OTIV On Track Innovations Ltd

ROSH PINA, Israel, Aug. 8, 2018 /PRNewswire/ -- On Track Innovations Ltd. (OTI) (NASDAQ: OTIV) (the "Company" or "OTI"), a global provider of near field communication (NFC) and cashless payment solutions, has provided a business update and announced financial results for the second quarter ended June 30, 2018.

Operational Updates:

• In June, OTI received a purchase order for more than 3,000 cashless payment systems from Japan via its partner, Billing Systems Cooperation (TSEL 3623), a leading payment service provider. OTI will recognize a one-time sale, followed by a high-margin, recurring revenue stream over the long-term. By the end of the third quarter of 2018, OTI will have delivered a total of more than 10,000 advanced payment systems to Japan.
• Expanded footprint in Poland through new government contracts:
• • In April, OTI secured a recurring revenue contract with the Polish National Post Office (Poczta Polska S.A.) to manage Warsaw's public transportation "Smart City" card program (i.e. purchase or refill cards for travel via train, bus, or other mode of public transportation). OTI will be providing both the payment portion, as well as the software, in 272 terminals throughout post offices in Warsaw, whereby OTI will manage and control the entire sales and payment process.
  • In May, OTI signed one-year, $500,000 agreement to provide intermediation in the sale of train tickets for trains operated by Mazowieckie Railways in Poland. OTI will provide service to the Masovian Card and sharing information via the infokiosk using 84 ticket vending machines.
  •  In June, OTI secured a four-year service contract with the Mazowieckie Railways company to provide and maintain their Smart Cart IT system in support of electronic ticket sales in Poland's largest and most populous province.
• In June, OTI received two technology awards from Global Brand Publications (GBR):
• • OTI PetroSmart, OTI's South Africa based fuel management subsidiary, was named "Most Innovative Technology Company" in Africa.
  • OTI Europa, OTI's European subsidiary, was named "Most Innovative Cashless Payment Solutions Provider" in Europe.

• In July, OTI received a purchase order for 5,000 advanced contactless readers to the widespread Russian retail self-service market. OTI has also applied for the Russian Mir certification, a Payment System Established by The Central Bank of Russia. The company expects greater penetration once the Mir certification is officially approved.

Management Commentary

"We've continued to experience strong operational execution in our business, evidenced by several purchase orders and contracts in some of our key target markets, including Poland, Japan, and most recently, Russia," said Shlomi Cohen, Chief Executive Officer of On Track Innovations. "As part of these initiatives, we have continued to invest in our growing list of esteemed certifications, and most recently applied for the Russian Mir certification that we expect to receive in short order, which most likely accelerate penetration in this key market. In fact, we've identified Russia as a potential strategic market for OTI, and in July, we received a purchase order for 5,000 advanced contactless readers to the widespread Russian retail self-service market.

"In the first half of 2018, we recognized revenues of more than $12.0 million, representing growth of 10% from the year-ago period, and experienced our third consecutive quarter of positive Adjusted EBITDA results as we drive towards profitability. Looking towards the third quarter of 2018, we are expecting double-digit revenue growth compared to the third quarter of 2017 as a result of execution across all business units as we continue gaining market share in the cashless payments arena."

Financial Summary

• Total revenue in the second quarter of 2018 was $6.2 million, compared to $6.9 million in the same year-ago period. Revenues in the first half of 2018 increased 10% to $12.0 million, compared to $11.0 million in the first half of 2017.
• Recurring revenues accounted for 24% of total revenues in the first half of 2018, compared to 23% of total revenues in the first half of 2017. On an absolute dollar basis, recurring revenues increased by 14% to $2.9 million, compared to $2.5 million.
• Gross profit in the second quarter of 2018 was $3.2 million, or 52% of revenues, compared to $3.5 million, or 50% of revenues, in the same year-ago period. In the first half of 2018, gross profit increased 11% to $6.3 million, or 52% of total revenues, compared to $5.7 million, or 52% of revenues, in the same year-ago period.
• Net loss from continuing operations in the second quarter of 2018 was $230,000, or $(0.01) per share, compared to a net income from continuing operations of $86,000, or $0.00 per share, in the same year-ago period. Net loss from continuing operations in the first half of 2018 was $525,000, or $(0.01) per share, compared to a net loss from continuing operations of $696,000, or $(0.02) per share, in the same year-ago period.
• Positive adjusted EBITDA in the second quarter of 2018 was $315,000, compared with a positive adjusted EBITDA of $536,000 in the same year-ago period. Positive adjusted EBITDA in the first half of 2018 increased to $429,000, compared to a positive adjusted EBITDA of $227,000 in the same year-ago period.
• Cash and cash equivalents and short-term investments at June 30, 2018 totaled $8.8 million, compared to $10.5 million at March 31, 2018 and $10.1 million at December 31, 2017. Debt at the end of the second quarter of 2018 decreased to $4.5 million, compared to $4.9 million at the end of the first quarter of 2018.

Conference Call

Management will host an investor conference call at 9:00 a.m. Eastern time on August 8, 2018, to discuss OTI's second quarter 2018 financial results, provide a corporate update, and conclude with a Q&A from participants. To participate, please use the following information:

Date: Wednesday, August 8, 2018
Time: 9:00 a.m. Eastern time
U.S. Dial-in: 1-888-317-6002
International Dial-in: 1-412-317-5245
Webcast: https://www.webcaster4.com/Webcast/Page/1720/26753

Please dial in at least 10 minutes before the start of the call and request to join the "On Track Innovations Q2 2018 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.

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, patent litigation and maintenance expenses and other expenses. 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.

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," "expect," "anticipate," "intend," "plan," "estimate," "would," "should," "can," "promising" or similar expressions, we are making forward-looking statements. For example, we are using forward-looking statements when we discuss, among others:  our expectations regarding delivery of our payment systems to Japan, receipt of the Russian Mir certification in short order and its potential effect on our penetration to the Russian market, our drive towards profitability and our expectations for revenue growth in Q3 compared to Q2 and market share gaining in the cashless payments arena and our expectations regarding future growth into new markets such as the Russian market.  Forward-looking statements are made as of the date of this document and are inherently subject to risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements.  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.

(*) Reclassified to conform with the current period presentation.

Investor Relations Contact:
Greg Falesnik
MZ North America
+1-949-385-6449
Greg.Falesnik@mzgroup.us

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SOURCE On Track Innovations Ltd. (OTI)