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Pointer Telocation Presents 2008 Results - Revenue of $76.6 Million Exceeds Company Guidance

Posted on: Wednesday, 25 February 2009, 03:57 CST

ROSH HAAYIN, Israel, February 25 /PRNewswire-FirstCall/ -- Pointer Telocation Ltd. (Nasdaq Capital Market: PNTR, Tel-Aviv Stock Exchange: PNTR) - a leading developer, manufacturer and operator of advanced command and control technologies and roadside assistance services for the automotive industry, announced today its financial results for the fiscal year ended December 31, 2008. The financial results for Pointer Telocation Ltd. (Pointer) for 2008 include for the first time a full year of financial results from the Cellocator business which was acquired in September 2007.

Pointer's 2008 financial results reflect major progress in the implementation of Pointer's business strategy to become a leading provider of technology and solutions to the automotive and insurance industries. Today, Pointer's products and services have a global presence with an installed product base of over 500,000 units in more than 25 countries.

Financial Highlights:

Revenues: Pointer's annual revenues for 2008 increased 48.5% to $76.6 million compared to $51.6 million in 2007. Pointer's annual revenue topped the Company's prior guidance released after the second quarter of 2008, which had upwardly revised its estimated annual revenue in 2008 to $76.0 million from $65.0 million.

Pointer's international operations accounted for 29% of its revenues in 2008 as compared to 17% in 2007. Pointer's revenues from products for the full year of 2008 accounted for 40% as compared with 30% of 2007 revenue.

The increase in total revenues and the growth in product sales and in international activities in the 2008 as compared to 2007, are primarily attributable to the inclusion of the operations of Cellocator in 2008.

Gross Profit:

In 2008, gross profit increased 55.6% to $29.4 million as compared to $18.9 million in 2007. As a percentage of revenues, gross margin was 38.4%, in the full year of 2008, compared to 36.6%in 2007.

Operating Income:

In 2008 Pointer recorded $9.3 million in operating income, compared to $4.2 million for the 2007. Operating income improved mainly because of growth in total revenue and an increase in gross margin. Operating expenses increased at a lower rate than the growth in revenue and gross margin.

Minority Interest:

For 2008 Pointer reported a $2.2 million minority share in the operations of Shagrir, compared to $1.4 million in full year 2007.

Net Income:

For the year ended December 31, 2008, Pointer recorded net income of $2.4 million or $0.5 per share as compared to net loss of $0.3 million or $(0.08) per share in 2007.

Non-GAAP net income:

For the year ended December 31, 2008, Pointer's non-GAAP net income was $7.1 million, as compared to non-GAAP net income of $2.2 million in 2007.

EBITDA:

Pointer's EBITDA in 2008 increased 72% to $15.4 million as compared to $9.0 million in 2007.

Balance Sheet Highlights:

Shareholder's Equity increased to $35.8 million at December 31, 2008 compared to $32.2 million at December 31, 2007.

Total liabilities from banks and other liabilities decreased to $31.7 million at December 31, 2008 from $36.8 million at December 31, 2007 due to Pointer's repayment of loans during 2008.

Danny Stern, Pointer CEO, said: "2008 was an excellent year for Pointer, especially in Israel. Our Mexican business, although still a very small part of our global business, continues to grow in subscribers and revenues, despite economic instability in that market. Events affecting the global vehicle industry have a significant bearing on the demand for our technology. We continue to closely monitor events affecting that industry; however, at this point in time, we cannot estimate their impact. On the other hand, our services business has a stable outlook even considering the current uncertainties in the global economy. Our Israeli subsidiary Shagrir, which provides Road Side Assistance and Stolen Vehicle Recovery services, enjoyed growth and profitability during 2008 and so is strongly positioned for 2009. Pointer's strong EBITDA enables us to maintain R&D investment in order to enhance our offering of products and services and competitive advantages in the coming years," concluded Mr. Stern.

Conference Call Information:

Pointer's management will host today, February 25th, 2009 a conference call with the investment community to review and discuss the financial results:

- The Conference Call will take place on 10:00 AM EST, 17:00 Israel time.

To listen to the call, please dial in to one of the following teleconferencing numbers. Please begin placing your calls at least 5 minutes before the conference call commences.

From USA: +1-866-527-8676 From Israel: 03-918-0610

A replay will be available from February 26, 2008 at the company website: http://www.pointer.com.

Reconciliation between results on a GAAP and Non-GAAP basis is provided in a table immediately following the condensed consolidated statements of cash flows contained in the press release. Pointer's non-GAAP net income adjusts GAAP net income to exclude amortization of acquired intangible assets and deferred income tax, as well as certain business combination accounting entries. The purpose of such adjustments is to give an indication of our performance exclusive of non-GAAP charges and other items that are considered by management to be outside of our core operating results.

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.

Our non-GAAP financial measures, such as non-GAAP net income and EBITDA, 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. Reconciliation between results on a GAAP and non-GAAP basis is provided in tables immediately following the condensed consolidated statement of cash flows.

About Pointer Telocation:

The Pointer Telocation Group, publiclly traded on Nasdaq (PNTR) and on TASE (PNTR), develops, manufactures, provides and operates advanced command and control technonogies for the automotive and cargo industries. With 500,000 installations in 25 countries around the world, The Pointer Group is Israel's leading exporter of state-of-the-art solutions for managing vehicle fleets. As a service provider, The Pointer Group operates through its subsidiary Shagrir Systems Ltd., that provides comprehensive solutions for the automotive markets in Israel, Argentina, Mexico and Romania.

The Pointer Telocation Group is headquartered in Rosh Ha'ayin, Israel. CEO is Danny Stern. For more information, please visit 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 CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands December 31, 2008 2007 Unaudited ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,708 $ 1,200 Trade receivables, net 13,509 11,756 Other accounts receivable and prepaid expenses 2,774 2,001 Inventories 3,999 2,657 Total current assets 22,990 17,614 LONG-TERM ASSETS: Long-term accounts receivable 339 337 Severance pay fund 4,925 4,866 Property and equipment, net 7,998 7,708 Deferred income taxes 1,037 941 Other intangible assets, net 14,894 18,058 Goodwill 50,416 50,712 Total long-term assets 79,609 82,622 Total assets $ 102,599 $ 100,236 CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands (except share and per share data) December 31, 2008 2007 Unaudited LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term bank credit and current maturities of long-term loans $ 7,849 $ 10,564 Trade payables 8,613 8,001 Deferred revenues and customer advances 8,958 8,253 Other accounts payable and accrued expenses 5,535 6,123 Total current liabilities 30,955 32,941 LONG-TERM LIABILITIES: Long-term loans from banks 20,520 18,460 Long-term loans from shareholders and others 3,305 5,767 Other long-term liabilities 257 89 Accrued severance pay 6,375 5,730 Convertible debentures - 1,979 30,457 32,025 MINORITY INTEREST 5,372 3,067 SHAREHOLDERS' EQUITY 35,815 32,203 Total liabilities and shareholders' equity $ 102,599 $ 100,236 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands (except per share data) Year ended December 31, 2008 2007 2006 Unaudited Revenues: Products $ 30,645 $ 15,821 $ 9,701 Services 46,010 35,806 32,211 Total revenues 76,655 51,627 41,912 Cost of revenues: Products 16,392 9,414 5,602 Services 29,869 23,034 20,786 Amortization of intangible assets 980 277 - Total cost of revenues 47,241 32,725 26,388 Gross profit 29,414 18,902 15,524 Operating expenses: Research and development, net 2,511 1,675 1,170 Selling and marketing 6,934 4,934 3,927 General and administrative 8,311 6,209 4,749 Amortization of intangible assets and impairment of long-lived assets 2,365 1,877 2,112 Other income, net - - (1,292) Total operating expenses 20,121 14,695 10,666 Operating income 9,293 4,207 4,858 Financial expenses, net 4,054 2,814 2,577 Other expenses (income), net (22) 12 (14) Income (loss) before taxes on income 5,261 1,381 2,295 Taxes on income 640 353 82 Income (loss) before minority interest 4,621 1,028 2,213 Minority interest 2,248 1,366 1,044 Net income (loss) $ 2,373 $ (338) $ 1,169 Basic net earnings (loss) per share $ 0.51 $ (0.08) $ 0.39 Diluted net earnings (loss) per share $ 0.50 $ (0.08) $ 0.31 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Year ended December 31, 2008 2007 2006 Unaudited Cash flows from operating activities: Net income (loss) $ 2,373 $ (338) $ 1,169 Adjustments required to reconcile net income (loss) to net cash provided by operating activities: Depreciation, amortization and impairment 6,918 5,273 4,490 Accrued interest and exchange rate changes of convertible debenture and long-term loans 1,187 750 137 Accrued severance pay, net 619 (70) (166) Gain from sale of property and equipment, net (36) (182) (563) Amortization of deferred stock-based compensation 230 783 251 Minority interest in earnings of subsidiary 2,248 1,366 1,044 Increase in trade receivables, net (1,773) (1,172) (1,167) Increase in other accounts receivable and prepaid expenses (6) (421) (36) Increase in inventories (2,088) (395) (490) Write-off of inventories 112 150 127 Deferred income taxes (178) (174) (99) Decrease (increase) in long-term accounts receivable 23 (141) 60 Increase in trade payables 888 730 1,049 Increase (decrease) in other accounts payable and accrued expenses 379 1,855 (400) Net cash provided by operating activities 10,896 8,014 5,406 Cash flows from investing activities: Increase in other account receivables (357) - - Purchase of property and equipment (3,476) (2,638) (2,277) Proceeds from sale of property and equipment 605 860 1,026 Acquisition of Cellocator (a) - (16,571) - Acquisition of other intangible assets - (117) - Net cash used in investing activities (3,228) (18,466) (1,251) Cash flows from financing activities: Receipt of long-term loans from banks 9,064 5,000 2,243 Repayment of long-term loans from banks (4,930) (4,347) (2,949) Receipt of long-term loans from shareholders and others - - 131 Repayment of long-term loans from others (10,201) (2,767) (4,529) Proceeds from issuance of shares and exercise of warrants, net 1,000 9,588 3,481 Receipts on account of shares - - 2,586 Short-term bank credit, net (970) (1,752) (973) Net cash provided by (used in) financing activities (6,037) 5,722 (10) Effect of exchange rate changes on cash and cash equivalents (123) 80 9 Increase (decrease) in cash and cash equivalents 1,508 (4,650) 4,154 Cash and cash equivalents at the beginning of the year 1,200 5,850 1,696 Cash and cash equivalents at the end of the year $ 2,708 $ 1,200 $ 5,850 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Year ended December 31, 2008 2007 2006 Unaudited (a) Acquisition of Cellocator and Matan activities: Fair value of assets acquired and liabilities assumed at date of acquisition: Working capital $ - $ (1,323) $ - Property and equipment - (151) - Customer related intangibles - (3,943) - Brand name - (1,775) - Developed technology - (4,890) Goodwill - (8,750) - Accrued severance pay, net - 20 - (20,812) - Fair value of shares issued - 1,430 Fair value of convertible debentures - 1,951 Accrued expenses - 860 - - 4,241 $ - $ (16,571) $ - Reconciliation Table of Non-GAAP Financial Measures U.S. dollars in thousands Reconciliation of GAAP net income to non-GAAP net income is as follows: Year ended December 31, 2008 2007 2006 Net income (loss) as reported: $ 2,373 $ (338) $ 1,169 Amortization of intangible assets and impairment of long-lived assets 3,345 2,154 2,112 Loan Discount 704 - - Tax on income 640 353 82 Non-GAAP Net income $ 7,062 $ 2,169 $ 3,363 Reconciliation of GAAP to NON-GAAP Operating Results U.S. dollars in thousands CONDENSED EBITDA Year ended December 31, 2008 2007 2006 Net income (loss) as reported $ 2,373 $ (338) $ 1,169 Non GAAP adjustment: Financial expenses, net 4,054 2,814 2,577 Taxes on income 640 353 82 Depreciation and amortization 6,116 4,787 4,889 Minority interest 2,248 1,366 1,044 EBITDA $ 15,431 $ 8,982 $ 9,761 Contact: Zvi Fried Yael Nevat, V.P. and Chief Financial Officer Commitment-IR.com Tel: +972-3-572-3111 Tel: +972-9-741 8866 E-mail: zvif@pointer.com E-mail: yael@commitment-IR.com

SOURCE Pointer Telocation Ltd

Source: PR Newswire

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