Pointer Telocation Reports Third Quarter 2017 Financial Results

ROSH HAAYIN, Israel, Nov. 15, 2017 /PRNewswire/ --

Financial Highlights of the Quarter

• Record revenues of $20.2 million, up 27% year-over-year;
• Recurring service revenues of $13.3 million, up 27% year-over-year;
• Record EBITDA of $3.6 million, up 87% year-over-year;
• Total subscribers reached 249,000, an increase of 26% year-over-year;

Pointer Telocation Ltd. (NASDAQ CM: PNTR)  (TASE: PNTR) - a leading provider of telematic services and technology solutions for Fleet Management, Mobile Asset Management and Internet of Vehicles, announced its financial results for the third quarter of 2017.^[1]

Financial summary for the third quarter of 2017

Revenues for the third quarter of 2017 increased 27% to a record $20.2 million as compared to $15.9 million in the third quarter of 2016.

Revenues from products in the third quarter of 2017 increased 28% to $6.9 million (34% of revenues) compared to $5.4 million (34% of revenues) in the comparable period of 2016.

Revenues from recurring services in the third quarter of 2017 increased 27% to $13.3 million (66% of revenues) compared to $10.5 million (66% of revenues), in the comparable period of 2016. The growth in service revenue was primarily due to the growth in the subscriber base which grew by 51,000 subscribers since September 30, 2016 and 10,000 subscribers since June 30, 2017.

Gross profit was $10.5 million (51.8% of revenues) compared to $7.8 million (49.2% of revenues) in the third quarter of 2016.

Operating income on a GAAP basis was $2.9 million (14.4% of revenues), an increase of 108%, compared with $1.4 million (8.8% of revenues) in the third quarter of 2016.

Non-GAAP operating income was $3.1 million (15.3% of revenues), an increase of 71% compared to $1.8 million (11.4% of revenues) in the third quarter of 2016.

GAAP net income was $1.9 million (9.3% of revenues), an increase of 163% compared to $0.7 (4.5% of revenues) million reported in the third quarter of 2016.

Non-GAAP net income was $2.3 million (11.4% of revenues), an increase of 61%, compared with $1.4 million (9.0% of revenues) in the third quarter of 2016.

EBITDA was $3.6 million (17.8% of revenues), an increase of 87% compared with $1.9 million (12.1% of revenues) in the third quarter of 2016.

Cash and cash equivalents totaled $7.0 million and total debt was $11.6 million. Operating cash flow in the quarter was $3.3 million.

Management Comment

David Mahlab, Pointer's Chief Executive Officer, commented: "We are very pleased with our financial results, showing very strong revenue growth, record EBITDA and strong margins across the board. The integration of our recent acquisition in Brazil of Cielo's operation is progressing as planned and we believe that we will enjoy the full benefit of the cost synergies in 2018. In South Africa, we recently announced an acquisition, in line with our growth strategy, which we expect will also contribute positively in the coming quarters."

Mr. Mahlab continued, "We have recently seen increased interest in Cellotrack Nano, our new solution for Mobile Asset Management. We have a number of prospects undergoing evaluations and we believe it will be a long-term growth engine for Pointer. We are also pleased with the increased penetration of our connected car solution following our intensive R&D and marketing efforts over the past few quarters. Pointer's continued solid results represent the ongoing successful execution of our long-term growth strategy."

Conference Call Information Pointer Telocation's management will host a conference call today, at 7:00am Pacific Time, 10:00 Eastern Time, 17:00 Israel time. On the call, management will review and discuss the results. To listen to the call, please dial in to one of the following teleconferencing numbers. Please begin placing your call a few minutes before the conference call commences.

Dial in numbers are as follows:

From the USA: +1-888-281-1167; From Israel: 03-918-0685; From the UK 0-800-917-5108

A replay will be available a few hours following the call on the company's website.

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 EBITDA and Non-GAAP net income as Non-GAAP financial performance measurements.

Pointer calculates EBITDA by adding back to net income financial expenses, taxes, depreciation and amortization and impairment of goodwill and intangible assets.

Pointer calculates Non-GAAP net income by adding back to net income the effects of non-cash stock based compensation expenses, amortization and impairment of long lived assets, non-cash tax expenses, other expenses of retirement costs, spin-off related expenses and losses and acquisition related one-time costs.

The purpose of such adjustments is to give an indication of the Company's performance exclusive of Non-GAAP charges that are considered by management to be outside of the Company's core operating results.

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. Management believes that these non-GAAP measures help investors to understand the Company's current and future operating cash flow and performance, especially as the Company's acquisitions have resulted in amortization and non-cash items that have had a material impact on the Company's GAAP profits. 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 the Company's 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

For over 20 years, Pointer has rewritten the rules for the Mobile Resource Management (MRM) market and is a pioneer in the Connected Car segment. Pointer has in-depth knowledge of the needs of this market and has developed a full suite of tools, technology and services to respond to them. The vehicles of the future will be intimately networked with the outside world, enhancing and optimizing the in-car experience.

Pointer's innovative and reliable cloud-based software-as-a-service (SAAS) platform extracts and captures an organization's critical mobility data points – from office, drivers, routes, points-of-interest, logistic-network, vehicles, trailers, containers and cargo. The SAAS platform analyzes the raw data converting it into valuable information for Pointer's customers providing them with actionable insights and thus enabling the customers to improve their bottom line and increase their profitably.

For more information, please visit http://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.

* In calculating diluted non-GAAP net income per share, the diluted weighted average number of shares outstanding excludes the effects of stock-based compensation expenses in accordance with FASB ASC 718.

[1] On June 8, 2016 Pointer spun off its Israeli subsidiary, Shagrir Group Vehicle Services Ltd., through which Pointer carried out its road side assistance (RSA) activities and listed Shagrir's shares for trade on the Tel Aviv Stock Exchange. The results of Shagrir until that date are included in Pointer's results as discontinued operation.

Contacts:

Yaniv Dorani, CFO
Tel.: +972-3-572 3111
E-mail: [email protected]

Gavriel Frohwein/Ehud Helft, GK Investor Relations
Tel: +1-646-688-3559
E-mail: [email protected]

SOURCE Pointer Telocation Ltd.

Related Links

http://www.pointer.com