SOURCE: On Track Innovations Ltd.

On Track Innovations Ltd.

August 14, 2014 08:31 ET

oti Reports 58% Revenue Increase for Second Quarter 2014

ROSH PINA, ISRAEL--(Marketwired - Aug 14, 2014) -  On Track Innovations Ltd. (oti) (NASDAQ: OTIV), a global provider of near field communication (NFC) and cashless payment solutions, reported financial results for the second quarter ended June 30, 2014.

Q2 2014 Operational Highlights

  • Launched Trio modular payments reader, which handles multiple payment methods in a single solution for the growing self-service markets.
  • Received an initial commercial order from Vianet for oti's new Trio modular payment reader. Vianet plans to initially install the readers in vending machines in Europe starting Q3 2014.
  • oti PetroSmart was awarded a major 15-year contract from a government ministry in Southern Africa to supply its EasyFuel Plus management system.
  • Signed a five-year contract to help manage more than 5,000 on-street parking spaces in Arlington County, Virginia.
  • Signed a 20-year contract to co-manage the parking operations for Elbasan, a city in central Albania.
  • Expanded the capabilities and use of the 84 transit ticket vending machines operated by oti's electronic ticket systems subsidiary, ASEC S.A., for the Mazovia Railway System in Poland.

Q2 2014 Financial Highlights 

  • Revenues in the second quarter of 2014 increased 38% sequentially and 58% from the same year-ago period to $7.2 million. The significant improvement was primarily driven by NFC readers sold to the U.S. market and first deliveries of oti's Wave device to Asia.
  • Gross profit in the second quarter of 2014 increased 26% to $3.3 million (46% of revenue) from $2.6 million (58% of revenue) in the same year-ago period.
  • Total operating expenses in the second quarter of 2014 were $5.3 million compared to $5.0 million in the same year-ago period. The slight increase was primarily due to higher sales and marketing expenses designed to accelerate oti's growth, offset by a 20% decrease in general and administrative expenses.
  • Net loss from continuing operations in the second quarter of 2014 totaled $2.3 million or $(0.07) per share, an improvement from a net loss from continuing operations of $2.6 million or $(0.08) per share in the same period last year.
  • Adjusted EBITDA loss from continuing operations in the second quarter of 2014 totaled $1.0 million, a significant improvement from an adjusted EBITDA loss from continuing operations of $1.8 million in the same year-ago period (see discussion about the presentation of adjusted EBITDA from continuing operations, a non-GAAP term, below).
  • At quarter-end, cash and cash equivalents, and short-term investments totaled $10.6 million.

Management Commentary
"During Q2 we made strong progress executing on our plan to grow our core cashless payment solutions business," said the company's CEO Ofer Tziperman. "This was demonstrated by the 58% revenue increase in the quarter, driven by our industry-leading technology and expanded salesforce.

"The quarter was also highlighted by several customer wins across all of our verticals. This included the first order for our new Trio modular reader.

"We plan to build on this operational and financial momentum and take advantage of the strong industry tailwinds in the cashless payments space.

"Given this tremendous market opportunity, coupled with our focus and leaner, highly capable team, we continue believe we will be able to deliver at least 30% revenue growth in 2014, as well as achieve positive adjusted EBITDA on a quarterly basis by Q1 2015."

Conference Call
OTI will hold a conference call today (August 14, 2014) at 10:30 a.m. Eastern time to discuss these results. The company's CEO Ofer Tziperman, CFO Shay Tomer, and Chairman Dimitrios Angelis will host the presentation, followed by a question and answer period.

To participate, please dial the appropriate number 5-10 minutes prior to the start time and ask for the On Track Innovations conference call. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

U.S. dial-in: 1-877-407-0784
International dial-in: 1-201-689-8560

The conference call will be broadcast simultaneously and available for replay via the investor section of the company's website at www.otiglobal.com.

A replay of the call will be available after 1:30 p.m. Eastern time on the same day through September 14, 2014.

U.S. replay dial-in: 1-877-870-5176
International replay dial-in: 1-858-384-5517
Replay ID: 13588075

Use of Non-GAAP Financial Information
This press release contains certain non-GAAP measures, namely, adjusted EBITDA from continuing operation, or adjusted earnings from continuing operation before interest, income tax, depreciation and amortization. Adjusted EBITDA from continuing operations represents earnings before interest1, income tax, depreciation and amortization, and further eliminates the effect of share-based compensation expense and patent litigation and maintenance expenses. 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 US GAAP, but should not be considered a substitute for the US GAAP results. The non-GAAP measures included in this press release have been reconciled to the US GAAP results in the tables below.

1 "Financial expenses"

 
ON TRACK INNOVATIONS LTD.
INTERIM UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENT
The following tables reflect selected On Track Innovations Ltd, non-GAAP results reconciled to GAAP results:
 (In thousands, except share and per share data)
 
    Three months ended June 30     Six months ended June 30  
    2014     2013     2014     2013  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
                                 
                                 
Net Loss   $ (2,234 )   $ (2,304 )   $ (5,592 )   $ (5,343 )
                                 
  Net loss (profit) from discontinued operations     (74 )     (321 )     270       (91 )
  Financial expenses     249       256       353       821  
  Depreciation     317       275       648       556  
  Taxes on income     55       (2 )     173       (4 )
  Amortization expenses     -       28       -       53  
TOTAL EBITDA   $ (1,687 )   $ (2,068 )   $ (4,148 )   $ (4,008 )
                                 
Patent litigation and maintenance     380       202       1,019       418  
Stock based compensation   $ 280     $ 56     $ 436     $ 113  
TOTAL ADJUSTED EBITDA   $ (1,027 )   $ (1,810 )   $ (2,693 )   $ (3,477 )
                                 

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, cashless parking fee collection systems 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, the content of which does not form a part of this press release.

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 we use words such as "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions, we are making forward-looking statements. 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. Forward-looking statements include statements regarding the successful implementation of our strategic plan of refocusing on our core business of cashless payment technology, success in achieving further revenues or benefits while relying on the current operational and financial momentum in the cashless payment market, increase of future revenues and rate of such increase and achieving positive adjusted EBITDA in the near or mid future. 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, market acceptance of 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, 2013, 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, we can give no assurance that our 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)
 
    June 30   December 31
    2014   2013
Assets            
             
Current assets            
Cash and cash equivalents   $ 6,114   $ 14,962
Short-term investments     4,448     2,601
Trade receivables (net of allowance for doubtful accounts of $610 as of June 30, 2014 and December 31, 2013)     6,526    
5,134
Other receivables and prepaid expenses     3,377     4,632
Inventories     3,572     3,477
Assets from discontinued operations - held for sale     -     3,919
Total current assets     24,037     34,725
             
             
Long term restricted deposit for employees benefit     626     623
             
Severance pay deposits     728     738
             
Property, plant and equipment, net     9,318     9,837
             
Deferred tax asset     51     173
             
             
             
             
             
             
             
             
             
             
             
Total Assets   $ 34,760   $ 46,096
   
   
   
ON TRACK INNOVATION LTD.  
INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET  
(In thousands, except share and per share data)  
   
    June 30     December 31  
    2014     2013  
Liabilities and Equity                
                 
Current Liabilities                
Short-term bank credit and current maturitiesof long-term bank loans   $ 4,142     $ 3,842  
Trade payables     9,705       9,255  
Other current liabilities     3,011       6,299  
Liabilities from discontinued operations - held for sale     -       2,956  
Total current liabilities     16,858       22,352  
                 
Long-Term Liabilities                
Long-term loans, net of current maturities     2,816       3,342  
Accrued severance pay     1,691       1,706  
Deferred tax liability     304       292  
Total long-term liabilities     4,811       5,340  
                 
Total Liabilities     21,669       27,692  
                 
                 
                 
                 
Equity                
Shareholders' Equity                
Ordinary shares of NIS 0.1 par value: Authorized - 50,000,000 shares as of March 31, 2014 and December 31, 2013; issued: 34,386,066 and 34,199,511 shares as of March 31, 2014 and December 31, 2013, respectively; outstanding: 33,207,367 and 33,020,812 shares as of March 31, 2014 and December 31, 2013, respectively  
 
 
 
 
860
 
 
 
 
 
 
 


854
 
 
Additional paid-in capital     212,892       212,246  
Treasury shares at cost - 1,178,699 shares                
      (2,000 )     (2,000 )
Accumulated other comprehensive income (loss)     (345 )     28  
Accumulated deficit     (197,762 )     (192,179 )
Total Shareholder's equity     13,645       18,949  
Non-controlling interest     (554 )     (545 )
                 
Total Equity     13,091       18,404  
                 
Total Liabilities and Equity   $ 34,760     $ 46,096  
   
   
   
ON TRACK INNOVATION LTD.  
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS  
(In thousands, except share and per share data)  
   
    Three months ended June 30         Six months ended June 30      
    2014     2013*     2014     2013*  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
                                 
Revenues                                
Sales   $ 5,852     $ 3,385     $ 9,690     $ 5,949  
Licensing and transaction fees     1,302       1,149       2,662       2,227  
                                 
Total revenues     7,154       4,534       12,352       8,176  
                                 
Cost of revenues                                
Cost of sales     3,847       1,914       6,447       3,553  
                                 
Gross profit     3,307       2,620       5,905       4,623  
Operating expenses                                
Research and development     1,221       1,131       2,381       1,988  
Selling and marketing     2,072       1,587       4,192       3,231  
General and administrative     1,638       2,043       3,109       3,550  
Patent litigation and maintenance     380       202       1,019       418  
Amortization of intangible assets     -       28       -       53  
                                 
Total operating expenses     5,311       4,991       10,701       9,240  
                                 
Operating loss from continuing operations     (2,004 )     (2,371 )     (4,796 )     (4,617 )
                                 
Financial expense, net     (249 )     (256 )     (353 )     (821 )
                                 
Loss from continuing operations before taxes on income     (2,253 )     (2,627 )     (5,149 )     (5,438 )
                                 
Income tax     (55 )     2       (173 )     4  
                                 
Net loss from continuing operations     (2,308 )     (2,625 )     (5,322 )     (5,434 )
Net Income (loss) from discontinued operations     74       321       (270 )     91  
                                 
Net loss     (2,234 )     (2,304 )     (5,592 )     (5,343 )
                                 
Net loss attributable to noncontrolling interest     15       31       9       64  
Net loss attributable to shareholders   $ (2,219 )   $ (2,273 )   $ (5,583 )   $ (5,279 )
Basic and diluted net loss attributable to shareholders perordinary share                                
From continuing operations     (0.07 )     (0.08 )     (0.16 )     (0.16 )
From discontinued operations     ** -       0.01       (0.01 )     ** -  
    $ (0.07 )   $ (0.07 )   $ (0.17 )   $ (0.16 )
                                 
Weighted average number of ordinary shares used in computing basic and diluted net loss per ordinary share     33,228,978       32,495,334       33,228,978       32,467,881  
     
    **Less than 0.01 per ordinary share
   
  *Reclassified to conform with the current period presentation.
   
   
   
ON TRACK INNOVATION LTD.  
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW  
(In thousands, except share and per share data)  
       
    Six months ended June 30  
    2014     2013*  
Cash flows from continuing operating activities                
Net loss from continuing operations   $ (5,322 )   $ (5,434 )
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     436       113  
Gain on sale of property and equipment     (5 )     (11 )
Amortization of intangible assets     -       53  
Depreciation     648       556  
                 
Changes in operating assets and liabilities:                
Accrued severance pay, net     (6 )     (157 )
Accrued interest and linkage differences     (8 )     69  
Deferred tax, net     134       (6 )
Decrease (increase) in trade receivables     (1,676 )     365  
Decrease (increase) in other receivables and prepaid expenses     (138 )     1,390  
Increase in inventories     (104 )     (792 )
Increase (decrease) in trade payables     816       (1,413 )
Decrease in other current liabilities     (1,018 )     (760 )
Net cash used in continuing operating activities     (6,243 )     (6,027 )
                 
Cash flows from continuing investing activities                
                 
Purchase of property and equipment     (202 )     (1,595 )
Purchase of short term investments     (2,402 )     (295 )
Proceeds from restricted deposit for employees benefit     -       306  
Proceeds from maturity or sale of short - term investments     560       5,541  
Proceeds from sale of property and equipment     5       11  
Net cash provided by (used in) continuing investing activities     (2,039 )     3,968  
                 
Cash flows from continuing financing activities                
Increase (decrease) in short-term bank credit, net     215       (2,325 )
Proceeds from long-term bank loans     12       1,398  
Repayment of long-term bank loans     (436 )     (601 )
Proceeds from exercise of options     311       239  
Net cash provided by (used in) continuing financing activities     102       (1,289 )
                 
Cash flows from discontinued operations                
Net cash provided by (used in) discontinued operating activities     (1,264 )     1,132  
Net cash provided by (used in) discontinued investing activities     695       (61 )
Net cash used in discontinued financing activities     (154 )     (722 )
Total net cash provided by (used in) discontinued operations     (723 )     349  
                 
Effect of exchange rate changes on cash and cash equivalents     55       (112 )
                 
Decrease in cash and cash equivalents     (8,848 )     (3,111 )
Cash and cash equivalents at the beginning of the period     14,962       9,304  
                 
Cash and cash equivalents at the end of the period   $ 6,114     $ 6,193  
                 
  *Reclassified to conform with the current period presentation.
   

Contact Information

  • Investor Contact:
    Scott Liolios or Matt Glover
    Liolios Group, Inc.
    949-574-3860
    Email Contact

    Press Contact:
    Inbar Ben-Hur
    oti Marketing Communication Manager
    Email Contact