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Pointer Telocation Corporate Profile
David Mahlab, CEODecember 2018
Managing the Business of Automotive IOT
This presentation contains forward-looking statements including data with respect to the growth in location based and other services. All such forward-looking statements are only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations. Actual performance and results of operations may differ materially from those projected or suggested in the forward-looking statements due to certain risks and uncertainties including, without limitation:
§ our future operations depend on our ability to obtain additional financing;
§ we depend on a small number of customers, the loss of which could negatively impact our operations;
§ we rely on third-party operators to provide services for our location-based solution systems;
§ we rely on a single-source supplier to manufacture the car-based devices for our location-based solution systems;
§ the technology and standards in the stolen vehicle retrieval industry in which we operate change rapidly and the introduction of products using new technology and the emergence of new
industry standards and practices could negatively impact our business;
§ our location-based solution products employ proprietary technology which is difficult to protect and which may infringe on the intellectual property rights of third parties;
§ our ability to timely obtain components from our suppliers or to timely deliver through our subcontractors or vendors;
§ the impact of exchange rate and interest rate fluctuations on our fixed price contracts, financial condition and results of operations;
§ our ability to timely develop and introduce new technologies or enter new markets;
§ our ability to respond to the introduction of new technology or new industry standards and practices in the stolen vehicle retrieval and location based services industries;
§ our ability to retain and attract key managerial, technical and research and development personnel; and
§ our ability to respond to political or military conditions in the countries in which we operate.
Further information on potential factors that could affect our business is described in our reports on file with the Securities and Exchange Commission. Presentation of non-GAAP Financial Information: This presentation contains both GAAP and non-GAAP financial information pertaining to actual results and estimates of future performance. Non-GAAP financial information includes EBITDA information.
Forward-looking Statements
Nasdaq: PNTR 2
Managing the Business of Automotive IOT
WHO WE ARE
• Pointer offers a unique combination of feature-rich software and an advanced variety of Telematics and IOT devices
• Using Pointer’s cutting-edge devices, fleet and asset owners can Track, Trace and Monitor their valuable assets
• Pointer Connect enables fleet owners to increase revenue, reduce costs, increase productivity and streamline operations
Leading Provider of High-end Telematics and Mobile IOT Solutions
Fleet Management Asset Tracking Mobile IOT
Nasdaq: PNTR 3
Managing the Business of Automotive IOT
How It All Works
Mobile Resource Management (MRM) Solutions
Nasdaq: PNTR 4
Managing the Business of Automotive IOT Nasdaq: PNTR 5
Growing Subscriber Base • Large and growing base of subscribers up 10% y/y to 274,000 in Q3 2018
Attractive Financial Profile
• Robust visibility driven by recurring revenue• Leading EBITDA Margins >17% with attractive free cash flow conversion
Accelerated Growth• Pointer is perfectly positioned to take market share in the Fleet Management and Asset Tracking markets
• High growth potential in the automotive IOT market
$55B Global Growing Market
• Serving a $55B global, growing market with a primary focus on India, Israel, Latin America and the U.S.
3M Units Installed 900,000 Units Connected to Cellocator +
80 Countries 450 Partners 9 Offices WorldwideFailure rate (<0.3%)25 Years of Excellence
• 65% of the revenues from a solid base of recurring revenue from cloud-based solutions with consistent growth on a constant currency basis
Recurring Revenues
Investment Highlights
Managing the Business of Automotive IOT
Worldwide Customers
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Serving Top Brands Across a Diversity of Industries
Managing the Business of Automotive IOT
Fleet Management
Our Business
Asset Tracking IIoT Solutions
Fuel Efficiency
Controlled Shipments
Driver SafetyCar Sharing
Hours of Service & DTCO
Hybrid Network
Security Usage-Based
Insurance
Vehicle Diagnostics
Cargo Tracking Cold Chain
Construction & Heavy Equipment
Container Security
LogisticsTrailer Management
Utilities & Rental Equipment
Cargo Tracking Devices
Software Mobile App
Consulting
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Managing the Business of Automotive IOT
Fleet Management
Our Business
Asset Tracking IIoT Solutions
Fuel Efficiency
Controlled Shipments
Driver SafetyCar Sharing
Hours of Service & DTCO
Hybrid Network
Security Usage-Based
Insurance
Vehicle Diagnostics
`
Cargo Tracking Cold Chain
Construction & Heavy Equipment
Container Security
LogisticsTrailer Management
Utilities & Rental Equipment
Cargo Tracking Devices
Software Mobile App
Consulting
Nasdaq: PNTR 8
SecuritySavings Safety & Driver Behavior
Preventive Maintanance
Efficiency & Performance
Managing the Business of Automotive IOT
Case Study – Preventive Maintenance
Challenges• Optimally manage a large fleet of vehicles
• Achieve smooth functioning for long periods of time
• Monitor and train drivers for safe and optimal driving performance
Solution• Continuous collection and analysis of data to identify patterns & trends that enable alerts for mechanical and performance problems
• In-vehicle devices connect to the vehicle’s controller–area network (CAN) –bus
• Diagnostic trouble codes (DTCs) allow maintenance teams to identify malfunctions rapidly within the vehicle and determine remedy and timing of repairs
Results• Increased driver and vehicle safety• Reduced repair time • Lower costs• Less downtime
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Our Solution Enabled a Large Fleet Customer to Reduce Repair Expenditures and Vehicle Downtime
Managing the Business of Automotive IOT
Pharmaceutical Last Mile DistributionPharmaceuticals require temperature control and monitoring during storage and transportation, to avoid decomposition and sustain the intended effects from the products. Failure to do so could lead to toxicity or even death.
Monitoring and managing is often required by regulators, and keeping the specified temperature during transportation requires continuous monitoring, or alerting the driver and technicians to fix problems by changing / shortening delivery routes or reducing temperature while on the road.
ChallengesA large pharmaceutical company
§ Reduce the number of defected goods § Real-time preventive monitoring § Reduce the number of stolen deliveries§ Optimizing routes and increase saving
Solution§ Fixed devices sense temperature, light,
humidity and shock, alerting on deviations or tampering with goods
§ Mobile devices inside packages provide real-time monitoring and enable goods retrieval if stolen
§ Devices transmit information at predetermined intervals to our MRM platform, creating alerts for deviation in the condition or location of goods
Results§ Optimize fleet efficiency§ Reduce good waist § Improve operation utilization§ Meet the regulation requirements § Increase revenue
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Case Study – Cold Chain
Managing the Business of Automotive IOT
1991 - Founded
2014
2007
2016
Acquisitions
Customer Portfolio Growth
11Tier 1 Customers
M&A Portfolio Growth
Managing the Business of Automotive IOT
Global Presence
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Mexico
Argentina
Brazil
Technology & Products MRM SaaS Services
Israel*Americas*39%
6%
45%
Rest of World*4%
Europe*
* % of FY 2017 revenues
Africa*6%
MRM SaaS Services… Serving 274,000 Subscribers in Six Countries Technology & Products… More than 3 Million Hardware Units Installed in 80 Countries
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Managing the Business of Automotive IOT
Massive Market Opportunity in Mobile Resource Management (MRM) and Growing
$34.6
$20.5
$55 Billion Total Addressable Market
MaaS / Fleet Management Asset Tracking
24% CAGR through 2022
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32% CAGR through 2020
Key Market Drivers
• Increasing Operational Efficiency
• Driver Safety & Compliance
• Cargo Asset tracking
• Connected Cars
• IIOT platform
Source: Research and Markets; Markets and Markets
Market Overview
Managing the Business of Automotive IOT
Continuous Subscriber Growth
Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318
165 170 174 180 185192 198
222231
239249
258265 271 274
Users In Service (UIS) (at Quarter End)
274K
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Subscriber Growth is a Strong Driver of Profitability
# of Users in Thousands 18% CAGR
Managing the Business of Automotive IOT
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
$12,349 $12,894 $13,336 $13,394 $13,824 $13,162 $12,812
$6,682 $7,147 $6,896 $5,456$7,059
$6,578 $5,918
Quarterly Revenue
Products Services
$18,730
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Financial Overview: Revenue
• Services consistently represents ~2/3 of total revenue
$19,740$20,883
$18,850$20,232$20,041
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Solid Base of Recurring Services Revenue
USD in thousands
68%32%
Revenue BreakdownQ3 2018
Services Products
$19,031
Managing the Business of Automotive IOT 16
Financial Overview: Local Currency Revenue
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Consistent Growth on a Local Currency Basis
USD in thousands
YTD 30-9-18YTD 30-9-17Q3 2018Q3 2017
42,054 38,579
14,382 13,336
19,578 20,725
6,151 6,896
Service Products
$59,304
$20,232 $20,533
$61,632
YTD 30-9-18- per the currencies exchange rates in January-September 2017Q3 2018 – per the currencies exchange rates in Q3 2017
Managing the Business of Automotive IOT
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
$3,106$3,435 $3,601
$3,086$3,270 $3,385
$3,118
Quarterly EBITDA(% of Revenues)
15.7%16.4%
17.8%17.1%
16.3%
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
$2,256
$2,834 $2,906
$2,316$2,568
$2,758$2,523
Quarterly GAAP Operating Income(% of Revenues)
12.3%12.3%
14.0%14.4%14.1%
11.9% 13.5%17.1%
USD in thousands
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Financial Overview: Profitability (1)
USD in thousands
(1) Please refer to the explanation of the reconciliation between results on a GAAP and Non-GAAP basis in Exhibit 99.1 to our Periodic Report on Form 6-K filed with the SEC on November 15,2018, and the reconciliation of Non-GAAP EBITDA from GAAP to Non-GAAP on page 26 of this presentation.
16.6%
Managing the Business of Automotive IOT
a - On September 2014, the company acquired 100% interest in Global Telematics S.A.b - On October 2016, the company completed the acquisition of Cielo through its subsidiary Pointer Brazil, which acquired 100% of Cielo’s shares.
18Nasdaq: PNTR
2014 2015 2016 2017
$5,596
$8,802 $9,077 $9,700
($2,929) ($2,350)($3,596) ($3,152)
($688)
($8,531)
$2,626
$6,452$5,481
$6,548
Cash from Operations CapEx Acquisitions Free Cash Flow before Acquisitions
USD in thousands
Sources and Uses of Cash
Strong Generation of Cash From Operations and Low Levels of Capital Required to fund Organic Growth Further Reinforces the Strength of the Balance Sheet
a
b
Managing the Business of Automotive IOT Nasdaq: PNTR
USD in millions, except per share amounts
As of
9/30/2018 12/312017
Cash and cash equivalents $8.3 $7.4
Cash per share $1.03 $0.92
Total Current Assets $30.4 $30.5
Total Assets $89.5 $94.5
Total Current Liabilities $17.0 $21.2
Total Debt $6.3 $10.1
Total Liabilities $24.1 $31.0
Total Stockholders’ Equity $65.3 $63.4
Current Ratio 1.8:1 1.4:1
Debt-to-Total Capital 9.6% 15.9%
ü Strong cash balance
ü Declining debt balance
ü Sufficient working capital
ü Minimal financial leverage
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Summary Balance Sheets
Healthy Balance sheet Capitalized with Sufficient Cash and Minimal Debt
Positive net cash for the first time in more than a decade
Managing the Business of Automotive IOT Nasdaq: PNTR 20
Selective, Accretive M&A Transactions
Increase Subscribers Increase Average Revenue per User (ARPU)
Expand Vertical Markets
SaaS
Leverage SaaS model to increase subscribers
Sell additional services to existing users
Reach new markets… IIoT, Logistics
Growth Drivers
Managing the Business of Automotive IOT Nasdaq: PNTR 21
2015 2016 2017 3 to 5 Year Target
$60.6 $64.4 $78.2
$160.0
Revenue
Targeting 2X Growth
2015 2016 2017 3 to 5 Year Target
11.2%15.5% 16.9%
20.0%
EBITDA Margin1
• Leverage existing infrastructure to add new subscribers at low incremental costs
1 Excludes one-time acquisition related costs
• Continue to scale subscriber base
• Complement organic growth with selective M&A
USD in millions
Long-term Growth Targets
Positioned for Growth with a Low-risk, Recurring Revenue Business Model that has Significant Operating Leverage
Managing the Business of Automotive IOT
Fleetmatics $2,906
Sources: Company financial reports, Pointer Telocation analysis, share price and market cap data as of November29, 2018.Note Graph is not to scale; for informational purposes only.
Peer Group Analysis
Ituran(ITRN)9.3x
Mix Telematics (MIXT)11.6x
Fleetmatics (subsidiary of Verizon)
32x Pointer (PNTR)7.2x
EV/EBITDABased on Current Market Price or Buyout Price & LTM EBITDA
Market Cap Per SubscriberUS$, Current Market Cap or Buyout Price / Number of Subscribers
Mix Tele.
$527Ituran
$598 Pointer
$344
826kSubscribers
Number of subscribers based on most recent data available (acquisition date for Fleetmatics)
1,752k 714k 274k
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Acqu
isiti
on
Managing the Business of Automotive IOT
David Mahlab CEO
Yaniv Dorani CFO
Rami Peled CIO
Joshua RozanskiVP Sales & Marketing
Moses Zelinker CTO
Gustavo LadeiraCEO Pointer Cielo Brazil
Nessy Turgeman VP global Software
Paul RobertsCEO Pointer South Africa
Eduardo ChavezCEO Pointer Mexico
Pablo PortoCEO Pointer Argentina
Ilan GoldsteinCEO Pointer Israel
Prior Experience
Pointer Subsidiaries
Nasdaq: PNTR 23
Winning Team
Managing the Business of Automotive IOT Nasdaq: PNTR 24
Growing Subscriber Base • Large and growing base of subscribers up 10% y/y to 274,000 in Q3 2018
Attractive Financial Profile
• Robust visibility driven by recurring revenue• Leading EBITDA Margins >17% with attractive free cash flow conversion
Accelerated Growth• Pointer is perfectly positioned to take market share in the Fleet Management and Asset Tracking markets
• High growth potential in the automotive IOT market
$55B Global Growing Market
• Serving a $55B global, growing market with a primary focus on India, Israel, Latin America and the U.S.
3M Units Installed 900,000 Units Connected to Cellocator +
80 Countries 450 Partners 9 Offices WorldwideFailure rate (<0.3%)25 Years of Excellence
• 67% of the revenues from a solid base of recurring revenue from cloud-based solutions with consistent growth on a constant currency basis
Recurring Revenues
Investment Highlights
Thank You!www.pointer.com
Appendix
www.pointer.com
Managing the Business of Automotive IOT Nasdaq: PNTR 27
Reconciliation of GAAP Net Income to Non-GAAP EBITDA
Three months ended
September
30th, 2018June 30th,
2018 March 31st,
2018December 31st, 2017
September 30th, 2017
June 30th, 2017
GAAP Net income as reported: 1,804 1,925 1,769 11,106 1,883 1,966 Financial expenses, net 190 332 334 296 288 259Tax on income 531 501 449 (9,098) 739 609Depreciation, amortization and impairment of goodwill and intangible assets
593
627 718 782
691
601 EBITDA 3,118 3,385 3,270 3,086 3,601 3,435
Managing the Business of Automotive IOT
Our Products
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CR-300Cost-Effective Fleet and Security Management
Cello-IQIntelligent Fleet Management, Driver Behavior& Diagnostics Solution Intelligence.
MiniTrackLow Cost Fleet Management Device with BLE Connectivity
CelloTrack (Power/10Y)Asset Management Device with Longer Operational Lifetime & Wireless Sensors connectivity
CelloTrack SolarSolar Asset Management Device with BLE Connectivity & High Rate Transmission Capacity
CelloTrack Nano & MultiSenseUnique Asset Management Solution Using a Portable Hub and Wireless Sensor Network
Fleet Asset
Managing the Business of Automotive IOT
Our Software – Pointer Connect
Nasdaq: PNTR 29
A Complete fleet & Asset management SAAS solution
IIOT management Software
• Robust Global infrastructure • Real-Time tracking• Optimize, improved and manage
• Driver’s behavior • Vehicle Maintenance, • Improve asset utilization • Fuel Saving • Extensive BI and Reporting tools
• Pointer Works manage their day-to-day tasks and routes.