Gross Margin Increased to 43% From 39% in H1 2008; EBITDA - $5.7M
in H1 2009; Strong Cash Flow - Outstanding Debt Decreased by $4.2M
Since 31.12.08; Non-Cash Impairment Charge of ~$3M in Q2 2009 ROSH
HAAYIN, Israel, August 13 /PRNewswire-FirstCall/ -- Pointer
Telocation Ltd. (Nasdaq Capital Market: PNTR, Tel-Aviv Stock
Exchange: PNTR) - a leading developer, manufacturer and provider of
high-end technology and products for AVL (Automatic Vehicle
Location) solutions for stolen vehicle retrieval, fleet management,
car & driver safety, vehicle security and asset management, and
a leading provider of RSA (Road Side Assistance) services,
announced today its financial results for the first six months and
second quarter of 2009. Pointer Telocation financial figures in the
second quarter of 2009 reflect a continuation of the effects of the
global and industrial recession. Despite product revenue weakness,
Pointer has improved gross margin. On a GAAP basis, the Company's
operating expenses, operating income and net income reflect a
non-cash impairment charge of approximately $3.0 million related to
the acquisition of the Cellocator business in 2007, which was
recorded in the second quarter of 2009. The impairment charge
reflects the Company's current estimate of the fair market value of
the business with certain customers in the current business
recession. Financial Highlights: Revenues: Pointer's revenue for
the second quarter of 2009 was $15.6 million, compared to $19.4
million in the second quarter of 2008. In the first six months of
2009, revenue was $31.6 million, compared to $37.9 million for the
same period of 2008. Pointer's revenues from services increased in
the second quarter of 2009 and in the first six months of 2009 to
68% of total revenues, as compared to 60% for each of these periods
in 2008. International activities for the second quarter and first
six months of 2009 were 23% and 24% of total revenue compared to
27% in each of the comparable periods in 2008. Gross Profit: For
the second quarter of 2009, gross profit was $6.6 million compared
to $7.4 million in the second quarter of 2008. As a percentage of
revenues, gross profit was 42.5% in the second quarter of 2009, as
compared to 38.3% in the second quarter of 2008.In the first six
months of 2009, gross profit was $13.5 million compared to $14.6
million in the first six months of 2008. Gross margin for the first
six months of 2009 was 43%, as compared to 39% for the first six
months of 2008. Gross margins were improved primarily due to
efficiency and cost reductions. Operating Income: Pointer's
operating loss was $1.5 million in the second quarter of 2009,
compared to operating income of $2.5 million for the second quarter
of 2008. The operating loss was primarily attributable to the
non-cash impairment of $3.0 million, attributable to a revised
estimate of the fair market value of the business with certain
customers of the Cellocator business which we acquired in September
2007. Excluding this non-cash impairment, operating income in the
second quarter of 2009 was $1.4 million. In the first six months of
2009, operating income was $226 thousand, compared to $4.8 million
for the same period of 2008. Excluding the non-cash impairment
mentioned above, operating income for the first six months of 2009
was $3.2 million. Net Income (loss): Pointer recorded net loss
attributable to Pointer shareholders of $2.8 million or $(0.61) per
share during the second quarter of 2009, as compared to net income
of $0.8 million in the second quarter of 2008 or $0.17 per share.
Net income attributable to a non-controlling interest in affiliates
in the second quarter of 2009 was $0.7 million compared to $0.3
million for the second quarter of 2008. For the second quarter of
2009 the net loss, before giving effect to the exclusion of those
earnings relating to non-controlling interests in accordance with
SFAS 160, was $2.2 million. For the first six months of 2009,
Pointer recorded net loss attributable to Pointer shareholders of
$2.8 million or $(0.61) per share, compared to net income of $1.55
million or $0.33 per share in the same period of 2008. Net income
attributable to non-controlling interest in affiliates in the first
six months of 2009 was $1.7 million compared to $0.9 million for
the second quarter of 2008. For the first six months of 2009, the
net loss, before giving effect to the exclusion of those earnings
relating to non-controlling interests in accordance with SFAS 160,
was $1.1 million. Non GAAP net income attributable to Pointer:
Pointer recorded non-GAAP net income of $0.9 million during the
second quarter of 2009, as compared to non-GAAP net income of $2.4
million in the second quarter of 2008. For the first six months of
2009, Pointer recorded non-GAAP net income of $1.7 million,
compared to non-GAAP net income of $4.2 million in the same period
of 2008. EBITDA: Pointer's EBITDA for the second quarter of 2009
and for the first six months of 2009 was $2.5 million and $5.7
million, respectively, as compared to $4.2 million and $8.0 million
in the comparable periods of 2008. Danny Stern, Pointer CEO, said:
"Pointer continued to feel the effects of the global and industrial
slowdown in Q2. We have taken actions to reduce expenses in order
to increase our profitability and lessen the effect of this
slowdown on the Company's strong cash flow and EBITDA. Our positive
cash flow and EBITDA, for example, enabled us to reduce our loans
and credit facilities by $4.2 million during the first six months
of 2009. Our services business was less effected by the slowdown.
We also continue to invest in new products and technology, and
believe that these investments will result in increased revenues
following a pickup in sales. During the second quarter we acquired
51% of Car2Go, a car sharing service provider operating in Israel.
Also, a recent Brazilian government decision requires that all new
vehicles in Brazil will be sold with SVR devices as of Q1 2010. As
a result, Pointer joined local partners in Brazil aiming to
increase services and products sales in this large and growing
market. Pointer continues to seek additional opportunities in the
global marketplace in order to leverage the expected economic
upturn", 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, August 13th, 2009 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: 03-918-0609 A replay of the
conference call will be available through Aug 14th, 2009 on the
Company's website at http://www.pointer.com/. 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. Non-GAAP financial measures consist of GAAP
financial measures adjusted to exclude amortization and impairment
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. 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. Reconciliation between results on a GAAP
and non-GAAP basis is provided in a table immediately following the
consolidated statements of cash flows in this press release.
Pointer uses EBITDA as a non-GAAP financial performance
measurement. EBITDA is calculated by adding back to net income
interest, taxes and depreciation and amortization including in
respect of our non-cash impairment charge related to the fair
market value of the business with certain customers from our
acquisition of Cellocator. 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 included in the financial tables 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,
Brazil, 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 June 30,
December 31, 2009 2008 Unaudited ASSETS CURRENT ASSETS: Cash and
cash equivalents $ 2,828 $ 2,708 Trade receivables, net 13,935
13,509 Other accounts receivable and prepaid expenses 3,021 2,774
Inventories 2,917 3,999 Total current assets 22,701 22,990
LONG-TERM ASSETS: Long-term accounts receivable and deferred
expenses 524 339 Investments in affiliate 9 - Severance pay fund
5,408 4,925 Property and equipment, net 7,846 7,998 Deferred income
taxes 1,006 1,037 Other intangible assets, net 10,203 14,894
Goodwill 49,582 50,416 Total long-term assets 74,578 79,609 Total
assets $ 97,279 $ 102,599 CONDENSED INTERIM CONSOLIDATED BALANCE
SHEETS U.S. dollars in thousands (except share and per share data)
June 30, December 31, 2009 2008 Unaudited LIABILITIES AND
SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term bank credit
and current maturities of long-term loans $ 7,344 $ 7,849 Trade
payables 7,872 8,613 Deferred revenues and customer advances 10,189
8,701 Other accounts payable and accrued expenses 5,880 5,792 Total
current liabilities 31,285 30,955 LONG-TERM LIABILITIES: Long-term
loans from banks 16,944 20,520 Long-term loans from shareholders
and others 3,189 3,305 Other long-term liabilities 284 257 Accrued
severance pay 6,570 6,375 Total long-term liabilities 26,987 30,457
Shareholders' equity *) 39,007 41,187 Total liabilities and
shareholders' equity $ 97,279 $ 102,599 *) Reclassification due to
the adoption of SFAS 160. INTERIM CONSOLIDATED STATEMENTS OF
OPERATIONS U.S. dollars in thousands (except share and per share
data) Six months Three months Year ended ended ended June 30, June
30, December 31, 2009 2008 2009 2008 2008 Unaudited Revenues:
Products $10,145 $15,321 $ 4,962 $ 7,714 $30,645 Services 21,414
22,564 10,612 11,694 46,010 Total revenues 31,559 37,885 15,574
19,408 76,655 Cost of revenues: Products 5,418 8,112 2,457 4,155
16,392 Services 12,105 14,673 6,247 7,567 29,869 Amortization of
intangible assets 492 490 246 245 980 Total cost of revenues 18,015
23,275 8,950 11,967 47,241 Gross profit 13,544 14,610 6,624 7,441
29,414 Operating expenses: Research and development, net 1,460
1,171 707 498 2,511 Selling and marketing 2,978 3,477 1,494 1,776
6,934 General and administrative 4,874 3,920 2,488 1,996 8,311
Amortization of intangible assets 1,047 1,235 523 628 2,365
Impairment of intangible assets 2,959 - 2,959 - - Total operating
expenses 13,318 9,803 8,171 4,898 20,121 Operating income (loss)
226 4,807 (1,547) 2,543 9,293 Financial expenses, net 1,096 2,175
422 1,424 4,054 Other(income) expenses, net 12 (19) - (2) (22)
Income (loss) before taxes on income (882) 2,651 (1,969) 1,121
5,261 Taxes on income 42 230 22 12 640 Income (loss) after Income
taxes (924) 2,421 (1,991) 1,109 4,621 Equity in losses of affiliate
191 - 191 - - Net income(loss) *) $(1,115) $ 2,421 $(2,182) $ 1,109
$ 4,621 Less: net income (loss)attributable to the noncontrolling
interest $ 1,737 *)$ 872 $ 673 *)$ 311 *)$ 2,248 Net income
attributable to Pointer's shareholders $(2,852) $ 1,549 $(2,855) $
798 $ 2,373 Basic net earnings (loss) per share $ (0.60) $ 0.34 $
(0.60) $ 0.17 $ 0.51 Diluted net earnings (loss) per share $ (0.61)
$ 0.33 $ (0.61) $ 0.17 $ 0.50 *) Reclassification due to the
adoption of SFAS 160. INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands Six months Three months Year ended ended
ended June 30, June 30, December 31, 2009 2008 2009 2008 2008
Unaudited Cash flows from operating activities: Net income (loss)
$(1,115) *)$2,421 $(2,182) *)$1,109 *)$ 4,621 Adjustments required
to reconcile net income (loss) to net cash provided by operating
activities: Depreciation, amortization and impairment 5,653 3,423
4,272 1,644 6,918 Accrued interest and exchange rate changes of
convertible debenture and long-term loans (129) 1,244 (104) 1,059
1,187 Accrued severance pay, net (255) 167 (143) (179) 619 Gain
from sale of property and equipment, net (138) (158) (63) (70) (36)
Equity in losses of affiliate 191 - 191 - - Amortization of
deferred stock-based compensation 270 140 126 69 350 Decrease
(increase) in trade receivables, net (659) (2,274) 283 169 (1,773)
Decrease (increase) in other accounts receivable and prepaid
expenses (155) (726) 524 117 (6) Decrease (increase) in inventories
345 (267) 24 (335) (2,088) Decrease (increase) in long-term
accounts receivable and deferred expenses (163) 48 (49) 48 23
Write-off of inventories - - - - 112 Increase in deferred income
taxes - - - - (178) Increase (decrease) in trade payables (686) 137
837 101 888 Increase in other accounts payable and accrued expenses
1,892 1,581 100 340 379 Net cash provided by operating activities
5,051 5,736 3,816 4,072 11,016 Cash flows from investing
activities: Purchase of property and equipment (1,337) (1,776)
(868) (1,057) (3,476) Proceeds from sale of property and equipment
559 379 337 137 605 Investments in affiliate (200) - (200) - -
Acquisition of subsidiary (a) (38) - (38) - - Increase in long-term
accounts receivable - (228) - (126) (357) Net cash used in
investing activities (1,016) (1,625) (769) (1,046) (3,228) Cash
flows from financing activities: Receipt of long-term loans from
banks - 7,099 - 7,099 9,064 Repayment of long-term loans from banks
(2,870) (2,088) (1,446) (1,076) (4,930) Repayment of long-term
loans from shareholders and others (15) (8,868) (8) (8,045)
(10,201) Proceeds from issuance of shares and exercise of warrants,
net - - - - 1,000 Dividend paid to the noncontrolling interest
(586) - (586) - Short-term bank credit, net (434) (625) 513 (851)
(970) Net cash provided by (used in) financing activities (3,905)
(4,482) (1,527) (2,873) (6,037) Effect of exchange rate on cash and
cash equivalents (10) (291) (31) (263) (243) Increase in cash and
cash equivalents 120 (662) 1,489 (110) 1,508 Cash and cash
equivalents at the beginning of the period 2,708 1,200 1,339 648
1,200 Cash and cash equivalents at the end of the period $ 2,828 $
538 $ 2,828 $ 538 $ 2,708 *) Reclassification due to the adoption
of SFAS 160. INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS U.S.
dollars in thousands Six months Three months Year ended ended ended
June 30, June 30, December 31, 2009 2008 2009 2008 2008 Unaudited
(a) Acquisition of subsidiary Fair value of assets acquired and
liabilities assumed at date of acquisition: Working capital (40) -
(40) - - Property and equipment 60 - 60 - - Customer list 24 - 24 -
- Goodwill 384 - 384 - - Accrued severance pay, net (12) - (12) - -
Shareholders loan (122) - (122) - - Minority interest (256) - (256)
- - 38 - 38 - - Reconciliation Table of Non-GAAP Measures U.S.
dollars in thousands Reconciliation of GAAP net income to non-GAAP
net income is as follows: Six months Three months Year ended ended
ended June 30 June 30 December 31 2009 2008 2009 2008 2008
Unaudited Net income (loss) as reported: $(1,115) $ 2,421 $(2,182)
$ 1,109 $ 4,621 Net income attributable to the non-controlling
interest (1,737) (872) (673) (311) (2,248) Amortization of
intangible assets 1,539 1,725 769 873 3,345 Impairment of
long-lived assets 2,959 - 2,959 - - Loan Discount - 695 - 695 704
Tax on income 42 230 22 12 640 Non-GAAP Net income $ 1,688 $ 4,199
$ 895 2,378 $ 7,062 Reconciliation of GAAP to NON-GAAP Operating
Results 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 and amortization
including in respect of our non-cash impairment charge related to
the fair market value of the business with certain customers from
our acquisition of Cellocator. 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 Six months Three months Year ended ended ended June 30
June 30 December 31 2009 2008 2009 2008 2008 Unaudited Net income
(loss) as reported: $(1,115) $ 2,421 $(2,182) $ 1,109 $ 4,621
Financial expenses, net 1,096 2,175 422 1,424 4,054 Tax on income
42 230 22 12 640 Depreciation, amortization and impairment 5,654
3,195 4,275 1,632 6,116 Non-GAAP Net income $ 5,677 $ 8,020 $ 2,537
$ 4,177 $ 15,431 Contact: Zvi Fried, V.P. and Yael Nevat, Chief
Financial Officer Commitment-IR.com Tel.; +972-3-572-3111 Tel:
+972-9-741-8866 E-mail: 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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