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SuperCom Reports Financial Results for the Third Quarter of 2018 With $1.8 Million in EBITDA, 30% EBITDA Margin, and Non-GAAP EPS $0.09

For First Three Quarters of 2018: Non-GAAP EBITDA of $4.7 million and Non-GAAP EPS $0.23

HERZLIYA, Israel, Nov, 14, 2018 /PRNewswire/ -- SuperCom (SPCB), a global provider of secure solutions for the e-government, public safety, healthcare, and finance sectors, reported results for the third quarter of 2018.

Nine Months Ended September 30, 2018 Financial Highlights (Compared to the Prior Year Period)

  • Revenue decreased to $19.9 million from $25.5 million.
  • Gross Profit decreased $11.1 million from 11.6 million.
  • Non-GAAP Gross Margin increased to 56% from 45.5%.
  • Non-GAAP core operating expenses improved by 34% to $9.4 million from $14.3 million.
  • EBITDA improved to $4.7 million compared to $3.3 million.
  • Non-GAAP Net Profit improved to $3.5 million or $0.23 per share from $2.1 million or $0.14 per share.
  • Working Capital increased to $18.6 million from $15.9 million.
  • Current Ratio increased to 2.5 from 2

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

  • Revenue decreased to $6.1 million from $9.6 million.
  • Non-GAAP Gross Margin increased to 58.8% from 48%.
  • Non-GAAP core operating expenses improved by 41% to $2.5 million from $4.2 million.
  • EBITDA decreased to $1.8 million compared to $2.4 million.
  • EBITDA Margin increased to 30% compared to 25%.
  • Non-GAAP Net Profit decreased to $1.4 million or $0.09 per share from $2 million or $0.14 per share.

Management Commentary

"We are excited to share our third quarter 2018 results, representing our very hard work optimizing our operational cost structure to record levels since 2015 with EBITDA margins as high as 30% and quarterly core Non-GAAP operating expenses as low as $2.5 million," commented Arie Trabelsi, President and CEO of SuperCom. "We have also been successful in securing a $20 million credit facility from a large US investment management firm, allowing us to grow our working capital to properly deploy our numerous ongoing multi-year projects as well as signal to potential customers and partners that we have capacity to do even more."

"With a steady base of recurring revenues globally, a growing targeted pipeline of  opportunities across our three business segments, a lean operating cost structure, and strong financial backing, we are poised to grow our top line and cash flow generation in 2019 and in years to come," concluded Mr. Trabelsi.

First Three Quarters of 2018 and Recent Operational Highlights:

General:

  • Secured a $20 million credit facility from funds managed by affiliates of Fortress Investment Group LLC, a highly diversified global investment manager with approximately $41.4 billion of assets under management. The facility is expected mainly to help support working capital and growth of the business operations.
  • Reached a record low operating expense structure since 2015 with core Non-GAAP operating expenses of approximately $2.5 million in Q3 2018, providing a lean operating base for continued profitability.

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, an additional national EM project win in Sweden.
  • In November 2018, secured an additional contract to provide PureSecurity EM Suite in Minnesota and surrounding regions.
  • Continued progress on 13 EM project deployments, including those in Europe, Canada and the USA.

Cyber Security:

  • Safend continued to close deals with sizable enterprise customers in various locations globally, each with orders above $100 thousand in value.
  • 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.

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

Date: Wednesday, November 14, 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, 2017. 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.

 

 

SUPERCOM LTD.

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)



September 30,

December 31,


2018

2017


Unaudited

Audited







CURRENT ASSETS



Cash and cash equivalents

1,786

1,037

Restricted bank deposits

1,291

1,063

Trade receivable, net

17,724

12,456

Patents

5,283

5,283

Other accounts receivable and prepaid expenses

543

2,698

Inventories, net

4,825

4,876




Total current assets

31,452

27,413




LONG-TERM ASSETS



Severance pay funds

306

319

Deferred tax long term

4,888

4,505

Customer Contracts

2,873

3,640

Software and other IP

4,456

5,006

Other Asset, net

5,447

5,071

Goodwill

7,026

7,026

Property & equipment, net

896

1,218

Total long-term assets:

25,892

26,785




Total Assets

57,344

54,198




CURRENT LIABILITIES



Short-term Bank credit

0

738

Trade payables

3,055

5,838

Employees and payroll accruals

4,106

4,910

Related parties

187

61

Accrued expenses and other liabilities

3.517

3,739

Deferred revenues ST

970

1,511

Short-term liability for future earn-out

1,039

1,163




Total current liabilities

12,874

17,960




LONG-TERM LIABILITIES






Long-term bank loan

0

0

Long-term loan

5,000

0

Accrued severance pay

563

585

Related Parties

3,825

2,082

Deferred tax liability

0

49

Deferred revenues

796

668

Long-term liability for future earn-out

95

147




Total long-term liabilities

10,279

3,531




SHAREHOLDERS' EQUITY:



Ordinary shares

1,026

1,026

Additional paid-in capital

83,810

82,157

Accumulated deficit

(50,646)

(50,476)




Total shareholders' equity

34,191

32,707




Total liabilities and equity

57,344

54,198

 

 

SUPERCOM LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands)


3 months ended




September

September


30, 2018

30, 2017


Unaudited

Unaudited

REVENUES

6,082

9,638

COST OF REVENUES

2,676

4,512




GROSS PROFIT (LOSS)

3,406

5,126




OPERATING EXPENSES:



Research and development

1,034

1,695

Selling and marketing

1,050

1,724

General and administrative

1,075

1,202

Other expense (Income)

(31)

(87)




Total operating expenses

3,128

4,534




OPERATING INCOME

278

592

FINANCIAL INCOME (EXPENSES), NET

(348)

(31)




INCOME BEFORE INCOME TAX

(70)

561

INCOME TAX BENEFIT (EXPENSES)

188

53




NET PROFIT(LOSS) FOR THE PERIOD

118

614




EPS Basic

0.01

0.04

EPS Diluted

0.01

0.04




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

14,980,006

14,938,339




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

15,028,339

15,017,308

 

 

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





September

September


30, 2018

30, 2017


Unaudited

Unaudited




GAAP gross profit

3,406

5.126

Amortization of Software and IP

153

154

Stock-based compensation expenses

19

36

Non-GAAP gross profit

3,578

5,316




GAAP operating Income

278

592

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

1081

1053

Foreign Currency Loss

367

429

Non-GAAP operating Income

1,726

2,074




GAAP net PROFIT

118

614

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

1081

1053

Foreign Currency Loss

367

429

Income tax expense (benefit)

(188)

(53)

Non-GAAP net Profit(Loss)

1,378

2,043




Non-GAAP EPS

0.09

0.14




NET PROFIT FOR THE PERIOD

118

614

Income tax expenses (benefit), net

(188)

(53)

Financial expenses (income), net

348

31

Depreciation, amortization and stock-based compensation expenses

1,169

1,398

Foreign Currency Loss

367

429

EBITDA *

1,814

2.419


* 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)



9 months ended





September

September


30, 2018

30, 2017


Unaudited

Unaudited




REVENUES

19,857

25,467

COST OF REVENUES

8,730

13,868




GROSS PROFIT (LOSS)

11,127

11,599




OPERATING EXPENSES:



Research and development

3,578

5,336

Selling and marketing

4,232

5,995

General and administrative

3,677

4,393

Other expenses(Income)

152

(2,404)




Total operating expenses

11,639

13,320




OPERATING LOSS

(512)

(1,721)

FINANCIAL INCOME (EXPENSES), NET

(70)

(433)




LOSS BEFORE INCOME TAX

(582)

(2,154)

INCOME TAX BENEFIT

413

111




NET LOSS FOR THE PERIOD

(169)

(2,043)

 

 

SUPERCOM LTD.

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

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


9 months ended





September

September


30, 2018

30, 2017


Unaudited

Unaudited




GAAP gross profit

11,127

11.599

Amortization of Software and IP

460

460

Stock-based compensation expenses

78

153

Non-GAAP gross profit

11,665

12,212




GAAP operating Loss

(512)

(1,721)

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

2,897

2,883

Foreign Currency Loss

1,154

1,330

Non-GAAP operating Income(Loss)

3,539

2,492




GAAP net Income (Loss)

(169)

(2,043)

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

2,897

2,883

Foreign Currency Loss

1,154

1330

Income tax expense (benefit)

(413)

(111)

Non-GAAP net Income(Loss)

3,469

2,059




Non-GAAP EPS

0.23

0.14




NET LOSS FOR THE PERIOD

(169)

(2,043)

Income tax expenses (benefit), net

(413)

(111)

Financial expenses (income), net

70

433

Depreciation, amortization and stock-based compensation expenses

4,055

3,673

Foreign Currency Loss

1,154

1,330

EBITDA *

4,697

3,282




* 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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