U.S. Markets closed

Pointer Telocation Reports Results for the Full Year and the Fourth Quarter of 2018

ROSH HAAYIN, Israel, Feb. 28, 2019 /PRNewswire/ -- Pointer Telocation Ltd. (PNTR.TA) (PNTR.TA), 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.

Pointer Telocation Ltd Logo (PRNewsfoto/Pointer Telocation Ltd)

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

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.

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.

 

 


 

 

 

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






 

 

 

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

 

 


 

 

 

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












 

 

 

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)


 

 

 

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


 

 

 

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.

 

 

 

EBITDA and Adjusted EBITDA

U.S. dollars in thousands




Year ended
De
cember 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























 

 


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 

 

 

 

 

 


Cision

View original content to download multimedia:http://www.prnewswire.com/news-releases/pointer-telocation-reports-results-for-the-full-year-and-the-fourth-quarter-of-2018-300804064.html