HERZLIYA, Israel, Nov, 14, 2018
/PRNewswire/ -- SuperCom (NASDAQ: SPCB), a global provider of
secure solutions for the e-government, public safety, healthcare,
and finance sectors, reported results for the third quarter of
2018.
Nine Months Ended September 30,
2018 Financial Highlights (Compared to the Prior Year
Period)
- Revenue decreased to $19.9
million from $25.5
million.
- Gross Profit decreased $11.1
million from 11.6 million.
- Non-GAAP Gross Margin increased to 56% from 45.5%.
- Non-GAAP core operating expenses improved by 34% to
$9.4 million from $14.3 million.
- EBITDA improved to $4.7 million
compared to $3.3 million.
- Non-GAAP Net Profit improved to $3.5
million or $0.23 per share
from $2.1 million or $0.14 per share.
- Working Capital increased to $18.6
million from $15.9
million.
- Current Ratio increased to 2.5 from 2
Third Quarter 2018 Financial Highlights (Compared to the
Third Quarter of 2017)
- Revenue decreased to $6.1 million
from $9.6 million.
- Non-GAAP Gross Margin increased to 58.8% from 48%.
- Non-GAAP core operating expenses improved by 41% to
$2.5 million from $4.2 million.
- EBITDA decreased to $1.8 million
compared to $2.4 million.
- EBITDA Margin increased to 30% compared to 25%.
- Non-GAAP Net Profit decreased to $1.4
million or $0.09 per share
from $2 million or $0.14 per share.
Management Commentary
"We are excited to share our third quarter 2018 results,
representing our very hard work optimizing our operational cost
structure to record levels since 2015 with EBITDA margins as high
as 30% and quarterly core Non-GAAP operating expenses as low as
$2.5 million," commented Arie Trabelsi, President and CEO of SuperCom.
"We have also been successful in securing a $20 million credit facility from a large US
investment management firm, allowing us to grow our working capital
to properly deploy our numerous ongoing multi-year projects as well
as signal to potential customers and partners that we have capacity
to do even more."
"With a steady base of recurring revenues globally, a growing
targeted pipeline of opportunities across our three business
segments, a lean operating cost structure, and strong financial
backing, we are poised to grow our top line and cash flow
generation in 2019 and in years to come," concluded Mr.
Trabelsi.
First Three Quarters of 2018 and Recent Operational
Highlights:
General:
- Secured a $20 million credit
facility from funds managed by affiliates of Fortress Investment
Group LLC, a highly diversified global investment manager with
approximately $41.4 billion of assets
under management. The facility is expected mainly to help support
working capital and growth of the business operations.
- Reached a record low operating expense structure since 2015
with core Non-GAAP operating expenses of approximately $2.5 million in Q3 2018, providing a lean
operating base for continued profitability.
e-Gov:
- In April 2018, signed a new
contract worth approximately $4
million in value with an existing national government
customer in Africa. Built around
SuperCom's Magna platform, the deployment will allow for quick
expansion of additional e-Gov modules, which would lead to
potential increases in the overall contract size. The majority of
the new contract is expected to be recognized over the next two
years and will grow SuperCom's steady-state recurring
revenues.
- Continued progress on national project deployments as well as
transition of recent projects in Africa into Steady State.
IoT and Connectivity:
- In January 2018, secured an
additional contract to provide PureSecurity EM Suite in
Idaho.
- In March 2018, secured an
additional contract to provide PureSecurity EM Suite in
South Carolina.
- In April 2018, secured an
additional contract to provide PureSecurity EM Suite in eastern
Texas to an established service
provider.
- In April 2018, awarded a
$7 million project with the national
government of Sweden to deploy
PureSecurity EM Suite.
- In June 2018, announced the
deployment of an innovative protection from domestic violence
project with the Sweden national
police, an additional national EM project win in Sweden.
- In November 2018, secured an
additional contract to provide PureSecurity EM Suite in
Minnesota and surrounding
regions.
- Continued progress on 13 EM project deployments,
including those in Europe,
Canada and the USA.
Cyber Security:
- Safend continued to close deals with sizable enterprise
customers in various locations globally, each with orders above
$100 thousand in value.
- Continued progress in the development of new advanced cyber
security products, adding more capabilities, including anti-malware
to be incorporated into the Safend cyber security platform.
SuperCom management will host the conference call, followed by a
question and answer period.
Date: Wednesday, November 14,
2018
Time: 10:00 a.m. Eastern time
(7:00 a.m. Pacific time)
U.S. toll-free: 877-407-9124
Israel toll-free:
180-940-6247
International: 201-689-8584
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization.
About SuperCom
Since 1988, SuperCom has been a global provider of traditional
and digital identity solutions, providing advanced safety,
identification and security solutions to governments and
organizations, both private and public, throughout the world.
Through its proprietary e-government platforms and innovative
solutions for traditional and biometrics enrollment,
personalization, issuance and border control services, SuperCom has
inspired governments and national agencies to design and issue
secure Multi-ID documents and robust digital identity solutions to
its citizens and visitors. SuperCom offers a unique all-in-one
field-proven RFID & mobile technology and product suite,
accompanied by advanced complementary services for various
industries including healthcare and homecare, security and safety,
community public safety, law enforcement, electronic monitoring,
livestock monitoring, and building and access automation. For more
information, visit www.supercom.com.
Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Statements preceded or followed by or that otherwise
include the words "believes", "expects", "anticipates", "intends",
"projects", "estimates", "plans", and similar expressions or future
or conditional verbs such as "will", "should", "would", "may" and
"could" are generally forward-looking in nature and not historical
facts. Forward-looking statements in this release also
include statements about business and economic trends. Investors
should also consider the areas of risk described under the heading
"Forward Looking Statements" and those factors captioned as "Risk
Factors" in the Company's periodic reports under the Securities
Exchange Act of 1934, as amended, or in connection with any
forward-looking statements that may be made by the Company. These
statements are subject to known and unknown risks, uncertainties
and other factors that may cause actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. More detailed information about the
Company and the risk factors that may affect the realization of
forward-looking statements is set forth in the Company's filings
with the Securities and Exchange Commission (SEC), including the
Company's Annual Report on Form 20-F filed with the SEC on
May 21, 2017. The Company undertakes
no obligation to update or revise these forward-looking statements,
whether as a result of new information, future events or otherwise,
after the date of this press release.
Use of Non-GAAP Financial Information
In addition to disclosing financial results calculated in
accordance with United States
generally accepted accounting principles (GAAP), this release of
operating results also contains non-GAAP financial measures, which
SuperCom believes are the principal indicators of the operating and
financial performance of its business. Management believes the
non-GAAP financial measures provided are useful to investors'
understanding and assessment of the Company's on-going core
operations and prospects for the future, as the charges eliminated
are not part of the day-to-day business or reflective of the core
operational activities of the Company. Management uses these
non-GAAP financial measures as a basis for strategic decisions,
forecasting future results and evaluating the Company's current
performance. However, such measures should not be considered in
isolation or as substitutes for results prepared in accordance with
GAAP. Reconciliation of the non-GAAP measures to the most
comparable GAAP measures are provided in the schedules attached to
this release.
SUPERCOM
LTD.
|
CONSOLIDATED
BALANCE SHEETS
|
(U.S. dollars in
thousands)
|
|
|
September
30,
|
December
31,
|
|
2018
|
2017
|
|
Unaudited
|
Audited
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
Cash and cash
equivalents
|
1,786
|
1,037
|
Restricted bank
deposits
|
1,291
|
1,063
|
Trade receivable,
net
|
17,724
|
12,456
|
Patents
|
5,283
|
5,283
|
Other accounts
receivable and prepaid expenses
|
543
|
2,698
|
Inventories,
net
|
4,825
|
4,876
|
|
|
|
Total current
assets
|
31,452
|
27,413
|
|
|
|
LONG-TERM
ASSETS
|
|
|
Severance pay
funds
|
306
|
319
|
Deferred tax long
term
|
4,888
|
4,505
|
Customer
Contracts
|
2,873
|
3,640
|
Software and other
IP
|
4,456
|
5,006
|
Other Asset,
net
|
5,447
|
5,071
|
Goodwill
|
7,026
|
7,026
|
Property &
equipment, net
|
896
|
1,218
|
Total long-term
assets:
|
25,892
|
26,785
|
|
|
|
Total Assets
|
57,344
|
54,198
|
|
|
|
CURRENT
LIABILITIES
|
|
|
Short-term Bank
credit
|
0
|
738
|
Trade
payables
|
3,055
|
5,838
|
Employees and payroll
accruals
|
4,106
|
4,910
|
Related
parties
|
187
|
61
|
Accrued expenses and
other liabilities
|
3.517
|
3,739
|
Deferred revenues
ST
|
970
|
1,511
|
Short-term liability
for future earn-out
|
1,039
|
1,163
|
|
|
|
Total current
liabilities
|
12,874
|
17,960
|
|
|
|
LONG-TERM
LIABILITIES
|
|
|
|
|
|
Long-term bank
loan
|
0
|
0
|
Long-term
loan
|
5,000
|
0
|
Accrued severance
pay
|
563
|
585
|
Related
Parties
|
3,825
|
2,082
|
Deferred tax
liability
|
0
|
49
|
Deferred
revenues
|
796
|
668
|
Long-term liability
for future earn-out
|
95
|
147
|
|
|
|
Total long-term
liabilities
|
10,279
|
3,531
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
Ordinary
shares
|
1,026
|
1,026
|
Additional paid-in
capital
|
83,810
|
82,157
|
Accumulated
deficit
|
(50,646)
|
(50,476)
|
|
|
|
Total shareholders'
equity
|
34,191
|
32,707
|
|
|
|
Total liabilities and
equity
|
57,344
|
54,198
|
SUPERCOM
LTD.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(U.S. dollars in
thousands)
|
|
3 months
ended
|
|
|
|
September
|
September
|
|
30,
2018
|
30,
2017
|
|
Unaudited
|
Unaudited
|
REVENUES
|
6,082
|
9,638
|
COST OF
REVENUES
|
2,676
|
4,512
|
|
|
|
GROSS PROFIT
(LOSS)
|
3,406
|
5,126
|
|
|
|
OPERATING
EXPENSES:
|
|
|
Research and
development
|
1,034
|
1,695
|
Selling and
marketing
|
1,050
|
1,724
|
General and
administrative
|
1,075
|
1,202
|
Other expense
(Income)
|
(31)
|
(87)
|
|
|
|
Total operating
expenses
|
3,128
|
4,534
|
|
|
|
OPERATING
INCOME
|
278
|
592
|
FINANCIAL INCOME
(EXPENSES), NET
|
(348)
|
(31)
|
|
|
|
INCOME BEFORE
INCOME TAX
|
(70)
|
561
|
INCOME TAX BENEFIT
(EXPENSES)
|
188
|
53
|
|
|
|
NET PROFIT(LOSS) FOR
THE PERIOD
|
118
|
614
|
|
|
|
EPS Basic
|
0.01
|
0.04
|
EPS Diluted
|
0.01
|
0.04
|
|
|
|
Weighted average number
of ordinary shares used in computing basic income per share
|
14,980,006
|
14,938,339
|
|
|
|
Weighted average number
of ordinary shares used in computing diluted income per share
|
15,028,339
|
15,017,308
|
SUPERCOM
LTD.
|
Reconciliation
Table of GAAP to Non-GAAP Figures and EBITDA to Net
Income
|
(U.S. dollars in
thousands, except per share data)
|
|
3 months
ended
|
|
|
|
|
September
|
September
|
|
30,
2018
|
30,
2017
|
|
Unaudited
|
Unaudited
|
|
|
|
GAAP gross
profit
|
3,406
|
5.126
|
Amortization of
Software and IP
|
153
|
154
|
Stock-based
compensation expenses
|
19
|
36
|
Non-GAAP gross
profit
|
3,578
|
5,316
|
|
|
|
GAAP operating
Income
|
278
|
592
|
Amortization of
Software/IP, Customer Contracts and Brand, and Stock-
based compensation expenses
|
1081
|
1053
|
Foreign Currency
Loss
|
367
|
429
|
Non-GAAP operating
Income
|
1,726
|
2,074
|
|
|
|
GAAP net
PROFIT
|
118
|
614
|
Amortization of
Software/IP, Customer Contracts and Brand, and Stock-
based compensation expenses
|
1081
|
1053
|
Foreign Currency
Loss
|
367
|
429
|
Income tax expense
(benefit)
|
(188)
|
(53)
|
Non-GAAP net
Profit(Loss)
|
1,378
|
2,043
|
|
|
|
Non-GAAP
EPS
|
0.09
|
0.14
|
|
|
|
NET
PROFIT FOR THE PERIOD
|
118
|
614
|
Income tax expenses
(benefit), net
|
(188)
|
(53)
|
Financial expenses
(income), net
|
348
|
31
|
Depreciation,
amortization and stock-based compensation expenses
|
1,169
|
1,398
|
Foreign Currency
Loss
|
367
|
429
|
EBITDA
*
|
1,814
|
2.419
|
|
* EBITDA
is a non-GAAP financial measure generally defined as earnings
before interest, taxes, depreciation and
amortization.
|
SUPERCOM
LTD.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(U.S. dollars in
thousands)
|
|
|
9 months
ended
|
|
|
|
|
September
|
September
|
|
30,
2018
|
30,
2017
|
|
Unaudited
|
Unaudited
|
|
|
|
REVENUES
|
19,857
|
25,467
|
COST OF
REVENUES
|
8,730
|
13,868
|
|
|
|
GROSS PROFIT
(LOSS)
|
11,127
|
11,599
|
|
|
|
OPERATING
EXPENSES:
|
|
|
Research and
development
|
3,578
|
5,336
|
Selling and
marketing
|
4,232
|
5,995
|
General and
administrative
|
3,677
|
4,393
|
Other
expenses(Income)
|
152
|
(2,404)
|
|
|
|
Total operating
expenses
|
11,639
|
13,320
|
|
|
|
OPERATING
LOSS
|
(512)
|
(1,721)
|
FINANCIAL INCOME
(EXPENSES), NET
|
(70)
|
(433)
|
|
|
|
LOSS BEFORE INCOME
TAX
|
(582)
|
(2,154)
|
INCOME TAX
BENEFIT
|
413
|
111
|
|
|
|
NET LOSS FOR THE
PERIOD
|
(169)
|
(2,043)
|
SUPERCOM
LTD.
|
Reconciliation
Table of GAAP to Non-GAAP Figures and EBITDA to Net
Income
|
(U.S. dollars in
thousands, except per share data)
|
|
9 months
ended
|
|
|
|
|
September
|
September
|
|
30,
2018
|
30,
2017
|
|
Unaudited
|
Unaudited
|
|
|
|
GAAP gross
profit
|
11,127
|
11.599
|
Amortization of
Software and IP
|
460
|
460
|
Stock-based
compensation expenses
|
78
|
153
|
Non-GAAP gross
profit
|
11,665
|
12,212
|
|
|
|
GAAP operating
Loss
|
(512)
|
(1,721)
|
Amortization of
Software/IP, Customer Contracts and Brand, and Stock-
based compensation expenses
|
2,897
|
2,883
|
Foreign Currency
Loss
|
1,154
|
1,330
|
Non-GAAP operating
Income(Loss)
|
3,539
|
2,492
|
|
|
|
GAAP net Income
(Loss)
|
(169)
|
(2,043)
|
Amortization of
Software/IP, Customer Contracts and Brand, and Stock-
based compensation expenses
|
2,897
|
2,883
|
Foreign Currency
Loss
|
1,154
|
1330
|
Income tax expense
(benefit)
|
(413)
|
(111)
|
Non-GAAP net
Income(Loss)
|
3,469
|
2,059
|
|
|
|
Non-GAAP
EPS
|
0.23
|
0.14
|
|
|
|
NET LOSS FOR THE
PERIOD
|
(169)
|
(2,043)
|
Income tax expenses
(benefit), net
|
(413)
|
(111)
|
Financial expenses
(income), net
|
70
|
433
|
Depreciation,
amortization and stock-based compensation expenses
|
4,055
|
3,673
|
Foreign Currency
Loss
|
1,154
|
1,330
|
EBITDA
*
|
4,697
|
3,282
|
|
|
|
* EBITDA
is a non-GAAP financial measure generally defined as earnings
before interest, taxes, depreciation and
amortization.
|
SuperCom Corporate Contact:
Ordan Trabelsi,
President, Americas
Tel: +1-212-675-4606
ordan@supercom.com
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