Pointer Telocation Reports Q2 2016 Financial Results

ROSH HAAYIN, Israel, Aug. 11, 2016 /PRNewswire/ --

Highlights (excluding Shagrir) in the Second Quarter 2016

• Revenues of $16.2 million; up 15% YoY in local currencies (up 5% in US dollars);
• Service revenues were $10.2 million; up 20% YoY in local currency terms (up 4% in US dollars);
• Adjusted EBITDA (from continuing operations) was $2.3 million, up 9% YoY
• Total MRM subscribers reached 192,000; a 13% increase of 22,000 since Q2 2015 end

Pointer Telocation Ltd. (Nasdaq CM: PNTR; TASE: PNTR) - a leading developer, manufacturer and operator of Mobile Resource Management (MRM) services, today announced its financial results for the second quarter of 2016.

On June 8, 2016 Pointer spun off its Israeli subsidiary, Shagrir Group Vehicle Services Ltd., through which Pointer carried out its road side assistance (RSA) activities and listed Shagrir's shares for trade on the Tel Aviv Stock Exchange. The results of Shagrir until that date are included in Pointer's results as discontinued operations.

Revenues for the second quarter of 2016 increased 4.6% to $16.2 million as compared to $15.5 million in the second quarter of 2015. In local currency terms, revenues increased by 15%.

Revenues from products in the second quarter of 2016 increased 5.1% to $6 million (37% of revenues) compared to $5.8 million (37% of revenues) in the comparable period of 2015.

Revenues from services in the second quarter of 2016 increased 4.4% to $10.2 million (63% of revenues) compared to $9.7 million (63% of revenues), in the comparable period of 2015. In local currency terms in the territories where the subsidiaries operate, revenue from services increased by 20%.

Gross profit was $7.7 million (47.7% of revenues) compared to $7.2 million (46.7% of revenues) in the second quarter of 2015.

Non-GAAP operating income was $1.8 million (11% of revenues), compared to $1.6 million (10.6% of revenues) in the second quarter of 2015.

Non-GAAP net income from continuing operations was $1.4 million (9% of revenues), compared with $1.3 million (8.6% of revenues).

Adjusted EBITDA from continuing operations was $2.3 million compared with $2.1 million in the second quarter of 2015, an increase of 9%.

Management Comment

David Mahlab, Pointer's Chief Executive Officer, commented: "We are very pleased with our financial results, but just as importantly, with the strategic developments in the quarter. Our spin-off of the Shagrir RSA business culminates a long process which is a key and important part of our long term strategy. It enables Pointer to focus fully on the MRM market, makes our operations more transparent and allows the value inherent in our business to become clearer."

Mr. Mahlab continued, "In local currency terms, our revenues in the quarter grew strongly by 15% year over year, built on the solid subscriber growth expanding by 13% in the past year. As we have an existing infrastructure in place, we can add each new subscriber at minimal incremental cost. Solid operating leverage is therefore inherent to our business model, and it is also clear given the year-over-year growth of 17% in operating income."

Mr. Mahlab further noted, "We see new opportunities in our end-markets, in all our target territories. This was evidenced by our recent contract, whereby we are managing the vehicles and personnel responsible for transit control, emergency and contingencies during the Olympic Games currently held in Rio. More generally, we see an uptick in tenders in which we are competing and winning. We continue to invest in sales and marketing as well as R&D, in order to capitalize on these opportunities and on the new solutions we continue to develop. We are also examining potential acquisitions in the markets in which we operate, which will enable us to increase our customer base and further benefit from the leverage in our business model."

Conference Call Information Pointer Telocation's management will host a conference call today, at 7:00am Pacific Time, 10:00 Eastern Time, 17:00 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: +1-866-744-5399; From Israel: 03-918-0691

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 financial expenses, taxes, depreciation, amortization and impairment of goodwill and intangible assets and the effects of non-cash stock-based compensation expenses.

We calculate Non-GAAP net income by adding back to net income the effects of non-cash stock based compensation expenses, amortization and impairment of long lived assets, non-cash tax expenses and spin-off related expenses and losses.

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 Mobile Resource Management, Fleet Management and Stolen Vehicle Recovery. Pointer has a growing list of customers and products installed in 50 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.

* 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.