On Track Innovations Ltd. Reports Third Quarter 2018 Financial Results
ROSH PINA, Israel, Nov. 7, 2018 /PRNewswire/ -- On Track Innovations Ltd. (OTI) (NASDAQ: OTIV) (the "Company" or "OTI"), a global provider of near field communication (NFC) and cashless payment solutions, has provided a business update and announced financial results for the third quarter ended September 30, 2018.
Operational Updates:
-- OTI delivered a total of more than 3,000 advanced payment systems to
Japan.
-- OTI delivered approximately 8,000 advanced contactless readers to the
widespread Russian retail self-service market.
-- The Company received the MIR National Card Payment System organization
certification, a key component of effectively penetrating the strategic
Russian unattended payment market.
-- In August, Apriva released a white paper affirming its ongoing
partnership with OTI for deploying next generation self-serve and
vending technologies, enabling OTI to offer merchants a pre-certified,
off-the-shelf EMV solution for self-service kiosks.
-- In October, OTI was granted the Interbank Network Interac certification,
allowing Canadian businesses to integrate OTI's secure cashless payment
solutions into vending machines, kiosks and other unattended devices
throughout the significant Canadian market.
Management Commentary
"I am pleased to announce another quarter of continued operational execution, highlighted by our robust sequential and year-over-year revenue growth," said Shlomi Cohen, Chief Executive Officer of On Track Innovations. "The third quarter revenue of $6.5 million represents the highest third quarter revenue achieved since 2013. We continued to make notable progress on several key fronts, primarily through successful sales efforts in Japan and the United States.
"Alongside success in our existing markets, we continued to expand our efforts to new international markets - as evidenced through the granting of the MIR certification in Russia, where we delivered almost 8,000 advanced contactless readers in the third quarter, as well as the Interac certification in Canada. Both of these certifications are crucial to successfully operating in these countries, allowing our sales team to now focus their efforts on well-suited opportunities abroad.
"We also experienced our fourth consecutive quarter of positive adjusted EBITDA while expanding our recurring revenue base by 19% on an absolute dollar basis to $1.5 million per quarter, compared to $1.2 million in same year ago period. We also reduced our debt by 89% in the quarter when compared to the prior quarter, with total debt now standing at just $0.5 million.
"Our ability to maintain a significant technological advantage over the competition while diligently managing our expenses has positioned us well for continued revenue growth and shareholder value creation over the long-term," concluded Cohen.
Q3 2018 Financial Highlights
-- Total revenue in the third quarter of 2018 increased 39% to $6.5
million, compared to $4.7 million in the same year-ago period.
-- Recurring revenues, on an absolute dollar basis, increased by 19% to
$1.5 million, compared to $1.2 million in the same year-ago period.
-- Gross profit in the third quarter of 2018 was $3.4 million, or 53% of
revenues, compared to $2.5 million, or 53% of revenues, in the same
year-ago period.
-- Net loss from continuing operations in the third quarter of 2018 was
$158,000, or $(0.00) per share, compared to a net loss from continuing
operations of $573,000, or ($0.01) per share, in the same year-ago
period.
-- Adjusted EBITDA in the third quarter of 2018 was $362,000, compared with
adjusted EBITDA loss of $74,000 in the same year-ago period.
-- Cash, cash equivalents and short-term investments at September 30, 2018
totaled $5.9 million, compared to $8.8 million at June 30, 2018 and $8.7
million at September 30, 2017. Debt at the end of the third quarter of
2018 decreased by 89% to $0.5 million, compared to $4.5 million at the
end of the second quarter of 2018.
Conference Call
Management will host an investor conference call at 9:00 a.m. EST on November 7, 2018, to discuss OTI's third quarter 2018 financial results, provide a corporate update, and conclude with a Q&A from participants. To participate, please use the following information:
Date: Wednesday, November 7, 2018
Time: 9:00 a.m. Eastern Standard Time (6:00 a.m. Pacific Standard Time)
U.S. Dial-in: 1-888-317-6002
International Dial-in: 1-412-317-5245
Webcast: https://www.webcaster4.com/Webcast/Page/1720/27970
Please dial in at least 10 minutes before the start of the call and request to join the "On Track Innovations Q3 2018 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.
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 and other expenses. 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 tables 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,
2018 2017 2018 2017
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Net (loss) income $(184) $868 $(797) $96
Net loss (income)
from discontinued
operations 26 (1,441) 114 (1,365)
Financial expenses,
net 2 126 129 236
Depreciation 342 295 1,022 878
Taxes on income 111 12 73 68
---
Total EBITDA FROM
CONTINUING
OPERATIONS $297 $(140) $541 $(87)
Other expenses 70 -
Stock-based
compensation 65 66 180 240
---
Total adjusted
EBITDA FROM
CONTINUING
OPERATIONS $362 $(74) $791 $153
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," "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 importance of the MIR certification in Russia and the Interac certification in Canada for the successful operation in these countries, future opportunities and revenue growth and shareholder value creation over the long-term due to our ability to maintain a significant technological advantage over the competition while diligently managing our expenses. Forward-looking statements are made as of the date of this document and are inherently subject to risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements. 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.
ON TRACK INNOVATION LTD.
INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(US dollars in thousands)
September 30, December 31,
2018 2017
Assets
Current assets
Cash and cash equivalents $4,514 $6,742
Short-term investments 1,391 3,331
Trade receivables (net of
allowance for doubtful
accounts of $619 and $568
as of September 30, 2018
and December 31, 2017,
respectively) 4,026 5,827
Other receivables and
prepaid expenses 2,676 1,563
Inventories 3,356 3,009
Total current assets 15,963 20,472
Long-term restricted
deposit for employees
benefit 468 498
Severance pay deposits 358 405
Property, plant and
equipment, net 5,246 5,859
Intangible assets, net 264 336
Total Assets $22,299 $27,570
ON TRACK INNOVATION LTD.
INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(US dollars in thousands)
September 30, December 31,
2018 2017
Liabilities and Equity
Current Liabilities
Short-term bank credit and current
maturities
of long-term bank loans $504 $4,181
Trade payables 6,670 6,264
Other current
liabilities 2,133 2,421
Total current
liabilities 9,307 12,866
Long-Term Liabilities
Long-term loans, net of
current maturities 8 814
Accrued severance pay 874 939
Deferred tax liability 452 500
Total long-term
liabilities 1,334 2,253
Total Liabilities 10,641 15,119
Commitments and Contingencies
Equity
Shareholders' Equity
Ordinary shares of NIS 0.1 par value:
Authorized: 50,000,000 shares as of
September 30, 2018 and
December 31, 2017; issued: 42,473,076
and 42,353,077 shares as
of September 30, 2018 and December
31, 2017, respectively;
outstanding: 41,294,377 and
41,174,378 shares
as of September 30,
2018, and December 31,
2017, respectively 1,068 1,064
Additional paid-in
capital 224,968 224,758
Treasury shares at cost -1,178,699
shares as of September 30,
2018 and December 31,
2017 (2,000) (2,000)
Accumulated other
comprehensive loss (901) (691)
Accumulated deficit (211,477) (210,680)
Total Equity 11,658 12,451
Total Liabilities and
Equity $22,299 $27,570
ON TRACK INNOVATION LTD.
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(US dollars in thousands, except share and per share data)
Three months ended Nine months ended
September 30, September 30,
---
2018 2017 2018 2017
---
Revenues
Sales $5,020 $3,445 $14,157 $11,871
Licensing and
transaction fees 1,453 1,225 4,332 3,765
---
Total revenues 6,473 4,670 18,489 15,636
---
Cost of revenues
Cost of sales 3,051 2,192 8,778 7,468
---
Total cost of revenues 3,051 2,192 8,778 7,468
---
Gross profit 3,422 2,478 9,711 8,168
---
Operating expenses
Research and
development 777 823 2,422 2,414
Selling and marketing 1,592 1,332 4,700 4,166
General and
administrative 1,098 758 3,070 2,553
---
Total operating
expenses 3,467 2,913 10,192 9,133
---
Operating loss from
continuing operations (45) (435) (481) (965)
Financial expenses,
net (2) (126) (129) (236)
---
Loss from continuing operations
before taxes on income (47) (561) (610) (1,201)
Income tax (111) (12) (73) (68)
---
Net loss from
continuing operations (158) (573) (683) (1,269)
Net (loss) income from
discontinued
operations (26) 1,441 (114) 1,365
---
Net (loss) income (184) 868 (797) 96
Basic and diluted net gain (loss) attributable to
shareholders per ordinary share
From continuing
operations
(*) (0.01) (0.02) (0.03)
From discontinued
operations
(*) 0.03
(*) 0.03
$ (*) $0.02 $(0.02)
$ (*)
Weighted average number of ordinary shares
used in computing basic and diluted net (loss)
income per ordinary
share 41,294,377 41,122,965 41,260,426 41,099,603
===
(*) 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,
2018 2017
---
Cash flows from continuing
operating activities
Net
loss
from
continuing
operations $(683) $(1,269)
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 180 238
Depreciation
and
amortization 978 878
Deferred
tax,
net (20) 37
Gain
on
sale
of
property
and
equipment (25) (9)
Accrued
interest
and
linkage
differences,
net - (41)
Changes in operating assets
and liabilities:
Accrued
severance
pay,
net (19) 72
Decrease
in
trade
receivables,
net 1,744 187
Increase
in
other
receivables
and
prepaid
expenses (1,162) (435)
Increase
in
inventories (381) (710)
Increase
(decrease)
in
trade
payables 668 (611)
Decrease
in
other
current
liabilities (273) (777)
---
Net
cash
provided
by
(used
in)
continuing
operating
activities 1,007 (2,440)
---
Cash flows from continuing
investing activities
Purchase
of
property
and
equipment (467) (160)
Proceeds
from
sale
of
property
and
equipment 52 14
Change
in
short-
term
investments,
net 1,195 2,917
Investment
in
capitalized
certification
costs (92) (185)
Proceeds
from
restricted
deposit
for
employees
benefit 8 44
---
Net
cash
provided
by
continuing
investing
activities 696 2,630
---
Cash flows from continuing
financing activities
Decrease
in
short-
term
bank
credit,
net (3,449) (72)
Repayment
of
long-
term
bank
loans (979) (469)
Proceeds
from
exercise
of
options
and
warrants 34 25
---
Net
cash
used
in
continuing
financing
activities (4,394) (516)
---
Cash flows from
discontinued operations
Net
cash
used
in
discontinued
operating
activities (115) (86)
Total
net
cash
used
in
discontinued
operations (115) (86)
---
Effect
of
exchange
rate
changes
on
cash
and
cash
equivalents (187) 460
---
(Decrease)
increase
in
cash,
cash
equivalents
and
restricted
cash (2,993) 48
Cash,
cash
equivalents
and
restricted
cash
-
beginning
of
the
period 7,799
(*) 7,500
---
Cash,
cash the
equivalents period
and
restricted
cash
-
end
of $4,806
$ (*) 7,548
===
(*) Reclassified to conform with the current
period presentation.
Investor Relations Contact:
Greg Falesnik
MZ North America
+1-949-385-6449
Greg.Falesnik@mzgroup.us
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SOURCE On Track Innovations Ltd. (OTI)
