EX-99.1 2 v446574_ex1.htm EXHIBIT 1

Exhibit 1

 

For Immediate Release

 

Pointer Telocation Reports Q2 2016 Financial Results

 

Highlights (excluding Shagrir) in the Second Quarter 2016

 

·Revenues of $16.2 million; up 15% YoY in local currencies (up 5% in US dollars);

 

·Service revenues were $10.2 million; up 20% YoY in local currency terms (up 4% in US dollars);

 

·Adjusted EBITDA (from continuing operations) was $2.3 million, up 9% YoY

 

·Total MRM subscribers reached 192,000; a 13% increase of 22,000 since Q2 2015 end

 

 

Rosh HaAyin, Israel, August 11th, 2016 Pointer Telocation Ltd. (Nasdaq CM: PNTR; TASE: PNTR) - a leading developer, manufacturer and operator of Mobile Resource Management (MRM) services, today announced its financial results for the second quarter of 2016.

 

On June 8, 2016 Pointer spun off its Israeli subsidiary, Shagrir Group Vehicle Services Ltd., through which Pointer carried out its road side assistance (RSA) activities and listed Shagrir's shares for trade on the Tel Aviv Stock Exchange. The results of Shagrir until that date are included in Pointer's results as discontinued operations.

 

Revenues for the second quarter of 2016 increased 4.6% to $16.2 million as compared to $15.5 million in the second quarter of 2015. In local currency terms, revenues increased by 15%.

 

Revenues from products in the second quarter of 2016 increased 5.1% to $6 million (37% of revenues) compared to $5.8 million (37% of revenues) in the comparable period of 2015.

 

Revenues from services in the second quarter of 2016 increased 4.4% to $10.2 million (63% of revenues) compared to $9.7 million (63% of revenues), in the comparable period of 2015. In local currency terms in the territories where the subsidiaries operate, revenue from services increased by 20%.

 

Gross profit was $7.7 million (47.7% of revenues) compared to $7.2 million (46.7% of revenues) in the second quarter of 2015.

 

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Non-GAAP operating income was $1.8 million (11% of revenues), compared to $1.6 million (10.6% of revenues) in the second quarter of 2015.

 

Non-GAAP net income from continuing operations was $1.4 million (9% of revenues), compared with $1.3 million (8.6% of revenues).

 

Adjusted EBITDA from continuing operations was $2.3 million compared with $2.1 million in the second quarter of 2015, an increase of 9%.

 

Management Comment

 

David Mahlab, Pointer's Chief Executive Officer, commented: “We are very pleased with our financial results, but just as importantly, with the strategic developments in the quarter. Our spin-off of the Shagrir RSA business culminates a long process which is a key and important part of our long term strategy. It enables Pointer to focus fully on the MRM market, makes our operations more transparent and allows the value inherent in our business to become clearer.”

 

Mr. Mahlab continued, “In local currency terms, our revenues in the quarter grew strongly by 15% year over year, built on the solid subscriber growth expanding by 13% in the past year. As we have an existing infrastructure in place, we can add each new subscriber at minimal incremental cost. Solid operating leverage is therefore inherent to our business model, and it is also clear given the year-over-year growth of 17% in operating income.”

 

Mr. Mahlab further noted, “We see new opportunities in our end-markets, in all our target territories. This was evidenced by our recent contract, whereby we are managing the vehicles and personnel responsible for transit control, emergency and contingencies during the Olympic Games currently held in Rio. More generally, we see an uptick in tenders in which we are competing and winning. We continue to invest in sales and marketing as well as R&D, in order to capitalize on these opportunities and on the new solutions we continue to develop. We are also examining potential acquisitions in the markets in which we operate, which will enable us to increase our customer base and further benefit from the leverage in our business model. ”

 

Conference Call Information Pointer Telocation's management will host a conference call today, at 7:00am Pacific Time, 10:00 Eastern Time, 17:00 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.

 

 2 

 

 

Dial in numbers are as follows:

 

From the USA: +1-866-744-5399; From Israel: 03-918-0691

 

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 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 Non-GAAP financial performance measurements.

 

We calculate adjusted EBITDA by adding back to net income financial expenses, taxes, depreciation, amortization and impairment of goodwill and intangible assets and the effects of non-cash stock-based compensation expenses.

 

We calculate Non-GAAP net income by adding back to net income the effects of non-cash stock based compensation expenses, amortization and impairment of long lived assets, non-cash tax expenses and spin-off related expenses and losses.

 

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 Mobile Resource Management, Fleet Management and Stolen Vehicle Recovery. Pointer has a growing list of customers and products installed in 50 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.

 

 3 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

 

 

   June 30,
2016		   December 31,
2015		 
   Unaudited     
         
ASSETS          
           
CURRENT ASSETS:          
Cash and cash equivalents   7,745    9,347 
Trade receivables   11,627    9,494 
Other accounts receivable and prepaid expenses   2,360    1,596 
Inventories   4,416    4,697 
Assets of discontinued operation (*)   -    36,879 
           
Total current assets   26,148    62,013 
           
           
LONG-TERM ASSETS:          
Long term loan to others   820    - 
Long-term accounts receivable   499    490 
Severance pay fund   3,000    2,740 
Property and equipment, net   3,614    3,278 
Other intangible assets, net   398    443 
Goodwill   32,208    31,388 
Deferred tax asset   2,202    3,086 
           
Total long-term assets   42,741    41,425 
           
Total assets   68,889    103,438 

 

(*) Excluding cash and cash equivalents

 

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POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

 

 

   June 30,   December 31, 
   2016   2015 
   Unaudited     
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
CURRENT LIABILITIES:          
Short-term bank credit and current maturities of long-term loans   4,572    4,820 
Trade payables   5,871    4,651 
Deferred revenues and customer advances   735    671 
Other accounts payable and accrued expenses   6,160    5,168 
Liabilities of discontinued operation   -    21,105 
           
Total current liabilities   17,338    36,415 
           
           
LONG-TERM LIABILITIES:          
Long-term loans from banks   6,340    8,385 
Deferred taxes and other long-term liabilities   331    258 
Accrued severance pay   3,429    3,345 
           
Total long term liabilities   10,100    11,988 
           
COMMITMENTS AND CONTINGENT LIABILITIES          
           
EQUITY:          
Pointer Telocation Ltd's shareholders' equity:          
Share capital   5,775    5,770 
Additional paid-in capital   128,183    128,410 
Accumulated other comprehensive loss   (5,351)   (6,254)
Accumulated deficit   (87,316)   (71,822)
           
Total Pointer Telocation Ltd's shareholders' equity   41,291    56,104 
           
Non-controlling interest   160    (1,069)
           
Total equity   41,451    55,035 
           
Total liabilities and equity   68,889    103,438 

 

 5 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands

 

 

  

Six months ended
June 30,

  

Three months ended
June 30,

   Year ended
December 31,		 
   2016   2015   2016   2015   2015 
   Unaudited   Unaudited     
                     
Revenues:                         
Products   11,555    11,535    6,048    5,753    22,266 
Services   19,485    19,368    10,166    9,738    38,301 
                          
Total revenues   31,040    30,903    16,214    15,491    60,567 
                          
Cost of revenues:                         
Products   7,178    6,906    3,782    3,583    13,435 
Services   8,774    9,372    4,702    4,673    17,879 
                          
Total cost of revenues   15,952    16,278    8,484    8,256    31,314 
                          
Gross profit   15,088    14,625    7,730    7,235    29,253 
                          
Operating expenses:                         
Research and development   1,824    1,718    919    824    3,409 
Selling and marketing   5,615    5,079    2,968    2,640    10,468 
General and administrative   4,227    4,391    2,093    2,220    9,278 
Amortization of intangible assets   195    292    105    140    538 
Impairment of intangible and tangible assets   -    -    -    -    917 
                          
Total operating expenses   11,861    11,480    6,085    5,824    24,610 
                          
Operating income   3,227    3,145    1,645    1,411    4,643 
Financial expenses (income),  net   243    (221)   323    147    63 
Other expenses (income), net   (4)   13    2    13    10 
                          
Income before taxes on income   2,988    3,353    1,320    1,251    4,570 
Taxes on income   854    645    276    309    1,307 
                          
Income from continuing operations   2,134    2,708    1,044    942    3,263 
Income (loss) from discontinued operations, net   154    57    (168)   (41)   535 
Net income   2,288    2,765    876    901    3,798 

 

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POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

  

Six months ended
June 30,

  

Three months ended
June 30,

  

Year ended
December 31,

 
   2016   2015   2016   2015   2015 
   Unaudited     
                     
Profit  (loss) from continuing operations attributable to:   2,123    2,765    1,037    1,004    3,338 
Equity holders of the parent   11    (57)   7    (62)   (75)
Non-controlling interests                         
                          
    2,134    2,708    1,044    942    3,263 
                          
Profit  (loss) from discontinued operations attributable to:                         
Equity holders of the parent   120    103    (175)   (1)   607 
Non-controlling interests   34    (46)   7    (40)   (72)
                          
    154    57    (168)   (41)   535 
                          
                          
Earnings per share from continuing operations attributable to Pointer Telocation Ltd's shareholders:                         
Basic net earnings (loss) per share  $0.29   $0.37   $0.11   $0.13   $0.51 
                          
Diluted net earnings (loss) per share  $0.28   $0.36   $0.11   $0.13   $0.50 
                          
Weighted average -Basic number of shares   7,787,009    7,694,976    7,789,365    7,701,317    7,725,246 
                          
Weighted average – fully diluted number of shares   7,924,421    7,961,010    7,934,321    7,957,222    7,938,489 

 

 7 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

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,

 
   2016   2015   2016   2015   2015 
   Unaudited   Unaudited     
                     
Cash flows from operating activities:                         
                          
Net income  $2,288   $2,765   $876   $901   $3,798 
                          
Adjustments required to reconcile net income
to net cash provided by operating activities:		                         
Depreciation and amortization   1,775    1,985    877    979    3,959 
Impairment of tangible and intangible assets   -    -    -    -    917 
Accrued interest and exchange rate changes of
debenture and long-term loans		   74    10    290    376    (888)
Accrued severance pay, net   121    (38)   74    (6)   17 
Gain from sale of property and equipment, net   (179)   (72)   (53)   (38)   (143)
Stock-based compensation   94    174    36    83    309 
Decrease  in restricted cash   -    62    -    -    62 
Decrease in trade receivables, net   (4,284)   (513)   (585)   (10)   (236)
Increase in other accounts receivable
and prepaid expenses		   (906)   (1,060)   (249)   (1,106)   (469)
Decrease (increase) in inventories   443    (180)   207    (171)   658 
Decrease Deferred income taxes   1,038    387    248    197    1,080 
Decrease (increase) in long-term accounts receivable   (9)   14    126    12    (91)
Increase in trade payables   2,042    900    296    837    1,277 
Increase (decrease) in other accounts payable
and accrued expenses		   2,460    (291)   1,293    (701)   (1,448)
                          
Net cash provided by operating activities   4,957    4,143    3,436    1,353    8,802 
                          
Cash flows from investing activities:                         
Purchase of property and equipment   (2,861)   (1,354)   (1,284)   (769)   (3,616)
Purchase of other intangible assets   (115)   -    (115)   -    - 
Proceeds from sale of property and equipment   594    648    118    337    1,266 
                          
Net cash used in investing activities   (2,382)   (706)   (1,281)   (432)   (2,350)

 

 8 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

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,		 
   2016   2015   2016   2015   2015 
   Unaudited   Unaudited     
                     
Cash flows from financing activities:                         
                          
Receipt of long-term loans from banks   95    15,103    -    4,546    14,934 
Repayment of long-term loans from banks   (2,250)   (17,729)   (1,123)   (6,335)   (19,503)
Repayment of long-term loans from shareholders   -    (32)   -    (19)   - 
Proceeds from issuance of shares and exercise of options, net of issuance costs   -    6    -    -    15 
Short-term bank credit, net   128    (486)   83    (18)   (915)
Distribution as a dividend in kind of previously consolidated subsidiary (a)   (1,870)   -    (1,870)   -    - 
                          
Net cash used in financing activities   (3,897)   (3,138)   (2,910)   (1,826)   (5,469)
                          
Effect of exchange rate on cash and cash equivalents   (280)   (409)   (155)   1,098    (193)
                          
Increase (decrease) in cash and cash equivalents   (1,602)   (110)   (910)   193    790 
Cash and cash equivalents at the beginning of the period  $9,347    8,557   $8,655    8,254    8,557 
                          
Cash and cash equivalents at the end of the period  $7,745   $8,447   $7,745   $8,447   $9,347 

 

(a) Distribution as a dividend in kind of previously consolidated subsidiary:                    
                       
  The subsidiaries' assets and liabilities at date of
distribution:		                         
                            
  Working capital (excluding cash and cash equivalents)   (5,443)   -    (5,443)   -    - 
  Property and equipment   7,048    -    7,048    -    - 
  Goodwill and other intangible assets   15,883    -    15,883    -    - 
  Other long term liabilities   (1,781)   -    (1,781)   -    - 
 

Non-controlling interest

   373    -    373    -    - 
  Accumulated other comprehensive loss   (213)   -    (213)   -    - 
  Dividend in kind   (17,737)   -    (17,737)   -    - 
                            
     $(1,870)  $-   $(1,870)  $-   $- 
                            

 

- - - - - - -

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POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

ADDITIONAL INFORMATION

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

 

 

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,

 
   2016   2015   2016   2015   2015 
                     
GAAP gross profit   15,088    14,625    7,730    7,235    29,253 
Stock-based compensation expenses   4    6    1    3    11 
Non-GAAP gross profit   15,092    14,631    7,731    7,238    29,264 
                          
                          
GAAP operating expenses   11,861    11,480    6,085    5,824    24,610 
Stock-based compensation expenses   90    168    35    80    298 
Amortization and impairment of long lived assets   195    292    105    140    1,455 
Non-GAAP operating expenses   11,576    11,020    5,945    5,604    22,857 
                          
GAAP operating income   3,227    3,145    1,645    1,411    4,643 
                          
Non-GAAP operating income   3,516    3,611    1,786    1,634    6,407 
                          
GAAP net income from continuing operations   2,134    2,708    1,044    942    3,263 
Stock-based compensation   94    174    36    83    309 
Amortization and impairment of long lived assets   195    292    105    140    1,455 
Non cash tax expenses   854    343    276    165    1,307 
Non-GAAP net income from continuing operations  $3,277   $3,517   $1,461   $1,330   $6,334 
                          
Income (loss) from discontinued operation   154    57    (168)   (41)   535 
Non cash tax expenses   249    110    91    46    97 
Spin-off related expenses and losses   349    -    349    -    - 
Amortization and impairment of long lived assets   67    98    28    50    197 
Non-GAAP net income  $4,096   $3,782   $1,761   $1,385   $7,163 
                          
Non-GAAP net income per share from continuing operations - Diluted  $0.41   $0.44   $0.18   $0.17   $0.80 
Non-GAAP weighted average number of shares - Diluted*   7,924,421    7,961,010    7,934,321    7,957,222    7,938,489 

 

* 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.

 

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POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

ADJUSTED EBITDA

U.S. dollars in thousands

 

 

  

Six months ended
June 30,

  

Three months ended
June 30,

  

Year ended
December 31,

 
   2016   2015   2016   2015   2015 
                     
GAAP Net income from continuing operations as reported:  $2,134   $2,708   $1,044   $942   $3,263 
                          
Financial expenses (income), net   243    (221)   323    147    63 
Tax on income   854    645    276    309    1,307 
Stock based compensation expenses   94    174    36    83    309 
Depreciation, amortization and impairment of goodwill and  intangible assets   1,109    1,216    591    600    3,157 
                          
Adjusted EBITDA from continuing operations  $4,434   $4,522   $2,270   $2,081   $8,099 
                          
Income (loss) from  discontinued operation   154    57    (168)   (41)   535 
Financial expenses (income), net   47    398    28    224    806 
Tax on income   249    110    91    46    97 
Depreciation, amortization and impairment of goodwill and  intangible assets   668    769    288    380    1,719 
                          
Adjusted EBITDA  $5,552   $5,856   $2,489   $2,690   $11,256 
                          

 

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Contact:
Zvi Fried, V.P. and Chief Financial Officer            
Tel.: +972-3-572 3111                                            
E-mail: zvif@pointer.com

Gavriel Frohwein/Ehud Helft, GK Investor Relations            
Tel: +1-646-688-3559
E-mail: pointer@gkir.com  

 

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