ROSH PINA, Israel, Aug. 28, 2013 (GLOBE NEWSWIRE) -- 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, 2013.
Q2 2013 Operational Highlights
- Received a 30,000 unit order for OTI's NFC and contactless payment readers from a leading provider of integrated technology solutions.
- ASEC S.A., OTI's wholly owned subsidiary, was awarded three multi-million dollar projects as an e-ticketing operator for mass transit systems throughout Poland. The contract value of the three projects total more than $50 million over a five to ten year period.
- City of Portsmouth, N.H. implemented EasyPark, OTI's cashless parking payment solution.
- Retained Global IP Law Group, a leading international IP-focused law firm, to lead OTI's new intellectual property monetization campaign.
- Received favorable Markman hearing decision in patent infringement suit again T-Mobile USA.
- Strengthened leadership team with appointments of Dimitrios Angelis as chairman of the board, Shay Tomer as chief financial offer, Shlomi Eytan as chief sales and marketing officer, and Hanan Caspi as vice president of operations.
Q2 2013 Financial Highlights
- Revenues in the second quarter of 2013 increased 19% to $9.2 million from $7.7 million in the same period last year.
- Gross margin in the second quarter of 2013 increased to 56.7% from 45.7% in the same period last year.
- Operating expenses in the second quarter of 2013 decreased 8% to $7.2 million from $7.9 million in the second quarter of 2012. The decrease was mainly attributable to lower headcount and reduced management costs.
- Net loss in the second quarter of 2013 improved to $2.3 million from $4.8 million in the same period last year.
- Adjusted EBITDA loss in the second quarter of 2013 totaled $1.5 million compared to an adjusted EBITDA loss of $3.5 million in the second quarter of 2012. The improvement was due to the increase in revenues and reduced operating expenses (see discussion about the presentation of adjusted EBITDA, a non-GAAP term, below).
- Cash and cash equivalents, and short-term investments at June 30, 2013 totaled $9.7 million. During the quarter, the company used cash to purchase equipment to support the expansion of its mass transit projects in Poland, and to repay short-term bank loans.
Management Commentary
"The second quarter results were consistent with our expectations and do not reflect our recent initiatives to divest non-core, B2C operations," said Ofer Tziperman, OTI's CEO. "The divestitures of Parx France and SmartID mark an important step in executing OTI's new strategic plan of reducing unnecessary costs and focusing on our core business of providing NFC-based contactless payment technology and solutions. By optimizing our operational structure, we can better leverage our core competencies in these areas, which we believe will drive long-term growth and sustained profitability.
"We anticipate the pending divesture of the SmartID business will close in November. This will further strengthen our balance sheet and allow us to allocate our resources to more effectively capitalize on the fast growing, multi-billion dollar NFC and cashless payments markets where we have significant advantages over the competition."
Management Discussion
OTI CEO Ofer Tziperman and CFO Shay Tomer will discuss these results on Wednesday, September 4, 2013 at 9:00 a.m. Eastern time.
Investors and analysts may submit questions they would like management to address during the discussion. Questions should be submitted via email to ir@otiglobal.com by Friday, August 30 at 5:00 p.m. Eastern time.
Discussion Date: Wednesday, September 4, 2013
Time: 9:00 a.m. Eastern time
U.S. Dial-In Number: 1-888-295-2634
Israel Dial-In Number: 1-800-270-077
The discussion will be also webcast and available for replay via the Investors section of OTI's website at www.otiglobal.com/Investors_Introduction .
For those dialing in, please call the telephone number 5-10 minutes prior to the start time. If you have any difficulty connecting, please contact Liolios Group at 1-949-574-3860.
A telephone replay of the discussion will be available through September 11, 2013.
Adoption of US Generally Accepted Accounting Principles (GAAP) Standards
Due to the changes in the composition of the company's board of directors, including the election of eight new U.S. directors on December 30, 2012, the company no longer qualifies as a "Foreign Private Issuer" as of June 30, 2013, and will be required to report as a domestic issuer commencing on January 1, 2014. As reported on May 31, 2012 and effective as of January 1, 2012, the company adopted International Financial Reporting Standards (IFRS) as published by the International Accounting Standards Board. However, as a domestic issuer, the company will no longer be entitled to prepare its financial results in accordance with IFRS. Therefore, the company has adopted US GAAP and accordingly to prepare its financial statements for the fiscal year ended December 31, 2012 and thereafter in accordance with US GAAP.
It should be noted that the financial results for the periods ended March 31, 2012, June 30, 2012, and September 30, 2012 were previously published in accordance with IFRS. The financial results for the period ended June 30, 2012 that appear in this press release were prepared in accordance with US GAAP.
About On Track Innovations
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 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 .
Use of Non-GAAP Financial Information
This press release contains certain non-GAAP measures, namely, Adjusted EBITDA, or adjusted earnings before interest, income tax, depreciation and amortization. Adjusted EBITDA represents earnings before interest 1 , income tax, depreciation and amortization, and further eliminates the effect of share-based compensation expense. OTI believes that adjusted EBITDA 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.
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 Generation of revenue and timing thereof with respect to e-ticketing projects awarded in Poland, the Company's efforts to decrease operating expenses, timing of the closing of the sale of SmartID business and consequential strengthening of the Company's balance sheet, increase revenues and drivers of long-term growth. 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 20-F for the year ended December 31, 2012, 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.
The content of websites or website links mentioned or provided herein is not part of this press release.
1 "Financial expenses"
| ON TRACK INNOVATIONS LTD. | ||
| CONDENSED CONSOLIDATED BALANCE SHEET | ||
| (In thousands, except share and per share data) | ||
| June 30 2013 | December 31 2012 | |
| (Unaudited) | (Audited) | |
| Assets | ||
| Current assets | ||
| Cash and cash equivalents | $ 6,193 | $ 9,304 |
| Short-term investments | 3,493 | 8,712 |
| Trade receivables (net of allowance for doubtful accounts of $429 and $431 as of June 30, 2013 and December 31, 2012, respectively) | 5,304 | 7,516 |
| Other receivables and prepaid expenses | 4,036 | 5,349 |
| Short term restricted deposit for employees benefit | 2,969 | 2,922 |
| Inventories | 6,884 | 7,049 |
| Total current assets | 28,879 | 40,852 |
| Long term restricted deposit for employees benefit | 615 | 1,099 |
| Severance pay deposits | 696 | 836 |
| Property, plant and equipment, net | 13,465 | 13,074 |
| Intangible assets, net | 602 | 656 |
| Goodwill | 485 | 485 |
| Total Assets | $ 44,742 | $ 57,002 |
| ON TRACK INNOVATIONS LTD. | ||
| CONDENSED CONSOLIDATED BALANCE SHEET | ||
| (In thousands, except share and per share data) | ||
| 30 June 2013 | 31 December 2012 | |
| (Unaudited) | (Audited) | |
| Liabilities and Equity | ||
| Current Liabilities | ||
| Short-term bank credit and current maturities of long-term bank loans | $ 4,004 | $ 7,368 |
| Trade payables | 8,272 | 10,696 |
| Accrued severance pay | 3,398 | 3,539 |
| Other current liabilities | 9,027 | 10,971 |
| Total current liabilities | 24,701 | 32,574 |
| Long-Term Liabilities | ||
| Long-term loans, net of current maturities | 3,277 | 2,224 |
| Accrued severance pay | 1,756 | 2,032 |
| Deferred tax liability | 47 | 53 |
| Total long-term liabilities | 5,080 | 4,309 |
| Total Liabilities | 29,781 | 36,883 |
| Equity | ||
| Shareholders' Equity | ||
| Ordinary shares of NIS 0.1 par value: Authorized – | ||
| 50,000,000 shares as of June 30, 2013 and December 31, 2012; issued: 33,434,511 and 32,938,011 shares as of June 30, 2013 and December 31, 2012, respectively; outstanding: 32,255,812 and 31,759,312 shares as of June 30, 2013 and December 31, 2012, respectively | 833 | 820 |
| Additional paid-in capital | 211,233 | 210,853 |
| Treasury shares at cost - 1,178,699 shares as of June 30, 2013 and December 31, 2012. | (2,000) | (2,000) |
| Accumulated other comprehensive income (loss) | (173) | 36 |
| Accumulated deficit | (194,410) | (189,131) |
| Total Shareholder's equity | 15,483 | 20,578 |
| Non-controlling interest | (522) | (459) |
| Total Equity | 14,961 | 20,119 |
| Total Liabilities and Equity | $ 44,742 | $ 57,002 |
| ON TRACK INNOVATIONS LTD. | ||||
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | ||||
| (In thousands, except share and per share data) | ||||
| Six months ended June 30 | Three months ended June 30 | |||
| 2013 | 2012 | 2013 | 2012 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Revenues | ||||
| Sales | $ 15,606 | $ 17,865 | $ 8,057 | $ 6,523 |
| Licensing and transaction fees | 2,227 | 2,475 | 1,149 | 1,213 |
| Total revenues | 17,833 | 20,340 | 9,206 | 7,736 |
| Cost of revenues | ||||
| Cost of sales | 8,351 | 10,526 | 3,984 | 4,204 |
| Total cost of revenues | 8,351 | 10,526 | 3,984 | 4,204 |
| Gross profit | 9,482 | 9,814 | 5,222 | 3,532 |
| Operating expenses | ||||
| Research and development | 3,864 | 4,426 | 2,092 | 2,083 |
| Selling and marketing | 5,261 | 7,030 | 2,600 | 3,396 |
| General and administrative | 4,588 | 5,096 | 2,521 | 2,369 |
| Amortization of intangible assets | 53 | 102 | 28 | 53 |
| Total operating expenses | 13,766 | 16,654 | 7,241 | 7,901 |
| Operating loss | (4,284) | (6,840) | (2,019) | (4,369) |
| Financial expense, net | (869) | (494) | (269) | (398) |
| Loss before taxes on income | (5,153) | (7,334) | (2,288) | (4,767) |
| Taxes on income | (190) | (91) | (17) | (70) |
| Net loss | (5,343) | (7,425) | (2,305) | (4,837) |
| Net loss attributable to noncontrolling interest | 64 | 36 | 31 | 2 |
| Net loss attributable to shareholders | $ (5,279) | $ (7,389) | $ (2,274) | $ (4,835) |
| Basic and diluted net loss attributable to shareholders per ordinary share | $ (0.16) | $ (0.23) | $ (0.07) | $ (0.15) |
| Weighted average number of ordinary shares used in computing basic and diluted net loss per ordinary share | 32,467,881 | 32,069,223 | 32,495,334 | 32,073,103 |
| (*) includes in H1 2013, $634 finance expenses resulted from exchange rate differentials. | ||||
| ON TRACK INNOVATIONS LTD. | ||||
| 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) | ||||
| Six months ended June 30 | Three months ended June 30 | |||
| 2013 | 2012 | 2013 | 2012 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Net Loss | $ (5,343) | $ (7,425) | $ (2,305) | $ (4,837) |
| Financial expenses | 869 | 494 | 269 | 398 |
| Depreciation | 787 | 755 | 387 | 369 |
| Taxes on income | 190 | 91 | 17 | 70 |
| Amortization expenses | 53 | 102 | 28 | 53 |
| Total EBITDA | $ (3,444) | $ (5,983) | $ (1,604) | $ (3,947) |
| Stock based compensation | $ 154 | $ 724 | $ 70 | $ 414 |
| Total adjusted EBITDA | $ (3,290) | $ (5,259) | $ (1,534) | $ (3,533) |
| ON TRACK INNOVATIONS LTD. | ||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||
| (In thousands, except share and per share data) | ||
| Six months ended June 30 | ||
| 2013 | 2012 | |
| (Unaudited) | (Unaudited) | |
| Cash flows from operating activities | ||
| Net loss | $ (5,343) | $ (7,425) |
| Adjustments required to reconcile net loss to net cash used in operating activities: | ||
| Stock-based compensation related to options and shares issued to employees and others | 154 | 724 |
| Amortization of intangible assets | 53 | 102 |
| Depreciation | 787 | 755 |
| Gain on sale of fixed assets | (11) | -- |
| Changes in operating assets and liabilities: | ||
| Accrued severance pay, net | (157) | 631 |
| Accrued interest and linkage differences | 69 | 29 |
| Decrease in deferred tax liability | (6) | (6) |
| Decrease in trade receivables, net | 2,147 | 5,377 |
| Decrease (Increase) in other receivables and prepaid expenses | 1,099 | (374) |
| Decrease in inventories | 87 | 581 |
| Decrease in trade payables | (1,881) | (1,501) |
| Decrease in other current liabilities | (1,893) | (210) |
| Net cash used in continuing operating activities | (4,895) | (1,317) |
| Cash flows from investing activities | ||
| Purchase of property and equipment | (1,656) | (249) |
| Purchase of short term investments and long term restricted deposit | (296) | (7,185) |
| Acquisition of business operations | -- | (100) |
| Proceeds from restricted deposit for employee benefit | 306 | -- |
| Proceeds from maturity and sale of short term investments | 5,542 | 10,843 |
| Proceeds from sale of fixed assets | 11 | -- |
| Net cash provided by investing activities | 3,907 | 3,309 |
| Cash flows from financing activities | ||
| Decrease in short-term bank credit, net | (2,438) | (418) |
| Proceeds from long-term bank loans | 1,398 | 273 |
| Repayment of long-term bank loans | (1,210) | (1,300) |
| Proceeds from exercise of options and warrants, net | 239 | 9 |
| Net cash used in financing activities | (2,011) | (1,436) |
| Cash flows from discontinued operations | ||
| Net cash used in discontinued operating activities | -- | (150) |
| Total net cash used in discontinued activities | -- | (150) |
| Effect of exchange rate changes on cash | (112) | (4) |
| Increase (decrease) in cash and cash equivalents | (3,111) | 402 |
| Cash and cash equivalents at the beginning of the period | 9,304 | 12,517 |
| Cash and cash equivalents at the end of the period | $ 6,193 | $ 12,919 |
Company Contact: Galit Mendelson VP, Corporate Relations 732 429 1900 ext. 111 Investor Contact: Scott Liolios or Matt Glover Liolios Group, Inc. 949 574 3860
