OTIVF - Earnings call transcript Q2 2018 | on Track Innovations LTD

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Operator

Greetings, and welcome to the On Track Innovations Second Quarter 2018 Corporate Update Call. [Operator Instructions]. I’d now like to turn the conference over to Greg Falesnik, Managing Director for MZ North America, OTI’s Investor Relations firm. Thank you.

You may begin.

Greg Falesnik

Operator. you, Thank OTI ended morning, results the for Earlier XX, released XXXX. quarter June second this financial The available website at release the www.otiglobal.com. of is on the section Investors Company’s may discussed Please the within and the Reform this certain other advised Litigation of or information Securities of be conference forward-looking that meaning call Act contain, Private statements Federal express imply Laws. in XXXX Securities terms. will, the expect, be can terms of statements and use other identified imminent by comparable intend, believe, as Such plan, promising, may, such

as base, statements opportunities. regarding sales to expectations regarding future in statements to expected initiatives, expected growing forward-looking and expectation example, revenues, continue and For margins and growth, increases and our to momentum sales include future outlook product regarding and ramp and continue deliveries and our our our Russia, certain adjusted revenue expected and and markets expectations EBITDA installed growth our profitability, segments, ATM up such launches into new deployment,

that the press turn faith, to and statements and him in Shlomi today earnings those judgment with the They their time the and performance The CEO Shlomi. of the While team in the full from forward-looking guarantees dates. obligation your subject the are host belief over filings, time as we future and Safe assumes morning. reports, respective Company’s will With factors or you, are on will statements and best periodic of uncertainties, speak call provisions current OTI set which the joining risks introduce statements to is known call. forward-looking based any forth to to information, information, or issued registration rest I are of no Cohen Harbor he results. detailed OTI’s not release this they unknown good and including reflect SEC. on filed to update

Shlomi Cohen

you call. and to us joining Greg you, thank Thank everyone on today's

including business. our XX% efforts experience our continued first half some half in five and to operational the position we quarter. as orders have EBITDA and contracts before walk ever our recently Poland, accomplishment. purchase going before and XXXX in to Today view by strong we Russia. grow execution is Evidenced most first major of a target by positive revenue some of business the which conservative in have adjusted the second Japan the CFO XXXX of markets the to than to like turn would for financials several further During quarter over of allowed call key other stronger us through but to These I

Assaf?

Assaf Cohen

Good you, morning Thank everyone. Shlomi.

today in and we our is million of available of the press revenues XXXX. result the quarter website. million of in of Before June market $X.X opened in our Relations compared the to issued a XX, ended half for section XXXX of copy the quarter A quarter Revenue XXXX a second Investor release. second was financial of release the first second $X.X

revenues or ticketing XXXX XXXX revenues for the flat of the an XXXX compared million $XX to revenue the record to at lumpiness In XXXX of XXXX. absolute first basis second In total revenues $X of Petroleum compared total Recurring sales XX% XX% were of first million of recurring on million. of half a we or increased and $X.X recurring And XX% of the revenues first In revenue $XXX,XXX noted the later. forward of were of to the at sales, $X.X at to revenues XX% were experience first by as to of increase were million transit petroleum the mass XXXX. quarter.. [indiscernible] in million revenues of [indiscernible] geographically XXXX half $XXX,XXX the more or XX% expand of factor in As businesses, retail compared quarter $X.X compared the we were million in sales. X% some XX% we or ticketing sales in on moving less XX% first and half this revenue to however revenues million of $XX of by have quarter of half revenues this accounting or were we million sales. revenues transit sales. revenues remained or XX% revenues total first XX% and to expect our $X.X $X.X of X% second and when and retail mass in be portion of dollar of our do Recurring

or the million $X and compared accounted Africa or or or compared Europe $X.X revenue, or at half XX% million XX%. gross XXXX, profit Gross XX% million for or $X.X of to million first $X.XX of compared accounted Net compared total for accounted same accounted remained of second of or XX% the to $X revenue or share million same in compared or share revenue APAC operations continuing revenues $X.X year quarter per $X.X per at In continuing million for of or quarter period. XX% XX% million for or in second $X.XX negative and QX of million $X.X of Net or or period. of Americas income $X.XX total XXXX ago the $X.XX XX% in ago negative to million $X.X second $X.X was in in of accounted the negative second in quarter in XX% the from expenses or $XX,XXX half a Europe expenses million of net In from XX% XXXX of $XXX,XXX $X.X for from per for or million per same period. XXXX compared operation of when in were same first loss million of accounted to XXXX the share ago XXXX period. flat the $X.X for of year the first half loss increased XXXX. was operating Africa $XXX,XXX accounted accounted for $X.X Operating the to total the $X.X $XXX,XXX million continuing the share revenue to XX% continuing APAC second from In $X.X XX% quarter $XXX,XXX profit the for XXXX. million ago first to year the the X%. operation XXXX year loss half Americas XXXX of of Looking quarter operation a or was of revenue, the net XX%,

believe second results or quarter Now ago $XXX,XXX operation the compared year our same XXXX use continuing in from useful provides our adjusted as Adjusted $XXX,XXX turning an EBITDA of to EBITDA with the of of operation non-GAAP metric non-GAAP EBITDA we it indication adjusted we period. and in results.

EBITDA, year recurring of view quarter XXXX as The our all second marks a XXXX company's history. year positive higher with of this our revenues significant across for focus units. the EBITDA the as indication of strength after third full well the our as achievement to We in business ending and quarter XX first positive consecutive margin positive time on

metric consolidation year than EBITDA for a adjusted today's to our Our our of release EBITDA see in XXXX adjusted to the more of EBITDA comparable website in half $XXX,XXX adjusted increased of earnings on about to non-GAAP period. including same Please ago XX% the further details GAAP this compared results. $XXX,XXX first by

XX% year of on $XX.X stock was in XX and equivalents first for mainly to in the the were XXXX This XX, $X.X to to XXXX in Debt second the XX, XXXX balance. rest summary. at with of million Cash decrease compared $XX.X sheet. XXXX. inventory op decreased $X.X in and at quarter December quarter quarter The the financial balance June of the investments this million on through my XXXX. during cash the the [indiscernible] debt compared due X.X million, decreasing March million and turning completes million second cash of Now

Form results For quarterly analysis With me reference by which plan detailed please file XXXX. back to on financial August call of XX, let XXQ we now more to Shlomi. turn that our the our report

Shlomi Cohen

Assaf. Thanks,

noted both and track in our remarks and my on remain opening As businesses healthy operationally financially. we

we also mentioning. our Publication think two awards for are Global technology from We worth that won Brand

our First OTI company most South technology fuel named management was in Africa. Africa PetroSmart, subsidiary innovative

by while our first to revenue half results history named as OTIEuropa, award value cashless adjusted European the as years partners and shown this are our growing the EBITDA our view revenue This marketplace. the positive Assaf company's into After and in customers EBITDA to adjusted We in 'XX continuing the reduce With day our appreciate provider Europe. we was in grow carried bringing in their the momentum that most XX% subsidiary be affirmation massive this integrated discussed. of can increasing and achieving XX%. of year XX of half XXXX. first -- solution first strong Second, has payment the

OTI and of know of a for may beyond. specifically core been XXXX a you balance As revenue growth the and its growth revenue strategic major most area and also has focus for focus

are announce We recurring revenue quarter that XX% stream second of half revenues the pleased of total in first for to and accounted XXXX. our

a moving base solution us now utilizes software to Our strategy stable revenues significantly provide more much company complete with a being the with at company designed strategy predictable is a company This offers margins that product off. customer turkey of and from paying was higher making to valuable.

first a via sales items few by we we where for followed In tremendous automated in opportunity Japan purchase to we order mass for the throughout one-time a continues term. stream the for half recurring here, we time progress where key our smart delivered retail made June sale over in followed XXXX deployments payment an cash to received us. XX,XXX presented of increase less of long growth the XXXX growth more is in a more received and in Collectively detail. partner and retail several result touch would the a around system items noteworthy Japan margin a attractive order I In discussing by like a the in as to area recognize additional leading system QX space very XXXX. systems payment in continue systems order a be In purchase March A corporation. on ATM Now more provider will for the noteworthy an the few spend billing we we markets. XX% than service than to revenue over high segments ATMs world. categories. I our am some transit have a XXXX we company glad for

expect XXXX total delivered deliver We system payment of third XX,XXX we will by to-date. than Japan and advance these to to more of time by quarter that have a systems

in Poland. the In with for to post in trains sale As Mazowieckie company manage also full the gain in [indiscernible] vending April national the we populous Polish May the Polish in with of maintain market card finally the electronic public both you XXX in market. as intermediation fraction where in opportunities have we IT terminals reserve provide ticket transportation, signed by and for believe as train well we smart contract our offices [ph]. payment Using agreement We a penetration more key we smart machines ticket for support In will of program in XX revenue June operated contract in post we tickets OTI. city Railways office software secured seen system recurring secured portion a Mazowieckie the the many by and $XXX,XXX Warsaw to Poland, into announcement, and throughout province. largest provide provide continue most sales exists to Railways to Poland, card

advance a continue in purchase expand our Russian received [indiscernible] we to to market. contact recently Russia, the self-service in $XXX,XXX footprint we Finally order widespread of most retail July

As applied for established Bank also the this Russia Central new effort system Russia. of a certification, we the payment of part by

Russia financial to the XX transactions control The According of in cards created September, or some around release. Russian the being Now on XXXX cannot banks. In XX numbers million card factors X.XX be so objective of an let organization. payment of National with XXXX system Mir in payment transactions and for Mir by the issued of cards no million cards exciting. governmental this are XXXX were why Payment Bank planned Unlike external primary touch me Mir independent processing. international new suspended is the a

provider will the Over a be we like a X Top OTI. potential significant believe for term growth Russia as payment there with for market us cashless the long is strategic trusted

we the believe and growth into of to half compared and positive present that XXXX. analysing healthy to forward strong continue pipeline are XXXX Looking second we a we will our

we my lines Now will Operator, providing to would it over Operator. open to like remarks the back Q&A closing please. and before I the for turn

Operator

Instructions]. [Operator

Northland The of Latimore is the first go question from ahead. Please line Mike Capital from Markets.

Mike Latimore

pretty quarter any the kind million On driving it’s color what that that I the strong you the I you PetroSmart in provide a business think in result. quarter? I said I was was can of on think believe, X.X guess

Shlomi Cohen

reminder in we over believe of I and we we strong we and believe better, half as we with expectation. a all be first all year the think of this its that a positive royalty XXXX momentum were PetroSmart were our and continue that all having this is XX% QX second quarter the will for yes this even presenting in in will

Mike Latimore

And you have kind OEM particular of customers there is is that across the one all there or segment?

Shlomi Cohen

momentum. the believe Look, partners year we this we the very overall promising the activities QX presenting is continue running we are will half with strongly that the U.S. reason quarter in and us and with that positive a for our of of were was second strong market part that this we

Mike Latimore

up I of about the way that accelerate there the events slow? business to recurring services growth of that are on or that XX% was rate year, would then think And the in a is it think good you or half said that first cause to your other growth

Shlomi Cohen

Okay. in Correction the QX the the was revenue. recurring and half first from total revenue of our XX% also this in year

Mike Latimore

XX% it think grew But then? I I think

Assaf Cohen

XX% is from basis X.X. X.X to the No absolute in

Mike Latimore

or growth And about right -- this rate from that might kind or growth are so business for of as that is rate? well there

Shlomi Cohen

is that except is we the ATM the The fuelling activities know payment verticals as the of for well. course actually transit card mass Mir the and supporting and entire activity ticketing

Mike Latimore

over your the selling then has know hardware year, been more And what's has average it in just past features does been that trending? trended the terms stable, selling how assuming Okay. that just for been kind growing average you average on products, of price price the

Shlomi Cohen

more injecting stable most the system exposing in moving if but selling So quite price in are not I are as quite ago they the we actually fast the of level. years devices price of and technology. advance to Needless feature device are that you package package, our is say systems is let's of or know are our with say system things the that we different the compare with into we will that The the say [indiscernible] technology following. you two totally change

almost are the actually is price margin the the we this but our revenue So recurring same is that generating our increase gross and in fact business.

Operator

Lake Street the Markets go next line of Smith Jason Thank question [ph]. you. from The Please is Capital from ahead.

Unidentified Analyst

you Top one we but into of Russia your about this market rest X curious order mentioned are markets year you know could grow XXXX. if I rank longer growth geography Shlomi, drivers, thinking thinking you could of and by how the should be

Shlomi Cohen

the Okay having. we you will are give we roughly split that

then as So also and year systems you we we the from not is XX,XXX major revenue based we North business XX% more see of and us. can our and market year there this next continue to have on Africa. American positive only at the be Europe the already than will to market the second coming North and around related but activities revenue very our something as America market Japan next then one, is we this the least of still have know is the fuelling generator Its the more revenue for XX% delivered over are are regarding mainly that generator

this geography perspective. So is from

Kiosk payment chargers. speak would about we chargers, are biggest in but having are you looking electric payment welding the general If go having is and to the and far say the want our then split we one vehicle And and and biggest the the ticketing. then can needless the one say from that can business EV payment the so I in is ATM, so you're and further fuelling division [ph] if the inside I the the I

Unidentified Analyst

we And how operating be the trending rest of about this expenses year? should thinking

Shlomi Cohen

changes we were but think I we keep in the will having level. this we that will HX, keep same same at minor there that level be I respect will believe in the

Unidentified Analyst

revenue from queue. will QX was mentioned revenue back release look growth year-over-year I expect if QX Okay jump digit and growth? just guys and I we me double fairly you you. show sequential directionally one can 'XX the into at in depressed the recall I level know for QX a you If of last in you

Shlomi Cohen

know The our having speaking bumpiness during was are 'XX we between answer is about in -- positive and the quarters. lumpiness I that you or

this better think from and that fact I following result a our more actually recurring generating became and increasing a more being This company 'XX revenue way much huge we that are stable we solution are a being the a of change is to by be XXXX of product revenue is and company. recurring is the instead selling is other more than activities year QX quarters stabilizing QX revenue. different again the will and that think in product activities. of to truly result solutions I about I much be the that more previous actually following believe a compared the generating and activities previously, the the stabilized this recurring

Operator

from Thank ahead. question you next of Alliance go line Please very Kinstlinger Brian Partners. much. Global from The the is

Brian Kinstlinger

year-over-year is profitability putting XX% that coupled with is modest nice up. company the consistently really a being growth

You're growth? clearly incremental is if and needed you is to can how on footing need accelerated types it R&D. much would what you is much are but, think talk targeting that is stronger rate Where lack more that investment it about investment you're to sales if you maybe there more drive you financial put or resources into growth an investments accelerate of any those,

Shlomi Cohen

marketing need Needless the they more development, that side, in where more accelerate business. to are that say to order let's we to our to business invest related actually its and business the to sales say meaning those part major

don’t company, always does fine the technology technology that and have technology it I You to will that not technology we quite be of that our fine to following mean say and will will sales to available sure We the we need related mentioned and making technology. tuning the order the marketing the fit but to it I are good we are to do our in majority cents and are market meaning tuning needs know we them so. in R&D that invest think wise we in need enough utilizing R&D to we technologies, develop that every upgrade we business more have how is and software more invest and upgrade enough in development today activities basically and

Brian Kinstlinger

that much the in change operating So said wouldn’t the the of one had you year. of second previous expenses response to questions half in

to sales and do the So you marketing? plan investment at in what accelerate point

Shlomi Cohen

at at kind and development fund raising revenue some moment be will the with any balance internal order in our and [ph] in marketing not sales are So also and existing least we that. doing increases are of in we The resources using doing R&D.

to be doing let's balance won, the will development are we not are of are with we kind change say We XX. some of if what will in to that that are we slowly to having going it the but expenses by since dramatically eventually August way having and marketing balance the the increase going and since they that’s we the rest were sales investment business be it internally,

Brian Kinstlinger

technology Thank question stations you've is you and can that quick that are partners aggressive how I've gas Last in slow pushing the talk the onto technology the about your customers? how you. installing are then or

Shlomi Cohen

someone actually OTI having in Difficulty] its who Again -- this the say business compared is are one strong are while we stepping also not evaluating Look fuelling digit that this 'XX [Technical in our definitely more that doing pipeline you're market. the actually thing. following, believe I in to what we see that we is will in exactly continue 'XX that competitors I I'm is growth PetroSmart. when following to our doing will saying this present think into I double that giants

the and industry competing this cards entire that and is we the our misunderstanding industry fuelling major in think this that the is the the is of We of with I are efficiency, direction that that and slowing is this realize are those guys we is this coming arguments with issuing in [indiscernible] the system And this system. are are and they in we industry. for from actually plastic other giants actually with is direction good moment that our having are is this arguments actually coming actually realize that and are going competition companies going that that forward now the but growth course

Operator

next Schwartz Schwartz Instructions]. from you. The ahead. Investments. is line Thank Please Edward [Operator question the go from of

Edward Schwartz

to some trial on give the Could us India what's you in color Fuel? on going with the as Easy

Shlomi Cohen

and [indiscernible] and is Yes. We in time is will like self-installed much consumer for that’s the what to that more that there. analyse end the units than consumer delivered and the of actually regarding fuelling to to tug will the early reaction a first little I India have year deliver a installation. we by self-destruct its XX,XXX India to more successful but technical considered continue evaluate months, partner from installation the of over so entire and it’s that the we the a before XX,XXX what more the this the we the successful seven we end will year to the our than than perspective the hopefully its bit be the very far considered of units better 'XX months too end in say to believe and data since six is delivered call picture

Edward Schwartz

will more filled XXXX sometime press you units release be with was initial the coming? to And quarter any see for units a in the regarding according and units. XX,XXX PO Do third the

Shlomi Cohen

system Absolutely and together continue Tokyo we billing all and will I that I us to week before facing of there growth Japan, our in in that and from just over strong we week in all with the developing see partner now last market. pipeline this returned both together are believe are we

of letter XX,XXX it the for that I As the was system we have beginning. the from got the say a reminder intent to when LOI,

Edward Schwartz

and that’s less That’s issue. you that than feel two in the correct not

Shlomi Cohen

believe to a see for in yes for is market presented in technology the also but I no although Japanese and 'XX we but after. continue we the that but actually the correct, growth quality and also the year sign answer That’s positive the this is

Edward Schwartz

of about cultural are previous in were And Malaysia. future resolved in the and differences difference those quicker global the a like -- cultural readers which Japan most you still cultural for problem? calls be Have still you will you issues in talked or

Operator

sorry Schwartz bit loudly? you not to can are we able Mr. but you, speak hear a

Edward Schwartz

you me Can hear now? Sure.

Operator

please better, much Yes proceed sir.

Edward Schwartz

your the will a timely have differences cultural Okay, manner? in in on come been more reader that they Japan so resolved

Shlomi Cohen

sure getting will I'm requirements dramatically the its the will the results that for increasing related beginning we year cultural or Japan HX fully that important you HX we that the not team a always I that believe needs are its is most eventually what believe to see we on. for meaning we, that goal to Japanese and in issues from of and that that compared approach since we relevant differences 'XX, the hefty example know the so the thing But have cultural definitely is the present market. fact that and we the

Edward Schwartz

XX%, overall something Do that? is you holding But you the over company up Easy or about have Fuel growth growth XX% some really like what's back? in

Shlomi Cohen

all QX think we all QX, having so -- then and I weak when don’t having analyse quarter the the if you're by QX, in QX of -- I results think in in the fuelling were relatively that quarter. much the way that in better you on we were looking

represents revenue six So exactly analyse generated the you if months first in XX% that it the growth. entire we

investing is about XX% of that of you the projects The If hard and me you still I'm know of and see based in business that year-over-year three on HX. the is in and our that based even at on you fuelling for on HX business revenue in because majority are example those we you projects its work of are this two growth why that’s years saying the point based time. ask COGS will we some generating mainly to not reason projects

Operator

you. Thank

Shlomi questions As remarks. turn there back the Over you. call are closing now to will over to Cohen for no I further

Shlomi Cohen

Thank you.

throughout add awareness months the next few in So our active remain would I activities. we like to to expect that investor

our meeting IR contact If setting you're MZGroup. a up please interested firm in

of in value our we the you the technology resulting and for tremendous for pioneer solution to revenues arena cashless for conclusion industry your leader will continuing our have a Thank high and recurring support. our predictable believe great we bring to thank while you good and a day. amount As payment in margin in you continue strongly company shareholders. In value

Operator

disconnect very you you concludes now you your lines. Thank gentlemen much. Ladies and Thank joining this conference. for and may today's

on Track Innovations (OTIVF) 8 Aug 182018 Q2 Earnings call transcript