Rosh Pina, Israel – March 19, 2013 – On Track Innovations Ltd. (“OTI”) (NASDAQ GM: OTIV) today reported 2012 full year revenue of $40 million, and cash, cash equivalents and short-term investments of $18 million as of December 31, 2012.
Since the shareholders extraordinary general meeting held on December 30, 2012, in which eight new directors were elected, OTI’s Board of Directors has been evaluating the Company’s positioning in its respective markets in order to identify a new strategy that will generate growth and build shareholder value. The focus of these efforts is to identify a new strategic direction for the Company that will better capitalize on its existing IP and the operating segments of its business.
Jeffery E. Eberwein, an OTI director, stated: “The new board of directors has been working diligently to identify and assess all possible solutions to maximize value for OTI’s shareholders. We believe the Company’s main strength lies in its technological achievements, which has led to the Company establishing an extensive patent and IP portfolio. We would like to build on these strengths by capitalizing on past R&D investments and expanding the global reach with more business development and sales efforts.”
2012 Financial Highlights
Revenues for 2012 were $40M, a decrease of 22% from $51.3M in 2011. Revenues for the fourth quarter were $10.3M, a decrease of 36% from $16.0M for the same period last year.
•Gross profit was 50%, compared to 51% last year. Gross profit for the fourth quarter was 47%, down from 57% for the same period last year.
•Operating expenses increased by 12% to $36.6M, from $32.7M last year. Operating expenses for the fourth quarter increased by 48% to $12.7M, from $8.5M for the same period last year.
•Net loss attributable to shareholders was $17.4M, up from $7.0M last year. Net loss attributable to shareholders for the fourth quarter was $8.0M, compared to net profit of $465,000 for the same period last year.
•Adjusted EBITDA loss was $14M compared to $2.3M last year. Adjusted EBITDA loss for the fourth quarter was $7.2M, compared to adjusted EBITDA profit of $1.6M for the same period last year.
•Cash, cash equivalents and short-term investments were $18 million as of December 31, 2012
These Financial Statements include amounts relating to potential termination benefits for former management. The Company is reviewing the termination provisions of former management’s employment agreements and assessing the amount of the provisions necessary.
Adoption of US GAAP
Due to the recent changes in the composition of the Company’s Board of Directors, including the election of eight new directors on December 30, 2012, the Company will no longer qualify as a ‘Foreign Private Issuer’ as of June 30, 2013 and will be required to report as a domestic issuer starting on January 1, 2014. As reported on May 31, 2012, effective as of January 1, 2012, the Company adopted International Financial Reporting Standards (“IFRS”) as published by the International Accounting Standards Board. As a domestic issuer, the Company will no longer be entitled to prepare its financial results in accordance with IFRS. Therefore, the Company has decided to adopt US GAAP immediately and accordingly to prepare its financial statements for the fiscal year ended December 31, 2012 in accordance with US GAAP.
Given that the Company’s financial statements for the fiscal year ended December 31, 2011 were prepared in accordance with US GAAP and not IFRS. The Company will not be required to accompany its financial results for 2012 with a reconciliation or explanation of the transition to US GAAP.
It should be noted that the financial results for the fourth quarter of 2012 were prepared in accordance with US GAAP, while the financial results of the first, second and third quarter of 2012 that were previously published were prepared in accordance with IFRS. Therefore, comparing the quarterly results of 2012 should take the foregoing factors into account.
Use of Non-GAAP Financial Information
This press release contains certain non-GAAP measures, namely, Adjusted Earnings before Interest, Income Tax, Depreciation and Amortization ("Adjusted EBITDA”).
Adjusted EBITDA represents earnings before interest , income tax, depreciation and amortization, and further eliminates the effect of share-based compensation expense.
OTI believes that Adjusted EBITDA should be considered in evaluating the Company's operations since it provides a clearer indication of OTI’s operating results.
This measure should be considered in addition to results prepared in accordance with US GAAP, but should not be considered a substitute for the US GAAP results. The non-GAAP measures included in this press release have been reconciled to the US-GAAP results in the tables below.
About On Track Innovations Ltd. (www.otiglobal.com)
On Track Innovations Ltd. ("OTI") designs, develops and markets secure identification, payment and transaction processing technologies and solutions for use in secure ID, payment and loyalty applications based on its extensive patent and IP portfolio. OTI combines state-of-the-art, contactless microprocessor-based technologies and enabling hardware with proprietary software applications to deliver high performance, end-to-end solutions that are secure, robust and scalable. OTI solutions have been deployed around the world to address homeland security, national ID, medical ID, Near Field communications (“NFC”), contactless payment and loyalty applications, petroleum payment, parking and mass transit ticketing. OTI markets and supports its solutions through a global network of regional offices and alliances.
VP, Corporate Relations
732 429 1900 ext. 111
Safe Harbor for Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws. Whenever we use words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions, we are making forward-looking statements. Because such statements deal with future events and are based on OTI’s current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of OTI could differ materially from those described in or implied by the statements in this press release. Forward-looking statements include statements regarding the Company’s forecast as to revenues in future periods, the results of identifying and implementing a new strategy and OTI’s ability to capitalize on its strengths. Forward-looking statements could be impacted by the effects of the protracted evaluation and validation periods in the U.S. and other markets for contactless payment cards, market acceptance of new and existing products and our ability to execute production on orders, as well as other risks and uncertainties, including those discussed in the “Risk Factors” section and elsewhere in our Annual Report on Form 20-F for the year ended December 31, 2011, and in subsequent filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be achieved. Except as otherwise required by law, OTI disclaims any intention or obligation to update or revise any forward-looking statements, which speak only as of the date hereof, whether as a result of new information, future events or circumstances or otherwise.
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(For tables, download the PDF available below