PNTR - Pointer Telocation Reports Results for the Full Year and the Fourth Quarter of 2018

ROSH HAAYIN, Israel, Feb. 28, 2019 /PRNewswire/ -- Pointer Telocation Ltd. (Nasdaq: 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 full year and fourth quarter ended December 31, 2018.

Financial Highlights for Full Year of 2018 Compared to Full Year of 2017

• Total revenues of $77.8 million, similar as in previous year and up 5% on a constant currency basis
• Service revenues of $52.5 million, up 1% as reported and up 9% on a constant currency basis
• Operating income of $9.8 million (13% of revenue), down 5%
• Net income of $6.9 million, down from $16.5 million. 2017 net income included $9.2 million onetime income resulting from the realization of a deferred tax asset
• Non-GAAP net income of $9.6 million, up 2%
• Adjusted EBITDA of $13.6 million same as in 2017
• Cash, net of debt, totaled $3.5 million. Generated $8.6 million in operating cash flow during the year
• Total subscribers reached 276,000, an increase of 7%  

Financial Highlights for Fourth Quarter 2018 Compared to Fourth Quarter 2017

• Total revenues of $18.4 million as reported, down from $18.9 million as reported,  up 8% on a constant currency basis
• Service revenues of $12.7 million, down from $13.4 million as reported, up 8% on a constant currency basis
• Operating income of $2.0 million (11% of revenue), down 15%
• Net income of $1.4 million, down from $11.1 million. Fourth quarter 2017 net income included $9.2 million onetime income resulting from the realization of a deferred tax asset
• Non-GAAP net income of $2.1 million, down 5%
• Adjusted EBITDA of $3.0 million, down 5%

Management Commentary

David Mahlab, Pointer's Chief Executive Officer, commented:
"The fourth quarter capped a solid year for Pointer, though we had currency exchange rate headwinds. In 2018, we strengthened our balance sheet, reversing the Company from a position of net debt to net cash, for the first time in more than a decade. Also, in the fourth quarter, we continued our trend of positive operating cash flow despite elevated investments in R&D and Sales and Marketing as planned in order to support our North America market expansion. Despite continued currency exchange headwinds, we delivered double-digit operating margin and positive earnings on both a GAAP and non-GAAP basis, demonstrating the leverage we have built into our operating model."

"In the year, we announced major wins of new contracts that will escalate our products sales in 2019. We focus on increasing our presence in the U.S. and we already started shipping new products to this market during the fourth quarter, and we expect deliveries to ramp this year to additional US based customers. Meanwhile, in Brazil, we secured several new service contracts in 2018 that will have an impact in the third and fourth quarters of 2019 as well. All of this should help us achieve our growth goals in 2019."

"Looking forward in 2019, we expect our markets and opportunities to continue to expand. We expect to see double-digit growth in our overall revenues, driven in part by 30% or greater product revenue growth in 2019 especially in the North American market"

Yaniv Dorani, Pointer's Chief Financial Officer, commented:

"In 2018, we continued to strengthen our balance sheet and improve our capital structure. In the fourth quarter, we generated $1.4 million in operating cash flow and ended the quarter with $3.5 million in net cash, continuing the trend of positive net cash from the previous quarter. In 2018, we reduced our debt by $5.1 million, and we remain on track for continued positive operating cash flow and long-term debt reduction in 2019."

Full Year 2018 Financial Summary Compared to Full Year 2017

Fourth Quarter 2018 Financial Summary Compared to Fourth Quarter 2017

In 2018, revenues from services increased 1% as reported to $52.5 million as compared to $52.0 million. In local currency terms, revenues from services increased by 9%.  Revenues from products decreased 4% as reported in 2018 to $25.2 million from $26.2 million. In local currency terms, revenues from products decreased by 3%. The currency exchange rate impact on total revenues for the year 2018 compared to the year 2017 was approximately $4.2 million.

In the fourth quarter of 2018, revenues from services decreased 5% as reported to $12.7 million as compared to $13.4 million. In local currency terms, revenues from services increased by 8%. Revenues from products increased 4% as reported to $5.7 million from $5.5 million in the same period a year ago. In local currency terms, revenues from products increased by 9%. The currency exchange rate impact on total revenues in the fourth quarter compared to a year ago was approximately $1.9 million.

Conference Call Information 

As previously announced, Pointer Telocation's management will host a conference call today, at 10:00 a.m. Eastern Time, 3:00 p.m. UK time, 5:00 p.m. 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 +1-877-407-0789 or 1-201-689-8562

From Israel 1-809-406-247

From the UK 0-800-756-3429

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

The call will also be accompanied by a live webcast over the Internet and accessible at http://public.viavid.com/index.php?id=133125.

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, adjusted EBITDA, Non-GAAP operating income, Non-GAAP net income and presentation of results in a constant currency based on the local currencies in which operations are conducted prior to giving effect to exchange rates into U.S. dollars as Non-GAAP financial performance measurements.

Pointer calculates EBITDA by adding back to net income financial expenses, taxes and depreciation and amortization of intangible assets. Pointer calculates adjusted EBITDA by adding back to EBITDA Stock-based compensation expenses. Pointer calculates Non-GAAP operating income by adding back to operating income the effects of non-cash stock-based compensation expenses, amortization of long-lived assets, other expenses of retirement costs and losses and acquisition related one-time costs. Pointer calculates Non-GAAP net income by adding back to net income the effects of non-cash stock-based compensation expenses, amortization of long lived assets, non-cash tax expenses, other expenses of retirement costs and acquisition related one-time costs.

Pointer calculates results on a constant currency based on the local currencies on a nominal value, without giving effect to conversion into U.S. dollar.

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 and to neutralize fluctuations in local currencies against the dollar.

EBITDA, Adjusted EBITDA, Non-GAAP operating and net income and presentation of results on a constant currency basis are provided to investors to complement the results provided in accordance with GAAP, as management believes these measures help to illustrate underlying operating trends in the Company's business and uses these measures 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, adjusted EBITDA, Non-GAAP operating and net income and presentation of results on a constant currency basis 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 profitability. 

For more information, please visit http://www.pointer.com, the content of which does not form a part of this press release.

Risks Regarding Forward Looking Statements

Certain statements made herein that use words such as "estimate", "project", "intend", "expect", "believe", "may", "might", "predict", "potential", "anticipate", "plan" or similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. For example, when the Company discusses its expectations for growth in 2019, and, in particular, in North America, and the impact of contracts on growth as well as continuation of certain trends, it is using forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties that could cause the actual results, performance or achievements of the Company to be materially different from those that may be expressed or implied by such statements, including, among others, changes in general economic and business conditions. For additional information regarding these and other risks and uncertainties associated with the Company's business, reference is made to the Company's reports filed from time to time with the U.S. Securities and Exchange Commission. The Company does not undertake to revise or update any forward-looking statements for any reason.

* 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.

Company contact: 
Yaniv Dorani, CFO  
Tel: +972-3-5723111  
E-mail: yanivd@pointer.com

Investor Relations Contact at Hayden IR, LLC:
Brett Maas                  
Tel: +1-646-536-7331   
E-mail: brett@haydenir.com

Dave Fore  
Tel: +1-206-395-2711  
E-mail: dave@haydenir.com 

SOURCE Pointer Telocation Ltd.