EX-99.1 2 tv479475_ex1.htm EXHIBIT 1

 

Exhibit 1

 

 

For Immediate Release

 

Pointer Telocation Reports

 

Third Quarter 2017 Financial Results

 

Financial Highlights of the Quarter

·Record revenues of $20.2 million, up 27% year-over-year;

 

·Recurring service revenues of $13.3 million, up 27% year-over-year;

 

·Record EBITDA of $3.6 million, up 87% year-over-year;

 

·Total subscribers reached 249,000, an increase of 26% year-over-year;

 

Rosh HaAyin, Israel, November 15th, 2017 Pointer Telocation Ltd. (Nasdaq CM: PNTR; Tel-Aviv Stock Exchange: PNTR) - a leading provider of telematic services and technology solutions for Fleet Management, Mobile Asset Management and Internet of Vehicles, announced its financial results for the third quarter of 2017.1

 

Financial summary for the third quarter of 2017

 

Revenues for the third quarter of 2017 increased 27% to a record $20.2 million as compared to $15.9 million in the third quarter of 2016.

 

Revenues from products in the third quarter of 2017 increased 28% to $6.9 million (34% of revenues) compared to $5.4 million (34% of revenues) in the comparable period of 2016.

 

Revenues from recurring services in the third quarter of 2017 increased 27% to $13.3 million (66% of revenues) compared to $10.5 million (66% of revenues), in the comparable period of 2016. The growth in service revenue was primarily due to the growth in the subscriber base which grew by 51,000 subscribers since September 30, 2016 and 10,000 subscribers since June 30, 2017.

 

 

 

1 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 operation.

 

 1 

 

 

Gross profit was $10.5 million (51.8% of revenues) compared to $7.8 million (49.2% of revenues) in the third quarter of 2016.

 

Operating income on a GAAP basis was $2.9 million (14.4% of revenues), an increase of 108%, compared with $1.4 million (8.8% of revenues) in the third quarter of 2016.

 

Non-GAAP operating income was $3.1 million (15.3% of revenues), an increase of 71% compared to $1.8 million (11.4% of revenues) in the third quarter of 2016.

 

GAAP net income was $1.9 million (9.3% of revenues), an increase of 163% compared to $0.7 (4.5% of revenues) million reported in the third quarter of 2016.

 

Non-GAAP net income was $2.3 million (11.4% of revenues), an increase of 61%, compared with $1.4 million (9.0% of revenues) in the third quarter of 2016.

 

EBITDA was $3.6 million (17.8% of revenues), an increase of 87% compared with $1.9 million (12.1% of revenues) in the third quarter of 2016.

 

Cash and cash equivalents totaled $7.0 million and total debt was $11.6 million. Operating cash flow in the quarter was $3.3 million.

 

Management Comment

 

David Mahlab, Pointer's Chief Executive Officer, commented: “We are very pleased with our financial results, showing very strong revenue growth, record EBITDA and strong margins across the board. The integration of our recent acquisition in Brazil of Cielo's operation is progressing as planned and we believe that we will enjoy the full benefit of the cost synergies in 2018. In South Africa, we recently announced an acquisition, in line with our growth strategy, which we expect will also contribute positively in the coming quarters.”

 

Mr. Mahlab continued, “We have recently seen increased interest in Cellotrack Nano, our new solution for Mobile Asset Management. We have a number of prospects undergoing evaluations and we believe it will be a long-term growth engine for Pointer. We are also pleased with the increased penetration of our connected car solution following our intensive R&D and marketing efforts over the past few quarters. Pointer’s continued solid results represent the ongoing successful execution of our long-term growth strategy.”

 

 2 

 

 

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.

 

Dial in numbers are as follows:

 

From the USA: +1-888-281-1167; From Israel: 03-918-0685; From the UK 0-800-917-5108

 

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 EBITDA and Non-GAAP net income as Non-GAAP financial performance measurements.

 

Pointer calculates EBITDA by adding back to net income financial expenses, taxes, depreciation and amortization and impairment of goodwill and intangible assets.

 

Pointer calculates 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, other expenses of retirement costs, spin-off related expenses and losses and acquisition related one-time costs.

 

The purpose of such adjustments is to give an indication of the Company’s performance exclusive of Non-GAAP charges that are considered by management to be outside of the Company’s core operating results.

 

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. Management believes that these non-GAAP measures help investors to understand the Company’s current and future operating cash flow and performance, especially as the Company’s acquisitions have resulted in amortization and non-cash items that have had a material impact on the Company’s GAAP profits. 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 the Company’s 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.

 

 3 

 

 

About Pointer Telocation

For over 20 years, Pointer has rewritten the rules for the Mobile Resource Management (MRM) market and is a pioneer in the Connected Car segment. Pointer has in-depth knowledge of the needs of this market and has developed a full suite of tools, technology and services to respond to them. The vehicles of the future will be intimately networked with the outside world, enhancing and optimizing the in-car experience.

 

Pointer’s innovative and reliable cloud-based software-as-a-service (SAAS) platform extracts and captures an organization’s critical mobility data points – from office, drivers, routes, points-of-interest, logistic-network, vehicles, trailers, containers and cargo. The SAAS platform analyzes the raw data converting it into valuable information for Pointer's customers providing them with actionable insights and thus enabling the customers to improve their bottom line and increase their profitably.

 

For more information, please visit 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.

 

Contacts:  
Yaniv Dorani, CFO  
Tel.: +972-3-572 3111  
E-mail: yanivd@pointer.com  
   
Gavriel Frohwein/Ehud Helft, GK Investor Relations  
Tel: +1-646-688-3559  
E-mail: pointer@gkir.com  

 

 4 

 

 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

 

INTERIM CONSOLIDATED BALANCE SHEETS

 

U.S. dollars in thousands

 

   September 30,
2017		   December 31,
2016		 
   Unaudited     
         
ASSETS          
           
CURRENT ASSETS:          
Cash and cash equivalents   7,004    6,066 
Trade receivables   14,440    11,464 
Other accounts receivable and prepaid expenses   3,180    2,504 
Inventories   6,216    5,242 
           
Total current assets   30,840    25,276 
           
LONG-TERM ASSETS:          
Long-term loan to related party   944    831 
Long-term accounts receivable   683    564 
Severance pay fund   3,381    2,878 
Property and equipment, net   6,119    5,614 
Other intangible assets, net   1,905    2,178 
Goodwill   40,843    38,107 
Deferred tax asset   286    1,433 
           
Total long-term assets   54,161    51,605 
           
Total assets   85,001    76,881 

 

 5 

 

 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

 

INTERIM CONSOLIDATED BALANCE SHEETS

 

U.S. dollars in thousands

 

   September 30,   December 31, 
   2017   2016 
   Unaudited     
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
CURRENT LIABILITIES:          
Short-term bank credit and current maturities of long-term loans   5,347    4,836 
Trade payables   6,282    7,116 
Deferred revenues and customer advances   890    1,037 
Other accounts payable and accrued expenses   9,274    6,839 
           
Total current liabilities   21,793    19,828 
           
LONG-TERM LIABILITIES:          
Long-term loans from banks   6,225    10,182 
Deferred taxes and other long-term liabilities   987    976 
Accrued severance pay   3,868    3,206 
           
Total long term liabilities   11,080    14,364 
           
COMMITMENTS AND CONTINGENT LIABILITIES          
           
EQUITY:          
Pointer Telocation Ltd's shareholders' equity:          
Share capital   5,993    5,837 
Additional paid-in capital   128,967    128,438 
Accumulated other comprehensive income   (2,289)   (5,633)
Accumulated deficit   (80,708)   (86,115)
           
Total Pointer Telocation Ltd's shareholders' equity   51,963    42,527 
           
Non-controlling interest   165    162 
           
Total equity   52,128    42,689 
           
Total liabilities and equity   85,001    76,881 

 

 6 

 

 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

 

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

 

U.S. dollars in thousands

 

   Nine months ended
September 30,		   Three months ended
September 30,		   Year ended
December 31,		 
   2017   2016   2017   2016   2016 
   Unaudited   Unaudited     
Revenues:                    
Products   20,725    16,948    6,896    5,394    22,784 
Services   38,579    30,007    13,336    10,522    41,569 
                          
Total revenues   59,304    46,955    20,232    15,916    64,353 
                          
Cost of revenues:                         
Products   12,831    10,479    4,078    3,301    13,904 
Services   16,294    13,563    5,673    4,789    18,672 
                          
Total cost of revenues   29,125    24,042    9,751    8,090    32,576 
                          
Gross profit   30,179    22,913    10,481    7,826    31,777 
                          
Operating expenses:                         
Research and development   3,024    2,694    1,037    870    3,669 
Selling and marketing   10,360    8,714    3,599    3,099    11,774 
General and administrative   8,463    6,378    2,827    2,152    9,004 
Amortization of intangible assets   339    300    112    105    473 
One-time acquisition related costs   -    200    -    200    609 
                          
Total operating expenses   22,186    18,286    7,575    6,426    25,529 
                          
Operating income   7,993    4,627    2,906    1,400    6,248 
Financial expenses, net   708    622    288    379    1,046 
Other expenses (income)   (7)   5    (4)   8    9 
                          
Income before taxes on income   7,292    4,000    2,622    1,013    5,193 
Taxes on income   1,877    1,151    739    298    1,845 
                          
Income from continuing operations   5,415    2,849    1,883    715    3,348 
Income from discontinued operation, net   -    154    -    -    154 
Net income   5,415    3,003    1,883    715    3,502 
                          
Earnings per share from continuing operations attributable to Pointer Telocation Ltd's shareholders:                         
Basic net earnings per share  $0.68   $0.36   $0.24   $0.09   $0.43 
                          
Diluted net earnings per share  $0.67   $0.36   $0.23   $0.09   $0.42 
                          
Weighted average -Basic number of shares   7,977,376    7,799,257    7,989,398    7,825,840    7,820,767 
                          
Weighted average – fully diluted number of shares   8,104,756    7,938,800    8,172,362    7,967,559    7,938,290 

 

 7 

 

 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

 

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,		 
   2017   2016   2017   2016   2016 
   Unaudited   Unaudited     
                     
Cash flows from operating activities:                         
                          
Net income   5,415    3,003    1,883    715    3,502 
Adjustments required to reconcile net income to net cash provided by operating activities:                         
Depreciation and amortization   2,142    2,306    691    529    3,258 
Accrued interest and exchange rate changes of debenture and long-term loans   -    29    -    (45)   29 
Accrued severance pay, net   134    37    22    (84)   20 
Gain from sale of property and equipment, net   (85)   (205)   (18)   (25)   (232)
Stock-based compensation   299    205    83    111    320 
Decrease (increase) in trade receivables, net   (2,271)   (3,430)   (144)   854    (3,489)
Decrease (increase)  in other accounts receivable and prepaid expenses   (569)   (750)   (89)   156    (942)
Decrease (increase) in inventories   (807)   90    (240)   (353)   (1,063)
Decrease in deferred income taxes   1,096    1,722    274    685    1,774 
Decrease (increase) in long-term accounts receivable   4    (240)   (48)   (231)   99 
Increase (decrease) in trade payables   (1,558)   2,052    (347)   10    3,346 
Increase (decrease) in other accounts payable and accrued expenses   2,200    1,568    1,206    (893)   2,455 
                          
Net cash provided by operating activities   6,000    6,387    3,273    1,429    9,077 
                          
Cash flows from investing activities:                         
Purchase of property and equipment   (1,987)   (3,577)   (875)   (716)   (4,129)
Purchase of other intangible assets   -    (115)   -    -    (115)
Proceeds from sale of property and equipment   86    624    31    30    648 
Acquisition of subsidiary (a)   -    -    -    -    (8,531)
                          
Net cash used in investing activities   (1,901)   (3,068)   (844)   (686)   (12,127)

 

 8 

 

 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

 

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,		 
   2017   2016   2017   2016   2016 
   Unaudited   Unaudited     
                     
Cash flows from financing activities:                         
                          
Receipt of long-term loans from banks   -    6,762    -    6,667    6,777 
Repayment of long-term loans from banks   (3,369)   (3,575)   (1,356)   (1,325)   (5,490)
Proceeds from issuance of shares and exercise of options, net of issuance costs   387    71    111    71    98 
Distribution as a dividend in kind of previously consolidated subsidiary (b)   -    (1,870)   -    -    (1,870)
Short-term bank credit, net   (305)   72    (3)   (56)   716 
                          
Net cash provided (used) in financing activities   (3,287)   1,460    (1,248)   5,357    231 
                          
Effect of exchange rate on cash and cash equivalents   126    (60)   123    221    (462)
                          
Increase (decrease) in cash and cash equivalents   938    4,719    1,304    6,321    (3,281)
Cash and cash equivalents at the beginning of the period   6,066    9,347    5,700    7,745    9,347 
                          
Cash and cash equivalents at the end of the period   7,004    14,066    7,004    14,066    6,066 
                          
(a) Acquisition of subsidiary:                         
                          
Working capital (Cash and cash equivalent excluded)   -    -    -    -    (334)
Property and equipment   -    -    -    -    (1,239)
Intangible assets   -    -    -    -    (2,098)
Goodwill   -    -    -    -    (6,070)
Deferred taxes   -    -    -    -    714 
Payables for acquisition of investments in subsidiaries   -    -    -    -    496 
                          
    -    -    -    -    (8,531)

 

 9 

 

 

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

 

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,		 
   2017   2016   2017   2016   2016 
   Unaudited   Unaudited     
(b)   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)

 

- - - - - - -

 10 

 

 

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:

 

  

Nine months ended

September 30,

  

Three months ended

September 30,

  

Year ended

December 31,

 
   2017   2016   2017   2016   2016 
                     
GAAP gross profit   30,179    22,913    10,481    7,826    31,777 
Stock-based compensation expenses   2    5    1    1    6 
Non-GAAP gross profit   30,181    22,918    10,482    7,827    31,783 
                          
GAAP operating expenses   22,186    18,286    7,575    6,426    25,529 
Stock-based compensation expenses   297    200    82    110    314 
Amortization and impairment of long lived assets   339    300    112    105    473 
Other expenses of retirement costs   125    -    -    -    - 
Acquisition related one-time costs   -    200    -    200    609 
Non-GAAP operating expenses   21,425    17,586    7,381    6,011    24,133 
                          
GAAP operating income   7,993    4,627    2,906    1,400    6,248 
                          
Non-GAAP operating income   8,756    5,332    3,101    1,816    7,650 
                          
GAAP net income from continuing operations   5,415    2,849    1,883    715    3,348 
Stock-based compensation expenses   299    205    83    111    320 
Amortization and impairment of long lived assets   339    300    112    105    473 
Other expenses of retirement costs   125    -    -    -    - 
Non cash tax expenses   1,030    1,151    229    298    1,723 
Acquisition related one-time costs   -    200    -    200    609 
Non-GAAP net income from continuing operations   7,208    4,705    2,307    1,429    6,473 
                          
Income from discontinued operation   -    154    -    -    154 
Non cash tax expenses   -    249    -    -    249 
Spin-off related expenses and losses   -    349    -    -    349 
Amortization and impairment of long lived assets   -    67    -    -    67 
Non-GAAP net income   7,208    5,524    2,307    1,429    7,292 
                          
Non-GAAP net income per share from continuing operations - Diluted   0.89    0.59    0.28    0.18    0.82 
Non-GAAP weighted average number of shares - Diluted*   8,104,756    7,938,800    8,172,362    7,967,559    7,938,290 

 

* 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

 

EBITDA

 

U.S. dollars in thousands

 

   Nine months ended
September 30,		   Three months ended
September 30,		   Year ended
December 31,		 
   2017   2016   2017   2016   2016 
                     
GAAP Net income from continuing operations as reported:   5,415    2,849    1,883    715    3,348 
                          
Financial expenses, net   708    622    288    379    1,046 
Tax on income   1,877    1,151    739    298    1,845 
Depreciation, amortization and impairment of goodwill and  intangible assets   2,138    1,638    687    529    2,590 
                          
EBITDA from continuing operations   10,138    6,260    3,597    1,921    8,829 
                          
Income (loss) from  discontinued operation   -    154    -    -    154 
Financial expenses , net   -    47    -    -    47 
Tax on income   -    249    -    -    249 
Depreciation, amortization and impairment of goodwill and intangible assets   -    668    -    -    668 
                          
EBITDA   10,138    7,378    3,597    1,921    9,947 

 

- - - - - -

 

 12