Revenue Increased 65.7% to $58.6M in the First Nine Months of 2008
ROSH HA'AYIN, Israel, November 13 /PRNewswire-FirstCall/ -- Pointer
Telocation Ltd. (Nasdaq Capital Market: PNTR, Tel-Aviv Stock
Exchange: PNTR) - a leading provider of Automatic Vehicle Location
(AVL) technology, stolen vehicle retrieval services, fleet
management, car & driver safety, public safety, vehicle
security, asset management and road side assistance, announced
today its financial results for the first nine months and third
quarter of 2008. Financial Highlights: Revenues: Pointer's revenues
for the third quarter of 2008 increased by 68%, to $20.7 million,
from $12.3 million in the comparable period in 2007. In the first
nine months of 2008, revenues were $58.6 million, a 65.7% increase
over the same period of 2007. Pointer's revenues from services in
the third quarter and the first nine months of 2008 were 58% and
59%, respectively, of total revenues, as compared with 72% and 74%
for these periods in 2007 respectively. International activities
for the third quarter of 2008 were 31.5% of total revenue compared
to 13.7% in the comparable period in 2007. Gross Profit: For the
third quarter of 2008, gross profit increased 76.2% to $7.7 million
from $4.3 million in the third quarter of 2007. As a percentage of
revenues, gross profit was 37% in the third quarter of 2008, as
compared to 35% in the third quarter of 2007. In the first nine
months of 2008, gross profit increased 75.1% to $22.3 million from
$12.7 million in the first nine months of 2007. Gross margin for
the first nine months of 2008 was 38%, as compared to 36% for the
first nine months of 2007. Operating Income: Pointer's operating
income increased 145% to $2.3 million in the third quarter of 2008,
compared to operating income of $0.9 million for the third quarter
of 2007. Operating margin was 11% in the third quarter of 2008, as
compared to approximately 7.6% in the third quarter of 2007. In the
first nine months of 2008, operating income increased 160% to $7.1
million, compared to $2.7 million for the same period of 2007.
Operating margin for the first nine months of 2008 was 12%,
compared to 7.7% for the first nine months of 2007. Minority share:
For the third quarter of 2008 and nine months ended September 30,
2008, Pointer reported a $431 thousand and $1.3 million minority
share in the operations of Shagrir, compared to $178 thousand and
$0.9 million in the comparable periods of 2007. Pointer holds 56.6%
interest in Shagrir. Net Income: Pointer presents net income of
$0.7 million during the third quarter of 2008, as compared to net
income of $3 thousand in the third quarter of 2007. For the first
nine months of 2008, Pointer recorded net income of $2.3 million,
compared to net loss of $565 thousand in the same period of 2007.
Non GAAP net income: Pointer recorded non-GAAP net income of $1.6
million during the third quarter of 2008, as compared to non-GAAP
net income of $497 thousand in the third quarter of 2007. For the
first nine months of 2008, Pointer's non-GAAP net income was $5.8
million, compared to non-GAAP net income of $1 million in the same
period of 2007. Non-GAAP net income is defined as net income
excluding certain non-cash expenses, including amortization of
acquired intangible assets, deferred income tax, impairment of
long-lived assets and a onetime non-cash expense relating to a loan
discount in the amount of $0.7 million as part of a loan
replacement which we reported in the second quarter of 2008.
EBITDA: Pointer's EBITDA for the third quarter of 2008 and for the
first nine months of 2008 was $3.8 million and $11.9 million,
respectively, as compared to $1.9 million and $5.8 million in the
comparable periods of 2007. Total Shareholders' Equity: Pointer's
total shareholders' equity increased by 18% during the first nine
months of 2008 to $38 million. Danny Stern, Pointer CEO, said:
"Pointer continued to grow during the third quarter. We recently
launched a new asset management product, which is expected to
enhance sales in new untapped markets targeted by the company. Our
products are designed to improve customers' ability to be efficient
in vehicle utilization and energy consumption, and therefore are
properly suited for a market that is savings driven. The company is
closely monitoring changes in the car industry and volatility in
exchange rates relating to the recent financial crisis, which
currently impact our visibility into the coming months'
performance. We are preparing ourselves to adjust our expenditures
to revenues. However, on the other hand, we also see this period as
an opportunity for business initiatives, since the company is
positioned very well globally. Our cash generative business yielded
nine month EBITDA of $11.9 million, and these earnings enable us to
maintain our R&D efforts and to enhance our competitive
advantages", 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, November 13th, 2008
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: 03-918-0610
International: +972-3-918-0610 A replay of the conference call will
be available through November 14th, 2008 on the Company's website
at http://www.pointer.com/. Reconciliation between results on a
GAAP and Non-GAAP basis. To supplement the consolidated financial
statements presented in accordance with generally accepted
accounting principles ("GAAP"), the Company uses non-GAAP measures
of net income and EBITDA. A reconciliation between results in a
GAAP and Non-GAAP basis is provided in a table immediately
following the Condensed Interim Consolidated Statements of Cash
Flows. Net income is adjusted from results based on GAAP to exclude
amortization of acquired intangible assets and deferred income tax,
as well as certain business combination accounting entries and a
non-cash expense due to a loan discount as part of a loan
replacement. These non-GAAP financial measures are provided to
enhance overall understanding of the Company's current financial
performance and prospects for the future. Specifically, the Company
believes the non-GAAP results provide useful information to both
management and investors as these non-GAAP results exclude
amortization of acquired intangible assets and deferred income tax,
as well as certain business combination accounting entries, and a
one-time non-cash expense due to a loan discount, that the Company
believes are not indicative 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. Pointer also uses EBITDA as a non-GAAP
financial performance measurement. EBITDA is calculated by adding
back to net income interest, taxes, depreciation, amortization and
minority interest. 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 also provided
in a table following the Condensed Interim Consolidated Statements
of Cash Flows 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, 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 September 30,
December 31, 2008 2007 Unaudited ASSETS CURRENT ASSETS: Cash and
cash equivalents $ 2,447 $ 1,200 Trade receivables, net 16,234
11,756 Other accounts receivable and prepaid expenses 2,703 2,001
Inventories 3,419 2,657 Total current assets 24,803 17,614
LONG-TERM ASSETS: Long-term accounts receivable and deferred
expenses 612 337 Severance pay fund 5,540 4,866 Property and
equipment, net 8,975 7,708 Deferred income taxes 1,058 941 Other
intangible assets, net 16,431 18,058 Goodwill 55,598 50,712 Total
long-term assets 88,214 82,622 Total assets $ 113,017 $ 100,236
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS U.S. dollars in
thousands (except share and per share data) September 30, December
31, 2008 2007 Unaudited LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES: Short-term bank credit and current maturities
of long-term loans $ 9,062 $ 10,564 Trade payables 10,725 8,001
Deferred revenues and customer advances 10,563 8,253 Other accounts
payable and accrued expenses 5,184 6,123 Total current liabilities
35,534 32,941 LONG-TERM LIABILITIES: Long-term loans from banks
24,135 18,460 Long-term loans from shareholders and others 3,321
5,767 Other long-term liabilities 245 89 Accrued severance pay
6,856 5,730 Convertible debentures - 1,979 34,557 32,025 MINORITY
INTEREST 4,865 3,067 SHAREHOLDERS' EQUITY 38,061 32,203 Total
liabilities and shareholders' equity $ 113,017 $ 100,236 INTERIM
CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands
(except share and per share data) Year Nine months ended Three
months ended ended December September 30, September 30, 31, 2008
2007 2008 2007 2007 Unaudited Revenues: Products $ 24,029 $9,172 $
8,708 $ 3,400 $ 15,821 Services 34,567 26,184 12,003 8,921 35,806
Total revenues 58,596 35,356 20,711 12,321 51,627 Cost of revenues:
Products 12,837 5,850 4,725 2,184 9,414 Services 22,757 16,759
8,084 5,759 23,034 Amortization of intangible assets 735 33 245 33
277 Total cost of revenues 36,329 22,642 13,054 7,976 32,725 Gross
profit 22,267 12,714 7,657 4,345 18,902 Operating expenses:
Research and development, net 1,792 1,126 621 451 1,675 Selling and
marketing 5,408 3,360 1,931 1,117 4,934 General and administrative
6,130 4,255 2,210 1,444 6,209 Amortization of intangible assets
1,818 1,238 583 391 1,877 Total operating expenses 15,148 9,979
5,345 3,403 14,695 Operating income 7,119 2,735 2,312 942 4,207
Financial expenses, net 3,252 2,044 1,077 659 2,814 Other income
(expenses), net 19 (17) - (32) (12) Income before taxes on income
3,886 674 1,235 251 1,381 Taxes on income 320 357 90 70 353 Net
income (loss) before minority interest 3,566 317 1,145 181 1,028
Minority interest 1,303 882 431 178 1,366 Net income (loss) $ 2,263
$ (565) $ 714 $ 3 $ (338) Basic net earnings (loss) per share $
0.49 $ (0.14) $ 0.15 $ 0.00 $ (0.08) Diluted net earnings (loss)
per share $ 0.48 $ (0.14) $ 0.15 $ 0.00 $ (0.08) INTERIM
CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands
Year Nine months ended Three months ended ended December September
30, September 30, 31, 2008 2007 2008 2007 2007 Unaudited Cash flows
from operating activities: Net income (loss) $ 2,263 $ (565) $ 714
$ 3 $ (338) Adjustments required to reconcile net income (loss) to
net cash provided by operating activities: Depreciation,
amortization and impairment 5,036 3,415 1,613 1,096 5,273 Accrued
interest and exchange rate changes of convertible debenture and
long-term loans 1,214 694 (30) 509 750 Accrued severance pay, net
365 (80) 198 (89) (70) Gain from sale of property and equipment,
net (133) (149) 25 (10) (182) Amortization of deferred stock-based
compensation 226 366 86 60 783 Minority interest in earning of
subsidiary 1,303 1,241 431 387 1,366 Increase in trade receivables,
net (3,313) (1,648) (1,039) 346 (1,172) Increase in other accounts
receivable and prepaid expenses (551) (559) 175 (11) (421) Decrease
(increase) in inventories (1,088) (317) (821) (448) (395) Decrease
(increase) in long-term accounts receivable and deferred expenses
49 31 1 33 (141) Write-off of inventories 75 150 75 135 150
Increase in deferred income taxes - - - - (174) Increase in trade
payables 1,958 756 1,821 293 730 Increase (decrease) in other
accounts payable and accrued expenses 163 1,839 (1,418) 276 1,855
Net cash provided by operating activities 7,567 5,174 1,831 2,580
8,014 Cash flows from investing activities: Purchase of property
and equipment (2,537) (2,106) (761) (336) (2,638) Proceeds from
sale of property and equipment 512 759 133 258 860 Increase in
long-term accounts receivable (247) - (19) - - Acquisition of
Cellocator (a) - (16,332) - (16,332) (16,571) Acquisition of other
intangible assets - (135) - - (117) Net cash used in investing
activities (2,272) (17,814) (647) (16,410) (18,466) Cash flows from
financing activities: Receipt of long-term loans from banks 9,254
5,000 2,155 5,000 5,000 Repayment of long-term loans from banks
(2,727) (3,392) (639) (1,446) (4,347) Repayment of long-term loans
from shareholders and others (10,394) (2,024) (1,526) (684) (2,767)
Proceeds from issuance of shares and exercise of warrants, net
1,000 9,588 1,000 (5) 9,588 Short-term bank credit, net (1,137)
(441) (512) 406 (1,752) Net cash provided by (used in) financing
activities (4,004) 8,731 478 3,271 5,722 Effect of exchange rate on
cash and cash equivalents (44) (61) 247 (113) 80 Increase in cash
and cash equivalents 1,247 (3,970) 1,909 (10,672) (4,650) Cash and
cash equivalents at the beginning of the period 1,200 5,850 538
12,552 5,850 Cash and cash equivalents at the end of the period $
2,447 $ 1,880 $ 2,447 $ 1,880 $ 1,200 CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands
Nine months Three months Year ended ended ended December September
30, September 30, 31, 2008 2007 2008 2007 2007 Unaudited (a)
Acquisition of Cellocator: Fair value of assets acquired and
liabilities assumed at date of acquisition: Working capital $ - $
(1,220) $ - $ (1,220) $ (1,323) Property and equipment - (151) -
(151) (151) Customer relationships - (3,876) - (3,876) (3,943)
Brand name - (1,749) - (1,749) (1,775) Developed Technology -
(4,886) - (4,886) (4,890) Goodwill - (8,645) - (8,645) (8,750)
Accrued severance pay, net - 107 - 107 20 - (20,420) - (20,420)
(20,812) Fair value of shares issued - 1,428 - 1,428 1,430 Fair
value of convertible debentures - 1,952 - 1,952 1,951 Accrued
expenses - 708 - 708 860 - 4,088 - 4,088 4,241 $ - $ (16,332) $ - $
(16,332) $(16,571) Reconciliation Tables of Non-GAAP Measures U.S.
dollars in thousands Reconciliation of GAAP net income to non-GAAP
net income is as follows: Year Nine months ended Three months ended
ended December September 30, September 30, 31, 2008 2007 2008 2007
2007 Unaudited Net income (loss) as reported $ 2,263 $ (565) $ 714
$ 3 $ (338) Amortization of intangible assets and impairment of
long-lived assets 2,553 1,241 828 424 2,154 Loan Discount 704 - 9 -
- Taxes on income 320 357 90 70 353 Non-GAAP Net income $ 5,840 $
1,033 $ 1,641 $ 497 $ 2,169 Reconciliation of GAAP net income to
EBITDA 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, amortization and
minority interest. 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 Year Nine
months ended Three months ended ended December September 30,
September 30, 31, 2008 2007 2008 2007 2007 Unaudited Net income
(loss) $ as reported $ 2,263 (565) $ 714 $ 3 $ (338) Non GAAP
adjustment: Financial expenses, net 3,252 2,044 1,077 659 2,814
Taxes on income 320 357 90 70 353 Depreciation and amortization
4,719 3,061 1,525 1,002 4,787 Minority interest 1,303 882 431 178
1,366 EBITDA $ $ 11,857 5,779 $ 3,837 $ 1,912 $ 8,982 Contact: Zvi
Fried, V.P. and Chief Financial Officer Tel: +972-3-572 3111
E-mail: Yael Nevat, Commitment-IR.com Tel: +972-9-741 8866 E-mail:
DATASOURCE: Pointer Telocation Ltd CONTACT: Contact: Zvi Fried,
V.P. and Chief Financial Officer, Tel.; +972-3-572 3111, E-mail: ;
Yael Nevat, Commitment-IR.com, Tel: +972-9-741 8866, E-mail:
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