SuperCom Reports Full Year 2021 Financial Results

Revenue Increased to $12.3 million; Gross Profit Increased to 50.6%; Cash & Restricted Cash increased to $4.6 million

TEL AVIV, Israel, March 31, 2022 /PRNewswire/ -- SuperCom (NASDAQ: SPCB), a global provider of secured solutions for the e-Government, IoT, and Cybersecurity sectors, today reported results for the twelve months ended December 31, 2021. 

Twelve-Months Ended December 31, 2021, Financial Highlights (Compared to the Prior Year Period)

• Revenue increased by 4% to $12.3 million in 2021, from $11.8 million last year, representing the first year of revenue increase since 2017 as significant progress is achieved on the transition from the legacy business to the IOT tracking business.
• Gross margin increased to 50.6% in 2021 from 47.4% last year.
• Cash and cash equivalents and restricted cash increased to $4.6 million from $4.0 million last year.
• Operating loss in 2021 reached $6.7 million compared with a $3.7 million loss in 2020, driven mainly by $4.4 million of one-time expenses in 2021 pertaining to the legacy business.
• EBITDA decreased to $2.1 million in 2021 compared to $2.8 million in 2020.
• Working Capital at the end of 2021 increased significantly to $20.5 million from $5.3 million in 2020, due to investment in new equipment manufacturing, settlements of old payables, and securing of new longer-term financing with preferable terms.
• Non-GAAP EPS of $(0.07) compared to $(0.09) in last year.

Fourth Quarter Ended December 31, 2021, Financial Highlights (Compared to the average results of third and fourth quarter 2020¹):

• Revenue increased to $3.0 million from $2.5 million
• Gross margin increased to 54.8% from 27.3%
• Operating loss reached $4.6 million compared to a $2.3 million loss, driven mainly by $3.7 million of one-time expenses in 2021 pertaining to the legacy identification business.
• EBITDA increased to approx. $600 thousand from approx. $100 thousand
• Non-GAAP EPS of $(0.01)

Select announcements in past year and recent months:

• In March 2022, the Company was awarded by the Ministry of Justice and Administration of Croatia the first full-scale electronic monitoring contract in the country.
• In March 2022, the Company raised $4.65 million in a registered direct offering with a single accredited institutional investor, providing additional liquidity to execute the Company's business plan.
• In July 2021, launched a new project in California, USA valued at up to $4 million over up to 5 years to provide Juvenile programming and rehabilitation services.
• Won and launched a new project with the probation department in California, USA valued at up to $1 million, providing rehabilitation services.
• Won and launched a new project in California, USA valued at up to $240,000 per year, providing Juvenile Programming and Rehabilitative Services for out of custody juvenile.
• Announced a few contract wins supporting expansion into three US states, Texas, Idaho, and Wyoming, for the PureTrack GPS tracking platform serving adults and juveniles.
• Through a competitive national RFP process, won a $3.6 million national electronic monitoring project in Finland and scored highly by offering SuperCom's proprietary PureSecurity Electronic Monitoring Suite.
• Supercom's cyber security division, Safend, was selected by government security agency and cyber security enterprises to grow their cyber security protection programs. Orders from these customers alone are expected to exceed $350,000 in the fourth quarter of 2021.

Recent Business Highlights:

• Experienced an increase in market activity in our IoT segment, resulting in more RFPs and interest in our proprietary IoT segment technology and service offerings in Europe and the USA.
• Focused on building world-class engineering teams by launching a new HR program to attract top talent to build SuperCom's next-generation tracking and monitoring products.
• Released new generations and capabilities to SuperCom's smartphone-based monitoring products and solutions including support for the new OS and mobile phone architectures.
• Strengthened the Company's global sales division, recruiting a new VP of sales and sales managers with industry expertise and a shift from passive bidding to an active outreach sales strategy.
• Revenue from the USA continued to grow and reached 56% of the total revenue, consistent with SuperCom's business plan to shift focus from emerging countries to the USA and Europe.
• Revenue from the IoT division reached 73% of total revenue, compared to 65% last year.
• Experienced continued high customer retention and strong relationships with existing government customers globally.
• In February 2021, the Company appointed Ordan Trabelsi as the new CEO. Ordan has been with the Company since May 2013 as the second US employee and grew the business in the US to millions in annual revenues and profitability, representing over 1000% of organic growth. He has also led successful mergers and acquisitions and numerous financings in the past, which totaled over $100 million.
• In response to the Covid-19 pandemic, the Company launched a new solution, PureHealth for quarantine compliance, to help fight the spread of infectious diseases. Pilots have been launched and evaluated in various regions around the world

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• The Company has adjusted its manufacturing capacity to enable more flexibility and to scale production capacity in response to increased potential demand for its IoT products. The Company has also made its global supply chain more resilient by reducing dependencies on specific suppliers and geographies.

Management Commentary:

"We are proud of our achievements over the past year and since I entered the new role as president and CEO last February. For the first time in five years, we achieved growth in annual revenues. We also generated over $2 million in EBITDA, enhanced our operational infrastructure, strengthened our workforce towards future growth, and maintained technology leadership. We also raised the needed financial resources to support the implementation of our business plan with new longer-term financings with preferable terms. We settled old disputes, cleaned up old payables and reorganized legacy parts of our company for improved efficiency. We honed in our business plan and aligned our customers, partners and employees with our mission and goals. And in a global environment riddled with uncertainty of a global pandemic and geopolitical crises, we are humbled to say we feel confident about our future," commented Ordan Trabelsi, President and CEO of SuperCom.

"The past year further demonstrates the continued execution of our strategy to expand our footprint and positioning in our niche market of IoT tracking solutions for the public safety market. During 2021, we had a handful of new wins in the USA, expanding our reach to 3 new states, and launched another sizable project in California valued at up to $4 million. In Europe, we won another national electronic monitoring project in Finland, valued at $3.6 million, and just last week announced an award by the Ministry of Justice of Croatia for the first full-scale electronic monitoring contract in the country, adding Croatia to a long line of European countries selecting our proprietary technology.  With the release of some government restrictions related to COVID, we have seen an increase in RFP activity. This can allow us to continue with consistent new electronic monitoring project wins on top of the over 40 new project wins we've had in this space in recent years. Incremental revenues from these contracts offset declines from our legacy business of electronic identification mainly in Africa. Per our long-term strategy, we've been able to replace those legacy revenues with new customer revenues in the USA and Europe and generate growth this past year," continued Ordan.

"The momentum we are seeing in our IoT Tracking segment is driven on the one hand by correctional institutions looking for alternative solutions for the challenges associated with overpopulated prisons. And on the other hand, by our proprietary technology offerings which score highly on competitive tenders and help us displace incumbent vendors in countries around the world. Our electronic monitoring solutions address the challenges related to overcrowding, provide substantial cost savings, and reduce recidivism among offenders promoting public safety in communities worldwide," continued Ordan.

"We believe our investments in research and development, as well as in sales and marketing are paying off as we are seeing continued interest in our IoT products, which we expect will drive continued growth in the long-term. While the sales cycles for these contract wins can be long, the resulting business typically lasts for years, providing steady recurring revenue streams. We are confident that we will continue to see a healthy amount of new projects and wins in the space as we continue gaining market share and expanding our footprint," Ordan concluded.

Conference Call
The Company will hold a conference call today (March 31, 2022) at 4:30 p.m. Eastern time (11:30 p.m. Israel time) to discuss these results, followed by a question and answer session.

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

SuperCom Investor Relations:
[email protected]

¹ SuperCom was not required to and did not report its Q4 2020 financial results and accordingly, comparable Q4 2020 financial results are not available without unreasonable effort and expense. In order to provide a reasonable comparison, an average of the Company's financial quarterly results for its third and fourth quarters of 2020 is presented.

About SuperCom 
Since 1988, SuperCom has been a global provider of traditional and digital identity solutions, providing advanced safety, identification and security solutions to governments and organizations, both private and public, throughout the world. Through its proprietary e-government platforms and innovative solutions for traditional and biometrics enrollment, personalization, issuance and border control services, SuperCom has inspired governments and national agencies to design and issue secure Multi-ID documents and robust digital identity solutions to its citizens and visitors. SuperCom offers a unique all-in-one field-proven RFID & mobile technology and product suite, accompanied by advanced complementary services for various industries including healthcare and homecare, security and safety, community public safety, law enforcement, electronic monitoring, livestock monitoring, and building and access automation. For more information, visit www.supercom.com.

Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded or followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical or current facts. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from the statements made. Examples of these statements include, but are not limited to, statements regarding business and economic trends, the anticipated effects of the COVID-19 outbreak on travel and physical locations, the levels of consumer, business and economic confidence generally, the duration of the COVID-19 outbreak and severity of such outbreak, the pace of recovery following the COVID-19 outbreak, the effect on our supply chain, our ability to implement cost containment and business recovery strategies and resulting anticipated impact of such outbreak on our business, financial condition and results of operations, the adverse effects of the COVID-19 outbreak on our business or the market price of our ordinary shares, and other risks and uncertainties described in the forward looking statements and in the section captioned "Risk Factors" in our Annual Report on Form 20-F for the year ended December 31, 2020, filed with the U.S. Securities and Exchange Commission (the "SEC") on April 30, 2021, our reports on Form 6-K filed from time to time with the SEC and our other filings with the SEC. Except as required by law, we not undertake any obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this press release.

Results presented in this press release are based on management's estimated unaudited analysis of financial results for the presented periods. SuperCom's independent registered accounting firm has not audited the financial data discussed in this press release. During the course of SuperCom's quarter- and fiscal year-end closing procedures and review process, SuperCom may identify items that would require it to make adjustments, which may be material, to the information presented in this press release. As a result, the estimate financial results constitute forward-looking information and are subject to risks and uncertainties, including possible adjustments to such results.

Use of Non-GAAP Financial Information
In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), this release of operating results also contains non-GAAP financial measures, which SuperCom believes are the principal indicators of the operating and financial performance of its business. Management believes the non-GAAP financial measures provided are useful to investors' understanding and assessment of the Company's on-going core operations and prospects for the future, as the charges eliminated are not part of the day-to-day business or reflective of the core operational activities of the Company. Management uses these non-GAAP financial measures as a basis for strategic decisions, forecasting future results and evaluating the Company's current performance. However, such measures should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. Reconciliation of the non-GAAP measures to the most comparable GAAP measures are provided in the schedules attached to this release.

[Tables to follow]

* EBITDA is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization and other non-cash or one-time expenses.

SOURCE SuperCom Ltd.