OTI Reports First Quarter 2017 Financial Results
May 10 2017 - 6:00AM
On Track Innovations Ltd.
(OTI) (NASDAQ:OTIV), a global provider of
near field communication (NFC) and cashless payment solutions,
reported financial results for the first quarter ended March 31,
2017.
Q1
2017 Operational
Highlights
- Received purchase orders for thousands of cashless payment
solutions for the growing fast food self-serve kiosk market, to be
delivered during 2017.
- Received purchase order for first installment of cashless
payment systems sale into Japanese market
- Enhanced sales organization depth and capabilities with the
appointment of Larry Susman as Vice President of Sales
Q1
2017 Financial
Details
- Total quarterly revenue decreased to $4.0 million, a 28%
decrease from $5.6 million in the prior quarter and a 12% decrease
from $4.6 million in the same year-ago period.
- Gross profit as a percentage of revenues increased to 55%, a
12% increase over 43% in the prior quarter and an increase of 4%
over 51% in the same year-ago period.
- Operating expenses decreased to $2.9 million, a 13% decrease
from $3.4 million in the prior quarter and a 3% decrease from $3.0
million in the same year-ago period.
- Net cash used in continuing operating activities decreased 43%
to $0.7 million compared to $1.2 million in the same year-ago
period.
- Cash, cash equivalents and short-term investments at March 31,
2017 totaled $10.8 million, a decrease of 6% from December 31, 2016
and an increase of 13% from the same year-ago period.
Management Commentary - Shlomi Cohen (OTI CEO)
“We are pleased to report continued growth in our gross margins and
an accelerating increase in recurring revenues from telemetry
terminal management services. Although our first quarter revenues
were down from the same year-ago period, our gross margins
increased to 55%, a 12% increase over the prior year’s 43% gross
margin. Due to our continued efforts to reduce costs and increase
efficiencies, our operating expenses and net cash used in
operations continue to decline. For the 2017 full year, we continue
to expect that we will present a positive adjusted EBITDA.”
“Strategically, we have successfully established OTI as the
leading one-stop-shop cashless solutions provider in our targeted
geographic and vertical business markets. This strength and the
value we deliver to our customers enable us to grow our recurring
revenue business. Key wins during the first quarter include
multiple contracts for cashless payment solutions that are being
installed in advanced self-checkout kiosks at major fast food
chains across the U.S. This is a dynamic and growing market in
which we expect to be a major payment solutions provider. Also, in
the U.S. we signed several partnering agreements to sell into
specific vertical markets in unattended retail.”
“Globally, we received our first purchase order in Japan, part
of a 10,000 system purchase over three years. In Europe, we
partnered with Hemisphere West to serve the UK vending market,
which remains primarily untapped and a clear opportunity for OTI.
Our OTI PetroSmart division has been effectively executing on the
fueling management and payments opportunities and we are on track
to launch our suite of fuel payment solutions including
EasyFuelPlus in North America later this year.”
Conference Call OTI will hold a conference call
on Wednesday, May 10th at 9:00 AM EDT to discuss results for
the first quarter of 2017.
OTI CEO Shlomi Cohen and CFO Yishay Curelaru will host the
presentation, followed by a question and answer period.
Details
Date: Wednesday, May 10, 2017
Time: 9:00 AM Eastern Daylight Time (EDT)
Toll-Free Dial-In Number: (855) 422-8965
International Dial-In Number: +1 (210) 229-8821
Conference ID: 13474702
The conference call will be broadcast simultaneously and
available for replay here and via the investor relations section of
the company’s website.
Please call the conference telephone number five minutes prior
to the start time. An operator will register your name and
organization.
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. OTI
believes that adjusted EBITDA from continuing operations 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 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. |
INTERIM UNAUDITED RECONCILIATION OF NON-GAAP
ADJUSTMENT |
The following table reflects On Track Innovations Ltd.
non-GAAP results reconciled to GAAP results: |
(In thousands) |
|
|
|
Three months ended March31 |
|
|
2017 |
|
|
2016 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
Net loss |
$ |
(865 |
) |
|
$ |
(928 |
) |
|
|
|
Net loss from discontinued operations |
|
83 |
|
|
144 |
|
Financial expenses, net |
|
71 |
|
|
93 |
|
Depreciation |
|
281 |
|
|
308 |
|
Taxes on income |
|
31 |
|
|
16 |
|
|
|
|
|
|
|
TOTAL EBITDA FROM CONTINUING
OPERATIONS |
$ |
(399 |
) |
|
$ |
(367 |
) |
|
|
|
Stock-based compensation |
|
90 |
|
|
27 |
|
TOTAL ADJUSTED EBITDA FROM CONTINUING
OPERATIONS |
$ |
(309 |
) |
|
$ |
(340 |
) |
About OTI On Track Innovations Ltd. (OTI) is a
leader in contactless and NFC applications based on its extensive
patent and IP portfolio. OTI’s field-proven innovations have been
deployed around the world to address NFC and other cashless payment
solutions, petroleum payment and management and mass transit
ticketing. OTI markets and supports its solutions through a global
network of regional offices and alliances. For more information,
visit www.otiglobal.com.
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 words such as “think”,
“believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or
similar expressions are used, we are making forward-looking
statements. For example, forward-looking statements include
statements regarding our expected Adjusted EBITDA for 2017,
our expectations regarding future product launches and growth
into new markets, and our expectations regarding our pipeline and
opportunities. Because such statements deal with future events and
is 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 could be impacted by the effects of the protracted
evaluation and validation periods in the U.S. and other markets for
contactless payment cards, as well as OTI’s 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
10-K for the year ended December 31, 2016, 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, it can provide no
assurance that 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.
ON TRACK INNOVATION LTD. |
INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEET |
(In thousands, except share and per share data) |
|
|
|
March 31 |
|
December 31 |
|
|
2017 |
|
2016 |
Assets |
|
|
|
|
|
|
|
Current assets |
|
|
|
Cash and
cash equivalents |
|
$ |
6,909 |
|
$ |
5,952 |
Short-term
investments |
|
|
3,934 |
|
5,585 |
Trade
receivables (net of allowance for doubtful |
|
|
|
accounts of
$720 as of March 31, 2017 |
|
|
|
and
December 31, 2016) |
|
|
5,232 |
|
5,620 |
Other
receivables and prepaid expenses |
|
|
1,832 |
|
1,638 |
Inventories |
|
|
3,439 |
|
3,069 |
|
|
|
|
|
Total
current assets |
|
|
21,346 |
|
21,864 |
|
|
|
|
|
|
|
|
Long-term restricted deposit for employees
benefit |
|
|
479 |
|
453 |
|
|
|
|
Severance pay deposits |
|
|
341 |
|
322 |
|
|
|
|
Property, plant and equipment, net |
|
|
5,875 |
|
5,788 |
|
|
|
|
Intangible assets, net |
|
|
326 |
|
278 |
|
|
|
|
Total Assets |
|
$ |
28,367 |
|
$ |
28,705 |
ON TRACK INNOVATION LTD.INTERIM UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEET(In thousands, except share and
per share data)
|
March 31 |
|
December 31 |
|
2017 |
|
2016 |
Liabilities and Equity |
|
|
|
|
|
Current Liabilities |
|
|
Short-term
bank credit and current maturities |
|
|
of
long-term bank loans |
$ |
4,482 |
|
|
$ |
4,369 |
|
Trade
payables |
|
6,540 |
|
|
6,957 |
|
Other
current liabilities |
|
3,397 |
|
|
2,822 |
|
|
|
|
|
|
Total
current liabilities |
|
14,419 |
|
|
14,148 |
|
|
|
|
Long-Term Liabilities |
|
|
Long-term
loans, net of current maturities |
|
1,134 |
|
|
1,215 |
|
Accrued
severance pay |
|
858 |
|
|
811 |
|
Deferred
tax liability |
|
416 |
|
|
|
373 |
|
Total
long-term liabilities |
|
2,408 |
|
|
2,399 |
|
|
|
|
Total
Liabilities |
|
16,827 |
|
|
16,547 |
|
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
Equity |
|
|
|
|
|
Ordinary
shares of NIS 0.1 par value: Authorized – |
|
|
50,000,000
shares as of March 31, 2017 and |
|
|
December
31, 2016; issued: 42,259,743 and 42,243,075 shares as |
|
|
of March
31, 2017 and December 31, 2016, respectively; |
|
|
outstanding: 41,081,044 and 41,064,376 shares |
|
|
as of March
31, 2017, and December 31, 2016, respectively |
|
1,061 |
|
|
1,061 |
|
Additional
paid-in capital |
|
224,507 |
|
|
224,415 |
|
Treasury
shares at cost - 1,178,699 shares as of March 31, |
|
|
2017 and December 31, 2016 |
|
(2,000 |
) |
|
(2,000 |
) |
Accumulated
other comprehensive loss |
|
(1,081 |
) |
|
(1,236 |
) |
Accumulated
deficit |
|
(210,947 |
) |
|
|
(210,082 |
) |
Total Equity |
|
11,540 |
|
|
|
12,158 |
|
|
|
|
|
|
|
Total Liabilities and Equity |
$ |
28,367 |
|
|
$ |
28,705 |
|
ON TRACK INNOVATION LTD. |
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS |
(In thousands, except share and per share data) |
|
|
|
Three months ended March 31 |
|
|
2017 |
2016* |
Revenues |
|
|
|
Sales |
|
$ |
2,780 |
|
|
$ |
|
3,362 |
|
Licensing and transaction fees |
|
|
1,240 |
|
|
1,210 |
|
|
|
|
|
Total
revenues |
|
|
4,020 |
|
|
4,572 |
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
|
|
Cost
of sales |
|
|
1,800 |
|
|
2,249 |
|
Total
cost of revenues |
|
|
1,800 |
|
|
2,249 |
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
2,220 |
|
|
2,323 |
|
Operating
expenses |
|
|
|
Research and development |
|
|
702 |
|
|
721 |
|
Selling and marketing |
|
|
1,342 |
|
|
1,353 |
|
General and administrative |
|
|
856 |
|
|
924 |
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
2,900 |
|
|
2,998 |
|
|
|
|
|
Operating loss from continuing operations |
|
|
(680 |
) |
|
(675 |
) |
Financial expenses, net |
|
|
(71 |
) |
|
(93 |
) |
|
|
|
|
Loss from continuing operations before taxes on
income |
|
|
(751 |
) |
|
(768 |
) |
|
|
|
|
Income tax |
|
|
(31 |
) |
|
(16 |
) |
|
|
|
|
Net loss from continuing operations |
|
|
(782 |
) |
|
(784 |
) |
Net loss from discontinued operations |
|
|
(83 |
) |
|
(144 |
) |
|
|
|
|
Net loss |
|
|
(865 |
) |
|
(928 |
) |
|
|
|
|
Net loss attributable
to non-controlling interest |
|
|
- |
|
|
63 |
|
Net loss
attributable to shareholders |
|
$ |
(865 |
) |
|
$ |
(865 |
) |
Basic and diluted net loss attributable
to |
|
|
|
|
shareholders per ordinary
share |
|
|
|
|
From
continuing operations |
|
$ |
(0.02 |
) |
|
$ |
(0.02 |
) |
From
discontinued operations |
|
$ |
|
** |
|
|
$ |
|
** |
|
|
|
$ |
(0.02 |
) |
|
$ |
|
(0.02 |
) |
Weighted
average number of ordinary shares used in computing basic and
diluted net loss per ordinary share |
|
|
41,079,580 |
|
|
40,874,474 |
|
*
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 |
(In thousands, except share and per share data) |
|
|
|
|
|
|
Three months ended March 31 |
|
|
2017 |
2016* |
|
|
|
|
Cash flows from continuing operating
activities |
|
|
|
Net
loss from continuing operations |
|
$ |
(782 |
) |
|
$ |
(784 |
) |
Adjustments required to reconcile net loss to |
|
|
|
net
cash used in continuing operating activities: |
|
|
|
Stock-based compensation related to options issued |
|
|
|
to employees and others |
|
|
90 |
|
|
27 |
|
Accrued interest and linkage differences, net |
|
|
(26 |
) |
|
(7 |
) |
Depreciation |
|
|
281 |
|
|
308 |
|
Deferred tax, net |
|
|
9 |
|
|
16 |
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
Accrued severance pay, net |
|
|
28 |
|
|
(146 |
) |
Decrease (increase) in trade receivables, net |
|
|
423 |
|
|
(1,341 |
) |
(Increase) decrease in other receivables and prepaid expenses |
|
|
(234 |
) |
|
2 |
|
(Increase) decrease in inventories |
|
|
(343 |
) |
|
346 |
|
(Decrease) increase in trade payables |
|
|
(693 |
) |
|
575 |
|
Increase (decrease) in other current liabilities |
|
|
569 |
|
|
(180 |
) |
Net
cash used in continuing operating activities |
|
|
(678 |
) |
|
(1,184 |
) |
|
|
|
|
Cash flows from continuing investing
activities |
|
|
|
Purchase of property and equipment |
|
|
(35 |
) |
|
(83 |
) |
Change in short-term investments, net |
|
|
1,651 |
|
|
901 |
|
Proceeds from restricted deposit for employee benefits |
|
|
44 |
|
|
- |
|
Investment in capitalized product costs |
|
|
(88 |
) |
|
(54 |
) |
Net
cash provided by continuing investing activities |
|
|
1,572 |
|
|
764 |
|
|
|
|
|
Cash flows from continuing financing
activities |
|
|
|
Increase in short-term bank credit, net |
|
|
112 |
|
|
286 |
|
Proceeds from long-term bank loans |
|
|
- |
|
|
27 |
|
Repayment of long-term bank loans |
|
|
(222 |
) |
|
(263 |
) |
Proceeds from exercise of options and warrants |
|
|
2 |
|
** |
|
|
|
|
Net
cash (used in) provided by continuing financing activities |
|
|
(108 |
) |
|
50 |
|
|
|
|
|
Cash flows from discontinued operations |
|
|
|
Net
cash used in discontinued operating activities |
|
|
(68 |
) |
|
(109 |
) |
Net
cash used in discontinued investing activities |
|
|
- |
|
|
(61 |
) |
Total net cash used in discontinued
operations |
|
|
(68 |
) |
|
(170 |
) |
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
239 |
|
|
143 |
|
|
|
|
|
Increase (decrease) in cash and cash
equivalents |
|
|
957 |
|
|
(397 |
) |
Cash and cash equivalents at the beginning of the
period |
|
|
5,952 |
|
|
5,450 |
|
|
|
|
|
Cash and cash equivalents at the end of the
period |
|
$ |
6,909 |
|
|
$ |
5,053 |
|
* Reclassified to conform with the current period
presentation. ** Less than $1. |
|
OTI Press Contact
Neil Barr
Director of Marketing
+972-4-686-8004
press@otiglobal.com
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