MIND CTI Reports Fourth Quarter and Full Year 2016 Results

*Board Declares Cash Dividend

 

Yoqneam, Israel, February 23, 2017 MIND C.T.I. LTD. – (NasdaqGM: MNDO), a leading provider of convergent end-to-end prepaid/postpaid billing and customer care product based solutions for service providers as well as unified communications analytics and call accounting solutions for enterprises, today announced results for the fourth quarter and year ended December 31, 2016.

 

The following will summarize our business in the fourth quarter of 2016 and provide a more detailed review of the financial results for the quarter and for the full year. The financial results can be found in the Investor Information section of our website at  https://www.mindcti.com/investor-information/ and in our Form 6-K.

 

Financial Highlights of Q4 2016

  • Revenues of $4.7 million, compared to $4.8 million in the fourth quarter of 2015..
  • Operating income was $1.8 million (including a one-time decrease in provisions), compared to $1.4 million in the fourth quarter of 2015.
  • Net income of $0.9 million or $0.05 per share, compared to $1.1 million or $0.06 per share in the fourth quarter of 2015.
  • Cash flow from operating activities was $0.9 million, compared to $1.7 million in the fourth quarter of 2015.
  • Multiple follow-on orders and one extension of a managed services contract.

Financial Highlights of Full Year 2016

  • Revenues of $18.1 million, down 13% from $20.9 million in 2015.
  • Operating income was $5.2 million, or 28.8% of revenue, compared to $6.4 million, or 30.6% of revenue, in 2015.
  • Net income of $4.2 million, or $0.22 per share, compared to $5.0 million or $0.26 per share in 2015.
  • Cash flow from operating activities was $5.2 million, compared to $6.3 million in 2015.
  • Cash position of approximately $19.8 million as of December 31, 2016.

As of December 31, 2016 we had 262 employees, compared to 337 as of December 31, 2015.

 

Monica Iancu, MIND CTI’s President and Chief Executive Officer commented: “In 2016 we successfully implemented new technologies and new methodologies, won two new deals, one of them being significant and we obtained a very high number of follow-on orders. We effectively completed different phases in ongoing deployments. Nowadays, the telecom carriers compete mainly on price. Our customers encounter profitability challenges and continuously aim to reduce both operating and capital expenditures. We believe that our up-to-date, versatile, comprehensive product-based billing platform and agile delivery fit perfectly with multi-play service providers and address their challenge of reducing operational cost. During the last two years we invested significantly in the new version of MINDBill, which will be released this year and we intend to promote the sales of upgrades. We also intend to continue to invest in our cloud solutions and to execute on our long-term targets.”

 

Revenue Distribution for Q4 2016

Revenues in the Americas represented 63.6%, revenues in Europe represented 22.3% and revenues in Israel represented 5.4% of our total revenues.

 

Revenues from our customer care and billing software totaled $3.6 million, or 77% of total revenues, while revenues from our enterprise call accounting software were $1.1 million, or 23% of total revenues.

 

Revenues from licenses were $0.7 million, or 16% of total revenues, while revenues from maintenance and additional services were $4.0 million, or 84% of total revenues.

 

Revenue Distribution for Full Year 2016

Revenues in the Americas represented 70.4%, revenues in Europe represented 18.5% and revenues in Israel represented 4.9% of our total revenues.

 

Revenues from our customer care and billing software totaled $14.6 million, or 81% of total revenues, compared with $16.6 million, or 79% of total revenues in 2015, while revenues from our enterprise call accounting software were $3.5 million, or 19% of total revenue, compared with $4.3 million or 21% of total revenues in 2015.

 

Revenues from licenses were $3.9 million, or 21.7% of total revenues, compared with $3.9 million, or 18.8% of total revenues in 2015, while revenues from maintenance and additional services were $14.2 million, or 78.3%, compared with $17.0 million or 81.2% of total revenues in 2015.

 

Follow-on Orders in Q4 2016

The MIND capability to deliver enhancements timely, in as short as a few weeks for small projects and a few months for larger projects, allows our customers to compete and adapt to changing market conditions. Similar to all other quarters, our customers strengthened their long-lasting relationships with us with multiple follow-on orders.

 

During the fourth quarter of 2016 MIND was awarded the first contract to upgrade a customer’s existing MIND solution to our new version of MINDBill, which will be released in Q2 2017. MIND’s latest version offers enhanced capabilities and a brand new Point-of-Sale module, with improved user experience. Similar to previous versions, this new solution supports prepaid and postpaid subscribers from a single platform, includes real-time monetization and subscriber management that enables service providers to support new business models, monetize next generation services, and create an omni-channel customer experience.

 

A second award is a two-year extension of a managed services agreement with an existing customer of nine years, confirming once again their belief in MIND’s capabilities to improve their competitiveness and to support their business goals.

 

Dividend Distribution

Since July 2003, when we first adopted a dividend policy, according to which we declare, subject to specific Board approval and applicable law, a dividend distribution once per year, we have distributed 13 annual dividends and one special dividend. We continue to believe that our annual dividends enhance shareholders value and we plan to continue with annual distributions.

 

Taking into consideration the longstanding positive cash flow, the current and foreseeable needs and the remaining cash after the distribution, our Board decided on a distribution based on available retained earnings and declared on February 23, 2017 a gross dividend of $6.16 million, or $0.32 per share. The record date for the dividend will be March 9, 2017 and the payment date will be March 23, 2017. Tax will be withheld at a rate of 25%.

 

Investing in R&D and Cloud Solutions

As carriers started to adopt cloud-based platforms, we increased our investment in extending our offering for SaaS and cloud-based solutions. Our products are already available for deployment on cloud as well as on premise and we aim towards a ‘one click deployment’ for cloud and virtualization technologies in order to increase operational efficiency. Our ongoing investment in maintaining a state-of-the-art technology, adding new modules and supporting new platforms is now more focused on cloud technologies and platforms.

 

 

MIND
C.T.I. LTD.

CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS

    Three
Months
    Year  
    Ended
December 31,
    Ended
December 31,
 
    2016     2015      2016     2015  
    U.S.
dollars in thousands (except per share data)
 
             
Revenues   $ 4,680     $ 4,819     $ 18,052     $ 20,928  
Cost
of revenues
    1,533       1,975       6,831       8,630  
Gross
profit
    3,147       2,844       11,221       12,298  
Research
and development expenses
    757       818       3,517       2,943  
Selling
and marketing expenses
    259       279       1,105       1,173  
General
and administrative expenses
    342       335       1,393       1,766  
Operating
income
    1,789       1,412       5,206       6,416  
Financial
income (expenses)  – net
    (217 )     (8 )     166       (114 )
Income
before taxes on income
    1,572       1,404       5,372       6,302  
Taxes
on income
    695       325       1,169       1,284  
Net
income
  $ 877     $ 1,079     $ 4,203     $ 5,018  
                                 
Earnings
per share:
                               
Basic
and Diluted
  $ 0.05     $ 0.06     $ 0.22     $ 0.26  
                                 
Weighted
average number of shares used in computation of earnings per share – in thousands:
                               
Basic     19,257       19,201       19,234       19,183  
Diluted     19,413       19,274       19,307       19,283  

 

 

MIND
C.T.I. LTD.

CONDENSED
CONSOLIDATED BALANCE SHEETS

 

    December 31,     December 31,  
    2016     2015  
    Audited     Audited  
    U.S.
dollars in thousands
 
A  s  s  e  t  s            
CURRENT
ASSETS:
           
Cash
and cash equivalents
  $ 9,165     $ 11,475  
Short-term
bank deposits
    5,033       1,498  
Marketable
securities
    4,784       5,151  
Accounts
receivable, net:
               
Trade     1,098       2,243  
Other     176       213  
Prepaid
expenses
    319       232  
Deferred
cost of revenues
          78  
Inventories     5       9  
Total
current assets
    20,580       20,899  
                 
INVESTMENTS
AND OTHER NON CURRENT ASSETS:
               
Marketable
securities – available-for-sale
    832       1,441  
Severance
pay fund
    1,565       1,623  
Deferred
income taxes
    95       241  
PROPERTY
AND EQUIPMENT,
net of accumulated depreciation and amortization
    498       591  
GOODWILL     5,430       5,430  
Total
assets
  $ 29,000     $ 30,225  
                 
Liabilities
and shareholders’ equity
               
CURRENT
LIABILITIES:
               
Accounts
payable and accruals:
               
Trade   $ 51     $ 237  
Other     1,233       2,264  
Deferred
revenues
    4,079       3,664  
Total
current liabilities
    5,363       6,165  
                 
LONG
TERM LIABILITIES:
               
Deferred
revenues
    665       426  
Employee
rights upon retirement
    1,687       1,786  
Total
liabilities
    7,715       8,377  
                 
SHAREHOLDERS’
EQUITY:
               
Share
capital
    54       54  
Additional
paid-in capital
    25,998       25,862  
Accumulated
other comprehensive loss
    (867 )     (1,072 )
Accumulated
deficit
    (2,293 )     (1,304 )
Treasury
shares
    (1,607 )     (1,692 )
Total
shareholders’ equity
    21,285       21,848  
Total
liabilities and shareholders’ equity
  $ 29,000     $ 30,225  

 

MIND
C.T.I. LTD.

CONSOLIDATED
STATEMENTS OF CASH FLOWS

Three Months Year
Ended December 31, Ended December 31,
2016 2015 2016 2015
U.S. dollars in thousands
Cash flows from operating activities:
Net income $ 877 $ 1,079 $ 4,203 $ 5,018
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 45 27 161 173
Deferred income taxes, net 146 (46 ) 146 (46 )
Accrued severance pay (76 ) 11 (123 ) 105
Realized gain from marketable securities – available-for-sale (44 ) (44 )
Foreign currency exchange rate loss from marketable securities – available-for-sale 128 128
Unrealized loss on marketable securities, net 48 13 23 98
Employees share-based compensation expenses 45 31 136 138
Changes in operating asset and liability items:
Decrease (increase) in accounts receivable:
Trade (439 ) 181 1,145 352
Other 480 (43 ) 37 21
Decrease (increase) in prepaid expenses and deferred cost of revenues (51 ) (23 ) (9 ) 95
Decrease in inventories 4 1 4 1
Increase (decrease) in accounts payable and accruals:
Trade (88 ) 124 (186 ) 99
Other (89 ) (180 ) (1,031 ) (42 )
Increase (decrease) in deferred revenues (134 ) 561 654 285
Net cash provided by operating activities 852 1,736 5,244 6,297
Cash flows from investing activities:
Purchase of property and equipment (44 ) (26 ) (68 ) (146 )
Severance pay funds 61 21 82 (32 )
Proceeds from sale of (Investment in) marketable securities 286 (129 ) 344 (210 )
Investment in marketable securities – available-for-sale (525 ) (1,000 )
Proceeds from sale of marketable securities – available-for-sale 1,171 1,730
Proceeds from (Investment in) short-term bank deposits (1,507 ) 1,248 (3,535 ) 3,053
Net cash provided by (used in) investing activities (558 ) 1,114 (2,447 ) 2,665
Cash flows from financing activities:
Employee stock options exercised and paid 25 17 85 171
Dividend paid (5,192 ) (5,758 )
Net cash provided by (used in) financing activities 25 17 (5,107 ) (5,587 )
Increase (decrease) in cash and cash equivalents 319 2,867 (2,310 ) 3,375
Balance of
cash and cash equivalents at beginning of period
8,846 8,608 11,475 8,100
Balance of cash and cash equivalents at end of period $ 9,165 $ 11,475 $ 9,165 $ 11,475

 
 
About MIND
MIND CTI Ltd. is a leading provider of convergent end-to-end billing and customer care product based solutions for service providers as well as unified communications analytics and call accounting solutions for enterprises. MIND provides a complete range of billing applications for any business model (license, managed service or complete outsourced billing service) for Wireless, Wireline, Cable, IP Services and Quad-play carriers in more than 40 countries around the world. A global company, with over twenty years of experience in providing solutions to carriers and enterprises, MIND operates from offices in the United States, Romania and Israel.
Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995: All statements other than historical facts included in the foregoing press release regarding the Company’s business strategy are “forward-looking statements.” These statements are based on management’s beliefs and assumptions and on information currently available to management. Forward-looking statements are not guarantees of future performance, and actual results may materially differ. The forward-looking statements involve risks, uncertainties, and assumptions, including the risks discussed in the Company’s filings with the United States Securities Exchange Commission. The Company does not undertake to update any forward-looking information.

 

For more information please contact:
Andrea Dray
MIND CTI Ltd.
Tel: +972-4-993-6666
investor@mindcti.com