SuperCom Reports Financial Result for the First Half of 2020 with $2.5 Million EBITDA, 36% EBITDA Margin, and Non-GAAP EPS $0.06

TEL AVIV, Israel, Sept. 3, 2020 /PRNewswire/ -- SuperCom (NASDAQ: SPCB), a global provider of secure solutions for the e-government, public safety, healthcare, and finance sectors, reports 6 months ended June 30^th, 2020  financial results. SuperCom management will host a conference call, upon filing of the full 2020 semi-annual financial report including balance sheet and cash flows statements.

First Half 2020 Financial Highlights 

• GAAP Operating Expenses decreased to $3.45 million.
• GAAP Gross Margin Increased to 62%.
• GAPP Operating Income increased to $0.8 million.
• Non-GAAP Operating Income increased to $2.0 million.
• Non-GAAP Net Profit of $0.9 million or $0.06 per share.
• EBITDA improved to $2.5 million
• EBITDA Margin increased to 36%
• Revenue decreased to $6.8 million 
• IOT products sub-segment annualized revenue increased by over 119% over last year, affected by Covid-19 related growing demand for PureSecurity and PureHealth solutions
• IOT services sub-segment annualized revenue decreased by 43% over last year, due to large impact coming from Covid-19 related imposed government restrictions in California and other geographies.
• e-Gov segment annualized revenue decreased by 43% over last year due to Covid-19 effects and completion of large project in 2019
• Cyber segment revenue decreased due to Covid-19 affect in the Israel, US, Europe and Asia.

First Half 2020 and Recent Operational Highlights

• IOT products sub-segment experienced a sharp growth in demand in reaction to global Covid-19 implications, requiring release of more offenders from prison to house arrest as well as new technology solutions to assist with quarantine compliance and combating of the spread of Covid-19. Production capacity and production line has been improved.
• IOT services sub-segment impacted by imposed government restrictions in California and other geographies, limiting our ability to interact with our clients to provide full services as well as adding new clients to our monitoring programs given court systems shutdown.
• e-Gov division impacted by Covid-19 government imposed lockdowns and travel restrictions, although continued development and enhancement for projects in Europe and Africa, and maintained relationships with existing customers with existing SuperCom systems in place.
• Cyber segment impacted by Covid-19 government imposed restrictions hindering proper sales and R&D processes and ability of customers to deploy more licenses and new features.

Select Announcements:

• In March 2020, SuperCom through its subsidiary, Leaders in Community Alternatives (LCA), has won a new project with a California Central Valley county to provide employment and anger management services, valued at up to $3.8 million.
• In March 2020, SuperCom announced PureHealth – its new solution for quarantine and isolation monitoring to assist governments in combating infectious diseases such as the coronavirus.
• In March 2020, SuperCom announced it shipped equipment designated for a Pilot of its Coronavirus (COVID-19) citizen quarantine compliance technology.
• In April 2020, announced today that a new government agency in Canada has adopted SuperCom's PureSecurity Offender Tracking Suite.
• In April 2020, SuperCom announced that its e-Gov division has secured a new approximately $1 million order from a national government customer.
• In April 2020, SuperCom announced it has released a second shipment of its Coronavirus (COVID-19) citizen quarantine and containment tracking technology, to Central America.
• In May 2020, SuperCom announced its e-GOV division has secured a 2nd new order of approximately $1 million from a national government customer.
• In June 2020, SuperCom announced it was awarded a new 5-year contract with the national government of Latvia to deploy its enhanced PureSecurity Electronic Monitoring (EM) Suite, including both RF House Arrest and GPS tracking.
• In June 2020, SuperCom announced it has shipped equipment for two new pilots in the Middle East of its COVID-19 citizen quarantine and containment tracking technology solution
• In July 2020, SuperCom announced it has shipped equipment for three new pilots of its people tracking solutions in the Caribbean, Central America and South America.
• In July 2020, SuperCom announces the closing of a private placement financing raising gross proceeds of $3.2 million.

Management Commentary

"It was a challenging half year, with the unexpected effects of the Covid-19 on our operations and our customer's operations, with government imposed restrictions and lockdowns limiting our ability to get new clients from courts, serve our existing clients, travel as part of ongoing operations, proper shipping and handling of goods, progress project deployment effectively, run sales processes, and implement R&D plans. Although thanks to our agile teams and operating structures, we managed to adapt quickly and efficiently. We decreased our operating expenses to new lows, while continuing to support all required operational and customer needs," commented Arie Trabelsi, President and CEO of SuperCom. "The financial result highlighted an improvement in some of our financial performance compared to last year. We achieved improvements in profitability margins with 36% EBITDA margins and GAAP gross margins of 62%, and as we continued to optimize our cost structure, operating expenses reached a low of $3.45 million for the first half of 2020."

"While we did see some monthly revenue declines with the spread of Covid-19 and government imposed restrictions, we believe we have passed the bottom and have been pleased to see monthly increases in active unit counts and revenues in recent months. The unexpected environment has forced us to adapt and quickly. We have implemented cost-optimizations that can persist and improve future profitability, launched new products to meet the rapidly changing and growing needs of our customers, enhanced our opportunity pipeline with great new prospects and projects, and learned to work better together to overcome even the most devastating of global shifts. We believe we are weathering the storm and at the end will come out stronger and improved," concluded Arie Trabelsi.

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.

SuperCom Corporate Contact:

Ordan Trabelsi, President, Americas
Tel: +1-212-466-4606
ordan@supercom.com

Cautionary Note 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 or current facts. Examples of these statements include, but are not limited to, statements regarding business and economic trends, the anticipated impact of the COVID-19 outbreak on travel and physical locations and the anticipated impact of such outbreak on our business and results of operations. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. These risks and uncertainties include, but are not limited to, the effects of the COVID-19 outbreak, including levels of consumer, business and economic confidence generally, the duration of the COVID-19 outbreak and severity of such outbreak, the pace of recovery following the COVID-19 outbreak, the effect on our supply chain, our ability to implement cost containment and business recovery strategies; and the adverse effects of the COVID-19 outbreak on our business or the market price of our ordinary shares, risks and uncertainties described under the heading "Forward Looking Statements" in any repot and the risk factors described in our Annual Report on Form 20-F for the year ended December 31, 2018 and our subsequent filings with the U.S. Securities and Exchange Commission and reports on Form 6-K are uncertain. Except as required by law, we not undertake any 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.

SOURCE SuperCom Ltd