PNTR
$16.55
Pointer Telocation
($.10)
(.60%)
Earnings Details
2nd Quarter June 2017
Wednesday, August 16, 2017 4:37:00 AM
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Summary

Pointer Telocation (PNTR) Recent Earnings

Pointer Telocation (PNTR) reported 2nd Quarter June 2017 earnings of $0.31 per share on revenue of $20.0 million. The consensus earnings estimate was $0.21 per share on revenue of $18.2 million. Revenue grew 23.6% on a year-over-year basis.

Pointer Telocation Ltd provides mobile resource management products & services for the automotive & insurance industries. It offers road-side assistance, vehicle towing, stolen vehicle retrieval services & fleet management, among others.

Results
Reported Earnings
$0.31
Earnings Whisper
-
Consensus Estimate
$0.21
Reported Revenue
$20.0 Mil
Revenue Estimate
$18.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Pointer Telocation Reports Second Quarter 2017 Financial Results

Financial Highlights of the Quarter

-- Record revenues of $20.0 million, up 24% year-over-year;

-- Recurring Service revenues of $12.9 million, up 27% year-over-year;

-- Record EBITDA of $3.4 million, up 54% year-over-year;

-- Net income doubled year-over-year to $2.0 million;

-- Total subscribers reached 239,000, an increase of 24% year-over-year;

Pointer Telocation Ltd. (PNTR) (TASE: PNTR), a leading provider of telematic services and technology solutions for Fleet Management, Mobile Asset Management and Internet of Vehicles, announced today its financial results for the second quarter of 2017. [1]

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Financial summary for the second quarter of 2017

Revenues for the second quarter of 2017 increased 24% to $20.0 million as compared to $16.2 million in the second quarter of 2016.

Revenues from products in the second quarter of 2017 increased 18% to $7.1 million (36% of revenues) compared to $6.0 million (37% of revenues) in the comparable period of 2016.

Revenues from recurring services in the second quarter of 2017 increased 27% to $12.9 million (64% of revenues) compared to $10.2 million (63% of revenues), in the comparable period of 2016. The growth in service revenue was primarily due to the growth in the subscriber base which grew by 47,000 subscribers since June 30, 2016 and 8,000 subscribers since March 31, 2017.

Gross profit was $10.3 million (51.4% of revenues) compared to $7.7 million (47.7% of revenues) in the second quarter of 2016.

Operating income on a GAAP basis was $2.8 million (14.1% of revenues), an increase of 72%, compared with $1.6 million (10.1% of revenues) in the second quarter of 2016.

Non-GAAP operating income was $3.1 million (15.2% of revenues), an increase of 71% compared to $1.8 million (11% of revenues) in the second quarter of 2016.

GAAP net income (from continuing operations) was $2.0 million, double the net income of $1.0 million reported in the second quarter of 2016.

Non-GAAP net income (from continuing operations) was $2.6 million (12.9% of revenues), an increase of 78%, compared with $1.5 million (9% of revenues) in the second quarter of 2016.

EBITDA (from continuing operations) was $3.4 million (17.1% of revenues), an increase of 54% compared with $2.2 million (13.8% of revenues) in the second quarter of 2016.

Cash and Cash Equivalents totaled $5.7 million and Total Debt was $12.7 million.

Management Comment

David Mahlab, Pointer’s Chief Executive Officer, commented: "We are extremely pleased with our record results for the quarter. We achieved strong revenue growth and increased margins with nearly 2/3 of our total revenues comprised of recurring service revenues. In addition to these financial achievements, we continued to execute our long term strategic objectives to strengthen our position as a leading provider of technology solutions in Fleet Management, Mobile Asset Management and the Internet of Vehicles. Our results demonstrate the success of our long-term strategy for growing our business, increasing profitability and building shareholder value."

Mr. Mahlab continued, "In the past months, we have made great progress on two strategically important deployments. We have successfully completed most of the installations with Femsa, the Coca-Cola bottling company in Mexico, and we have fully deployed our driving behavior solution integrated with Mobileye devices in a 5,000-car fleet in New York City. In addition, we recently announced a new long-term product supply agreement with a leading US-based telematics provider. This contract is the first substantial win for our new Nano CelloTrack technology. We believe this is the first of many other opportunities that we expect to capitalize on in the coming quarters."

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; From the UK 0-800-917-5108

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 EBITDA and Non-GAAP net income as Non-GAAP financial performance measurements.

Pointer calculates EBITDA by adding back to net income financial expenses, taxes, depreciation and amortization and impairment of goodwill and intangible assets.

Pointer calculates 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, other expenses of retirement costs, spin-off related expenses and losses and acquisition related one-time costs.

The purpose of such adjustments is to give an indication of the Company’s performance exclusive of Non-GAAP charges that are considered by management to be outside of the Company’s core operating results.

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. Management believes that these non-GAAP measures help investors to understand the Company’s current and future operating cash flow and performance, especially as the Company’s acquisitions have resulted in amortization and non-cash items that have had a material impact on the Company’s GAAP profits. 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 the Company’s 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.

[1] 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 operation.

About Pointer Telocation

For over 20 years, Pointer has rewritten the rules for the Mobile Resource Management (MRM) market and is a pioneer in the Connected Car segment. Pointer has in-depth knowledge of the needs of this market and has developed a full suite of tools, technology and services to respond to them. The vehicles of the future will be intimately networked with the outside world, enhancing and optimizing the in-car experience.

Pointer’s innovative and reliable cloud-based software-as-a-service (SAAS) platform extracts and captures an organization’s critical mobility data points - from office, drivers, routes, points-of-interest, logistic-network, vehicles, trailers, containers and cargo. The SAAS platform analyzes the raw data converting it into valuable information for Pointer’s customers providing them with actionable insights and thus enabling the customers to improve their bottom line and increase their profitably.

For more information, please visit 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.

INTERIM CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
June 30,
December 31,
2017
2016
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
5,700
$
6,066
Trade receivables
14,273
11,464
Other accounts receivable and prepaid expenses
3,008
2,504
Inventories
5,915
5,242
Total current assets
28,896
25,276
LONG-TERM ASSETS:
Long-term loan to related party
940
831
Long-term accounts receivable
588
564
Severance pay fund
3,340
2,878
Property and equipment, net
5,752
5,614
Other intangible assets, net
1,939
2,178
Goodwill
40,759
38,107
Deferred tax asset
478
1,433
Total long-term assets
53,796
51,605
Total assets
$
82,692
$
76,881
INTERIM CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
June 30,
December 31,
2017
2016
Unaudited
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term bank credit and current maturities of long-term loans
$
5,211
$
4,836
Trade payables
6,539
7,116
Deferred revenues and customer advances
1,079
1,037
Other accounts payable and accrued expenses
7,671
6,839
Total current liabilities
20,500
19,828
LONG-TERM LIABILITIES:
Long-term loans from banks
7,525
10,182
Deferred taxes and other long-term liabilities
988
976
Accrued severance pay
3,808
3,206
Total long term liabilities
12,321
14,364
COMMITMENTS AND CONTINGENT LIABILITIES
EQUITY:
Pointer Telocation Ltd’s shareholders’ equity:
Share capital
5,970
5,837
Additional paid-in capital
128,798
128,438
Accumulated other comprehensive income
(2,477)
(5,633)
Accumulated deficit
(82,588)
(86,115)
Total Pointer Telocation Ltd’s shareholders’ equity
49,703
42,527
Non-controlling interest
168
162
Total equity
49,871
42,689
Total liabilities and equity
$
82,692
$
76,881
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands
Six months ended
Three months ended
Year ended
June 30,
June 30,
December 31,
2017
2016
2017
2016
2016
Unaudited
Unaudited
Revenues:
Products
$
13,829
$
11,555
$
7,147
$
6,048
$
22,784
Services
25,243
19,485
12,894
10,166
41,569
Total revenues
39,072
31,040
20,041
16,214
64,353
Cost of revenues:
Products
8,753
7,178
4,477
3,782
13,904
Services
10,621
8,774
5,258
4,702
18,672
Total cost of revenues
19,374
15,952
9,735
8,484
32,576
Gross profit
19,698
15,088
10,306
7,730
31,777
Operating expenses:
Research and development
1,987
1,824
1,017
919
3,669
Selling and marketing
6,761
5,615
3,456
2,968
11,774
General and administrative
5,634
4,227
2,886
2,093
9,004
Amortization of intangible assets
226
195
113
105
473
One-time acquisition related costs
-
-
-
-
609
Total operating expenses
14,608
11,861
7,472
6,085
25,529
Operating income
5,090
3,227
2,834
1,645
6,248
Financial expenses, net
419
243
259
323
1,046
Other expenses (income)
-
(4)
-
2
9
Income before taxes on income
4,671
2,988
2,575
1,320
5,193
Taxes on income
1,138
854
609
276
1,845
Income from continuing operations
3,533
2,134
1,966
1,044
3,348
Income (loss) from discontinued operation, net
-
154
-
(168)
154
Net income
$
3,533
$
2,288
$
1,966
$
876
$
3,502
Earnings per share from continuing
operations attributable to Pointer
Telocation Ltd’s shareholders:
Basic net earnings per share
$
0.44
$
0.27
$
0.24
$
0.13
$
0.43
Diluted net earnings per share
$
0.44
$
0.27
$
0.24
$
0.13
$
0.42
Weighted average -Basic number of shares
7,942,957
7,787,009
7,978,102
7,789,365
7,820,767
Weighted average - fully diluted number of shares
8,070,953
7,924,421
8,111,119
7,934,321
7,938,290
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Six months ended
Three months ended
Year ended
June 30,
June 30,
December 31,
2017
2016
2017
2016
2016
Unaudited
Unaudited
Cash flows from operating activities:
Net income
$
3,533
$
2,288
$
1,966
$
876
$
3,502
Adjustments required to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization
1,451
1,775
601
877
3,258
Accrued interest and exchange rate changes of debenture and long-term loans
-
74
-
290
29
Accrued severance pay, net
112
121
54
74
20
Gain from sale of property and equipment, net
(67)
(179)
(49)
(53)
(232)
Stock-based compensation
217
94
106
36
320
Increase in trade receivables, net
(2,127)
(4,284)
(1,202)
(585)
(3,489)
Decrease (increase)
in other accounts receivable and prepaid expenses
(480)
(906)
131
(249)
(942)
Decrease (increase) in inventories
(567)
443
(418)
207
(1,063)
Decrease in deferred income taxes
822
1,038
452
248
1,774
Decrease (increase) in long-term accounts receivable
52
(9)
123
126
99
Increase (decrease) in trade payables
(1,211)
2,042
(732)
296
3,346
Increase in other accounts payable and accrued expenses
994
2,460
192
1,293
2,455
Net cash provided by operating activities
2,729
4,957
1,224
3,436
9,077
Cash flows from investing activities:
Purchase of property and equipment
(1,112)
(2,861)
(344)
(1,284)
(4,129)
Purchase of other intangible assets
-
(115)
-
(115)
(115)
Proceeds from sale of property and equipment
55
594
37
118
648
Acquisition of subsidiary (a)
-
-
-
-
(8,531)
Net cash used in investing activities
(1,057)
(2,382)
(307)
(1,281)
(12,127)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Six months ended
Three months ended
Year ended
June 30,
June 30,
December 31,
2017
2016
2017
2016
2016
Unaudited
Unaudited
Cash flows from financing activities:
Receipt of long-term loans from banks
-
95
-
-
6,263
Repayment of long-term loans from banks
(2,013)
(2,250)
(1,063)
(1,123)
(4,976)
Proceeds from issuance of shares and exercise
276
-
197
-
98
of options, net of issuance costs
Distribution as a dividend in kind of previously
-
(1,870)
-
(1,870)
(1,870)
consolidated subsidiary (b)
Short-term bank credit, net
(302)
128
(21)
83
716
Net cash provided (used) in financing activities
(2,039)
(3,897)
(887)
(2,910)
231
Effect of exchange rate on cash and cash equivalents
1
(280)
(84)
(155)
(462)
Decrease in cash and cash equivalents
(366)
(1,602)
(54)
(910)
(3,281)
Cash and cash equivalents at the beginning of the period
6,066
9,347
5,754
8,655
9,347
Cash and cash equivalents at the end of the period
$
5,700
$
7,745
$
5,700
$
7,745
$
6,066
(a) Acquisition of subsidiary:
Working capital (Cash and cash equivalent excluded)
$
-
$
-
$
-
$
-
$
(334)
Property and equipment
-
-
-
-
(1,239)
Intangible assets
-
-
-
-
(2,098)
Goodwill
-
-
-
-
(6,070)
Deferred taxes
-
-
-
-
714
Payables for acquisition of investments in subsidiaries
-
-
-
-
496
$
-
$
-
$
-
$
-
$
(8,531)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Six months ended
Three months ended
Year ended
June 30,
June 30,
December 31,
2017
2016
2017
2016
2016
Unaudited
Unaudited
(b) Distribution as a dividend in kind of previously
consolidated subsidiary:
The subsidiaries’ assets and liabilities at date of distribution:
Working capital
$
-
(5,443)
$
-
(5,443)
(5,443)
(excluding cash and cash equivalents)
Property and equipment
-
7,048
-
7,048
7,048
Goodwill and other intangible assets
-
15,883
-
15,883
15,883
Other long term liabilities
-
(1,781)
-
(1,781)
(1,781)
Non-controlling interest
-
373
-
373
373
Accumulated other comprehensive loss
-
(213)
-
(213)
(213)
Dividend in kind
(17,737)
(17,737)
(17,737)
$
-
$
(1,870)
$
-
$
(1,870)
$
(1,870)
(c) Non-cash investing activity:
Purchase of property and equipment
$
156
$
39
$
54
$
(12)
$
48
ADDITIONAL INFORMATION
U.S. dollars in thousands (except share and per share data)
The following table reconciles the GAAP to non-GAAP operating results:
Six months ended
Three months ended
Year ended
June 30,
June 30,
December 31,
2017
2016
2017
2016
2016
GAAP gross profit
$
19,698
$
15,088
$
10,306
$
7,730
$
31,777
Stock-based compensation expenses
2
4
1
1
6
Non-GAAP gross profit
$
19,700
15,092
$
10,307
7,731
31,783
GAAP operating expenses
$
14,608
$
11,861
$
7,472
$
6,085
$
25,529
Stock-based compensation expenses
215
90
105
35
314
Amortization and impairment of long lived assets
226
195
113
105
473
Other expenses of retirement costs
125
-
-
-
-
Acquisition related one-time costs
-
-
-
-
609
Non-GAAP operating expenses
$
14,042
$
11,576
$
7,254
$
5,945
$
24,133
GAAP operating income
$
5,090
$
3,227
$
2,834
$
1,645
$
6,248
Non-GAAP operating income
$
5,658
$
3,516
$
3,053
$
1,786
$
7,650
GAAP net income from continuing operations
$
3,533
$
2,134
$
1,966
$
1,044
$
3,348
Stock-based compensation expenses
217
94
106
36
320
Amortization and impairment of long lived assets
226
195
113
105
473
Other expenses of retirement costs
125
-
-
-
-
Non cash tax expenses
801
854
415
276
1,723
Acquisition related one-time costs
-
-
-
-
609
Non-GAAP net income from continuing operations
$
4,902
$
3,277
$
2,600
$
1,461
$
6,473
Income (loss) from discontinued operation
-
154
-
(168)
154
Non cash tax expenses
-
249
-
91
249
Spin-off related expenses and losses
-
349
-
349
349
Amortization and impairment of long lived assets
-
67
-
28
67
Non-GAAP net income
$
4,902
$
4,096
$
2,600
$
1,761
$
7,292
Non-GAAP net income per share from continuing
$
0.61
$
0.41
$
0.32
$
0.18
$
0.82
operations - Diluted
Non-GAAP weighted average number of shares
8,070,953
7,924,421
8,111,119
7,934,321
7,938,290
- Diluted*

* 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.

EBITDA
U.S. dollars in thousands
Six months ended
Three months ended
Year ended
June 30,
June 30,
December 31,
2017
2016
2017
2016
2016
GAAP Net income from continuing operations
$
3,533
$
2,134
$
1,966
$
1,044
$
3,348
as reported:
Financial expenses, net
419
243
259
323
1,046
Tax on income
1,138
854
609
276
1,845
Depreciation, amortization and impairment of
1,451
1,109
601
591
2,590
goodwill and
intangible assets
EBITDA from continuing operations
$
6,541
$
4,340
$
3,435
$
2,234
$
8,829
Income (loss) from
discontinued operation
-
154
-
(168)
154
Financial expenses , net
-
47
-
28
47
Tax on income
-
249
-
91
249
Depreciation, amortization and impairment of goodwill and
intangible assets
-
668
-
288
668
EBITDA
$
6,541
$
5,458
$
3,435
$
2,473
$
9,947

Contact:Yaniv Dorani, CFOTel.: +972-3-572 3111E-mail: yanivd@pointer.com

Gavriel Frohwein/Ehud Helft, GK Investor RelationsTel: +1-646-688-3559E-mail: pointer@gkir.com

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SOURCE Pointer Telocation Ltd

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