Exhibit 99.1
 | Press Release |
oti Reports Third Quarter 2015 Financial Results
Rosh Pina, Israel – November 12, 2015 – On Track Innovations Ltd. (oti) (NASDAQ: OTIV), a global provider of near field communication (NFC) and cashless payment solutions, reported financial results for the third quarter ended September 30, 2015.
Q3 2015 Operational Highlights
| · | Appointed Shlomi Cohen as CEO, who brings more than 25 years of experience managing global organizations to advance the sales of oti's cashless payment solutions. |
| · | Implemented a new go-to-market strategy designed to advance the company's NFC market leadership and drive growth. |
| · | Filed patent infringement lawsuits against AT&T and Verizon. |
Q3 2015 Financial Details
Total revenues decreased 31% to $3.8 million from $5.4 million in the prior quarter and 29% from $5.3 million in the same year-ago period.
Gross profit declined 23% to $2.1 million (55% of revenue) from $2.7 million (50% of revenue) in the prior quarter and 21% from $2.6 million (50% of revenue) in the same year-ago period.
Operating expenses were $4.4 million, a decrease of 4% from $4.6 million in the prior quarter and 9% from $4.8 million in the same year-ago period.
Net loss from continuing operations totaled $2.4 million or $(0.06) per share, compared to a net loss from continuing operations of $2.3 million or $(0.07) per share in the same year-ago period.
Adjusted EBITDA loss from continuing operations totaled $1.2 million, an improvement from a loss of $1.5 million in the same year-ago period (see discussion about the presentation of adjusted EBITDA from continuing operations, a non-GAAP financial measure, below).
At quarter-end, cash and cash equivalents and short-term investments totaled $11.5 million.
Management Commentary
“During the third quarter, we made meaningful progress with new key initiatives designed to optimize our manufacturing processes, accelerate growth and reduce costs,” said Shlomi Cohen, CEO of oti. “These efforts resulted in lower operating expenses and improved gross margins, and an overall leaner, more efficient organization.
“While we experienced strong growth in our petroleum segment in Q3, our retail segment sales declined. The company over recent years has primarily focused on restructuring and R&D activity, and has not benefited as much as it could have from growth in the global NFC market. However, it is clear that our company has all the right elements in place, including industry leading technology and world-class R&D, to be a leader in the multi-billion dollar global cashless payments market.
“To take better advantage of these strengths, over the last few months we have begun to implement a new go-to-market strategy to transition oti into a more capable sales organization in order to capture greater market share in the NFC space. We have been actively recruiting new sales and marketing professionals to address emerging opportunities in Europe, Asia Pacific and North America.
“We recently introduced a new product lineup to support the success of our sales team, particularly as we enter new markets and industry growth verticals. One of the revolutionary new products we introduced at Money20/20 last month was the oti Pay Capsule, a wearable NFC payment device.
“Pay Capsule plays into The Internet of Things revolution, the emerging hyper-connected world that is transforming the way consumers interact and transact. Pay Capsule eliminates the boundaries of how we pay by delivering a secure digital payment experience using virtually any personal item, such as rings, fitness bands, car key fobs, and apparel. We plan to complete the rollout of Pay Capsule and other new product additions in 2016.
“Our operational progress in the third quarter along with our expanding product portfolio, sales pipeline and partner channels have set the stage for a better finish to the year and an even stronger 2016. While there is more work to be done, we are in a strong position to capitalize on the global growth in the cashless payment market.”
Conference Call
oti will hold a conference call today (November 12, 2015) at 10:30 a.m. Eastern time to discuss these results. oti’s CEO Shlomi Cohen and CFO Shay Tomer will host the presentation, followed by a question and answer period.
Date: Thursday, November 12, 2015
Time: 10:30 a.m. Eastern time
U.S. dial-in: 877-407-0784
International dial-in: 201-689-8560
Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at 949-574-3860.
A replay of the call will be available after 1:30 p.m. Eastern time through December 12, 2015.
U.S. replay dial-in: 877-870-5176
International replay dial-in: 858-384-5517
Replay ID: 13623973
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 share-based compensation expense, patent litigation and maintenance expenses and other 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 September 30, | Nine months ended September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Net Loss | $ | (1,986 | ) | $ | (1,951 | ) | $ | (5,795 | ) | $ | (7,543 | ) | ||||
| Net income from discontinued operations | (461 | ) | (311 | ) | (823 | ) | (41 | ) | ||||||||
| Financial expenses, net | 122 | 44 | 542 | 397 | ||||||||||||
| Depreciation | 324 | 311 | 941 | 959 | ||||||||||||
| Income tax | 35 | 29 | 38 | 202 | ||||||||||||
| TOTAL EBITDA FROM CONTINUING OPERATIONS | $ | (1,966 | ) | $ | (1,878 | ) | $ | (5,097 | ) | $ | (6,026 | ) | ||||
| Patent litigation and maintenance | 371 | 194 | 830 | 1,213 | ||||||||||||
| Other expenses | 408 | - | 918 | - | ||||||||||||
| Stock-based compensation | 37 | 206 | 369 | 642 | ||||||||||||
| TOTAL ADJUSTED EBITDA FROM CONTINUING OPERATIONS | $ | (1,150 | ) | $ | (1,478 | ) | $ | (2,980 | ) | $ | (4,171 | ) | ||||
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 is not 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 words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions are used, the company is making forward-looking statements. For example, forward-looking statements include statements regarding our intent to rollout new products and our position to capitalize on the cashless payment market. 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 could be impacted by the effects of the protracted evaluation and validation periods in the U.S. and other markets for contactless payment cards, as well as oti’s 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, 2014, and in subsequent filings with the Securities and Exchange Commission. Although the company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can provide no assurance that 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:
Nir (Neil) Barr
oti Marketing Director
+972-4-686-8004
press@otiglobal.com
ON TRACK INNOVATION LTD.
INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
| September 30, | December 31, | |||||||
2015 | 2014 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 4,419 | $ | 5,351 | ||||
| Short-term investments | 7,056 | 11,048 | ||||||
| Trade receivables (net of allowance for doubtful | ||||||||
| accounts of $696 and $671 as of September 30, 2015 | ||||||||
| and December 31, 2014, respectively) | 2,719 | 4,299 | ||||||
| Other receivables and prepaid expenses | 2,917 | 2,530 | ||||||
| Inventories | 3,961 | 3,703 | ||||||
| Total current assets | 21,072 | 26,931 | ||||||
| Long-term restricted deposit for employees benefit | 519 | 555 | ||||||
| Severance pay deposits | 469 | 614 | ||||||
| Property, plant and equipment, net | 8,828 | 9,234 | ||||||
| Intangible assets, net | 145 | - | ||||||
| Deferred tax asset | 39 | 47 | ||||||
| Total Assets | $ | 31,072 | $ | 37,381 | ||||
ON TRACK INNOVATION LTD.
INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
| September 30, | December 31, | |||||||
| 2015 | 2014 | |||||||
| Liabilities and Equity | ||||||||
| Current Liabilities | ||||||||
| Short-term bank credit and current maturities | ||||||||
| of long-term bank loans | $ | 3,280 | $ | 3,617 | ||||
| Trade payables | 7,297 | 7,306 | ||||||
| Other current liabilities | 2,730 | 2,656 | ||||||
| Total current liabilities | 13,307 | 13,579 | ||||||
| Long-Term Liabilities | ||||||||
| Long-term loans, net of current maturities | 2,050 | 2,161 | ||||||
| Accrued severance pay | 1,232 | 1,456 | ||||||
| Deferred tax liability | 318 | 302 | ||||||
| Total long-term liabilities | 3,600 | 3,919 | ||||||
| Total Liabilities | 16,907 | 17,498 | ||||||
| Equity | ||||||||
| Shareholders' Equity | ||||||||
| Ordinary shares of NIS 0.1 par value: Authorized – | ||||||||
| 50,000,000 shares as of September 30, 2015 and | ||||||||
| December 31, 2014; issued: 42,014,673 and 41,996,602 | ||||||||
| shares as of September 30, 2015 and December 31, 2014, respectively; | ||||||||
| outstanding: 40,835,974 and 40,817,903 shares | ||||||||
| as of September 30, 2015 and December 31, 2014, respectively | 1,055 | 1,055 | ||||||
| Additional paid-in capital | ||||||||
| Treasury shares at cost - 1,178,699 shares as of September 30, | 224,603 | 224,234 | ||||||
| 2015 and December 31, 2014 | (2,000 | ) | (2,000 | ) | ||||
| Accumulated other comprehensive loss | (1,092 | ) | (800 | ) | ||||
| Accumulated deficit | (207,895 | ) | (202,103 | ) | ||||
| Total Shareholder’s equity | 14,671 | 20,386 | ||||||
| Non-controlling interest | (506 | ) | (503 | ) | ||||
| Total Equity | 14,165 | 19,883 | ||||||
| Total Liabilities and Equity | $ | 31,072 | $ | 37,381 | ||||
ON TRACK INNOVATION LTD.
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Revenues | ||||||||||||||||
| Sales | $ | 2,361 | $ | 3,691 | $ | 10,015 | $ | 13,381 | ||||||||
| Licensing and transaction fees | 1,394 | 1,564 | 4,131 | 4,226 | ||||||||||||
| Total revenues | 3,755 | 5,255 | 14,146 | 17,607 | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Cost of sales | 1,673 | 2,619 | 6,896 | 9,066 | ||||||||||||
| Gross profit | 2,082 | 2,636 | 7,250 | 8,541 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | 807 | 1,281 | 2,712 | 3,662 | ||||||||||||
| Selling and marketing | 1,730 | 1,968 | 5,388 | 6,160 | ||||||||||||
| General and administrative | 1,056 | 1,382 | 3,440 | 4,491 | ||||||||||||
| Patent litigation and maintenance | 371 | 194 | 830 | 1,213 | ||||||||||||
| Other expenses | 408 | - | 918 | - | ||||||||||||
| Total operating expenses | 4,372 | 4,825 | 13,288 | 15,526 | ||||||||||||
| Operating loss from continuing operations | (2,290 | ) | (2,189 | ) | (6,038 | ) | (6,985 | ) | ||||||||
| Financial expenses, net | (122 | ) | (44 | ) | (542 | ) | (397 | ) | ||||||||
| Loss from continuing operations | ||||||||||||||||
| before taxes on income | (2,412 | ) | (2,233 | ) | (6,580 | ) | (7,382 | ) | ||||||||
| Income tax | (35 | ) | (29 | ) | (38 | ) | (202 | ) | ||||||||
| Net loss from continuing operations | (2,447 | ) | (2,262 | ) | (6,618 | ) | (7,584 | ) | ||||||||
| Net income from discontinued operations | 461 | 311 | 823 | 41 | ||||||||||||
| Net loss | (1,986 | ) | (1,951 | ) | (5,795 | ) | (7,543 | ) | ||||||||
| Net (income) loss attributable to noncontrolling interest | (23 | ) | (46 | ) | 3 | (37 | ) | |||||||||
| Net loss attributable to shareholders | $ | (2,009 | ) | $ | (1,997 | ) | $ | (5,792 | ) | $ | (7,580 | ) | ||||
| Basic and diluted net gain (loss) attributable to shareholders per ordinary share | ||||||||||||||||
| From continuing operations | (0.06 | ) | (0.07 | ) | (0.16 | ) | (0.23 | ) | ||||||||
| From discontinued operations | 0.01 | 0.01 | 0.02 | ** | ||||||||||||
| $ | (0.05 | ) | $ | (0.06 | ) | $ | (0.14 | ) | $ | (0.23 | ) | |||||
| Weighted average number of ordinary shares | ||||||||||||||||
| used in computing basic and diluted net loss | ||||||||||||||||
| per ordinary share | 40,874,474 | 33,310,672 | 40,868,252 | 33,245,249 | ||||||||||||
**Less than $0.01 per ordinary share.
ON TRACK INNOVATION LTD.
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(In thousands, except share and per share data)
| Nine months ended September 30, | ||||||||
| 2015 | 2014 | |||||||
| Cash flows from continuing operating activities | ||||||||
| Net loss from continuing operations | $ | (6,618 | ) | $ | (7,584 | ) | ||
| 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 | 369 | 642 | ||||||
| Gain on sale of property and equipment | (8 | ) | (5 | ) | ||||
| Accrued interest and linkage differences | 30 | 55 | ||||||
| Depreciation | 941 | 959 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accrued severance pay, net | (79 | ) | (112 | ) | ||||
| Deferred tax, net | 36 | 135 | ||||||
| Decrease in trade receivables | 1,936 | 240 | ||||||
| Decrease (increase) in other receivables and prepaid expenses | 131 | (308 | ) | |||||
| Increase in inventories | (382 | ) | (689 | ) | ||||
| Increase in trade payables | 402 | 235 | ||||||
| Increase (decrease) in other current liabilities | 197 | (772 | ) | |||||
| Net cash used in continuing operating activities | (3,045 | ) | (7,204 | ) | ||||
| Cash flows from continuing investing activities | ||||||||
| Purchase of property and equipment | (1,117 | ) | (340 | ) | ||||
| Purchase of short-term investments | (4,181 | ) | (2,434 | ) | ||||
| Investment in capitalized product costs | (153 | ) | - | |||||
| Investment in restricted deposit for employees benefit | (281 | ) | - | |||||
| Proceeds from restricted deposit for employees benefit | 144 | - | ||||||
| Proceeds from maturity or sale of short-term investments | 8,179 | 1,317 | ||||||
| Proceeds from sale of property and equipment | 31 | 6 | ||||||
| Net cash provided by (used in) continuing investing activities | 2,622 | (1,451 | ) | |||||
| Cash flows from continuing financing activities | ||||||||
| (Decrease) increase in short-term bank credit, net | (783 | ) | 179 | |||||
| Proceeds from long-term bank loans | 716 | 29 | ||||||
| Repayment of long-term bank loans | (606 | ) | (811 | ) | ||||
| Proceeds from exercise of options and warrants | (* | ) | 965 | |||||
| Net cash provided by (used in) continuing financing activities | (673 | ) | 362 | |||||
| Cash flows from discontinued operations | ||||||||
| Net cash used in discontinued operating activities | (25 | ) | (1,325 | ) | ||||
| Net cash provided by discontinued investing activities | 387 | 925 | ||||||
| Net cash used in discontinued financing activities | - | (154 | ) | |||||
| Total net cash provided by (used in) discontinued operations | 362 | (554 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents | (198 | ) | (227 | ) | ||||
| Decrease in cash and cash equivalents | (932 | ) | (9,074 | ) | ||||
| Cash and cash equivalents at the beginning of the period | 5,351 | 14,962 | ||||||
| Cash and cash equivalents at the end of the period | $ | 4,419 | $ | 5,888 | ||||
(*) Less than $1