Pointer Telocation Reports Q1 2014 Financial Results Highlights of the first quarter 2014

- Revenues of $27 million up 22% year-over-year

- Gross Margin of 34.8% versus 32.5% in Q1 last year

- Adjusted EBITDA of $3.9 million up 40% year-over-year

- Non-GAAP net income of $2.2 million, up 22% year-over-year

ROSH HAAYIN, Israel, May 14, 2014 /PRNewswire/ -- Pointer Telocation Ltd. (Nasdaq CM: PNTR) - a leading developer, manufacturer and operator of Mobile Resource Management (MRM) and roadside assistance services for the automotive industry, announced today its financial results for the first quarter of 2014.

Financial Highlights

Revenues: Pointer's revenues for the first quarter of 2014 increased 22% to $27 million as compared to $22.1 million in the first quarter of 2013.

International activities for the first quarter of 2014 were 31% of total revenues compared to 27% in the same period in 2013.

Revenues from products in the first quarter of 2014 increased 23% to $9.1 million (34% of revenues) compared to $7.4 million (34% of revenues) in the comparable period of 2013.

Pointer's revenues from services in the first quarter of 2014 increased 22% to $18 million (66% of revenues) compared to $14.7 million (66% of revenues), in the comparable period of 2013.

Gross Profit: In the first quarter of 2014, gross profit was $9.4 million (34.8% of revenues) compared to $7.2 million (32.5% of revenues) in the first quarter of 2013.

Operating Income: Operating income increased 66% to $2.6 million in the first quarter of 2014 compared to $1.5 million in the first quarter of 2013.

Net Income: Pointer recorded net income of $1.5 million or $0.22 per share in the first quarter of 2014 compared to $0.8 million, or $0.14 per share, in the first quarter of 2013.

Non GAAP net income: Pointer recorded non-GAAP net income of $2.2 million in the first quarter of 2014, an increase of 21% as compared to non-GAAP net income of $1.8 million in the first quarter of 2013.

Adjusted EBITDA: Pointer's adjusted EBITDA for the first quarter of 2014 was $3.9 million, an increase of 40% compared to $2.8 million in the first quarter of 2013.

Management Comment

David Mahlab, Pointer's Chief Executive Officer, commented on the results: "We have had a great start to 2014, showing solid top line growth as well as improvements in profitability across the board. We grew our top line by 22%, while increasing operating income by 66% demonstrating the strong inherent operating leverage built into our business model." 

Continued Mr. Mahlab: "Our services segment, which we provide on a recurring monthly basis, continues to be our strongest revenue source, making up two-thirds of total revenues and provides us with good visibility of revenues for the foreseeable future. Our technology division, developing new MRM technologies and products, continues to see the result of our efforts from entering new markets with new products and technologies.  2014 is shaping up to be a key inflection year for Pointer in which we are reaping the fruits of our strategy and past investments in the business. We also improved our cash position which should enable us to continue to capitalize on additional acquisition opportunities which we are currently considering," concluded Mr. Mahlab.

Conference Call Information:

Pointer Telocation's management will host a conference call today, at 9:30 Eastern Time, 16:30 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 USA: + 1-888-281-1167

From Israel: 03-918-0644

A replay will be available a few hours following the call on the company's website.

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  non-GAAP financial performance measurements.

We calculate adjusted EBITDA by adding back to net income, net loss from discontinued operations, financial expenses, taxes, depreciation, the effects of non-cash stock-based compensation expense, amortization and non-cash impairment of goodwill and intangible assets.

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 of intangibles related to acquisitions and non-cash tax expenses resulting from timing differences relating to the amortization of acquisition-related intangible assets and goodwill.

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: http://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.


Contact:





Zvi Fried, V.P. and Chief Financial Officer




Ehud Helft, GK Investor & Public Relations

Tel: 972-3-572 3111                                    




Tel: +1 646 201 9246

E-mail: zvif@pointer.com                              




E-mail: pointer@gkir.com

 

 

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands




March 31,
2014


December 31,
2013



Unaudited








ASSETS










Cash and cash equivalents


$        13,070


$              3,349

Restricted cash


66


81

Trade receivables


21,501


19,793

Other accounts receivable and prepaid expenses


2,494


2,033

Inventories


5,826


6,038






Total current assets


42,957


31,294











LONG-TERM ASSETS:





Long-term accounts receivable


473


546

Severance pay fund


9,275


9,349

Property and equipment, net


13,476


13,975

Other intangible assets, net


2,677


2,936

Goodwill


55,145


55,127






Total long-term assets


81,046


81,933






Total assets


$     124,003


$          113,227











 

INTERIM CONSOLIDATED BALANCE SHEETS

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




March 31,


December 31,



2014


2013



Unaudited



LIABILITIES AND SHAREHOLDERS' EQUITY










CURRENT LIABILITIES:





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


$            10,702


$            10,643

Trade payables


13,867


14,793

Deferred revenues and customer advances


8,869


7,753

Other accounts payable and accrued expenses


9,185


10,768






Total current liabilities


42,623


43,957











LONG-TERM LIABILITIES:





Long-term loans from banks


17,345


9,301

Long-term loans from others


1,195


1,301

Deferred taxes and other long-term liabilities


6,187


5,712

Accrued severance pay


10,226


10,317








34,953


26,631

COMMITMENTS AND CONTINGENT LIABILITIES










EQUITY:





Pointer Telocation Ltd's shareholders' equity:





Share capital


10,248


3,878

Additional paid-in capital


136,110


120,996

Accumulated other comprehensive loss from transactions with shareholders

Accumulated other comprehensive income


(11,368)


-

1,563

1,456

Accumulated deficit


(87,754)


(89,220)






Total Pointer Telocation Ltd's shareholders' equity


48,799


37,110






Non-controlling interest


(2,372)


5,529






Total equity


46,427


42,629






Total liabilities and equity


$          124,003


$          113,227

 


INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands




Three months ended

March 31,


Year ended
December 31,



2014


2013


2013



Unaudited










Revenues:







Products


$             9,116


$             7,422


$          34,662

Services


17,899


14,723


63,195








Total revenues


27,015


22,145


97,857








Cost of revenues:







Products


5,396


4,381


20,763

Services


12,209


10,560


45,497

Amortization and impairment of intangible assets




-


-








Total cost of revenues


17,605


14,941


66,260








Gross profit


9,410


7,204


31,597








Operating expenses:







Research and development


858


670


3,244

Selling and marketing


2,691


2,325


10,398

General and administrative


2,957


2,283


10,539

Other general and administrative  expenses


-


-


403

Amortization and impairment of intangible assets


337


381


967








Total operating expenses


6,843


5,659


25,551








Operating income


2,567


1,545


6,046

Financial expenses, net


504


338


1,077

Other income (expenses), net


3


6


3,299








Income before taxes on income


2,060


1,213


8,268

Taxes on income


600


164


1,337








Income  after taxes on income


1,460


1,049


6,931

Equity in gains (losses) of affiliate


-


112


(340)








Income from continuing operations


1,460


1,161


7,271








Net income


$             1,460


$             1,161


$            7,271

 

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands




Three months ended

March 31,


Year ended December 31,



2014


2013


2013



Unaudited










Profit from continuing operations attributable to:







Equity holders of the parent


1,466


807


6,320

Non-controlling interests


(6)


354


951










1,460


1,161


7,271








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







Basic net earnings per share


$             0.22


$             0.14


$           1.14








Diluted net earnings per share


$             0.21


$             0.14


$           1.10

 

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands




Three months ended

March 31,


Year ended December 31,



2014


2013


2013



Unaudited










Cash flows from operating activities:














Net income


$         1,460


$         1,161


$          7,271

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







Depreciation, amortization and impairment


1,280


1,083


4,049

Gain from obtaining control in a subsidiary previously 
              accounted for by the equity method


-


-


(3,299)

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


5


(24)


21

Accrued severance pay, net


(13)


(40)


(397)

Gain from sale of property and equipment, net


(66)


(68)


(195)

Equity in losses (gains) of affiliate


-


(112)


(340)

Amortization of stock-based compensation


48


33


374

Decrease in restricted cash


15


5


27

Increase in trade receivables, net


(2,083)


(2,013)


(1,270)

Decrease (increase) in other accounts receivable and
               prepaid expenses


(561)


(393)


148

Decrease (increase) in inventories


264


(35)


(685)

Deferred income taxes


485


161


1,272

Decrease (increase) in long-term accounts receivable


41


23


(4)

Increase (decrease)  in trade payables


(624)


(178)


1,290

Increase  (decrease) in other accounts payable and accrued 
               expenses


(354)


1,416


1,449








Net cash provided by operating activities


(103)


1,019


9,711








Cash flows from investing activities:














Purchase of property and equipment


(1,154)


(1,027)


(4,663)

Proceeds from sale of property and equipment


707


670


1,216

Investment and loans/Repayments in affiliate


(7,740)


32


137

Acquisition of subsidiary (a)


-


-


(3,973)








Net cash used in investing activities


(8,187)


(325)


(7,283)








 


INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands








Three months ended

March 31,


Year ended December 31,



2014


2013


2013



Unaudited










Cash flows from financing activities:














Receipt of long-term loans from banks


11,437


1,348


7,127

Repayment of long-term loans from banks


(2,206)


(3,175)


(10,137)

Repayment of long-term loans from others


(115)


(3)


-

Proceeds from issuance of shares and exercise of warrants


10,059


-


7

Short-term bank credit, net


(1,201)


(376)


563








Net cash provided by (used in) financing activities


17,974


(2,206)


(2,440)








Effect of exchange rate changes on cash and cash equivalents


37


157


(324)








Increase (decrease) in cash and cash equivalents


9,721


(1,355)


(336)

Cash and cash equivalents at the beginning of the period


3,349


3,685


3,685








Cash and cash equivalents at the end of the period


$     13,070


$                    2,330


$          3,349















(a)  Acquisition of subsidiary:







     Working capital (Cash and cash equivalent excluded)


$                -


$                          -


130

     Property and equipment


-


-


2,486















     Other intangible assets


-


-


1,690

     Goodwill


-


-


4,894

     Long term loans from banks and others


-


-


(1,342)

     Investment in subsidiary previously accounted for by the 
          equity method


-


-


(3,885)



$               -


$                          -


$        3,973















(b)  Non-cash investing activity:







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


11,385


-


-



$     11,385


$                          -


$               -








 

ADDITIONAL INFORMATION

U.S. dollars in thousands


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


Non GAAP Net income




Three months ended

March 31,


Year ended December 31,



2014


2013


2013








GAAP Net income as reported:


$            1,460


$            1,161


$            7,271








Amortization and impairment of  intangible assets


337


381


967

Other expenses of termination costs


-


-


403

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


-


-


(3,299)

Stock based compensation expenses


49


33


374

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


353


248


1,700










$            2,199


$            1,823


$            7,416















Adjusted EBITDA























Three months ended

March 31,


Year ended December 31,



2014


2013


2013








GAAP Net income as reported:


$            1,460


$            1,161


$            7,271








Financial expenses, net


504


338


1,077

Tax on income


600


164


1,337

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


-


-


(3,299)

Stock based compensation  expenses


49


33


374

Depreciation, amortization and impairment of goodwill and
     intangible assets


1,280


1,083


4,049










$            3,893


$            2,779


$          10,809

 

SOURCE Pointer Telocation Ltd.



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