ROSH PINA, Israel, Aug. 7,
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 second quarter ended
June 30, 2019.
Highlights
- Revenues of $4.1 million in the
second quarter, growth of 37% compared to the first quarter of 2019
and a decrease of 28% compared to the second quarter of last
year.
- Gross margin at 58% in the second quarter, at a multi-year
high, in part due to growing portion of recurring revenue out of
the total.
- Continued tight control over operating expenses which decreased
by 6% in the first half of 2019, versus the same period in
2018.
- Delivered globally more than 10,000 advanced contactless
readers to the smart ATMs market, more than 8,000 advanced payment
readers to the Russian market, and more than 1,000 advanced payment
systems to the Japanese unattended retail market.
Management Commentary
Mr. Assaf Cohen, OTI's Interim
CEO, commented, "We are pleased with the recovery in our
results in the second quarter. The increase in revenue over the
prior quarter gives us confidence that the issue we faced in the
U.S. from the impact of tariffs is now behind us, and we have
regained our positive momentum. Furthermore, in line with our
long-term strategy, the recurring portion of our revenues continues
to grow, and this has allowed us to see a solid improvement in the
gross margin."
Mr. Cohen continued, "I would like to wish Mr. Shlomi Cohen, our former CEO, the best of luck
in future with all his endeavors and thank him for the years he
invested in OTI, in stabilizing the business and advancing its
strategy. The Board is working to find a suitable replacement in
the coming months."
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.
Second quarter 2019 financial results summary
- Total revenue in the quarter was $4.1
million, compared to $5.7
million in the same year-ago quarter. Revenues in the prior
quarter were $3.0 million, and
current quarter revenues represent a 37% sequential
improvement.
- Recurring revenues were $1.2
million (29% of total revenues), compared to $1.4 million (24% of total revenues) in the
second quarter of 2018.
- Gross profit in the quarter was $2.4
million, or 58% of revenues, compared to $2.9 million, or 50% of revenues, in the second
quarter of 2018.
- Operating expenses totaled $3.2
million in the quarter, compared to $3.3 million in the same year-ago quarter.
- Loss from continuing operations was $849,000 compared to $399,000 in the same year-ago quarter.
- Net loss was $899,000, or loss of
$0.02 per share, compared to a net
loss of $280,000, or loss of
$0.01 per share, in the same year-ago
quarter. Net loss in the prior quarter amounted to $1.7 million, or loss of $0.04 per share.
- Adjusted EBITDA loss from continuing operations was
$442,000 in the quarter, compared to
adjusted EBITDA of $32,000 in the
same year-ago quarter. Adjusted EBITDA loss in the prior quarter
was $1.1 million.
- As of the end of the quarter, the company had cash and cash
equivalents and short-term investments of $5.7 million.
Conference Call
Management will host an investor conference call at 9:00 a.m. Eastern Time on August 12, 2019, to discuss the financial
results, provide a corporate update, and conclude with a recorded
Q&A session.
Investors and analysts are encouraged to submit questions they
would like the Interim CEO to address on the call. Please submit
questions to oti_questions@gkir.com by Thursday, August 8, 2019 at 5:00 p.m. Eastern time. OTI intends to hold
conference calls in this format during the CEO transition phase and
expects to return to the live format, upon the appointment of a
permanent CEO.
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/1720/30987
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 Company's belief that the impact of tariffs is now
behind it, and continued positive momentum. 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. 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
and other 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.
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
June 30,
|
Six months
ended
June 30,
|
|
2019
|
2018
|
2019
|
2018
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
|
|
|
|
Net
loss
|
$
(899)
|
$
(280)
|
$
(2,644)
|
$
(613)
|
|
|
|
|
|
Net loss (income)
from discontinued operations
|
50
|
(119)
|
243
|
(186)
|
Financial expenses,
net
|
37
|
95
|
106
|
127
|
Depreciation and
amortization
|
323
|
345
|
643
|
680
|
Taxes on
income
|
3
|
(141)
|
8
|
(265)
|
Total EBITDA FROM
CONTINUING OPERATIONS
|
$
(486)
|
$
(100)
|
$
(1,644)
|
$
(257)
|
|
|
|
|
|
Other
expenses
|
-
|
70
|
-
|
70
|
Stock-based
compensation
|
44
|
62
|
90
|
115
|
Total adjusted
EBITDA FROM CONTINUING
OPERATIONS
|
$
(442)
|
$
32
|
$
(1,554)
|
$
(72)
|
ON TRACK
INNOVATION LTD.
|
INTERIM UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEET
|
(US dollars in
thousands)
|
|
|
|
June
30,
|
December
31,
|
|
|
2019
|
2018
|
Assets
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
|
$
3,575
|
$
4,827
|
Short-term
investments
|
|
2,105
|
1,078
|
Trade receivables
(net of allowance for doubtful
|
|
|
|
accounts of
$564 and $555 as of June 30, 2019
|
|
|
|
and December
31, 2018, respectively)
|
|
2,793
|
4,530
|
Other receivables and
prepaid expenses
|
|
1,457
|
2,060
|
Inventories
|
|
4,929
|
3,527
|
Asset held for
sale
|
|
764
|
-
|
|
|
|
|
Total current
assets
|
|
15,623
|
16,022
|
|
|
|
|
|
|
|
|
Long-term
restricted deposit for employees benefit
|
|
463
|
451
|
|
|
|
|
Severance pay
deposits
|
|
394
|
375
|
|
|
|
|
Property, plant
and equipment, net
|
|
3,981
|
5,033
|
|
|
|
|
Intangible assets,
net
|
|
262
|
241
|
|
|
|
|
Right-of-use
assets
|
|
1,696
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
22,419
|
$
22,122
|
ON TRACK
INNOVATION LTD.
|
INTERIM UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEET
|
(US dollars in
thousands)
|
|
|
June
30,
|
December
31,
|
|
2019
|
2018
|
Liabilities and
Equity
|
|
|
|
|
|
Current
Liabilities
|
|
|
Short-term bank
credit and current maturities
|
|
|
of long-term
bank loans
|
$
2,811
|
$
260
|
Trade
payables
|
5,226
|
4,712
|
Other current
liabilities
|
2,248
|
3,622
|
|
|
|
Total current
liabilities
|
10,285
|
8,594
|
|
|
|
Long-Term
Liabilities
|
|
|
Long-term loans, net
of current maturities
|
27
|
39
|
Long-term liabilities
due to operating leases, net of current maturities
|
1,092
|
-
|
Accrued severance
pay
|
916
|
853
|
Deferred tax
liability
|
424
|
445
|
Total long-term
liabilities
|
2,459
|
1,337
|
|
|
|
Total
Liabilities
|
12,744
|
9,931
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Ordinary shares of
NIS 0.1 par value; Authorized:
|
|
|
50,000,000 shares as
of June 30, 2019 and
|
|
|
December 31, 2018;
issued: 42,503,076 and 42,473,076 shares as
|
|
|
of June 30, 2019 and
December 31, 2018, respectively;
|
|
|
outstanding:
41,324,377 and 41,294,377 shares
|
|
|
as of June 30, 2019,
and December 31, 2018, respectively
|
1,069
|
1,068
|
Additional paid-in
capital
|
225,111
|
225,022
|
Treasury shares at
cost - 1,178,699 shares as of June 30,
|
|
|
2019 and
December 31, 2018
|
(2,000)
|
(2,000)
|
Accumulated other
comprehensive loss
|
(918)
|
(956)
|
Accumulated
deficit
|
(213,587)
|
(210,943)
|
Total
Equity
|
9,675
|
12,191
|
|
|
|
Total Liabilities
and Equity
|
$
22,419
|
$
22,122
|
ON TRACK
INNOVATION LTD.
|
INTERIM UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
|
(US dollars in
thousands, except share and per share data)
|
|
|
|
Three months
ended
June 30,
|
Six months
ended
June 30,
|
|
|
2019
|
*2018
|
2019
|
*2018
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
Sales
|
|
$2,933
|
$
4,352
|
$
4,655
|
$
8,593
|
Licensing and
transaction fees
|
|
1,183
|
1,387
|
2,474
|
2,658
|
|
|
|
|
|
|
Total
revenues
|
|
4,116
|
5,739
|
7,129
|
11,251
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
|
|
|
Cost of
sales
|
|
1,742
|
2,849
|
3,112
|
5,481
|
Total cost of
revenues
|
|
1,742
|
2,849
|
3,112
|
5,481
|
|
|
|
|
|
|
Gross
profit
|
|
2,374
|
2,890
|
4,017
|
5,770
|
Operating
expenses
|
|
|
|
|
|
Research and
development
|
|
817
|
806
|
1,688
|
1,626
|
Selling and
marketing
|
|
1,320
|
1,464
|
2,605
|
3,109
|
General and
administrative
|
|
1,046
|
1,065
|
2,011
|
1,972
|
Total operating
expenses
|
|
3,183
|
3,335
|
6,304
|
6,707
|
|
|
|
|
|
|
Operating loss
from continuing operations
|
|
(809)
|
(445)
|
(2,287)
|
(937)
|
Financial expenses,
net
|
|
(37)
|
(95)
|
(106)
|
(127)
|
Loss from
continuing operations
|
|
|
|
|
|
before taxes
on income
|
|
(846)
|
(540)
|
(2,393)
|
(1,064)
|
Income tax
|
|
(3)
|
141
|
(8)
|
265
|
Loss from
continuing operations
|
|
(849)
|
(399)
|
(2,401)
|
(799)
|
Net (loss) income
from discontinued
operations
|
|
(50)
|
119
|
(243)
|
186
|
Net
loss
|
|
$
(899)
|
$
(280)
|
$
(2,644)
|
$
(613)
|
Basic and diluted
net (loss) income
attributable to shareholders per ordinary
share
|
|
|
|
|
|
From continuing
operations
|
|
(0.02)
|
(0.01)
|
(0.06)
|
(0.02)
|
From discontinued
operations
|
|
**
|
**
|
**
|
0.01
|
|
|
|
|
|
|
|
|
$
(0.02)
|
$
(0.01)
|
$
(0.06)
|
$
(0.01)
|
|
|
|
|
|
|
Weighted average
number of ordinary shares
used in computing basic and diluted net (loss)
income per ordinary share
|
|
41,300,641
|
41,271,644
|
41,297,526
|
41,243,169
|
|
*
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
|
(US dollars in
thousands)
|
|
|
|
Six months ended
June 30,
|
|
|
2019
|
*
2018
|
|
|
|
|
Cash flows from
continuing operating activities
|
|
|
|
Net loss from
continuing operations
|
|
$
(2,401)
|
$
(799)
|
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
|
115
|
Accrued interest and
linkage differences, net
|
|
(18)
|
7
|
Depreciation and
amortization
|
|
643
|
680
|
Deferred tax
benefits, net
|
|
(24)
|
(281)
|
Gain on sale of fixed
assets
|
|
(2)
|
(17)
|
|
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accrued severance
pay, net
|
|
44
|
(28)
|
Decrease in trade
receivables, net
|
|
1,254
|
1,051
|
Decrease in other
receivables and prepaid expenses
|
|
597
|
249
|
Increase in
inventories
|
|
(1,405)
|
(344)
|
Increase (decrease)
in trade payables
|
|
585
|
(567)
|
Decrease in other
current liabilities
|
|
(540)
|
(528)
|
Net cash used in
continuing operating activities
|
|
(1,177)
|
(462)
|
|
|
|
|
Cash flows from
continuing investing activities
|
|
|
|
Purchase of property
and equipment
|
|
(221)
|
(414)
|
Change in short-term
investments, net
|
|
(1,190)
|
1,173
|
Investment in
capitalized product costs
|
|
(120)
|
(87)
|
Proceeds from
restricted deposit for employee benefits
|
|
10
|
-
|
Proceeds from sale of
fixed assets
|
|
10
|
17
|
Net cash (used in)
provided by continuing investing activities
|
|
(1,511)
|
689
|
|
|
|
|
Cash flows from
continuing financing activities
|
|
|
|
Increase (decrease)
in short-term bank credit, net
|
|
2,747
|
(80)
|
Repayment of
long-term bank loans
|
|
(233)
|
(348)
|
Proceeds from
exercise of options
|
|
-
|
34
|
Net cash provided by
(used in) continuing financing activities
|
|
2,514
|
(394)
|
|
|
|
|
Cash flows from
discontinued operations
|
|
|
|
Net cash (used in)
provided by discontinued operating activities
|
|
(1,304)
|
289
|
|
|
|
|
Total net cash
(used in) provided by discontinued operations
|
|
(1,304)
|
289
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
53
|
(288)
|
|
|
|
|
Decrease in cash,
cash equivalents and restricted cash
|
|
(1,425)
|
(166)
|
Cash, cash
equivalents and restricted cash-beginning of the
period
|
|
5,105
|
7,799
|
|
|
|
|
Cash, cash
equivalents and restricted cash-end of the period
|
|
$
3,680
|
$
7,633
|
|
|
|
|
(*) Reclassified to
conform with the current period presentation.
|
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)