Pointer Telocation Ltd. Reports Results for the Fourth Quarter and Full Year 2015

Financial Highlights

- Full year revenues of $101 million;

- Non-GAAP net income: $7.1 million for 2015; $1.3 million for Q4;

- MRM service revenue grew by over 15% YoY in local currency terms;

- MRM year-end total subscribers of about 180 thousand, grew up 10% YoY.

Feb 29, 2016, 06:55 ET from Pointer Telocation Ltd.

ROSH HAAYIN, Israel, Feb. 29, 2016 /PRNewswire/ -- Pointer Telocation Ltd. (Nasdaq: PNTR) - a leading developer, manufacturer and operator of Mobile Resource Management (MRM) services, announced today its financial results for the three month period and fiscal year ended December 31, 2015.

Financial Summary for the Fourth Quarter of 2015

Revenues were $25.7 million compared to $26.6 million in the fourth quarter of 2014, a decrease of 3.2%. The significant strengthening of the US Dollar in the period versus the various local currencies in which the Company generates sales, caused a reduction in the revenue level when translated into US Dollars. In local currency terms, revenues were similar to those of last year.

International activities for the fourth quarter of 2015 accounted for 31.3% of total revenue, compared to 40% in the fourth quarter of 2014.

Revenues from products were $7.5 million (29.3% of revenues) compared to $8.3 million (31% of revenues) in the fourth quarter of 2014, a decrease of 9.4%. Revenues from services were $18.1 million (70.7% of revenues) compared to $18.3 million (69% of revenues) in the fourth quarter of 2014, a decrease of 0.4%. In local currency terms, revenues from services increased by 7%.  

Gross profit was $8.5 million (33.1% of revenues) compared to $8.7 million (32.9% of revenues) in the fourth quarter of 2014, a decrease of 2.6%.

Operating income on a GAAP basis was $0.5 million compared to operating income of $0.2 million in the fourth quarter of 2014. On a non-GAAP basis, operating income was $1.7 million (6.5% of revenues) compared with $2.3 million (8.8% of revenues), a decrease of 27.6%.

Net income (loss) on a GAAP basis was $(0.06) million or $(0.01) loss per diluted share compared with net income a $9.5 million income or $1.23 per diluted share in the fourth quarter of 2014.

Net income on a non-GAAP basis was $1.3 million (5.3% of revenues) compared to non-GAAP net income of $2.3 million (8.6% of revenues) in the fourth quarter of 2014, a decrease of 1.8%. Fully diluted earnings based on non-GAAP net income in the fourth quarter were $0.23 per share, compared to $0.29 per share in the fourth quarter of 2014.

Adjusted EBITDA was $2.5 million compared with $2.6 million in the fourth quarter of 2014, a decrease of 2.1%. In local currency terms, EBITDA in Q4 2015 would have been $2.8 million an increase of 8% over the prior period.

Financial Summary for the Full Year of 2015

Revenues for 2015 were $100.9 million compared to $105.3 million in 2014, a decrease of 4.1%. In local currency terms, revenues increased by 3% compared with last year.

International activities for 2015 accounted for 35.4% of total revenues compared to 33% in 2014.

Revenues from products were $28.6 million (28.4% of revenues) compared to $33.1 million (31% of revenues) in 2014, a decrease of 13.5%. Revenues from services were $72.3 million (71.6% of revenues) compared to $72.2 million (69% of revenues) in 2014, an increase of 0.2%. In local currency terms, revenues from services increased by 7%.

Revenues from the MRM business were $60.4 million, compared with $65.3 million in 2014, a decrease of 7.6%. MRM service revenues were $38.2 million, compared with $37.5 million in 2014, an increase of 1.7%. In local currency terms, MRM service revenues grew by 15% over 2014. 

Gross profit was $34.1 million (33.9% of revenues) in 2015, a decrease of 3.8% compared to $35.6 million (33.8% of revenues) in 2014. Non-GAAP gross profit in the MRM business was $29.1 million (48.2% of revenues) compared with $31.0 million (45.3% of revenues) in 2014, a decrease of 6.2%.

Operating income on a GAAP basis was $6.1 million (6% of revenues) in 2015 compared to operating income of $6.6 million (6.5% of revenues) in 2014. Operating income on a non-GAAP basis was $8.0 million (8% of revenues) in 2015 compared to non-GAAP operating income of $9.4 million (9.0% of revenues) in 2014.

Operating income on a non-GAAP basis at the MRM business was $7.1 million in 2015, compared with $9.1 million in 2014, a decrease of 22.7%.

Net income on a GAAP basis was $3.8 million (3.8% of revenue) or $0.50 per diluted share in 2015, compared to $12.7 million (12% of revenues) or $1.74 per diluted share in 2014. Net income on a non-GAAP basis was $7.2 million (7.2% of revenues) or $0.9 per diluted share, compared to non-GAAP net income of $7.9 million (7.5% of revenues) or $1.02 in 2014.

Adjusted EBITDA was $11.3 million (11.2% of revenues), compared to $12.5 million (11.9%) in 2014, a decrease of 9.9%. In local currency terms, EBITDA in 2015 would have been $12.0 million, a decrease of 4%.

In connection with Pointer's plan to spin-off its Shagrir business to shareholders, Pro-forma information providing certain details of the financial performance of the Shagrir RSA business and MRM business separately, are provided in Exhibit A for informational purposes only.

Management Comment

David Mahlab, Pointer's Chief Executive Officer, commented on the results: "While we faced significant currency headwinds in 2015 impacting our financial results, as we move into 2016, we are increasingly optimistic. Despite the economic slowdown in Brazil, we are now seeing improving activity and growing interest for our services, and we are participating in an increasing number of new tenders. Looking ahead, we expect to resume our subscriber base growth in this region in 2016."

Continued Mr. Mahlab, "Our MRM software as a service business, is growing nicely in local currency terms, and we have been successful in attracting new subscribers for our services, growing by 10% year-over-year. We are launching new MRM related products and services, in particular for the large connected-car markets as well as the Internet of Things space. In 2016, we expect our MRM business to continue to grow, benefitting from the growth in subscribers as well as the recurring revenues from our subscriber base. We look forward to reaping the fruits of our solid subscriber growth as well as from our new products and services in the year ahead."

Conference Call Information

Pointer Telocation's management will host a conference call with the investment community today, Monday, February 29th, 2016 to review and discuss the financial results, and will also be available to answer questions.  

The conference call will commence at 9:30 AM Eastern Time, 4:30 PM Israel time.

To participate in the call, please dial in to one of the teleconference numbers below. Please begin placing your call at least 5 minutes before the time set for the commencement of the conference call.

From USA: +1-888-668-9141
From Israel: 03-918-0609

A replay will be available the following day on the Company's website: www.pointer.com

Forward Looking Statements

This press release contains historical information and forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 with respect to the business, financial condition and results of operations of the Company. The words "believe," "expect," "anticipate," "intend," "seems," "plan," "aim," "should" and similar expressions are intended to identify forward-looking statements. Such statements reflect the current views, assumptions and expectations of the Company with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in the markets in which the Company operates and in general economic and business conditions, loss or gain of key customers and unpredictable sales cycles, competitive pressures, market acceptance of new products, inability to meet efficiency and cost reduction objectives, changes in business strategy and various other factors, both referenced and not referenced in this press release. Various risks and uncertainties may affect the Company and its results of operations, as described in reports filed by the Company with the Securities and Exchange Commission from time to time. The Company does not assume any obligation to update these forward-looking statements.

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 adjusted EBITDA and non-GAAP net income as a non-GAAP financial performance measurement.

We calculate adjusted EBITDA by adding back to net income, net loss from discontinued operations, financial expenses, taxes, depreciation, amortization and impairment of goodwill and intangible assets, the effects of non-cash stock-based compensation expense, profit raise from gaining control in subsidiary previously treated by the equity method, and related goodwill adjustment.

We calculate non-GAAP net income by adding back to net income, net loss from discontinued operations, the effects of non-cash stock based compensation expenses, amortization and impairment of long lived assets, non-cash tax expenses resulting from timing differences relating to the amortization of acquisition-related intangible assets, profit raise from gaining control in subsidiary previously treated by the equity method, acquisition related goodwill adjustment,  onetime 'other expense' related to the termination cost of a former general manager of a Pointer subsidiary and restructuring in a subsidiary, loss from sale of subsidiary, one time financial expenses resulting from the devaluation of Israeli Shekel denominated bank deposits and non-cash tax income from raised tax asset.

The purpose of such adjustments is to give an indication of our performance exclusive of non-GAAP charges that are considered by management to be outside of our core operating results.

Adjusted EBITDA and non-GAAP net income are provided to investors to complement results provided in accordance with GAAP, as management believes the measure helps illustrate underlying operating trends in the Company's business and uses the measure to establish internal budgets and goals, manage the business and evaluate performance. We believe that these non-GAAP measures help investors to understand our current and future operating cash flow and performance, especially as our acquisitions have resulted in amortization and non-cash items that have had a material impact on our GAAP profits. Adjusted EBITDA and non GAAP net income should not be considered in isolation or as a substitute for comparable measures calculated and should be read in conjunction with our 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

Pointer Telocation is a leading provider of technology and services to the automotive and insurance industries, offering a set of services including Road Side Assistance, Stolen Vehicle Recovery and Fleet Management. Pointer has a growing list of customers and products installed in more than 45 countries. Cellocator, a Pointer Products Division, is a leading AVL (Automatic Vehicle Location) solutions provider for stolen vehicle retrieval, fleet management, car & driver safety, public safety, vehicle security and more. The Company's top management and the development center are located in the Afek Industrial Area of Rosh Ha'ayin, Israel.

For more information, please visit http://www.pointer.com

 

 

CONSOLIDATED BALANCE SHEETS

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






December 31,



2015


2014






ASSETS










CURRENT ASSETS:





Cash and cash equivalents


$         9,347


$         8,557

Restricted cash


-


62

Trade receivables


18,402


19,032

Other accounts receivable and prepaid expenses


2,040


1,853

Inventories


4,866


6,133

Deferred tax asset


1,137


901

Property and equipment held for sale


282


1,034






Total current assets


36,074


37,572











LONG-TERM ASSETS:





Long-term accounts receivable


490


408

Severance pay fund


8,186


8,609

Property and equipment, net


9,112


10,075

Other intangible assets, net


816


1,950

Goodwill


46,753


48,941

Deferred tax asset


2,007


3,449






Total long-term assets


67,364


73,432






Total assets


$      103,438


$      111,004

 

 


CONSOLIDATED BALANCE SHEETS

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






December 31,



2015


2014

LIABILITIES AND SHAREHOLDERS' EQUITY










CURRENT LIABILITIES:





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


$         4,903


$         7,478

Trade payables


11,778


11,460

Deferred revenues and customer advances


5,843


6,420

Other accounts payable and accrued expenses


7,928


8,972






Total current liabilities


30,452


34,330











LONG-TERM LIABILITIES:





Long-term loans from banks


8,565


12,046

Long-term loans from shareholders and others


179


997

Deferred taxes and other long-term liabilities


79


298

Accrued severance pay


9,128


9,537






Total long term liabilities


17,951


22,878






COMMITMENTS AND CONTINGENT LIABILITIES










EQUITY:





Pointer Telocation Ltd's shareholders' equity:





Share capital


5,770


5,705

Additional paid-in capital


128,441


129,618

Accumulated other comprehensive loss


(6,285)


(2,909)

Accumulated deficit


(71,822)


(75,767)






Total Pointer Telocation Ltd's shareholders' equity


56,104


56,647






Non-controlling interest


(1,069)


(2,851)






Total equity


55,035


53,796






Total liabilities and shareholders' equity


$      103,438


$      111,004

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS

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








Year ended
 December 31,


Three months ended
December 31,



2015


2014


2015


2014

Revenues:









Products


$   28,617


$    33,099


$     7,534


$     8,316

Services


72,307


72,191


18,186


18,258










Total revenues


100,924


105,290


25,720


26,574










Cost of revenues:









Products


17,003


19,279


4,428


4,561

Services


49,739


50,461


12,792


13,276










Total cost of revenues


66,742


69,740


17,220


17,837










Gross profit


34,182


35,550


8,500


8,737










Operating expenses:









Research and development


3,409


3,390


875


784

Selling and marketing


12,063


11,219


3,190


2,760

General and administrative


10,991


11,883


2,829


2,966

Other general and administrative  expenses


-


683


-


683

Other (income) loss


2


(288)


2


-

Amortization of intangible assets


735


994


169


205

 Impairment of intangible and tangible assets


917


1,122


917


1,122










Total operating expenses


28,117


29,003


7,982


8,520










Operating income


6,065


6,547


518


217

Financial expenses, net


869


2,424


332


700

Other expenses  (income)


(6)


232


(18)


238










Income (loss) before taxes on income


5,202


3,891


204


(721)

Tax expenses (income)


1,404


(8,849)


262


(10,217)










Income after taxes on income


3,798


$   12,740


(58)


9,496

Equity in gains  of affiliate


-


-


-


-










Net income


$     3,798


$   12,740


$     (58)


$      9,496










Profit (loss) from continuing operations attributable to:









Equity holders of the parent


3,945


13,453


(40)


9,824

Non-controlling interests


(147)


(713)


(18)


(328)












$       3,798


$    12,740


$     (58)


$      9,496



















Earnings per share from continuing operations
attributable to Pointer Telocation Ltd's shareholders:









Basic net earnings (loss) per share


$         0.51


$          1.81


$    (0.01)


$        1.27










Diluted net earnings (loss) per share


$         0.50


$        1.74


$    (0.01)


$        1.23










Weighted average - Basic number of shares


7,725,246


7,446,707


7,725,653


7,688,564










Weighted average - fully diluted number of shares


7,938,489


7,726,653


7,881,751


7,945,839

 

 


CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands








Year ended
December 31,


Three months ended
December 31,



2015


2014


2015


2014

Cash flows from operating activities:


















   Net income (loss)


$    3,798


$     12,740


$      (58)


$    9,496

Adjustments required to reconcile net income  to net cash provided by operating activities:









Depreciation and amortization


43,959


4,767


1,013


1,176

Impairment of tangible and intangible assets


917


1,122


917


1,122

Gain from a bargain purchase


-


(288)


-


-

Accrued interest and exchange rate changes of debenture and long-term loans


26


17


22


4

Accrued severance pay, net


18


56


37


(57)

Gain (loss) from sale of property and equipment, net


(143)


(95)


(55)


35

Amortization of stock-based compensation


309


375


64


90

Decrease  in restricted cash


62


19


-


1

Decrease (increase) in trade receivables, net


(236)


(1,141)


57


155

Decrease (increase) in other accounts receivable and prepaid expenses


(418)


(21)


(184)


270

Decrease (increase) in inventories


733


(462)


613


(179)

Decrease (increase) in long-term accounts receivable


(91)


126


15


133

Increase (decrease)  in Deferred tax asset


869


(9,120)


318


(10,205)

Increase (decrease) in trade payables


749


(654)


453


186

Increase (decrease) in other accounts payable
and accrued expenses


(936)


(1,845)


104


(241)

Net cash provided by operating activities


9,616


5,596


3,316


1,986










Cash flows from investing activities:


















Purchase of property and equipment


(3,616)


(4,458)


(1,105)


(1,254)

Proceeds from sale of property and equipment


1,266


1,529


437


418

Acquisition of Subsidiary (a)


-


(688)


-


-

Proceeds from sale of investments in previously consolidated subsidiaries (b)


-


(41)


-


(41)










Net cash used in investing activities


(2,350)


(3,658)


(668)


(877)

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands








Year ended
December 31,


Three months ended
December 31,



2015


2014


2015


2014










Cash flows from financing activities:


















Receipt of long-term loans from banks


14,846


12,577


(313)


(308)

Repayment of long-term loans from banks


(19,393)


(8,986)


(990)


(1,906)

Repayment of long-term loans from shareholders


-


(301)


-


52

Repurchase of shares from non-controlling interests


-


(7,740)


-


-

Proceeds from issuance of shares


15


10,065


-


-

Short-term bank credit, net


(832)


(1,640)


(610)


734










Net cash provided by (used in) financing activities


(5,364)


3,975


(1,913)


(1,428)










Effect of exchange rate changes on cash and cash equivalents


(1,112)


(705)




 

(115)

432



















Increase (decrease) in cash and cash equivalents


790


5,208


1,167


(434)

Cash and cash equivalents at the beginning of the period

8,557

3,349

8,180

8,991










Cash and cash equivalents at the end of the period


$    9,347


$       8,557


$     9,347


$      8,557










(a)  Acquisition of subsidiary:








      Working capital (Cash and cash equivalent excluded)


-


221


-


-

      Property and equipment


-


565


-


-

      Other intangible assets


-


190


-


(48)

      Goodwill


-


(288)


-


48

      Long term loans from banks and others


-


-


-


-

      Investment in subsidiary previously treated by the equity method


-


-


-


-












-


$          688


$             -


$             -










(b)  Proceeds from sale of investments in previously consolidated subsidiaries:









      Working capital (Cash and cash equivalent excluded)


-


(18)


-


(18)

      Property and equipment


-


(30)


-


(30)

      Long term loans from banks and others


-


5


-


5

      Minority Interest


-


(125)


-


(125)

      Loss from sale of subsidiaries


-


209


-


209












$            -


$           41


-


$           41










(c)  Non-cash activity:


















      Issuance of shares in respect of acquisition of non-controlling interests in subsidiary


$            -


$    11,385


$            -


$   11,368

 

 

ADDITIONAL INFORMATION

U.S. dollars in thousands






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








Year ended

December 31,


Three months ended

December 31,






2015


2014


2015


2014










GAAP gross profit


$          34,182


$       35,550


$         8,500


$         8,737

Stock-based compensation expenses


11


10


2


3

Non-GAAP gross profit


34,192


$       35,560


8,502


$         8,740



















GAAP operating expenses


$       28,117


$       29,003


$         7,982


$       8,568

Stock-based compensation expenses


298


380


62


96

Amortization and impairment of long lived assets


1,652


2,116


1,086


1,327

Other expenses of termination costs and restructuring in subsidiary


 

-


 

683


 

-


 

683

Acquisition related goodwill adjustment


-


(288)


-


48

Non-GAAP operating expenses


$       26,167


$       26,112


$         6,834


$       6,414



















GAAP operating income


$          6,065


$         6,547


$            518


$          169










Non-GAAP operating income


$          8,025


$         9,448


$         1,668


$         2,326










GAAP net income


$          3,798


$      12,740


$         (58)


$       9,448

Stock-based compensation


309


390


64


99

Amortization and impairment of long lived assets


1,652


2,116


1,086


1,327

Acquisition related goodwill adjustment


-


(288)


-


48

Profit raise from gaining control in subsidiary previously treated by the equity method


 

-


 

-


 

-


 

-

Other expenses of termination costs and restructuring
in subsidiary


-


683


 

-


683

Loss from sale of subsidiary


-


209


-


209

Financial expenses resulting from the devaluation of Israeli Shekel denominated bank deposits


 

-


 

498


-


 

-

Non-cash tax expenses resulting from timing differences relating to the amortization of acquisition-related intangible assets and goodwill


 

 

-


 

 

1,379


 

 

-


 

 

320

Non cash tax (income) expenses


1,404


(9,799)


262


(9,799)

Non-GAAP net income


$          7,163


$        7,928


$       1,354


$       2,335










Non-GAAP net income per share - Diluted


$            0.90


$          1.02


$          0.20


$           0.29

Non-GAAP weighted average number of shares - Diluted*


7,938,489


7,726,653


7,881,751


7,945,839

 

* 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.

 

 

Adjusted EBITDA








Year ended
December 31,


Three months ended
December 31,



2015


2014


2015


2014










GAAP Net income as reported:


$       3,798


$    12,740


$       (58)


$      9,448










Financial expenses, net


869


2,424


332


700

Tax on income


1,404


(8,849)


262


(10,217)

Profit raise from gaining control in subsidiary previously treated by the equity method and acquisition related goodwill adjustment


-


(288)


-


48

Stock based compensation expenses


309


390


64


99

Loss from sale of subsidiary


-


209


-


209

Depreciation, amortization and impairment of goodwill and  intangible assets


4,876


5,889


1,930


2,298










Adjusted EBITDA


$     11,256


$     12,515


$       2,530


$       2,585












 

 

Exhibit A*






U.S. dollars in thousands












Year ended
December 31, 2015


Year ended
December 31, 2014 (**)



Unaudited


Unaudited



MRM

RSA

Total


MRM

RSA

Total

Revenues:









Products


22,267

6,351

28,617


27,855

5,244

33,099

Services


38,160

34,147

72,307


37,522

34,670

72,191

Total Revenues


60,426

40,498

100,924


65,377

39,913

105,290










Non-GAAP Cost of Revenues


31,307

35,427

66,734


34,334

35,396

69,730










Non-GAAP Gross Profit


29,121

5,071

34,192


31,043

4,517

35,560



48.2%

12.5%

33.9%


47.5%

11.3%

33.8%

Non-GAAP Operating expenses:









Research and development, net


3,409

-

3,409


3,390

-

3,390

Selling and marketing


10,326

1,738

12,063


9,334

1,886

11,219

General and administrative


8,282

2,413

10,695


9,132

2,371

11,503










Non-GAAP Operating Expenses


22,017

4,150

26,167


21,855

4,257

26,112










Non-GAAP Operating  Income


7,105

920

8,025


9,187

260

9,448

 

(**)  

Note that certain figures for the year ended December 31, 2014 have been slightly revised from the previously reported figures as a result of allocation between segments and spin off the Car2Go subsidiary together with Shagrir, our RSA business.

 

 

Contact:



Zvi Fried, V.P. and Chief Financial Officer      

Ehud Helft, GK Investor Relations           

Tel.: +972-3-572 3111                                   

Tel: +1 646 201 9246

E-mail: zvif@pointer.com                               

E-mail: pointer@gkir.com 

SOURCE Pointer Telocation Ltd.