OTI Reports Second Quarter 2017 Financial Results

ROSH PINNA, Israel, Aug. 9, 2017 /PRNewswire/ -- 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, 2017.

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Q2 2017 Operational Highlights

    --  Delivered first batch of 3,000 payment systems to the Japanese market.
    --  Signed global supply agreement with Dover Fueling Solutions,
        facilitating entry into North American fueling market
    --  Announced with Apriva the launch of a semi-integrated solution for
        unattended market

Q2 2017 Financial Details

    --  Total quarterly revenue increased to $6.9 million, a 73% increase from
        $4.0 million in the prior quarter and a 44% increase from $4.8 million
        in the same year-ago period.
    --  Gross profit increased to $3.5 million (50% of revenues), a 56% increase
        over $2.2 million (55% of revenues) in the prior quarter and an increase
        of 42% over $2.5 million (51% of revenues) in the same year-ago period.
    --  Net income from continuing operations totaled $86,000 or $0.002 per
        share, an improvement from a net loss from continuing operations of
        $782,000 or $(0.02) per share in the prior quarter and an improvement
        from a net loss from continuing operations of $598,000 or $(0.02) per
        share in the same year-ago period.
    --  Adjusted EBITDA income from continuing operations improved to $536,000,
        an improvement from a loss of $309,000 in the prior quarter and an
        improvement from a loss of $133,000 in the same year-ago period (see
        discussion about the presentation of adjusted EBITDA from continuing
        operations, a non-GAAP financial measure, below).

Management Commentary - Shlomi Cohen (OTI CEO)

"The second quarter of 2017 marks a significant milestone in our plan to bring OTI to its full potential. We are pleased to report quarterly revenues of more than $6.9 million dollars and quarterly positive adjusted EBITDA income of more than $500,000. This represents not only the highest quarterly revenue level since we started our overhaul of OTI's operations two years ago, but also the highest quarterly revenue achieved since the second quarter of 2014."

"Our achievements for the second quarter of 2017 result from significant growth in both our retail segment and petroleum segment. In our retail segment, we saw increased sales and the delivery of new products into new and expanding markets and verticals together with outstanding achievement to recover in very short time on lost accounts. In the US market alone we saw a growth of 200% in our reader sales compared to the prior quarter. In our PetroSmart division, we saw during the second quarter of 2017 a revenue growth of more than 100% compared to the first quarter, resulting from long-term efforts to grow existing and new opportunities. In total the second quarter of 2017 presented an increase in revenues of more than 70% compared to the prior quarter and more than 40% compared to the second quarter of 2016 together with positive adjusted EBITDA."

"We followed our plans, executed our strategy, and delivered the expected results. For the long term, I strongly believe that we will continue to see growth within our different verticals and present a positive adjusted EBITDA in 2017."

Conference Call
OTI will hold a conference call on Wednesday, August 9 at 9:00 AM EDT to discuss results for the second quarter of 2017.

OTI CEO Shlomi Cohen and CFO Yishay Curelaru will host the presentation, followed by a question and answer period.

Date: Wednesday, August 9th, 2017
Time: 9:00 AM Eastern Daylight Time (EDT)
Toll-Free Dial-In Number: 1-877-870-4263
International Dial-In Number: 1-412-317-0790
Conference Title: On Track Innovations Ltd. Q2 Earnings Conference Call

The conference call will be broadcast simultaneously and available for replay here and via the investor relations section of the company's website.

Please call the conference telephone number five minutes prior to the start time and request to be joined to the "On Track Innovations Ltd. Q2 Earnings Conference Call".

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. OTI believes that adjusted EBITDA from continuing operations should be considered in evaluating the company's operations since it provides a clear indication of OTI'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 INNOVATION LTD.

                    INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

                              (In thousands, except share data)


                                                 June 30,                  December 31,

                                                            2017                           2016

    Assets


    Current
     assets

    Cash and
     cash
     equivalents                                          $6,242                         $5,952

    Short-term
     investments                                           3,084                          5,585

    Trade
     receivables
     (net of
     allowance
     for
     doubtful

     accounts of
      $694 and
      $720 as of
      June 30,
      2017

     and December
      31, 2016,
      respectively)                                        6,843                          5,620

    Other
     receivables
     and prepaid
     expenses                                              1,554                          1,638

    Inventories                                            3,180                          3,069


    Total
     current
     assets                                               20,903                         21,864
                                                          ------                         ------



    Long-term
     restricted
     deposit for
     employees
     benefit                                                 500                            453


    Severance
     pay
     deposits                                                355                            322


    Property,
     plant and
     equipment,
     net                                                   5,967                          5,788


    Intangible
     assets, net                                             351                            278




    Total Assets                                         $28,076                        $28,705
                                                         =======                        =======


                                          ON TRACK INNOVATION LTD.

                           INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

                                     (In thousands, except share data)


                                                       June 30,                   December 31,

                                                                    2017                           2016

    Liabilities and Equity


    Current Liabilities

    Short-term bank credit and
     current maturities

      of long-
       term
       bank
       loans                                                      $4,663                         $4,369

    Trade
     payables                                                      7,104                          6,957

    Other
     current
     liabilities                                                   1,991                          2,822


    Total
     current
     liabilities                                                  13,758                         14,148
                                                                  ------                         ------


    Long-Term Liabilities

    Long-
     term
     loans,
     net of
     current
     maturities                                                    1,041                          1,215

    Accrued
     severance
     pay                                                             918                            811

    Deferred
     tax
     liability                                                       452                            373
                                                                     ---                            ---

    Total
     long-
     term
     liabilities                                                   2,411                          2,399
                                                                   -----                          -----


    Total
     Liabilities                                                  16,169                         16,547
                                                                  ------                         ------



    Commitments and Contingencies


    Equity

    Shareholders' Equity

    Ordinary shares of NIS 0.1 par
     value: Authorized -

    50,000,000 shares as of June 30,
     2017 and

    December 31, 2016; issued:
     42,288,077 and 42,243,075 shares
     as

    of June 30, 2017 and December 31,
     2016, respectively;

    outstanding: 41,109,378    and
     41,064,376 shares

    as of
     June
     30,
     2017
     and
     December
     31,
     2016,
     respectively                                                  1,062                          1,061

     Additional
     paid-
     in
     capital                                                     224,603                        224,415

    Treasury shares at cost -
     1,178,699 shares as of June 30,

       2017 and
        December
        31,
        2016                                                     (2,000)                       (2,000)

     Accumulated
     other
     comprehensive
     loss                                                          (904)                       (1,236)

     Accumulated
     deficit                                                   (210,854)                     (210,082)
                                                                --------                       --------

    Total
     Equity                                                       11,907                         12,158
                                                                  ------                         ------


    Total
     Liabilities
     and
     Equity                                                      $28,076                        $28,705
                                                                 =======                        =======


                                                  ON TRACK INNOVATION LTD.

                              INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                                                       (In thousands)


                                                     Three months ended June    Six months ended June
                                                     30,                         30,

                                                                        2017                              2016*      2017      2016*

    Revenues

    Sales                                                             $5,646                             $3,584     $8,426     $6,946

    Licensing and transaction
     fees                                                              1,300                              1,226      2,540      2,436
                                                                       -----                              -----      -----      -----


    Total revenues                                                     6,946                              4,810     10,966      9,382
                                                                       -----                              -----     ------      -----


    Cost of revenues

    Cost of sales                                                      3,476                              2,360      5,276      4,609
                                                                       -----                              -----      -----      -----

    Total cost of revenues                                             3,476                              2,360      5,276      4,609
                                                                       -----                              -----      -----      -----


    Gross profit                                                       3,470                              2,450      5,690      4,773
                                                                       -----                              -----      -----      -----

    Operating expenses

    Research and development                                             889                                747      1,591      1,468

    Selling and marketing                                              1,492                              1,321      2,834      2,674

    General and administrative                                           939                                902      1,795      1,826
                                                                         ---                                ---      -----      -----

    Total operating expenses                                           3,320                              2,970      6,220      5,968
                                                                       -----                              -----      -----      -----


    Operating income (loss) from
     continuing operations                                               150                              (520)     (530)   (1,195)

    Financial expenses, net                                             (39)                              (62)     (110)     (155)
                                                                         ---                                ---       ----       ----

    Income (loss) from continuing
     operations

     before taxes on income                                              111                              (582)     (640)   (1,350)

    Income tax                                                          (25)                              (16)      (56)      (32)
                                                                         ---                                ---        ---        ---

    Net income (loss) from
     continuing operations                                                86                              (598)     (696)   (1,382)

    Net income (loss) from
     discontinued operations                                               7                              1,947       (76)     1,803
                                                                         ---                              -----        ---      -----

    Net income (loss)                                                     93                              1,349      (772)       421

    Net (income) loss
     attributable to non-
     controlling interest                                                  -                              (36)         -        27
                                                                         ---                               ---        ---       ---

    Net income (loss)
     attributable to shareholders                                        $93                             $1,313     $(772)      $448
                                                                         ===                             ======      =====       ====

    Basic and diluted net income
     (loss)
    attributable to shareholders
     per ordinary
    share

    From continuing operations                                            **                            (0.02)    (0.02)    (0.03)

    From discontinued operations                                          **                              0.05         **      0.04
                                                                         ---                              ----        ---      ----

                                                                   $      **                             $0.03    $(0.02)     $0.01
                                                                    --------                             -----     ------      -----


    Weighted average number of
     ordinary shares                                              41,095,788                         40,896,863 41,087,729 40,885,668
    used in computing basic and
     diluted net
    income (loss) per ordinary
     share



    * Reclassified to conform with the current period presentation.

    ** Less than $0.01 per ordinary share.


                                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)


                                             Three months ended June
                                             30,                         Six months ended June 30,

                                                    2017            2016            2017                               2016

                                             (Unaudited)    (Unaudited)    (Unaudited)                       (Unaudited)


    Net Income (Loss)                                $93          $1,349          $(772)                              $421


    Net (income) loss
     from discontinued
     operations                                      (7)        (1,947)             76                            (1,803)

    Financial expenses,
     net                                              39              62             110                                155

    Depreciation                                     302             309             583                                617

    Taxes on income                                   25              16              56                                 32
                                                     ---             ---             ---                                ---

    Total EBITDA FROM
     CONTINUING
     OPERATIONS                                     $452          $(211)            $53                             $(578)
                                                    ----           -----             ---                              -----


    Stock-based
     compensation                                     84              78             174                                105
                                                     ---             ---             ---                                ---

    TOTAL ADJUSTED EBITDA
     FROM CONTINUING                                $536          $(133)           $227                             $(473)
    OPERATIONS


                        ON TRACK INNOVATION LTD.

    INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

                             (In thousands)


                                                      Six months ended
                                                              June 30,

                                                                  2017     2016*


    Cash flows from continuing operating
     activities

    Net loss from continuing operations                         $(696) $(1,382)

    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                                      174       105

    Accrued interest and linkage
     differences, net                                             (47)       55

    Depreciation                                                   583       617

    Deferred tax, net                                               21        32

    Gain on sale of fixed assets                                   (7)        -


    Changes in operating assets and
     liabilities:

    Accrued severance pay, net                                      74     (151)

    Increase in trade receivables, net                         (1,151)  (1,115)

    Decrease in other receivables and
     prepaid expenses                                               90       215

    (Increase) decrease in inventories                            (47)      590

    (Decrease) increase in trade payables                        (396)      290

    Decrease in other current liabilities                        (855)    (453)
                                                                  ----      ----

    Net cash used in continuing operating
     activities                                                (2,257)  (1,197)
                                                                ------    ------


    Cash flows from continuing investing
     activities

    Purchase of property and equipment,
     net                                                          (98)    (139)

    Change in short-term investments, net                        2,500     (884)

    Investment in capitalized product
     costs                                                       (157)     (98)

    Proceeds from restricted deposit for
     employee benefits                                              44         -

    Advance payment from sale of property                            -      396

    Proceeds from sale of fixed assets                              12         -


    Net cash provided by (used in)
     continuing investing activities                             2,301     (725)
                                                                 -----      ----


    Cash flows from continuing financing
     activities

    Increase in short-term bank credit,
     net                                                           213        81

    Proceeds from long-term bank loans                               -       27

    Repayment of long-term bank loans                            (374)    (538)

    Proceeds from exercise of options and
     warrants                                                       15        **
                                                                   ---       ---

    Net cash used in continuing financing
     activities                                                  (146)    (430)


    Cash flows from discontinued
     operations

    Net cash used in discontinued
     operating activities                                         (71)    (214)

    Net cash provided by discontinued
     investing activities                                            -    1,949

    Total net cash (used in) provided by
     discontinued operations                                      (71)    1,735
                                                                   ---     -----


    Effect of exchange rate changes on
     cash and cash equivalents                                     463      (17)


    Increase (decrease) in cash and cash
     equivalents                                                   290     (634)

    Cash and cash equivalents at the
     beginning of the period                                     5,952     5,450
                                                                 -----     -----


    Cash and cash equivalents at the end
     of the period                                              $6,242    $4,816
                                                                ======    ======


    (*) Reclassified to conform with the current period presentation

    (**) Less than $1

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. For example, we are using forward-looking statements when we discuss our expectations regarding our growth or profitability, new opportunities, a positive adjusted EBITDA in 2017 and delivery long-term shareholder value. 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 could be impacted by the effects of the protracted evaluation and validation periods in the U.S. and other markets for contactless payment cards, or 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, 2016, 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.

OTI Investor Contact
ir@otiglobal.com

OTI Press Contact
Neil Barr
Director of Marketing
+972-4-686-8004
press@otiglobal.com

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SOURCE On Track Innovations Ltd (OTI)