MIND CTI Reports First Quarter 2020 Results

 

Yoqneam, Israel, May 14, 2020 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, unified communications analytics and call accounting solutions for enterprises as well as enterprise messaging solutions, today announced results for its first quarter ended March 31, 2020.

The following will summarize our major achievements in the first quarter of 2020 as well as our business. The financial results can be found in the Company News section of our website at http://www.mindcti.com/company/news/ and in our Form 6-K.

 

Financial Highlights
  • Revenues were $6.0 million, compared with $4.5 million in the first quarter of 2019, with the increase attributed to the acquisition of Message Mobile in March 2019 and GTX in September 2019, which generated revenues of approximately $2.3 million during the quarter.
  • Operating income was $1.3 million, or 21% of total revenues, compared with $1.5 million, or 33% of total revenues in the first quarter of 2019.
  • Net income was $1.2 million, or $06 per share, compared with $1.5 million, or $0.08 per share in the first quarter of 2019.
  • Cash flow from operating activities during the quarter was $1.1 million, compared with $2.3 million in the first quarter of 2019.
  • Cash position was $16.2 million as of March 31, 2020 (before the dividend distribution of $4.8 million on April 16, 2020).

As of March 31, 2020, we had 204 employees in our Romania, Israel, Germany and U.S. offices, compared with 220 as of March 31, 2019.

Monica Iancu, MIND CTI CEO, commented: “In these unprecedented times, our top priority is to ensure that our employees and customers are safe and that we remain resilient and agile. We have successfully transitioned into a new mode of operations to best support our customers under a firm business continuity program wherein most of our employees are working partially or fully from home using secured access. We informed our customers that as always, they can count on us to tirelessly maintain and strengthen their business.

As we continue to face the many challenges mentioned in previous press releases and the additional impact caused by the COVID-19 pandemic, we expect a decline in our revenues and income in 2020. Nevertheless, we are encouraged that even in these times of uncertainty we have the experience, the resilience and the cash to weather the storm.”

 

Impact of COVID-19

We experience the effect of the pandemic in all areas of our business, mainly due to the following reasons:

  • Ongoing project delays: Delays in the pace of ongoing implementation rollouts in all our lines of business, due to lockdowns and other COVID-19 related measures.
  • New opportunities freeze: As much of the population remains homebound, service providers are taking action to ramp up their network infrastructure, but we believe that at the same time they are reluctant to promote billing transformation projects. The Messaging segment is also harmed due to a lack of campaigns and a freeze of new enrollments.
  • Existing customers reducing budget: Due to the general economic uncertainty, the majority of our customers, both enterprises and carriers, are restricting their budgets. Especially, due to lack of revenues from supplying communication services to tourists, carriers’ willingness to invest in enhancements in new features is extremely low.

 

Revenue Distribution

The Americas represented 45%, Europe represented 49% (including the Message Mobile and GTX revenues in Germany that represented 38%) and  the rest of the world represented 6% of total revenues.

Customer care and billing software totaled $3.0 million, or 50% of total revenues, enterprise messaging and payment solutions were $2.3 million, or 38% of total revenues and enterprise call accounting software totaled $0.7 million, or 12% of total revenues.

Licenses totaled $0.4 million, or 6.5% of total revenues, while maintenance and additional services were $5.6 million, or 93.5% of total revenues.

 

Dividend Distribution

As previously announced, the Board declared on March 11, 2020 a cash dividend of $0.24 per share.

The dividend of approximately $4.8 million, is presented in our March 31, 2020 balance sheet among  other payables and was distributed to our shareholders in April 2020 .

 

AGM Update

The Company held its Annual General Meeting of Shareholders on May 12, 2020 and all the proposed resolutions were approved.

 

Board of Directors Update

Mr. Meir Nissensohn was appointed as MIND’s new Chairman of the Board of Directors. Mr. Nissensohn has served as an independent director of our company since August 2014. Mr. Nissensohn served as the Chairman of the Board of Directors and Chief Executive Officer of IBM Israel Ltd. from 1996 to 2012. Since his retirement from IBM, he is involved in various business initiatives and serves on the Board of several companies.

 

 

MIND C.T.I. LTD.

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (Unaudited)

  

Three Months
Ended March 31,
2020 2019
U.S. dollars in thousands (except per share data)
REVENUES $ 6,008 $ 4,461
COST OF REVENUES 2,878 1,211
GROSS PROFIT 3,130 3,250
OPERATING EXPENSES:
Research and development 993 939
Selling and marketing 429 305
General and administrative 421 523
Total operating expenses 1,843 1,767
OPERATING INCOME 1,287 1,483
FINANCIAL INCOME (EXPENSES),
net
(8 ) 138
INCOME BEFORE TAXES ON INCOME 1,279 1,621
TAXES ON INCOME 105 127
NET INCOME $ 1,174 $ 1,494
EARNINGS PER SHARE
basic and diluted – in U.S. dollars
$ 0.06 $ 0.08
WEIGHTED AVERAGE NUMBER OF SHARES USED IN COMPUTATION
OF EARNINGS PER SHARE – in thousands:
Basic 19,898 19,475
Diluted 20,081 19,549

 

 

MIND C.T.I. LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

 (Unaudited)

 

    March
31,
    December 31,  
    2020     2019  
    U.S.
dollars in thousands
 
ASSETS            
CURRENT ASSETS:            
Cash
and cash equivalents
  $ 11,016     $ 6,479  
Short-term bank
deposits
    3,060       6,795  
Marketable securities     2,038       1,916  
Accounts receivable,
net:
               
Trade     2,536       3,082  
Other     635       577  
Prepaid expenses     290       224  
Inventories     4       4  
Total
current assets
    19,579       19,077  
                 
INVESTMENTS AND OTHER
NON-CURRENT ASSETS:
               
Marketable securities     109       129  
Severance pay fund     1,639       1,725  
Deferred income
taxes
    36       36  
PROPERTY AND EQUIPMENT, net of
accumulated depreciation and amortization
    161       167  
RIGHT-OF-USE ASSETS,
net of accumulated depreciation
    1,224       1,290  
INTANGIBLE ASSETS,
net of accumulated amortization
    716       761  
GOODWILL     7,846       7,910  
Total
assets
  $ 31,310     $ 31,095  
                 
LIABILITIES AND SHAREHOLDERS’
EQUITY
               
CURRENT LIABILITIES:                
Accounts payable
and accruals:
               
Trade   $ 1,684     $ 2,066  
Other     6,699       2,048  
Current maturities
of lease liabilities
    271       292  
Deferred
revenues
    1,674       1,892  
Total current liabilities     10,328       6,298  
                 
LONG-TERM LIABILITIES:                
Deferred revenues     91       103  
Lease liabilities,
net of current maturities
    905       983  
Employee
rights upon retirement
    1,686       1,775  
Total
liabilities
    13,010       9,159  
                 
SHAREHOLDERS’
EQUITY:
               
Share capital     54       54  
Additional paid-in
capital
    27,106       27,050  
Accumulated other
comprehensive loss
    (975 )     (884 )
Accumulated deficit     (6,681 )     (3,080 )
Treasury
shares
    (1,204 )     (1,204 )
Total
shareholders’ equity
    18,300       21,936  
Total
liabilities and shareholders’ equity
  $ 31,310     $ 31,095  

 

MIND C.T.I. LTD.

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited)

 

    Three
Months
 
    Ended
March 31,
 
    2020     2019  
    U.S.
dollars in thousands
 
CASH FLOWS FROM OPERATING
ACTIVITIES:
           
Net
income
  $ 1,174     $ 1,494  
Adjustments to reconcile
net income to net cash provided by operating activities:
               
Depreciation and amortization     46       13  
Accrued severance pay     30       72  
Unrealized loss (gain) from marketable
securities, net
    51       (29 )
Realized gain on sale of marketable
securities, net
    (5 )     (24 )
Financial expenses           15  
Employees share-based compensation expenses     56       47  
Changes in operating asset and liability
items:
               
Decrease (increase) in accounts receivable:                
Trade     497       385  
Other     (65 )     6  
Increase prepaid expenses     (66 )     (415 )
Increase (decrease) in accounts payable
and accruals:
               
Trade     (334 )     490  
Other     (71 )     (169 )
Change in operating lease liability     (33 )     (3 )
Increase (decrease)
in deferred revenues
    (230 )     392  
Net cash provided
by operating activities
    1,050       2,274  
                 
CASH FLOWS FROM INVESTING
ACTIVITIES:
               
Acquisition of a subsidiary           (2,215 )
Purchase of property and equipment     (12 )     (1 )
Severance pay funds     (33 )     (55 )
Proceeds from sale (investment in) of
marketable securities
    (148 )     1,677  
Proceeds from
short-term bank deposits
    3,735       2,720  
Net cash provided
by investing activities
    3,542       2,126  
CASH FLOWS FROM FINANCING
ACTIVITIES:
               
Dividend paid           (4,049 )
Net cash used
in financing activities
          (4,049 )
Translation
adjustments on cash and cash equivalents
    (55 )      
                 
INCREASE IN CASH
AND CASH EQUIVALENTS
    4,537       351  
BALANCE OF CASH AND
CASH EQUIVALENTS AT BEGINNING OF PERIOD
    6,479       2,803 *
BALANCE OF CASH AND
CASH EQUIVALENTS AT END OF PERIOD
  $ 11,016     $ 3,154  

  

* Includes $2,739 cash and cash equivalents and $64 restricted
cash that was presented in other receivables.

  

 

About MIND
MIND CTI Ltd. is a leading provider of convergent end-to-end billing and customer care product-based solutions for service providers, unified communications analytics and call accounting solutions for enterprises as well as enterprise messaging solutions. MIND provides a complete range of billing applications for any business model (license, SaaS, managed service or complete outsourced billing service) for Wireless, Wireline, Cable, IP Services and Quad-play carriers. 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, Germany 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