Pointer Telocation Reports Q1 2015 Financial Results

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

March 31, 2015

December 31, 2014

Unaudited

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$       8,254

$        8,557

Restricted cash

-

62

Trade receivables

18,882

19,032

Other accounts receivable and prepaid expenses

2,060

1,853

Inventories

6,099

6,133

Deferred tax asset

706

901

Property and equipment held for sale

847

1,034

Total current assets

36,848

37,572

LONG-TERM ASSETS:

Long-term accounts receivable

419

408

Severance pay fund

8,160

8,609

Property and equipment, net

9,100

10,075

Other intangible assets, net

1,612

1,950

Goodwill

47,278

48,941

Deferred tax asset

3,499

3,449

Total long-term assets

70,068

73,432

Total assets

$    106,916

$    111,004

INTERIM CONSOLIDATED BALANCE SHEETS

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

March 31,

December 31,

2015

2014

Unaudited

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

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

$        5,331

$        7,478

Trade payables

10,813

11,460

Deferred revenues and customer advances

7,348

6,420

Other accounts payable and accrued expenses

8,054

8,972

Total current liabilities

31,546

34,330

LONG-TERM LIABILITIES:

Long-term loans from banks

11,906

12,046

Long-term loans from shareholders and others

977

997

Deferred taxes and other long-term liabilities

302

298

Accrued severance pay

9,038

9,537

Total long term liabilities

22,223

22,878

COMMITMENTS AND CONTINGENT LIABILITIES

EQUITY:

Pointer Telocation Ltd's shareholders' equity:

Share capital 

5,705

5,705

Additional paid-in capital

129,715

129,618

Accumulated other comprehensive income

(5,498)

(2,909)

Accumulated deficit

(73,904)

(75,767)

Total Pointer Telocation Ltd's shareholders' equity

56,018

56,647

Non-controlling interest

(2,871)

(2,851)

Total equity

53,147

53,796

Total liabilities and equity

$    106,916

$    111,004

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands

Three months ended

March 31,

Year ended December 31,

2015

2014

2014

Unaudited

Revenues:

Products

$           7,083

$           9,116

$        33,099

Services

17,894

17,899

72,191

Total revenues

24,977

27,015

105,290

Cost of revenues:

Products

4,083

5,396

19,279

Services

12,288

12,209

50,461

Total cost of revenues

16,371

17,605

69,740

Gross profit

8,606

9,410

35,550

Operating expenses:

Research and development

894

858

3,390

Selling and marketing

2,806

2,691

11,219

General and administrative

2,636

2,957

11,883

Other general and administrative  expenses

-

-

683

Other income

-

-

(288)

Amortization of intangible assets

200

337

994

 Impairment of intangible and tangible assets

-

-

1,122

Total operating expenses

6,536

6,843

29,003

Operating income

2,070

2,567

6,547

Financial expenses (income), net

(194)

504

2,424

Other income, net

-

3

232

Income before taxes on income

2,264

2,060

3,891

Taxes on income

400

600

(8,849)

Net income

$           1,864

$           1,460

$        12,740

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands

Three months ended

March 31,

Year ended December 31,

2015

2014

2014

Unaudited

Profit (loss) from continuing operations attributable to:

Equity holders of the parent

1,865

1,466

13,453

Non-controlling interests

(1)

(6)

(713)

$    1,864

$    1,460

$   12,740

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

Basic net earnings per share

$             0.24

$            0.22

$             1.81

Diluted net earnings per share

$            0.23

$            0.21

$             1.74

Weighted average -Basic number of shares

7,688,564

6,707,702

7,446,707

Weighted average – fully diluted number of shares

7,964,798

7,054,677

7,726,653

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

Three months ended

March 31,

Year ended December 31,

2015

2014

2014

Unaudited

Cash flows from operating activities:

Net income

$       1,864

$        1,460

$      12,740

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

Depreciation and amortization

1,006

1,280

4,767

Impairment of tangible and intangible assets

-

-

1,122

Gain from a bargain purchase

-

-

(288)

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

(366)

5

17

Accrued severance pay, net

(32)

(13)

56

Gain from sale of property and equipment, net

(34)

(66)

(95)

 Stock-based compensation

91

48

375

Decrease  in restricted cash

62

15

19

Increase in trade receivables, net

(503)

(2,083)

(1,141)

Decrease (increase)  in other accounts receivable and      prepaid expenses

46

(561)

(21)

Decrease (increase) in inventories

(9)

264

(462)

Decrease (increase) Deferred income taxes

189

485

(9,120)

Decrease (increase) in long-term accounts receivable

2

41

126

Increase (decrease) in trade payables

62

(624)

(654)

Increase (decrease) in other accounts payable and      accrued expenses

410

(354)

(1,845)

Net cash provided by operating activities

2,788

(103)

5,596

Cash flows from investing activities:

Purchase of property and equipment

(584)

(1,154)

(4,458)

Proceeds from sale of property and equipment

312

707

1,529

Investment and loans/ Repayments in affiliate

-

(7,740)

-

Acquisition of subsidiary (a)

-

-

(688)

Proceeds from sale of investments in previously      consolidated subsidiaries (c)

-

-

(41)

Net cash used in investing activities

(272)

(8,187)

(3,658)

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

Three months ended

March 31,

Year ended December 31,

2015

2014

2014

Unaudited

Cash flows from financing activities:

Receipt of long-term loans from banks

10,557

11,437

12,577

Repayment of long-term loans from banks

(11,393)

(2,206)

(8,986)

Repayment of long-term loans from shareholders

(13)

(115)

(301)

Repurchase of shares from non-controlling interests

-

-

(7,740)

Proceeds from issuance of shares and exercise of options,      net of issuance costs

6

10,059

10,074

Short-term bank credit, net

(468)

(1,201)

(1,640)

Net cash provided (used) in financing activities

(1,311)

17,974

3,984

Effect of exchange rate on cash and cash equivalents

(1,508)

37

(714)

Increase (decrease) in cash and cash equivalents

(303)

9,721

5,208

Cash and cash equivalents at the beginning of the period

8,557

3,349

3,349

Cash and cash equivalents at the end of the period

$        8,254

$     13,070

$         8,557

(a) Acquisition of subsidiary:

     Working capital (Cash and cash equivalent excluded)

$                -

$                -

$            221

     Property and equipment

-

-

565

     Other intangible assets

-

-

190

     Goodwill

-

-

(288)

$                -

$                -

$            688

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

Three months ended

March 31,

Year ended December 31,

2015

2014

2014

Unaudited

Proceeds from sale of investments in previously      consolidated subsidiaries:

The subsidiaries' assets and liabilities at date of sale:

Working capital (excluding cash and cash equivalents)

$                -

$                -

$          (18)

Property and equipment

-

-

(30)

Long term loans from banks and others

-

-

5

Non-controlling interests

-

-

(125)

Loss from sale of subsidiaries

209

$                 -

$                -

$  41

 (c) 

Non-cash investing activity:

Purchase of property and equipment

$                56

$                -

$                45

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

$                   -

$       11,385

$         11,368

ADDITIONAL INFORMATION

U.S. dollars in thousands

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

Three months ended

March 31,

Year ended

December 31,

2015

2014

2014

GAAP gross profit

$       8,606

$       9,410

$       35,550

Stock-based compensation expenses

3

1

10

Non-GAAP gross profit

$      8,609

$       9,411

$      35,560

GAAP operating expenses

$       6,536

$       6,843

$       29,003

Stock-based compensation expenses

88

48

380

Amortization and impairment of long lived assets

200

337

2,116

Other expenses of termination costs and restructuring in subsidiary

-

-

683

Acquisition related goodwill adjustment

-

-

(288)

Non-GAAP operating expenses

$       6,248

$       6,458

$       26,112

GAAP operating income

$        2,070

$       2,567

$         6,547

Non-GAAP operating income

$        2,361

$       2,953

$         9,448

GAAP net income

$        1,864

$        1,460

$      12,740

Stock-based compensation

91

49

390

Amortization and impairment of long lived assets

200

337

2,116

Acquisition related goodwill adjustment

-

-

(288)

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

-

-

-

Other expenses of termination costs and restructuring in subsidiary

-

-

683

Loss from sale of subsidiary

-

-

209

Financial expenses resulting from the devaluation of Israeli Shekel denominated bank deposits

-

-

498

Non-cash tax expenses resulting from timingdifferences relating to the amortization of acquisition-related intangible assets and goodwill

242

353

1,379

Non cash tax income from raised tax asset

-

-

(9,799)

Non-GAAP net income

$          2,397

$         2,199

$        7,928

Non-GAAP net income per share - Diluted

$         0.30

$           0.31

$          1.02

Non-GAAP weighted average number of shares - Diluted*

7,964,798

7,054,677

7,726,653

* 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.

Adjusted EBITDA

Three months ended March 31,

Year ended December 31,

2015

2014

2014

GAAP Net income as reported:

$     1,864

$      1,460

$    12,740

Financial expenses (income), net

(194)

504

2,424

Tax on income

400

600

(8,849)

Profit raise from gaining control in subsidiary      previously treated by the equity method and      acquisition related goodwill adjustment

-

-

(288)

Stock based compensation expenses

91

49

390

Loss from sale of subsidiary

-

-

209

Depreciation, amortization and impairment of      goodwill and  intangible assets

1,005

1,280

5,889

Adjusted EBITDA

$     3,166

$     3,893

$     12,515

Three months endedMarch 31, 2015

Three months ended March 31, 2014

Unaudited

Unaudited

Unaudited

MRM

RSA

Total

MRM

RSA

Total

MRM

RSA

Total

Revenues:

Products

5,782

1,301

7,083

7,978

1,138

9,116

27,855

5,244

33,099

Services

10,452

7,442

17,894

10,118

7,781

17,899

41,267

30,925

72,191

Total Revenues

16,234

8,743

24,977

18,096

8,919

27,015

69,122

36,168

105,290

Non-GAAP Cost of Revenues

8,679

7,689

16,368

10,039

7,565

17,604

37,653

32,078

69,730

Non-GAAP Gross Profit

7,555

1,054

8,609

8,057

1,354

9,411

31,469

4,091

35,560

46.5%

12.1%

34.5%

44.5%

15.2%

34.8%

45.5%

11.3%

Non-GAAP Operating Expenses

5,591

657

6,248

5,609

849

6,458

22,711

3,401

26,112

Non-GAAP Operating  Income

1,964

398

2,361

2,448

505

2,953

8,758

690

9,448

(*) See reconciliation information on p. 12 herein

(**)       Note that certain figures for the year ended December 31, 2014 have been slightly revised from the previously reported figures as a result of allocation between segments

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: [email protected]

E-mail: [email protected]