Pointer Telocation Reports Record Revenues of $11.7 Million for the Second Quarter of 2007
Gross Profit Increased 18.3% in Q2 2007 Over Q2 2006 to $4.3 Million
$1.9 Million EBITDA in Q2 2007
GIVATAYIM, Israel, August 30 -- Pointer Telocation Ltd. (Nasdaq Capital Market: PNTR; Tel-Aviv Stock Exchange: PNTR), a leading provider of services to insurance companies and car owners, including road-side assistance, towing, stolen vehicle retrieval and fleet management services in Israel, Argentina and Mexico, today reported its financial results for the second quarter of 2007 and the six months ended June 30, 2007.
During the quarter, Pointer continued with its growth strategy and continued to invest in marketing and business acquisitions. The company is targeting new businesses, technologies and on expanding its activities into new territories. A key element in its growth strategy is to build a global sales infrastructure and broaden the scope of its services. This strategy has resulted in operating improvements in Mexico and Argentina and increased total revenues during the six months ended June 30, 2007.
The Cellocator acquisition is expected to close during September 2007, upon the completion of certain closing conditions.
Financial Highlights:
Revenues: Pointer's revenues for the second quarter of 2007 increased by 15.5%, to $11.7 million from $10.1 million, in the comparable period in 2006. In the first six months of 2007, revenues were $23 million, a 16.4% increase over the same period of 2006. Pointer's revenues from services in the second quarter and the first six months of 2007 were 75.8% and 74.9%, respectively, of total revenues, as compared with 78.5% and 79.1% in 2006. International activities for the second quarter of 2007 were 11.1% of total revenue compared to 10.2% in the comparable period in 2006.
Gross Profit: For the second quarter of 2007, gross profit increased 18.3% to $4.3 million from $3.6 million in Q2 2006. As a percentage of revenues, gross profit was approximately 36.8% in Q2 2007, as compared to approximately 35.9% in Q2 2006. In the first six months of 2007, gross profit increased 15.2% to $8.4 million from $7.3 million in the first six months of 2006. Gross margin for the first six months of 2007 was 36.3%, compared to 36.7% for the first six months of 2006.
Operating income: Pointer's operating income was $842 thousand for the second quarter of 2007, compared to operating income of $1.7 million for the second quarter of 2006. In the first six months of 2007, operating income was $1.8 million, compared to $2.7 million for the same period of 2006. The decrease is primarily attributable to one time other income of $1.3 million associated with an agreement signed with a Latin American customer, offset by a $350 thousand impairment of long-lived assets that were recorded in the second quarter of 2006. Excluding this one time income offset by the impairment, operating income in Q2 and first six months of 2007 increased 13% and 4%, respectively, compared to the same periods in 2006.
Minority share: For the second quarter of 2007 and six months ended June 30, 2007, Pointer reported a $270 thousand and $704 thousand minority share in the operations of Shagrir, compared to zero in both periods of 2006. Pointer holds 56.56% interest in Shagrir.
Net loss: Pointer recorded a loss of $388 thousand during the second quarter of 2007, as compared to net income of $665 thousand in the second quarter of 2006. For the first six months of 2007, Pointer recorded a net loss of $568 thousand, compared to net income of $686 thousand in the same period of 2006. The decrease in profitability is primarily attributable to the above mentioned one time net income of $0.9 million.
EBITDA: Pointer's EBITDA for the second quarter of 2007 and for the first six months of 2007 was $1.9 million and $3.9 million, respectively, as compared to $3.0 million and $4.8 million in the comparable periods of 2006 in which periods the above mentioned one time net income of $0.9 million was included.
Pointer uses EBITDA as a non-GAAP financial performance measurement. EBITDA is calculated by adding back to net income interest, taxes, depreciation, amortization and minority interest. EBITDA is 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. EBITDA should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. A reconciliation of EBITDA to GAAP measures is included in the financial tables accompanying this press release.
Total Shareholder's Equity increased during the second quarter of 2007 to $28.7 million, mainly as a result of the proceeds from two private placements.
Danny Stern, Pointer CEO, said: "We are proceeding with our efforts to increase revenues and broaden our technological solutions offerings. These are necessary steps in order to build a strong company with an expanding global presence. We hope to conclude the Cellocator acquisition before the end of the third quarter."
Conference Call Information:
Pointer's management will host two conference calls with the investment
community today, August 30th , 2007.
The Hebrew conference call will start at 15:30 Israel time (GMT +2, 8:30
EST)
The English conference call will start at 9:30 EST (16:30 Israel time)
To listen to the conference calls, please dial:
From USA: +1-888-642-5032
From Israel:+972-(0)3-918-0688
A replay of the conference call will be available through August 31st, 2007 on the Company's website at http://www.pointer.com.
About Pointer Telocation:
Pointer Telocation Ltd http://www.pointer.com provides range of services to insurance companies and automobile owners, including road-side assistance, vehicle towing, stolen vehicle retrieval, fleet management and other value added services. Pointer Telocation provides services, for the most part, in Israel, through its subsidiary Shagrir and in Argentina and Mexico through its local subsidiaries. Independent operators provide similar services in Russia and Venezuela utilizing Pointer's technology and operational know-how.
Safe Harbor Statement
This press release contains forward-looking statements with respect to the business, financial condition and results of operations of Pointer and its affiliates. These forward-looking statements are based on the current expectations of the management of Pointer, only, and are subject to risk and uncertainties relating to changes in technology and market requirements, the company's concentration on one industry in limited territories, decline in demand for the company's products and those of its affiliates, inability to timely develop and introduce new technologies, products and applications, and loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of the company to differ materially from those contemplated in such forward-looking statements. Pointer undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. For a more detailed description of the risks and uncertainties affecting the company, reference is made to the company's reports filed from time to time with the Securities and Exchange Commission.
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
------------------------------------------------------------------------
June 30, December
2007 31, 2006
------------------------------------------------------------------------
Unaudited
------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 12,552 $ 5,850
Trade receivables, net 10,217 8,315
Other accounts receivable and prepaid expenses 1,906 1,368
Inventories 1,117 1,447
------------------------------------------------------------------------
Total current assets 25,792 16,980
------------------------------------------------------------------------
LONG-TERM ASSETS:
Long-term accounts receivable 187 183
Severance pay fund 3,952 3,794
Property and equipment, net 7,710 7,346
Goodwill 38,200 38,707
Other intangible assets, net 7,871 8,612
Deferred income taxes 761 777
------------------------------------------------------------------------
Total long-term assets 58,681 59,419
------------------------------------------------------------------------
Total assets $ 84,,473 $ 76,399
------------------------------------------------------------------------
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)
------------------------------------------------------------------------
June 30, December
2007 31, 2006
------------------------------------------------------------------------
Unaudited
------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit and current maturities of
long-term loans $ 11,107 $ 11,801
Trade payables 5,798 5,378
Deferred revenues and customer advances 8,280 6,584
Other accounts payable and accrued expenses 3,870 4,091
------------------------------------------------------------------------
Total current liabilities 29,055 27,854
------------------------------------------------------------------------
LONG-TERM LIABILITIES:
Long-term loans from banks 13,729 15,833
Long-term loans from shareholders & others 6,210 7,490
Accrued severance pay 4,814 4,650
------------------------------------------------------------------------
24,753 27,973
------------------------------------------------------------------------
MINORITY INTEREST 1,996 1,142
------------------------------------------------------------------------
SHAREHOLDERS' EQUITY:
Share capital -
Ordinary shares of NIS 3 par value:
Authorized - 8,000,000 shares at June 30, 2007 and
December 31, 2006, respectively; Issued and
outstanding: 4,452,875 and 3,222,875 shares at June
30, 2007 and December 31, 2006, respectively 3,021 2,140
Additional paid-in capital 115,484 103,880
Receipt on account of shares - 2,586
Accumulated other comprehensive income 6 98
Accumulated deficit (89,842) (89,274)
-------------------------------------------------------------------------
Total shareholders' equity 28,669 19,430
-------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 84,473 $ 76,399
-------------------------------------------------------------------------
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
------------------------------------------------------
Six months ended
June 30,
2007 2006
------------------------------------------------------
Unaudited
------------------------------------------------------
Revenues:
Products $ 5,772 $ 4,132
Services 17,263 15,662
------------------------------------------------------
Total revenues 23,035 19,794
------------------------------------------------------
Cost of revenues:
Products 3,666 2,482
Services 11,000 10,051
------------------------------------------------------
Total cost of revenues 14,666 12,533
------------------------------------------------------
Gross profit 8,369 7,261
------------------------------------------------------
Operating expenses:
Research and
development, net 675 544
Selling and marketing 2,243 1,789
General and
administrative 2,811 2,275
Amortization of
intangible assets 847 930
Other income, net - (1,292)
Impairment of long lived
assets - 350
------------------------------------------------------
Total operating expenses 6,576 4,596
------------------------------------------------------
Operating income 1,793 2,665
Financial expenses, net 1,385 1,581
Other income (expenses),
net 15 (5)
------------------------------------------------------
Income before taxes on
income 423 1,079
Taxes on income 287 393
------------------------------------------------------
Net income (loss) before
minority interest 136 686
Minority interest 704 -
------------------------------------------------------
Net income (loss) $ (568) $ 686
------------------------------------------------------
Basic net earnings
(loss) per share $ (0.14) $ 0.24
------------------------------------------------------
Diluted net earnings
(loss) per share $ (0.25) $ 0.24
------------------------------------------------------
(Continued)
---------------------------------------------------------------------
Three months ended Year ended
June 30, December 31,
2007 2006 2006
---------------------------------------------------------------------
Unaudited
---------------------------------------------------------------------
Revenues:
Products $ 2,823 $ 2,180 $ 9,701
Services 8,867 7,937 32,211
---------------------------------------------------------------------
Total revenues 11,690 10,117 41,912
---------------------------------------------------------------------
Cost of revenues:
Products 1,760 1,210 5,602
Services 5,631 5,273 20,786
---------------------------------------------------------------------
Total cost of revenues 7,391 6,483 26,388
---------------------------------------------------------------------
Gross profit 4,299 3,634 15,524
---------------------------------------------------------------------
Operating expenses:
Research and
development, net 343 288 1,170
Selling and marketing 1,131 978 3,927
General and
administrative 1,551 1,152 4,749
Amortization of
intangible assets 432 471 1,740
Other income, net - (1,292) (1,292)
Impairment of long lived
assets - 350 372
---------------------------------------------------------------------
Total operating expenses 3,457 1,947 10,666
---------------------------------------------------------------------
Operating income 842 1,687 4,858
Financial expenses, net 860 803 2,577
Other income (expenses),
net 5 (11) 14
---------------------------------------------------------------------
Income before taxes on
income (13) 873 2,295
Taxes on income 105 208 82
---------------------------------------------------------------------
Net income (loss) before
minority interest (118) 665 2,213
Minority interest 270 1,044
---------------------------------------------------------------------
Net income (loss) $ (388) $ 665 $ 1,169
---------------------------------------------------------------------
Basic net earnings
(loss) per share $ (0.09) $ 0.22 $ 0.39
---------------------------------------------------------------------
Diluted net earnings
(loss) per share $ (0.12) $ 0.22 $ 0.31
---------------------------------------------------------------------
CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands
------------------------------------------------------------------------
Additional Deferred Receipts
Number of Share paid-in stock-based on account
shares capital capital compensation of shares
------------------------------------------------------------------------
Balance as of
January 1, 2006 2,479,020 $ 1,680 $ 100,707 $ (1) $ -
Deferred
stock-based
compensation - - (1) 1 -
Stock-based
compensation
expanses - - 153 - -
Exercise of
warrants and
stock options 743,855 460 3,021 - -
Receipt on
account of
shares - - - - 2,586
Comprehensive
income:
Foreign currency
translation
adjustments - - - - -
Net income - - - - -
------------------------------------------------------------------------
Total
comprehensive
income
------------------------------------------------------------------------
Balance as of
December 31,
2006 3,222,875 2,140 103,880 - 2,586
Issuance of
shares 1,230,000 881 8,712 - -
Stock-based
compensation
expanses - - 306 - -
Receipt on
account of
shares - - 2,586 - (2,586)
Comprehensive
income:
Foreign currency
translation
adjustments - - - - -
Net loss - - - - -
Total
comprehensive
loss
------------------------------------------------------------------------
Balance as of
June 30, 2007
(unaudited) 4,452,875 $ 3,021 $115,484 $ - $ -
------------------------------------------------------------------------
Balance as of
April 1, 2007 3,222,875 $ 2,439 $ 108,192 $ - -
Issuance of
shares 1,230,000 582 7,158 - -
Stock-based
compensation
expanses - - 134 - -
Comprehensive
loss:
Foreign currency
translation
adjustments - - - - -
Net loss - - - - -
Total
comprehensive
loss
-------------------------------------------------------------------------
Balance as of
June 30, 2007
(unaudited) 4,452,875 $ 3,021 $ 115,484 $ -
-------------------------------------------------------------------------
(Continued)
-------------------------------------------------------------------------
Accumulated Total
other comprehensive Total
comprehensive Accumulated income shareholders'
income (loss) deficit (loss) equity
-------------------------------------------------------------------------
Balance as of
January 1, 2006 $ (1,138) $ (90,443) $ 10,805
Deferred
stock-based
compensation - - -
Stock-based
compensation
expanses - - 153
Exercise of
warrants and
stock options - - 3,481
Receipt on
account of
shares - - 2,586
Comprehensive
income:
Foreign
currency
translation
adjustments 1,236 - $ 1,236 1,236
Net income - 1,169 1,169 1,169
-------------------------------------------------------------------------
Total
comprehensive
income $ 2,405
-------------------------------------------------------------------------
Balance as of
December 31,
2006 98 (89,274) 19,430
Issuance of
shares - - 9,593
Stock-based
compensation
expanses - - 306
Receipt on
account of
shares - - -
Comprehensive
income: -
Foreign
currency
translation
adjustments (92) - $ (92) (92)
Net loss - (568) (568) (568)
Total
comprehensive
loss $ ( 660)
-------------------------------------------------------------------------
Balance as of
June 30, 2007
(unaudited) $ 6 $ (89,842) $ 28,669
-------------------------------------------------------------------------
Balance as of
April 1, 2007 $ 397 $ (89,454) $ 21,574
Issuance of
shares - - 7,740
Stock-based
compensation
expanses - - 134
Comprehensive
loss:
Foreign
currency
translation
adjustments (391) - $ (391) (391)
Net loss - (388) (388) (388)
Total
comprehensive
loss $ (779)
-------------------------------------------------------------------------
Balance as of
June 30, 2007
(unaudited) $ 6 $ (89,842) $ 28,669
-------------------------------------------------------------------------
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
-----------------------------------------------------------
Six months ended
June 30,
2007 2006
-----------------------------------------------------------
Unaudited
-----------------------------------------------------------
Cash flows from operating
activities:
Net income (loss) $ (568) $ 686
Adjustments required to
reconcile net income (loss) to
net cash provided by operating
activities:
Depreciation ,amortization and
impairment 2,319 2,351
Accrued interest and exchange
rate changes of convertible
debenture and long-term loans 185 382
Accrued severance pay, net 9 (23)
Gain from sale of property and
equipment, net (139) 74
Amortization of deferred
stock-based compensation 306 69
Minority interest in earning of
subsidiary 854 -
Decrease (increase) in trade
receivables, net (1,994) (609)
Decrease (increase) in other
accounts receivable and prepaid
expenses (548) (152)
Decrease (increase) in
inventories 131 55
Decrease (increase) in long-term
accounts receivable (2) 51
Write-off of inventories 15 69
Increase in deferred income
taxes - -
Increase in trade payables 463 285
Increase (decrease) in other
accounts payable and accrued
expenses 1,563 1,003
-----------------------------------------------------------
Net cash provided by operating
activities 2,594 4,241
-----------------------------------------------------------
Cash flows from investing
activities:
Purchase of property and
equipment (1,770) (874)
Proceeds from sale of property
and equipment 501 426
Acquisition of other intangible
assets (135) -
-----------------------------------------------------------
Net cash used in investing
activities (1,404) (448)
-----------------------------------------------------------
Cash flows from financing
activities:
Receipt of long-term loans from
banks - -
Repayment of long-term loans
from banks (1,946) (1,227)
Receipt of long-term loans from
shareholders and others - 131
Repayment of long-term loans
from shareholders and others (1,340) (2,997)
Proceeds from issuance of shares
and exercise of warrants, net 9,593 2,712
Receipt on account of shares - -
Short-term bank credit, net (847) (592)
-----------------------------------------------------------
Net cash provided by (used in)
financing activities 5,460 (1,973)
-----------------------------------------------------------
Effect of exchange rate on cash
and cash equivalents 52 (30)
-----------------------------------------------------------
Increase in cash and cash
equivalents 6,702 1,790
Cash and cash equivalents at the
beginning of the period 5,850 1,696
-----------------------------------------------------------
Cash and cash equivalents at the
end of the period $ 12,552 $ 3,486
-----------------------------------------------------------
(Continued)
------------------------------------------------------------------------
Three months ended Year ended
June 30, December 31,
2007 2006 2006
------------------------------------------------------------------------
Unaudited
------------------------------------------------------------------------
Cash flows from operating
activities:
Net income (loss) $ (388) $ 665 $ 1,169
Adjustments required to reconcile
net income (loss) to net cash
provided by operating activities:
Depreciation ,amortization and
impairment 1,125 1,070 4,490
Accrued interest and exchange rate
changes of convertible debenture
and long-term loans 199 212 137
Accrued severance pay, net 63 79 (166)
Gain from sale of property and
equipment, net (59) 212 (563)
Amortization of deferred
stock-based compensation 134 34 251
Minority interest in earning of
subsidiary 311 1,044
Decrease (increase) in trade
receivables, net (660) 1,375 (1,167)
Decrease (increase) in other
accounts receivable and prepaid
expenses (12) 287 (36)
Decrease (increase) in inventories 13 (265) (490)
Decrease (increase) in long-term
accounts receivable (1) 42 60
Write-off of inventories - 69 127
Increase in deferred income taxes - - (99)
Increase in trade payables 138 53 1,049
Increase (decrease) in other
accounts payable and accrued
expenses 5 (405) (400)
------------------------------------------------------------------------
Net cash provided by operating
activities 883 3,428 5,406
------------------------------------------------------------------------
Cash flows from investing
activities:
Purchase of property and equipment (950) (438) (2,277)
Proceeds from sale of property and
equipment 247 210 1026
Acquisition of other intangible
assets (135) - -
------------------------------------------------------------------------
Net cash used in investing
activities (838) (228) (1,251)
------------------------------------------------------------------------
Cash flows from financing
activities:
Receipt of long-term loans from
banks - - 2,243
Repayment of long-term loans from
banks (1,446) (833) (2,949)
Receipt of long-term loans from
shareholders and others - 36 131
Repayment of long-term loans from
shareholders and others (684) (2,476) (4,529)
Proceeds from issuance of shares
and exercise of warrants, net 7,742 551 3,481
Receipt on account of shares - - 2,586
Short-term bank credit, net 501 434 (973)
------------------------------------------------------------------------
Net cash provided by (used in)
financing activities 6,113 (2,288) (10)
------------------------------------------------------------------------
Effect of exchange rate on cash and
cash equivalents 33 (55) 9
------------------------------------------------------------------------
Increase in cash and cash
equivalents 6,191 857 4,154
Cash and cash equivalents at the
beginning of the period 6,361 2,629 1,696
------------------------------------------------------------------------
Cash and cash equivalents at the
end of the period $ 12,552 $ 3,486 $ 5,850
------------------------------------------------------------------------
Reconciliation of GAAP to NON-GAAP Operating Results
To supplement the consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), the Company uses EBITDA as a non-GAAP financial performance measurement. EBITDA is calculated by adding back to net income interest, taxes, depreciation, amortization and minority interest. EBITDA is 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. EBITDA should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. Reconciliation the GAAP to non-GAAP operating results:
CONDENSED EBITDA
US dollars in thousands
-------------------------------------------------------------------------
Six months ended Three months ended
June 30, June 30,
2007 2006 2007 2006
-------------------------------------------------------------------------
Unaudited
-------------------------------------------------------------------------
Net income
(loss) GAAP
results
(as reported) (568) 686 (388) 665
Non GAAP
adjustment:
Financial
expenses, net 1,385 1,581 860 803
Taxes on income 287 393 105 208
Deprecation and
amortization 2,060 2,156 1,044 1,332
Minority
interest 704 - 270 -
------------------------------------------------------------------------
EBITDA 3,868 4,816 1,891 3,008
-------------------------------------------------------------------------