Pointer Telocation Reports Second Quarter 2019 Financial Results

ROSH HAAYIN, Israel, Aug. 15, 2019 /PRNewswire/ -- Pointer Telocation Ltd. PNTR 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 second quarter and six months ended June 30, 2019.

Pointer Telocation Ltd Logo (PRNewsfoto/Pointer Telocation Ltd)

Financial Highlights for Second Quarter of 2019 Compared to Second Quarter of 2018

  • Record revenues of $21.4 million, up 9% as reported and up 16% on a constant currency basis
  • Service revenues of $12.5 million, down 5% as reported and up 5% on a constant currency basis
  • Operating income of $1.8 million (8% of revenue), down from $2.8 million for the prior-year period
  • Net income of $1.1 million, down from $1.9 million for the prior-year period
  • Adjusted EBITDA of $3.3 million, down from $3.6 million for the prior-year period
  • Cash net of debt totaled to $2.7 million at June 30, 2019
  • Total subscribers reached 282,000, an increase of 4% year-over-year

Management Comment

David Mahlab, Pointer's Chief Executive Officer, commented:

"We are very excited to report record revenue of $21.4 million in the second quarter, driven by significant product revenue in North America. We are seeing increasing traction in this key expansion market as we benefit from synergies with our primary partner, ID Systems, and we expect to accelerate our combined efforts there as we fully integrate our business and operations, post-acquisition. We believe we are on track to close this transaction in October 2019 after the parties extended the date after which each party can terminate the merger agreement without cause until the end of October.

Meanwhile in other major markets we saw strong growth in Brazil in the second quarter based on wins we announced earlier this year, and we expect to continue this momentum in Brazil and other Latin America markets.

During the fourth quarter of 2018 and the first quarter of 2019, we significantly reduced services to low margin customers, cutting approximately 15,000 low revenue subscribers in total, in order to enhance our long-term profitability. In the second quarter of 2019, we executed our plans and returned to subscriber growth of about 4% quarter-over-quarter. We expect to continued momentum in our service subscriber growth going forward.

For the remainder of 2019, we continue to expect double-digit growth in our overall business comparing same period in 2018, with accelerating growth on our top line and continuing investment in new products and solutions, particularly for the North American market."

 

Second Quarter 2019 Financial Summary Compared to Second Quarter 2018



(in millions, except per share amounts)

June 30, 2019

June 30, 2018

Total Revenues

$21.4

$19.7

Service Revenues

$12.5

$13.2

Operating Income (% of Revenue)

$1.8 (8%)

$2.8 (14%)

Diluted Earnings per Share (EPS)

$0.13

$0.23

Non-GAAP Diluted EPS

$0.22

$0.30

Net Income

$1.1

$1.9

EBITDA

$2.9

$3.4

 

First Half 2019 Financial Summary Compared to First Half 2018



(in millions, except per share amounts)

June 30, 2019

June 30, 2018

Total Revenues

$39.7

$40.6

Service Revenues

$24.9

$27.0

Operating Income (% of Revenue)

$3.0 (8%)

$5.3 (13%)

Diluted Earnings per Share (EPS)

$0.20

$0.44

Non-GAAP Diluted EPS

$0.42

$0.60

Net Income

$1.7

$3.7

EBITDA

$4.8

$6.7

 

Revenues from services decreased 5% to $12.5 million as compared to $13.2 million in the second quarter of 2018. In constant currency terms, revenues from services increased by 5%. Revenues from products increased by 36% as reported in the second quarter of 2019 to $8.9 million from $6.6 million in the second quarter of 2018. In constant currency terms, revenues from products increased by 37%. The currency exchange rate impact on total revenues for the second quarter of 2019 compared to the second quarter of 2018 was approximately $1.5 million. The currency exchange rate impact on operating income for the second quarter of 2019 compared to the second quarter of 2018 was immaterial.

Conference Call Information 

As previously announced, Pointer Telocation's management will host a conference call today, at 10:00 a.m. Eastern Time, 3:00 p.m. UK time, 5:00 p.m. 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 +1-877-407-0789 or 1-201-689-8562

From Israel 1-809-406-247

From the UK 0-800-756 -3429

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

Reconciliation between results on a GAAP and Non-GAAP basis

A 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, adjusted EBITDA, Non-GAAP operating income, Non-GAAP net income and presentation of results in a constant currency based on the local currencies in which operations are conducted prior to giving effect to exchange rates into U.S. dollars as Non-GAAP financial performance measurements.

Pointer calculates EBITDA by adding back to net income financial expenses, taxes and depreciation and amortization of intangible assets. Pointer calculates adjusted EBITDA by adding back to EBITDA Stock-based compensation expenses and acquisition related costs. Pointer calculates Non-GAAP operating income by adding back to operating income the effects of non-cash stock-based compensation expenses, amortization of long-lived assets and losses and acquisition related costs. Pointer calculates Non-GAAP net income by adding back to net income the effects of non-cash stock-based compensation expenses, amortization of long lived assets, non-cash tax expenses and acquisition related costs.

Pointer calculates results on a constant currency based on the local currencies on a nominal value, without giving effect to conversion into U.S. dollar.

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 and to neutralize fluctuations in local currencies against the dollar.

EBITDA, Adjusted EBITDA, Non-GAAP operating and net income and presentation of results on a constant currency basis are provided to investors to complement the results provided in accordance with GAAP, as management believes these measures help to illustrate underlying operating trends in the Company's business and uses these measures 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, adjusted EBITDA, Non-GAAP operating and net income and presentation of results on a constant currency basis 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.

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 profitability.

For more information, please visit http://www.pointer.com, the content of which does not form a part of this press release.

Risks Regarding Forward Looking Statements

Certain statements made herein that use words such as "estimate," "project," "intend," "expect," "'believe", "may", "might", "predict", "potential", "anticipate", "plan" or similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. For example, when the Company discusses increasing traction in the North America market, potential acceleration of efforts with I.D. Systems, full integration of the companies' businesses and timing of closing of the acquisition transaction with I.D. Systems, continued positive momentum in Brazil, other Latin America markets and in the number of service subscribers and rates of top and bottom line growth for the remainder of 2019 as well as continued investment in products and solutions, it is using forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties that could cause the actual results, performance or achievements of the Company to be materially different from those that may be expressed or implied by such statements, including, among others, changes in general economic and business conditions. For additional information regarding these and other risks and uncertainties associated with the Company's business, reference is made to the Company's reports filed from time to time with the U.S. Securities and Exchange Commission. The Company does not undertake to revise or update any forward-looking statements for any reason.

 





INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands





June 30,

2019



December 31,

2018





Unaudited





ASSETS



















CURRENT ASSETS:









Cash and cash equivalents



6,698



8,528

Trade and unbilled receivables



17,688



13,902

Other accounts receivable and prepaid expenses



5,484



3,362

Inventories



7,668



6,432











Total current assets



37,538



32,224





















LONG-TERM ASSETS:









Long-term loan to related party



1,022



948

Long-term unbilled and other accounts receivable



940



1,258

Severance pay fund



3,382



3,038

Property and equipment, net



6,236



5,915

Other intangible assets, net



1,073



1,229

Goodwill



39,044



37,538

Deferred tax asset



7,856



7,934

Operating lease right-of-use asset



3,280



-











Total long-term assets



62,833



57,860











Total assets



100,371



90,084











 

 



INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands















June 30,

2019



December 31,

2018





Unaudited





LIABILITIES AND SHAREHOLDERS' EQUITY



















CURRENT LIABILITIES:









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



2,068



2,354

Trade payables



8,605



5,743

Deferred revenues and customer advances



769



785

Other accounts payable and accrued expenses



8,943



8,490











Total current liabilities



20,385



17,372





















LONG-TERM LIABILITIES:









Long-term loans from banks



1,933



2,685

Deferred taxes and other long-term liabilities



343



360

Accrued severance pay



3,751



3,531

Operating lease liability



3,300



-











Total long term liabilities



9,327



6,576











COMMITMENTS AND CONTINGENT LIABILITIES



















EQUITY:









Pointer Telocation Ltd.'s shareholders' equity:









Share capital 



6,059



6,050

Additional paid-in capital



130,802



130,309

Accumulated other comprehensive income



(5,762)



(8,151)

Accumulated deficit



(60,547)



(62,278)











Total Pointer Telocation Ltd.'s shareholders' equity



70,552



65,930











Non-controlling interest



107



206











Total equity



70,659



66,136











Total liabilities and equity



100,371



90,084

 



 

INTERIM CONSOLIDATED STATEMENT OF OPERATIONS

U.S. dollars in thousands, except for share and per share information



















Six months ended

June 30,



Three months ended

June 30,



Year ended

December 31,





2019



2018



2019



2018



2018





Unaudited



Unaudited





Revenues:





















Products



14,810



13,637



8,918



6,578



25,243

Services



24,891



26,986



12,525



13,162



52,543























Total revenues



39,701



40,623



21,443



19,740



77,786























Cost of revenues:





















Products



9,892



8,188



6,109



3,963



15,104

Services



10,727



11,148



5,511



5,438



21,674























Total cost of revenues



20,619



19,336



11,620



9,401



36,778























Gross profit



19,082



21,287



9,823



10,339



41,008























Operating expenses:





















Research and development



2,641



2,359



1,370



1,122



4,707

Selling and marketing



7,513



7,545



3,855



3,677



14,560

General and administrative



5,038



5,548



2,452



2,661



11,169

Amortization of intangible assets



173



248



78



121



456

One-time acquisition related costs



711



262



260



-



300























Total operating expenses



16,076



15,962



8,015



7,581



31,192























Operating income



3,006



5,325



1,808



2,758



9,816

Financial expenses, net



365



666



145



332



1,133

Other expenses (income)



(8)



15



(8)



-



3























Income before taxes on income



2,649



4,644



1,671



2,426



8,680

Taxes on income



973



950



596



501



1,753























Net income



1,676



3,694



1,075



1,925



6,927













































Earnings per share from continuing 

       operations attributable to Pointer 

       Telocation Ltd.'s shareholders:





















Basic net earnings per share



0.21



0.46



0.13



0.24



0.85























Diluted net earnings per share



0.20



0.44



0.13



0.23



0.84























Weighted average -Basic number of shares



8,162,950



8,066,698



8,188,475



8,073,665



8,099,952























Weighted average – fully diluted number of 

     shares



8,360,140



8,257,968



8,393,890



8,221,373



8,279,562

 

 

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

U.S. dollars in thousands



















Six months ended

June 30,



Three months ended

June 30,



Year ended

December 31,





2019



2018



2019



2018



2018





Unaudited



Unaudited



























Cash flows from operating activities:











































Net income



1,676



3,694



1,075



1,925



6,927

Adjustments required to reconcile net income to 

    net cash provided by operating activities:





















Depreciation and amortization



1,746



1,345



1,068



627



2,571

Accrued interest and exchange rate changes of 

     debenture and long-term loans



(99)



25



(37)



24



(20)

Accrued severance pay, net



(142)



46



(27)



(32)



71

Gain from sale of property and equipment, net



(36)



(49)



(20)



(22)



(101)

 Stock-based compensation



471



386



125



244



1,198

Decrease (increase) in trade and unbilled

receivables, net



(3,310)



(788)



(2,517)



200



(1,121)

Increase in other accounts 

    receivable and prepaid expenses



(2,214)



(1,370)



(1,362)



(749)



(855)

Decrease (increase) in inventories



(1,359)



751



(557)



541



(56)

Decrease (increase) in deferred income taxes



385



341



266



186



779

Decrease (increase) in long-term unbilled and

other accounts receivable



381



(202)



(173)



(360)



220

Increase (decrease) in trade payables



2,496



247



3,292



358



48

Increase (decrease) in other accounts payable 

   and accrued expenses



1,117



(382)



250



(1,214)



(1,064)























Net cash provided by operating activities



1,112



4,044



1,383



1,728



8,597























Cash flows from investing activities:





















Purchase of property and equipment



(1,507)



(1,633)



(977)



(674)



(2,721)

Proceeds from sale of property and equipment



36



49



20



22



101























Net cash used in investing activities



(1,471)



(1,584)



(957)



(652)



(2,620)

 

 

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

U.S. dollars in thousands





 

Six months ended

June 30,



 

Three months ended

June 30,



Year ended

December 31,





2019



2018



2019



2018



2018





Unaudited



Unaudited



























Cash flows from financing activities:











































Repayment of long-term loans from banks



(1,585)



(2,645)



(367)



(1,294)



(5,078)

Proceeds from issuance of shares and exercise of

options, net of issuance costs



20



80



20



76



89

Short-term bank credit, net



546



79



32



21



32























Net cash used in financing activities



(1,019)



(2,486)



(315)



(1,197)



(4,957)























Effect of exchange rate on cash and cash equivalents



(453)



(181)



(288)



(477)



133























Decrease in cash and cash equivalents



(1,831)



(207)



(177)



(598)



1,153

Cash and cash equivalents at the beginning of the

period



8,529



7,375



6,875



7,766



7,375























Cash and cash equivalents at the end of the period



6,698



7,168



6,698



7,168



8,528



 

 

 

ADDITIONAL INFORMATION

U.S. dollars in thousands, except share and per share data



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







Six months ended

June 30,



Three months ended

June 30,



Year ended

December 31,





2019



2018



2019



2018



2018























GAAP gross profit



19,082



21,287



9,823



10,339



41,008

Stock-based compensation expenses



61



33



27



24



104

Non-GAAP gross profit



19,143



21,320



9,850



10,363



41,112













































GAAP operating income



3,006



5,325



1,808



2,758



9,816

Stock-based compensation expenses



471



386



125



244



1,198

Amortization and impairment of long lived assets



173



248



78



121



456

Acquisition related one-time costs



711



262



260



-



300

Non-GAAP operating income



4,361



6,221



2,271



3,123



11,770























GAAP net income



1,676



3,694



1,075



1,925



6,927

Stock-based compensation expenses



471



386



125



244



1,198

Amortization and impairment of long lived assets



173



248



78



121



456

Non cash tax expenses



449



375



283



204



759

Acquisition related one-time costs



711



262



260



-



300

Non-GAAP net income



3,480



4,965



1,821



2,494



9,640























Non-GAAP net income per share from continuing

operations - Diluted



0.42



0.60



0.22



0.30



1.16

Non-GAAP weighted average number of shares -

Diluted*



8,360,140



8,257,968



8,393,890



8,221,373



8,279,562























* 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.

 

 

EBITDA

U.S. dollars in thousands





Six months ended

June 30,



Three months ended

June 30,



Year ended

December 31,





2019



2018



2019



2018



2018























GAAP Net income as reported:



1,676



3,694



1,075



1,925



6,927























Financial expenses, net



365



666



145



332



1,133

Tax on income



973



950



596



501



1,753

Depreciation, amortization and impairment of 

     goodwill and  intangible assets



1,746



1,345



1,068



627



2,571























EBITDA



4,760



6,655



2,884



3,385



12,384























Stock-based compensation expenses



471



386



125



244



1,198























Acquisition related costs



711



262



260



-



300























Adjusted EBITDA



5,942



7,303



3,269



3,629



13,882

























 

                                

Company contact:

Yaniv Dorani, CFO

Tel: +972-3-5723111

E-mail: yanivd@pointer.com  

Investor Relations Contact at Hayden IR, LLC:

Brett Maas

Tel: 646-536-7331

E-mail: brett@haydenir.com  

Dave Fore

Tel: 206-395-2711

E-mail: dave@haydenir.com

 



 

 

 

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SOURCE Pointer Telocation Ltd

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