SuperCom Reports First Quarter 2016 Financial Results

“As we have previously reported, our first quarter results were impacted by delays associated with macro-economic conditions in certain emerging markets where we are deploying large long-term government systems, which were mostly resolved in the second quarter, as well as a significant increase in the consolidated operating expenses caused by our recent acquisitions, which we are in the process of optimizing as we have done historically,” commented Arie Trabelsi, SuperCom’s President and CEO.

“As we have previously reported, our first quarter results were impacted by delays associated with macro-economic conditions in certain emerging markets where we are deploying large long-term government systems, which were mostly resolved in the second quarter, as well as a significant increase in the consolidated operating expenses caused by our recent acquisitions, which we are in the process of optimizing as we have done historically,” commented Arie Trabelsi, SuperCom’s President and CEO. “Despite these factors, we are encouraged by both our near- and long-term opportunities and are making progress with customers and potential customers. In addition, we expect our broader product lines and expanded global customer base to provide us with a more robust sales opportunities pipeline in the future, which is less sensitive to macro-economic conditions in specific countries or regions.”

First Quarter and YTD Operational Highlights

M2M(IoT) division completed the acquisition of Leaders in Community Alternatives (LCA), adding more than 25 years of electronic monitoring experience and an established base of customers, within the U.S. Since the closing of the LCA acquisition, we have integrated SuperCom’s PureSecurity technology solutions into LCA’s existing customer base and have monitored over 200 offenders in California using SuperCom’s proprietary technology SuperCom acquired Safend, a Cyber and data security company, giving SuperCom a more established cybersecurity presence with thousands of valuable customers and leading product offerings in their space, and it has since the acquisition reached an annual run-rate of recurring bookings from existing customers of over $2 millionSubsequent to the end of the quarter, the Secured Payment Solution division acquired PowaPOS, a market-leading point-of-sale platform purpose-built to meet market demand for mobile and tablet-based payments, with potential deployments in more than 20 countries, and it has reached over $1 million in orders in the first month post-acquisition Subsequent to the end of the quarter, SuperCom acquired Alvarion, a provider of autonomous Wi-Fi networks with a proven record of reliability and performance in over 25,000 sites in more than 95 countries. Since last year, SuperCom grew its experience and relationships with a customer base consisting primarily of over 20 governments to currently over 30,000 customers including governments and banks, telecom providers, retail chains and other enterprises in over 100 countries.

Mr. Trabelsi added, “We continue to advance our stated growth strategy of providing a more integrated offering to customers through complementary and interconnected products and solutions. We believe there is significant opportunity to sell these expanded solutions to both government and enterprise customers using our existing sales channels. These new capabilities and offerings are complementary to, and interconnected with, our core business and should provide us with opportunities to increase our operating leverage.”

Mr. Trabelsi concluded, “Subsequent to the end of the first quarter, we have made significant progress to integrate our recent acquisitions and are beginning to leverage a number of synergies which we believe will pave the way for improved financial results in the quarters to come.”

Results Conference Call

The Company will host a conference call, today, Wednesday July 6, 2016, at 10:00 a.m. Eastern time to review the Company’s financial results and business outlook.

To participate, interested investors should call one of the following telephone numbers. It is recommended that participants dial in at least five minutes before the start of the call:

US:

1-866-932-0173

at 10 a.m. Eastern Time

Israel:

1-80-925-6145

at 5 p.m. Israel Time

International:

1-785-424-1630

A live and archived webcast of the call will be available on the SuperCom investor relations website at http://www.supercom.com.

About SuperCom

Since 1988, SuperCom has been a leading 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.

SuperCom’s website is http://www.supercom.com

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 16, 2016. 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)

March 31,

December 31,

2016

2015

Unaudited

Audited

CURRENT ASSETS

Cash and cash equivalents

11,222

22,246

Restricted bank deposits

4,249

3,274

Trade receivable, net

17,009

15,122

Deferred tax short term

1,391

2,639

Other accounts receivable and prepaid expenses

1,504

1,199

Inventories, net

3,190

3,602

Total current assets

38,565

48,082

LONG-TERM ASSETS

Severance pay funds

242

216

Deferred tax long term

4,194

1,433

Customer Contracts

6,507

4,052

Software and other IP

4,507

4,595

Goodwill

6,948

4,688

Other Intangible assets

2,436

1,988

Property & equipment, net

992

888

Total Assets

64,391

65,942

CURRENT LIABILITIES

Trade payables

3,131

3,705

Employees and payroll accruals

1,884

1,488

Related parties

33

77

Accrued expenses and other liabilities

2,848

2,917

Advances from customers

69

Short-term liability for future earn-out

2,445

2,051

Total current liabilities

10,410

10,238

LONG-TERM LIABILITIES

Long-term liability for future earn-out

719

931

Deferred tax liability long term

198

Accrued severance pay

435

341

Total long-term liabilities

1,352

1,272

SHAREHOLDERS’ EQUITY:

Ordinary shares

1,023

1,053

Additional paid-in capital

81,349

83,201

Accumulated deficit

(29,743)

(29,822)

Total shareholders’ equity

52,629

54,432

64,391

65,942

SUPERCOM LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three months ended

March 31,

2016

2015

Unaudited

Unaudited

REVENUES

5,867

7,700

COST OF REVENUES

5,003

2,302

GROSS PROFIT

864

5,398

OPERATING EXPENSES:

Research and development

1,189

677

Selling and marketing

1,931

1,401

General and administrative

1,596

716

Other expenses

-2,606

Total operating expenses

2,110

2,794

OPERATING INCOME (LOSS)

-1,246

2,604

FINANCIAL EXPENSES (INCOME) , NET

56

-6

INCOME BEFORE INCOME TAX

1,302

2,610

INCOME TAX EXPENSES

1,381

548

NET INCOME FOR THE PERIOD

79

2,062

Basic

0.01

0.15

Diluted

0.01

0.15

Weighted average number of ordinary shares

15,130,490

13,742,586

used in computing basic income per share

Weighted average number of ordinary shares

15,219,619

13,875,938

used in computing diluted income per share

SUPERCOM LTD.

Reconciliation Table of GAAP to Non-GAAP figures and EBITDA to Net Income

(U.S. dollars in thousands)

Three months ended

March 31,

2016

2015

Unaudited

Unaudited

GAAP gross profit

864

5,398

Amortization of Software and IP

89

89

Stock-based compensation expenses

86

37

Non-GAAP gross profit

1,039

5,524

GAAP operating income (expense)

-1,246

2,604

Amortization of Software and IP

89

89

Amortization of Customer Contracts

191

230

Stock-based compensation expenses

489

175

Expense related transaction DD

108

Expense for doubtful debt

-800

Non-GAAP operating income (loss)

-1,169

3,098

GAAP net income

79

2,062

Amortization of Software and IP

89

89

Amortization of Customer Contracts

191

230

Stock-based compensation expenses

489

175

Expense related transaction DD

108

Expense for doubtful debt

-800

Non-GAAP net income

156

2,556

Non-GAAP EPS

0.01

0.15

NET INCOME FOR THE PERIOD

79

2,062

Income tax expenses (income), net

-1,381

548

Financial expenses (income), net

56

-6

Depreciation , amortization and stock-based compensation expenses

988

510

Expense related transaction DD

108

Expense for doubtful debt

-800

EBITDA *

-950

3,114

* EBITDA is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization.

(U.S. dollars in thousands)

Investor Relations Contacts:
Brett Maas / Rob Fink
Hayden IR
+1-(646)-536.7331 / +1-(646)-415-8972
brett@haydenir.com / rob@haydenir.com

Company Contact:
Ordan Trabelsi, President Americas
Tel: +1-212-675-4606
ordan@supercom.com

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/supercom-reports-first-quarter-2016-financial-results-300294619.html

SOURCE SuperCom Ltd

Related Links

http://www.supercom.com

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