Exhibit 99.1
 | Press Release |
For Immediate Release
oti Reports 58% Revenue Increase for Second Quarter 2014
Rosh Pina, Israel – August 14, 2014 – 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, 2014.
Q2 2014 Operational Highlights
| | · | Launched Trio modular payments reader, which handles multiple payment methods in a single solution for the growing self-service markets. |
| | · | Received an initial commercial order from Vianet for oti's new Trio modular payment reader. Vianet plans to initially install the readers in vending machines in Europe starting Q3 2014. |
| | · | oti PetroSmart was awarded a major 15-year contract from a government ministry in Southern Africa to supply its EasyFuel Plus management system. |
| | · | Signed a five-year contract to help manage more than 5,000 on-street parking spaces in Arlington County, Virginia. |
| | · | Signed a 20-year contract to co-manage the parking operations for Elbasan, a city in central Albania. |
| | · | Expanded the capabilities and use of the 84 transit ticket vending machines operated by oti’s electronic ticket systems subsidiary, ASEC S.A., for the Mazovia Railway System in Poland. |
Q2 2014 Financial Highlights
| | · | Revenues in the second quarter of 2014 increased 38% sequentially and 58% from the same year-ago period to $7.2 million. The significant improvement was primarily driven by NFC readers sold to the U.S market and first deliveries of oti's Wave device to Asia. |
| | · | Gross profit in the second quarter of 2014 increased 26% to $3.3 million (46% of revenue) from $2.6 million (58% of revenue) in the same year-ago period. |
| | · | Total operating expenses in the second quarter of 2014 were $5.3 million compared to $5.0 million in the same year-ago period. The slight increase was primarily due to higher sales and marketing expenses designed to accelerate oti’s growth, offset by a 20% decrease in general and administrative expenses. |
| | · | Net loss from continuing operations in the second quarter of 2014 totaled $2.3 million or $(0.07) per share, an improvement from a net loss from continuing operations of $2.6 million or $(0.08) per share in the same period last year. |
| | · | Adjusted EBITDA loss from continuing operations in the second quarter of 2014 totaled $1.0 million, a significant improvement from an adjusted EBITDA loss from continuing operations of $1.8 million in the same year-ago period (see discussion about the presentation of adjusted EBITDA from continuing operations, a non-GAAP term, below). |
| | · | At quarter-end, cash and cash equivalents, and short-term investments totaled $10.6 million. |
Management Commentary
“During Q2 we made strong progress executing on our plan to grow our core cashless payment solutions business,” said the company’s CEO Ofer Tziperman. “This was demonstrated by the 58% revenue increase in the quarter, driven by our industry-leading technology and expanded salesforce.
“The quarter was also highlighted by several customer wins across all of our verticals. This included the first order for our new Trio modular reader.
“We plan to build on this operational and financial momentum and take advantage of the strong industry tailwinds in the cashless payments space.
“Given this tremendous market opportunity, coupled with our focus and leaner, highly capable team, we continue believe we will be able to deliver at least 30% revenue growth in 2014, as well as achieve positive adjusted EBITDA on a quarterly basis by Q1 2015.”
Conference Call
OTI will hold a conference call today (August 14, 2014) at 10:30 a.m. Eastern time to discuss these results. The company's CEO Ofer Tziperman, CFO Shay Tomer, and Chairman Dimitrios Angelis will host the presentation, followed by a question and answer period.
To participate, please dial the appropriate number 5-10 minutes prior to the start time and ask for the On Track Innovations conference call. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.
U.S. dial-in: 1-877-407-0784
International dial-in: 1-201-689-8560
The conference call will be broadcast simultaneously and available for replay via the investor section of the company's website at www.otiglobal.com.
A replay of the call will be available after 1:30 p.m. Eastern time on the same day through September 14, 2014.
U.S. replay dial-in: 1-877-870-5176
International replay dial-in: 1-858-384-5517
Replay ID: 13588075
Use of Non-GAAP Financial Information
This press release contains certain non-GAAP measures, namely, adjusted EBITDA from continuing operation, or adjusted earnings from continuing operation before interest, income tax, depreciation and amortization. Adjusted EBITDA from continuing operations represents earnings before interest1, income tax, depreciation and amortization, and further eliminates the effect of share-based compensation expense and patent litigation and maintenance expenses. OTI believes that adjusted EBITDA from continuing operations 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.
ON TRACK INNOVATIONS LTD.
INTERIM 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)
| | | | Three months ended June 30 | | | | Six months ended June 30 | |
| | | | 2014 | | | | 2013 | | | | 2014 | | | | 2013 | |
| | | | (Unaudited) | | | | (Unaudited) | | | | (Unaudited) | | | | (Unaudited) | |
| | | | | | | | | | | | | | | | | |
| Net Loss | | $ | (2,234 | ) | | $ | (2,304 | ) | | $ | (5,592 | ) | | $ | (5,343 | ) |
| | | | | | | | | | | | | | | | | |
| Net loss (profit) from discontinued operations | | | (74 | ) | | | (321 | ) | | | 270 | | | | (91 | ) |
| Financial expenses | | | 249 | | | | 256 | | | | 353 | | | | 821 | |
| Depreciation | | | 317 | | | | 275 | | | | 648 | | | | 556 | |
| Taxes on income | | | 55 | | | | (2 | ) | | | 173 | | | | (4 | ) |
| Amortization expenses | | | - | | | | 28 | | | | - | | | | 53 | |
| TOTAL EBITDA | | $ | (1,687 | ) | | $ | (2,068 | ) | | $ | (4,148 | ) | | $ | (4,008 | ) |
| | | | | | | | | | | | | | | | | |
| Patent litigation and maintenance | | | 380 | | | | 202 | | | | 1,019 | | | | 418 | |
| Stock based compensation | | $ | 280 | | | $ | 56 | | | $ | 436 | | | $ | 113 | |
| TOTAL ADJUSTED EBITDA | | $ | (1,027 | ) | | $ | (1,810 | ) | | $ | (2,693 | ) | | $ | (3,477 | ) |
About OTI
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 and other cashless 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, the content of which does not form a part of this press release.
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 the successful implementation of our strategic plan of refocusing on our core business of cashless payment technology, success in achieving further revenues or benefits while relying on the current operational and financial momentum in the cashless payment market, increase of future revenues and rate of such increase and achieving positive adjusted EBITDA in the near or mid future. 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 10-K for the year ended December 31, 2013, 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.
Investor Contact:
Scott Liolios or Matt Glover
Liolios Group, Inc.
949-574-3860
OTIV@liolios.com
Press Contact:
Inbar Ben-Hur
oti Marketing Communication Manager
inbar@otiglobal.com
ON TRACK INNOVATION LTD.
INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
| | | June 30 | | | December 31 | |
| | | | | | | |
| Assets | | | | | | |
| | | | | | | |
| Current assets | | | | | | |
| Cash and cash equivalents | | $ | 6,114 | | | $ | 14,962 | |
| Short-term investments | | | 4,448 | | | | 2,601 | |
| Trade receivables (net of allowance for doubtful | | | | | | | | |
| accounts of $610 as of June 30, 2014 | | | | | | | | |
| and December 31, 2013) | | | 6,526 | | | | 5,134 | |
| Other receivables and prepaid expenses | | | 3,377 | | | | 4,632 | |
| Inventories | | | 3,572 | | | | 3,477 | |
| Assets from discontinued operations - held for sale | | | - | | | | 3,919 | |
| Total current assets | | | 24,037 | | | | 34,725 | |
| | | | | | | | | |
| Long term restricted deposit for employees benefit | | | 626 | | | | 623 | |
| | | | | | | | | |
| Severance pay deposits | | | 728 | | | | 738 | |
| | | | | | | | | |
| Property, plant and equipment, net | | | 9,318 | | | | 9,837 | |
| | | | | | | | | |
| Deferred tax asset | | | 51 | | | | 173 | |
| | | | | | | | | |
| Total Assets | | $ | 34,760 | | | $ | 46,096 | |
ON TRACK INNOVATION LTD.
INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
| | | June 30 | | | December 31 | |
| | | 2014 | | | 2013 | |
| Liabilities and Equity | | | | | | |
| | | | | | | |
| Current Liabilities | | | | | | |
| Short-term bank credit and current maturities | | | | | | |
| of long-term bank loans | | $ | 4,142 | | | $ | 3,842 | |
| Trade payables | | | 9,705 | | | | 9,255 | |
| Other current liabilities | | | 3,011 | | | | 6,299 | |
| Liabilities from discontinued operations - held for sale | | | - | | | | 2,956 | |
| Total current liabilities | | | 16,858 | | | | 22,352 | |
| | | | | | | | | |
| Long-Term Liabilities | | | | | | | | |
| Long-term loans, net of current maturities | | | 2,816 | | | | 3,342 | |
| Accrued severance pay | | | 1,691 | | | | 1,706 | |
| Deferred tax liability | | | 304 | | | | 292 | |
| Total long-term liabilities | | | 4,811 | | | | 5,340 | |
| | | | | | | | | |
| Total Liabilities | | | 21,669 | | | | 27,692 | |
| | | | | | | | | |
| Equity | | | | | | | | |
| Shareholders' Equity | | | | | | | | |
| Ordinary shares of NIS 0.1 par value: Authorized – | | | | | | | | |
| 50,000,000 shares as of March 31, 2014 and | | | | | | | | |
| December 31, 2013; issued: 34,386,066 and 34,199,511 | | | | | | | | |
| shares as of March 31, 2014 and December 31, 2013, | | | | | | | | |
| respectively; outstanding: : 33,207,367 and 33,020,812 shares | | | | | | | | |
| as of March 31, 2014 and December 31, 2013, respectively | | | 860 | | | | 854 | |
| Additional paid-in capital | | | 212,892 | | | | 212,246 | |
| Treasury shares at cost - 1,178,699 shares | | | | | | | | |
| | | | (2,000 | ) | | | (2,000 | ) |
| Accumulated other comprehensive income (loss) | | | (345 | ) | | | 28 | |
| Accumulated deficit | | | (197,762 | ) | | | (192,179 | ) |
| Total Shareholder’s equity | | | 13,645 | | | | 18,949 | |
| Non-controlling interest | | | (554 | ) | | | (545 | ) |
| | | | | | | | | |
| Total Equity | | | 13,091 | | | | 18,404 | |
| | | | | | | | | |
| Total Liabilities and Equity | | $ | 34,760 | | | $ | 46,096 | |
ON TRACK INNOVATION LTD.
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
| | | Three months ended June 30 | | | | Six months ended June 30 | |
| | | | | | | 2013* | | | | 2014 | | | | 2013* | |
| | | | | | | | | | | | | |
| Revenues | | | | | | | | | | | | | | | |
| Sales | | $ | 5,852 | | | $ | 3,385 | | | $ | 9,690 | | | $ | 5,949 | |
| Licensing and transaction fees | | | 1,302 | | | | 1,149 | | | | 2,662 | | | | 2,227 | |
| | | | | | | | | | | | | | | | | |
| Total revenues | | | 7,154 | | | | 4,534 | | | | 12,352 | | | | 8,176 | |
| | | | | | | | | | | | | | | | | |
| Cost of revenues | | | | | | | | | | | | | | | | |
| Cost of sales | | | 3,847 | | | | 1,914 | | | | 6,447 | | | | 3,553 | |
| | | | | | | | | | | | | | | | | |
| Gross profit | | | 3,307 | | | | 2,620 | | | | 5,905 | | | | 4,623 | |
| Operating expenses | | | | | | | | | | | | | | | | |
| Research and development | | | 1,221 | | | | 1,131 | | | | 2,381 | | | | 1,988 | |
| Selling and marketing | | | 2,072 | | | | 1,587 | | | | 4,192 | | | | 3,231 | |
| General and administrative | | | 1,638 | | | | 2,043 | | | | 3,109 | | | | 3,550 | |
| Patent litigation and maintenance | | | 380 | | | | 202 | | | | 1,019 | | | | 418 | |
| Amortization of intangible assets | | | - | | | | 28 | | | | - | | | | 53 | |
| | | | | | | | | | | | | | | | | |
| Total operating expenses | | | 5,311 | | | | 4,991 | | | | 10,701 | | | | 9,240 | |
| | | | | | | | | | | | | | | | | |
| Operating loss from continuing operations | | | (2,004 | ) | | | (2,371 | ) | | | (4,796 | ) | | | (4,617 | ) |
| | | | | | | | | | | | | | | | | |
| Financial expense, net | | | (249 | ) | | | (256 | ) | | | (353 | ) | | | (821 | ) |
| | | | | | | | | | | | | | | | | |
| Loss from continuing operations before taxes on income | | | (2,253 | ) | | | (2,627 | ) | | | (5,149 | ) | | | (5,438 | ) |
| | | | | | | | | | | | | | | | | |
| Income tax | | | (55 | ) | | | 2 | | | | (173 | ) | | | 4 | |
| | | | | | | | | | | | | | | | | |
| Net loss from continuing operations | | | (2,308 | ) | | | (2,625 | ) | | | (5,322 | ) | | | (5,434 | ) |
| Net Income (loss) from discontinued operations | | | 74 | | | | 321 | | | | (270 | ) | | | 91 | |
| | | | | | | | | | | | | | | | | |
| Net loss | | | (2,234 | ) | | | (2,304 | ) | | | (5,592 | ) | | | (5,343 | ) |
| | | | | | | | | | | | | | | | | |
| Net loss attributable to noncontrolling interest | | | 15 | | | | 31 | | | | 9 | | | | 64 | |
| Net loss attributable to shareholders | | $ | (2,219 | ) | | $ | (2,273 | ) | | $ | (5,583 | ) | | $ | (5,279 | ) |
Basic and diluted net loss attributable to shareholders per ordinary share | | | | | | | | | | | | | | | | |
| From continuing operations | | | (0.07 | ) | | | (0.08 | ) | | | (0.16 | ) | | | (0.16 | ) |
| From discontinued operations | | | ** - | | | | 0.01 | | | | (0.01 | ) | | | ** - | |
| | | $ | (0.07 | ) | | $ | (0.07 | ) | | $ | (0.17 | ) | | $ | (0.16 | ) |
| | | | | | | | | | | | | | | | | |
| Weighted average number of ordinary shares used in | | | | | | | | | | | | | | | | |
computing basic and diluted net loss per ordinary share | | | 33,228,978 | | | | 32,495,334 | | | | 33,228,978 | | | | 32,467,881 | |
**Less than 0.01 per ordinary share
*Reclassified to conform with the current period presentation.
ON TRACK INNOVATION LTD.
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(In thousands, except share and per share data)
| | | | |
| | | | | | | 2013* | |
| Cash flows from continuing operating activities | | | | | | | |
| Net loss from continuing operations | | $ | (5,322 | ) | | $ | (5,434 | ) |
| 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 | | | 436 | | | | 113 | |
| Gain on sale of property and equipment | | | (5 | ) | | | (11 | ) |
| Amortization of intangible assets | | | - | | | | 53 | |
| Depreciation | | | 648 | | | | 556 | |
| | | | | | | | | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Accrued severance pay, net | | | (6 | ) | | | (157 | ) |
| Accrued interest and linkage differences | | | (8 | ) | | | 69 | |
| Deferred tax, net | | | 134 | | | | (6 | ) |
| Decrease (increase) in trade receivables | | | (1,676 | ) | | | 365 | |
| Decrease (increase) in other receivables and prepaid expenses | | | (138 | ) | | | 1,390 | |
| Increase in inventories | | | (104 | ) | | | (792 | ) |
| Increase (decrease) in trade payables | | | 816 | | | | (1,413 | ) |
| Decrease in other current liabilities | | | (1,018 | ) | | | (760 | ) |
| Net cash used in continuing operating activities | | | (6,243 | ) | | | (6,027 | ) |
| | | | | | | | | |
| Cash flows from continuing investing activities | | | | | | | | |
| | | | | | | | | |
| Purchase of property and equipment | | | (202 | ) | | | (1,595 | ) |
| Purchase of short term investments | | | (2,402 | ) | | | (295 | ) |
| Proceeds from restricted deposit for employees benefit | | | - | | | | 306 | |
| Proceeds from maturity or sale of short - term investments | | | 560 | | | | 5,541 | |
| Proceeds from sale of property and equipment | | | 5 | | | | 11 | |
Net cash provided by (used in) continuing investing activities | | | (2,039 | ) | | | 3,968 | |
| | | | | | | | | |
| Cash flows from continuing financing activities | | | | | | | | |
| Increase (decrease) in short-term bank credit, net | | | 215 | | | | (2,325 | ) |
| Proceeds from long-term bank loans | | | 12 | | | | 1,398 | |
| Repayment of long-term bank loans | | | (436 | ) | | | (601 | ) |
| Proceeds from exercise of options | | | 311 | | | | 239 | |
| Net cash provided by (used in) continuing financing activities | | | 102 | | | | (1,289 | ) |
| | | | | | | | | |
| Cash flows from discontinued operations | | | | | | | | |
| Net cash provided by (used in) discontinued operating activities | | | (1,264 | ) | | | 1,132 | |
| Net cash provided by (used in) discontinued investing activities | | | 695 | | | | (61 | ) |
| Net cash used in discontinued financing activities | | | (154 | ) | | | (722 | ) |
| Total net cash provided by (used in) discontinued operations | | | (723 | ) | | | 349 | |
| | | | | | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | | 55 | | | | (112 | ) |
| | | | | | | | | |
| Decrease in cash and cash equivalents | | | (8,848 | ) | | | (3,111 | ) |
| Cash and cash equivalents at the beginning of the period | | | 14,962 | | | | 9,304 | |
| | | | | | | | | |
| Cash and cash equivalents at the end of the period | | $ | 6,114 | | | $ | 6,193 | |
* Reclassified to conform with current period presentation.
