ROSH PINA, Israel, Nov. 6,
2019 /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 nine months and third quarter
periods ended September 30, 2019.
Highlights
- Revenues of $3.9 million in the
third quarter, of which 32% were from a recurring revenue
source.
- Continued tight control over operating expenses, which
decreased by 20% compared to the third quarter of last year.
- During the first nine months of 2019, delivered globally more
than 20,000 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, "I am pleased to announce that we have hired a
new CEO, Yehuda Holtzman who brings
to OTI a strong sales background and whose initial goals will be to
grow OTI's revenue and margins."
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.
Third quarter 2019 financial results summary
- Total revenue in the quarter was $3.9
million. This is compared to $6.1
million in the same year-ago quarter and $4.1 million in the prior quarter.
- Recurring revenues were $1.2
million (32% of total revenues), compared to $1.3 million (22% of total revenues) in the third
quarter of 2018.
- Gross profit in the quarter was $1.7
million, or 44% of revenues, compared to $3.2 million, or 53% of revenues, in the third
quarter of 2018.
- Operating expenses totaled $2.8
million in the quarter, significantly reduced when compared
to operating expenses of $3.5 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.
- Loss from continuing operations was $1.2
million, compared to loss of $0.2
million in the same year-ago quarter.
- Net loss was $1.2 million, or
loss of $0.03 per share, compared to
a net loss of $0.2 million, or loss
of $0.00 per share, in the same
year-ago quarter. Net loss in the prior quarter amounted to
$0.9 million, or loss of $0.02 per share.
- Adjusted EBITDA loss from continuing operations was
$1.1 million in the quarter, compared
to adjusted EBITDA of $0.0 million in
the same year-ago quarter. Adjusted EBITDA loss in the prior
quarter was $0.4 million.
- As of the end of the quarter, the company had cash and cash
equivalents and short-term investments of $5.3 million.
Conference Call
Management will host a conference call for investors at
9:00 a.m. Eastern Time on Monday,
November 11, 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
any questions to oti_questions@gkir.com by Thursday, November 7, 2019 at 5:00 p.m. Eastern time. OTI intends to hold
conference calls in this format during the CEO transition
phase.
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/1720/32155
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 recurring revenue and long-term strategy.
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 (gain) expenses, net. 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.
|
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,
|
|
2019
|
2018
|
2019
|
2018
|
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|
|
|
|
|
|
Net (loss)
income
|
$
(1,210)
|
$
(184)
|
$
(3,854)
|
$
(797)
|
|
|
|
|
|
|
Net loss (income)
from discontinued operations
|
36
|
(42)
|
279
|
(228)
|
|
Financial expenses,
net
|
93
|
2
|
199
|
129
|
|
Depreciation and
amortization
|
308
|
342
|
951
|
1,022
|
|
Taxes on
income
|
17
|
(2)
|
25
|
(267)
|
|
TOTAL EBITDA FROM
CONTINUING OPERATIONS
|
$
(756)
|
$
116
|
$
(2,400)
|
$
(141)
|
|
|
|
|
|
|
Other (gain)
expenses, net
|
(335)
|
-
|
(335)
|
70
|
|
Stock-based
compensation
|
6
|
65
|
96
|
180
|
|
TOTAL ADJUSTED
EBITDA FROM CONTINUING
|
$
(1,085)
|
$
181
|
$
(2,639)
|
$
109
|
|
OPERATIONS
|
|
|
|
|
|
ON TRACK
INNOVATION LTD.
|
|
|
INTERIM UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEET
|
|
|
(US dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
December
31,
|
|
|
|
2019
|
2018
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
3,396
|
$
4,827
|
|
|
Short-term
investments
|
|
1,905
|
1,078
|
|
|
Trade receivables
(net of allowance for doubtful
|
|
|
|
|
|
accounts of
$558 and $555 as of September 30, 2019
|
|
|
|
|
|
and December
31, 2018, respectively)
|
|
2,469
|
4,530
|
|
|
Other receivables and
prepaid expenses
|
|
1,602
|
2,060
|
|
|
Inventories
|
|
4,366
|
3,527
|
|
|
|
|
|
|
|
Total current
assets
|
|
13,738
|
16,022
|
|
|
|
|
|
|
|
Long-term
restricted deposit for employees benefit
|
|
473
|
451
|
|
|
|
|
|
|
|
Severance pay
deposits
|
|
404
|
375
|
|
|
|
|
|
|
|
Property, plant
and equipment, net
|
|
3,693
|
5,033
|
|
|
|
|
|
|
|
Intangible assets,
net
|
|
246
|
241
|
|
|
|
|
|
|
|
Right-of-use
assets
|
|
1,930
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
20,484
|
$
22,122
|
|
|
|
|
|
|
|
|
ON TRACK
INNOVATION LTD.
|
|
INTERIM UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEET
|
|
(US dollars in
thousands)
|
|
|
|
|
September
30,
|
December
31,
|
|
2019
|
2018
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
Short-term bank
credit and current maturities
|
|
|
|
of long-term
bank loans
|
$
2,553
|
$
260
|
|
Trade
payables
|
4,857
|
4,712
|
|
Other current
liabilities
|
2,286
|
3,622
|
|
|
|
|
Total current
liabilities
|
9,696
|
8,594
|
|
|
|
|
Long-Term
Liabilities
|
|
|
|
Long-term loans, net
of current maturities
|
26
|
39
|
|
Long-term liabilities
due to operating leases, net of current maturities
|
1,204
|
-
|
|
Accrued severance
pay
|
948
|
853
|
|
Deferred tax
liability
|
393
|
445
|
|
Total long-term
liabilities
|
2,571
|
1,337
|
|
|
|
|
Total
Liabilities
|
12,267
|
9,931
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
Equity
|
|
|
|
Shareholders'
Equity
|
|
|
|
Ordinary shares of
NIS 0.1 par value:
|
|
|
|
Authorized:
50,000,000 shares as of September 30, 2019 and
|
|
|
|
December 31, 2018;
issued: 42,503,076 and 42,473,076 shares as
|
|
|
|
of September 30, 2019
and December 31, 2018, respectively;
|
|
|
|
outstanding:
41,324,377 and 41,294,377 shares
|
|
|
|
as of September 30,
2019, and December 31, 2018, respectively
|
1,069
|
1,068
|
|
Additional paid-in
capital
|
225,117
|
225,022
|
|
Treasury shares at
cost - 1,178,699 shares as of September 30,
|
|
|
|
2019 and
December 31, 2018
|
(2,000)
|
(2,000)
|
|
Accumulated other
comprehensive loss
|
(1,172)
|
(956)
|
|
Accumulated
deficit
|
(214,797)
|
(210,943)
|
|
Total
Equity
|
8,217
|
12,191
|
|
|
|
|
Total Liabilities
and Equity
|
$
20,484
|
$
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
September
30,
|
Nine months
ended
September
30,
|
|
2019
|
*2018
|
2019
|
*2018
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
Sales
|
$
2,631
|
$
4,760
|
$
7,286
|
$
13,353
|
|
Licensing and
transaction fees
|
1,234
|
1,339
|
3,708
|
3,997
|
|
|
|
|
|
|
Total
revenues
|
3,865
|
6,099
|
10,994
|
17,350
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
|
|
|
Cost of
sales
|
2,161
|
2,870
|
5,273
|
8,351
|
|
Total cost of
revenues
|
2,161
|
2,870
|
5,273
|
8,351
|
|
|
|
|
|
|
Gross
profit
|
1,704
|
3,229
|
5,721
|
8,999
|
|
Operating
expenses
|
|
|
|
|
|
Research and
development
|
840
|
765
|
2,528
|
2,391
|
|
Selling and
marketing
|
1,193
|
1,591
|
3,798
|
4,700
|
|
General and
administrative
|
1,070
|
1,099
|
3,081
|
3,001
|
|
Other (gain)
expenses, net
|
(335)
|
-
|
(335)
|
70
|
|
|
|
|
|
|
Total operating
expenses
|
2,768
|
3,455
|
9,072
|
10,162
|
|
|
|
|
|
|
Operating loss
from continuing operations
|
(1,064)
|
(226)
|
(3,351)
|
(1,163)
|
|
Financial expenses,
net
|
(93)
|
(2)
|
(199)
|
(129)
|
|
|
|
|
|
|
Loss from
continuing operations
|
|
|
|
|
|
before taxes on
income
|
(1,157)
|
(228)
|
(3,550)
|
(1,292)
|
|
Income tax(expenses)
benefit, net
|
(17)
|
2
|
(25)
|
267
|
|
|
|
|
|
|
Net loss from
continuing operations
|
(1,174)
|
(226)
|
(3,575)
|
(1,025)
|
|
Net (loss) income
from discontinued operations
|
(36)
|
42
|
(279)
|
228
|
|
|
|
|
|
|
Net
loss
|
(1,210)
|
(184)
|
(3,854)
|
(797)
|
|
|
|
|
|
|
Basic and diluted
net (loss) income attributable to
shareholders per ordinary share
|
|
|
|
|
|
From continuing
operations
|
(0.03)
|
(**)
|
(0.09)
|
(0.02)
|
|
From discontinued
operations
|
(**)
|
(**)
|
(**)
|
(**)
|
|
$
(0.03)
|
$
(**)
|
$
(0.09)
|
$
(0.02)
|
|
|
|
|
|
|
Weighted average
number of ordinary shares
|
|
|
|
|
|
used in
computing basic and diluted net(loss)
|
|
|
|
|
|
income per
ordinary share
|
41,324,377
|
41,294,377
|
41,306,575
|
41,260,426
|
|
|
|
|
|
|
*
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)
|
|
|
Nine months ended
September 30,
|
|
2019
|
*2018
|
|
Cash flows from
continuing operating activities
|
|
|
|
Net loss from
continuing operations
|
$
(3,575)
|
$
(1,025)
|
|
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
|
96
|
180
|
|
Depreciation and
amortization
|
951
|
978
|
|
Deferred tax,
net
|
(25)
|
(360)
|
|
Gain on sale of
property and equipment
|
(328)
|
(25)
|
|
Accrued interest and
linkage differences, net
|
(48)
|
-
|
|
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accrued severance
pay, net
|
66
|
(19)
|
|
Decrease in trade
receivables, net
|
1,576
|
1,377
|
|
Decrease (increase)
in other receivables and prepaid expenses
|
395
|
(255)
|
|
Increase in
inventories
|
(879)
|
(381)
|
|
Increase
(decrease) in trade payables
|
506
|
(263)
|
|
Decrease in other
current liabilities
|
(585)
|
(151)
|
|
Net cash (used in)
provided by continuing operating activities
|
(1,850)
|
56
|
|
|
|
|
Cash flows from
continuing investing activities
|
|
|
|
|
|
|
Purchase of property
and equipment
|
(433)
|
(467)
|
|
Proceeds from sale of
property and equipment
|
1,102
|
52
|
|
Change in short-term
investments, net
|
(978)
|
1,195
|
|
Investment in
capitalized certification costs
|
(156)
|
(92)
|
|
Proceeds from
restricted deposit for employees benefit
|
10
|
8
|
|
Net cash (used in)
provided by continuing investing activities
|
(455)
|
696
|
|
|
|
|
Cash flows from
continuing financing activities
|
|
|
|
Increase (decrease)
in short-term bank credit, net
|
2,636
|
(3,449)
|
|
Repayment of
long-term bank loans
|
(261)
|
(979)
|
|
Proceeds from
exercise of options and warrants
|
-
|
34
|
|
Net cash provided by
(used in) continuing financing activities
|
2,375
|
(4,394)
|
|
|
|
|
Cash flows from
discontinued operations
|
|
|
|
Net cash (used in)
provided by discontinued operating activities
|
(1,397)
|
836
|
|
|
|
|
Total net cash
(used in) provided by discontinued operations
|
(1,397)
|
836
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(277)
|
(187)
|
|
|
|
|
Decrease in cash,
cash equivalents and restricted cash
|
(1,604)
|
(2,993)
|
|
|
|
|
Cash, cash
equivalents and restricted cash - beginning of the
period
|
5,105
|
7,799
|
|
|
|
|
Cash, cash
equivalents and restricted cash - end of the
period
|
$
3,501
|
$
4,806
|
|
|
|
|
|
|
*
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)