EX-99.1 2 v432931_ex-1.htm EXHIBIT 1

Exhibit 1

For Immediate Release

Pointer Telocation Ltd. Reports Results

for the Fourth Quarter and Full Year 2015

Financial Highlights

Full year revenues of $101 million;

Non-GAAP net income: $7.1 million for 2015; $1.3 million for Q4;

MRM service revenue grew by over 15% YoY in local currency terms;

MRM year-end total subscribers of about 180 thousand, grew up 10% YoY.

Rosh HaAyin, Israel, February 29, 2016, Pointer Telocation Ltd. (Nasdaq: PNTR) - a leading developer, manufacturer and operator of Mobile Resource Management (MRM) services, announced today its financial results for the three month period and fiscal year ended December 31, 2015.

Financial Summary for the Fourth Quarter of 2015

Revenues were $25.7 million compared to $26.6 million in the fourth quarter of 2014, a decrease of 3.2%. The significant strengthening of the US Dollar in the period versus the various local currencies in which the Company generates sales, caused a reduction in the revenue level when translated into US Dollars. In local currency terms, revenues were similar to those of last year.

International activities for the fourth quarter of 2015 accounted for 31.3% of total revenue, compared to 40% in the fourth quarter of 2014.

Revenues from products were $7.5 million (29.3% of revenues) compared to $8.3 million (31% of revenues) in the fourth quarter of 2014, a decrease of 9.4%. Revenues from services were $18.1 million (70.7% of revenues) compared to $18.3 million (69% of revenues) in the fourth quarter of 2014, a decrease of 0.4%. In local currency terms, revenues from services increased by 7%.

Gross profit was $8.5 million (33.1% of revenues) compared to $8.7 million (32.9% of revenues) in the fourth quarter of 2014, a decrease of 2.6%.

Operating income on a GAAP basis was $0.5 million compared to operating income of $0.2 million in the fourth quarter of 2014. On a non-GAAP basis, operating income was $1.7 million (6.5% of revenues) compared with $2.3 million (8.8% of revenues), a decrease of 27.6%.

Net income (loss) on a GAAP basis was $(0.06) million or $(0.01) loss per diluted share compared with net income a $9.5 million income or $1.23 per diluted share in the fourth quarter of 2014.

Net income on a non-GAAP basis was $1.3 million (5.3% of revenues) compared to non-GAAP net income of $2.3 million (8.6% of revenues) in the fourth quarter of 2014, a decrease of 1.8%. Fully diluted earnings based on non-GAAP net income in the fourth quarter were $0.23 per share, compared to $0.29 per share in the fourth quarter of 2014.

Adjusted EBITDA was $2.5 million compared with $2.6 million in the fourth quarter of 2014, a decrease of 2.1%. In local currency terms, EBITDA in Q4 2015 would have been $2.8 million an increase of 8% over the prior period.

Financial Summary for the Full Year of 2015

Revenues for 2015 were $100.9 million compared to $105.3 million in 2014, a decrease of 4.1%. In local currency terms, revenues increased by 3% compared with last year.

International activities for 2015 accounted for 35.4% of total revenues compared to 33% in 2014.

Revenues from products were $28.6 million (28.4% of revenues) compared to $33.1 million (31% of revenues) in 2014, a decrease of 13.5%. Revenues from services were $72.3 million (71.6% of revenues) compared to $72.2 million (69% of revenues) in 2014, an increase of 0.2%. In local currency terms, revenues from services increased by 7%.

Revenues from the MRM business were $60.4 million, compared with $65.3 million in 2014, a decrease of 7.6%. MRM service revenues were $38.2 million, compared with $37.5 million in 2014, an increase of 1.7%. In local currency terms, MRM service revenues grew by 15% over 2014.

Gross profit was $34.1 million (33.9% of revenues) in 2015, a decrease of 3.8% compared to $35.6 million (33.8% of revenues) in 2014. Non-GAAP gross profit in the MRM business was $29.1 million (48.2% of revenues) compared with $31.0 million (45.3% of revenues) in 2014, a decrease of 6.2%.

Operating income on a GAAP basis was $6.1 million (6% of revenues) in 2015 compared to operating income of $6.6 million (6.5% of revenues) in 2014. Operating income on a non-GAAP basis was $8.0 million (8% of revenues) in 2015 compared to non-GAAP operating income of $9.4 million (9.0% of revenues) in 2014.

Operating income on a non-GAAP basis at the MRM business was $7.1 million in 2015, compared with $9.1 million in 2014, a decrease of 22.7%.

Net income on a GAAP basis was $3.8 million (3.8% of revenue) or $0.50 per diluted share in 2015, compared to $12.7 million (12% of revenues) or $1.74 per diluted share in 2014. Net income on a non-GAAP basis was $7.2 million (7.2% of revenues) or $0.9 per diluted share, compared to non-GAAP net income of $7.9 million (7.5% of revenues) or $1.02 in 2014.

Adjusted EBITDA was $11.3 million (11.2% of revenues), compared to $12.5 million (11.9%) in 2014, a decrease of 9.9%. In local currency terms, EBITDA in 2015 would have been $12.0 million, a decrease of 4%.

In connection with Pointer’s plan to spin-off its Shagrir business to shareholders, Pro-forma information providing certain details of the financial performance of the Shagrir RSA business and MRM business separately, are provided in Exhibit A for informational purposes only.

Management Comment

David Mahlab, Pointer's Chief Executive Officer, commented on the results: “While we faced significant currency headwinds in 2015 impacting our financial results, as we move into 2016, we are increasingly optimistic. Despite the economic slowdown in Brazil, we are now seeing improving activity and growing interest for our services, and we are participating in an increasing number of new tenders. Looking ahead, we expect to resume our subscriber base growth in this region in 2016.”

Continued Mr. Mahlab, “Our MRM software as a service business, is growing nicely in local currency terms, and we have been successful in attracting new subscribers for our services, growing by 10% year-over-year. We are launching new MRM related products and services, in particular for the large connected-car markets as well as the Internet of Things space. In 2016, we expect our MRM business to continue to grow, benefitting from the growth in subscribers as well as the recurring revenues from our subscriber base. We look forward to reaping the fruits of our solid subscriber growth as well as from our new products and services in the year ahead.”

Conference Call Information

Pointer Telocation's management will host a conference call with the investment community today, Monday, February 29^th, 2016 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: +1-888-668-9141

From Israel: 03-918-0609

A replay will be available the following day on the Company’s website: 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.

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, amortization and impairment of goodwill and intangible assets, the effects of non-cash stock-based compensation expense, profit raise from gaining control in subsidiary previously treated by the equity method, and related goodwill adjustment.

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 and impairment of long lived assets, non-cash tax expenses resulting from timing differences relating to the amortization of acquisition-related intangible assets, profit raise from gaining control in subsidiary previously treated by the equity method, acquisition related goodwill adjustment, onetime ‘other expense’ related to the termination cost of a former general manager of a Pointer subsidiary and restructuring in a subsidiary, loss from sale of subsidiary, one time financial expenses resulting from the devaluation of Israeli Shekel denominated bank deposits and non-cash tax income from raised tax asset.

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

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

	December 31,
	2015		2014

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	9,347	$	8,557
Restricted cash		-		62
Trade receivables		18,402		19,032
Other accounts receivable and prepaid expenses		2,040		1,853
Inventories		4,866		6,133
Deferred tax asset		1,137		901
Property and equipment held for sale		282		1,034

Total current assets		36,074		37,572


LONG-TERM ASSETS:
Long-term accounts receivable		490		408
Severance pay fund		8,186		8,609
Property and equipment, net		9,112		10,075
Other intangible assets, net		816		1,950
Goodwill		46,753		48,941
Deferred tax asset		2,007		3,449

Total long-term assets		67,364		73,432

Total assets	$	103,438	$	111,004

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

	December 31,
	2015			2014
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Short-term bank credit and current maturities of long-term loans	$	4,903		$	7,478
Trade payables		11,778			11,460
Deferred revenues and customer advances		5,843			6,420
Other accounts payable and accrued expenses		7,928			8,972

Total current liabilities		30,452			34,330


LONG-TERM LIABILITIES:
Long-term loans from banks		8,565			12,046
Long-term loans from shareholders and others		179			997
Deferred taxes and other long-term liabilities		79			298
Accrued severance pay		9,128			9,537

Total long term liabilities		17,951			22,878

COMMITMENTS AND CONTINGENT LIABILITIES

EQUITY:
Pointer Telocation Ltd's shareholders' equity:
Share capital		5,770			5,705
Additional paid-in capital		128,441			129,618
Accumulated other comprehensive loss		(6,285	)		(2,909	)
Accumulated deficit		(71,822	)		(75,767	)

Total Pointer Telocation Ltd's shareholders' equity		56,104			56,647

Non-controlling interest		(1,069	)		(2,851	)

Total equity		55,035			53,796

Total liabilities and shareholders' equity	$	103,438		$	111,004

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands (except per share data)

	Year ended December 31,						Three months ended December 31,
	2015			2014			2015			2014
Revenues:
Products	$	28,617		$	33,099		$	7,534		$	8,316
Services		72,307			72,191			18,186			18,258

Total revenues		100,924			105,290			25,720			26,574

Cost of revenues:
Products		17,003			19,279			4,428			4,561
Services		49,739			50,461			12,792			13,276

Total cost of revenues		66,742			69,740			17,220			17,837

Gross profit		34,182			35,550			8,500			8,737

Operating expenses:
Research and development		3,409			3,390			875			784
Selling and marketing		12,063			11,219			3,190			2,760
General and administrative		10,991			11,883			2,829			2,966
Other general and administrative expenses		-			683			-			683
Other (income) loss		2			(288	)		2			-
Amortization of intangible assets		735			994			169			205
Impairment of intangible and tangible assets		917			1,122			917			1,122

Total operating expenses		28,117			29,003			7,982			8,520

Operating income		6,065			6,547			518			217
Financial expenses, net		869			2,424			332			700
Other expenses (income)		(6	)		232			(18	)		238

Income (loss) before taxes on income		5,202			3,891			204			(721	)
Tax expenses (income)		1,404			(8,849	)		262			(10,217	)

Income after taxes on income		3,798		$	12,740			(58	)		9,496
Equity in gains of affiliate		-			-			-			-

Net income	$	3,798		$	12,740		$	(58	)	$	9,496

Profit (loss) from continuing operations attributable to:
Equity holders of the parent		3,945			13,453			(40	)		9,824
Non-controlling interests		(147	)		(713	)		(18	)		(328	)

	$	3,798		$	12,740		$	(58	)	$	9,496


Earnings per share from continuing operations attributable to Pointer Telocation Ltd's shareholders:
Basic net earnings (loss) per share	$	0.51		$	1.81		$	(0.01	)	$	1.27

Diluted net earnings (loss) per share	$	0.50		$	1.74		$	(0.01	)	$	1.23

Weighted average - Basic number of shares		7,725,246			7,446,707			7,725,653			7,688,564

Weighted average - fully diluted number of shares		7,938,489			7,726,653			7,881,751			7,945,839

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

	Year ended December 31,						Three months ended December 31,
	2015			2014			2015			2014
Cash flows from operating activities:

Net income (loss)	$	3,798		$	12,740		$	(58	)	$	9,496
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,959			4,767			1,013			1,176
Impairment of tangible and intangible assets		917			1,122			917			1,122
Gain from a bargain purchase		-			-			-			-
Accrued interest and exchange rate changes of debenture and long-term loans		26			17			22			4
Accrued severance pay, net		18			56			37			(57	)
Gain (loss) from sale of property and equipment, net		(143	)		(95	)		(55	)		35
Amortization of stock-based compensation		309			375			64			90
Decrease in restricted cash		62			19			-			1
Decrease (increase) in trade receivables, net		(236	)		(1,141	)		57			155
Decrease (increase) in other accounts receivable and prepaid expenses		(418	)		(21	)		(184	)		270
Decrease (increase) in inventories		733			(462	)		613			(179	)
Decrease (increase) in long-term accounts receivable		(91	)		126			15			133
Increase (decrease) in Deferred tax asset		869			(9,120	)		318			(10,205	)
Increase (decrease) in trade payables		749			(654	)		453			186
Increase (decrease) in other accounts payable and accrued expenses		(936	)		(1,845	)		104			(241	)

Net cash provided by operating activities		9,616			5,596			3,316			1,986

Cash flows from investing activities:

Purchase of property and equipment		(3,616	)		(4,458	)		(1,105	)		(1,254	)
Proceeds from sale of property and equipment		1,266			1,529			437			418
Acquisition of Subsidiary (a)		-			(688	)		-			-
Proceeds from sale of investments in previously consolidated subsidiaries (b)		-			(41	)		-			(41	)

Net cash used in investing activities		(2,350	)		(3,658	)		(668	)		(877	)

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

	Year ended December 31,						Three months ended December 31,
	2015			2014			2015			2014

Cash flows from financing activities:

Receipt of long-term loans from banks		14,846			12,577			(313	)		(308	)
Repayment of long-term loans from banks		(19,393	)		(8,986	)		(990	)		(1,906	)
Repayment of long-term loans from shareholders		-			(301	)		-			52
Repurchase of shares from non-controlling interests		-			(7,740	)		-			-
Proceeds from issuance of shares		15			10,065			-			-
Short-term bank credit, net		(832	)		(1,640	)		(610	)		734

Net cash provided by (used in) financing activities		(5,364	)		3,975			(1,913	)		(1,428	)

Effect of exchange rate changes on cash and cash equivalents		(1,112	)		(705	)		432			(115	)


Increase (decrease) in cash and cash equivalents		790			5,208			1,167			(434	)
Cash and cash equivalents at the beginning of the period		8,557			3,349			8,180			8,991

Cash and cash equivalents at the end of the period	$	9,347		$	8,557		$	9,347		$	8,557

(a)	Acquisition of subsidiary:
	Working capital (Cash and cash equivalent excluded)	-		221			-		-
	Property and equipment	-		565			-		-
	Other intangible assets	-		190			-		(48	)
	Goodwill	-		(288	)		-		48
	Long term loans from banks and others	-		-			-		-
	Investment in subsidiary previously treated by the equity method	-		-			-		-

		-	$	688		$	-	$	-

(b)	Proceeds from sale of investments in previously consolidated subsidiaries:
	Working capital (Cash and cash equivalent excluded)		-		(18	)		-		(18	)
	Property and equipment		-		(30	)		-		(30	)
	Long term loans from banks and others		-		5			-		5
	Minority Interest		-		(125	)		-		(125	)
	Loss from sale of subsidiaries		-		209			-		209

		$	-	$	41			-	$	41

(c)	Non-cash activity:

	Issuance of shares in respect of acquisition of non-controlling interests in subsidiary	$	-	$	11,385		$	-	$	11,368

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

ADDITIONAL INFORMATION

U.S. dollars in thousands

The following table reconciles the GAAP to non-GAAP operating results:

	Year ended December 31,					Three months ended December 31,

	2015		2014			2015			2014

GAAP gross profit	$	34,182	$	35,550		$	8,500		$	8,737
Stock-based compensation expenses		11		10			2			3
Non-GAAP gross profit		34,192	$	35,560			8,502		$	8,740


GAAP operating expenses	$	28,117	$	29,003		$	7,982		$	8,568
Stock-based compensation expenses		298		380			62			96
Amortization and impairment of long lived assets		1,652		2,116			1,086			1,327
Other expenses of termination costs and restructuring in subsidiary		-		683			-			683
Acquisition related goodwill adjustment		-		(288	)		-			48
Non-GAAP operating expenses	$	26,167	$	26,112		$	6,834		$	6,414


GAAP operating income	$	6,065	$	6,547		$	518		$	169

Non-GAAP operating income	$	8,025	$	9,448		$	1,668		$	2,326

GAAP net income	$	3,798	$	12,740		$	(58	)	$	9,448
Stock-based compensation		309		390			64			99
Amortization and impairment of long lived assets		1,652		2,116			1,086			1,327
Acquisition related goodwill adjustment		-		(288	)		-			48
Profit raise from gaining control in subsidiary previously treated by the equity method		-		-			-			-
Other expenses of termination costs and restructuring in subsidiary		-		683			-			683
Loss from sale of subsidiary		-		209			-			209
Financial expenses resulting from the devaluation of Israeli Shekel denominated bank deposits		-		498			-			-
Non-cash tax expenses resulting from timing differences relating to the amortization of acquisition-related intangible assets and goodwill		-		1,379			-			320
Non cash tax (income) expenses		1,404		(9,799	)		262			(9,799	)
Non-GAAP net income	$	7,163	$	7,928		$	1,354		$	2,335

Non-GAAP net income per share - Diluted	$	0.90	$	1.02		$	0.20		$	0.29
Non-GAAP weighted average number of shares - Diluted*		7,938,489		7,726,653			7,881,751			7,945,839

* In calculating diluted non-GAAP net income per share, the diluted weighted average number of shares outstanding excludes the effects of stock-based compensation expenses in accordance with FASB ASC 718.

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

Adjusted EBITDA

	Year ended December 31,					Three months ended December 31,
	2015		2014			2015			2014

GAAP Net income as reported:	$	3,798	$	12,740		$	(58	)	$	9,448

Financial expenses, net		869		2,424			332			700
Tax on income		1,404		(8,849	)		262			(10,217	)
Profit raise from gaining control in subsidiary previously treated by the equity method and acquisition related goodwill adjustment		-		(288	)		-			48
Stock based compensation expenses		309		390			64			99
Loss from sale of subsidiary		-		209			-			209
Depreciation, amortization and impairment of goodwill and intangible assets		4,876		5,889			1,930			2,298

Adjusted EBITDA	$	11,256	$	12,515		$	2,530		$	2,585

- - - - - - - - - - - -

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

Exhibit A*

U.S. dollars in thousands

	Year ended December 31, 2015									Year ended December 31, 2014 ^()**
	Unaudited									Unaudited
	MRM			RSA			Total			MRM			RSA			Total
Revenues:
Products		22,267			6,351			28,617			27,855			5,244			33,099
Services		38,160			34,147			72,307			37,522			34,670			72,191
Total Revenues		60,426			40,498			100,924			65,377			39,913			105,290

Non-GAAP Cost of Revenues		31,307			35,427			66,734			34,334			35,396			69,730

Non-GAAP Gross Profit		29,121			5,071			34,192			31,043			4,517			35,560
		48.2	%		12.5	%		33.9	%		47.5	%		11.3	%		33.8	%
Non-GAAP Operating expenses:
Research and development, net		3,409			-			3,409			3,390			-			3,390
Selling and marketing		10,326			1,738			12,063			9,334			1,886			11,219
General and administrative		8,282			2,413			10,695			9,132			2,371			11,503

Non-GAAP Operating Expenses		22,017			4,150			26,167			21,855			4,257			26,112

Non-GAAP Operating Income		7,105			920			8,025			9,187			260			9,448

(**)

Note that certain figures for the year ended December 31, 2014 have been slightly revised from the previously reported figures as a result of allocation between segments and spin off the Car2Go subsidiary together with Shagrir, our RSA business.

Contact:

Zvi Fried, V.P. and Chief Financial Officer 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