Q3 2024: Revenue $6.9million; Free Cash Flows of $1.2 million; EBITDA $1.1 million
SuperCom(NASDAQ: SPCB),a global provider of secured solutions for the e-Government, IoT, and Cybersecurity sectors, todayreported financial and operating results for the three and nine months ended September 30, 2024.
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First Nine Months Ended September 30, 2024, Financial Highlights (Compared to First Nine months of 2023)
— Revenue increased to $21.3 million from $20.9 million.
— Gross profit increased to $10.7 million from $7.9 million.
— Gross Profit margin increased to 50.1% from 37.7%.
— Operating Income improved to $1.13 million compared to Operating Loss of ($0.91) million.
— Net Income improved to $2.52 million from Net Loss of ($2.48) million.
— Non-GAAP Operating Income improved to $3.91 million compared to $3.0million.
— Non-GAAP Net Income improved to $4.88 million compared to $1.68 million.
— EBITDA improved to $4.6 million compared to $3.7 million.
— Cash increased to $6.23 million.
— Non-GAAP EPS of $3.1.
Third Quarter Ended September 30, 2024, Financial Highlights (Compared to the Third Quarter of 2023)
— Revenue increased to $6.91 million from $6.78 million.
— Gross Profit decreased to $3.2 million from $4.0 million.
— Gross Profit margin decreased to 46% from 59%.
— Operating Income decreased to $0.03 million compared to $0.81 million.
— EBITDA decreased to $1.1 million from $2.5 million.
— Net Loss decreased to $0.44 million compared to Net Profit of $0.12 million.
— Non-GAAP Net Profit decreased to $0.35 million compared to $1.4 million.
— Cash increased to $6.2 million from $1.2 million.
— Cash per Share of $3 at end of period.
— Generated Positive Free Cash Flows of $1.2 million.
— Working Capital increased to $26.1 million.
— Non-GAAP EPS of $0.17.
Recent Business Highlights:
— The company has received new orders totaling over $13.5 million from European governments. These orders are expected to be delivered by the end of 2024, further solidifyingSuperCom’s leadership in the public safety sector across Europe.
— SuperCom, together with prime partner Electra, has been awarded a 5-year contract by theIsraelPrison Service state agency (IPS) to deploy its PureSecurity Electronic Monitoring (EM) Suite. The nationwide program is expected to cover all EM offender programs in the country, with an estimated 1,500 enrolleesand potential for expansion. SuperCom will deploy its cutting-edge EM solutions, including PureCom, PureTrack, PureTag, and PureBeacon. The 5-year contract is already in effectand includes the option for up to four one-year extensions for a total of a 9-year potential contract term.
— SuperCom secured multiple new electronic monitoring contracts with Sheriff agencies across West Virginia. These contracts leverage SuperCom’s innovative PureOne suite, enhanced with both cellular and WiFi communication capabilities, to provide robust monitoring solutions in rural areas with limited cellular coverage. These newly initiated contracts are already generating recurring revenue, further solidifying SuperCom’s footprint in the U.S. market.
— SuperCom secured a new contract with a leading Baltimore-based service provider in Maryland. The contract, which was launched in June 2024, is estimated to generate an annual recurring revenue (ARR) of approximately$250,000. Through this new partnership, SuperCom has deployed its advanced GPS technology, along with its 24/7 monitoring center services.
— SuperCom secured its first new contract in a county in New York State. This win, achieved through a competitive selection process, further strengthens SuperCom’s strategic expansion across the US and marks another milestone in its global business plan.
— SuperCom, through its wholly owned subsidiary, LCA, secured a new North California contract to provide housing and evidence-based case management services to youth and individuals transitioning from housing. The contract is projected to generate nearly $500,000 annually, marking SuperCom’s fourth North American contract win in 2024 and further expanding its role in rehabilitative services and secure solutions.
— SuperCom secured a $1.8 million contract with a long-term government customer, continuing a decade-long partnership. The contract underscores SuperCom’s ability to maintain strong relationships and deliver consistent, high-quality solutions in the e-Government sector.
— SuperCom, through its wholly owned subsidiary, LCA, won a new project in California valued at up to $2.0 million to provide a comprehensive jail-based program focusing on re-entry services aimed at reducing recidivism. This project, won through a competitive bid process, marks an expansion into a new county and is expected to generate approximately $400,000 in annual recurring revenue over five years.
— SuperCom, through its wholly owned subsidiary, LCA, secured a new EM contract in California with an established California services provider in the judicial sector. This contract is particularly notable for SuperCom’s successful displacement of a long-time incumbent competitor, primarily due to SuperCom’s new innovative PureOne solution.
— SuperCom won a new project in Canada with a renowned Canadian industry partner in the tracking solutions sector. This new project expands an existing collaboration with a long-standing partner, transitioning from providing RF-based tracking technology to embracing new GPS technologies. This expansion into new GPS technologies with the state-of-the-art PureOne devices underscores the company’s commitment to innovation and its ability to adapt to the evolving needs of its clients.
Management Commentary:
“We are pleased to announce another quarter of significant achievements, showcasing the continued strength and resilience of our business,” commented Ordan Trabelsi, President and CEO of SuperCom. “Our financial results for the third quarter and the first nine months of 2024 reflect the successful execution of our strategic initiatives, which have been driving revenue growth, improving profitability, and enhancing cash flow. Year-to-date, revenue increased to $21.3 million, gross profit surged by 35% to $10.7 million, and our gross profit margin improved dramatically to 50.1% from 37.7% in the prior year period.”
“This quarter was particularly exciting as we solidified our leadership position with key contract wins, including the prestigious National Israeli Electronic Monitoring project. We also expanded into new regions, including New York, West Virginia, and Maryland, further strengthening our footprint in the U.S. market. These wins not only reflect the exceptional value of our technology but also help position us for sustained expansion in the years ahead,” Ordan continued.
“Our commitment to financial discipline, operational efficiencies, and technology innovation has translated into tangible results: an improvement in net income to $2.52 million for the nine-month period, compared to a net loss of $2.48 million in the prior year. Free cash flow generation of $1.2 million in this quarter and a cash balance of $6.23 million at the end of it underscore these tangible results along with an ability to support further potential growth opportunities,” he added.
“Looking ahead, we remain focused on executing our strategy by delivering cutting-edge solutions, deepening relationships with existing clients, and entering new markets. With a pipeline of opportunities, continued technology advances, and a track record of operational excellence, we are well-positioned to drive shareholder value,” Ordan concluded.
Conference Call SuperCom will hold a conference call today (Thursday, November 14, 2024) at 10:00 a.m. Eastern time (7:00 a.m. Pacific time; 5:00 p.m. Israel time) to discuss the company’s financial and operating results for the three and nine months ended September 30, 2024, followed by a question and answer session.
Conference Call Dial-In Information:
Date: Thursday, November 14, 2024 Time: 10 a.m. Eastern time (7 a.m. Pacific time) U.S. toll-free: 888-506-0062 Israel toll-free: 1-809-423-853 International: 973-528-0011 Access Code: SuperCom Link: https://www.webcaster4.com/Webcast/Page/2259/51654
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, visithttps://www.supercom.com/
SuperCom Investor Relations: ir@supercom.com
Cautionary Note 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 or current facts. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from the statements made. Examples of these statements include, but are not limited to, statements regarding business and economic trends, the levels of consumer, business and economic confidence generally, the adverse effects of these risks on our business or the market price of our ordinary shares, and other risks and uncertainties described in the forward looking statements and in the section captioned “Risk Factors” in our Annual Report on Form 20-F for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 22, 2024, our reports on Form 6-K filed from time to time with the SEC and our other filings with the SEC. Except as required by law, we not undertake any 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.
Results presented in this press release are based on management’s estimated unaudited analysis of financial results for the presented periods. SuperCom’s independent registered accounting firm has not audited the financial data discussed in this press release. During the course of SuperCom’s quarter- and fiscal year-end closing procedures and review process, SuperCom may identify items that would require it to make adjustments, which may be material, to the information presented in this press release. As a result, the estimate financial results constitute forward-looking information and are subject to risks and uncertainties, including possible adjustments to such results.
Use of Non-GAAP Financial Information In addition to disclosing financial results calculated in accordance with the generally accepted accounting principles in the United States (“GAAP”), this release 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 SuperCom’s ongoing 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.The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, or superior to, operating loss and or net income (loss) or any other performance measures derived in accordance with GAAP or as an alternative to net cash provided by operating activities or any other measures of our cash flows or liquidity.
Non-GAAP EPS is defined as earnings before amortization and other non-cash or one-time expenses divided by weighted average outstanding shares.
EBITDA is defined as earnings before interest, taxes, depreciation, amortization, and other non-cash or one-time expenses.
[Tables to follow]
SUPERCOM LTD.
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
As of As of
September 30, December 31,
2024 2023
Unaudited Unaudited
CURRENT ASSETS
Cash and cash equivalents 6,229 5,206
Restricted bank deposits 347 371
Trade receivable, net 14,887 13,357
Patents 5,283 5,283
Other accounts receivable and prepaid expenses 2,257 1,742
Inventories, net 2,725 2,503
Total current assets 31,728 28,462
LONG-TERM ASSETS
Deferred tax long term 919 501
Other intangible assets, net 5,099 5,576
Operating lease right-of-use assets 923 487
Goodwill 7,026 7,026
Property and equipment, net 3,071 2,701
Total long-term assets 17,038 16,291
Total Assets 48,766 44,753
CURRENT LIABILITIES
Short-term loans and credit 765 792
Trade payables 1,990 1,883
Employees and payroll accruals 1,131 1,015
Related parties - 100
Accrued expenses and other liabilities 333 485
Operating lease liabilities 877 401
Deferred revenues ST 576 726
Total current liabilities 5,672 5,403
LONG-TERM LIABILITIES
Long-term loan 29,530 33,952
Deferred tax liability 170 170
Deferred revenues 49 305
Long-term operating lease liabilities - 108
Total long-term liabilities 29,749 34,535
SHAREHOLDERS' EQUITY:
Ordinary shares 21,970 9,094
Additional paid-in capital 95,803 102,670
Accumulated deficit (104,428) (106,948)
Total shareholders' equity 13,345 4,816
Total liabilities and equity 48,766 44,754
SUPERCOMLTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands)
Three months ended
September 30, September 30,
2024 2023
Unaudited Unaudited
REVENUES 6,911 6,778
COST OF REVENUES (3,758) (2,751)
GROSS PROFIT 3,153 4,027
OPERATING EXPENSES:
Research and development 933 774
Selling and marketing 625 531
General and administrative 1,474 1,093
Other expenses 90 793
Total operating expenses 3,122 3,191
OPERATING PROFIT 31 836
FINANCIAL EXPENSES, NET (474) (690)
PROFIT (LOSS) BEFORE INCOMETAX (443) 146
INCOME TAX EXPENSE - -
NET PROFIT (LOSS) FOR THEPERIOD (443) 146
SUPERCOM LTD.
Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income
(U.S. dollars in thousands)
Three months ended
September 30, 2024 September 30, 2023
Unaudited Unaudited
GAAP gross profit 3,153 4,027
Amortization of intangible assets 88 88
Non-GAAP gross profit 3,241 4,115
GAAP Operating profit 31 836
Amortization of intangible assets 540 446
Foreign currency loss 159 111
One-time expense 90 899
Non-GAAP operating profit 820 2,292
GAAP net profit (loss) (443) 146
Amortization of intangible assets 540 446
One-time expense 90 899
Foreign currency loss 159 111
Non-GAAP net profit 346 1,602
Non-GAAP EPS 0.17 4.8
Net profit (loss) for the period (443) 146
Financial expenses, net 474 690
Depreciation and Amortization 797 822
One-time expense 90 899
Foreign currency loss 159 111
EBITDA * 1,077 2,668
* EBITDA is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization and
other non-cash or one-time expenses.
SUPERCOM LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands)
Nine months ended
September30, 2024 September30, 2023
Unaudited Unaudited
REVENUES 21,308 20,902
COST OF REVENUES (10,625) (13,027)
GROSS PROFIT 10,683 7,875
OPERATING EXPENSES:
Research and development 2,833 2,436
Selling and marketing 1,835 1,659
General and administrative 4,222 3,467
Other expenses, net 660 1,198
Total operating expenses 9,550 8,760
OPERATING PROFIT (LOSS) 1,133 (885)
FINANCIAL EXPENSES, NET (969) (1,559)
PROFIT (LOSS) BEFORE INCOMETAX 2,112 (2,444)
INCOME TAX BENEFIT 418 -
NET PROFIT(Loss) FOR THE PERIOD 2,520 (2,444)
SUPERCOMLTD.
Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income
(U.S. dollars in thousands)
Nine months ended
September30, 2024 September30, 2023
Unaudited Unaudited
GAAP gross profit 10,683 7,875
Amortization of intangible assets 265 265
Non-GAAP gross profit 10,948 8,140
GAAP Operating Profit (Loss) 1,133 (885)
Amortization of intangible assets 1,604 1,429
One-time expenses 660 1,687
Foreign currency loss 512 1,009
Non-GAAP operating profit 3,909 3,240
GAAP net Profit (Loss) 2,520 (2,444)
Amortization of intangible assets 1,604 1,429
One-time expenses 660 1,687
Foreign currency loss 512 1,009
Income Tax Benefit (418) -
Non-GAAP net profit 4,878 1,681
Non-GAAP EPS 3.05 6.2
Net Profit (Loss) for the period 2,520 (2,444)
Financial expenses (income), net (969) 1,559
Income Tax Benefit (418) -
Depreciation and Amortization 2,293 2,129
One-time expenses 512 1,687
Foreign currency loss 660 1,009
EBITDA* 4,598 3,940
* EBITDA is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and
amortization and other non-cash or one-time expenses.
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