PR Newswire | Aug 10, 2021 08:25AM EDT

08/10 07:24 CDT

SuperCom Reports Second Quarter 2021 Financial ResultsGross Margin increased to 57.6% and EBITDA to $684,000;Cash & Restricted Cash at the end of Q2 increased to $10.9 million TEL AVIV, Israel, Aug. 10, 2021

TEL AVIV, Israel, Aug. 10, 2021 /PRNewswire/ -- SuperCom(NASDAQ: SPCB), a global provider of secured solutions for the e-Government, IoT and Cybersecurity sectors, today reported results for the three months ended June 30, 2021.

Second Quarter 2021 Financial Highlights(Compared to the First Quarter of 2021):

* Revenue increased to $3,093 million from $3,032 million. * Gross margin increased to 57.6% from 55.3%. * EBITDA increased to $684,000 from $652,000. * EBITDA margin increased to 22.1% from 21.5%. * Cash and cash equivalents increased to $10.9 million from $9 million.

Recent Business Highlights:

* Won new project in California valued at up to $4 million providing support to offenders reentering the community from periods of incarceration with objective of driving a reduction in recidivism, which represents continued growth in demand for the various offerings in our IoT Tracking segment. * Won $3.6 million national electronic monitoring project in Finland, through a competitive national RFP process, and scoring high by offering our proprietary PureSecurity Electronic Monitoring Suite. * Experienced an increase in market activity in our IOT segment, resulting in more RFPs and interest in our proprietary IOT segment technology and service offerings in Europe and the USA. * Opened a new office in Kentucky, with new sales, sales support and tech support resources tailored to our unique offerings for the USA market. Since the beginning of the second quarter, received requests to demo and evaluate our proprietary technology from over 15 new USA potential customers. * Launched new HR programs to attract top talent and are actively recruiting and building world class engineering teams to build our next generation tracking and monitoring products * Released new generations and capabilities to our smartphone based monitoring products and solutions including support for new OS and mobile phone architectures. * Experienced continued high customer retention and strong relationships with existing customers across all 3 business segments. * Closed $5 million financing, which will also help support the Company's growth strategy.

Management Commentary:

"In the second quarter, we achieved sequential quarterly improvements in revenue and margins in parallel to winning new projects and increasing our investment in long-term growth. We continued to see momentum in our IoT Tracking segment as correctional institutions are increasingly looking at alternative solutions to address challenges associated with overpopulated prisons. Our remote monitoring solutions, which enable offenders to serve sentences in home confinement, are not only successful in addressing the overpopulated prisons issue, but also enable these institutions to experience substantial cost savings while also reducing recidivism among offenders," said Ordan Trabelsi, President and CEO of SuperCom.

"Given the recent surge in COVID cases driven also by the spread of the delta variant, many countries are considering another round of lockdowns and associated quarantine measures to help fight the spread of coronavirus. Accordingly, we are still seeing interest in our PureCare solution as governments look for an effective solution to help them implement appropriate quarantine compliance measures," continued Ordan.

"At the end of the quarter, we closed $5 million in additional financing that consists of a two-year unsecured promissory note. Our financings help provide the upfront capital required to support new project deployments, while continuing to invest in growth, taking advantage of the opportunities we see in the market. We continue to execute on our business plan to offer exceptional value to our existing customers and to potential new ones as we expand our global footprint," concluded Ordan.

Conference Call

The company will hold a conference call today (August 10, 2021) at 8:30 a.m. Eastern time (3:30 p.m.Israel time) to discuss these results, followed by a question and answer period.

Conference Call Dial-In Information:

Date:Tuesday, August 10, 2021Time:8:30 a.m. Eastern time (5:30 a.m. Pacific time)U.S. toll-free:877-545-0320 (Passcode: 514587)Israel toll-free:1-809-423-853 (Passcode: 514587)International:973-528-0016

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

SuperCom Investor Relations:ir@supercom.com

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, visit www.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 anticipated effects of the COVID-19 outbreak on travel and physical locations, the levels of consumer, business and economic confidence generally, the duration of the COVID-19 outbreak and severity of such outbreak, the pace of recovery following the COVID-19 outbreak, the effect on our supply chain, our ability to implement cost containment and business recovery strategies and resulting anticipated impact of such outbreak on our business, financial condition and results of operations; the adverse effects of the COVID-19 outbreak 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, 2020, filed with the U.S. Securities and Exchange Commission (the "SEC") on April 30, 2021, 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

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)



June 30, December 31,

2021 2020

UnauditedAudited



CURRENT ASSETS

Cash and cash equivalents 9,419 3,137

Restricted bank deposits 1,462 815

Trade receivable, net 13,574 12,427

Patents 5,283 5,283

Other accounts receivable and prepaid expenses874 876

Inventories, net 3,567 2,404



Total current assets 34,179 24,942



LONG-TERM ASSETS

Severance pay funds 404 531

Deferred tax long term 204 204

Customer Contracts 1,094 1,250

Software and other IP 2,472 2,677

Other Asset, net 2,290 2,343

Goodwill 7,026 7,026

Property & equipment, net 1,628 1,371

Total long-term assets: 15,118 15,402



Total Assets 49,297 40,344





CURRENT LIABILITIES

Short-term loans and other 1,909 7,204

Trade payables 1,872 2,860

Employees and payroll accruals 2,558 2,627

Related parties 359 1,749

Accrued expenses and other liabilities 2,642 4,393

Deferred revenues ST 329 766

Short-term liability for future earn-out- -



Total current liabilities 9,669 19,599



LONG-TERM LIABILITIES



Long-term bank loan 28,536 14,952

Accrued severance pay 520 656

Related Parties - -

Deferred tax liability 170 170

Deferred revenues 49 49



Total long-term liabilities 29,275 15,827



SHAREHOLDERS' EQUITY:

Ordinary shares 1,862 1,397

Additional paid-in capital 96,089 88,853

Accumulated deficit (87,598)(85,331)



Total shareholders' equity 10,353 4,919



Total liabilities and equity 42,297 40,004

SUPERCOM LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands)



Three months ended

June 30, March 31, 2021 2021





REVENUES 3,093 3,032

COST OF REVENUES (1,313) (1,356)



GROSS PROFIT 1,780 1,676



OPERATING EXPENSES:

Research and development 589 657

Selling and marketing 377 370

General and administrative 976 830

Other expense (income), net- -



Total operating expenses 1,942 1,857



OPERATING PROFIT (LOSS) (162) (182)

FINANCIAL EXPENSES, NET (797) (1,122)



LOSS BEFORE INCOME TAX (959) (1,303)

INCOME TAX EXPENSE (5) -



NET LOSS FOR THE PERIOD (964) (1,303)



Net loss Per Share:

Basic and Diluted (0.04) (0.05)

Shares used in calculation:

Basic and Diluted 25,882,52624,843,049

SUPERCOM LTD. Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income (U.S. dollars in thousands)



Three months ended

June 30, March 31, 2021 2021

UnauditedUnaudited



GAAP gross profit 1,780 1,676

Amortization of Software and IP 88 88

Stock-based compensation expenses - -

Non-GAAP gross profit 1,868 1,764



GAAP Operating Profit (Loss) (162) (182)

Amortization of Software and IP, Customer 378 377 Contracts and Brand

Stock-based compensation expenses - -

One time inventory write off - 34

Foreign Currency Loss 342 315

Allowance for doubtful debt - -



Non-GAAP operating profit(loss) 558 544

GAAP net Loss (964)(1,303)

Amortization of Software and IP, Customer Contracts and 378 377 Brand

Stock-based compensation expenses - -

One time inventory write-off - 34

Foreign Currency Loss 342 315

Income tax expense(benefit) 5 -

Allowance for doubtful debt - -



Non-GAAP net Profit (Loss) (239)(578)



NET LOSS FOR THE PERIOD (964)(1,303)

Income tax expense (benefit) 5 -

Financial expenses (income), net 797 1,122

Depreciation and Amortization 504 485

One time inventory write off - 34

Stock-based compensation expenses - -

Foreign Currency Loss 342 315

Allowance for doubtful debt - -

EBITDA * 684 652



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

SUPERCOM LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands)



Six months ended

June 30, June 30, 2021 2020

UnauditedAudited



REVENUES 6,125 6,796

COST OF REVENUES (2,669) (2,573)



GROSS PROFIT 3,456 4,223



OPERATING EXPENSES:

Research and development 1,246 987

Selling and marketing 747 973

General and administrative 1,806 1,453

Other expense (income), net- 45



Total operating expenses 3,799 3,458



OPERATING PROFIT (LOSS) (343) 765

FINANCIAL EXPENSES, NET (1,919) (1,141)



LOSS BEFORE INCOME TAX (2,262) (376)

INCOME TAX EXPENSE (5) -



NET LOSS FOR THE PERIOD (2,267) (376)

SUPERCOM LTD. Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income (U.S. dollars in thousands)



Six months ended

June 30, March 31, 2021 2020

UnauditedAudited



GAAP gross profit 3,456 4,223

Amortization of Software and IP 177 177

Stock-based compensation expenses - -

Non-GAAP gross profit 3,633 4,400



GAAP Operating Profit (Loss) (343) 765

Amortization of Software and IP, Customer Contracts and755 459 Brand

Stock-based compensation expenses - -

One time inventory write off 34 -

Foreign Currency Loss 657 805

Allowance for doubtful debt - -



Non-GAAP operating profit(loss) 1,103 2,029

GAAP net Loss (2,267)(376)

Amortization of Software and IP, Customer Contracts and 755 459 Brand

Stock-based compensation expenses - -

One time inventory write off 34 -

Foreign Currency Loss 657 805

Income tax expense(benefit) 5 -

Allowance for doubtful debt - -



Non-GAAP net Profit (Loss) (817) 888



NET LOSS FOR THE PERIOD (2,267)(376)

Income tax expense (benefit) 5 -

Financial expenses (income), net 1,919 1,141

Depreciation and Amortization 988 980

One time inventory write-off 34 -

Stock-based compensation expenses - -

Foreign Currency Loss 657 805

Allowance for doubtful debt - -

EBITDA * 1,336 2,550





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SOURCE SuperCom Ltd