Pointer Telocation Reports $32 Million Revenue in H1 2009
Gross Margin Increased to 43% From 39% in H1 2008; EBITDA - $5.7M in H1 2009; Strong Cash Flow - Outstanding Debt Decreased by $4.2M Since 31.12.08; Non-Cash Impairment Charge of ~$3M in Q2 2009
ROSH HAAYIN, Israel, August 13 -- Pointer Telocation Ltd. (Nasdaq Capital Market: PNTR, Tel-Aviv Stock Exchange: PNTR) - a leading developer, manufacturer and provider of high-end technology and products for AVL (Automatic Vehicle Location) solutions for stolen vehicle retrieval, fleet management, car & driver safety, vehicle security and asset management, and a leading provider of RSA (Road Side Assistance) services, announced today its financial results for the first six months and second quarter of 2009.
Pointer Telocation financial figures in the second quarter of 2009 reflect a continuation of the effects of the global and industrial recession. Despite product revenue weakness, Pointer has improved gross margin.
On a GAAP basis, the Company's operating expenses, operating income and net income reflect a non-cash impairment charge of approximately $3.0 million related to the acquisition of the Cellocator business in 2007, which was recorded in the second quarter of 2009. The impairment charge reflects the Company's current estimate of the fair market value of the business with certain customers in the current business recession.
Financial Highlights:
Revenues: Pointer's revenue for the second quarter of 2009 was $15.6 million, compared to $19.4 million in the second quarter of 2008. In the first six months of 2009, revenue was $31.6 million, compared to $37.9 million for the same period of 2008. Pointer's revenues from services increased in the second quarter of 2009 and in the first six months of 2009 to 68% of total revenues, as compared to 60% for each of these periods in 2008. International activities for the second quarter and first six months of 2009 were 23% and 24% of total revenue compared to 27% in each of the comparable periods in 2008.
Gross Profit: For the second quarter of 2009, gross profit was $6.6 million compared to $7.4 million in the second quarter of 2008. As a percentage of revenues, gross profit was 42.5% in the second quarter of 2009, as compared to 38.3% in the second quarter of 2008.In the first six months of 2009, gross profit was $13.5 million compared to $14.6 million in the first six months of 2008. Gross margin for the first six months of 2009 was 43%, as compared to 39% for the first six months of 2008. Gross margins were improved primarily due to efficiency and cost reductions.
Operating Income: Pointer's operating loss was $1.5 million in the second quarter of 2009, compared to operating income of $2.5 million for the second quarter of 2008. The operating loss was primarily attributable to the non-cash impairment of $3.0 million, attributable to a revised estimate of the fair market value of the business with certain customers of the Cellocator business which we acquired in September 2007. Excluding this non-cash impairment, operating income in the second quarter of 2009 was $1.4 million. In the first six months of 2009, operating income was $226 thousand, compared to $4.8 million for the same period of 2008. Excluding the non-cash impairment mentioned above, operating income for the first six months of 2009 was $3.2 million.
Net Income (loss): Pointer recorded net loss attributable to Pointer shareholders of $2.8 million or $(0.61) per share during the second quarter of 2009, as compared to net income of $0.8 million in the second quarter of 2008 or $0.17 per share. Net income attributable to a non-controlling interest in affiliates in the second quarter of 2009 was $0.7 million compared to $0.3 million for the second quarter of 2008. For the second quarter of 2009 the net loss, before giving effect to the exclusion of those earnings relating to non-controlling interests in accordance with SFAS 160, was $2.2 million.
For the first six months of 2009, Pointer recorded net loss attributable to Pointer shareholders of $2.8 million or $(0.61) per share, compared to net income of $1.55 million or $0.33 per share in the same period of 2008. Net income attributable to non-controlling interest in affiliates in the first six months of 2009 was $1.7 million compared to $0.9 million for the second quarter of 2008. For the first six months of 2009, the net loss, before giving effect to the exclusion of those earnings relating to non-controlling interests in accordance with SFAS 160, was $1.1 million.
Non GAAP net income attributable to Pointer: Pointer recorded non-GAAP net income of $0.9 million during the second quarter of 2009, as compared to non-GAAP net income of $2.4 million in the second quarter of 2008. For the first six months of 2009, Pointer recorded non-GAAP net income of $1.7 million, compared to non-GAAP net income of $4.2 million in the same period of 2008.
EBITDA: Pointer's EBITDA for the second quarter of 2009 and for the first six months of 2009 was $2.5 million and $5.7 million, respectively, as compared to $4.2 million and $8.0 million in the comparable periods of 2008.
Danny Stern, Pointer CEO, said: "Pointer continued to feel the effects of the global and industrial slowdown in Q2. We have taken actions to reduce expenses in order to increase our profitability and lessen the effect of this slowdown on the Company's strong cash flow and EBITDA. Our positive cash flow and EBITDA, for example, enabled us to reduce our loans and credit facilities by $4.2 million during the first six months of 2009. Our services business was less effected by the slowdown. We also continue to invest in new products and technology, and believe that these investments will result in increased revenues following a pickup in sales. During the second quarter we acquired 51% of Car2Go, a car sharing service provider operating in Israel. Also, a recent Brazilian government decision requires that all new vehicles in Brazil will be sold with SVR devices as of Q1 2010. As a result, Pointer joined local partners in Brazil aiming to increase services and products sales in this large and growing market. Pointer continues to seek additional opportunities in the global marketplace in order to leverage the expected economic upturn", concluded Mr. Stern.
Conference Call Information:
Pointer Telocation's management will host a conference call
with the investment community to review and discuss the financial
results:
Conference call will take place today, August 13th, 2009 on
9:30 AM EST, 16:30 Israel time.
To listen to the call, please dial in to one of the following
teleconferencing numbers. Please begin placing your call at least
5 minutes before the conference call commences.
From USA: +1-888-668-9141
From Israel: 03-918-0609
A replay of the conference call will be available through Aug 14th, 2009
on the Company's website at http://www.pointer.com.
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. Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude amortization and impairment of acquired intangible assets and deferred income tax, as well as certain business combination accounting entries. The purpose of such adjustments is to give an indication of our performance exclusive of non-GAAP charges and other items that are considered by management to be outside of our core operating results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP.
Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. We believe that these non- GAAP measures help investors to understand our current and future operating cash flow and performance, especially as our three most recent acquisitions have resulted in amortization and non-cash items that have had a material impact on our GAAP profits. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table immediately following the consolidated statements of cash flows in this press release.
Pointer uses EBITDA as a non-GAAP financial performance measurement. EBITDA is calculated by adding back to net income interest, taxes and depreciation and amortization including in respect of our non-cash impairment charge related to the fair market value of the business with certain customers from our acquisition of Cellocator. 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
About Pointer Telocation:
Pointer Telocation is a leading provider of technology and services to the automotive and insurance industries, offering a set of services including Road Side Assistance, Stolen Vehicle Recovery and Fleet Management. Pointer has a growing client list with products installed in over 400,000 vehicles across the globe: the UK, Greece, Mexico, Argentina, Brazil, Russia, Croatia, Germany, Czech Republic, Latvia, Turkey, Hong Kong, Singapore, India, Costa Rica, Norway, Venezuela, Hungary, Israel and more. Cellocator, a Pointer Products Division, is a leading AVL (Automatic Vehicle Location) solutions provider for stolen vehicle retrieval, fleet management, car & driver safety, public safety, vehicle security and more. In 2004, Cellocator was selected as the official security and location equipment supplier for the Olympic Games in Athens. For more information: http://www.pointer.com
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 31,
2009 2008
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,828 $ 2,708
Trade receivables, net 13,935 13,509
Other accounts receivable and prepaid expenses 3,021 2,774
Inventories 2,917 3,999
Total current assets 22,701 22,990
LONG-TERM ASSETS:
Long-term accounts receivable and deferred expenses 524 339
Investments in affiliate 9 -
Severance pay fund 5,408 4,925
Property and equipment, net 7,846 7,998
Deferred income taxes 1,006 1,037
Other intangible assets, net 10,203 14,894
Goodwill 49,582 50,416
Total long-term assets 74,578 79,609
Total assets $ 97,279 $ 102,599
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)
June 30, December 31,
2009 2008
Unaudited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit and current maturities of
long-term loans $ 7,344 $ 7,849
Trade payables 7,872 8,613
Deferred revenues and customer advances 10,189 8,701
Other accounts payable and accrued expenses 5,880 5,792
Total current liabilities 31,285 30,955
LONG-TERM LIABILITIES:
Long-term loans from banks 16,944 20,520
Long-term loans from shareholders and others 3,189 3,305
Other long-term liabilities 284 257
Accrued severance pay 6,570 6,375
Total long-term liabilities 26,987 30,457
Shareholders' equity *) 39,007 41,187
Total liabilities and shareholders' equity $ 97,279 $ 102,599
*) Reclassification due to the adoption of SFAS 160.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
Six months Three months Year
ended ended ended
June 30, June 30, December 31,
2009 2008 2009 2008 2008
Unaudited
Revenues:
Products $10,145 $15,321 $ 4,962 $ 7,714 $30,645
Services 21,414 22,564 10,612 11,694 46,010
Total revenues 31,559 37,885 15,574 19,408 76,655
Cost of revenues:
Products 5,418 8,112 2,457 4,155 16,392
Services 12,105 14,673 6,247 7,567 29,869
Amortization of
intangible assets 492 490 246 245 980
Total cost of
revenues 18,015 23,275 8,950 11,967 47,241
Gross profit 13,544 14,610 6,624 7,441 29,414
Operating expenses:
Research and
development, net 1,460 1,171 707 498 2,511
Selling and marketing 2,978 3,477 1,494 1,776 6,934
General and
administrative 4,874 3,920 2,488 1,996 8,311
Amortization of
intangible assets 1,047 1,235 523 628 2,365
Impairment of
intangible assets 2,959 - 2,959 - -
Total operating
expenses 13,318 9,803 8,171 4,898 20,121
Operating income (loss) 226 4,807 (1,547) 2,543 9,293
Financial expenses, net 1,096 2,175 422 1,424 4,054
Other(income)
expenses, net 12 (19) - (2) (22)
Income (loss) before
taxes on income (882) 2,651 (1,969) 1,121 5,261
Taxes on income 42 230 22 12 640
Income (loss) after
Income taxes (924) 2,421 (1,991) 1,109 4,621
Equity in losses of
affiliate 191 - 191 - -
Net income(loss) *) $(1,115) $ 2,421 $(2,182) $ 1,109 $ 4,621
Less: net income
(loss)attributable to
the noncontrolling
interest $ 1,737 *)$ 872 $ 673 *)$ 311 *)$ 2,248
Net income attributable
to Pointer's
shareholders $(2,852) $ 1,549 $(2,855) $ 798 $ 2,373
Basic net earnings
(loss) per share $ (0.60) $ 0.34 $ (0.60) $ 0.17 $ 0.51
Diluted net earnings
(loss) per share $ (0.61) $ 0.33 $ (0.61) $ 0.17 $ 0.50
*) Reclassification due to the adoption of SFAS 160.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Six months Three months Year
ended ended ended
June 30, June 30, December 31,
2009 2008 2009 2008 2008
Unaudited
Cash flows from
operating activities:
Net income (loss) $(1,115) *)$2,421 $(2,182) *)$1,109 *)$ 4,621
Adjustments required
to reconcile net
income (loss) to net
cash provided by
operating activities:
Depreciation,
amortization and
impairment 5,653 3,423 4,272 1,644 6,918
Accrued interest and
exchange rate changes
of convertible
debenture and
long-term loans (129) 1,244 (104) 1,059 1,187
Accrued severance pay,
net (255) 167 (143) (179) 619
Gain from sale of
property and
equipment, net (138) (158) (63) (70) (36)
Equity in losses of
affiliate 191 - 191 - -
Amortization of
deferred stock-based
compensation 270 140 126 69 350
Decrease (increase) in
trade receivables, net (659) (2,274) 283 169 (1,773)
Decrease (increase) in
other accounts
receivable and prepaid
expenses (155) (726) 524 117 (6)
Decrease (increase) in
inventories 345 (267) 24 (335) (2,088)
Decrease (increase) in
long-term accounts
receivable and
deferred expenses (163) 48 (49) 48 23
Write-off of
inventories - - - - 112
Increase in deferred
income taxes - - - - (178)
Increase (decrease) in
trade payables (686) 137 837 101 888
Increase in other
accounts payable and
accrued expenses 1,892 1,581 100 340 379
Net cash provided by
operating activities 5,051 5,736 3,816 4,072 11,016
Cash flows from
investing activities:
Purchase of property
and equipment (1,337) (1,776) (868) (1,057) (3,476)
Proceeds from sale of
property and equipment 559 379 337 137 605
Investments in
affiliate (200) - (200) - -
Acquisition of
subsidiary (a) (38) - (38) - -
Increase in long-term
accounts receivable - (228) - (126) (357)
Net cash used in
investing activities (1,016) (1,625) (769) (1,046) (3,228)
Cash flows from
financing activities:
Receipt of long-term
loans from banks - 7,099 - 7,099 9,064
Repayment of long-term
loans from banks (2,870) (2,088) (1,446) (1,076) (4,930)
Repayment of long-term
loans from
shareholders and
others (15) (8,868) (8) (8,045) (10,201)
Proceeds from issuance
of shares and exercise
of warrants, net - - - - 1,000
Dividend paid to the
noncontrolling
interest (586) - (586) -
Short-term bank
credit, net (434) (625) 513 (851) (970)
Net cash provided by
(used in) financing
activities (3,905) (4,482) (1,527) (2,873) (6,037)
Effect of exchange
rate on cash and cash
equivalents (10) (291) (31) (263) (243)
Increase in cash and
cash equivalents 120 (662) 1,489 (110) 1,508
Cash and cash
equivalents at the
beginning of the
period 2,708 1,200 1,339 648 1,200
Cash and cash
equivalents at the
end of the period $ 2,828 $ 538 $ 2,828 $ 538 $ 2,708
*) Reclassification due to the adoption of SFAS 160.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Six months Three months Year
ended ended ended
June 30, June 30, December 31,
2009 2008 2009 2008 2008
Unaudited
(a) Acquisition of
subsidiary
Fair value of assets
acquired and liabilities
assumed at date of
acquisition:
Working capital (40) - (40) - -
Property and equipment 60 - 60 - -
Customer list 24 - 24 - -
Goodwill 384 - 384 - -
Accrued severance pay,
net (12) - (12) - -
Shareholders loan (122) - (122) - -
Minority interest (256) - (256) - -
38 - 38 - -
Reconciliation Table of Non-GAAP Measures
U.S. dollars in thousands
Reconciliation of GAAP net income to non-GAAP net income is as follows:
Six months Three months Year
ended ended ended
June 30 June 30 December 31
2009 2008 2009 2008 2008
Unaudited
Net income (loss)
as reported: $(1,115) $ 2,421 $(2,182) $ 1,109 $ 4,621
Net income
attributable to the
non-controlling
interest (1,737) (872) (673) (311) (2,248)
Amortization of
intangible assets 1,539 1,725 769 873 3,345
Impairment of
long-lived assets 2,959 - 2,959 - -
Loan Discount - 695 - 695 704
Tax on income 42 230 22 12 640
Non-GAAP Net income $ 1,688 $ 4,199 $ 895 2,378 $ 7,062
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 and amortization including in respect of our non-cash impairment charge related to the fair market value of the business with certain customers from our acquisition of Cellocator. 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 of the GAAP to non-GAAP operating results is as follows:
CONDENSED EBITDA
US dollars in thousands
Six months Three months Year
ended ended ended
June 30 June 30 December 31
2009 2008 2009 2008 2008
Unaudited
Net income (loss) as
reported: $(1,115) $ 2,421 $(2,182) $ 1,109 $ 4,621
Financial expenses,
net 1,096 2,175 422 1,424 4,054
Tax on income 42 230 22 12 640
Depreciation,
amortization and
impairment 5,654 3,195 4,275 1,632 6,116
Non-GAAP Net income
$ 5,677 $ 8,020 $ 2,537 $ 4,177 $ 15,431