Pointer Telocation Reports Q2 2015 Financial Results

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

June 30, 2015

December 31, 2014

Unaudited

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$       8,447

$         8,557

Restricted cash

-

62

Trade receivables

19,738

19,032

Other accounts receivable and prepaid expenses

2,416

1,853

Inventories

6,025

6,133

Deferred tax asset

544

901

Property and equipment held for sale

706

1,034

Total current assets

37,876

37,572

LONG-TERM ASSETS:

Long-term accounts receivable

438

408

Severance pay fund

8,662

8,609

Property and equipment, net

9,592

10,075

Other intangible assets, net

1,469

1,950

Goodwill

49,709

48,941

Deferred tax asset

3,185

3,449

Total long-term assets

73,055

73,432

Total assets

$    110,931

$      111,004

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

June 30,

December 31,

2015

2014

Unaudited

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Short-term bank credit and current maturities of long-term loans

$        5,206

$         7,478

Trade payables

12,070

11,460

Deferred revenues and customer advances

7,085

6,420

Other accounts payable and accrued expenses

8,343

8,972

Total current liabilities

32,704

34,330

LONG-TERM LIABILITIES:

Long-term loans from banks

10,802

12,046

Long-term loans from shareholders and others

921

997

Deferred taxes and other long-term liabilities

301

298

Accrued severance pay

9,575

9,537

Total long term liabilities

21,599

22,878

COMMITMENTS AND CONTINGENT LIABILITIES

EQUITY:

Pointer Telocation Ltd's shareholders' equity:

Share capital 

5,707

5,705

Additional paid-in capital

129,797

129,618

Accumulated other comprehensive income

(2,961)

(2,909)

Accumulated deficit

(72,901)

(75,767)

Total Pointer Telocation Ltd's shareholders' equity

59,642

56,647

Non-controlling interest

(3,014)

(2,851)

Total equity

56,628

53,796

Total liabilities and equity

$    110,931

$      111,004

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands

Six months ended

June 30,

Three months ended

June 30,

Year endedDecember 31,

2015

2014

2015

2014

2014

Unaudited

Unaudited

Revenues:

Products

$        14,256

$         17,170

$        7,173

$            8,054

$          33,099

Services

36,031

35,719

18,137

17,820

72,191

Total revenues

50,287

52,889

25,310

25,874

105,290

Cost of revenues:

Products

8,428

10,342

4,345

4,946

19,279

Services

24,742

24,553

12,454

12,344

50,461

Total cost of revenues

33,170

34,895

16,799

17,290

69,740

Gross profit

17,117

17,994

8,511

8,584

35,550

Operating expenses:

Research and development

1,718

1,766

824

908

3,390

Selling and marketing

5,906

5,523

3,100

2,832

11,219

General and administrative

5,392

5,901

2,756

2,944

11,883

Other general and administrative  expenses

-

-

-

-

683

Other income

-

-

-

-

(288)

Amortization of intangible assets

390

567

190

230

994

 Impairment of intangible and tangible assets

-

-

-

-

1,122

Total operating expenses

13,406

13,757

6,870

6,914

29,003

Operating income

3,711

4,237

1,641

1,670

6,547

Financial expenses,  net

177

812

371

308

2,424

Other expenses (income), net

14

(6)

14

(9)

232

Income before taxes on income

3,520

3,431

1,256

1,371

3,891

Taxes on income

755

1,014

355

414

(8,849)

Net income

$         2,765

$         2,417

$           901

$               957

$         12,740

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands

Six months ended

June 30,

Three months ended

June 30,

Year ended

December 31,

2015

2014

2015

2014

2014

Unaudited

Profit  (loss) from continuing operations attributable to:

Equity holders of the parent

2,866

2,612

1,001

1,146

13,453

Non-controlling interests

(101)

(195)

(100)

(189)

(713)

$      2,765

$      2,417

$      901

$       957

$   12,740

Earnings per share attributable to Pointer Telocation Ltd's shareholders:

Basic net earnings (loss) per share

$        0.37

$       0.36

$     0.13

$    0.15

$    1.81

Diluted net earnings (loss) per share

$        0.36

$       0.35

$    0.13

$    0.14

$    1.74

Weighted average -Basic number of shares

7,694,976

7,200,842

7,701,317

7,688,564

7,446,707

Weighted average – fully diluted number of shares

7,961,010

7,542,146

7,957,222

8,029,615

7,726,653

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

Six months ended

June 30,

Three months ended

June 30,

Year ended

December 31,

2015

2014

2015

2014

2014

Unaudited

Unaudited

Cash flows from operating activities:

Net income

$         2,765

$       2,417

$       901

$       957

$        12,740

Adjustments required to reconcile net income

to net cash provided by operating activities:

Depreciation and amortization

1,985

2,475

979

1,194

4,767

Impairment of tangible and intangible assets

-

-

-

-

1,122

Gain from a bargain purchase

-

-

-

-

(288)

Accrued interest and exchange rate changes of debenture and long-term loans

10

9

376

4

17

Accrued severance pay, net

(38)

125

(6)

138

56

Gain from sale of property and equipment, net

(72)

(97)

(38)

(32)

(95)

 Stock-based compensation

174

175

83

127

375

Decrease  in restricted cash

62

16

-

1

19

Increase (decrease) in trade receivables, net

(513)

(1,705)

(10)

378

(1,141)

Increase in other accounts receivable

 and prepaid expenses

(1,060)

(629)

(1,106)

(69)

(21)

Increase in inventories

(180)

(217)

(171)

(481)

(462)

Decrease (increase) Deferred income taxes

387

804

197

319

(9,120)

Decrease (increase) in long-term accounts receivable

14

(9)

12

(50)

126

Increase (decrease) in trade payables

900

493

837

1,117

(654)

Decrease in other accounts payable

and accrued expenses

(291)

(1,342)

(701)

(988)

(1,845)

Net cash provided by operating activities

4,143

2,515

1,353

2,615

5,596

Cash flows from investing activities:

Purchase of property and equipment

(1,354)

(2,248)

(769)

(1,094)

(4,458)

Proceeds from sale of property and equipment

648

867

337

160

1,529

Investment and loans/ Repayments in affiliate

-

(7,740)

-

-

-

Acquisition of subsidiary (a)

-

-

-

-

(688)

Proceeds from sale of investments in previously

consolidated subsidiaries (b)

-

-

-

-

(41)

Net cash used in investing activities

(706)

(9,121)

(432)

(934)

(3,658)

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

Six months ended

June 30,

Three months ended

June 30,

Year ended December 31,

2015

2014

2015

2014

2014

Unaudited

Unaudited

Cash flows from financing activities:

Receipt of long-term loans from banks

15,103

12,927

4,546

1,490

12,577

Repayment of long-term loans from banks

(17,729)

(4,803)

(6,335)

(2,597)

(8,986)

Repayment of long-term loans from shareholders

(32)

(366)

(19)

(251)

(301)

Repurchase of shares from non-controlling interests

-

-

-

-

(7,740)

Proceeds from issuance of shares and exercise of options, net of issuance costs

6

10,065

-

6

10,074

Short-term bank credit, net

(486)

(2,582)

(18)

(1,382)

(1,640)

Net cash provided (used) in financing activities

(3,138)

15,241

(1,826)

(2,734)

3,984

Effect of exchange rate on cash and cash equivalents

(409)

(194)

1,098

(227)

(714)

Increase (decrease) in cash and cash equivalents

(110)

8,441

193

(1,280)

5,208

Cash and cash equivalents at the beginning of the period

8,557

3,349

8,254

13,070

3,349

Cash and cash equivalents at the end of the period

$     8,447

$     11,790

$     8,447

$     11,790

$          8,557

(a)

Acquisition of subsidiary:

Working capital (Cash and cash equivalent excluded)

$         -

$           -

$           -

$           -

$             221

Property and equipment

-

-

-

-

565

Other intangible assets

-

-

-

-

190

Goodwill

-

-

-

-

(288)

$          -

$           -

$           -

$           -

$             688

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

Six months ended

June 30,

Three months ended

June 30,

Year ended December 31,

2015

2014

2015

2014

2014

Unaudited

Unaudited

Proceeds from sale of investments in previously consolidated subsidiaries:

The subsidiaries' assets and liabilities at date of sale:

Working capital (excluding cash and cash equivalents)

$                -

$                -

$                -

$                -

$             (18)

Property and equipment

-

-

-

-

(30)

Long term loans from banks and others

-

-

-

-

5

Non-controlling interests

-

-

-

-

(125)

Loss from sale of subsidiaries

-

-

-

-

209

$               -

$              -

$               -

$               -

$              41

(c)

Non-cash investing activity:

Purchase of property and equipment

$        264

$        179

$             208

$        179

$              45

Issuance of shares in respect of acquisition of non-controlling interests in subsidiary

$             -

$      11,385

$             -

$             -

$      11,368

ADDITIONAL INFORMATION

U.S. dollars in thousands

The following table reconciles the GAAP to non-GAAP operating results:

Six months ended

June 30,

Three months ended

June 30,

Year ended December 31,

2015

2014

2015

2014

2014

GAAP gross profit

$       17,117

$       17,994

$      8,511

$      8,584

$       35,550

Stock-based compensation expenses

6

4

3

3

10

Non-GAAP gross profit

$       17,123

$       17,998

$      8,514

$     8,587

$      35,560

GAAP operating expenses

$       13,406

$       13,757

$     6,870

$     6,914

$       29,003

Stock-based compensation expenses

168

178

80

130

380

Amortization and impairment of long lived assets

390

567

190

230

2,116

Other expenses of termination costs and restructuring in subsidiary

-

-

-

-

683

Acquisition related goodwill adjustment

-

-

-

-

(288)

Non-GAAP operating expenses

$       12,848

$       13,012

$      6,600

$     6,554

$       26,112

GAAP operating income

$       3,711

$       4,237

$      1,641

$     1,670

$         6,547

Non-GAAP operating income

$       4,275

$       4,986

$      1,914

$     2,033

$         9,448

GAAP net income

$       2,765

$       2,417

$      901

$       957

$      12,740

Stock-based compensation

174

182

83

133

390

Amortization and impairment of long lived assets

390

567

190

230

2,116

Acquisition related goodwill adjustment

-

-

-

-

(288)

Other expenses of termination costs and restructuring in subsidiary

-

-

-

-

683

Loss from sale of subsidiary

-

-

-

-

209

Financial expenses resulting from the devaluation of Israeli Shekel denominated bank deposits

-

-

-

-

498

Non-cash tax expenses resulting from timing differences relating to the amortization of acquisition-related intangible assets and goodwill

453

708

211

356

1,379

Non cash tax income from raised tax asset

-

-

-

-

(9,799)

Non-GAAP net income

$       3,782

$       3,874

$      1,385

$     1,676

$        7,928

Non-GAAP net income per share - Diluted

$          0.48

$          0.51

$        0.17

$         0.21

$          1.02

Non-GAAP weighted average number of shares - Diluted*

7,961,010

7,542,146

7,957,222

8,029,615

7,726,653

* In calculating diluted non-GAAP net income per share, the diluted weighted average number of shares outstanding excludes the effects of stock-based compensation expenses in accordance with FASB ASC 718.

ADDITIONAL INFORMATION

U.S. dollars in thousands

Adjusted EBITDA

Six months ended

June 30,

Three months ended

June 30,

Year endedDecember 31,

2015

2014

2015

2014

2014

GAAP Net income as reported:

$    2,765

$    2,417

$    901

$    957

$    12,740

Financial expenses (income), net

177

812

371

307

2,424

Tax on income

755

1,014

355

414

(8,849)

Profit raise from gaining control in subsidiary previously treated by the equity method and acquisition related goodwill adjustment

-

-

-

-

(288)

Stock based compensation expenses

174

182

83

133

390

Loss from sale of subsidiary

-

-

-

-

209

Depreciation, amortization and impairment of goodwill and  intangible assets

1,985

2,475

979

1,194

5,889

Adjusted EBITDA

$    5,856

$    6,900

$    2,689

$    3,005

$     12,515

Exhibit A (*)

U.S Dollars in Thousands

Three months endedJune 30, 2015

Three months ended June 30, 2014

Year endedDecember 31, 2014 (**)

Unaudited

Unaudited

Unaudited

MRM

RSA

Total 

MRM

RSA

Total 

MRM

RSA

Revenues:

Products

5,760

1,413

7,173

6,837

1,217

8,054

27,855

5,244

33,099

Services

10,629

7,508

18,137

9,904

7,916

17,820

41,267

30,925

72,191

Total Revenues

16,389

8,921

25,310

16,741

9,133

25,874

69,122

36,168

105,290

Non-GAAP Cost of Revenues

8,984

7,812

16,796

9,301

7,986

17,287

37,653

32,078

69,730

Non-GAAP Gross Profit

7,405

1,109

8,514

7,440

1,147

8,587

31,469

4,091

35,560

45.2%

12.4%

33.6%

44.4%

12.6%

33.2%

45.5%

11.3%

Non-GAAP Operating Expenses

5,784

816

6,600

5,669

885

6,554

22,711

3,401

26,112

Non-GAAP Operating  Income

1,621

293

1,914

1,771

262

2,033

8,758

690

9,448

(*)  

See reconciliation information on p. 12 herein

(**) 

Note that certain figures for the year ended December 31, 2014 have been slightly revised from the previously reported figures as a result of allocation between segments

Contact:

Zvi Fried, V.P. and Chief Financial Officer                

              Ehud Helft, GK Investor & Public Relations

Tel: 972-3-572 3111                                        

              Tel: +1 646 201 9246

E-mail: [email protected]                              

              E-mail: [email protected]