Pointer Telocation Ltd. Reports Record Results for the Financial Year 2014

ROSH HAAYIN, Israel, Feb. 26, 2015 /PRNewswire/ --

Full Year 2014 Highlights

• Net income of $12.7 million up 34% year-over-year;
• Revenues of $105.3 million, up 8% year-over-year;
• Non GAAP operating income of $9.5 million, up 20% year-over-year;
• Adjusted EBITDA of $12.5 million, up 16% year-over-year;
• MRM business: revenues of $69.4 million, up 11% YoY with non GAAP operating income of $8.9 million, up 30% YoY.

Pointer Telocation Ltd. (Nasdaq: PNTR) - a leading developer, manufacturer and operator of Mobile Resource Management (MRM) services, announced today its financial results for the three month period and fiscal year ended December 31, 2014.

David Mahlab, Pointer's Chief Executive Officer, commented on the results: "We are pleased with our performance in 2014. While we faced some significant currency headwinds, especially in the second half of the year, in local currency terms our business grew nicely in all of our various regions.  2014 was particularly important from a strategic point of view. We purchased our partners' shares in the Shagrir operation in Israel, acquired our South African subsidiary and towards the end of the year transferred our roadside assistance business in Israel into a new subsidiary which we plan to spin-off in the second half of 2015.

"We invested strongly in our SaaS infrastructure during 2014, and during 2015 we plan to continue moving our offering to the cloud with the aim of fully offering it as a SaaS model. We also plan on launching new MRM related products and services to additional vertical markets. We expect our MRM business to continue to grow throughout 2015, benefitting from the growth in subscribers as well as the recurring revenues from our subscriber base."

Financial Summary for the Fourth Quarter of 2014

Revenues were $26.6 million compared to $28.1 million in the fourth quarter of 2013, a decrease of 5%. The significant strengthening of the US Dollar in the period versus the various local currencies in which the Company generates sales in, caused a reduction in the revenue level when translated into US Dollars. In local currency terms, revenues slightly increased year-over-year.

International activities for the fourth quarter of 2014 accounted for 40% of total revenue, compared to 34% in the fourth quarter of 2013.

Revenues from products were $8.3 million (31% of revenues) compared to $9.6 million (34% of revenues) in the fourth quarter of 2013, a decrease of 14%. Pointer's revenues from services were $18.3 million (69% of revenues) compared to $18.4 million (66% of revenues) in the fourth quarter of 2013, a decrease of 1%.

Gross profit was $8.7 million (32.9% of revenues) compared to $9.1 million (32.5% of revenues) in the fourth quarter of 2013, a decrease of 4%.

Operating income on a GAAP basis was $0.2 million compared to operating income of $1.2 million in the fourth quarter of 2013. On a non-GAAP basis, operating income was $2.3 million (8.8% of revenues) compared with $2.1 million (7.6% of revenues), an increase of 9%.

Net income on a GAAP basis was $9.4 million or $1.23 per diluted share compared with $3.9 million or $0.65 per diluted share in the fourth quarter of 2013. The net income included a non-cash tax income from a raised tax asset amounting to $9.8 million, which was recorded following the restructuring and separation of the RSA business into a separate entity, and the merger of profitable operations.

Net income on a non-GAAP basis was $2.3 million (8.6% of revenues) compared to a non-GAAP net income of $1.9 million (6.8% of revenues) in the fourth quarter of 2013, an increase of 20%. Fully diluted earnings based on non-GAAP net income in the fourth quarter was $0.29 per share, compared to $0.33 per share in the fourth quarter of 2013.

Adjusted EBITDA was $2.6 million compared with $2.7 million in the fourth quarter of 2014, a decrease of 4%.

Financial Summary for the Full Year of 2014

Revenues for 2014 were $105.3 million compared to $97.9 million in 2013, an increase of 8%. In local currency terms, revenues increased by 10%.

International activities for 2014 accounted for 33% of total revenues compared to 29% in 2013.

Revenues from products were $33.1 million (31% of revenues) compared to $34.7 million (35% of revenues) in 2013, a decrease of 5%. Revenues from services were $72.2 million (69% of revenues) compared to $63.2 million (65% of revenues) in 2013, an increase of 14%.

Revenues from the MRM business were $69.4 million, compared with $62.3 million in 2013, an increase of 11.4%.

Gross profit was $35.6 million (33.8% of revenues) in 2014, an increase of 12.5% compared to $31.6 million (32.3% of revenues) in 2013. Non-GAAP Gross profit in the MRM business was $31.5 million (45.3% of revenues) compared with $27.2 million (43.6% of revenues) in 2013, a growth of 15.9%.

Operating income on a GAAP basis was $6.6 million (6.2% of revenues) in 2014 compared to operating income of $6.0 million (6.2% of revenues) in 2013. Operating income on a non-GAAP basis was $9.5 million (9.0% of revenues) in 2014 compared to operating income of $7.8 million (8.0% of revenues) in 2013.

Operating income on a non-GAAP basis at the MRM business was $8.9 million, compared with $6.8 million in 2013, an increase of 30%.

Net income on a GAAP basis was $12.7 million (12% of revenue) or $1.74 per diluted share compared to $7.3 million (7.4% of revenues) or $1.10 per diluted share in 2013. Net income on a non-GAAP basis was $7.9 million (7.5% of revenues) or $1.02 per diluted share, compared to non-GAAP net income of $7.4 million (7.6% of revenues) or $1.30 in 2013.

Adjusted EBITDA was $12.5 million (11.9% of revenues), compared to $10.8 million (11.0%) in 2013, an increase of 16%.

In connection with Pointer's plan to spin-off its Shagrir business to shareholders, Pro-forma information providing certain details of the financial performance of the Shagrir RSA business and MRM business separately, are provided in Exhibit A for informational purposes only.

Conference Call Information

Pointer Telocation's management will host a conference call with the investment community today, Thursday, February 26^th, 2015 to review and discuss the financial results, and will also be available to answer questions.  

The conference call will commence at 9:30 AM Eastern Time, 4:30 PM Israel time.

To participate in the call, please dial in to one of the teleconference numbers below. Please begin placing your call at least 5 minutes before the time set for the commencement of the conference call.

From USA: +1-888-407-2553
From Israel: 03-918-0610

A replay will be available the following day on the Company's website: www.pointer.com

Forward Looking Statements

This press release contains historical information and forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 with respect to the business, financial condition and results of operations of the Company. The words "believe," "expect," "anticipate," "intend," "seems," "plan," "aim," "should" and similar expressions are intended to identify forward-looking statements. Such statements reflect the current views, assumptions and expectations of the Company with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in the markets in which the Company operates and in general economic and business conditions, loss or gain of key customers and unpredictable sales cycles, competitive pressures, market acceptance of new products, inability to meet efficiency and cost reduction objectives, changes in business strategy and various other factors, both referenced and not referenced in this press release. Various risks and uncertainties may affect the Company and its results of operations, as described in reports filed by the Company with the Securities and Exchange Commission from time to time. The Company does not assume any obligation to update these forward-looking statements.

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.

Pointer uses adjusted EBITDA and non-GAAP net income as a non-GAAP financial performance measurement.

We calculate adjusted EBITDA by adding back to net income, net loss from discontinued operations, financial expenses, taxes, depreciation, amortization and impairment of goodwill and intangible assets, the effects of non-cash stock-based compensation expense, profit raise from gaining control in subsidiary previously treated by the equity method, and related goodwill adjustment.

We calculate non-GAAP net income by adding back to net income, net loss from discontinued operations, the effects of non-cash stock based compensation expenses, amortization and impairment of long lived assets, non-cash tax expenses resulting from timing differences relating to the amortization of acquisition-related intangible assets, profit raise from gaining control in subsidiary previously treated by the equity method, acquisition related goodwill adjustment,  onetime 'other expense' related to the termination cost of a former general manger of a Pointer subsidiary and restructuring in a subsidiary, loss from sale of subsidiary, one time financial expenses resulting from the devaluation of Israeli Shekel denominated bank deposits and non-cash tax income from raised tax asset.

The purpose of such adjustments is to give an indication of our performance exclusive of non-GAAP charges that are considered by management to be outside of our core operating results.

Adjusted EBITDA and non-GAAP net income are 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. We believe that these non-GAAP measures help investors to understand our current and future operating cash flow and performance, especially as our acquisitions have resulted in amortization and non-cash items that have had a material impact on our GAAP profits. Adjusted EBITDA and non GAAP net income should not be considered in isolation or as a substitute for comparable measures calculated and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies.

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 list of customers and products installed in more than 45 countries. 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. The Company's top management and the development center are located in the Afek Industrial Area of Rosh Ha'ayin, Israel.

For more information, please visit http://www.pointer.com

SOURCE Pointer Telocation Ltd.

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