EX-99.1 2 tv507241_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

SuperCom Reports Financial Results for the Third Quarter of 2018 with $1.8 million in EBITDA, 30% EBITDA Margin, and Non-GAAP EPS $0.09

 

For First Three Quarters of 2018: Non-GAAP EBITDA of $4.7 million and Non-GAAP EPS $0.23

 

Herzliya, Israel, November 14, 2018 – SuperCom (NASDAQ: SPCB), a global provider of secure solutions for the e-government, public safety, healthcare, and finance sectors, reported results for the third quarter of 2018.

  

Nine Months Ended September 30, 2018 Financial Highlights (Compared to the Prior Year Period)

 

·Revenue decreased to $19.9 million from $25.5 million.

 

·Gross Profit decreased $11.1 million from 11.6 million.

 

·Non-GAAP Gross Margin increased to 56% from 45.5%.

 

·Non-GAAP core operating expenses improved by 34% to $9.4 million from $14.3 million.

 

·EBITDA improved to $4.7 million compared to $3.3 million.

 

·Non-GAAP Net Profit improved to $3.5 million or $0.23 per share from $2.1 million or $0.14 per share.

 

·Working Capital increased to $18.6 million from $15.9 million.

 

·Current Ratio increased to 2.5 from 2

 

Third Quarter 2018 Financial Highlights (Compared to the Third Quarter of 2017)

 

·Revenue decreased to $6.1 million from $9.6 million.

 

·Non-GAAP Gross Margin increased to 58.8% from 48%.

 

·Non-GAAP core operating expenses improved by 41% to $2.5 million from $4.2 million.

 

·EBITDA decreased to $1.8 million compared to $2.4 million.

 

·EBITDA Margin increased to 30% compared to 25%.

 

·Non-GAAP Net Profit decreased to $1.4 million or $0.09 per share from $2 million or $0.14 per share.

 

 

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Management Commentary

 

“We are excited to share our third quarter 2018 results, representing our very hard work optimizing our operational cost structure to record levels since 2015 with EBITDA margins as high as 30% and quarterly core Non-GAAP operating expenses as low as $2.5 million,” commented Arie Trabelsi, President and CEO of SuperCom. “We have also been successful in securing a $20 million credit facility from a large US investment management firm, allowing us to grow our working capital to properly deploy our numerous ongoing multi-year projects as well as signal to potential customers and partners that we have capacity to do even more.”

 

“With a steady base of recurring revenues globally, a growing targeted pipeline of opportunities across our three business segments, a lean operating cost structure, and strong financial backing, we are poised to grow our top line and cash flow generation in 2019 and in years to come,” concluded Mr. Trabelsi.

 

First Three Quarters of 2018 and Recent Operational Highlights:

 

General:

 

·Secured a $20 million credit facility from funds managed by affiliates of Fortress Investment Group LLC, a highly diversified global investment manager with approximately $41.4 billion of assets under management. The facility is expected mainly to help support working capital and growth of the business operations.

 

·Reached a record low operating expense structure since 2015 with core Non-GAAP operating expenses of approximately $2.5 million in Q3 2018, providing a lean operating base for continued profitability.

 

e-Gov:

 

·In April 2018, signed a new contract worth approximately $4 million in value with an existing national government customer in Africa. Built around SuperCom's Magna platform, the deployment will allow for quick expansion of additional e-Gov modules, which would lead to potential increases in the overall contract size. The majority of the new contract is expected to be recognized over the next two years and will grow SuperCom's steady-state recurring revenues.

 

·Continued progress on national project deployments as well as transition of recent projects in Africa into Steady State.

 

IoT and Connectivity:

 

·In January 2018, secured an additional contract to provide PureSecurity EM Suite in Idaho.

 

·In March 2018, secured an additional contract to provide PureSecurity EM Suite in South Carolina.

 

·In April 2018, secured an additional contract to provide PureSecurity EM Suite in eastern Texas to an established service provider.

 

·In April 2018, awarded a $7 million project with the national government of Sweden to deploy PureSecurity EM Suite.

 

·In June 2018, announced the deployment of an innovative protection from domestic violence project with

 

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the Sweden national police, an additional national EM project win in Sweden.

 

·In November 2018, secured an additional contract to provide PureSecurity EM Suite in Minnesota and surrounding regions.

 

·Continued progress on 13 EM project deployments, including those in Europe, Canada and the USA.

 

Cyber Security:

 

·Safend continued to close deals with sizable enterprise customers in various locations globally, each with orders above $100 thousand in value.

 

·Continued progress in the development of new advanced cyber security products, adding more capabilities, including anti-malware to be incorporated into the Safend cyber security platform.

 

SuperCom management will host the conference call, followed by a question and answer period.

 

Date: Wednesday, November 14, 2018

Time: 10:00 a.m. Eastern time (7:00 a.m. Pacific time)

U.S. toll-free: 877-407-9124 Israel toll-free: 180-940-6247 International: 201-689-8584

 

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

 

About SuperCom

 

Since 1988, SuperCom has been a global provider of traditional and digital identity solutions, providing advanced safety, identification and security solutions to governments and organizations, both private and public, throughout the world. Through its proprietary e-government platforms and innovative solutions for traditional and biometrics enrollment, personalization, issuance and border control services, SuperCom has inspired governments and national agencies to design and issue secure Multi-ID documents and robust digital identity solutions to its citizens and visitors. SuperCom offers a unique all-in-one field-proven RFID & mobile technology and product suite, accompanied by advanced complementary services for various industries including healthcare and homecare, security and safety, community public safety, law enforcement, electronic monitoring, livestock monitoring, and building and access automation. For more information, visit www.supercom.com.

 

SuperCom Corporate Contact: Ordan Trabelsi, President, Americas Tel: 1-212-675-4606

 

ordan@supercom.com

 

Notice Regarding Forward-Looking Statements

 

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded or followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Forward-looking

 

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statements in this release also include statements about business and economic trends. Investors should also consider the areas of risk described under the heading "Forward Looking Statements" and those factors captioned as "Risk Factors" in the Company’s periodic reports under the Securities Exchange Act of 1934, as amended, or in connection with any forward-looking statements that may be made by the Company. These statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the Securities and Exchange Commission (SEC), including the Company's Annual Report on Form 20-F filed with the SEC on May 21, 2017. The Company undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this press release.

 

Use of Non-GAAP Financial Information

 

In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), this release of operating results also contains non-GAAP financial measures, which SuperCom believes are the principal indicators of the operating and financial performance of its business. Management believes the non-GAAP financial measures provided are useful to investors' understanding and assessment of the Company's on-going core operations and prospects for the future, as the charges eliminated are not part of the day-to-day business or reflective of the core operational activities of the Company. Management uses these non-GAAP financial measures as a basis for strategic decisions, forecasting future results and evaluating the Company's current performance. However, such measures should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. Reconciliation of the non-GAAP measures to the most comparable GAAP measures are provided in the schedules attached to this release.

 

 

[Tables to follow]

 

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SUPERCOM LTD. CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

 

 

 

   September 30,   December 31, 
   2018   2017 
   Unaudited   Audited 
  CURRENT ASSETS          
Cash and cash equivalents   1,786    1,037 
Restricted bank deposits   1,291    1,063 
Trade receivable, net   17,724    12,456 
Patents   5,283    5,283 
Other accounts receivable and prepaid expenses   543    2,698 
Inventories, net   4,825    4,876 
  Total current assets   31,452    27,413 
  LONG-TERM ASSETS          
Severance pay funds   306    319 
Deferred tax long term   4,888    4,505 
Customer Contracts   2,873    3,640 
Software and other IP   4,456    5,006 
Other Asset, net   5,447    5,071 
Goodwill   7,026    7,026 
Property & equipment, net   896    1,218 
Total long-term assets:   25,892    26,785 
Total Assets   57,344    54,198 

 

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CURRENT LIABILITIES        
Short-term Bank credit   0    738 
Trade payables   3,055    5,838 
Employees and payroll accruals   4,106    4,910 
Related parties   187    61 
Accrued expenses and other liabilities   3,517    3,739 
Deferred revenues ST   970    1,511 
Short-term liability for future earn-out   1,039    1,163 
Total current liabilities   12,874    17,960 
LONG-TERM LIABILITIES          
Long-term bank loan   0    0 
Long-term loan   5,000    0 
Accrued severance pay   563    585 
Related Parties   3,825    2,082 
Deferred tax liability   0    49 
Deferred revenues   796    668 
Long-term liability for future earn-out   95    147 
Total long-term liabilities   10,279    3,531 
SHAREHOLDERS' EQUITY:          
Ordinary shares   1,026    1,026 
Additional paid-in capital   83,810    82,157 
Accumulated deficit   (50,646)   (50,476)
Total shareholders' equity   34,191    32,707 
Total liabilities and equity   57,344    54,198 

 

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SUPERCOM LTD. CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands)

 

  3 months ended
   September 30 2018   September 30 2017 
   Unaudited   Unaudited 
REVENUES   6,082    9,638 
COST OF REVENUES   2,676    4,512 
GROSS PROFIT (LOSS)   3,406    5,126 
OPERATING EXPENSES:          
Research and development   1,034    1,695 
Selling and marketing   1,050    1,724 
General and administrative   1,075    1,202 
Other expense (Income)   (31)   (87)
Total operating expenses   3,128    4,534 
OPERATING INCOME   278    592 
FINANCIAL INCOME (EXPENSES), NET   (348)   (31(
INCOME BEFORE INCOME TAX   (70)   561 
INCOME TAX BENEFIT (EXPENSES )   188    53 
NET PROFIT(LOSS) FOR THE PERIOD   118    614 
           
EPS Basic   0.01    0.04 
EPS Diluted   0.01    0.04 
Weighted average number of ordinary shares used in computingbasic income per share   14,980,006    14,938,339 
Weighted average number of ordinary shares used in computingdiluted income per share   15,028,339    15,017,308 

 

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SUPERCOM LTD.

Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income

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

 

  3 months ended
   September   30,2018   September 30, 2017 
   Unaudited   Unaudited 
GAAP gross profit   3,406    5,126 
Amortization of Software and IP   153    154 
Stock-based compensation expenses   19    36 
Non-GAAP gross profit   3,578    5,316 
GAAP operating Income   278    592 
Amortization of Software/IP, Customer Contracts and Brand, and Stock- based compensation expenses   1081    1053 
Foreign Currency Loss   367    429 
Non-GAAP operating Income   1726    2,074 

 

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GAAP net PROFIT   118    614 
Amortization of Software/IP, Customer Contracts and Brand, and Stock- based compensation expenses   1081    1053 
Foreign Currency Loss   367    429 
Income tax expense (benefit)   (188)   (53)
Non-GAAP net Profit   1,378    2,043 
Non-GAAP EPS   0.09    0.14 
NET PROFIT )LOSS( FOR THE PERIOD   118    614 
Income tax expenses (benefit), net   (188)   (53)
Financial expenses (income), net   348    31 
Depreciation, amortization and stock-based compensation expenses   1,169    1,398 
Foreign Currency Loss   367    429 
EBITDA *   1,814    2,419 
* EBITDA is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization.

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SUPERCOM LTD. CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands)

 

 

  9 months ended
   September 30 2018   September 30 2017 
   Unaudited   Unaudited 
REVENUES   19,857    25,467 
COST OF REVENUES   8,730    13,868 
GROSS PROFIT (LOSS)   11,127    11,599 
OPERATING EXPENSES:          
Research and development   3,578    5,336 
Selling and marketing   4,232    5,995 
General and administrative   3,677    4,393 
Other expenses(Income)   152    (2,404)
Total operating expenses   11,639    13,320 
OPERATING LOSS   (512)   (1,721)
FINANCIAL INCOME (EXPENSES), NET   (70)   (433)
LOSS BEFORE INCOME TAX   (582)   (2,154)
INCOME TAX BENEFIT   413    111 
NET LOSS FOR THE PERIOD   (169)   (2,043)

 

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SUPERCOM LTD.

Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income

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

 

   9 months ended 
   September   30,2018   September 30, 2017 
   Unaudited   Unaudited 
GAAP gross profit   11,127    11.599 
Amortization of Software and IP   460    460 
Stock-based compensation expenses   78    153 
Non-GAAP gross profit   11,665    12,212 
GAAP operating Loss   (512)   (1,721)
Amortization of Software/IP, Customer Contracts and Brand, and Stock- based compensation expenses   2,897    2,883 
Foreign Currency Loss   1,154    1,330 
Non-GAAP operating Income(Loss)   3,539    2,492 

 

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GAAP net Income (Loss)   (169)   (2,043)
Amortization of Software/IP, Customer Contracts and Brand, and Stock- based compensation expenses   2,897    2,883 
Foreign Currency Loss   1,154    1330 
Income tax expense (benefit)   (413)   (111)
Non-GAAP net Income(Loss)   3,469    2,059 
Non-GAAP EPS   0.23    0.14 
NET LOSS FOR THE PERIOD   (169)   (2,043)
Income tax expenses (benefit), net   (413)   (111)
Financial expenses (income), net   70    433 
Depreciation, amortization and stock-based compensation expenses   4,055    3,673 
Foreign Currency Loss   1,154    1,330 
EBITDA *   4,697    3,282 
* EBITDA is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization.

 

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