On Track Innovations Ltd. Reports Fourth Quarter & Full Year 2019 Financial Results
YOKNEAM, Israel, March 18, 2020 /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 fourth quarter and full year ended December 31, 2019.
Management Commentary
Mr. Yehuda Holtzman, OTI's CEO, commented, "Since joining OTI, I have come to realize that we have a very strong team of employees, excellent technology and much unrealized potential. In the past few months, together with the management team, we have been working on updating our strategy for the coming years, which we believe will enable us to realize that potential and resume our growth, and ultimately create shareholder value. We look forward to sharing more details in the coming quarters."
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.
Fourth Quarter 2019 Financial Results Summary
-- Revenue in the quarter was $3.8 million, compared to $4.5 million in the
fourth quarter of 2018.
-- Recurring revenues were $1.1 million (28% of total revenues), compared
to $1.2 million (26% of total revenues) in the fourth quarter of 2018.
-- Gross profit in the quarter was $1.6 million, or 42% of revenues,
compared to $2.2 million, or 48% of revenues, in the fourth quarter of
2018.
-- Operating expenses totaled $3.1 million in the quarter, compared to
operating expenses of $3.0 million in the same year-ago quarter.
-- Net loss from continuing operations was $1.6 million, compared to a loss
of $0.9 million in the same year-ago quarter.
-- Net loss was $2.0 million, or loss of $0.05 per share, compared to a net
income of $0.5 million, or $0.01 per share, in the same year-ago
quarter.
-- Adjusted EBITDA loss from continuing operations was $1.1 million in the
quarter, compared to adjusted EBITDA loss of $0.5 million in the same
year-ago quarter.
Full Year 2019 Financial Results Summary
-- Total revenue in 2019 was $14.8 million, compared to $21.9 million in
2018.
-- Gross profit in 2019 was $7.3 million, or 49% of revenues, compared to
$11.2 million, or 51% of revenues in 2018.
-- Operating expenses totaled $12.1 million in 2019, compared to operating
expenses of $13.1 million in 2018. Operating expenses in 2019 included a
gain of $0.3 million related to the sale of a building by OTI's South
African subsidiary.
-- Net loss from continuing operations in 2019 was $5.2 million, compared
to a loss of $1.9 million in 2018.
-- Net loss in 2019 was $5.9 million, or loss of $0.14 per share, compared
to a net loss of $0.3 million, or loss of $0.01 per share, in 2018.
-- Adjusted EBITDA loss from continuing operations in 2019 was $3.8
million, compared to an adjusted EBITDA loss of $0.4 million in 2018.
-- As of December 31, 2019, the company had cash and cash equivalents and
short-term investments of $4.8 million.
Conference Call
Management will host a pre-recorded conference call for investors on Monday, March 23, 2020 at 9:00 am Eastern Time, to discuss the financial results, provide a corporate update, and conclude with a Q&A session.
Investors and analysts are encouraged to submit questions they would like management to address on the call. Please submit questions to oti@gkir.com by Thursday, March 19, 2020 at 5:00 p.m. Eastern time. OTI has been holding conference calls in this format during the current transition period and intends to return to the more traditional live format in the coming quarters.
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/1720/33248
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. 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 long-term strategy, the realization of the Company's potential, the resumption of the Company's growth, and the creation of 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. 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 stock-based compensation expense and other (income) expenses, net which includes a gain of $0.3 million related to the sale of a building by OTI's South African subsidiary. 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 table below.
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):
ON TRACK INNOVATIONS LTD.
RECONCILIATION OF NON-GAAP ADJUSTMENTS
(US dollars in thousands)
Year ended Three months
December 31 ended December
31
---
2019 2018 2019 2018
---
Net
(loss)
income $(5,889) $(263) $(2,035) $533
Net
loss
(income)
from
discontinued
operations 714 (1,625) 435 (1,395)
Financial
expenses,
net 397 228 198 98
Depreciation 1,270 1,328 319 307
Income
tax
benefit,
net (57) (301) (82) (34)
Total
EBITDA
FROM
CONTINUING
OPERATIONS $(3,565) $(633) $(1,165) $(491)
Other
(income)
expenses,
net (341) 33 (6) (37)
Stock
based
compensation 125 234 29 54
---
Total
adjusted
EBITDA
FROM
CONTINUING
OPERATIONS $(3,781) $(366) $(1,142) $(474)
ON TRACK INNOVATION LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
(US dollars in thousands)
December 31
2019 2018
Assets
Current assets
Cash and cash equivalents $2,543 $4,827
Short-term investments 2,305 1,078
Trade receivables (net of
allowance for doubtful
accounts of $612 and $555 as of
December 31, 2019
and December 31, 2018,
respectively) 2,430 4,530
Other receivables and prepaid
expenses 1,822 2,060
Inventories 3,332 3,527
Total current assets 12,432 16,022
Long term restricted deposit
for employee benefits 477 451
Severance pay deposits 383 375
Property, plant and equipment,
net 3,694 5,033
Intangible assets, net 733 241
Right-of-use assets due to
operating leases 2,134
Total Assets $19,853 $22,122
ON TRACK INNOVATION LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
(US dollars in thousands except share data)
December 31
2019 2018
Liabilities and
Equity
Current
Liabilities
Short-term bank
credit and
current
maturities
of long-
term
bank
loans $2,478 $260
Trade
payables 4,126 4,712
Other
current
liabilities 3,054 3,622
Total
current
liabilities 9,658 8,594
Long-Term
Liabilities
Long-
term
loans,
net of
current
maturities 22 39
Long-
term
liabilities
due to
operating
leases,
net of
current
maturities 1,483
Accrued
severance
pay 884 853
Deferred
tax
liability 416 445
Total
long-
term
liabilities 2,805 1,337
Total
Liabilities 12,463 9,931
Equity
Shareholders'
Equity
Ordinary shares of
NIS 0.1 par
value: Authorized
-
50,000,000 shares
as of December
31, 2019 and
2018; issued:
47,963,076 and
42,473,076
shares as of
December 31, 2019
and 2018,
respectively;
outstanding:
46,784,377 and
41,294,377 shares
as of
December
31,
2019
and
2018,
respectively 1,226 1,068
Additional
paid-
in
capital 225,970 225,022
Treasury shares at
cost -1,178,699
shares as of
December 31,
2019 and
2018 (2,000) (2,000)
Accumulated
other
comprehensive
loss (974) (956)
Accumulated
deficit (216,832) (210,943)
Total
Equity 7,390 12,191
Total
Liabilities
and
Equity $19,853 $22,122
ON TRACK INNOVATIONS LTD.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(US dollars in thousands except share data)
Year ended Three months ended
December 31 December 31
2019 2018 2019 2018
Revenues
Sales $9,983 $16,725 $2,697 $3,372
Licensing and
transaction fees 4,768 5,153 1,060 1,156
Total revenues 14,751 21,878 3,757 4,528
Cost of revenues
Total cost of revenues 7,455 10,710 2,182 2,360
Gross profit 7,296 11,168 1,575 2,168
Operating expenses
Research and
development 3,334 3,175 806 782
Selling and marketing 5,026 5,940 1,228 1,240
General and
administrative 4,112 3,981 1,031 981
Other (income)expenses,
net (341) 33 (6) (37)
Total operating
expenses 12,131 13,129 3,059 2,966
Operating loss from
continuing operations (4,835) (1,961) (1,484) (798)
Financial expense, net (397) (228) (198) (98)
Loss from continuing
operations before
taxes on income (5,232) (2,189) (1,682) (896)
Income tax benefit, net 57 301 82 34
Net loss from
continuing operations (5,175) (1,888) (1,600) (862)
Total (loss) income
from discontinued
operations (714) 1,625 (435) 1,395
Net (loss) income $(5,889) $(263) $(2,035) $533
Basic and diluted net (loss) income attributable to
shareholders per ordinary share
From continuing
operations $(0.12) $(0.05) $(0.04) $(0.02)
From discontinued
operations $(0.02) $0.04 $(0.01) $0.03
$(0.14) $(0.01) $(0.05) $0.01
Weighted average number of ordinary shares used in
computing basic and diluted net (loss) income per
ordinary share
41,385,856 41,268,984 41,621,116 41,260,426
ON TRACK INNOVATION LTD.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(US dollars in thousands)
Year ended December 31
2019 2018 2017
Cash flows from continuing operating
activities
Net loss from
continuing
operations $(5,175) $(1,888) $(2,385)
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 125 234 254
(Gain) loss on sale
of property and
equipment (328) (37) 52
Accrued interest and
linkage differences,
net (36) 19 (6)
Depreciation and
amortization 1,270 1,328 1,172
Deferred tax
benefits, net (25) (477) (165)
Changes in operating assets and
liabilities:
Change in accrued
severance pay, net 23 (57) 45
Decrease (increase)
in trade
receivables, net 1,646 1,118 (124)
Decrease (increase)
in other receivables
and prepaid expenses 228 350 (838)
Decrease (increase)
in inventories 184 (573) 110
Decrease in trade
payables (507) (2,089) (644)
Decrease in other
current liabilities (270) (110) (597)
Net cash used in
continuing operating
activities (2,865) (2,182) (3,126)
Cash flows from continuing investing
activities
Purchase of property
and equipment and
intangible assets (1,155) (636) (293)
Proceeds from sale of
property, plant and
equipment 1,102 68 17
Change in short-term
investments, net (1,369) 1,495 1,773
Proceeds from
restricted deposit
for employee
benefits 10 8 44
Net cash (used in)
provided by
continuing investing
activities (1,412) 815 1,302
Cash flows from continuing financing
activities
Increase (decrease)
in short-term bank
credit, net 2,450 (3,554) (335)
Repayment of long-
term bank loans (270) (1,064) (632)
Proceeds from
issuance of shares,
net of issuance
expenses 981 -
Proceeds from
exercise of options
and warrants - 34 92
Net cash provided by
(used in) continuing
financing activities 3,161 (4,584) (875)
Cash flows from discontinued operations
Net cash (used in)
provided by
discontinued
operating activities (1,344) 750 2,311
Net cash provided by
discontinued
investing activities - 2,750
Total net cash (used
in) provided by
discontinued
operations (1,344) 3,500 2,311
3 (243) 687
Effect of exchange rate
changes on cash and cash
equivalents
(Decrease) increase
in cash, cash
equivalents and
restricted cash (2,457) (2,694) 299
Cash, cash
equivalents and
restricted cash -
beginning of the
year 5,105 7,799 7,500
Cash, cash
equivalents and
restricted cash at
the end of the year $2,648 $5,105 $7,799
===
Investor Relations Contact:
Ehud Helft
GK Investor & Public Relations
+1-646-201-9246
oti@gkir.com
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SOURCE On Track Innovations Ltd. (OTI)
