EX-99.1 2 f6k022719ex99-1_pointer.htm PRESS RELEASE, DATED FEBRUARY 28, 2019 REPORTING THE REGISTRANT'S FULL YEAR AND FOURTH QUARTER ENDED 2018 FINANCIAL RESULTS

Exhibit 99.1

 

 

 

For Immediate Release

 

Pointer Telocation Reports Results for

the Full Year and the Fourth Quarter of 2018

 

Rosh HaAyin, Israel, February 28, 2019. Pointer Telocation Ltd. (Nasdaq: PNTR; TASE: 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 full year and fourth quarter ended December 31, 2018.

 

Financial Highlights for Full Year of 2018 Compared to Full Year of 2017

 

●Total revenues of $77.8 million, similar as in previous year and up 5% on a constant currency basis
●Service revenues of $52.5 million, up 1% as reported and up 9% on a constant currency basis
●Operating income of $9.8 million (13% of revenue), down 5%
●Net income of $6.9 million, down from $16.5 million. 2017 net income included $9.2 million onetime income resulting from the realization of a deferred tax asset
●Non-GAAP net income of $9.6 million, up 2%
●Adjusted EBITDA of $13.6 million same as in 2017
●Cash, net of debt, totaled $3.5 million. Generated $8.6 million in operating cash flow during the year
●Total subscribers reached 276,000, an increase of 7%

 

Financial Highlights for Fourth Quarter 2018 Compared to Fourth Quarter 2017

 

●Total revenues of $18.4 million as reported, down from $18.9 million as reported, up 8% on a constant currency basis
●Service revenues of $12.7 million, down from $13.4 million as reported, up 8% on a constant currency basis
●Operating income of $2.0 million (11% of revenue), down 15%
●Net income of $1.4 million, down from $11.1 million. Fourth quarter 2017 net income included $9.2 million onetime income resulting from the realization of a deferred tax asset
●Non-GAAP net income of $2.1 million, down 5%
●Adjusted EBITDA of $3.0 million, down 5%

 

Management Commentary

 

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

“The fourth quarter capped a solid year for Pointer, though we had currency exchange rate headwinds. In 2018, we strengthened our balance sheet, reversing the Company from a position of net debt to net cash, for the first time in more than a decade. Also, in the fourth quarter, we continued our trend of positive operating cash flow despite elevated investments in R&D and Sales and Marketing as planned in order to support our North America market expansion. Despite continued currency exchange headwinds, we delivered double-digit operating margin and positive earnings on both a GAAP and non-GAAP basis, demonstrating the leverage we have built into our operating model.”

 

 

 

 

“In the year, we announced major wins of new contracts that will escalate our products sales in 2019. We focus on increasing our presence in the U.S. and we already started shipping new products to this market during the fourth quarter, and we expect deliveries to ramp this year to additional US based customers. Meanwhile, in Brazil, we secured several new service contracts in 2018 that will have an impact in the third and fourth quarters of 2019 as well. All of this should help us achieve our growth goals in 2019.”

 

“Looking forward in 2019, we expect our markets and opportunities to continue to expand. We expect to see double-digit growth in our overall revenues, driven in part by 30% or greater product revenue growth in 2019 especially in the North American market”

 

Yaniv Dorani, Pointer’s Chief Financial Officer, commented:

“In 2018, we continued to strengthen our balance sheet and improve our capital structure. In the fourth quarter, we generated $1.4 million in operating cash flow and ended the quarter with $3.5 million in net cash, continuing the trend of positive net cash from the previous quarter. In 2018, we reduced our debt by $5.1 million, and we remain on track for continued positive operating cash flow and long-term debt reduction in 2019.”

 

Full Year 2018 Financial Summary Compared to Full Year 2017

 

(in millions, except per share amounts)  2018   2017 
Total Revenues  $77.8   $78.2 
Service Revenues  $52.5   $52.0 
Operating Income (% of Revenue)  $9.8 (13%)  $10.3 (13%)
Diluted EPS  $0.84   $2.03 
Non-GAAP Diluted EPS  $1.16   $1.16 
Adjusted EBITDA  $13.6   $13.6 

 

Fourth Quarter 2018 Financial Summary Compared to Fourth Quarter 2017

 

(in millions, except per share amounts)  Q4/2018   Q4/2017 
Total Revenues  $18.4   $18.9 
Service Revenues  $12.7   $13.4 
Operating Income (% of Revenue)  $2.0 (11%)  $2.3 (12%)
Diluted EPS  $0.18   $1.35 
Non-GAAP Diluted EPS  $0.25   $0.27 
Adjusted EBITDA  $3.0   $3.2 

 

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In 2018, revenues from services increased 1% as reported to $52.5 million as compared to $52.0 million. In local currency terms, revenues from services increased by 9%. Revenues from products decreased 4% as reported in 2018 to $25.2 million from $26.2 million. In local currency terms, revenues from products decreased by 3%. The currency exchange rate impact on total revenues for the year 2018 compared to the year 2017 was approximately $4.2 million.

 

In the fourth quarter of 2018, revenues from services decreased 5% as reported to $12.7 million as compared to $13.4 million. In local currency terms, revenues from services increased by 8%. Revenues from products increased 4% as reported to $5.7 million from $5.5 million in the same period a year ago. In local currency terms, revenues from products increased by 9%. The currency exchange rate impact on total revenues in the fourth quarter compared to a year ago was approximately $1.9 million.

 

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.

 

The call will also be accompanied by a live webcast over the Internet and accessible at http://public.viavid.com/index.php?id=133125.

 

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, 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. 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, other expenses of retirement costs and losses and acquisition related one-time 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, other expenses of retirement costs and acquisition related one-time 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.

 

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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 its expectations for growth in 2019, and, in particular, in North America, and the impact of contracts on growth as well as continuation of certain trends, 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.

 

 

Company contact:

 

Yaniv Dorani, CFO

Tel: +972-3-5723111

E-mail: yanivd@pointer.com

Investor Relations Contact at

Hayden IR, LLC:

 

Brett Maas

Tel: +1-646-536-7331

E-mail: brett@haydenir.com

 

Dave Fore

Tel: +1-206-395-2711

E-mail: dave@haydenir.com

 

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POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

 

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

 

  

December 31,

2018

   December 31, 2017 
ASSETS        
         
CURRENT ASSETS:        
Cash and cash equivalents   8,528    7,375 
Trade and unbilled receivables   13,902    13,660 
Other accounts receivable and prepaid expenses   3,362    2,865 
Inventories   6,432    6,551 
           
Total current assets   32,224    30,451 
           
LONG-TERM ASSETS:          
Long-term loan to related party   948    973 
Long-term unbilled and other accounts receivable   1,258    1,116 
Severance pay fund   3,038    3,546 
Property and equipment, net   5,915    5,848 
Other intangible assets, net   1,229    1,935 
Goodwill   37,538    41,010 
Deferred tax asset   7,934    9,585 
           
Total long-term assets   57,860    64,013 
           
Total assets   90,084    94,464 

 

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POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

 

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

 

   December 31,   December 31, 
   2018   2017 
LIABILITIES AND SHAREHOLDERS’ EQUITY        
         
CURRENT LIABILITIES:        
Short-term bank credit and current maturities of long-term loans   2,354    5,101 
Trade payables   5,743    6,204 
Deferred revenues and customer advances   785    777 
Other accounts payable and accrued expenses   8,490    9,117 
           
Total current liabilities   17,372    21,199 
           
LONG-TERM LIABILITIES:          
Long-term loans from banks   2,685    5,015 
Deferred taxes and other long-term liabilities   360    838 
Accrued severance pay   3,531    3,996 
           
Total long term liabilities   6,576    9,849 
           
COMMITMENTS AND CONTINGENT LIABILITIES          
           
EQUITY:          
Pointer Telocation Ltd.’s shareholders’ equity:          
Share capital   6,050    5,995 
Additional paid-in capital   130,309    129,076 
Accumulated other comprehensive income   (8,151)   (2,340)
Accumulated deficit   (62,278)   (69,597)
           
Total Pointer Telocation Ltd.’s shareholders’ equity   65,930    63,134 
           
Non-controlling interest   206    282 
           
Total equity   66,136    63,416 
           
Total liabilities and equity   90,084    94,464 

 

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POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

 

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

  

Year ended

December 31,

  

Three months ended

December 31,

 
   2018   2017   2018   2017 
Revenues:                
Products   25,243    26,182    5,688    5,457 
Services   52,543    51,973    12,745    13,394 
                     
Total revenues   77,786    78,155    18,433    18,851 
                     
Cost of revenues:                    
Products   15,104    16,073    3,364    3,242 
Services   21,674    21,914    5,365    5,620 
                     
Total cost of revenues   36,778    37,987    8,729    8,862 
                     
Gross profit   41,008    40,168    9,704    9,989 
                     
Operating expenses:                    
Research and development   4,707    4,051    1,261    1,027 
Selling and marketing   14,560    14,038    3,578    3,678 
General and administrative   11,169    11,275    2,769    2,812 
Amortization of intangible assets   456    463    90    124 
One-time acquisition related costs   300    32    38    32 
                     
Total operating expenses   31,192    29,859    7,736    7,673 
                     
Operating income   9,816    10,309    1,968    2,316 
Financial expenses, net   1,133    1,004    277    296 
Other expenses (income)   3    5    (11)   12 
                     
Income before taxes on income   8,680    9,300    1,702    2,008 
Taxes on income   1,753    (7,221)   273    (9,098)
                     
Net income   6,927    16,521    1,429    11,106 
                     
Earnings per share from continuing operations attributable to Pointer Telocation Ltd.’s shareholders:                    
Basic net earnings per share   0.85    2.07    0.18    1.38 
                     
Diluted net earnings per share   0.84    2.03    0.18    1.35 
                     
Weighted average -Basic number of shares   8,099,952    7,997,684    8,133,338    8,057,946 
                     
Weighted average – fully diluted number of shares   8,279,562    8,130,566    8,297,653    8,207,997 

 

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POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

 

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

 

  

Year ended

December 31,

  

Three months ended

December 31,

 
   2018   2017   2018   2017 
                 
Cash flows from operating activities:                
                 
Net income   6,927    16,521    1,429    11,106 
Adjustments required to reconcile net income to net cash provided by operating activities:                    
Depreciation and amortization   2,571    2,924    633    782 
Accrued interest and exchange rate changes of debenture and long-term loans   (20)   52    (27)   52 
Accrued severance pay, net   71    93    56    (41)
Gain from sale of property and equipment, net   (101)   (113)   (28)   (28)
Stock-based compensation   1,198    380    407    81 
Decrease (increase) in trade and unbilled receivables, net   (1,121)   (1,616)   (1,191)   655 
Decrease (increase)  in other accounts receivable and prepaid expenses   (855)   (206)   184    363 
Increase in inventories   (56)   (1,170)   (1,073)   (363)
Decrease (increase) in deferred income taxes   779    (8,018)   163    (9,114)
Decrease in long-term unbilled and other accounts receivable   220    165    319    161 
Increase (decrease) in trade payables   48    (1,597)   527    (316)
Increase (decrease) in other accounts payable and accrued expenses   (1,064)   2,285    31    362 
                     
Net cash provided by operating activities   8,597    9,700    1,430    3,700 
                     
Cash flows from investing activities:                    
Purchase of property and equipment   (2,721)   (3,033)   (660)   (1,046)
Purchase of other intangible assets   -    (233)   -    (233)
Proceeds from sale of property and equipment   101    114    29    28 
                     
Net cash used in investing activities   (2,620)   (3,152)   (631)   (1,251)

 

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sPOINTER TELOCATION LTD. AND ITS SUBSIDIARIES

 

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

 

  

Year ended

December 31,

  

Three months ended

December 31,

 
   2018   2017   2018   2017 
                 
Cash flows from financing activities:                
                 
Repayment of long-term loans from banks   (5,078)   (4,875)   (1,268)   (1,506)
Proceeds from issuance of shares and exercise of options, net of issuance costs   89    395    9    7 
Short-term bank credit, net   32    (231)   74    74 
                     
Net cash used in financing activities   (4,957)   (4,711)   (1,185)   (1,425)
                     
Effect of exchange rate on cash and cash equivalents   133    (528)   599    (653)
                     
Increase in cash and cash equivalents   1,153    1,309    213    371 
Cash and cash equivalents at the beginning of the period   7,375    6,066    8,315    7,004 
                     
Cash and cash equivalents at the end of the period   8,528    7,375    8,528    7,375 

 

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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 GAAP to non-GAAP operating results:

 

  

Year ended

December 31,

  

Three months ended

December 31,

 
   2018   2017   2018   2017 
                 
GAAP gross profit   41,008    40,168    9,704    9,989 
Stock-based compensation expenses   104    3    39    1 
Non-GAAP gross profit   41,112    40,171    9,743    9,990 
                     
GAAP operating income   9,816    10,309    1,968    2,316 
Stock-based compensation expenses   1,198    380    407    81 
Amortization and impairment of long lived assets   456    463    90    124 
Other expenses of retirement costs   -    125    -    - 
Acquisition related one-time costs   300    154    38    154 
Non-GAAP operating income   11,770    11,431    2,503    2,675 
                     
GAAP net income   6,927    16,521    1,429    11,106 
Stock-based compensation expenses   1,198    380    407    81 
Amortization and impairment of long lived assets   456    463    90    124 
Other expenses of retirement costs   -    125    -    - 
Non cash tax expenses   759    (8,213)   147    (9,243)
Acquisition related one-time costs   300    154    38    154 
Non-GAAP net income   9,640    9,430    2,111    2,222 
                     
Non-GAAP net income per share from continuing operations - Diluted   1.16    1.16    0.25    0.27 
Non-GAAP weighted average number of shares - Diluted*   8,279,562    8,130,566    8,297,653    8,207,997 

 

*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

 

EBITDA and Adjusted EBITDA

U.S. dollars in thousands

 

  

Year ended

December 31,

  

Three months ended

December 31,

 
   2018   2017   2018   2017 
                 
GAAP Net income as reported:   6,927    16,521    1,429    11,106 
                     
Financial expenses, net   1,133    1,004    277    296 
Tax on income   1,753    (7,221)   273    (9,098)
Depreciation and amortization of goodwill and  intangible assets   2,571    2,924    633    782 
                     
EBITDA   12,384    13,228    2,612    3,086 
                     
Stock-based compensation expenses   1,198    380    407    81 
                     
Adjusted EBITDA   13,582    13,608    3,019    3,167 

 

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