Nexus Telocation Systems Ltd. Reports Record Second Quarter 2005
739% Revenues Growth, Improved Gross Margin to 36.6%
$508K Operating Profit, $2,184K EBITDA
Fully Consolidated Financial Results With Shagrir as of Q2/2005
GIVATAYIM, Israel, August 25 -- Nexus Telocation Systems Ltd. (OTC Bulletin Board: NXTSF), a leading provider of stolen vehicle retrieval services in Israel, Argentina and Mexico, and a leading provider of road side assistance and towing services in Israel, reported today its consolidated financial results for Q2 2005 and the six months period ended June 30, 2005.
Financial Highlights:
Q2 2005 is the first financial period in which Nexus has fully consolidated the financial results of Shagrir, Nexus' Israeli subsidiary.
Revenues: Nexus' revenues for the second quarter and the first six months of 2005 increased by 739% and 591%, respectively to $10,160 thousands and $16,653 thousands from $1,211 thousands and $2,411 thousands, respectively, in the comparable periods in 2004.
Revenue breakdown: Nexus' revenues from services in Q2 2005 were 79.2% of total revenues, as compared with 41% in the same period at 2004. In the first six months of 2005 services revenues were 73.3% from total revenues, compared to 39% in the first six months of 2004.
Gross margin: For the second quarter and first six months of 2005, gross margin improved to 36.6% and 36% respectively, compared to 27.3% and 15.1% in the same periods in 2004.
Operating Profit (loss): Nexus reports a $508 thousands operating profit in the second quarter of 2005, compared to an operating loss of $424 thousands in the second quarter
of 2004. In the first six months of 2005, operating loss reduced to $863 thousands from an operating loss of $1,127 thousands for the same period in 2004.
Without the non recurrent charges associated with the acquisition of Shagrir activity, Nexus would have present in the first six month of 2005 an approximate operating breakeven.
EBITDA: Nexus' EBITDA improved to $2,184 thousands and $1,912 thousands in the second quarter and the first six months of 2005, respectively, as compared to a negative EBITDA of $40 thousands in the second quarter of 2004 and a negative EBITDA of $358 thousands in the first half of 2004
Total shareholder's equity increased during the first six months of 2005 to $11 million, mainly as a result of the issuance of Nexus shares and warrants.
Danny Stern, CEO, added: "We are delighted with our financial results and with the substantial growth. Nexus has completed its transformation into a service providing company and is currently focused on leveraging its businesses in all of the markets in which it is competing: Israel, Argentina, Mexico, Venezuela and Russia. We are looking forward to further cooperation with our clients worldwide, in order to achieve our mutual goals."
Commenting on the results, Yossi Ben Shalom, Chairman of the Board said: "We are pleased to present a substantial improvement in our major financial indicators, as manifested primarily by our operating profit in Q2 2005. We have started to prove to our shareholders that we are committed to accomplishing the targets we set ourselves and as previously outlined to the public, i.e. positive growth in revenues, profitability and EBITDA. We are confident in our ability to further achieve our business goals, based upon our growing share in all our markets. We are confident that recent investments, mainly in Mexico, that currently do not have a positive impact on our financial results, will ultimately contribute substantially to improve our results in the future."
Mr. Ben Shalom added: "Nexus today is a different and a better company in all of its business aspects. Nexus will announce its financial results every quarter and will communicate directly with the investment community."
"We are updating our guidance for Nexus' annual revenues to $35 million."
Conference Call Information:
Nexus will host conference calls with the investment community on Monday, August 29th in Hebrew on 15:30 local time and in English on 10:00 ET.
To listen to the conference calls, please dial:
English +1-866-860-9642 or +972-3-9180600
Hebrew +972-3-9180609
A replay of the conference call will be available through August 31st, 2005 at the Company's website www.nexus.telocation.com.
Nexus Telocation Systems Ltd. is a service provider of a range of services to automobile owners and insurance companies, including road-side assistance, vehicle towing, stolen vehicle retrieval and other value added services. Nexus provides services, for the most part, in Israel, through its subsidiary Shagrir and in Argentina and Mexico through its subsidiaries Tracsat and Pointer SA.
Condensed Interim Consolidated Balance Sheets
U.S. dollars in thousands
June 30, December 31,
2005 2004
Unaudited
Assets
Current Assets:
Cash and cash equivalents $ 2,043 $ 75
Short-term investments - 15
Trade receivables 7,499 3,828
Other accounts receivable and prepaid expenses 891 639
Inventories 1,375 1,343
Total current assets 11,808 5,900
Long-term assets:
Long-term accounts receivable 239 230
Severance pay fund 2,858 751
Property and equipment, net 7,922 2,670
Goodwill 42,540 13,154
Other intangible assets, net 11,349 2,808
Total long-term assets 64,908 19,613
Total assets $ 76,716 $ 25,513
Condensed Interim Consolidated Balance Sheets
U.S. dollars in thousands
June 30, December 31,
2005 2004
Unaudited
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term bank credit and current maturities of
long-term bank loans $ 8,515 $ 7,064
Trade payables 4,354 2,894
Other accounts payable and accrued expenses 11,990 2,640
Total current liabilities 24,859 12,598
Long-Term Liabilities:
Long-term loans 36,930 4,572
Accrued severance pay 3,927 1,257
40,857 5,829
Shareholders' Equity:
Share capital -
Ordinary shares of NIS 3 par value:
Authorized :8,000,000 and 4,000,000 shares at June
30, 2005 and December 31, 2004, respectively; Issued
and outstanding: 2,458,910 and 1,704,505 shares at
June 30, 2005 and December 31, 2004, respectively 1,667 1,145
Additional paid-in capital 100,646 94,127
Deferred stock-based compensation (13) (117)
Accumulated other comprehensive loss (1,223) (353)
Accumulated deficit (90,077) (87,716)
Total shareholders' equity 11,000 7,086
Total liabilities and shareholders' equity $ 76,716 $ 25,513
Condensed Interim Consolidated Statements of Operations U.S.
Dollars in thousands (except share and per share data)
Year
Six months ended Three months ended ended
June 30, June 30, December
31,
2005 2004 2005 2004 2004
Unaudited
Revenues:
Products $ 4,447 $ 1,475 $ 2,109 $ 716 $ 5,594
Services 12,206 936 8,051 495 5,375
Total revenues 16,653 2,411 10,160 1,211 10,969
Cost of revenues:
Products 3,076 1,071 1,304 546 5,666
Services 7,578 975 5,140 334 1,876
Total cost of
revenues 10,654 2,046 6,444 880 7,542
Gross profit 5,999 365 3,716 331 3,427
Operating expenses:
Research and
development, net 439 254 232 54 482
Selling and
marketing 1,930 269 971 156 1,588
General and
administrative 3,059 741 1,184 431 2,887
Amortization of
deferred stock
compensation 114 228 64 114 465
Amortization of
intangible assets 1,320 - 757 - 932
Total operating
expenses 6,862 1,492 3,208 755 6,354
Operating profit
(loss) (863) (1,127) 508 (424) (2,927)
Financial expenses,
net (1,592) (172) (1,091) (204) (758)
Other income
(expenses), net 94 - 107 (42)
Loss before taxes on
income 2,361 1,299 476 628 3,727
Taxes on income - - - - 37
Net loss $ 2,361 $ 1,299 $ 476 $ 628 $ 3,764
Basic and diluted
loss per share $ 1.07 $ 1.08 $ 0.19 $ 0.50 $ 2.58
Ronen Stein, V.P. and Chief Financial Officer, Tel.; +972-3-572-3111, E-mail: ronens@nexus.co.il. Yael Nevat, Commitment-IR.com, Tel: +972-3-611-4466, E-mail: yael@commitment-IR.com