Pointer Telocation Ltd. Reports Record Results for the Financial Year 2013

  Pointer Telocation Ltd. Reports Record Results for the Financial Year 2013  GAAP net income for the fourth quarter and full year of 2013 was $3.9 million and $7.3 million, respectively;  Non-GAAP net income was $1.9 million and $7.4 million, up 17% and 26% year-on-year, respectively;  Fourth quarter revenues were up 28% year-on-year, full year revenues were up 15%;  Revenues from international activities in the fourth quarter of 2013 were up to 33% of total revenues, compared with 25% in the previous year.  PR Newswire  ROSH HAAYIN, Israel, Feb. 27, 2014  ROSH HAAYIN, Israel, Feb. 27, 2014 /PRNewswire/ -- Pointer Telocation Ltd. (Nasdaq CM: PNTR) - a leading developer, manufacturer and operator of Mobile Resource Management (MRM) and roadside assistance services for the automotive industry, announced today its financial results for the three month period and fiscal year ended December 31, 2013.  Financial Summary for the Fourth Quarter of 2013  Revenues increased 28% to $28.1 million compared to $21.9 million in the fourth quarter of 2012. International activities for the fourth quarter of 2013 accounted for 33% of total revenues compared to 25% in the fourth quarter of 2012.  Revenues from products increased 22% to $9.6 million (34% of revenues) compared to $7.9 million (36% of revenues) in the fourth quarter of 2012. Pointer's revenues from services increased 32% to $18.4 million (66% of revenues) compared to $14.0 million (64% of revenues) in the fourth quarter of 2012. Revenues from products and services increased due to growth in MRM activities.  Gross Profit was $9.1 million (32.5% of revenues), an increase of 28% compared to $7.1 million (32.5% of revenues) in the fourth quarter of 2012.  Operating Income was $1.2 million (4.3% of revenues) compared to an operating income of $1.2 million (5.5% of revenues) in the fourth quarter of 2012.  Profit from continuing operations attributable to Pointers' shareholders was $3.7 million (13% of revenues), or $0.68 per share compared to net income of 609 thousand (2.8% of revenues), or $0.11 per share, in the fourth quarter of 2012. Profit from continuing operations included $2.9 million of onetime profit in connection with the Brazilian transaction (comprised of $3.3 million in profit from the Brazilian transaction offset by a one-time $0.4 million 'other expense' related to the termination cost of the former general manager of Pointer's subsidiary).  Net income was $3.9 million (14.0% of revenues) compared with $896 thousand (4.1% of revenues) in the fourth quarter of 2012.  Non GAAP net income was $1.9 million (6.8% of revenues), an increase of 17% compared to non-GAAP net income of $1.6 million (7.5% of revenues) in the fourth quarter of 2012.  Adjusted EBITDA was $2.7 million, which is comparable to that of the fourth quarter of 2012.  Financial Summary for the Full Year of 2013  Revenues for 2013 increased 15% to $97.9 million compared to $84.8 million in 2012. International activities for 2013 accounted for 29% of total revenues compared to 26% in 2012.  Revenues from products increased 14% to $34.6 million (35% of revenues) compared to $30.4 million (36% of revenues) in 2012. Revenues from services increased 16% to $63.2 million (64% of revenues) compared to $54.4 million (64% of revenues) in 2012. Revenues from products and services increased due to growth in MRM activities.  Gross Profit was $31.6 million (32.3% of revenues) in 2013, an increase of 12.4% compared to $28.1 million (33.1% of revenues) in 2012.  Operating Income was $6 million (6.1% of revenues) in 2013 compared to operating income of $5.1 million (6.0% of revenues) in 2012.  Profit from continuing operations attributable to Pointers' shareholders was $6.3 million (6.4% of revenues), or $1.14 per share, compared to net income of $1.2 million (plus the part of loss from discontinued operations) (2.1% of revenues), or $0.35 per share in 2012.  Net income was $7.3 million (7.4% of revenues) compared to $ 1.6 million (1.9% of revenues) in 2012.  Non GAAP net income was $7.4 million (7.6% of revenues), compared to non-GAAP net income of $5.9 million (6.9% of revenues) in 2012.  Adjusted EBITDA was $10.8 million, an increase of 2% compared to $10.6 million 2012.  David Mahlab, Pointer's Chief Executive Officer, commented on the results: "We are delighted with our performance in 2013, including our strong growth in revenue and full year net income as well as our general improvement in profitability resulting from growth in our MRM activities. We continue investing in infrastructure and recently released additional new mobile resource management (MRM) technologies and services which will improve our profitability, competitive market position and grow our business in 2014."  Mr. Mahlab further continued: "Towards the end of 2013 we fully consolidated our Brazilian subsidiary, and post year-end, we purchased the remaining minority holdings of our subsidiary Shagrir, reaching full ownership. These two transactions greatly simplify our company structure and will enable us to better benefit from the synergies across our various operations throughout the world. We currently see global opportunities and keep searching for additional growth through acquisitions mainly in developing markets, in which we can leverage our infrastructure and know-how, to penetrate the market and grow our business."  Conference Call Information  Pointer Telocation's management will host today, Thursday, February 27^th, 2014 a conference call with the investment community to review and discuss the financial results, and will also be available to answer questions.  The conference call will commence at 9:30 AM Eastern Time, 4:30 PM Israel time.  To participate in the call, please dial in to one of the teleconference numbers below. Please begin placing your call at least 5 minutes before the time set for the commencement of the conference call.  From USA: + 1-888-281-1167, From Israel: 03-918-0644  A replay will be available from February 28^th, 2014 at the company website: 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.  Pointer uses adjusted EBITDA and non-GAAP net income as a non-GAAP financial performance measurement.  We calculate adjusted EBITDA by adding back to net income, net loss from discontinued operations, financial expenses, taxes, depreciation, the effects of non-cash stock-based compensation expense, amortization and non-cash impairment of goodwill, intangible assets and profit raise from gaining control in subsidiary previously treated by the equity method.  We calculate non-GAAP net income by adding back to net income, net loss from discontinued operations, the effects of non-cash stock based compensation expenses, amortization of intangibles related to acquisitions and non-cash tax expenses resulting from timing differences relating to the amortization of acquisition-related intangible assets, goodwill and profit raise from gaining control in subsidiary previously treated by the equity method and a onetime 'other expense' related to the termination cost of a former general manger of a Pointer subsidiary.  The purpose of such adjustments is to give an indication of our performance exclusive of non-GAAP charges that are considered by management to be outside of our core operating results.  Adjusted EBITDA and non-GAAP net income are 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. We believe that these non-GAAP measures help investors to understand our current and future operating cash flow and performance, especially as our acquisitions have resulted in amortization and non-cash items that have had a material impact on our GAAP profits. Adjusted EBITDA and non GAAP net income should not be considered in isolation or as a substitute for comparable measures calculated and should be read in conjunction with our 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  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 list of customers and products installed in more than 45 countries. 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. The Company's top management and the development center are located in the Afek Industrial Area of Rosh Ha'Ayin, Israel.  For more information, please visit http://www.pointer.com  Forward Looking Statements  This press release contains historical information and forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 with respect to the business, financial condition and results of operations of the Company. The words "believe," "expect," "anticipate," "intend," "seems," "plan," "aim," "should" and similar expressions are intended to identify forward-looking statements. Such statements reflect the current views, assumptions and expectations of the Company with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in the markets in which the Company operates and in general economic and business conditions, loss or gain of key customers and unpredictable sales cycles, competitive pressures, market acceptance of new products, inability to meet efficiency and cost reduction objectives, changes in business strategy and various other factors, both referenced and not referenced in this press release. Various risks and uncertainties may affect the Company and its results of operations, as described in reports filed by the Company with the Securities and Exchange Commission from time to time. The Company does not assume any obligation to update these forward-looking statements.  Contact: Zvi Fried, V.P. and Chief Financial Officer       Kenny Green/Ehud Helft, GK                                                     Investor Relations Tel.: +972-3-572 3111                               Tel.: +1 646 201 9246  E-mail: zvif@pointer.com                            E-mail: Pointer@gkir.com     CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands (except share and per share data)                                                December 31,                                               2013             2012 ASSETS CURRENT ASSETS: Cash and cash equivalents                     $     3,349  $     3,685 Restricted cash                               81               108 Trade receivables                             19,793           16,215 Other accounts receivable and prepaid         2,033            2,069 expenses Inventories                                   6,038            3,982 Total current assets                          31,294           26,059 LONG-TERM ASSETS: Long-term accounts receivable                 546              582 Severance pay fund                            9,349            8,125 Property and equipment, net                   13,975           10,364 Investment and long term loans to affiliate   -                814 Other intangible assets, net                  3,045            2,242 Goodwill                                      55,455           47,190 Total long-term assets                        82,370           69,317 Total assets                                  $   113,664   $    95,376    CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands (except share and per share data)                                                December 31,                                               2013             2012 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term bank credit and current            $    10,624  $    11,129 maturities of long-term loans Trade payables                                14,793           11,248 Deferred revenues and customer advances       7,900            6,954 Other accounts payable and accrued expenses   10,611           7,251 Total current liabilities                     43,928           36,582 LONG-TERM LIABILITIES: Long-term loans from banks                    9,301            9,339 Long-term loans from shareholders and others  1,320            925 Other long-term liabilities                   5,739            3,765 Accrued severance pay                         10,317           9,419                                               26,677           23,448 COMMITMENTS AND CONTINGENT LIABILITIES EQUITY: Pointer Telocation Ltd's shareholders' equity: Share capital                                 3,878            3,871 Additional paid-in capital                    120,996          120,290 Accumulated other comprehensive income        1,876            1,127 Accumulated deficit                           (89,220)         (95,540) Total Pointer Telocation Ltd's shareholders'  37,530           29,748 equity Non-controlling interest                      5,529            5,598 Total equity                                  43,059           35,346 Total liabilities and shareholders' equity    $   113,664   $    95,376    CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands (except per share data)                                Year ended            Three months ended                                December 31,         December 31,                               2013       2012       2013        2012 Revenues: Products                      $      $      $        $                                    34,662    30,402    9,640      7,877 Services                      63,195     54,430     18,439      14,009 Total revenues              97,857       84,832     28,079      21,886 Cost of revenues: Products                    20,763       17,988     5,964       4,582 Services                    45,497       38,573     12,987      10,182 Amortization and impairment of intangible    -            181        - assets Total cost of revenues      66,260       56,742     18,951      14,764 Gross profit                31,597       28,090     9,128       7,122 Operating expenses: Research and development    3,244        2,716      948         680 Selling and marketing       10,398       9,067      2,874       2,484 General and                 10,539       9,232      3,374       2,246 administrative Other expenses              403          -          403         - Amortization of             967          1,987      328         501 intangible assets Total operating expenses    25,551       23,002     7,927       5,911 Operating income            6,046        5,088      1,201       1,211 Financial expenses, net     1,077        1,628      292         343 Other expenses (income),    (3,299)      5          (3,299)     (7) net Income before taxes on      8,268        3,455      4,208       875 income Taxes on income             1,337        861        283         123 Income after taxes on       6,931        2,594      3,925       752 income Equity in gains of         340          38         -           144 affiliate Income from continuing      7,271        2,632      3,925       896 operations Loss from discontinued      -            995        -           - operations, net Net income                  $       $      $        $                                  7,271        1,637   3,925       896 Profit from continuing operations attributable to: Equity holders of the       6,320        1,203      3,756       609 parent Non-controlling interests   951          434        169         287                             $       $      $        $                                  7,271         1,637    3,925        896 Earnings per share from continuing operations attributable to Pointer Telocation Ltd's shareholders: Basic net earnings per     $  1.14    $  0.35  $  0.68   $  0.11 share Diluted net earnings per   $  1.1     $  0.35  $  0.65   $  0.11 share  CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands                                        Year ended            Three months ended                                        December 31,          December 31,                                       2013       2012       2013       2012  Cash flows from operating  activities:                                       $      $      $      $      Net income                        7,271     1,637     3,925                                                                               896  Adjustments required to reconcile  net income to net cash provided by  operating activities:  Depreciation, amortization and       4,049      5,546      1,281      1,276  impairment  Profit raise from gaining control  in subsidiary previously treated by  (3,299)    -          (3,299)    -  the equity method  Accrued interest and exchange rate  changes of debenture and long-term   21         118        58         99  loans  Accrued severance pay, net           (397)      91         (283)      (12)  Changes in long-term loans to        -          -          -          (34)  affiliate  Gain from sale of property and       (195)      (271)      (26)       (43)  equipment, net  Equity in gains of affiliate         (340)      (38)       -          (144)  Amortization of stock-based          374        265        211        43  compensation  Decrease in restricted cash         27         15         10         5  Decrease (increase) in trade         (1,270)    (1,572)    1,582      1,300  receivables, net  Increase in other accounts           148        46                    506  receivable and prepaid expenses                            511  Decrease (increase) in inventories   (685)      732        260        265  Deferred income taxes, net           1,272      847        601        109  Decrease (increase) in long-term     (4)        234                   (35)  accounts receivable                                        (16)  Increase (decrease) in trade         1,290      965        (241)      579  payables Increase (decrease) in other accounts payable and accrued          1,449      (274)      (269)      (657) expenses Net cash provided by operating        9,711      8,341      4,305      4,153 activities Cash flows from investing activities: Purchase of property and equipment    (4,663)    (4,033)    (1,475)    (818) Proceeds from sale of property and    1,216      1,733      (242)      539 equipment Investment and loans/Repayments in    137        (669)      36         25 affiliate Acquisition of Subsidiary (a)         (3,973)    (251)      (3,973)    - Purchase of activity (b)              -          (3,125)    -          - Net cash used in investing            (7,283)    (6,345)    (5,654)    (254) activities    CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands                             Year ended                Three months ended                             December 31,              December 31,                            2013           2012       2013         2012 Cash flows from financing activities: Receipt of long-term       7,127          11,670     3,417        2,346 loans from banks Repayment of long-term     (10,137)       (12,253)   (2,278)      (2,856) loans from banks Dividend paid to           -              (1,215)    -            (1,215) non-controlling interest Proceeds from issuance of  7              1,945      7            - shares Short-term bank credit,    563            (345)      950          (306) net Net cash used in           (2,440)        (198)      2,096        (2,031) financing activities Effect of exchange rate changes on cash and cash   (324)          419        (95)         (257) equivalents Increase (decrease) in     (336)          2,217      652          1,611 cash and cash equivalents Cash and cash equivalents at the beginning of the    3,685          1,468      2,697        2,074 year Cash and cash equivalents  $    3,349  $       $         $    at the end of the year                    3,685      3,349        3,685 (a) Acquisition of subsidiary: Working capital (Cash and  130            -          130          - cash equivalent excluded) Property and equipment     2,486          22         2,486        - Technology                 -              58         -            - Other intangible assets    1,690          -          1,690        - Goodwill                   4,894          304        4,894        - Long term loans from       (1,342)        -          (1,342)      - banks and others Investment in subsidiary previously treated by the  (3885)         -          (3885)       - equity method Minority Interest          -              (133)      -            -                            $           $      $        $                                 3,973         251       3,973          - (b)Purchase of business activity: Working capital            -              27         -            - Property and equipment     -              112        -            - Customer list              -              1,364      -            - Goodwill                   -              1,669      -            - Accrued severance pay,     -              (23)       -            - net Employees accruals         -              (24)       -            -                            $        $      $       $                                    -        3,125           -     -    ADDITIONAL INFORMATION U.S. dollars in thousands  The following table reconciles the GAAP to non-GAAP operating results:  Non GAAP Net income                                     Year ended               Three months ended                                     December 31,             December 31,                                    2013         2012        2013        2012                                    Unaudited GAAP Net income as reported:       $       $       $      $                                        7,271        1,637    3,925      896 amortization and impairment of    967          2,168       328      501 intangible assets Loss from discontinued             -            995         -        - operations, net Other expenses of termination      403          -           403      - costs Profit raise from gaining control in subsidiary previously treated   (3,299)      -           (3,299)  - by the equity method Stock based compensation expenses  374          265         211      43 Non-cash tax expenses (income) resulting from timing differences relating to the amortization of    1,700        819                  200 acquisition-related intangible                              350 assets and goodwill Non-GAAP Net income                $       $       $      $                                        7,416        5,884    1,918    1,640  Adjusted EBITDA                           Year ended                 Three months ended                           December 31,               December 31,                          2013         2012          2013             2012                          Unaudited GAAP Net income as       $       $        $       $     896 reported:                7,271       1,637        3,925 Loss from discontinued   -            995           -            - operations, net Financial expenses, net  1,077        1,628         292          343 Tax on income            1,337        861           282          123 Profit raise from gaining control in subsidiary previously    (3,299)      -                          - treated by the equity                               (3,299) method Stock based compensation expenses    374          265           211          43  Depreciation, amortization and impairment of goodwill   4,049        5,198         1,281        1,276 and intangible assets Adjusted EBITDA          $        $         $         $                               10,809       10,584       2,692       2,681    SOURCE Pointer Telocation Ltd.  Website: http://www.pointer.com