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SuperCom Reports Significant Improvements in Gross Profit, Earnings, and EPS With $1.4 Million in EBITDA for Q2 2018

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SuperCom Reports Significant Improvements in Gross Profit, Earnings, and EPS With $1.4 Million in EBITDA for Q2 2018

Non-GAAP gross margin 59.2%; EBITDA margin 21%; Non-GAAP EPS $0.07

PR Newswire

HERZLIYA, Israel, Aug. 13, 2018 /PRNewswire/ -- SuperCom (NASDAQ:SPCB), a global provider of secure solutions for the e-government, public safety, healthcare, and finance sectors, reported results for the second quarter of 2018. 

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

  • Revenue decreased to $6.8 million from $7.5 million.
  • Gross Profit increased 30% to $3.83 million from $3.4 million.
  • Non-GAAP Gross Margin increased to 59.2% from 48.6%.
  • Non-GAAP core operating expenses decreased 33% to $3.3 million from $5.4 million.
  • EBITDA improved to $1.4 million compared to $1.0 million.
  • Non-GAAP Net Profit improved to $1.1 million or $0.07 per share from $0.46 million or $0.03 per share.
  • Working Capital increased to $11.3 million from $7.6 million.
  • Current Ratio increased to 1.62 from 1.5

First Half 2018 Financial Highlights (Compared to the First Half of 2017)

  • Revenue decreased to $13.8 million from $15.8 million.
  • Gross Profit increased 19% to $7.7 million from 6.5 million.
  • Non-GAAP Gross Margin increased to 58.7% from 43.6%.
  • Non-GAAP core operating expenses decreased 31% to $6.8 million from $9.9 million.
  • EBITDA improved to $2.9 million compared to $0.7 million.
  • Non-GAAP Net Profit improved to $2.1 million or $0.14 per share from non-GAAP Net Loss of $(.46) million or $(0.03) per share.

First Half 2018 and Recent Operational Highlights by Business Segment: 

 e-Gov:

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

IoT and Connectivity:

  • In January 2018, secured an additional contract to provide PureSecurity EM Suite in Idaho.
  • In March 2018, secured an additional contract to provide PureSecurity EM Suite in South Carolina.
  • In April 2018, secured an additional contract to provide PureSecurity EM Suite in eastern Texas to an established service provider.
  • In April 2018, awarded a $7 million project with the national government of Sweden to deploy PureSecurity EM Suite.
  • In June 2018, announced the deployment of an innovative protection from domestic violence project with the Sweden national police, a second national EM project win in Sweden within two months.
  • Continued progress on 13 EM project deployments, including those in Denmark, Czech Republic, Bulgaria, Canada and the USA.

Cyber Security:

  • Safend maintains numerous Fortune 500 customers and a greater than 90% retention rate in the US, driven by sustained customer satisfaction and continued technological improvements.
  • Continued progress in the development of new advanced cyber security products, adding more capabilities, including anti-malware to be incorporated into the Safend cyber security platform.

Management Commentary

"We are pleased with our second quarter 2018 results, highlighted by a dramatic improvement in our financial performance compared to the same quarter last year. We also achieved sequential quarterly improvements in profitability margins with 21% EBITDA margins and Non-GAAP gross margins of 59%, and as we continued to optimize our cost structure, Non-GAAP core operating expenses reached a low of $3.3m," said Arie Trabelsi, President and CEO of SuperCom. "We expect more cost optimizations in the following quarters brining us closer to the lean operating structure that we have not seen since 2015, before the strategic acquisitions took place. Yet today, I believe our business prospects are multiples greater, with 2 additional business segments, a major presence in developed markets, over 50% growth in our steady-state recurring revenue, and significant enhancements to our technology portfolio backed by 119 patents."

"We continue to execute on our growth strategy across our business segments. In the recent past we have been expanding organically into new countries and governments faster than ever before with an exceptionally high win rate, including 8 new multi-year project wins in the last 8 months alone. This brings us to over 16 concurrent multi-year project deployments globally, which are expected to generate long term recurring revenues for years to come as well as additional business from customer references."

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

Date: Monday, August 13, 2018
Time: 10:00 a.m. Eastern time (7:00 a.m. Pacific time)
U.S. toll-free: 877-407-9124
Israel toll-free: 180-940-6247
International: 201-689-8584

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

About SuperCom 

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

Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded or followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Forward-looking statements in this release also include statements about business and economic trends. Investors should also consider the areas of risk described under the heading "Forward Looking Statements" and those factors captioned as "Risk Factors" in the Company's periodic reports under the Securities Exchange Act of 1934, as amended, or in connection with any forward-looking statements that may be made by the Company. These statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the Securities and Exchange Commission (SEC), including the Company's Annual Report on Form 20-F filed with the SEC on May 21, 2018. The Company undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this press release.

Use of Non-GAAP Financial Information

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

 

[Tables to follow]

 

SUPERCOM LTD.

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)










June 30,


December 31,



2018


2017



Unaudited


Audited






CURRENT ASSETS





   Cash and cash equivalents


1,920


1,037

Restricted bank deposits


1,314


1,063

Trade receivable, net


15,633


12,456

Patents


5,283


5,283

Other accounts receivable and prepaid expenses


531


2,698

Inventories, net


4,889


4,876






Total current assets


29,570


27,413






LONG-TERM ASSETS





Severance pay funds


303


319

Deferred tax long term


4,591


4,505

Customer Contracts


3,130


3,640

Software and other IP


4,646


5,006

Other Asset, net


5,250


5,071

Goodwill


7,026


7,026

Property & equipment, net


816


1,218

Total long-term assets:


25,762


26,785






Total Assets


55,332


54,198

 

 


CURRENT LIABILITIES






    Short-term Bank credit


1,113


738


Trade payables


4,295


5,838


Employees and payroll accruals


5,171


4,910


Related parties


997


61


Accrued expenses and other liabilities


4,614


3,739


Deferred revenues ST


1,074


1,511


Short-term liability for future earn-out


1,038


1,163








Total current liabilities


18,302


17,960








LONG-TERM LIABILITIES












   Long-term bank loan


0


0


   Accrued severance pay


558


585


   Related Parties


2,980


2,082


Deferred tax liability


39


49


Deferred revenues


802


668


Long-term liability for future earn-out


114


147








Total long-term liabilities


4,493


3,531








SHAREHOLDERS' EQUITY:






Ordinary shares


1,026


1,026


Additional paid-in capital


82,274


82,157


Accumulated deficit


(50,763)


(50,476)








Total shareholders' equity


32,537


32,707








Total liabilities and equity

55,332


54,198


 

 

SUPERCOM LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands)





3 months ended

 




June 30
2018

June 30 
2017



Unaudited

Unaudited






REVENUES



6,761

7,502

COST OF REVENUES



2,927

4,071






GROSS PROFIT (LOSS)



3,834

3,431






OPERATING EXPENSES:





   Research and development



1,203

1,960

   Selling and marketing



1,481

2,337

   General and administrative



1,254

1,516

   Other expense (Income)



133

(1,917)






Total operating expenses



4,071

3,896






OPERATING LOSS



(237)

(465)

FINANCIAL INCOME (EXPENSES), NET



226

(226)






LOSS BEFORE INCOME TAX



(11)

(691)

INCOME TAX BENEFIT (EXPENSES )



44

30






NET PROFIT(LOSS) FOR THE PERIOD



33

(661)






EPS Basic



0

(0.04)

EPS Diluted



0

(0.04)

Weighted average number of ordinary shares  used in computing basic income per share  



14,958,339

 

14,938,339

 

Weighted average number of ordinary shares  used in computing diluted income per share  



15,011,129

 

15,012,263

 


 

 

SUPERCOM LTD.

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

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




3 months ended

 




June 30,
2018

June 30,
2017



Unaudited

 Unaudited






GAAP gross profit



3,834

3,431

    Amortization of Software and IP     



153

152

    Stock-based compensation expenses



18

64

Non-GAAP gross profit



4,005

3,647






GAAP operating Loss



(237)

(465)

  Amortization of Software/IP, Customer Contracts and Brand, and Stock-based compensation expenses



761

671

  Foreign Currency Loss



342

478

Non-GAAP operating Income(Loss)



866

684


 

GAAP net PROFIT (Loss)



33

(661)

  Amortization of Software/IP, Customer Contracts and Brand, and Stock-based compensation expenses



761

671

    Foreign Currency Loss



342

478

    Income tax expense (benefit)



(44)

(30)

Non-GAAP net Profit(Loss)



1,092

458






Non-GAAP EPS



0.07

0.03






NET PROFIT )LOSS( FOR THE PERIOD



33

(661)

    Income tax expenses (benefit), net



(44)

(30)

    Financial expenses (income), net



(226)

226

    Depreciation, amortization and stock-based compensation expenses



1,298

1,012

    Foreign Currency Lossncy (benefit)20F annual report. k out the  APAC.om ssing



342

478

EBITDA *



1,403

1,025

* EBITDA is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization.

 

 

 

SUPERCOM LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands)





6 months ended

 




June 30
2018

June 30 
  2017



Unaudited

Unaudited






REVENUES



13,775

15,829

COST OF REVENUES



6,054

9,356






GROSS PROFIT (LOSS)



7,721

6,473






OPERATING EXPENSES:





   Research and development



2,544

3,641

   Selling and marketing



3,182

4,271

   General and administrative



2,602

3,191

   Other expenses(Income)



183

(2,317)






Total operating expenses



8,511

8,786






OPERATING LOSS



(790)

(2,313)

FINANCIAL INCOME (EXPENSES), NET



278

(402)






LOSS BEFORE INCOME TAX



(512)

(2,715)

INCOME TAX BENEFIT )EXPENSES(  



225

58






NET LOSS FOR THE PERIOD



(287)

(2,657)







 

 

SUPERCOM LTD.

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

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





6 months ended

 




June 30,
2018

June 30,
2017



Unaudited

 Unaudited






GAAP gross profit



7,721

6,473

    Amortization of Software and IP



307

306

    Stock-based compensation expenses



59

117

Non-GAAP gross profit



8,087

6,896






GAAP operating Loss



(790)

(2,313)

  Amortization of Software/IP, Customer Contracts and Brand, and Stock-based compensation expenses



1816

1,581

  Foreign Currency Loss



787

679

Non-GAAP operating Income(Loss)



1,813

(53)


 

GAAP net Income (Loss)



(287)

(2,657)

  Amortization of Software/IP, Customer Contracts and Brand, and Stock-based compensation expenses



1,816

1,581

  Foreign Currency Loss



787

679

    Income tax expense (benefit)



(225)

(58)

Non-GAAP net Income(Loss)



2,091

(455)






Non-GAAP EPS



0.14

(0.03)






NET LOSS FOR THE PERIOD



(287)

(2,657)

    Income tax expenses (benefit), net



(225)

(58)

    Financial expenses (income), net



(278)

402

    Depreciation, amortization and stock-based compensation expenses



2,886

2,326

    Foreign Currency Loss



787

679

EBITDA *



2,883

692

* EBITDA is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization.

 







 

SuperCom Corporate Contact:
Ordan Trabelsi, President, Americas
Tel: 1-212-675-4606
ordan@supercom.com

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SOURCE SuperCom

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