On Track Innovations Ltd. Reports Second Quarter 2021 Financial Results
YOKNEAM, Israel, Aug. 12, 2021 /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 second quarter ended June 30, 2021.
Management Comments
Mr. Yehuda Holtzman, OTI's CEO, commented, "We are pleased with the growth in our Software as a Service (SaaS) revenue, which continued to grow in the second quarter of 2021, in line with our strategy. We also saw strong traction in our target regions bringing new customers and growing business with existing customers, all with potential for long-term recurring revenue growth. However, we have seen a significant increase in the prices and scarcity of electronic parts, along with extremely extended delivery dates which impacted our revenues and product gross margin, mainly in the Retail segment. Hence, a large portion of additional revenue we were hoping to recognize in the second quarter has become backlogged and will be delivered later in the year."
Following OTI's sale of our Polish subsidiary, ASEC, in Poland, the financial results of ASEC were included as discontinued operations and all the prior periods' information has been reclassified to conform with the current period's presentation.
Second quarter 2021 Financial Results Summary
- Revenue in the quarter was $2.9 million, compared to $4.0 million in the second quarter of 2020. These amounts include SaaS revenues, which are recurring by nature, and amounted to $405 thousand in the quarter compared to $286 thousand in the second quarter of last year.
- Gross profit in the quarter was $1.0 million, or 34% of revenues, compared to $1.7 million, or 42% of revenues, in the second quarter of last year.
- Operating expenses totaled $2.4 million in the quarter, compared to operating expenses of $2.5 million in the second quarter of last year.
- Net loss from continuing operations was $1.5 million, compared to a net loss of $0.9 million in the second quarter of last year.
- Net loss was $2.7 million, or loss of $0.04 per share, compared to a net loss of $1.1 million, or loss of $0.02 per share, in the second quarter of last year.
- Adjusted EBITDA loss from continuing operations was $1.3 million in the quarter, compared to adjusted EBITDA loss of $0.7 million in the second quarter of last year.
- As of June 30, 2021, the Company had cash and cash equivalents and short-term investments of $2.6 million.
Conference Call
Management will host a live investor conference call at 9:00 a.m. ET on August 12, 2021, to discuss OTI's financial results, provide a corporate update, and conclude with a Q&A session taking live questions from participants as well as answering many of the previously submitted questions by investors.
To participate, please use the following information:
U.S. Dial-in: 1 888 723 3164
International Dial-in: +972 3 918 0691
Webcast: https://veidan.activetrail.biz/otiq2-2021
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 also be available for replay by clicking on the above webcast link or via a link on 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.
Investor Relations Contact:
Ehud Helft
GK Investor & Public Relations
+1 646 201 9246
[email protected]
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 strategy, potential of new customers, growing business with existing customers and the potential for long-term recurring revenues, increased traction and opportunities, the Company's expected growth and profitability, expected backlog as well as current trends of price increases, scarcity of electronic parts and extended delivery dates. 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, including those as a result of the current COVID-19 pandemic. 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 loss from continuing operations, or adjusted earnings from continuing operations before interest, income tax, depreciation and amortization. Adjusted EBITDA loss 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 loss 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.
ON TRACK INNOVATIONS LTD. |
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RECONCILIATION OF NON-GAAP ADJUSTMENT |
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The following table reflects selected On Track Innovations Ltd. |
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non-GAAP results reconciled to GAAP results: |
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(US dollars in thousands) |
||||
Three months ended June 30, |
Six months ended June 30, |
|||
2021 |
(*)2020 |
2021 |
(*)2020 |
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|
Net loss |
$ (2,722) |
$ (1,123) |
$ (5,883) |
$ (1,792) |
Net loss from discontinued operations |
1,197 |
195 |
1,615 |
288 |
Financial expenses (income), net |
131 |
109 |
2,101 |
(67) |
Depreciation and amortization |
100 |
105 |
200 |
212 |
Income tax (benefits) expenses, net |
- |
12 |
(13) |
17 |
Total EBITDA FROM CONTINUING |
$ (1,294) |
$ (702) |
$ (1,980) |
$ (1,342) |
OPERATIONS |
||||
Stock-based compensation |
15 |
16 |
29 |
28 |
Total adjusted EBITDA FROM CONTINUING |
$ (1,279) |
$ (686) |
$ (1,951) |
$ (1,314) |
OPERATIONS |
||||
(*) Reclassified to conform with the current period presentation. |
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ON TRACK INNOVATION LTD. |
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INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET |
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(US dollars in thousands) |
|||
June 30, |
December 31, |
||
2021 |
2020 |
||
Assets |
|||
Current assets |
|||
Cash and cash equivalents |
$ 959 |
$ 1,377 |
|
Short-term investments |
1,605 |
105 |
|
Trade receivables (net of allowance for doubtful |
|||
accounts of $609 and $620 as of June 30, 2021 |
|||
and December 31, 2020, respectively) |
2,139 |
1,148 |
|
Other receivables and prepaid expenses |
2,712 |
695 |
|
Inventories |
2,742 |
2,479 |
|
Assets from discontinued operations - held for sale |
- |
6,358 |
|
Total current assets |
10,157 |
12,162 |
|
Non-current assets |
|||
Long term restricted deposit for employee benefits |
504 |
511 |
|
Severance pay deposits |
406 |
411 |
|
Property, plant and equipment, net |
705 |
752 |
|
Intangible assets, net |
189 |
247 |
|
Right-of-use assets due to operating leases |
2,508 |
2,903 |
|
Total non-current assets |
4,312 |
4,824 |
|
Total Assets |
$ 14,469 |
$ 16,986 |
|
ON TRACK INNOVATION LTD. |
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INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET |
||
(US dollars in thousands) |
||
June 30, |
December 31, |
|
2021 |
2020 |
|
Liabilities and Equity |
||
Current Liabilities |
||
Short-term bank credit, short-term loans and current maturities |
||
of long-term bank loans |
$ 795 |
$ 542 |
Convertible short-term loan from a controlling shareholder |
77 |
625 |
Trade payables |
2,212 |
1,667 |
Other current liabilities |
4,270 |
2,283 |
Liabilities from discontinued operations - held for sale |
- |
5,829 |
Total current liabilities |
$ 7,354 |
$ 10,946 |
Long-Term Liabilities |
||
Long-term loans, net of current maturities |
8 |
14 |
Long-term liabilities due to operating leases, net of current maturities |
1,931 |
2,343 |
Accrued severance pay |
977 |
977 |
Total long-term liabilities |
2,916 |
3,334 |
Total Liabilities |
10,270 |
14,280 |
Commitments and Contingencies |
||
Equity |
||
Ordinary shares of NIS 0.1 par value: Authorized – |
||
100,000,000 shares as of June 30, 2021 and December 31, 2020; |
||
issued: 73,968,592 and 55,003,076 shares as |
||
of June 30, 2021 and December 31, 2020, respectively; |
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outstanding: 72,789,893 and 53,824,377 shares |
||
as of June 30, 2021 and December 31, 2020, respectively |
2,008 |
1,423 |
Additional paid-in capital |
233,391 |
227,209 |
Treasury shares at cost - 1,178,699 shares as of June 30, |
||
2021 and December 31, 2020 |
(2,000) |
(2,000) |
Accumulated other comprehensive loss |
(352) |
(961) |
Accumulated deficit |
(228,848) |
(222,965) |
Total Equity |
4,199 |
2,706 |
Total Liabilities and Equity |
$ 14,469 |
$ 16,986 |
ON TRACK INNOVATION LTD. |
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INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS |
|||||
(US dollars in thousands, except share and per share data) |
|||||
Three months ended June 30, |
Six months ended June 30, |
||||
2021 |
(*) 2020 |
2021 |
(*)2020 |
||
Revenues |
|||||
Sales |
$ 2,446 |
$ 3,751 |
$ 4,833 |
$ 7,094 |
|
Software as a Service ("SaaS") |
405 |
286 |
787 |
610 |
|
Total revenues |
2,851 |
4,037 |
5,620 |
7,704 |
|
Cost of revenues |
|||||
Cost of sales |
1,874 |
2,358 |
3,240 |
4,379 |
|
Total cost of revenues |
1,874 |
2,358 |
3,240 |
4,379 |
|
Gross profit |
977 |
1,679 |
2,380 |
3,325 |
|
Operating expenses |
|||||
Research and development |
900 |
903 |
1,738 |
1,796 |
|
Selling and marketing |
736 |
885 |
1,341 |
1,583 |
|
General and administrative |
735 |
698 |
1,481 |
1,500 |
|
Total operating expenses |
2,371 |
2,486 |
4,560 |
4,879 |
|
Operating loss from continuing operations |
(1,394) |
(807) |
(2,180) |
(1,554) |
|
Loss from change in fair value of embedded derivative |
- |
- |
(1,974) |
- |
|
Other financial (expenses) income, net |
(131) |
(109) |
(127) |
67 |
|
Financial (expenses) income, net |
(131) |
(109) |
(2,101) |
67 |
|
Loss from continuing operations |
|||||
before taxes on income |
(1,525) |
(916) |
(4,281) |
(1,487) |
|
Income tax benefits (expenses) |
- |
(12) |
13 |
(17) |
|
Loss from continuing operations |
(1,525) |
(928) |
(4,268) |
(1,504) |
|
Loss from discontinued operations |
(1,197) |
(195) |
(1,615) |
(288) |
|
Net loss
|
$ (2,722) |
$ (1,123) |
$ (5,883) |
$ (1,792) |
|
Basic and diluted net loss attributable to |
|||||
From continuing operations |
(0.02) |
(0.02) |
(0.07) |
(0.03) |
|
From discontinued operations |
(0.02) |
(**) |
(0.03) |
(0.01) |
|
$ (0.04) |
$ (0.02) |
$ (0.10) |
$ (0.04) |
||
Weighted average number of ordinary shares used in |
62,577,692 |
(***)56,335,759 |
58,225,215 |
(***)53,840,138 |
|
(*) Reclassified to conform with the current period presentation. |
|||||
(**) Less than $0.01 per ordinary share. |
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(**) Basic and diluted net losses losses attributable to shareholders perordinary share for previous reporting periods were |
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ON TRACK INNOVATION LTD. |
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INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW |
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(US dollars in thousands) |
|||
Six months ended June 30, |
|||
2021 |
(*) 2020 |
||
Cash flows from continuing operating activities |
|||
Net loss from continuing operations |
$ (4,268) |
$ (1,504) |
|
Adjustments required to reconcile net loss to net cash used in provided |
|||
by continuing operating activities: |
|||
Stock-based compensation related to options issued |
|||
to employees and others |
29 |
28 |
|
Accrued interest and linkage differences, net |
(55) |
(162) |
|
Transaction expenses related to convertible short-term loan received |
10 |
- |
|
Loss from change in fair value of embedded derivative |
1,974 |
- |
|
Depreciation and amortization |
200 |
212 |
|
Deferred tax (benefits) expenses, net |
(13) |
17 |
|
Changes in operating assets and liabilities: |
|||
Change in accrued severance pay, net |
5 |
11 |
|
(Increase) decrease in trade receivables, net |
(1,143) |
92 |
|
Increase in other receivables and prepaid expenses |
(416) |
(92) |
|
(Increase) decrease in inventories |
(263) |
380 |
|
Increase in trade payables |
544 |
1,268 |
|
Increase (decrease) in other current liabilities |
173 |
(283) |
|
Net cash used in continuing operating activities |
(3,223) |
(33) |
|
Cash flows from continuing investing activities |
|||
Purchase of property and equipment and intangible assets |
(137) |
(283) |
|
Change in short-term investments, net |
(1,500) |
511 |
|
Net cash (used in) provided by continuing investing activities |
(1,637) |
228 |
|
Cash flows from continuing financing activities |
|||
(Decrease) increase in short-term bank credit and loans, net |
(1,474) |
62 |
|
Convertible short-term loan received from shareholders, net of |
923 |
- |
|
Repayment of long-term bank loans |
(2) |
(7) |
|
Proceeds from issuance of shares, net of issuance costs |
3.209 |
1,369 |
|
Net cash provided by continuing financing activities |
2,656 |
1,424 |
|
Cash flows from discontinued operations |
|||
Net cash used in discontinued operating activities |
(91) |
(1,300) |
|
Net cash provided by (used in) discontinued investing activities |
1,338 |
(207) |
|
Net cash (used in) provided by discontinued financing activities |
(380) |
799 |
|
Total net cash provided by (used in) discontinued operations |
867 |
(708) |
|
Effect of exchange rate changes on cash and cash equivalents |
(98) |
(86) |
|
(Decrease) increase in cash, cash equivalents and restricted cash |
(1,435) |
825 |
|
Cash, cash equivalents and restricted cash - beginning of the period |
2,499 |
2,648 |
|
Cash, cash equivalents and restricted cash - end of the period |
$ 1,064 |
$ 3,473 |
|
(*) Reclassified to conform with the current period presentation. |
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SOURCE On Track Innovations Ltd. (OTI)
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