MTS Announces Third Quarter 2012 Financial Results
Year over Year Quarterly Revenues Increased 12% and Operating Income Increased 180%; Generated $1.3 Million of Free Cash Flow During the First Nine Months of 2012; The Company Recorded a Non-Recurring Charge of $0.45 Million Due to a Tax Ruling
RA'ANANA, Israel, November 8, 2012 /PRNewswire/ --
MTS - Mer Telemanagement Solutions Ltd. (Nasdaq Capital Market: MTSL), a global provider of MVNE services and telecommunications expense management (TEM) services and solutions, today announced its financial results for the third quarter of 2012.
Revenues for the third quarter of 2012 were $3.4 million, compared with $3.0 million in revenues during the same quarter last year and revenues of $3.3 million in the second quarter of 2012. The Company's operating profit was $692,000 in the third quarter of 2012 compared to an operating profit of $244,000 for the third quarter of 2011 and $517,000 in the second quarter of 2012. On a non-GAAP basis, excluding the non-recurring tax charge related to a court ruling, net income for the third quarter of 2012 was $691,000 or $0.15 per diluted share, compared with net income of $226,000 or $0.05 per diluted share in the third quarter of 2011 and $460,000 or $0.10 per diluted share in the second quarter of 2012. Net income for the third quarter, after a $446,000 non-recurring tax charge, was $245,000 or $0.05 per diluted share, compared with net income of $226,000 or $0.05 per diluted share in the third quarter of 2011 and $460,000 or $0.10 per diluted share in the second quarter of 2012.
Revenues for the nine months period ended September 30, 2012 were $9.6 million, compared with $8.8 million for the comparable period in 2011. The Company's operating profit was $1.5 million for the nine months period ended September 30, 2012 compared to an operating profit of $439,000 for the same period last year. On a non-GAAP basis, excluding the non-recurring tax charge related to the court ruling, net income for the nine months ended September 30, 2012 was $1.5 million or $0.32 per diluted share, compared with net income of $588,000 or $0.13 per diluted share in the comparable period of 2011. Net income for the nine months ended September 30, 2012 was $1.0 million or $0.22 per diluted share, compared with net income of $588,000 or $0.13 per diluted share in the comparable period in 2011.
Net income for the third quarter and for the nine months period ending September 30, 2012 was negatively affected by a non-recurring tax charge of approximately $446,000, as a result of a court ruling relating to the Company's appeal of a tax ruling of the Israeli tax authorities that was issued with respect to the 1997 to 1999 period. The Company has not as yet received an assessment from the tax authorities.
As of September 30, 2012, we had cash and marketable securities of $4.6 million as compared to $3.4 million as at December 31, 2011. During the nine month period ended September 30, 2012 we had positive operating cash flow of $1.3 million, as compared to positive operating cash flow of $800,000 during the nine month period ended September 30, 2011.
"Our third quarter results represent continued improvements in our financial results and indicators as a result of our efforts to develop our Mobile Virtual Network Enabler (MVNE) activity and the Telecom Expense Management opportunities through partners, new customer acquisitions and expanding our existing customer base" said Eytan Bar, CEO of MTS.
"As we previously announced, we extended our largest existing MVNO services contract, with minimum revenues of $3.6 million during 2013. In addition, following last quarter's announcement that we signed a new managed service agreement, we recently were able to successfully launch our MVNE service with this new MVNO in the US. The Company sees other opportunities in this market and we are working diligently to turn them into new contracts. We are looking forward to improving both our top and bottom line performance," concluded Mr. Bar.
Non-GAAP Financial Measures
This release includes non-GAAP net income and diluted earnings per share financial measures. These non-GAAP measures exclude a non-recurring tax charge.
The Company's management believes that the presentation of non-GAAP measures provides useful information to investors and management regarding financial and business trends relating to the Company's financial condition and results of operations.
These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures. Please refer to the reconciliation of GAAP to Non-GAAP table below.
About MTS
Mer Telemanagement Solutions Ltd. (MTS) is a worldwide provider of innovative products and services for comprehensive telecom expense management (TEM) and enterprise mobility management (EMM) solutions used by enterprises, telecom billing solutions used by telecommunication service providers, and mobile virtual network operators and enablers (MVNO/MVNE) solutions used by mobile service providers.
Headquartered in Israel, MTS markets its solutions through wholly owned subsidiaries in the United States, Hong Kong and The Netherlands as well as through OEM partnerships with Siemens, Phillips, NEC and other vendors. MTS shares are traded on the NASDAQ Capital Market (symbol MTSL). For more information please visit the MTS web site: http://www.mtsint.com.
Certain matters discussed in this news release are forward-looking statements that involve a number of risks and uncertainties including, but not limited to, risks in product development plans and schedules, rapid technological change, changes and delays in product approval and introduction, customer acceptance of new products, the impact of competitive products and pricing, market acceptance, the lengthy sales cycle, proprietary rights of the Company and its competitors, risk of operations in Israel, government regulations, dependence on third parties to manufacture products, general economic conditions and other risk factors detailed in the Company's filings with the United States Securities and Exchange Commission.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
September December
30, 31,
2012 2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,516 $ 3,269
Restricted cash 146 45
Restricted marketable securities 123 127
Trade receivables, net 751 854
Prepaid expenses and other assets 152 93
Total current assets 5,688 4,388
LONG-TERM ASSETS:
Severance pay fund 696 619
Other long term assets 35 37
Total long-term assets 731 656
PROPERTY AND EQUIPMENT, NET 201 161
OTHER ASSETS:
Goodwill 3,479 3,479
Other intangible assets, net 809 1,050
Total other assets 4,288 4,529
Total assets $ 10,908 $ 9,734
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
September 30, December 31,
2012 2011
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 255 $ 326
Accrued expenses and other liabilities 2,694 2,354
Deferred revenues 1,690 2,025
Liabilities of discontinued operations 435 435
Total current liabilities 5,074 5,140
LONG-TERM LIABILITIES -
Accrued severance pay 835 762
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY:
Share capital 13 13
Additional paid-in capital 19,903 19,773
Treasury shares (29) (29)
Accumulated other comprehensive income 3 (19)
Accumulated deficit (14,891) (15,906)
Total shareholders' equity 4,999 3,832
Total liabilities and shareholders'
equity $ 10,908 $ 9,734
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
Nine months ended Three months ended
September 30, September 30,
2012 2011 2012 2011
Revenues:
Product sales $ 2,622 $ 2,933 $ 870 $ 926
Services 7,026 5,911 2,515 2,083
Total revenues 9,648 8,844 3,385 3,009
Cost of revenues:
Product sales 887 836 269 255
Services 2,458 1,982 846 662
Total cost of
revenues 3,345 2,818 1,115 917
Gross profit 6,303 6,026 2,270 2,092
Operating expenses:
Research and
development, net of
grants from the OCS 1,003 1,445 299 500
Selling and marketing 1,600 1,465 557 439
General and
administrative 2,206 2,267 717 909
Total operating
expenses 4,809 5,587 1,573 1,848
Operating profit 1,494 439 697 244
Financial income
(expenses), net (20) 79 1 (11)
Capital gain on sale
of investment - 78 - -
Income before taxes
on income 1,474 596 698 233
Tax on income
(benefit), net 459 8 453 7
Net income $ 1,015 $ 588 $ 245 $ 226
Net Income per share:
Basic net income per
Ordinary share $ 0.23 $ 0.13 $ 0.05 $ 0.05
Diluted net income
per Ordinary share $ 0.22 0.13 $ 0.05 $ 0.05
Weighted average
number of Ordinary
shares used in
computing basic net
income per share 4,462,807 4,459,057 4,470,306 4,459,057
Weighted average
number of Ordinary
shares used in
computing diluted net
income per share 4,525,694 4,459,057 4,533,193 4,459,057
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
U.S. dollars in thousands (except share and per share data)
Nine months ended Three months ended
September 30, September 30,
2012 2011 2012 2011
GAAP Net Income 1,015 588 245 226
Tax charge related to
court ruling 446 - 446 -
Non-GAAP Net income $ 1,461 $ 588 $ 691 $ 226
Net Income per share:
GAAP diluted net
income per Ordinary
share $ 0.22 $ 0.13 $ 0.05 $ 0.05
Non-GAAP diluted net
income per Ordinary
share $ 0.32 $ 0.13 $ 0.15 $ 0.05
Weighted average
number of Ordinary
shares used in
computing GAAP
diluted net income
per share 4,525,694 4,459,057 4,533,193 4,459,057
Weighted average
number of Ordinary
shares used in
computing Non-GAAP
diluted net income
per share 4,525,694 4,459,057 4,533,193 4,459,057
Company Contact:
Alon Mualem
CFO
Tel: +972-9-7777-540
Email: [email protected]
SOURCE MTS-MER Telemanagement Solutions Ltd
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