Press Releases

On Track Innovations Ltd. Reports Third Quarter 2019 Financial Results

ROSH PINA, Israel, Nov. 6, 2019 /PRNewswire/ -- On Track Innovations Ltd. ("OTI") (OTCQX: OTIVF) (the "Company" or "OTI"), a global provider of near field communication (NFC) and cashless payment solutions, today provided a business update and announced financial results for the nine months and third quarter periods ended September 30, 2019.

On Track Innovations logo (PRNewsfoto/On Track Innovations Ltd)

Highlights

  • Revenues of $3.9 million in the third quarter, of which 32% were from a recurring revenue source.
  • Continued tight control over operating expenses, which decreased by 20% compared to the third quarter of last year.
  • During the first nine months of 2019, delivered globally more than 20,000 advanced contactless readers to the smart ATMs market, more than 8,000 advanced payment readers to the Russian market, and more than 1,000 advanced payment systems to the Japanese unattended retail market.

Management Commentary

Mr. Assaf Cohen, OTI's Interim CEO, commented, "I am pleased to announce that we have hired a new CEO, Yehuda Holtzman who brings to OTI a strong sales background and whose initial goals will be to grow OTI's revenue and margins."

Following OTI's sale of its MediSmart division in the fourth quarter of 2018, the financial results of MediSmart are included as discontinued operations and all the prior periods' information has been reclassified to conform with the current period's presentation.

Third quarter 2019 financial results summary

  • Total revenue in the quarter was $3.9 million. This is compared to $6.1 million in the same year-ago quarter and $4.1 million in the prior quarter.
  • Recurring revenues were $1.2 million (32% of total revenues), compared to $1.3 million (22% of total revenues) in the third quarter of 2018.
  • Gross profit in the quarter was $1.7 million, or 44% of revenues, compared to $3.2 million, or 53% of revenues, in the third quarter of 2018.
  • Operating expenses totaled $2.8 million in the quarter, significantly reduced when compared to operating expenses of $3.5 million in the same year-ago quarter. Operating expenses for the quarter ended September 30, 2019 included a gain of $0.3 million related to the sale of a building by OTI's South African subsidiary.
  • Loss from continuing operations was $1.2 million, compared to loss of $0.2 million in the same year-ago quarter.
  • Net loss was $1.2 million, or loss of $0.03 per share, compared to a net loss of $0.2 million, or loss of $0.00 per share, in the same year-ago quarter. Net loss in the prior quarter amounted to $0.9 million, or loss of $0.02 per share.
  • Adjusted EBITDA loss from continuing operations was $1.1 million in the quarter, compared to adjusted EBITDA of $0.0 million in the same year-ago quarter. Adjusted EBITDA loss in the prior quarter was $0.4 million.
  • As of the end of the quarter, the company had cash and cash equivalents and short-term investments of $5.3 million.

Conference Call

Management will host a conference call for investors at 9:00 a.m. Eastern Time on Monday, November 11, 2019, to discuss the financial results, provide a corporate update, and conclude with a recorded Q&A session.

Investors and analysts are encouraged to submit questions they would like the Interim CEO to address on the call. Please submit any questions to oti_questions@gkir.com by Thursday, November 7, 2019 at 5:00 p.m. Eastern time.  OTI intends to hold conference calls in this format during the CEO transition phase.

To listen, please use the following dial-in information:

U.S. Dial-in: 1-888-317-6002
International Dial-in: +1-412-317-5245
Webcast:  https://www.webcaster4.com/Webcast/Page/1720/32155   

Please dial in a few minutes before the start of the call and request to join the "On Track Innovations Earnings Conference Call" to ensure timely participation.

The conference call will be available for replay by clicking here and via the investor relations section of the company's website.

About On Track Innovations Ltd

On Track Innovations (OTI) is a global leader in the design, manufacture, and sale of secure cashless payment solutions using contactless NFC technology. OTI's field-proven innovations have been deployed around the world to address cashless payment, automated retail and petroleum markets. OTI distributes and supports its solutions through a global network of regional offices and alliances. OTI is the proud recipient of the 2017 AI Award for Best Cashless Payment Solutions Provider – Israel. For more information, visit www.otiglobal.com.

Safe Harbor / Forward-Looking Statements

This press release contains express or implied 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 "will," "look forward," "expect," "anticipate," "intend," "plan," "estimate," "believe," "should," "can" or similar expressions, we are making forward-looking statements. For example, we are using forward-looking statements when we discuss, among others: the Company's recurring revenue and long-term strategy. 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. Additional factors that could cause actual results to differ materially from those anticipated by our forward-looking statements are stated under the captions "Risk Factors" in our most recent Annual Report (Form 10-K) and other known and unknown uncertainties and risk factors including those detailed from time to time in the Company's filings with the Securities and Exchange Commission.  Forward-looking statements are made as of the date of this release, and we expressly disclaim any obligation or undertaking to update forward-looking statements. The reader is cautioned not to place undue reliance on forward-looking statements.

Use of Non-GAAP Financial Information

This press release contains certain non-GAAP measures, namely, adjusted EBITDA from continuing operations, or adjusted earnings from continuing operations before interest, income tax, depreciation and amortization. Adjusted EBITDA from continuing operations represents earnings before interest or financing expenses, income tax, depreciation and amortization, and further eliminates the effect of patent litigation expenses, stock-based compensation expense and other (gain) expenses, net. Patent litigation expenses are presented only at the end of each year, as we do not consider their impact on quarterly results to be material. OTI believes that adjusted EBITDA from continuing operations should be considered in evaluating the Company's operations since it provides a clear indication of the Company's operating results. This measure should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for the U.S. GAAP results. The non-GAAP measures included in this press release have been reconciled to the U.S. GAAP results in the tables below.

 

ON TRACK INNOVATIONS LTD.

RECONCILIATION OF NON-GAAP ADJUSTMENT

The following table reflects selected On Track Innovations Ltd. non-GAAP results reconciled to
GAAP results:

(US dollars in thousands)



Three months ended Sept. 30,

Nine months ended Sept. 30,


2019

2018

2019

2018


(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)






Net (loss) income

$       (1,210)

$      (184)

$       (3,854)

$        (797)






Net loss (income) from discontinued operations

36

(42)

279

(228)

Financial expenses, net

93

2

199

129

Depreciation and amortization

308

342

951

1,022

Taxes on income

17

(2)

25

(267)

TOTAL EBITDA FROM CONTINUING OPERATIONS

$          (756)

$        116

$        (2,400)

$           (141)






Other (gain) expenses, net

(335)

-

(335)

70

Stock-based compensation

6

65

96

180

TOTAL ADJUSTED EBITDA FROM CONTINUING 

$        (1,085)

$      181

$        (2,639)

$         109

OPERATIONS





 

 

ON TRACK INNOVATION LTD.


INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET


(US dollars in thousands)











September 30,

December 31,




2019

2018







Assets










Current assets





Cash and cash equivalents


$     3,396

$      4,827


Short-term investments


1,905

1,078


Trade receivables (net of allowance for doubtful





 accounts of $558 and $555 as of September 30, 2019





 and December 31, 2018, respectively)


2,469

4,530


Other receivables and prepaid expenses


1,602

2,060


Inventories


4,366

3,527







Total current assets


13,738

16,022







Long-term restricted deposit for employees benefit


473

451







Severance pay deposits


404

375







Property, plant and equipment, net


3,693

5,033







Intangible assets, net


246

241







Right-of-use assets


1,930

-

















Total Assets


$      20,484

$      22,122








 

 

ON TRACK INNOVATION LTD.

INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

(US dollars in thousands)





September 30,

December 31,


2019

2018

Liabilities and Equity






Current Liabilities



Short-term bank credit and current maturities



  of long-term bank loans

$          2,553

$          260

Trade payables

4,857

4,712

Other current liabilities

2,286

3,622




Total current liabilities

9,696

8,594




Long-Term Liabilities



Long-term loans, net of current maturities

26

39

Long-term liabilities due to operating leases, net of current maturities

1,204

-

Accrued severance pay

948

853

Deferred tax liability

393

445

Total long-term liabilities

2,571

1,337




Total Liabilities

12,267

9,931







Commitments and Contingencies






Equity



Shareholders' Equity



Ordinary shares of NIS 0.1 par value:



Authorized: 50,000,000 shares as of September 30, 2019 and



December 31, 2018; issued: 42,503,076 and 42,473,076 shares as



of September 30, 2019 and December 31, 2018, respectively;



outstanding: 41,324,377 and 41,294,377 shares



as of September 30, 2019, and December 31, 2018, respectively

1,069

1,068

Additional paid-in capital

225,117

225,022

Treasury shares at cost - 1,178,699 shares as of September 30,



   2019 and December 31, 2018

(2,000)

(2,000)

Accumulated other comprehensive loss

(1,172)

(956)

Accumulated deficit

(214,797)

(210,943)

Total Equity

8,217

12,191




Total Liabilities and Equity

$       20,484

$     22,122






 

 

ON TRACK INNOVATION LTD.

INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(US dollars in thousands, except share and per share data)



Three months ended

September 30,

Nine months ended

September 30,


2019

  *2018

2019

  *2018






Revenues





Sales

$      2,631

$      4,760

$     7,286

$     13,353

Licensing and transaction fees

1,234

1,339

3,708

3,997






Total revenues

3,865

6,099

10,994

17,350






Cost of revenues





Cost of sales

2,161

2,870

5,273

8,351

Total cost of revenues

2,161

2,870

5,273

8,351






Gross profit

1,704

3,229

5,721

8,999

Operating expenses





Research and development

840

765

2,528

2,391

Selling and marketing

1,193

1,591

3,798

4,700

General and administrative

1,070

1,099

3,081

3,001

Other (gain) expenses, net

(335)

-

(335)

70






Total operating expenses

2,768

3,455

9,072

10,162






Operating loss from continuing operations

(1,064)

(226)

(3,351)

(1,163)

Financial expenses, net

(93)

(2)

(199)

(129)






Loss from continuing operations





before taxes on income

(1,157)

(228)

(3,550)

(1,292)

Income tax(expenses) benefit, net

(17)

2

(25)

267






Net loss from continuing operations

(1,174)

(226)

(3,575)

(1,025)

Net (loss) income from discontinued operations

(36)

42

(279)

228






Net loss

(1,210)

(184)

(3,854)

(797)






Basic and diluted net (loss) income attributable to
shareholders per ordinary share





From continuing operations

(0.03)

(**)

(0.09)

(0.02)

From discontinued operations

(**)

(**)

(**)

(**)


$       (0.03)

$         (**)

$       (0.09)

$       (0.02)






Weighted average number of ordinary shares





 used in computing basic and diluted net(loss)





 income per ordinary share

41,324,377

41,294,377

41,306,575

41,260,426






          * Reclassified to conform with the current period presentation.


          ** Less than $0.01 per ordinary share.

 

 

ON TRACK INNOVATION LTD.

INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

(US dollars in thousands)



Nine months ended September 30,


2019

 *2018

Cash flows from continuing operating activities



Net loss from continuing operations

$              (3,575)

$            (1,025)

Adjustments required to reconcile net loss to



net cash used in continuing operating activities:



Stock-based compensation related to options and shares issued



  to employees and others

96

180

Depreciation and amortization

951

978

Deferred tax, net

(25)

(360)

Gain on sale of property and equipment

(328)

(25)

Accrued interest and linkage differences, net 

(48)

-




Changes in operating assets and liabilities:



Accrued severance pay, net

66

(19)

Decrease in trade receivables, net

1,576

1,377

Decrease (increase) in other receivables and prepaid expenses

395

(255)

Increase in inventories

(879)

(381)

Increase (decrease) in trade payables

506

(263)

Decrease in other current liabilities

(585)

(151)

Net cash (used in) provided by continuing operating activities

(1,850)

56




Cash flows from continuing investing activities






Purchase of property and equipment

(433)

(467)

Proceeds from sale of property and equipment

1,102

52

Change in short-term investments, net

(978)

1,195

Investment in capitalized certification costs

(156)

(92)

Proceeds from restricted deposit for employees benefit

10

8

Net cash (used in) provided by continuing investing activities

(455)

696




Cash flows from continuing financing activities



Increase (decrease) in short-term bank credit, net

2,636

(3,449)

Repayment of long-term bank loans

(261)

(979)

Proceeds from exercise of options and warrants

-

34

Net cash provided by (used in) continuing financing activities

2,375

(4,394)




Cash flows from discontinued operations



Net cash (used in) provided by discontinued operating activities

(1,397)

836




Total net cash (used in) provided by discontinued operations

(1,397)

836




Effect of exchange rate changes on cash and cash equivalents

(277)

(187)




Decrease in cash, cash equivalents and restricted cash

(1,604)

(2,993)




Cash, cash equivalents and restricted cash - beginning of the period

5,105

7,799




Cash, cash equivalents and restricted cash - end of the period

$               3,501

$               4,806






          * Reclassified to conform with the current period presentation.






 

Investor Relations Contact:
Gavriel Frohwein
GK Investor & Public Relations
+1 646 688 3559
oti@gkir.com

 

SOURCE On Track Innovations Ltd. (OTI)