OTIV - Earnings call transcript Q4 2018 | on Track Innovations LTD

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Operator

Welcome to On Track Innovations' Fourth Quarter and Full Year 2018 Results Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded.

You should have all received by now the company’s press release.

If you have not received it please review it on the IR section of the company’s website or contact the investor relations GK Investor and Public Relations. now call to to like would hand over the Mr. I Public of GK Helft Relations. Investor Ehud & Mr. Helft would to you like begin.

Ehud Helft

I also Thank you, this are Full Call. Mr. and Innovations' call. Fourth like Operator. Welcome the CEO to Year On With us Shlomi XXXX line for Cohen, thank management to Track on Quarter would hosting to today Conference Mr. and

will of Shlomi the recent and Assaf of the will performance key financial some briefly provide CFO. OTI's Cohen, Assaf review quarter. highlights

we open Harbor this advised presents ahead CEO, company the the remarks earlier the will I and answer Shlomi, be content Cohen. for conference Shlomi also prepared Please question with over this call that would the Following to of then And to please. go the today Statement like the call call. hand session. now Safe the issue to

Shlomi Cohen

you Welcome us thank Thank you, and for Ehud. joining all today.

cutting has more 'XX step of years to our efforts dramatically overall minimal the that achievement Following turnaround during for $XXX,XXX. by than in decreased net we and OTI. history. following been amount This hard together taken another of half to our with OTI loss work profitability than debt that zero put to we true us better in ever fact the our believe I place marked almost a a XXXX much our year by

XXXX, our the whole. show turnaround hear, moment, over more ingredients revenue to will about ability really place for effort a in few start as through a for the fruits solid hear progress you all we the of have to a me growth As our we XXXX years. optimistic as excuse enjoying will you past And

increasing loss allowed as 'XX. from profile $XXX,XXX which we loss total to Furthermore gross $XX.X million year This the show reduced year continuing our EBITDA higher improvements revenue. through margin an to as $XXX,XXX growth now footprint. reported operations expense versus us profitability, at potential well given revenue XX% we whole is revenue efficient in our of co-spending and towards of better stable recurring a portion adjusted for as margin the our increasingly of Looking

strengthed balance X portion provide with $X.XX position. close recurring focusing R&D continues I year positioned to more know, our at with. in progress. technology. well are to is would only the will strategic activity that revenue sold predictable smart to at long-term to which efforts on debt already strategy over million the like are we revenue sales perspective, to cash you million. fully December, grow recurring have us sheet, as bolster growth in close to In business our to on non-core our our nicely an the As core we XXXX by we in place a place we Medi that improve our enjoy with zero our and sale X.X XXXX, additional To of cash This will end added million focus

the to internally have This were XXXX our shown continue XX% US our QX United as mitigate affect affected of end results. ability QX momentum also by few we goods delivered market. China. the China we revenue months, result, started during to believe relocating working administration production on in order site, which past and until a tariff outside the US to positive a this decrease QX that the from on will in faced started from We tax presented that to new QX of tariffs Towards XXXX we had revenue the the with US face XXXX, temporarily our States. our In

revenue and the will by positive is momentum that continue and accelerate to over end complete we of believe XXXX even expected we process our QX strongly once during We project XXXX. this this

and temporary throughout change and is that beyond. indeed picture doesn’t will XXXX our the XXXX, in bigger this business throughout we short-term turnaround overall continue the negative expect improvement and While

XXXX, QX year U.S more less in XX,XXX and to successful readers than kiosk XX,XXX prior for market payment fact, ATM. delivered advanced was to for and overall In rebuilds us the globally. the We contact US smart

For XXXX, which was year us beyond. we in for sales footprint well very perspectives several made on fronts an progress which and steps important set XXXX

certification retail service most contact expansion leading with In We’re for especially signals. international less our Russia Russian XX,XXX payment development of achievement by the advanced Bank more of we readers pleased was self system XXXX us In our transit October to Russia. international brands. new than market. the Canada's in The and delivered payment we in important notification Central of one achieved established the mark retail the

our to integrate machine, throughout expanding Our and into by our business devices other and Both Canadian certification the certifications kiosk country. cashless vending total addressable Canadian Russian the secure payment market. our solution potential allows are significantly the important, growing unattended

to revenue systems Japanese account and the generated delivered these OTI. XXXX than system advanced for During market are more we XXXX

to around call XXXX. for the and and contact summarize quarter turn company XXXX area increase whole. the Another key ATMs. to than deployments growth XX% world to continue in the delivered In I the a in XX,XXX would automated retail the over to up sales readers and more is year-over-year space less CFO, advanced we Assaf to the XXXX, fourth expect financial our smart for now like as Cohen we results

Assaf?

Assaf Cohen

Thank you, morning, Shlomi good everyone.

GAAP on some of believe detail of good We our the GAAP adjusted provides comparable metrics, including would performance. a of the issued year press today additional covering this earnings XX, the highlights Before continued conciliation to some to non this our operation. adjusted EBITDA the and market of the a about available ended understanding see section results. be opened financial of our including further XXXX for copy cover quarter for in would A I investor website. fourth colors. provide in relations release Please main results is December release. website of our the we I ongoing metric EBITDA non GAAP just release our

announced prior been period has The you in as December. million, year. classified sale and quarter fourth quarter $X.X the presentation. included to MediSmart Revenues of confirm last we of information In were addition know the the in the in are with compared period current with MediSmart result XXXX all $X.X fourth of therefore discontinued million operations as the

As the lower due of Shlomi of manufacturer impact import level explained revenues China. product was of tariffs to the in

we APAC. In addition, have lower quarter from fourth in the of levels revenues the

the to tariffs end We were Full which year year. mitigate have the taken versus last the million million quarter revenues should of of completed $XX.X first be steps by XXXX XXXX. issue $XX.X

retail million or XX% revenues for revenues sales ticketing $X.X XX% and $X.X of breakdown terms derived and were or were transit of sales. In where mass revenues of of were fourth patrolling the quarter, million

$XX.X XXXX mass were million XX% For and as petroleum ticketing revenues revenues sales. or transit and million whole were of sales or XX% $X.X a retail of

or million accounted Looking at $X.X was the was million or quarter, million XX%, the XX%, geographic $X.X Europe XX% $X.X Americas for $X.X was X%. breakdown Africa million or or in fourth and APAC

of quarter and grew the Recurring to XX% accounted XX% $X.X total in in or as XX% which to revenues $X.X XX% XX%. Americas the for was $X.X million million or revenue is was of XX we in whole and $X.X Europe. was million for compared total accounted million $X.X fourth Compared Europe or XX% million by last XX%, year $X.X or APAC or For Americas a million, XX%, the revenues. revenues Africa

last revenues $X.X QX $X.X XX% or revenues. compared of the in revenue of improvement XX%, For million year. over the quarter was the XX% year million Gross in for or reported the XX% recurring total total accounted margin solid fourth to a

For quarter the year gross were as margin also the of of $X XXXX fourth of operating expenses fourth was quarter reported $X.X million in XX% versus the In year. XX% million year. last last the

of last Net the expenses loss quarter loss versus from of $X.XX $XX.X per share $XX.X share $XXX,XXX or of in $XXX,XXX fourth this loss million of is increased $X.XX last For year. was year. in continuing XXXX to to the our compared per quarter or million slightly operations loss

had share We the quarter income in $X.XX quarter of last For share the a loss per or per net year. from with of reported of $XXX,XXX operations loss $XXX,XXX $X.XX loss per net or million, of $X.XX loss of in or versus share loss fourth $X.X the a loss or per compared $X.XX of share, XXXX. year a $X.X million a we positive continued net in of

we year, $XXX,XXX, of net loss a loss loss $X.XX a or or versus share the per of share reported For $X.XX in $XXX,XXX per loss of of XXXX.

loss Now loss an in was turning to EBITDA the in adjusted compared $XXX,XXX results. QX with Adjusted of fourth our GAAP XXXX. XXXX non EBITDA of of quarter $XXX,XXX a

For XXXX in solid improvement a EBITDA adjusted the $XXX,XXX as loss an reported loss EBITDA of a of over $XXX,XXX XXXX. adjusted we whole

equivalents $X call $X.X reduction. XXXX, detail with hand XX, was giving cash $XX.X end on to million At would we report OTI ended XXXX sheet Shlomi. long-term by a investment my net XX-K, and balance and of financial we short-term for strong investments debts. XXXX. of cash, short and million. a This was $X.X And our now plan to short-term more cash at complete in our $X.X to a cash cash, analysis year equivalents million At annual debt in summary yearend please million solid Looking file results, Form back financial position reference and like million, the and our I us which had March debt position in

Shlomi Cohen

Thank you, Assaf.

offering solutions us predictable company company transitioning margin solution service providing and software stable that While is working. our and is complete strategy the with base the from to a it ongoing utilizes working, of has ongoing with in stream. is taken strategy clouds This time and revenue customer product higher a growing pure

changes. last are we’re focus XX% XX% term this emphasizing absolute a portion. a an overall As energies in increase of few of the One worth important XX% revenues versus pie it to is accounting our our result and recurring increasing year, on now

year our compared QX our recurring reached total revenue of of revenue XX% a period to ago. the to During same XX%

Americas in revenue the byXX%. Our grew year-over-year

ahead our which quarter one as end manufacturing China we will of quarter. first XXXX slower our will transition Looking be completed the a into be the by of out while

potential. few XXXX. with our over as to begin energies And any don't level. to had furthermore, excited put really to growth we see we change expect in to the quarters OpEx years we for revenue and past expect very our off solid hard our All work will the in year in We’re pay regard this

believe we this creation past effort I enjoy that please. value With would and we XXXX well-positioned the our forward for hope will So the Q&A. like are the of in new long-term. summary, open Operator, growth to improve In our I to over fruits can to bottom look much line. shareholders lines reach that of and

Operator

first Please William go from Gibson ahead. The [Operator question comes ROTH Instructions] of Capital.

William Gibson

China to that follow-up is a where And to. In manufacturing is to moving then it XXX% what of is your regards it that out percent or so less. of you

Shlomi Cohen

market fact actually done on actually US the QX is Okay China mainly actually the regarding our I market US More production QX, having. revenues in from on market. we’re creating the in so say of that results biggest that that fact China almost XX% production the is Philippines than into the and an is will one is third impact and of it's we’re the our relocating the generated that

Operator

question comes of next Please Taglich Nobile John ahead. from Our go Brothers.

John Nobile

the to to just back manufacturing moving to Philippines. get I operations the wanted from China

of to an this won't idea till how to magnitude really idea the just Philippines is quarter was quarter. that first impacted get end get Just fourth impact this think fully first be wanted operational the an quarter. I impact said the by the first in like It going of this, the quarter of the you could to trying

year. it you decline revenues. first obviously, at had Should in looking the the decline quarter we I similar quarter that temporary a in fourth look of at XX% or this decline type about of So, know

Shlomi Cohen

by the order to in we quarters, last that, the that end month all to I to the first two do from start one. is the the of we’re Philippines from to handover would this recovery facing do would say China this we going were and of the complete this entire in moment ramp-up

final any we because a QX market around Second seeing had purchase a on in we this bypass in to thing, deliver order bit to especially early plan order what order clock and we I we share early will to picture working US tell it's to of about much you it's I think creative the impact market. the the time in the will this results of will later that little speak tax. in point too right it it’s the are to be weeks think we can to see QX, order But do be now better and have and few legally in what globally at to with XX% we

John Nobile

wondering the just you the costs And labor in I Philippines to idea of could if move labor to give the was the China. there an how cost us compared

Shlomi Cohen

when discussion Europe, to with that interesting an and are east on market even market internally. were you’re the that Chinese is those point Far This they in mentioned having I compared Today looking on East the we other market Chinese a of competing market.

So sold product, face from to not margins. kind our improve we able to will change any be we're going cost perspective a in of gross

it's So better. cases in even all be going in to same all cost from some perspective same or the

John Nobile

press Very strategic know your I was believe a could your just ago of idea that, top what trying to your move this actually in and potential Puma long with an that contribute not the there Energy line And on XXXX release there. about of the beyond. little to you get size that could you hoping was behalf about I a that talk partnership

Shlomi Cohen

Puma that and fueling fueling are having. it's automated activities we so to audience that the with not to related familiar the our Okay the PR are business

say So products coming question years strategic that to first I selling gross all during will solution. one. is account we’re wise we’re This the because our would it Revenue there margin your of high for not be although selling significant the is following. us

a the sector We’re and to because energy guys from technology globally countries is the is accelerate the activities many doing up stepping new OTI. idea those player actually are to ramp in Puma this with and now global

John Nobile

product licensing mean look does this fee you’re So should we going on transaction selling not account, this your that recurring line. into revenue and at

Shlomi Cohen

give phase it's multibillion you as this in as we other having in such looking BP answer direct Puma we’re to Because presentation accounts prefer reached or I eventually all that when not you're but a the all in to on still or this point well. are sector accounts

John Nobile

your books impact think And the of you with completed. and if forward? What any going already going is in in operating do to this divestiture expenses margins MediSmart it's or that the have

Shlomi Cohen

of but margin. part strategically on control The on was MediSmart, focus again is operations other the on four that without less impact we for is related if to the already to investing are the strategy we and run, I the is R&D XX% MediSmart First core the company keeping can gross this it long we since years not on today that all the much see MediSmart I core and technology also XX% focused think not MediSmart is dealing margin from board took of that with gross our a MediSmart. are that out in will see having business, you when am decision came you from entire was easy only came because fact and we’re the it. and lately I idea board ago But I access more when we and step and part, activities. The

activities those technology business. of of part core All will our not and core

John Nobile

certification and into hoping was could little more question, the certification I a your one Thank Russia you. MER interest this in this might a regions. Give benefit further sales just little that these how Canada, in insight to please. I about have you talk how

Shlomi Cohen

respect. and got we to the I��m MER short the that MER Absolutely, in started And get the over so contact identified to moment first the significant, Russian there we expecting MER was far with efforts than strategic Russian to and very readers for a the the moment market by in from the of that all delivered year think we time in growing strength, keep that that the is this regarding of more the decided relatively to advanced less injecting payment relatively MER, so see order certification. see we market. market faster. more is understood Russian we of to maybe invest this want market the almost, meaning half saw XX,XXX potential fast cash is we sales activities in I there and we over will market we market beginning certification quite market of The second system Europe positive the take continued are we OTI will more compared some first is half less in positive and markets like a share way the now results the in the to parts the the that this Russian momentum other more way and the 'XX. by And will we they moving

will that this the order we our direct the actually the in time in market related partners this and partner the that don’t activities, active US believe to Regarding of Canadian to Canadian their the interact Canadian decided going that certification we almost the incentive see XXXX, have interact activities But impact also certification in of it's to point I get are having And of it's during the this for we to active is revenue to US at there in Canadian they the with the in we’re that in support us was market. they're market. market. in market results the achievement interact every reason get

John Nobile

for yet definitely but some you'll doors up open Canada. revenue XXXX potential in that nothing believe just So

Shlomi Cohen

Absolutely.

Operator

of Marty Our comes next question Elbaum from Networks. Horizon

Marty Elbaum

I wanted listing. problem. NASDAQ do or the you plan, to to about in you what’s your jeopardy there were is out the thoughts solutions find were What now

Shlomi Cohen

we till We there all first an have time April from XX. of we office and got

Marty Elbaum

We have until when?

Shlomi Cohen

XXnd. April

Marty Elbaum

Right.

Shlomi Cohen

And the the every in that a but assuming we to this is relevant think is get correctly. need in to I almost would details company not that into don’t situation. order doing be change in that now conference reflect to few step investing say have lot efforts the be able other we market that's reflect this call And needless I we results we're order think consider that that of basically in to as the we to options a it's well. company

Operator

ahead. Capital of question next comes Latimore Mike Markets. Northland go from Please Our

Mike Latimore

maybe two the about this talk the a ATM regions, here bit top year. top revenue or cases driver whether lending use two get of little top are top addressing, just you it's drivers sense the what Can

Shlomi Cohen

say If I start the would from the verticals following. I

we the momentum with that the positive continue with all we of definitely First will ATM. are having

reminder from a through XXXX, XXXX were in we in vertical XX,XXX XX,XXX as and this contactless by were selling smart XX% compared times more 'XX Just we the ATMs. advanced readers to five growing to

one. to will I’m that very I is no and regarding little position volume continue two lot need on some vertical vertical fact having but from us one of the to number definitely challenge the So which for putting a is say kind here having the vertical be attention this we’re be of would interesting vehicle number one bit perspective interesting and that I’m will vending mention chargers. a to the but charger efforts EV actually number this electric In

EV think the having in moment see its hope it's First to one answer to in that unit every the question. From of EV market face already street point say be that that it's the also it's going in charger as in one well. reader they we’re the the even And next on contactless we’re but or definitely hundred on market that system. it's generate already City is that the biggest and efforts is than you to our the actually you order US following I going number XXXX with are increase doing of connect a Japanese can for well. us the in be the that quite London that I And I OTI and the yes, that that increasing active positive as the although few in market, the region the vertical via inside the telemetry market follow will dramatically of a today for of almost strategic the EV more number vertical continue gave in electric will years. perspective to I vehicles believe this US Russian the cloud to chargers your we’re needless lot to the region in not charger. but having At results to fact

Mike Latimore

a you fourth what Is of weakness bit what that say in you and the you was quarter the in APAC so little did the said saw cost. And region.

Shlomi Cohen

came year from by in I and and quarter, activities positive Unfortunately negative momentum one, when to on actually just created QX it was this I our way a production of US temporary the to three them in were to you end be hope tax China Again and the quarter that the in that market year China giving that the say having on previous reason by of the any and after to month, hand this actually a US of remind will over relocating we’re by compared quarter. from and better this very we the this goods with two over new event. end quarter the administration looking the you’re to would each delivered answer first on impact the that we’re US completed clear our the Philippines one

Mike Latimore

of out region expected. orders So APAC as were the

Shlomi Cohen

it's Japan Because than can when APAC more And we looking, you’re us the you by 'XX, way year mainly Japan, were selling its in for see 'XX. XX% in that Japan. over year

I So for to XXXX. system the were deliver months Japan planned in able us to first all the during the first half, nine in think we

Operator

[Operator the questions for will now back Instructions] call remarks. I There to Shlomi no are further over Cohen closing turn

Shlomi Cohen

of weeks business. your some we we In intend and and the meeting in Thank the support our of forward conference you of attend to over I of thank next the California I ROTH to you week OTI for long-term look coming to continued would management behalf interest you. there. like actually On

contact set agency, a you me please anytime. and meeting If Thanks the good or like to would a at with have me again GK day. up IR

Operator

is now attending Thank concluded. you for today’s The presentation. conference

You now may disconnect.

on Track Innovations (OTIVF) 13 Mar 192018 Q4 Earnings call transcript