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Micronet Enertec Technologies, Inc. Reports Second Quarter 2014 Financial Results; Quarterly Sequential Revenue Growth of 18% With 42% Increase in Backlog Over Year End

Companies mentioned in this article: Micronet Enertec Technologies, Inc.

MONTVALE, N.J., Aug. 14, 2014 /PRNewswire/ -- Micronet Enertec Technologies, Inc. (NASDAQCM: MICT), a developer and manufacturer of 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 second quarter and six months ended June 30, 2014.

David Lucatz, Chief Executive Officer of Micronet Enertec Technologies, Inc. stated, "We are at an exciting point in our growth, however, this is not yet reflected in our quarterly results, given the timing of certain events as part of our road map going forward. In June, we acquired Beijer Electronics' MRM division, establishing ourselves as a dominant player in the MRM market. Only one month of the acquired division's revenues are consolidated in the second quarter results. We also witnessed a reduction in revenue from one of our legacy customers during the quarter, temporarily impacting our revenue performance. That said, we saw healthy growth in our MRM business, transitioning our revenue to a more diverse customer base with increased market share in the higher growth local fleet vehicle vertical. Given our improved backlog performance, we expect our revenues for the second half of 2014 to grow in excess of 35% compared to the first half of the year."

Mr. Lucatz continued, "We are advancing with our growth strategy. We concluded the acquisition of Beijer's MRM division which provides us with significant new opportunities in the MRM space. Now, our combined extensive offering of rugged computers and tablets is ideally suited to service the rapidly growing MRM service providers in the MRM marketplace. Our ability to centralize our MRM operations in the U.S. and leverage a stronger U.S. sales team, will position us well to more effectively penetrate the local fleet vertical, the fastest growing vertical in the MRM space."

Second Quarter 2014 Review

    --  Total revenue declined 15% to $6.6 million, as compared to $7.8 million
        in the second quarter of 2013, due to reduced sales to the Company's
        major client.  Sequentially, revenues increased 18% compared to the
        first quarter of 2014. Second quarter revenues include approximately one
        month of revenue contribution from the recent acquisition of Beijer's 
        MRM division.
    --  Selling General & Administrative (SG&A) expense increased to $2 million
        as compared to $1.2 million in the same quarter of 2013, primarily
        related to costs associated with the acquisition of Beijer's  MRM
        division and consolidating the Company's MRM operations within the U.S.
    --  The Company reported an operating loss of $1.1 million as compared to
        operating income of $865,000 in the second quarter of 2013.
    --  Net loss attributable to Micronet Enertec  for the second quarter was
        $1.3 million or a loss of ($0.22) per basic and diluted share. During
        the second quarter, the Company had approximately $290,000 in one-time
        acquisition expenses.
    --  At June 30, 2014 the Company reported cash and marketable securities
        totaling $16.3 million and working capital of $19.5 million.
    --  Backlog increased by 42% to $20.4 million as compared to backlog of
        $14.4 million at December 30, 2013.

"We saw strong backlog growth in the quarter of 22% compared to the same quarter last year and 42% compared to year end 2013. During the second quarter, we received a $2.7 million order from a customer working with the transit industry, for the TREQ-VMx mobile rugged tablet, a product that became part of our portfolio with the Beijer acquisition. Additionally, we received an $800,000 follow-on order from a client catering to the heavy construction market, for TREQ-VMI, a tablet developed for both in-cab and out-of-cab operations. We are very encouraged to see demand for our products from a variety of MRM markets.

"Our Aerospace & Defense segment has a solid customer base that continues to deliver a consistent source of revenue. During the second quarter we announced $3 million in cumulative follow-on orders for a missile defense system support program. These orders follow the initial $2.6 million order we received in November 2013. Given the current global environment and sustained tensions in several areas of the world, we anticipate continued demand for the products offered by our Aerospace and Defense segment."

First Six Months 2014 Review

    --  Total revenue was $12.2 million, compared to $18.1 million in the first
        half of 2013. The decline in revenue was due to reduced sales to the
        Company's major client.  Revenue is expected to increase in the second
        half of 2014, including Beijer's revenues which will be fully integrated
        at that time.
    --  SG&A expense was $3.2 million in the first half of 2014, as compared to
        $2.3 million in the first half of 2013.  SG&A for the first six months
        of 2014 included costs associated with the acquisition of Beijer's MRM
        division and consolidation of the MRM business within the U.S.
    --  Operating loss was $1.2 million compared to operating income of $2.3
        million in the first half of 2013. The operating loss was mainly due to
        decline in revenues.
    --  Net loss attributable to Micronet Enertec for the first half of 2014 was
        $1.6 million or ($0.28) per basic and diluted share, based on 5.8
        million shares outstanding.

Mr. Lucatz concluded, "This is a transformative time for our Company. We see tremendous opportunity for our products as we target the growing MRM market, with a focus on local fleet management, the fastest growing segment. The acquisition of Beijer's MRM division diversifies our customer base, expands our geographic reach, fortifies our U.S. sales presence and strengthens our R&D efforts, all of which position us well to aggressively drive the successful penetration of high growth MRM verticals."

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 second quarter and first six months ended June 30, 2014. Dial in for U.S. based callers is (888) 668-9141, callers from outside of the U.S should dial 972-3-918-0610.

Participants may also access a live webcast of the conference call through the Investor Relations section of our website by clicking here.

A telephone replay will be available for two weeks following the end of the call. Replay dial in for U.S. based callers is (877) 456-0009, callers outside of the U.S should use: 972-3-3-925-5925


                                   MICRONET ENERTEC TECHNOLOGIES, INC. AND SUBSIDIARIES

                                       CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                                 (In Thousands, Except Share and Earnings Per Share Data)

                                                       (Unaudited)



                                                         Six months ended                      Three months ended

                                                             June 30,                               June 30,
                                                             --------                               --------

                                                              2014                        2013                       2014             2013
                                                              ----                        ----                       ----             ----


    Revenues                                               $12,153                     $18,132                     $6,586           $7,771

    Cost of revenues                                         8,244                      11,618                      4,729            4,903
                                                             -----                      ------                      -----            -----

    Gross profit                                             3,909                       6,514                      1,857            2,868
                                                             -----                       -----                      -----            -----


    Operating expenses:

    Research and
     development                                             1,618                       1,389                        874              680

    Selling and marketing                                      759                         678                        368              364

    General and
     administrative                                          2,482                       1,650                      1,598              866

    Amortization of
     intangible assets                                         251                         471                        158               93
                                                               ---                         ---                        ---              ---

    Total operating
     expenses                                                5,110                       4,188                      2,998            2,003
                                                             -----                       -----                      -----            -----


    Income (loss) from
     operations                                            (1,201)                      2,326                    (1,141)             865

    Financial  expenses,
     net                                                       634                       1,848                        588              717
                                                               ---                       -----                        ---              ---


    Income (loss) before
     provision for income
     taxes                                                 (1,835)                        478                    (1,729)             148

    Taxes on income                                           (37)                        130                      (116)              11
                                                               ---                         ---                       ----              ---


    Net income (loss)                                      (1,798)                        348                    (1,613)             137

    Net income (loss)
     attributable to non-
     controlling interests                                   (192)                      1,037                      (339)             364
                                                              ----                       -----                       ----              ---


    Net loss attributable to Micronet Enertec
     Technologies, Inc.                                                                          (1,274)                  (227)

                                                           (1,606)                      (689)
                                                            ======                        ====


    Loss per share attributable to Micronet Enertec
     Technologies, Inc.

    Basic and diluted                                      $(0.28)                    $(0.18)                   $(0.22)         $(0.04)
                                                            ======                      ======                     ======           ======


    Weighted average common shares outstanding:

    Basic and diluted                                    5,831,246                   3,725,998                  5,831,246        5,210,247
                                                         =========                   =========                  =========        =========




                                                      MICRONET ENERTEC TECHNOLOGIES, INC. AND SUBSIDIARIES

                                                         CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                                                       (USD In Thousands)

                                                                           (Unaudited)



                                       Six months ended                            Three months ended

                                           June 30,                                     June 30,
                                           --------                                     --------

                                               2014                   2013                          2014     2013
                                               ----                   ----                          ----     ----


    Net income (loss)                                 $(1,798)                                    $348            $(1,613)     $137

    Other comprehensive income (loss),
     net of tax:

    Currency translation
     adjustment                                 212                    724                           238      115
                                                ---                    ---                           ---      ---

    Total comprehensive
     income (loss)                          (1,586)                 1,072                       (1,375)      252

    Comprehensive income
     (loss) attributable
     to the non-
     controlling
     interests                                  149                (1,137)                          220    (423)
                                                ---                 ------                           ---     ----

    Comprehensive loss
     attributable to
     Micronet Enertec
     Technologies, Inc.                               $(1,735)                                   $(65)           $(1,595)   $(171)
                                                       =======                                     ====             =======     =====



                     MICRONET ENERTEC TECHNOLOGIES, INC. AND SUBSIDIARIES
                            CONDENSED CONSOLIDATED BALANCE SHEETS
                       (In Thousands, Except Share and Par Value Data)


                                                  June 30,                December
                                                                             31,

                                                        2014                   2013
                                                        ----                   ----

                                                 (Unaudited)

    ASSETS

    Current assets:

    Cash and cash
     equivalents                                                 $9,223             $12,825

    Marketable securities                              7,124                  6,969

    Trade account
     receivables, net                                 12,813                 13,467

    Inventories                                        6,509                  4,324

    Derivative asset -call
     options                                               -                   460

    Other account
     receivable                                        1,515                  1,165
                                                       -----                  -----

    Total current assets                              37,184                 39,210
                                                      ------                 ------

    Property, and
     equipment, net                                    2,433                  2,440

    Intangible assets and
     others, net                                       5,180                  1,076

    Goodwill                                           1,466                      -

    Long term deposit                                     74                    103

    Total long term assets                             9,153                  3,619
                                                       -----                  -----

    Total assets                                                $46,337             $42,829
                                                                -------             -------


         LIABILITIES AND EQUITY

         Short term bank credit
          and current portion of
          long term bank loans                                   $8,700              $5,058

      Current portion of long
       term notes, net of
       discount                                          989                      -

      Trade account payables                           5,310                  4,361

      Other account payables                           2,599                  3,355

      Total current
       liabilities                                    17,598                 12,774
                                                      ------                 ------

      Long term loans from
       banks and others                                5,492                  3,130
                                                       -----                  -----

      Long term notes, net of
       discount                                            -                   933

      Finance lease                                       88                    109

      Accrued severance pay,
       net                                               125                    172

      Deferred tax
       liabilities, net                                   85                    113

           Total long term
            liabilities                                5,790                  4,457
                                                       -----                  -----

      Preferred stock; $.001
       par value, 5,000,000
       shares authorized,
       none issued        and
       outstanding                                         6                      6

      Common stock; $.001 par value,
       100,000,000 shares authorized,
       5,831,246 s shares issued and
       outstanding as of June 30, 2014 and
       December 31, 2013

         Additional paid in
          capital                                      7,486                  8,053

      Accumulated other
       comprehensive income                            1,559                  1,389

      Retained earnings                                6,817                  8,423

      Micronet Enertec
       Technologies, Inc.
       stockholders' equity                           15,868                 17,871
                                                      ------                 ------

      Non-controlling
       interests                                       7,081                  7,727
                                                       -----                  -----

           Total equity                               22,949                 25,598

             Total liabilities and
              equity                                            $46,337             $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 Beijer's MRM division. 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-Transaction
        operating results.
    --  Amortization of note discount and related expenses - These interest
        expenses are non-cash and are related to amortization of discount of the
        UTA Capital LLC notes. 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.
    --  One time expenses relates to purchase of a business - These expenses are
        one time and relates directly to the purchase of the Vehicle business
        and consist mainly of legal and accounting fees, finders fees and travel
        expenses. We believe that these expenses do not reflect our operational
        performance. Therefore, we exclude them to provide investors with a
        consistent basis for comparing pre- and post-Business purchase operating
        results.

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:


                                          Six months ended

                                              June 30,
                                             --------

                                      (Dollars in Thousands,

                                       other than share and

                                        per share amounts)
                                       -----------------

                                        2014                 2013
                                        ----                 ----

    GAAP net loss attributable to
     Micronet Enertec                             $(1,606)          $(689)

    Amortization of acquired
     intangible assets                                 251              471

    Change in fair value of call
     options and warrants                              308              193

    Amortization of note discount and
     related expenses                                   56            1,188

    Stock-based compensation                            13                6

    One time expenses relates to
     purchase of a business                            290                -

    Income tax-effect of above non-
     GAAP adjustments                                 (28)            (71)
                                                       ---              ---

    Total Non-GAAP net income (loss)
     attributable to Micronet Enertec               $(716)          $1,098


    Non-GAAP net income (loss) per
     diluted share attributable to
     Micronet Enertec                              $(0.12)           $0.29

    Shares used in per share
     calculations                                5,831,246        3,727,372

    GAAP net income (loss)  per
     diluted share attributable to
     Micronet Enertec                              $(0.28)         $(0.18)

                                                 5,831,246        3,725,998

    Shares used in per share
     calculations                                        6                8


                               Three months ended June 30,
                               ---------------------------

                                 (Dollars in Thousands,

                                other than share and per

                                     share amounts)
                                      -------------

                                   2014                    2013
                                   ----                    ----

    GAAP net loss attributable
     to Micronet Enertec                     $(1,274)             $(227)

    Amortization of acquired
     intangible assets                            158                  93

    Change in fair value of
     call options and warrants                    381               (105)

    Amortization of note
     discount and related
     expenses                                       6                 619

    Stock-based compensation                        7                   6

    One time expenses relates
     to purchase of a business                    290                   -

    Income tax-effect of
     above non-GAAP
     adjustments                                 (14)               (14)
                                                  ---                 ---

    Total Non-GAAP net income
     (loss) attributable to
     Micronet Enertec                          $(446)               $372


    Non-GAAP net income
     (loss) per diluted share
     attributable to Micronet
     Enertec                                  $(0.08)              $0.07

    Shares used in per share
     calculations                           5,831,246           5,211,888

    GAAP net loss per diluted
     share attributable to
     Micronet Enertec                         $(0.22)            $(0.04)

    Shares used in per share
     calculations                           5,831,246           5,210,247

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 the Company and Beijer's MRM division, potential growth of the Company's MRM business with increased market share in the higher growth local fleet vehicle vertical, increase in revenues, effect of revenues from Beijer operations on the Company's future results, presence and levels of backlog, and demand in our 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.

SOURCE Micronet Enertec Technologies, Inc.