EX-99.1 2 v402892_ex1.htm EXHIBIT 1

 

Exhibit 1

 

  

 

 

For Immediate Release

 

Pointer Telocation Ltd. Reports Record Results

for the Financial Year 2014

 

Full Year 2014 Highlights

 

·Net income of $12.7 million up 34% year-over-year;
·Revenues of $105.3 million, up 8% year-over-year;
·Non GAAP operating income of $9.5 million, up 20% year-over-year;
·Adjusted EBITDA of $12.5 million, up 16% year-over-year;
·MRM business: revenues of $69.4 million, up 11% YoY with non GAAP operating income of $8.9 million, up 30% YoY.

 

 

Rosh HaAyin, Israel, February 26, 2015, Pointer Telocation Ltd. (Nasdaq: PNTR) - a leading developer, manufacturer and operator of Mobile Resource Management (MRM) services, announced today its financial results for the three month period and fiscal year ended December 31, 2014.

 

David Mahlab, Pointer's Chief Executive Officer, commented on the results: “We are pleased with our performance in 2014. While we faced some significant currency headwinds, especially in the second half of the year, in local currency terms our business grew nicely in all of our various regions. 2014 was particularly important from a strategic point of view. We purchased our partners' shares in the Shagrir operation in Israel, acquired our South African subsidiary and towards the end of the year transferred our roadside assistance business in Israel into a new subsidiary which we plan to spin-off in the second half of 2015.

 

“We invested strongly in our SaaS infrastructure during 2014, and during 2015 we plan to continue moving our offering to the cloud with the aim of fully offering it as a SaaS model. We also plan on launching new MRM related products and services to additional vertical markets. We expect our MRM business to continue to grow strongly throughout 2015, benefitting from the growth in subscribers as well as the recurring revenues from our subscriber base.”

 

1
 

 

 

 

 

Financial Summary for the Fourth Quarter of 2014

 

Revenues were $26.6 million compared to $28.1 million in the fourth quarter of 2013, a decrease of 5%. The significant strengthening of the US Dollar in the period versus the various local currencies in which the Company generates sales in, caused a reduction in the revenue level when translated into US Dollars. In local currency terms, revenues slightly increased year-over-year.

 

International activities for the fourth quarter of 2014 accounted for 40% of total revenue, compared to 34% in the fourth quarter of 2013.

 

Revenues from products were $8.3 million (31% of revenues) compared to $9.6 million (34% of revenues) in the fourth quarter of 2013, a decrease of 14%. Pointer's revenues from services were $18.3 million (69% of revenues) compared to $18.4 million (66% of revenues) in the fourth quarter of 2013, a decrease of 1%.

 

Gross profit was $8.7 million (32.9% of revenues) compared to $9.1 million (32.5% of revenues) in the fourth quarter of 2013, a decrease of 4%.

 

Operating income on a GAAP basis was $0.2 million compared to operating income of $1.2 million in the fourth quarter of 2013. On a non-GAAP basis, operating income was $2.3 million (8.8% of revenues) compared with $2.1 million (7.6% of revenues), an increase of 9%.

Net income on a GAAP basis was $9.4 million or $1.23 per diluted share compared with $3.9 million or $0.65 per diluted share in the fourth quarter of 2013. The net income included a non-cash tax income from a raised tax asset amounting to $9.8 million, which was recorded following the restructuring and separation of the RSA business into a separate entity, and the merger of profitable operations.

 

Net income on a non-GAAP basis was $2.3 million (8.6% of revenues) compared to a non-GAAP net income of $1.9 million (6.8% of revenues) in the fourth quarter of 2013, an increase of 20%. Fully diluted earnings based on non-GAAP net income in the fourth quarter was $0.29 per share, compared to $0.33 per share in the fourth quarter of 2013.

 

Adjusted EBITDA was $2.6 million compared with $2.7 million in the fourth quarter of 2014, a decrease of 4%.

 

2
 

 

 

 

 

Financial Summary for the Full Year of 2014

 

Revenues for 2014 were $105.3 million compared to $97.9 million in 2013, an increase of 8%. In local currency terms, revenues increased by 10%.

 

International activities for 2014 accounted for 33% of total revenues compared to 29% in 2013.

 

Revenues from products were $33.1 million (31% of revenues) compared to $34.7 million (35% of revenues) in 2013, a decrease of 5%. Revenues from services were $72.2 million (69% of revenues) compared to $63.2 million (65% of revenues) in 2013, an increase of 14%.

Revenues from the MRM business were $69.4 million, compared with $62.3 million in 2013, an increase of 11.4%.

 

Gross profit was $35.6 million (33.8% of revenues) in 2014, an increase of 12.5% compared to $31.6 million (32.3% of revenues) in 2013. Non-GAAP Gross profit in the MRM business was $31.5 million (45.3% of revenues) compared with $27.2 million (43.6% of revenues) in 2013, a growth of 15.9%.

 

Operating income on a GAAP basis was $6.6 million (6.2% of revenues) in 2014 compared to operating income of $6.0 million (6.2% of revenues) in 2013. Operating income on a non-GAAP basis was $9.5 million (9.0% of revenues) in 2014 compared to operating income of $7.8 million (8.0% of revenues) in 2013.

 

Operating income on a non-GAAP basis at the MRM business was $8.9 million, compared with $6.8 million in 2013, an increase of 30%.

 

Net income on a GAAP basis was $12.7 million (12% of revenue) or $1.74 per diluted share compared to $7.3 million (7.4% of revenues) or $1.10 per diluted share in 2013. Net income on a non-GAAP basis was $7.9 million (7.5% of revenues) or $1.02 per diluted share, compared to non-GAAP net income of $7.4 million (7.6% of revenues) or $1.30 in 2013.

 

Adjusted EBITDA was $12.5 million (11.9% of revenues), compared to $10.8 million (11.0%) in 2013, an increase of 16%.

 

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 MRM business separately, are provided in Exhibit A for informational purposes only.

 

3
 

 

 

 

 

Conference Call Information

 

Pointer Telocation's management will host a conference call with the investment community today, Thursday, February 26th, 2015 to review and discuss the financial results, and will also be available to answer questions.

 

The conference call will commence at 9:30 AM Eastern Time, 4:30 PM Israel time.

 

To participate in the call, please dial in to one of the teleconference numbers below. Please begin placing your call at least 5 minutes before the time set for the commencement of the conference call.

 

From USA: +1-888-407-2553

From Israel: 03-918-0610

 

A replay will be available the following day on the Company’s website: 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 Kenny Green/Ehud Helft, GK Investor Relations
Tel.: +972-3-572 3111 Tel: +1 646 201 9246
E-mail: zvif@pointer.com E-mail: pointer@gkir.com

 

4
 

 

 

 

 

Reconciliation between results on a GAAP and Non-GAAP basis

 

Reconciliation 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 a non-GAAP financial performance measurement.

 

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, 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, please visit http://www.pointer.com

 

5
 

 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

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

 

 

 

   December 31, 
   2014   2013 
         
ASSETS          
           
CURRENT ASSETS:          
Cash and cash equivalents  $8,557   $3,349 
Restricted cash   62    81 
Trade receivables   19,032    19,793 
Other accounts receivable and prepaid expenses   1,853    2,033 
Inventories   6,133    6,038 
           
Total current assets   35,637    31,294 
           
           
LONG-TERM ASSETS:          
Long-term accounts receivable   408    546 
Severance pay fund   8,609    9,349 
Property and equipment, net   11,109    13,975 
Other intangible assets, net   1,950    2,936 
Goodwill   48,941    55,127 
Deferred tax asset   4,545    - 
           
Total long-term assets   75,562    81,933 
           
Total assets  $111,199   $113,227 

 

6
 

 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

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

 

    December 31,  
    2014     2013  
LIABILITIES AND SHAREHOLDERS' EQUITY                
                 
CURRENT LIABILITIES:                
Short-term bank credit and current maturities of long-term loans   $ 7,432     $ 10,643  
Trade payables     11,460       14,793  
Deferred revenues and customer advances     6,379       7,753  
Other accounts payable and accrued expenses     9,013       10,768  
                 
Total current liabilities     34,284       43,957  
                 
                 
LONG-TERM LIABILITIES:                
Long-term loans from banks     11,963       9,301  
Long-term loans from shareholders and others     1,126       1,301  
Other long-term liabilities     493       5,712  
Accrued severance pay     9,537       10,317  
                 
      23,119       26,631  
COMMITMENTS AND CONTINGENT LIABILITIES                
                 
EQUITY:                
Pointer Telocation Ltd's shareholders' equity:                
Share capital     5,705       3,878  
Additional paid-in capital     129,618       120,996  
Accumulated other comprehensive income     (2,909 )     1,456  
Accumulated deficit     (75,767 )     (89,220 )
                 
Total Pointer Telocation Ltd's shareholders' equity     56,647       37,110  
                 
Non-controlling interest     (2,851 )     5,529  
                 
Total equity     53,796       42,639  
                 
Total liabilities and shareholders' equity   $ 111,199     $ 113,227  

 

7
 

 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

    Year ended
December 31,		     Three months ended
December 31,		  
    2014     2013     2014     2013  
Revenues:                        
Products   $ 33,099     $ 34,662     $ 8,316     $ 9,640  
Services     72,191       63,195       18,258       18,439  
                                 
Total revenues     105,290       97,857       26,574       28,079  
                                 
Cost of revenues:                                
Products     19,279       20,763       4,561       5,964  
Services     50,461       45,497       13,276       12,987  
                                 
Total cost of revenues     69,740       66,260       17,837       18,951  
                                 
Gross profit     35,550       31,597       8,737       9,128  
                                 
Operating expenses:                                
Research and development     3,390       3,244       784       948  
Selling and marketing     11,219       10,398       2,760       2,874  
General and administrative     11,883       10,539       2,966       3,374  
Other expenses     395       403       731       403  
Amortization and Impairment of long lived assets     2,116       967       1,327       328  
                                 
Total operating expenses     29,003       25,551       8,568       7,927  
                                 
Operating income     6,547       6,046       169       1,201  
Financial expenses, net     2,424       1,077       700       292  
Other expenses  (income)     232       (3,299 )     238       (3,299 )
                                 
Income (loss) before taxes on income     3,891       8,268       (769 )     4,208  
Tax expenses (income)     (8,849 )     1,337       (10,217 )     283  
                                 
Income after taxes on income     12,740       6,931       9,448       3,925  
Equity in gains  of affiliate     -       340       -       -  
                                 
Net income   $ 12,740     $ 7,271     $ 9,448     $ 3,925  
                                 
Profit (loss) from continuing operations attributable to:                                
Equity holders of the parent     13,453       6,320       9,776       3,756  
Non-controlling interests     (713 )     951       (328 )     169  
                                 
    $ 12,740     $ 7,271     $ 9,448     $ 3,925  
                                 
                                 
Earnings per share from continuing operations attributable to Pointer Telocation Ltd's shareholders:                                
Basic net earnings  per share   $ 1.81     $ 1.14     $ 1.27     $ 0.68  
                                 
Diluted net earnings  per share   $ 1.74     $ 1.10     $ 1.23     $ 0.65  
                                 
Weighted average -Basic number of shares     7,446,707       5,557,635       7,688,564       5,561,869  
                                 
Weighted average – fully diluted number of shares     7,726,653       5,697,446       7,945,839       5,769,591  

 

8
 

 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

 

   Year ended
December 31,		   Three months ended
December 31,		 
   2014   2013   2014   2013 
Cash flows from operating activities:                
                 
   Net income  $12,740   $7,271   $9,448   $3,925 
Adjustments required to reconcile net income  to net cash provided by operating activities:                    
Depreciation, amortization and impairment   5,889    4,049    2,298    1,281 
Profit raise from gaining control in subsidiary previously treated by the equity method   -    (3,299)   -    (3,299)
Gain from a bargain purchase   (288)   -    48    - 
Accrued interest and exchange rate changes of debenture and long-term loans   17    21    4    58 
Accrued severance pay, net   56    (397)   (57)   (283)
Gain (loss) from sale of property and equipment, net   (95)   (195)   35    (26)
Equity in gains of affiliate   -    (340)   -    - 
Amortization of stock-based compensation   375    374    90    211 
Decrease  in restricted cash   19    27    1    10 
Decrease (increase) in trade receivables, net   (1,141)   (1,270)   155    1,582 
Decrease (increase) in other accounts receivable and prepaid expenses   (21)   148    270    511 
Decrease (increase) in inventories   (462)   (685)   (179)   260 
Decrease (increase) in long-term accounts receivable   126    (4)   133    (16)
Increase in Deferred tax asset   (8,968)   -    (8,968)   - 
Increase (decrease) in trade payables   (654)   1,290    186    (241)
Increase (decrease) in other accounts payable and accrued expenses   (1,845)   1,449    (241)   (269)
Increase (decrease) in deferred income taxes   (152)   1,272    (1,237)   601 
                     
Net cash provided by operating activities   5,596    9,711    1,986    4,305 
                     
Cash flows from investing activities:                    
                     
Purchase of property and equipment   (4,458)   (4,663)   (1,254)   (1,475)
Proceeds from sale of property and equipment   1,529    1,216    418    (242)
Investment and loans/Repayments in affiliate   -    137    -    36 
Acquisition of Subsidiary (a)   (688)   (3,973)   -    (3,973)
Proceeds from sale of investments in previously consolidated subsidiaries (b)   (41)   -    (41)   - 
                     
Net cash used in investing activities   (3,658)   (7,283)   (877)   (5,654)

 

9
 

 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

 

   Year ended
December 31,		   Three months ended
December 31,		 
   2014   2013   2014   2013 
Cash flows from financing activities:                    
Receipt of long-term loans from banks   12,577    7,127    (308)   3,417 
Repayment of long-term loans from banks   (8,986)   (10,137)   (1,906)   (2,278)
Repayment of long-term loans from shareholders   (301)   -    52    - 
Repurchase of shares from non-controlling interests   (7,740)   -    -    - 
Proceeds from issuance of shares   10,065    7    -    7 
Short-term bank credit, net   (1,640)   563    734    950 
Net cash used in financing activities   3,975    (2,440)   (1,428)   2,096 
Effect of exchange rate changes on cash and cash equivalents   (705)   (324)   (95)     
                   (115)
Increase (decrease) in cash and cash equivalents   5,208    (336)   (434)   652 
Cash and cash equivalents at the beginning of the period   3,349    3,685    8,991    2,697 
Cash and cash equivalents at the end of the period  $8,557   $3,349   $8,557   $3,349 

 

(a)   Acquisition of subsidiary:                          
    Working capital (Cash and cash equivalent excluded)     221       130       -     130
    Property and equipment     565       2,486       -     2,486
    Other intangible assets     190       1,690       (48 )   1,690
    Goodwill     (288 )     4,894       48     4,894
    Long term loans from banks and others     -       (1,342 )     -     (1,342)
    Investment in subsidiary previously treated by the equity method     -       (3,885 )     -     (3,885)
                                 
        $ 688     $ 3,973     $ -   $ 3,973

(b) Proceeds from sale of investments in previously consolidated subsidiaries:                          
    Working capital (Cash and cash equivalent excluded)     (18 )     -       (18 )   -
    Property and equipment     (30 )     -       (30 )   -
    Long term loans from banks and others     5       -       5     -
    Minority Interest     (125 )     -       (125 )   -
    Loss from sale of subsidiaries     209               209      
                                 
        $ 41     $ -     $ 41   $ -
                                 
(c)   Non-cash activity:                            
                                 
    Issuance of shares in respect of acquisition of non-controlling interests in subsidiary   $ 11,385     $ -     $ -   $ -

 

 

10
 

 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES 

 

ADDITIONAL INFORMATION

U.S. dollars in thousands

 

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

 

   Year ended
December 31,		   Three months ended
December 31,		 
   2014   2013   2014   2013 
                     
GAAP gross profit  $35,550   $31,597   $8,737   $9,128 
Stock-based compensation expenses   10    2    3    1 
Non-GAAP gross profit  $35,560   $31,599   $8,740   $9,129 
                     
                     
GAAP operating expenses  $29,003   $25,551   $8,568   $7,927 
Stock-based compensation expenses   380    372    96    210 
Amortization and impairment of long lived assets   2,116    967    1,327    328 
Other expenses of termination costs and restructuring in subsidiary   683    403    683    403 
Acquisition related goodwill adjustment   (288)   -    48    - 
Non-GAAP operating expenses  $26,112   $23,809   $6,414   $6,986 
                     
                     
GAAP operating income  $6,547   $6,046   $169   $1,201 
                     
Non-GAAP operating income  $9,448   $7,790   $2,326   $2,143 
                     
GAAP net income  $12,740   $7,271   $9,448   $3,925 
Stock-based compensation   390    374    99    211 
Amortization and impairment of long lived assets   2,116    967    1,327    328 
Acquisition related goodwill adjustment   (288)   -    48    - 
Profit raise from gaining control in subsidiary previously treated by the equity method   -    (3,299)   -    (3,299)
Other expenses of termination costs and restructuring in subsidiary   683    403    683    403 
Loss from sale of subsidiary   209    -    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   1,379    1,700    320    350 
Non cash tax income from raised tax asset   (9,799)   -    (9,799)   - 
Non-GAAP net income  $7,928   $7,416   $2,335   $1,918 
                     
Non-GAAP net income per share - Diluted  $1.02   $1.30   $0.29   $0.33 
Non-GAAP weighted average number of shares - Diluted*   7,726,653    5,697,446    7,945,839    5,769,591 

 

* 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.

 

11
 

 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES 

 

Adjusted EBITDA

   Year ended
December 31,		   Three months ended
December 31,		 
   2014   2013   2014   2013 
                 
GAAP Net income as reported:  $12,740   $7,271   $9,448   $3,925 
                     
Financial expenses, net   2,424    1,077    700    292 
Tax on income   (8,849)   1,337    (10,217)   283 
Profit raise from gaining control in subsidiary previously treated by the equity method and acquisition related goodwill adjustment   (288)   (3,299)   48    (3,299)
Stock based compensation expenses   390    374    99    211 
Loss from sale of subsidiary   209    -    209    - 
Depreciation, amortization and impairment of goodwill and  intangible assets   5,889    4,049    2,298    1,281 
                     
Adjusted EBITDA  $12,515   $10,809   $2,585   $2,693 
                     

 

 

- - - - - - - - - - - -

 

12
 

 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES 

 

Exhibit A

 

U.S. dollars in thousands

 

   Year ended
December 31, 2014		   Year ended
December 31, 2013		 
   Unaudited   Unaudited 
    MRM    RSA    Total     MRM    RSA    Total  
                               
Revenues   69,426    35,864    105,290    62,303    35,554    97,857 
                               
Non-GAAP Cost of Revenues   37,961    31,769    69,730    35,153    31,105    66,258 
                               
Non-GAAP Gross profit   31,465    4,095    35,560    27,150    4,449    31,599 
    45.3%   11.4%   33.8%   43.6%   12.5%   32.3%
                               
Non-GAAP Operating Expenses   22,583    3,529    26,112    20,317    3,492    23,809 
                               
Non-GAAP Operating  profit   8,882    566    9,448    6,833    957    7,790 

 

13