Your Point of Contactless Payments

Quarterly Earnings

2020 Third Quarter
On Track Innovations Ltd. Reports Third Quarter 2020 Financial Results

YOKNEAM, Israel, Nov. 23, 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 third quarter ended September 30, 2020.

Management Commentary

Mr. Yehuda Holtzman, OTI's CEO, commented, "The results of the quarter continued to be impacted by the COVID-19 pandemic and the various lockdown measures taken in the geographies in which we operate. Specifically in Poland, the recent deterioration in the pandemic situation in that country has led to an almost complete stop to our Mass Transit Ticketing sales business, negatively impacting our cash flow. We are looking at various options to address the Company's cash needs, including measures we are taking to cut costs and raise funds."

Continued Mr. Holtzman, "While not yet expressed in our financial results, our new sales strategy of strengthening our presence in key regions is beginning to bear fruit, which makes us incrementally optimistic for the long-term. During the nine months ended September 30, 2020, we saw an almost 60% year-over-year increase in our Retail related revenues due the cashless and non-physical nature of our products. Barring a worsening of the current pandemic crisis, and subject to successfully increasing our cash as necessary to continue as a going-concern in the short term, we believe that our Retail activity will continue to present solid results alongside a recovery post COVID-19 in our Mass Transit Ticketing sales, which should lead to sales growth during 2021."

Third quarter 2020 Financial Results Summary

  • Revenues in the quarter were $3.6 million, reflecting a 6% decline compared to $3.9 million in the third quarter of 2019. Licensing and transaction fees were $0.8 million, compared to $1.2 million in the third quarter of last year.
  • Gross profit for the quarter was $1.5 million (41% of revenue), compared to $1.7 million (44% of revenue) in the same year ago quarter. The decrease is mainly attributed to a change in the revenue mix and to the sharp decrease in Mass Transit Ticketing sales in the Polish market, as a result of the impact of the COVID-19 pandemic.
  • Operating expenses totaled $3.0 million in the quarter, compared to operating expenses of $2.8 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.
  • Net loss was $1.6 million, compared to a net loss of $1.2 million in the same year-ago quarter.
  • Adjusted EBITDA loss from continuing operations was $1.2 million in the quarter, compared to an adjusted EBITDA loss from continuing operations of $1.1 million in the same year-ago quarter, which reflects a gain of $0.3 million related to the sale of a building by OTI's South African subsidiary.  
  • As of September 30, 2020, the Company had cash and cash equivalents and short-term investments of $3.2 million.

Conference Call

Management will host a live investor conference call at 11:00 a.m. ET on November 23, 2020, to discuss OTI's third quarter 2020 financial results, provide a corporate update, and conclude with a Q&A session taking live questions from participants as well as answering many of the previously submitted questions by investors.

To participate, please use the following information:   
U.S. Dial-in: 1 888 281 1167  
International Dial-in: +972 3 918 0650  
Webcast: http://veidan-stream.com/otiq3-2020.html

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 also be available for replay by clicking on the above webcast link or via a link on 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.

Investor Relations Contact:

Ehud Helft

GK Investor & Public Relations

+1 646 688 3559

oti@gkir.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 strategy, the Company's cash needs and satisfaction thereof, the Company's ability to continue as a going concern, that the measures that the Company takes in cutting expenses and raising funds will be successful, the Company's optimism for the long term and the Company's belief that its Retail activity will continue to present solid results alongside recovery post COVID-19 in its Mass Transit Ticketing sales which should lead to sales growth during 2021. 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, including those as a result of the current COVID-19 pandemic. 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 on Form 10-K and Quarterly Report on Form 10-Q 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, net. 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.

 

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,


2020

2019

2020

2019


(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)






Net loss

$       (1,621)

$       (1,210)

$       (3,413)

$        (3,854)






Net loss from discontinued operations

82

36

125

279

Financial expenses, net

80

93

35

199

Depreciation and amortization

320

308

924

951

Income tax (benefits) expenses, net

(60)

17

(89)

25

Total EBITDA FROM CONTINUING OPERATIONS

$       (1,199)

$          (756)

$        (2,418)

$       (2,400)






Other income, net

-

(335)

-

(335)

Stock-based compensation

13

6

41

95

Total adjusted EBITDA FROM CONTINUING
OPERATIONS

$        (1,186)

$        (1,085)

$        (2,377)

$       (2,640)

 

 

 

ON TRACK INNOVATION LTD.


INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET


(US dollars in thousands)













September 30,

December 31,




2020

2019












Assets










Current assets





Cash and cash equivalents


$     2,578

$      2,543


Short-term investments


605

2,305


Trade receivables (net of allowance for doubtful





 accounts of $818 and $612 as of September 30, 2020





 and December 31, 2019, respectively)


2,824

2,430


Other receivables and prepaid expenses


1,181

1,822


Inventories


3,380

3,332







Total current assets


10,568

12,432












Long-term restricted deposit for employee benefits


477

477







Severance pay deposits


384

383







Property, plant and equipment, net


3,728

3,694







Intangible assets, net


721

733







Right-of-use assets due to operating leases


3,689

2,134

























































Total Assets


$      19,567

$     19,853








 

 

 

ON TRACK INNOVATION LTD.

INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

(US dollars in thousands)








September 30,

December 31,


2020

2019








Liabilities and Equity








Current Liabilities




Short-term bank credit and loans and current maturities




  of long-term bank loans

$       2,708

$        2,478

Trade payables

4,263

4,126

Other current liabilities

2,539

3,054




Total current liabilities

9,510

9,658




Long-Term Liabilities



Long-term loans, net of current maturities

740

22

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

2,802

1,483

Accrued severance pay

906

884

Deferred tax liability

299

416

Total long-term liabilities

4,747

2,805




Total Liabilities

14,257

12,463







Commitments and Contingencies






Equity



Shareholders' Equity



Ordinary shares of NIS 0.1 par value: Authorized –



100,000,000 and 50,000,000 shares as of September 30, 2020 and



December 31, 2019, respectively; issued: 55,003,076 and 47,963,076 shares as



of September 30, 2020 and December 31, 2019, respectively;



outstanding: 53,824,377 and 46,784,377 shares



as of September 30, 2020, and December 31, 2019, respectively

1,423

1,226

Additional paid-in capital

227,183

225,970

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



   2020 and December 31, 2019

(2,000)

(2,000)

Accumulated other comprehensive loss

(1,051)

(974)

Accumulated deficit

(220,245)

(216,832)

Total Equity

5,310

7,390




Total Liabilities and Equity

$       19,567

$     19,853






 

 

 

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,


2020

2019

2020

2019






Revenues





Sales

$      2,868

$      2,631

$     10,262

$     7,286

Licensing and transaction fees

769

1,234

2,679

3,708






Total revenues

3,637

3,865

12,941

10,994






Cost of revenues





Cost of sales

2,142

2,161

7,380

5,273

Total cost of revenues

2,142

2,161

7,380

5,273






Gross profit

1,495

1,704

5,561

5,721

Operating expenses





Research and development

841

840

2,643

2,528

Selling and marketing

1,215

1,193

3,570

3,798

General and administrative

958

1,070

2,690

3,081

Other gain, net

-

(335)

-

(335)






Total operating expenses

3,014

2,768

8,903

9,072






Operating loss from continuing operations

(1,519)

(1,064)

(3,342)

(3,351)

Financial expenses, net

(80)

(93)

(35)

(199)






Loss from continuing operations





before taxes on income

(1,599)

(1,157)

(3,377)

(3,550)

Income tax(expenses) benefit, net

60

(17)

89

(25)






Loss from continuing operations

(1,539)

(1,174)

(3,288)

(3,575)

Loss from discontinued operations

(82)

(36)

(125)

(279)






Net loss

(1,621)

(1,210)

(3,413)

(3,854)






 

Basic and diluted net loss attributable to shareholders per ordinary share





From continuing operations

(0.03)

(0.03)

(0.07)

(0.09)

From discontinued operations

(*)

(*)

(*)

(*)







$       (0.03)

$       (0.03)

$       (0.07)

$       (0.09)






Weighted average number of ordinary shares





used in computing basic and diluted net loss per





 ordinary share

53,824,377

41,324,377

51,448,903

41,306,575






* 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,


2020

2019

Cash flows from continuing operating activities



Net loss from continuing operations

$              (3,288)

$              (3,575)

     Adjustments required to reconcile net loss to net cash used in provided

     by continuing operating activities:



Stock-based compensation related to options and shares issued



  to employees and others

41

96

Accrued interest and linkage differences, net 

(102)

(48)

Depreciation and amortization

924

951

Deferred tax benefits, net

(107)

(25)

Gain on sale of property and equipment

-

(328)




Changes in operating assets and liabilities:



Change in accrued severance pay, net

21

66

(Increase) decrease in trade receivables, net

(401)

1,576

Decrease in other receivables and prepaid expenses

610

395

Increase in inventories

(48)

(879)

Increase in trade payables

204

506

Decrease in other current liabilities

(244)

(585)

Net cash used in continuing operating activities

(2,390)

(1,850)




Cash flows from continuing investing activities






Purchase of property and equipment and intangible assets

(994)

(589)

Proceeds from sale of property and equipment

-

1,102

Change in short-term investments, net

1,715

(978)

Proceeds from restricted deposit for employee benefits

-

10

Net cash provided by (used in) continuing investing activities

721

(455)




Cash flows from continuing financing activities



Increase in short-term bank credit, net

161

2,636

Proceeds from long-term bank loans

799

-

Repayment of long-term bank loans

(8)

(261)

Proceeds from issuance of shares, net of issuance costs

1,369

-

Net cash provided by continuing financing activities

2,321

2,375




Cash flows from discontinued operations



Net cash used in discontinued operating activities

(572)

(1,397)




Total net cash used in discontinued operations

(572)

(1,397)




Effect of exchange rate changes on cash and cash equivalents

(45)

(277)




Increase (decrease) in cash, cash equivalents and restricted cash

35

(1,604)




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

2,648

5,105




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

$               2,683

$               3,501






 

SOURCE On Track Innovations Ltd. (OTI)