Record Revenue: Increased 64.5% to $37.9M in the First Six Months
of 2008 From $23M in the First Six Months of 2007 ROSH HAAYIN,
Israel, August 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 six months and second quarter of 2008. Pointer Telocation
presents consecutive improvements in the second quarter of 2008,
based on the successful merger of Cellocator's business and strong
internal growth. Better revenue breakdown was accompanied by total
revenue and income growth which yielded improved margins. Both
technology and services sectors presented better results. As a
result of its financial results in the first six months of this
year, Pointer is raising its guidance for fiscal year 2008.
Pointer's revised guidance is as follows: Revenues for 2008 are now
estimated to be $76 million, which is a 17% increase over prior
guidance which we released in January 2008. Operating income is
estimated to be $8 million, which is a 33.3% increase over such
prior guidance. Financial Highlights: Revenues: Pointer's revenues
for the second quarter of 2008 increased by 66%, to $19.4 million,
from $11.7 million in the comparable period in 2007. In the first
six months of 2008, revenues were $37.9 million, a 64.5% increase
over the same period of 2007. Pointer's revenues from services in
each of the second quarter and the first six months of 2008 were
60% of total revenues, as compared with 76% and 75% for these
periods in 2007 respectively. International activities for the
second quarter of 2008 were 27% of total revenue compared to 11.1%
in the comparable period in 2007. Gross Profit: For the second
quarter of 2008, gross profit increased 73.1% to $7.4 million from
$4.3 million in the second quarter of 2007. As a percentage of
revenues, gross profit was 38.3% in the second quarter of 2008, as
compared to 36.8% in the second quarter of 2007. In the first six
months of 2008, gross profit increased 74.6% to $14.6 million from
$8.4 million in the first six months of 2007. Gross margin for the
first six months of 2008 was 38.6%, as compared to 36.3% for the
first six months of 2007. Gross margins were improved primarily due
to the revenue mix. Operating Income: Pointer's operating income
increased 202% to $2.5 million in the second quarter of 2008,
compared to operating income of $0.8 million for the second quarter
of 2007. Operating margin was 13.1% in the second quarter of 2008,
as compared to approximately 7.2% in the second quarter of 2007. In
the first six months of 2008, operating income increased 168% to
$4.8 million, compared to $1.8 million for the same period of 2007.
Operating margin for the first six months of 2008 was 12.7%,
compared to 7.8% for the first six months of 2007. Operating
figures for the first six month of 2008 improved mainly because
revenue increased 64.5%, more than the 49% increase in operating
expenses. Financial Expenses: The second quarter of 2008 included a
onetime non cash expense due to a loan discount in the amount of
$0.7 million as part of a loan replacement. Minority share: For the
second quarter of 2008 and six months ended June 30, 2008, Pointer
reported a $311 thousand and $872 thousand minority share in the
operations of Shagrir, compared to $270 thousand and $704 thousand
in the comparable periods of 2007. Pointer holds 56.6% interest in
Shagrir. Net Income: Pointer recorded net income of $0.8 million
during the second quarter of 2008, as compared to net loss of $388
thousand in the second quarter of 2007. For the first six months of
2008, Pointer recorded net income of $1.55 million, compared to net
loss of $568 thousand in the same period of 2007. Non GAAP net
income: Pointer recorded non-GAAP net income of $2.4 million during
the second quarter of 2008, as compared to non-GAAP net income of
$149 thousand in the second quarter of 2007. For the first six
months of 2008, Pointer recorded non-GAAP net income of $4.2
million, compared to non-GAAP net income of $566 thousand in the
same period of 2007. Non-GAAP net income for the second quarter of
2008 was increased by $0.7 million due to the one-time non-cash
expense relating to the loan discount, which was not reflected in
prior periods. 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 non-cash expense relating to the loan
discount discussed above. EBITDA: Pointer's EBITDA for the second
quarter of 2008 and for the first six months of 2008 was $4.2
million and $8.0 million, respectively, as compared to $1.9 million
and $3.9 million in the comparable periods of 2007. Total
Shareholders' Equity: Pointer's total shareholders' equity
increased by 14% during the first months of 2008 to $36.6 million.
Danny Stern, Pointer CEO, said: "Pointer continues to grow and
profit. We have a healthy geographic breakdown of revenue and an
excellent mix between services and products. International revenue
was responsible for 27% of revenue in Q2 2008, and was derived from
activities in over 25 countries. Our technology and products sales
generated 40% of our revenues. Our strong cash generative business
model yielded six month EBITDA of $8.0 million, which enables us to
broaden our products and services offering to more customers and
look toward expansion into more countries. The recently announced
partnership in Romania is a first and important step in duplicating
Shagrir's successful economies-of-scale business and operational
model in new territories. Based upon our financial results in the
first six months of 2008, and with better visibility of our
business potential both in services and in products, we have
increased our financial guidance for fiscal year 2008. The
increasing demand for high-quality technology and services from
automotive manufacturers, car dealers, fleet operators as well as
insurance companies, continues to provide favourable business
opportunities for our company", 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, 2008 on 9:00 AM EST, 16:00 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: +1-800-994-4498 From
Israel: 03-918-0610 International: +972-3-918-0610 A replay of the
conference call will be available through Aug 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 June 30,
December 31, 2008 2007 Unaudited ASSETS CURRENT ASSETS: Cash and
cash equivalents $ 538 $ 1,200 Trade receivables, net 15,480 11,756
Other accounts receivable and prepaid expenses 2,954 2,001
Inventories 2,806 2,657 Total current assets 21,778 17,614
LONG-TERM ASSETS: Long-term accounts receivable and deferred
expenses 664 337 Severance pay fund 5,771 4,866 Property and
equipment, net 9,038 7,708 Deferred income taxes 1,080 941 Other
intangible assets, net 17,431 18,058 Goodwill 56,653 50,712 Total
long-term assets 90,637 82,622 Total assets $ 112,415 $ 100,236
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS U.S. dollars in
thousands (except share and per share data) June 30, December 31,
2008 2007 Unaudited LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT
LIABILITIES: Short-term bank credit and current maturities of
long-term loans $ 9,708 $ 10,564 Trade payables 9,068 8,001
Deferred revenues and customer advances 11,896 8,253 Other accounts
payable and accrued expenses 5,669 6,123 Total current liabilities
36,341 32,941 LONG-TERM LIABILITIES: Long-term loans from banks
24,702 18,460 Long-term loans from shareholders and others 3,178
5,767 Other long-term liabilities 197 89 Accrued severance pay
6,903 5,730 Convertible debentures - 1,979 34,980 32,025 MINORITY
INTEREST 4,481 3,067 SHAREHOLDERS' EQUITY: Share capital - Ordinary
shares of NIS 3 par value: Authorized - 8,000,000 shares at June
30, 2008 and December 31, 2007, respectively; Issued and
outstanding - 4,612,875 shares at June 30, 2008 and December 31,
2007, respectively 3,139 3,139 Additional paid-in capital 117,052
116,910 Accumulated other comprehensive income 4,485 1,766
Accumulated deficit (88,063) (89,612) Total shareholders' equity
36,613 32,203 Total liabilities and shareholders' equity $ 112,415
$ 100,236 INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS U.S.
dollars in thousands (except share and per share data) Year Six
months ended Three months ended ended December June 30, June 30,
31, 2008 2007 2008 2007 2007 Unaudited Revenues: Products $ 15,321
$ 5,772 $ 7,714 $ 2,823 $ 15,821 Services 22,564 17,263 11,694
8,867 35,806 Total revenues 37,885 23,035 19,408 11,690 51,627 Cost
of revenues: Products 8,112 3,666 4,155 1,760 9,414 Services 14,673
11,000 7,567 5,631 23,034 Amortization of intangible assets 490 -
245 - 277 Total cost of revenues 23,275 14,666 11,967 7,391 32,725
Gross profit 14,610 8,369 7,441 4,299 18,902 Operating expenses:
Research and development, net 1,171 675 498 343 1,675 Selling and
marketing 3,477 2,243 1,776 1,131 4,934 General and administrative
3,920 2,811 1,996 1,551 6,209 Amortization of intangible assets
1,235 847 628 432 1,877 Total operating expenses 9,803 6,576 4,898
3,457 14,695 Operating income 4,807 1,793 2,543 842 4,207 Financial
expenses, net 2,175 1,385 1,424 860 2,814 Other income (expenses),
net 19 15 2 5 (12) Income before taxes on income 2,651 423 1,121
(13) 1,381 Taxes on income 230 287 12 105 353 Net income (loss)
before minority interest 2,421 136 1,109 (118) 1,028 Minority
interest 872 704 311 270 1,366 Net income (loss) $ 1,549 $ (568) $
798 $ (388) $ (338) Basic net earnings (loss) per share $ 0.3 $
(0.14) $ 0.17 $ (0.09) $ (0.08) Diluted net earnings (loss) per
share $ 0.33 $ (0.25) $ 0.17 $ (0.12) $ (0.08) INTERIM CONSOLIDATED
STATEMENTS OF CASH FLOWS U.S. dollars in thousands Six months ended
Three months Year ended ended June 30, June 30, December 2008 2007
2008 2007 31, 2007 Unaudited Cash flows from operating activities:
Net income (loss) $ 1,549 $ (568) $ 798 $ (388) $ (338) Adjustments
required to reconcile net income (loss) to net cash provided by
operating activities: Depreciation ,amortization and impairment
3,423 2,319 1,644 1,125 5,273 Accrued interest and exchange rate
changes of convertible debenture and long-term loans 1,244 185
1,059 199 750 Accrued severance pay, net 167 9 (179) 63 (70) Gain
from sale of property and equipment, net (158) (139) (70) (59)
(182) Amortization of deferred stock-based compensation 140 306 69
134 783 Minority interest in earnings of subsidiary 872 854 311 311
1,366 Decrease (increase) in trade receivables, net (2,274) (1,994)
169 (660) (1,172) Decrease (increase) in other accounts receivable
and prepaid expenses (726) (548) 117 (12) (421) Decrease (increase)
in inventories (267) 131 (335) 13 (395) Decrease (increase) in
long-term accounts receivable and deferred expenses 48 (2) 48 (1)
(141) Write-off of inventories - 15 - - 150 Increase in deferred
income taxes - - - - (174) Increase in trade payables 137 463 101
138 730 Increase in other accounts payable and accrued expenses
1,581 1,563 340 5 1,855 Net cash provided by operating activities
5,736 2,594 4,072 883 8,014 Cash flows from investing activities:
Purchase of property and equipment (1,776) (1,770) (1,057) (950)
(2,638) Proceeds from sale of property and equipment 379 501 137
247 860 Increase in long-term accounts receivable (228) - (126) - -
Acquisition of Cellocator (a) - - - - (16,571) Acquisition of other
intangible assets - (135) - (135) (117) Net cash used in investing
activities (1,625) (1,404) (1,046) (838) (18,466) Cash flows from
financing activities: Receipt of long-term loans from banks 7,099 -
7,099 - 5,000 Repayment of long-term loans from banks (2,088)
(1,946) (1,076) (1,446) (4,347) Repayment of long-term loans from
shareholders and others (8,868) (1,340) (8,045) (684) (2,767)
Proceeds from issuance of shares and exercise of warrants, net -
9,593 - 7,742 9,588 Short-term bank credit, net (625) (847) (851)
501 (1,752) Net cash provided by (used in) financing activities
(4,482) 5,460 (2,873) 6,113 5,722 Effect of exchange rate on cash
and cash equivalents (291) 52 (263) 33 80 Increase in cash and cash
equivalents (662) 6,702 (110) 6,191 (4,650) Cash and cash
equivalents at the beginning of the period 1,200 5,850 648 6,361
5,850 Cash and cash equivalents at the end of the period $ 538 $
12,552 $ 538 $ 12,552 $ 1,200 CONDENSED INTERIM CONSOLIDATED
STATEMENTS OF CASH FLOWS U.S. dollars in thousands Six months ended
Year ended June 30, December 31, 2008 2007 2007 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 Measures U.S. dollars in thousands Reconciliation of GAAP
net income to non-GAAP net income is as follows: Year ended Six
months ended Three months ended December June 30, June 30, 31, 2008
2007 2008 2007 2007 Unaudited Net income (loss) as reported $ 1,549
$ (568) $ 798 $ (388) $ (338) Amortization of intangible assets and
impairment of long-lived assets 1,725 847 873 432 2,154 Loan
Discount 695 - 695 - - Taxes on income 230 287 12 105 353 Non-GAAP
Net income $ 4,199 $ 566 $ 2,378 $ 149 $ 2,169 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,
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 ended Six months ended Three months ended December
June 30, June 30, 31, 2008 2007 2008 2007 2007 Unaudited Net income
(loss) as reported $ 1,549 $ (568) $ 798 $ (388) $ (338) Non GAAP
adjustment: Financial expenses, net 2,175 1,385 1,424 860 2,814
Taxes on income 230 287 12 105 353 Depreciation and amortization
3,195 2,060 1,632 1,044 4,787 Minority interest 872 704 311 270
1,366 EBITDA $ 8,021 $ 3,868 $ 4,177 $ 1,891 $ 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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