Pointer Telocation Reports Q3 2015 Financial Results

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Highlights of the third quarter of 2015 - Total revenue of $24.9 million - MRM revenue of $14.6 million: in local currency terms MRM revenue grew 7% year over year and MRM service revenue grew by 20% year over year - Strong MRM margin profile: gross margins of 49% and operating margin of 11%

November 12, 2015 6:34 AM EST

ROSH HAAYIN, Israel, Nov. 12, 2015 /PRNewswire/ -- Pointer Telocation Ltd. (Nasdaq CM: PNTR) - a leading developer, manufacturer and operator of Mobile Resource Management (MRM) services, announced today its financial results for the third quarter of 2015.

Financial Highlights

Revenue for the third quarter of 2015 decreased 3.5% to $24.9 million as compared to $25.8 million in the third quarter of 2014.

The significant strengthening of the US Dollar, in particular versus the Brazilian Real and Israeli Shekel, reduced the revenue level in US Dollars compared with that of the third quarter of 2014. In local currency terms in the territories where Pointer's subsidiaries operate, revenue showed an increase of 8%, year-over-year.

Revenue from products in the third quarter of 2015 decreased 10.3% to $6.8 million (27% of revenue) compared to $7.6 million (29% of revenue) in the comparable period of 2014.

Revenue from services in the third quarter of 2015 decreased 0.7% to $18.1 million (73% of revenue) compared to $18.2 million (71% of revenue), in the comparable period of 2014. In local currency terms, revenue from services increased by 13% over the same period last year. 

Gross profit in the third quarter of 2015 was $8.6 million, a decrease of 2.9% compared to $8.8 million in the third quarter of 2014.

Gross margin in the third quarter of 2015 was 34.4% of revenue, compared to 34.1% of revenue in the third quarter of 2014.

Operating income in the third quarter of 2015 was $1.8 million (7.4% of revenue), a decrease of 14.2% compared to $2.1 million (8.3% of revenue) in the third quarter of 2014.

Net income in the third quarter was $1.1 million, or $0.14 per share, compared to $0.8 million, or $0.14 per share, in the third quarter of 2014.

Non-GAAP net income in the third quarter was $1.6 million, a decrease of 8.2% as compared to non-GAAP net income of $1.7 million in the third quarter of 2014.

Adjusted EBITDA for the third quarter of 2015 was $2.9 million, a decrease of 5.2% compared to $3.0 million in the third quarter of 2014.

In connection with Pointer's plan to spin-off its Shagrir business to shareholders, pro-forma information providing certain details of the financial performance of the Shagrir RSA business and Pointer MRM business is provided separately in Exhibit A and is for informational purposes only.

Management Comment

David Mahlab, Pointer's Chief Executive Officer, commented: "During the third quarter, we continued to face significant currency headwinds, which hid our solid growth in local currency terms when expressed in our reporting currency (US dollars). However, from a local currency perspective, we are pleased with our overall MRM revenue growth of 7% and particularly the 20% growth in MRM service revenue. The MRM business is the one that will remain with us following the planned divestment of Shagrir next year and our focus is the service segment, where we see most of the growth potential going forward."

Continued Mr. Mahlab, "During the fourth quarter we plan to release  new products within the Internet of Things (IOT) and for the MRM market, which we expect to act as growth drivers as we head into 2016. We also expect to see improvement on both the top and bottom line in our Brazilian operations, despite the generally weak economy there. We are continuing to actively search for acquisition opportunities in the regions in which we operate. I believe that our ongoing investment in research and development will continue to strengthen our competitive advantage in the MRM market and we look forward to continued growth in our MRM and IOT business."

Conference Call Information:

Pointer Telocation's management will host a conference call today, November 12, 2015, at 6:30am Pacific Time, 9:30am Eastern Time, 4:30pm Israel time. On the call, management will review and discuss the results. To listen to the call, please dial in to one of the following teleconferencing numbers. Please begin placing your call a few minutes before the conference call commences.

Dial in numbers are as follows:

From USA: + 1-888-668-9141

From Israel and International: +972 3-918-0610

A replay will be available a few hours following the call on the company's website.

Reconciliation between results on a GAAP and Non-GAAP basisReconciliation between results on a GAAP and Non-GAAP basis is provided in a table immediately following the Condensed Interim Consolidated Statements of Cash Flows. Pointer uses adjusted EBITDA and non-GAAP net income as  non-GAAP financial performance measurements. We calculate adjusted EBITDA by adding back to net income, net loss from discontinued operations, financial expenses, taxes, depreciation, amortization and impairment of goodwill and intangible assets, the effects of non-cash stock-based compensation expense, profit raise from gaining control in subsidiary previously treated by the equity method and related goodwill adjustment. We calculate non-GAAP net income by adding back to net income, net loss from discontinued operations, the effects of non-cash stock based compensation expenses, amortization and impairment of long lived assets , non-cash tax expenses resulting from timing differences relating to the amortization of acquisition-related intangible assets and goodwill, profit raise from gaining control in subsidiary previously treated by the equity method, acquisition related goodwill adjustment, onetime 'other expense' related to the termination cost of a former general manger of a Pointer subsidiary and restructuring in a subsidiary, loss from sale of subsidiary, one time financial expenses resulting from the devaluation of Israeli Shekel denominated bank deposits and non-cash tax income from raised tax asset.

The purpose of such adjustments is to give an indication of our performance exclusive of non-GAAP charges that are considered by management to be outside of our core operating results.

Adjusted EBITDA and non-GAAP net income are provided to investors to complement results provided in accordance with GAAP, as management believes the measure helps illustrate underlying operating trends in the Company's business and uses the measure to establish internal budgets and goals, manage the business and evaluate performance. We believe that these non-GAAP measures help investors to understand our current and future operating cash flow and performance, especially as our acquisitions have resulted in amortization and non-cash items that have had a material impact on our GAAP profits. Adjusted EBITDA and non GAAP net income should not be considered in isolation or as a substitute for comparable measures calculated and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies.

About Pointer Telocation:

Pointer Telocation is a leading provider of technology and services to the automotive and insurance industries, offering a set of services including Road Side Assistance, Stolen Vehicle Recovery and Fleet Management. Pointer has a growing list of customers and products installed in more than 45 countries. Cellocator, a Pointer Products Division, is a leading AVL (Automatic Vehicle Location) solutions provider for stolen vehicle retrieval, fleet management, car & driver safety, public safety, vehicle security and more. The Company's top management and the development center are located in the Afek Industrial Area of Rosh Ha'ayin, Israel.

For more information: http://www.pointer.com

Forward Looking Statements

This press release contains historical information and forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 with respect to the business, financial condition and results of operations of the Company. The words "believe," "expect," "anticipate," "intend," "seems," "plan," "aim," "should" and similar expressions are intended to identify forward-looking statements. Such statements reflect the current views, assumptions and expectations of the Company with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in the markets in which the Company operates and in general economic and business conditions, loss or gain of key customers and unpredictable sales cycles, competitive pressures, market acceptance of new products, inability to meet efficiency and cost reduction objectives, changes in business strategy and various other factors, both referenced and not referenced in this press release. Various risks and uncertainties may affect the Company and its results of operations, as described in reports filed by the Company with the Securities and Exchange Commission from time to time. The Company does not assume any obligation to update these forward-looking statements.

Contact

Zvi Fried, V.P. and Chief Financial Officer

Tel: 972-3-572 3111

E-mail: [email protected]

 

Ehud Helft, GK Investor & Public Relations

Tel: +1 646 201 9246

E-mail: [email protected]

 

 

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

September 30, 2015

December 31, 2014

Unaudited

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$       8,180

$         8,557

Restricted cash

-

62

Trade receivables

18,475

19,032

Other accounts receivable and prepaid expenses

2,184

1,853

Inventories

5,373

6,133

Deferred tax asset

362

901

Property and equipment held for sale

519

1,034

Total current assets

35,093

37,572

LONG-TERM ASSETS:

Long-term accounts receivable

585

408

Severance pay fund

8,151

8,609

Property and equipment, net

9,325

10,075

Other intangible assets, net

1,149

1,950

Goodwill

47,238

48,941

Deferred tax asset

3,339

3,449

Total long-term assets

69,787

73,432

Total assets

$  104,880

$      111,004

 

 

INTERIM CONSOLIDATED BALANCE SHEETS

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

September 30,

December 31,

2015

2014

Unaudited

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

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

$        5,228

$         7,478

Trade payables

11,565

11,460

Deferred revenues and customer advances

6,174

6,420

Other accounts payable and accrued expenses

7,833

8,972

Total current liabilities

30,800

34,330

LONG-TERM LIABILITIES:

Long-term loans from banks

9,497

12,046

Long-term loans from shareholders and others

273

997

Deferred taxes and other long-term liabilities

307

298

Accrued severance pay

9,052

9,537

Total long term liabilities

19,129

22,878

COMMITMENTS AND CONTINGENT LIABILITIES

EQUITY:

Pointer Telocation Ltd's shareholders' equity:

Share capital 

5,770

5,705

Additional paid-in capital

128,572

129,618

Accumulated other comprehensive income

(6,590)

(2,909)

Accumulated deficit

(71,782)

(75,767)

Total Pointer Telocation Ltd's shareholders' equity

55,970

56,647

Non-controlling interest

(1,019)

(2,851)

Total equity

54,951

53,796

Total liabilities and equity

$    104,880

$      111,004

 

 

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands

Nine months ended

September 30,

Three months ended

September 30,

Year ended December 31,

2015

2014

2015

2014

2014

Unaudited

Unaudited

Revenues:

Products

$ 21,083

$         24,783

$        6,827

$            7,613

$          33,099

Services

54,121

53,933

18,090

18,214

72,191

Total revenues

75,204

78,716

24,917

25,827

105,290

Cost of revenues:

Products

12,575

14,718

4,147

4,376

19,279

Services

36,947

37,185

12,205

12,632

50,461

Total cost of revenues

49,522

51,903

16,352

17,008

69,740

Gross profit

25,682

26,813

8,565

8,819

35,550

Operating expenses:

Research and development

2,534

2,606

816

840

3,390

Selling and marketing

8,873

8,459

2,967

2,936

11,219

General and administrative

8,162

8,917

2,770

3,016

11,883

Other general and administrative  expenses

-

-

-

-

683

Other income

-

(288)

-

(288)

(288)

Amortization of intangible assets

566

789

176

222

994

 Impairment of intangible and tangible assets

-

-

-

-

1,122

Total operating expenses

20,135

20,483

6,729

6,726

29,003

Operating income

5,547

6,330

1,836

2,093

6,547

Financial expenses,  net

537

1,724

360

912

2,424

Other expenses (income), net

12

(6)

(2)

-

232

Income before taxes on income

4,998

4,612

1,478

1,181

3,891

Taxes on income

1,142

1,368

387

354

(8,849)

Net income

$         3,856

$         3,244

$        1,091

$               827

$          12,740

 

 

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands

Nine months ended

September 30,

Three months ended

September 30,

Year ended

December 31,

2015

2014

2015

2014

2014

Unaudited

Profit  (loss) from continuing operations attributable to:

Equity holders of the parent

3,985

3,629

1,117

1,017

13,453

Non-controlling interests

(129)

(385)

(26)

(190)

(713)

$      3,856

$      3,244

$       1,091

$       827

$   12,740

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

Basic net earnings (loss) per share

$         0.52

$           0.5

$           0.14

$           0.14

$           1.81

Diluted net earnings (loss) per share

$         0.50

$         0.48

$           0.14

$           0.13

$           1.74

Weighted average -Basic number of shares

7,705,355

7,365,202

7,725,653

7,688,563

7,446,707

Weighted average – fully diluted number of shares

7,957,361

7,698,289

7,950,062

8,010,573

7,726,653

 

 

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

Nine months ended

September 30,

Three months ended

September 30,

Year ended

December 31,

2015

2014

2015

2014

2014

Unaudited

Unaudited

Cash flows from operating activities:

Net income

$         3,856

$       3,244

$   1,091

$       827

$        12,740

Adjustments required to reconcile net income

to net cash provided by operating activities:

Depreciation and amortization

2,946

3,591

961

1,116

4,767

Impairment of tangible and intangible assets

-

-

-

-

1,122

Gain from a bargain purchase

-

(288)

-

(288)

(288)

Accrued interest and exchange rate changes of

debenture and long-term loans

4

13

 

(6)

 

4

17

Accrued severance pay, net

(19)

113

19

(12)

56

Gain from sale of property and equipment, net

(88)

(130)

(16)

(33)

(95)

 Stock-based compensation

245

285

71

110

375

Decrease  in restricted cash

62

18

-

2

19

Increase (decrease) in trade receivables, net

(293)

(1,296)

220

409

(1,141)

Increase  in other accounts receivable  and prepaid expenses

(234)

(291)

826

338

(21)

Increase in inventories

120

(283)

300

(66)

(462)

Decrease (increase) Deferred income taxes

551

1,085

164

281

(9,120)

Decrease (increase) in long-term accounts receivable

(106)

(7)

(120)

2

126

Increase (decrease) in trade payables

296

(840)

(604)

(1,333)

(654)

Decrease in other accounts payable

and accrued expenses

(1,040)

(1,604)

 

(749)

 

(262)

(1,845)

Net cash provided by operating activities

6,300

3,610

2,157

1,095

5,596

Cash flows from investing activities:

Purchase of property and equipment

(2,511)

(3,204)

(1,157)

(956)

(4,458)

Proceeds from sale of property and equipment

829

1,111

181

244

1,529

Acquisition of subsidiary (a)

-

(688)

-

(688)

(688)

Proceeds from sale of investments in previously

consolidated subsidiaries (b)

-

-

 

-

 

-

(41)

Net cash used in investing activities

(1,682)

(2,781)

(976)

(1,400)

(3,658)

 

 

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

Nine months ended

September 30,

Three months ended

September 30,

Year ended December 31,

2015

2014

2015

2014

2014

Unaudited

Unaudited

Cash flows from financing activities:

Receipt of long-term loans from banks

15,159

12,884

56

(43)

12,577

Repayment of long-term loans from banks

(18,403)

(7,080)

(674)

(2,277)

(8,986)

Repayment of long-term loans from shareholders

-

(353)

32

13

(301)

Repurchase of shares from non-controlling interests

-

(7,740)

-

-

(7,740)

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

15

10,065

9

-

10,074

Short-term bank credit, net

(222)

(2,374)

264

208

(1,640)

Net cash provided (used) in financing activities

(3,451)

5,402

(313)

(2,099)

3,984

Effect of exchange rate on cash and cash equivalents

(1,544)

(589)

(1,135)

(395)

(714)

Increase (decrease) in cash and cash equivalents

(377)

5,642

(267)

(2,799)

5,208

Cash and cash equivalents at the beginning of the period

8,557

3,349

8,447

11,790

3,349

Cash and cash equivalents at the end of the period

$     8,180

$     8,991

$     8,180

$     8,991

$          8,557

(a)

Acquisition of subsidiary:

Working capital (Cash and cash equivalent      excluded)

$                -

$             221

 

$                  -

$             221

$             221

Property and equipment

-

565

-

565

565

Other intangible assets

-

190

-

190

190

Goodwill

-

(288)

-

(288)

(288)

$                -

$             688

$                  -

$             688

$             688

 

 

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

Nine months ended

September 30,

Three months ended

September 30,

Year ended December 31,

2015

2014

2015

2014

2014

Unaudited

Unaudited

(b)

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

$         317

$           25

$        317

$          25

$                45

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

$          493

$   11,385

$        493

$             -

$         11,368

 

 

ADDITIONAL INFORMATION

U.S. dollars in thousands

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

Nine months ended

September 30,

Three months ended

September 30,

Year ended

December 31,

2015

2014

2015

2014

2014

GAAP gross profit

25,682

$       26,812

$     8,565

$       8,819

$       35,550

Stock-based compensation expenses

8

7

2

3

10

Non-GAAP gross profit

25,690

$       26,820

$    8,567

$       8,822

$      35,560

GAAP operating expenses

$       20,134

$       20,483

$     6,728

$       6,726

$       29,003

Stock-based compensation expenses

237

284

69

107

380

Amortization and impairment of long lived assets

566

789

176

222

2,116

Other expenses of termination costs and restructuring in subsidiary

 

-

 

-

 

-

 

-

 

683

Acquisition related goodwill adjustment

-

(288)

-

(288)

(288)

Non-GAAP operating expenses

$       19,331

$       19,698

$      6,483

$       6,685

$       26,112

GAAP operating income

$       5,548

$       6,338

$     1,837

$       2,093

$         6,547

Non-GAAP operating income

$       6,358

$       7,122

$      2,083

$       2,137

$         9,448

GAAP net income

$       3,856

$       3,292

$     1,091

$       827

$      12,740

Stock-based compensation

245

291

71

109

390

Amortization and impairment of long lived assets

566

789

176

222

2,116

Acquisition related goodwill adjustment

-

(288)

-

(288)

(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

 

 

-

 

 

498

 

 

498

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

 

 

693

 

 

1,059

 

 

240

 

 

351

 

 

1,379

Non cash tax income from raised tax asset

-

-

-

-

(9,799)

Non-GAAP net income

$       5,360

$       5,593

$      1,578

$       1,719

$        7,928

Non-GAAP net income per share - Diluted

$          0.67

$          0.73

$        0.2

$          0.21

$          1.02

Non-GAAP weighted average number of shares - Diluted*

7,957,361

7,698,289

7,950,062

8,010,573

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

Nine months ended

September 30,

Three months ended

September 30,

Year ended

December 31,

2015

2014

2015

2014

2014

GAAP Net income as reported:

$    3,856

$    3,244

$    1,091

$    827

$    12,740

Financial expenses, net

537

1,724

360

912

2,424

Tax on income

1,142

1,368

387

354

(8,849)

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

-

(288)

 

 

 

-

 

 

 

(288)

(288)

Stock based compensation expenses

245

291

71

109

390

Loss from sale of subsidiary

-

-

-

-

209

Depreciation, amortization and impairment of      goodwill and  intangible assets

2,946

3,591

 

961

 

1,116

5,889

Adjusted EBITDA

$    8,726

$    9,930

$    2,870

$    3,030

$     12,515

 

 

EXHIBIT A*

U.S. dollars in thousands

Three months endedSeptember 30, 2015

Three months ended September 30, 2014 (**)

Year endedDecember 31, 2014 (**)

Unaudited

Unaudited

Unaudited

MRM

RSA

Total

MRM

RSA

Total

MRM

RSA

Total

Revenues:

Products

5,090

1,737

6,827

6,117

1,519

7,613

27,855

5,244

33,099

Services

9,470

8,620

18,090

9,317

8,897

18,214

37,522

34,670

72,191

Total Revenues

14,560

10,357

24,917

15,410

10,417

25,827

65,377

39,913

105,290

Non-GAAP Cost of Revenues

7,418

8,932

16,349

7,759

9,246

17,005

34,334

35,396

69,730

Non-GAAP Gross Profit

7,142

1,425

8,568

7,652

1,170

8,822

31,043

4,517

35,560

49.1%

13.8%

34.4%

49.7%

11.2%

34.2%

47.5%

11.3%

33.8%

Non-GAAP Operating Expenses

5,494

990

6,483

5,571

1,115

6,686

21,855

4,257

26,112

Non-GAAP Operating  Income

1,649

436

2,084

2,080

56

2,136

9,187

260

9,448

(*)            See reconciliation information on p. 12 herein.

(**)           Note that certain figures for the year ended December 31, 2014 and Three months September, 2014 have been slightly revised from the previously reported figures as a result of allocation between segments and spin off the Car2Go subsidiary together with Shagrir, our RSA business.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/pointer-telocation-reports-q3-2015-financial-results-300177520.html

SOURCE Pointer Telocation Ltd.


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