OTI Reports Second Quarter 2013 Financial Results 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 email@example.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 December 31 2013 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 5,304 7,516 December 31, 2012, respectively) 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 31 December 2013 2012 (Unaudited) (Audited) Liabilities andEquity Current Liabilities Short-term bank credit and current maturities of $4,004 $7,368 long-term bank loans 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 andDecember 31, 2012; issued: 33,434,511 and 32,938,011shares as of June 30, 2013 and December 31, 2012, respectively; 833 820 outstanding: 32,255,812 and 31,759,312 shares as of June 30, 2013 and December 31, 2012, respectively Additional paid-in capital 211,233 210,853 Treasury shares at cost - 1,178,699 shares as of June (2,000) (2,000) 30,2013 and December 31, 2012. 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 2,227 2,475 1,149 1,213 fees 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 4,588 5,096 2,521 2,369 administrative Amortization of intangible 53 102 28 53 assets 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 (5,153) (7,334) (2,288) (4,767) income Taxes on income (190) (91) (17) (70) Net loss (5,343) (7,425) (2,305) (4,837) Net loss attributable to 64 36 31 2 noncontrolling interest Net loss attributable to $ (5,279) $ (7,389) $ (2,274) $ (4,835) shareholders Basic and diluted net loss attributable to $ (0.16) $ (0.23) $ (0.07) $ (0.15) shareholders per ordinary share Weighted average number of ordinary shares used incomputing basic and 32,467,881 32,069,223 32,495,334 32,073,103 diluted net loss per ordinary share (*) 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 $ 154 $ 724 $ 70 $ 414 compensation 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 tonet cash used in operating activities: Stock-based compensation related to options and 154 724 shares issuedto employees and others 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) Decreasein trade receivables, net 2,147 5,377 Decrease (Increase) in other receivables and prepaid 1,099 (374) expenses Decreasein inventories 87 581 Decrease in trade payables (1,881) (1,501) Decreasein 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 (296) (7,185) restricted deposit Acquisition ofbusiness operations -- (100) Proceeds from restricted deposit for employee benefit 306 -- Proceeds from maturityand sale of short term 5,542 10,843 investments Proceeds from sale of fixed assets 11 -- Net cash provided byinvesting 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 9,304 12,517 period Cash and cash equivalents at the end of the period $6,193 $12,919 CONTACT: Company Contact: Galit Mendelson VP, Corporate Relations 732 429 1900 ext. 111 firstname.lastname@example.org Investor Contact: Scott Liolios or Matt Glover Liolios Group, Inc. 949 574 3860 email@example.com OTI Logo
OTI Reports Second Quarter 2013 Financial Results
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