Micronet Enertec Technologies, Inc. Reports First Quarter 2014 Financial Results
MONTVALE, N.J., May 15, 2014 /PRNewswire/ -- Micronet Enertec Technologies, Inc. (NASDAQCM: MICT), a developer and manufacturer that integrates and globally markets rugged computers, tablets and computer-based systems for the commercial Mobile Resource Management (MRM) market and for the defense and aerospace markets, today announced financial results for the first quarter ended March 31, 2014.
David Lucatz, Chief Executive Officer of Micronet Enertec Technologies, Inc. stated, “During the quarter, we experienced a decline in our sales, mainly as a result of reduced sales to our major MRM client. However, our continuing efforts to penetrate new customers and new market verticals are very encouraging by the recent orders received from new customers and the successful entry into new verticals such as school buses in the U.S. (local fleets, the largest growing vertical) and others. In addition, we are in the process of penetrating new geographies such as Mexico and Chile, in which we have already been successful in introducing our products to certain local customers.”
Mr. Lucatz continued, “The recently announced pending acquisition of the MRM division of Beijer Electronics in Salt Lake City, Utah, will enable us to establish a strong U.S. sales and marketing base while offering a wide range of MRM tablets, including our recently introduced Android-based A 300 series family of tablets, supporting a variety of applications and verticals. In addition, Beijer Electronics will broaden and diversify our customer base.”
“On a stand-alone basis, Beijer generated sales for 2013 of approximately $11M annually. Going forward, we strongly believe that the successful integration of both companies' operations will accelerate our growth and position us as a significant supplier in this multi-billion dollar market.”
First Quarter 2014 Financial Highlights:
| · | Total revenue was $5.6 million, compared to $10.4 million in the first quarter of 2013. The decline in revenue attributed to reduced sales to our major client, is expected to increase in the second half of 2014 including Beijer’s revenues that will be fully integrated at that same period of time. |
| · | Gross profit is $2.1 million, compared to $3.6 million for the first quarter of 2013. Gross margin is 37%, compared to 35% in the first quarter of 2013. |
| · | R&D expenses are $744,000 (includes $146,000 grant from the Israeli Office of the Chief Scientist), compared to $709,000 in the first quarter of 2013. |
| · | Operating loss are $60,000, compared to operating income of $1.5 million in the first quarter of 2013. The operating loss is mainly due to decline in revenues. |
| · | GAAP net loss for the first quarter is $185,000, compared to net income of $212,000 for the same period last year. |
| · | GAAP net loss per share for the first quarter are $0.06, based on 5.8 million shares on a diluted basis, compared to GAAP net loss of $0.13, based on 3.5 million shares on a diluted basis, in the first quarter last year. |
| · | Non-GAAP net loss is $270,000 for the first quarter, compared to non-GAAP net income of $726,000 in the first quarter of 2013. |
| · | Non-GAAP diluted EPS is $(0.05) loss per share based on 5.8 million diluted shares compared to $0.18 income per share, based on 3.9 million shares on a diluted basis last year. |
| · | Balance sheet: Cash and marketable securities were $18.9 million at March 31, 2014 as compared to $19.8 million at December 31, 2013. Current ratio of 3:1 on March 31, 2014. |
| · | Total debt decreased to $8.4 million as of March 31, 2014 from $9.1 million as of December 31, 2013. |
A reconciliation of GAAP to non-GAAP financial measures is provided below. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."
Mr. Lucatz concluded: “Beyond the MRM/FM segments, we are committed to maintaining a strong presence and an ample backlog of business in the Aerospace and Defense segment. During the last quarter, we announced a new $2.6 million project for the development and supply of a generic computer-based test, diagnosis and simulation system designated to support a vast range of advanced missile defense systems. Looking forward, we see ongoing demand in the Aerospace and Defense segment, and we expect to announce new orders in this space in the coming months.”
Conference Call
Micronet Enertec will host a conference call today at 9:00 a.m. ET to discuss the company's financial results for the first quarter 2014, its business outlook and other matters.
Callers in the U.S: 1-888-407-2553, callers from outside of the U.S: 972-3-918-0610
Live webcast: http://www.veidan-stream.com/?con=Micronet_Enertec_Technologies_Q1_2014_Results
A telephone replay will be available for two weeks:
Callers in the U.S: 1-877-456-0009, outside of the U.S: 972-3- 925-5930
MICRONET ENERTEC TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Share and Earnings Per Share Data)
(Unaudited)
| | | Three months ended | |
| | | | | | | |
| | | | | | | |
| Revenues | | $ | 5,567 | | | $ | 10,361 | |
| Cost of revenues | | | 3,515 | | | | 6,714 | |
| | | | | | | | | |
| Gross profit | | | 2,052 | | | | 3,647 | |
| Operating expenses: | | | | | | | | |
| Research and development | | | 744 | | | | 709 | |
| Selling and marketing | | | 391 | | | | 314 | |
| General and administrative | | | 884 | | | | 784 | |
| Amortization of intangible assets | | | 93 | | | | 378 | |
| Total operating expenses | | | 2,112 | | | | 2,185 | |
| | | | | | | | | |
| Income (loss) from operations | | | (60 | ) | | | 1,462 | |
| Financial expenses, net | | | 46 | | | | 1,131 | |
| Income (loss) before provision for income taxes | | | (106 | ) | | | 331 | |
| Taxes on income | | | 79 | | | | 119 | |
| Net income (loss) | | | (185 | ) | | | 212 | |
| Net loss attributable to non-controlling interests | | | 147 | | | | 673 | |
| | | | | | | | | |
| Net loss attributable to Micronet Enertec | | $ | (332 | ) | | $ | (461 | ) |
| | | | | | | | | |
| Loss per share attributable to Micronet Enertec: | | | | | | | | |
| Basic and diluted | | $ | (0.06 | ) | | $ | (0.13 | ) |
| | | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | |
| Basic and diluted | | | 5,831,246 | | | | 3,483,749 | |
MICRONET ENERTEC TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)
(Unaudited)
| | | Three months ended | |
| | | | | | | |
| | | | | | | |
| Net income | | $ | (185 | ) | | $ | 212 | |
| Other comprehensive income net of tax: | | | | | | | | |
| Currency translation adjustment | | | (26 | ) | | | 609 | |
| Total comprehensive income | | | (211 | ) | | | 821 | |
| Comprehensive loss attributable to the non-controlling interests | | | 71 | | | | (714 | ) |
| Comprehensive income attributable to Micronet Enertec | | | (140 | ) | | | 107 | |
MICRONET ENERTEC TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Par Value Data)
| | | March 31, | | | December 31, | |
| | | | | | | |
| | | (Unaudited) | | | | |
| ASSETS | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 11,959 | | | $ | 12,825 | |
| Marketable securities | | | 6,964 | | | | 6,969 | |
| Trade account receivables, net | | | 11,454 | | | | 13,467 | |
| Inventories | | | 4,417 | | | | 4,324 | |
| Derivative asset - call options | | | 532 | | | | 460 | |
| Other account receivable | | | 1,326 | | | | 1,165 | |
| Total current assets | | | 36,652 | | | | 39,210 | |
| | | | | | | | | |
| Property, and equipment, net | | | 2,369 | | | | 2,440 | |
| Intangible assets and others, net | | | 1,000 | | | | 1,076 | |
| Long term deposit | | | 139 | | | | 103 | |
| Total long term assets | | | 3,508 | | | | 3,619 | |
| | | | | | | | | |
| Total assets | | $ | 40,160 | | | $ | 42,829 | |
| | | March 31, | | | December 31, | |
| | | (Unaudited) | | | | |
| LIABILITIES AND EQUITY | | | | | | |
| | | | | | | |
| Short term bank credit and current portion of long term bank loans | | $ | 5,080 | | | $ | 5,058 | |
| Current portion of long term notes, net of discount | | | 983 | | | | - | |
| Trade account payables | | | 3,645 | | | | 4,361 | |
| Other account payables | | | 2,352 | | | | 3,355 | |
| Total current liabilities | | | 12,060 | | | | 12,774 | |
| | | | | | | | | |
| Long term loans from banks and others | | | 2,374 | | | | 3,130 | |
| Long term notes, net of discount | | | - | | | | 933 | |
| Finance lease | | | 97 | | | | 109 | |
| Accrued severance pay, net | | | 138 | | | | 172 | |
| Deferred tax liabilities, net | | | 99 | | | | 113 | |
| Total long term liabilities | | | 2,708 | | | | 4,457 | |
| | | | | | | | | |
| Stockholders’ Equity: | | | | | | | | |
| Preferred stock; $.001 par value, 5,000,000 shares authorized, none issued and outstanding | | | | | | | | |
Common stock; $.001 par value, 100,000,000 shares authorized, 5,831,246 shares issued and outstanding as of March 31, 2014 and December 31, 2013 | | | 6 | | | | 6 | |
| Additional paid in capital | | | 8,059 | | | | 8,053 | |
| Accumulated other comprehensive income | | | 1,440 | | | | 1,389 | |
| Retained earnings | | | 8,090 | | | | 8,423 | |
| Micronet Enertec stockholders' equity | | | 17,595 | | | | 17,871 | |
| | | | | | | | | |
| Non-controlling interests | | | 7,797 | | | | 7,727 | |
| Total equity | | | 25,392 | | | | 25,598 | |
| Total liabilities and equity | | $ | 40,160 | | | $ | 42,829 | |
Non-GAAP Financial Measures
In addition to providing financial measurements based on generally accepted accounting principles in the United States of America (“GAAP)”, we provide additional financial metrics that are not prepared in accordance with GAAP (“non-GAAP”). Management uses non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate our financial performance.
Management believes that these non-GAAP financial measures reflect our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in our business, as they exclude expenses and gains that are not reflective of our ongoing operating results. Management also believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies.
The non-GAAP financial measures do not replace the presentation of our GAAP financial results and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP.
The non-GAAP adjustments, and the basis for excluding them from non-GAAP financial measures, are outlined below:
| | · | Amortization of acquired intangible assets - We are required to amortize the intangible assets, included in our GAAP financial statements, related to the acquisition of Micronet. The amount of an acquisition’s purchase price allocated to intangible assets and term of its related amortization are unique to the Acquisition. The amortization of acquired intangible assets are non-cash charges. We believe that such changes do not reflect our operational performance. Therefore, we exclude amortization of acquired intangible assets to provide investors with a consistent basis for comparing pre- and post-acquisition operating results. |
| | · | Amortization of UTA’s note discount and related expenses - These interest expenses are non-cash and are related to amortization of discount of certain notes held by UTA Capital LLC. Such expenses do not reflect our on-going operations and most of them will be incurred up to the end of fiscal 2014. |
| | · | Change in fair value of call options and warrants – The change in fair value of the call options relating to the Acquisition is recorded as interest expense. The change in fair value is derived primarily from Micronet’s share price and does not reflect our on-going operations. |
| | · | Stock-based compensation is share based awards granted to certain individuals. They are non-cash and affected by our historical stock prices which are irrelevant to forward-looking analyses and are not necessarily linked to our operational performance. |
The following table reconciles, for the periods presented, GAAP net loss attributable to Micronet Enertec to non-GAAP net income attributable to Micronet Enertec and GAAP loss per diluted share attributable to Micronet Enertec to non-GAAP net income per diluted share attributable to Micronet Enertec:
| | | Three months ended March 31, | |
| | | | | | | |
| | | In Thousands, Except Share and Per Share Data | |
| GAAP net loss attributable to Micronet Enertec | | $ | (332 | ) | | $ | (461 | ) |
| Amortization of acquired intangible assets | | | 93 | | | | 378 | |
Change in fair value of call options and warrants | | | (73 | ) | | | 298 | |
| Amortization of UTA’s note discount and related expenses | | | 50 | | | | 568 | |
| Stock-based compensation | | | 6 | | | | - | |
| Income tax-effect of above non-GAAP adjustments | | | (14 | ) | | | (57 | ) |
| Total Non-GAAP net income (loss) attributable to Micronet Enertec | | $ | (270 | ) | | $ | 726 | |
| | | | | | | | | |
| Non-GAAP net income (loss) per diluted share attributable to Micronet Enertec | | $ | (0.05 | ) | | $ | 0.18 | |
| Shares used in per share calculations | | | 5,831,247 | | | | 3,924,427 | |
| GAAP net loss per diluted share attributable to Micronet Enertec | | $ | (0.06 | ) | | $ | (0.13 | ) |
| Shares used in per share calculations | | | 5,831,247 | | | | 3,483,749 | |
About Micronet Enertec Technologies, Inc.
Micronet Enertec Technologies, Inc. (NASDAQCM: MICT) operates through two companies, Enertec Systems 2001 Ltd ("Enertec"), its wholly-owned subsidiary, and Micronet Ltd ("Micronet"), in which it has a controlling interest. Micronet operates in the growing commercial Mobile Resource Management (MRM) market, mainly in the United States. Micronet designs, develops, manufactures and sells rugged mobile computing devices that provide fleet operators and field workforces with computing solutions in challenging work environments. Enertec operates in the Defense and Aerospace markets and designs, develops, manufactures and supplies various customized military computer-based systems for missile defense systems, command and control and others. The Company's products, solutions and services are designed to perform in severe environments and battlefield conditions. For more information please visit: www.micronet-enertec.com, the content of which is not incorporated by reference into this press release.
Forward-looking Statement
This press release contains express or implied forward-looking statements within the Private Securities Litigation Reform Act of 1995 and other U.S. Federal securities laws. These forward-looking statements include, but are not limited to, those statements regarding successful integration of Micronet and Beijer, potential growth of Micronet, increase in revenues in the second half of 2014 of Micronet, effect of revenues from Beijer operations on Micronet future results, presence and levels of backlog and demand in the Aerospace and Defense segment. Such forward -looking statements and their implications involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. The forward-looking statements contained in this press release are subject to other risks and uncertainties, including those discussed in the "Risk Factors" section and elsewhere in the company's annual report on Form 10-K for the year ended December 31, 2013 and in subsequent filings with the Securities and Exchange Commission. Except as otherwise required by law, the company is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
Contact information:
Miri Segal Scharia
Managing Partner Global Accounts & IPOs
Hayden/ MS-IR LLC
Tel: 917-607-8654
msegal@ms-ir.com
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