ROSH PINA, Israel, March 13,
2019 /PRNewswire/ -- On Track Innovations Ltd.
(OTI) (NASDAQ: OTIV) (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 quarter and full year ended
December 31, 2018.
Highlights
- Recurring revenues accounted for 24% of full year 2018 revenues
and on an absolute dollar basis increased by 12% year-over-year to
$5.2 million;
- Solid improvement in gross margins to 51%, up from 50% in
2017;
- Reported 2018 net loss of $263,000 versus a net loss of $598,000 in 2017;
- Debt decreased over the year from $5.0
million to $0.3 million;
Year-end cash was $5.9 million;
- More focused and simplified corporate structure: divested
non-core MediSmart division, providing an additional $2.75 million to balance sheet;
- Successful year of global expansion and sales penetration:
delivered more than 5,000 advanced payment systems to Japan, 11,000 advanced contactless readers to
the Russian market, more than 16,000 advanced contactless readers
for smart ATMs globally and 10,000 advanced contactless readers for
the retail self-service market;
- Received MIR National Card Payment System organization
certification in Russia and
Interac certification in Canada,
which has the potential of significantly increasing OTI's
addressable markets.
Management Commentary
"I continue to remain very pleased with our overall progress in
2018, from both the financial and the strategic perspective,"
commented Shlomi Cohen, Chief
Executive Officer of OTI. "Despite the short-term volatility
in the fourth quarter, our revenues continued to grow on a yearly
basis, and we're especially pleased that almost a quarter of our
revenues are now recurring. Combined with an improvement in
the gross margin profile and a relatively stable expense footprint,
we were able to bring solid improvements in our overall results in
2018. Furthermore, we significantly improved our balance sheet,
lowering our debt levels to almost zero."
Continued Mr. Cohen, "From a strategic perspective, 2018 marked
an important year. Alongside success in our existing markets, we
continued to expand into new international markets, achieving key
certifications in Canada and
Russia. Both of these payment
markets present very significant potential for us."
"The positive trends we have seen in 2018 and the solid
improvements that we have made at OTI in recent quarters, put us in
a good position to enjoy the fruits of our investments in 2019.
Looking ahead, I expect our growth to accelerate, achieving solid
revenue growth in 2019 with corresponding improvements in
profitability," concluded Mr. Cohen.
Following OTI's sale of its MediSmart division, 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.
Full Year 2018 Financial Results Summary
- Full year revenue of $21.9
million compared with $20.9
million in 2017.
- Recurring revenues, on an absolute dollar basis, increased by
12% to $5.2 million (24% of total
revenues), compared to $4.6 million
(22% of total revenue) in 2017.
- Gross profit of $11.2 million, or
51% of revenues, compared to $10.4 million, or 50% of revenues in 2017.
- Operating expenses totaled $13.1
million in 2018, compared to $12.6
million in 2017.
- Net loss of $263,000, or loss of
$0.01 per share, compared to a net
loss of $598,000, or loss of
$0.01 per share, in 2017.
- Adjusted EBITDA loss from continuing operations of $356,000, compared to adjusted EBITDA loss of
$673,000 in 2017.
- Cash, cash equivalents and short-term investments at
December 31, 2018 totaled
$5.9 million. Debt at the end of 2018
decreased by 94% to $0.3 million
compared to the end of 2017.
Fourth Quarter 2018 Financial Results Summary
- Total revenue in the quarter was $4.5
million, compared to $6.3
million in the same year-ago period. The revenues in the
quarter were impacted by the lower level of orders from the
Asia-Pacific region as well as
tariffs implemented by the United
States on imports from China, where the Company manufactures its
products. OTI has taken steps to relocate manufacturing to other
locations, a process which is expected to be completed by the end
of the first quarter of 2019.
- Recurring revenues, on an absolute dollar basis, were
$1.2 million (26%
of total revenues), compared to $1.2
million (18% of total revenues) in the fourth quarter of
2017.
- Gross profit in the quarter was $2.2
million, or 48% of revenues, compared to $2.9 million, or 46% of revenues, in the same
year-ago period.
- Operating expenses totaled $3.0
million in the fourth quarter, compared to $3.5 million in the same year-ago period.
- Net income of $533,000, or
$0.01 per share, compared to a net
loss of $693,000, or loss of
$0.02 per share, in the fourth
quarter of 2017.
- Adjusted EBITDA loss from continuing operations of $471,000, compared to adjusted EBITDA loss of
$204,000 in the same year-ago
period.
Conference Call
Management will host an investor conference call at 9:00 a.m. EDT on March 13,
2019, to discuss the financial results, provide a corporate
update, and conclude with a Q&A session with participants. To
participate, please use the following dial-in information:
U.S. Dial-in: 1-866-250-8117
#International Dial-in: +1-412-317-6011
Webcast: https://www.webcaster4.com/Webcast/Page/1720/29378
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 potential from our expansion into new international
markets, the importance of the MIR certification in Russia and the Interac certification in
Canada for the successful
operation in these countries and the potential in these countries,
improvement in profitability, positive trends and 2019 revenue
growth. 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 expenses. 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.
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
|
The following tables
reflect selected On Track Innovations Ltd, non-GAAP results
reconciled to GAAP results:
|
(US dollars in
thousands)
|
|
|
Year ended
December 31
|
Three months
ended
December 31
|
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
|
Net (loss)
income
|
$
(263)
|
$
(598)
|
$
533
|
$
(693)
|
|
|
|
|
|
Net (income)
loss from discontinued operations
|
(1,625)
|
(1,787)
|
(1,395)
|
66
|
Financial
expenses, net
|
228
|
341
|
98
|
104
|
Depreciation
|
1,328
|
1,172
|
307
|
293
|
Income tax
benefit, net
|
(301)
|
(138)
|
(34)
|
(47)
|
|
|
|
|
|
Total EBITDA FROM
CONTINUING OPERATIONS
|
$
(633)
|
$
(1,010)
|
$
(491)
|
$
(277)
|
|
|
|
|
|
Patent litigation and
maintenance
|
$
10
|
$
31
|
$
3
|
$
7
|
Other expenses
(income), net
|
33
|
52
|
(37)
|
52
|
Stock based
compensation
|
234
|
254
|
54
|
14
|
Total adjusted
EBITDA FROM CONTINUING
OPERATIONS
|
$
(356)
|
$
(673)
|
$
(471)
|
$
(204)
|
|
|
ON TRACK INNOVATION
LTD.
|
CONDENSED
CONSOLIDATED BALANCE SHEET
|
(US dollars in
thousands)
|
|
|
|
December
31
|
|
|
2018
|
2017
|
Assets
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
|
$
4,827
|
$
6,742
|
Short-term
investments
|
|
1,078
|
3,331
|
Trade receivables
(net of allowance for doubtful
|
|
|
|
accounts of
$555 and $568 as of December 31, 2018
|
|
|
|
and December
31, 2017, respectively)
|
|
4,530
|
5,827
|
Other receivables and
prepaid expenses
|
|
2,060
|
3,325
|
Inventories
|
|
3,527
|
3,009
|
|
|
|
|
Total current
assets
|
|
16,022
|
22,234
|
|
|
|
|
Long term restricted
deposit for employees benefit
|
|
451
|
498
|
Severance pay
deposits
|
|
375
|
405
|
Property, plant and
equipment, net
|
|
5,033
|
5,859
|
Intangible assets,
net
|
|
241
|
336
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
22,122
|
$
29,332
|
|
|
|
|
|
|
|
|
ON TRACK INNOVATION
LTD.
|
CONDENSED
CONSOLIDATED BALANCE SHEET
|
(US dollars in
thousands except share data)
|
|
|
|
December
31
|
|
|
2018
|
2017
|
Liabilities
and Equity
|
|
|
|
|
|
Current
Liabilities
|
|
|
Short-term bank
credit and current maturities
|
|
|
of long-term
bank loans
|
|
$
260
|
$
4,181
|
Trade
payables
|
|
4,712
|
7,171
|
Other current
liabilities
|
|
3,622
|
3,276
|
Total current
liabilities
|
|
8,594
|
14,628
|
|
|
|
|
Long-Term
Liabilities
|
|
|
|
Long-term loans, net
of current maturities
|
|
39
|
814
|
Accrued severance
pay
|
|
853
|
939
|
Deferred tax
liability
|
|
445
|
500
|
Total long-term
liabilities
|
|
1,337
|
2,253
|
|
|
|
|
Total
Liabilities
|
|
9,931
|
16,881
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
Equity
|
|
|
|
Shareholders'
Equity
|
|
|
|
Ordinary shares of
NIS 0.1 par value: Authorized –
|
|
|
|
50,000,000
shares as of December 31, 2018 and
|
|
|
|
2017; issued:
42,473,076 and 42,353,077
|
|
|
|
shares as of
December 31, 2018 and 2017,
|
|
|
|
respectively;
outstanding: 41,294,377 and 41,174,378 shares
|
|
|
|
as of December
31, 2018 and 2017, respectively
|
|
1,068
|
1,064
|
Additional paid-in
capital
|
|
225,022
|
224,758
|
Treasury shares at
cost - 1,178,699 shares as of December 31, 2018 and 2017
|
|
(2,000)
|
(2,000)
|
Accumulated other
comprehensive loss
|
|
(956)
|
(691)
|
Accumulated
deficit
|
|
(210,943)
|
(210,680)
|
|
|
|
|
Total
Equity
|
|
12,191
|
12,451
|
|
|
|
|
Total Liabilities
and Equity
|
|
$
22,122
|
$
29,332
|
|
|
|
|
|
|
|
|
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
|
|
2018
|
*
2017
|
2018
|
*
2017
|
Revenues
|
|
|
|
|
Sales
|
$
16,725
|
$
16,252
|
$
3,372
|
$
5,157
|
Licensing and
transaction fees
|
5,153
|
4,621
|
1,156
|
1,169
|
Total
revenues
|
21,878
|
20,873
|
4,528
|
6,326
|
|
|
|
|
|
Cost of
revenues
|
|
|
|
|
Total cost of
revenues
|
10,710
|
10,456
|
2,360
|
3,390
|
|
|
|
|
|
Gross
profit
|
11,168
|
10,417
|
2,168
|
2,936
|
Operating
expenses
|
|
|
|
|
Research and
development
|
3,175
|
3,263
|
782
|
878
|
Selling and
marketing
|
5,940
|
5,633
|
1,240
|
1,467
|
General and
administrative
|
3,971
|
3,620
|
978
|
1,102
|
Patent litigation and
maintenance
|
10
|
31
|
3
|
7
|
Other expenses
(income), net
|
33
|
52
|
(37)
|
52
|
|
|
|
|
|
Total operating
expenses
|
13,129
|
12,599
|
2,966
|
3,506
|
|
|
|
|
|
Operating loss
from continuing operations
|
(1,961)
|
(2,182)
|
(798)
|
(570)
|
|
|
|
|
|
Financial expense,
net
|
(228)
|
(341)
|
(98)
|
(104)
|
Loss from
continuing operations before taxes on
income
|
(2,189)
|
(2,523)
|
(896)
|
(674)
|
|
|
|
|
|
Income tax benefit,
net
|
301
|
138
|
34
|
47
|
|
|
|
|
|
Net loss from
continuing operations
|
(1,888)
|
(2,385)
|
(862)
|
(627)
|
Total income
(loss) from discontinued operations
|
1,625
|
1,787
|
1,395
|
(66)
|
Net (loss)
income
|
$
(263)
|
$
(598)
|
$
533
|
$
(693)
|
Basic and diluted
net (loss) income attributable to
|
|
|
|
|
shareholders
per ordinary share
|
|
|
|
|
From continuing
operations
|
$
(0.05)
|
$
(0.06)
|
$
(0.02)
|
$
(0.02)
|
From discontinued
operations
|
$
0.04
|
$
0.05
|
$
0.03
|
$
**
|
|
$
(0.01)
|
$
(0.01)
|
$
0.01
|
$
(0.02)
|
Weighted average
number of ordinary shares used in
computing basic and diluted net (loss) income per
ordinary share
|
41,268,984
|
40,109,875
|
41,260,426
|
40,140,356
|
|
|
* Reclassified to conform with the current period
presentation.
|
** Less than $0.01 per ordinary share.
|
ON TRACK INNOVATION
LTD.
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOW
|
(US dollars in
thousands)
|
|
|
|
Year ended
December 31
|
|
|
2018
|
* 2017
|
* 2016
|
Cash flows from
continuing operating activities
|
|
|
|
Net loss from
continuing operations
|
$
(1,888)
|
$
(2,385)
|
$
(3,044)
|
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
|
234
|
254
|
239
|
Loss (gain) on sale
of property and equipment
|
(37)
|
52
|
83
|
Accrued interest and
linkage differences, net
|
19
|
(6)
|
56
|
Depreciation and
amortization
|
1,328
|
1,172
|
1,172
|
Deferred tax
benefits, net
|
(477)
|
(165)
|
(155)
|
|
|
|
|
Changes in
operating assets and liabilities:
|
|
|
|
Accrued severance
pay, net
|
(57)
|
45
|
(183)
|
Decrease (increase)
in trade receivables, net
|
1,118
|
(124)
|
(3,224)
|
Decrease (increase)
in other receivables and prepaid expenses
|
350
|
(838)
|
349
|
(Increase) decrease
in inventories
|
(573)
|
110
|
(106)
|
(Decrease) increase
in trade payables
|
(2,089)
|
(644)
|
1,631
|
(Decrease) increase
in other current liabilities
|
(110)
|
(597)
|
288
|
Net cash used in
continuing operating activities
|
(2,182)
|
(3,126)
|
(2,894)
|
|
|
|
|
Cash flows from
continuing investing activities
|
|
|
|
|
|
|
|
Purchase of property
and equipment
|
(636)
|
(293)
|
(311)
|
Proceeds from sale of
property, plant and equipment
|
68
|
17
|
1,779
|
Change in short-term
investments, net
|
1,495
|
1,773
|
(822)
|
Investment in
capitalized certification costs
|
(120)
|
(239)
|
(188)
|
Investment in
restricted deposit for employee benefits
|
-
|
-
|
(44)
|
Proceeds from
restricted deposit for employee benefits
|
8
|
44
|
142
|
Net cash provided by
continuing investing activities
|
815
|
1,302
|
556
|
|
|
|
|
Cash flows from
continuing financing activities
|
|
|
|
(Decrease) increase
in short-term bank credit, net
|
(3,554)
|
(335)
|
1,018
|
Proceeds from
long-term bank loans
|
-
|
-
|
27
|
Repayment of
long-term bank loans
|
(1,064)
|
(632)
|
(1,581)
|
Proceeds from
exercise of options and warrants
|
34
|
92
|
177
|
|
|
|
|
Net cash used in
continuing financing activities
|
(4,584)
|
(875)
|
(359)
|
|
|
|
|
Cash flows from
discontinued operations
|
|
|
|
Net cash provided by
discontinued operating activities
|
750
|
2,311
|
469
|
Net cash provided by
discontinued investing activities
|
2,750
|
-
|
2,292
|
|
|
|
|
Total net cash
provided by discontinued operations
|
3,500
|
2,311
|
2,761
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(243)
|
687
|
(268)
|
|
|
|
|
(Decrease)
Increase in cash and cash equivalents
|
(2,694)
|
299
|
(204)
|
Cash and cash
equivalents at the beginning of the year
|
7,799
|
7,500
|
7,704
|
|
|
|
|
Cash and cash
equivalents at the end of the year
|
$
5,105
|
$
7,799
|
$
7,500
|
|
*
Reclassified to conform with the current period
presentation.
|
Press
Contact:
Richard Harris,
OTI
Director of
Marketing
+972-4-686-8004
press@otiglobal.com
|
Investor Relations
Contact:
Gavriel
Frohwein
GK Investor &
Public Relations
+1 646 688
3559
oti@gkir.com
|
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SOURCE On Track Innovations Ltd. (OTI)