Your Point of Contactless Payments

Quarterly Earnings

2019 Fourth Quarter

On Track Innovations Ltd. Reports Fourth Quarter & Full Year 2019 Financial Results

YOKNEAM, IsraelMarch 18, 2020 /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 fourth quarter and full year ended December 31, 2019.

Management Commentary

Mr. Yehuda Holtzman, OTI’s CEO, commented, “Since joining OTI, I have come to realize that we have a very strong team of employees, excellent technology and much unrealized potential. In the past few months, together with the management team, we have been working on updating our strategy for the coming years, which we believe will enable us to realize that potential and resume our growth, and ultimately create shareholder value. We look forward to sharing more details in the coming quarters.”

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.

Fourth Quarter 2019 Financial Results Summary

  • Revenue in the quarter was $3.8 million, compared to $4.5 million in the fourth quarter of 2018.
  • Recurring revenues were $1.1 million (28% of total revenues), compared to $1.2 million (26% of total revenues) in the fourth quarter of 2018.
  • Gross profit in the quarter was $1.6 million, or 42% of revenues, compared to $2.2 million, or 48% of revenues, in the fourth quarter of 2018.
  • Operating expenses totaled $3.1 million in the quarter, compared to operating expenses of $3.0 million in the same year-ago quarter.
  • Net loss from continuing operations was $1.6 million, compared to a loss of $0.9 million in the same year-ago quarter.
  • Net loss was $2.0 million, or loss of $0.05 per share, compared to a net income of $0.5 million, or $0.01 per share, in the same year-ago quarter.
  • Adjusted EBITDA loss from continuing operations was $1.1 million in the quarter, compared to adjusted EBITDA loss of $0.5 million in the same year-ago quarter.

Full Year 2019 Financial Results Summary

  • Total revenue in 2019 was $14.8 million, compared to $21.9 million in 2018.
  • Gross profit in 2019 was $7.3 million, or 49% of revenues, compared to $11.2 million, or 51% of revenues in 2018.
  • Operating expenses totaled $12.1 million in 2019, compared to operating expenses of $13.1 million in 2018. Operating expenses in 2019 included a gain of $0.3 million related to the sale of a building by OTI’s South African subsidiary.
  • Net loss from continuing operations in 2019 was $5.2 million, compared to a loss of $1.9 million in 2018.
  • Net loss in 2019 was $5.9 million, or loss of $0.14 per share, compared to a net loss of $0.3 million, or loss of $0.01 per share, in 2018.
  • Adjusted EBITDA loss from continuing operations in 2019 was $3.8 million, compared to an adjusted EBITDA loss of $0.4 million in 2018.
  • As of December 31, 2019, the company had cash and cash equivalents and short-term investments of $4.8 million.

Conference Call

Management will host a pre-recorded conference call for investors on Monday, March 23, 2020 at 9:00 am Eastern Time, to discuss the financial results, provide a corporate update, and conclude with a Q&A session.

Investors and analysts are encouraged to submit questions they would like management to address on the call. Please submit questions to oti@gkir.com by Thursday, March 19, 2020 at 5:00 p.m. Eastern time.  OTI has been holding conference calls in this format during the current transition period and intends to return to the more traditional live format in the coming quarters.

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/1720/33248

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. 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 long-term strategy, the realization of the Company’s potential, the resumption of the Company’s growth, and the creation of shareholder value. 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. 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 stock-based compensation expense and other (income) expenses, net which includes a gain of $0.3 million related to the sale of a building by OTI’s South African subsidiary. 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 table below.

 

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):

ON TRACK INNOVATIONS LTD.
RECONCILIATION OF NON-GAAP ADJUSTMENTS
(US dollars in thousands)

         
 

Year ended December 31

Three months ended December 31

 

2019

2018

2019

2018

         

Net (loss) income

$          (5,889)

$             (263)

$          (2,035)

$               533

         

  Net loss (income) from discontinued operations

714

(1,625)

435

(1,395)

  Financial expenses, net

397

228

198

98

  Depreciation

1,270

1,328

319

307

  Income tax benefit, net

(57)

(301)

(82)

(34)

         

Total EBITDA FROM CONTINUING OPERATIONS

$          (3,565)

$             (633)

$          (1,165)

$             (491)

         

Other (income) expenses, net

(341)

33

(6)

(37)

Stock based compensation

125

234

29

54

Total adjusted EBITDA FROM CONTINUING OPERATIONS

$          (3,781)

$             (366)

$          (1,142)

$             (474)

 

ON TRACK INNOVATION LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
(US dollars in thousands)

       
   

December 31

   

2019

2018

       

Assets

     
       

Current assets

     

Cash and cash equivalents

 

$      2,543

$      4,827

Short-term investments

 

2,305

1,078

Trade receivables (net of allowance for doubtful

     

  accounts of $612 and $555 as of December 31, 2019

     

  and December 31, 2018, respectively)

 

2,430

4,530

Other receivables and prepaid expenses

 

1,822

2,060

Inventories

 

3,332

3,527

       

Total current assets

 

12,432

16,022

       

Long term restricted deposit for employee benefits

 

477

451

       

Severance pay deposits

 

383

375

       

Property, plant and equipment, net

 

3,694

5,033

       

Intangible assets, net

 

733

241

       

Right-of-use assets due to operating leases

 

2,134

       
       
       

Total Assets

 

$      19,853

$      22,122

       

 

ON TRACK INNOVATION LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
(US dollars in thousands except share data)

 
 

December 31

 

2019

2018

Liabilities and  Equity

     
       

Current Liabilities

     

Short-term bank credit and current maturities

     

  of long-term bank loans

$           2,478

$              260

 

Trade payables

4,126

4,712

 

Other current liabilities

3,054

3,622

 

Total current liabilities

9,658

8,594

 
       

Long-Term Liabilities

     

Long-term loans, net of current maturities

22

39

 

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

1,483

 

Accrued severance pay

884

853

 

Deferred tax liability

416

445

 

Total long-term liabilities

2,805

1,337

 
       

Total Liabilities

12,463

9,931

 
       
       

Equity

     

Shareholders’ Equity

     

Ordinary shares of NIS 0.1 par value: Authorized –

     

  50,000,000 shares as of December 31, 2019 and

     

  2018; issued: 47,963,076 and 42,473,076   

     

  shares as of December 31, 2019 and 2018,

     

  respectively; outstanding: 46,784,377 and 41,294,377 shares

     

  as of December 31, 2019 and 2018, respectively

1,226

1,068

 

Additional paid-in capital

225,970

225,022

 

Treasury shares at cost – 1,178,699 shares as of December 31,

     

2019 and 2018

(2,000)

(2,000)

 

Accumulated other comprehensive loss

(974)

(956)

 

Accumulated deficit

(216,832)

(210,943)

 
       

Total Equity

7,390

12,191

 
       

Total Liabilities and Equity

$         19,853

$         22,122

 
             

 

ON TRACK INNOVATIONS LTD.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(US dollars in thousands except share data)

     
 

Year ended
December 31

Three months ended
December 31

 

2019

2018

2019

2018

         

Revenues

         

Sales

$          9,983

$        16,725

$            2,697

$              3,372

 

Licensing and transaction fees

4,768

5,153

1,060

1,156

 

Total revenues

14,751

21,878

3,757

4,528

 
           

Cost of revenues

         

Total cost of revenues

7,455

10,710

2,182

2,360

 
           

Gross profit

7,296

11,168

1,575

2,168

 

Operating expenses

         

Research and development

3,334

3,175

806

782

 

Selling and marketing

5,026

5,940

1,228

1,240

 

General and administrative

4,112

3,981

1,031

981

 

Other (income)expenses, net

(341)

33

(6)

(37)

 
           

Total operating expenses

12,131

13,129

3,059

2,966

 
           

Operating loss from continuing operations

(4,835)

(1,961)

(1,484)

(798)

 
           

Financial expense, net

(397)

(228)

(198)

(98)

 

Loss from continuing operations
before taxes on income

(5,232)

(2,189)

(1,682)

(896)

 
           

Income tax benefit, net

57

301

82

34

 
           

Net loss from continuing operations

(5,175)

(1,888)

(1,600)

(862)

 

Total (loss) income from discontinued operations

 

(714)

1,625

(435)

1,395

 

Net (loss) income

$          (5,889)

$             (263)

$          (2,035)

$                 533

 
           

Basic and diluted net (loss) income attributable to

         

 shareholders per ordinary share

         

From continuing operations

$            (0.12)

$            (0.05)

$            (0.04)

$                (0.02)

 

From discontinued operations

$            (0.02)

$              0.04

$            (0.01)

$                 0.03

 
 

$            (0.14)

$            (0.01)

$            (0.05)

$                 0.01

 

Weighted average number of ordinary shares used in computing basic
and diluted net (loss) income  per ordinary share

41,385,856

41,268,984

41,621,116

41,260,426

 
           

 

ON TRACK INNOVATION LTD.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(US dollars in thousands)

 
   

Year ended December 31

   

2019

2018

2017

Cash flows from continuing operating activities

     

Net loss from continuing operations

$       (5,175)

$       (1,888)

$     (2,385)

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

125

234

254

(Gain) loss on sale of property and equipment

(328)

(37)

52

Accrued interest and linkage differences, net

(36)

19

(6)

Depreciation and amortization

1,270

1,328

1,172

Deferred tax benefits, net

(25)

(477)

(165)

       

Changes in operating assets and liabilities:

     

Change in accrued severance pay, net

23

(57)

45

Decrease (increase) in trade receivables, net

1,646

1,118

(124)

Decrease (increase) in other receivables and prepaid expenses

228

350

(838)

Decrease (increase) in inventories

184

(573)

110

Decrease in trade payables

(507)

(2,089)

(644)

Decrease in other current liabilities

(270)

(110)

(597)

Net cash used in continuing operating activities

(2,865)

(2,182)

(3,126)

       

Cash flows from continuing investing activities

     
       

Purchase of property and equipment and intangible assets

(1,155)

(636)

(293)

Proceeds from sale of property, plant and equipment

1,102

68

17

Change in short-term investments, net

(1,369)

1,495

1,773

Proceeds from restricted deposit for employee benefits

10

8

44

Net cash (used in) provided by continuing investing activities

(1,412)

815

1,302

       

Cash flows from continuing financing activities

     

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

2,450

(3,554)

(335)

Repayment of long-term bank loans

(270)

(1,064)

(632)

Proceeds from issuance of shares, net of issuance expenses

981

Proceeds from exercise of options and warrants

34

92

       

Net cash provided by (used in) continuing financing activities

3,161

(4,584)

(875)

       

Cash flows from discontinued operations

     

Net cash (used in) provided by discontinued operating activities

(1,344)

750

2,311

Net cash provided by discontinued investing activities

2,750

       

Total net cash (used in) provided by discontinued operations

(1,344)

3,500

2,311

Effect of exchange rate changes on cash and cash equivalents

3

(243)

687

       

(Decrease) increase in cash, cash equivalents and restricted cash

(2,457)

(2,694)

299

Cash, cash equivalents and restricted cash – beginning of the year

5,105

7,799

7,500

       

Cash, cash equivalents and restricted cash at the end of the year

$      2,648

$      5,105

$      7,799

             

 

Investor Relations Contact:

Ehud Helft
GK Investor & Public Relations
+1-646-201-9246
oti@gkir.com

 

SOURCE On Track Innovations Ltd. (OTI)