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OTI Reports 2013 First Quarter Financial Results

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ROSH PINA, Israel, May 31, 2013 (GLOBE NEWSWIRE) -- On Track Innovations Ltd. ("OTI") (Nasdaq:OTIV) today reported first quarter 2013 revenue of $8.6 million, and cash, cash equivalents and short-term investments of $17 million as of March 31, 2013.

Ofer Tziperman, Chief Executive Officer, commented: "the first quarter results are indicative of the efforts taken by the management and Board of Directors to decrease operating expenses while implementing a new strategy and exhausting ways to capitalize on our extensive IP. Obviously, the second part of the equation is increasing revenues and we are working diligently on doing just that. We are aiming our efforts to generate growth and build shareholder value."

Q1 2013 Financial Highlights

  • Revenues were $8.6M, a decrease of 32% from $12.6M in Q1 2012.
  • Gross profit was 49%, compared to 50% for the same period last year.
  • Operating expenses decreased by 25% to $6.5M, from $8.8M for the same period last year.
  • Net loss attributable to shareholders was $3M, up from $2.6M for the same period last year.
  • Adjusted EBITDA loss was $1.8M compared to $1.7M for the same period last year.
  • Cash, cash equivalents and short-term investments were $17 million as of March 31, 2013.

The balance sheet includes amounts relating to potential termination benefits for former management. The Company is reviewing the termination provisions of former management's employment agreements.

Adoption of US GAAP

Due to the changes in the composition of the Company's Board of Directors, including the election of eight new US directors on December 30, 2012, the Company will no longer qualify as a 'Foreign Private Issuer' as of June 30, 2013 and will be required to report as a domestic issuer starting on January 1, 2014. As reported on May 31, 2012, effective as of January 1, 2012, the Company adopted International Financial Reporting Standards ("IFRS") as published by the International Accounting Standards Board. However, as a domestic issuer, the Company will no longer be entitled to prepare its financial results in accordance with IFRS. Therefore, the Company has decided to adopt US GAAP and accordingly to prepare its financial statements for the fiscal year ended December 31, 2012 and thereafter in accordance with US GAAP.

It should be noted that the financial results for the first, second and third quarter of 2012 that were previously published were prepared in accordance with IFRS. The financial results for the first quarter of 2012 that appear in this press release were prepared in accordance with US GAAP.

Use of Non-GAAP Financial Information

This press release contains certain non-GAAP measures, namely, Adjusted Earnings before Interest, Income Tax, Depreciation and Amortization ("Adjusted EBITDA"). Adjusted EBITDA represents earnings before interest1, income tax, depreciation and amortization, and further eliminates the effect of share-based compensation expense. OTI believes that Adjusted EBITDA 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.

Management Discussion and Webcast Information

Shareholders and other parties can submit their questions about the company and its financial reports to ir@otiglobal.com. A prepared statement and answers will be provided by OTI's management on June 17, 2013 at 9am ET.

Deadline for inquiries submission: June 7, 2013, 5pm ET, midnight Israel
Management discussion available: June 17, 2013, 9am ET, 4pm Israel to June 24, 2013 midnight ET.
Telephone Replay: Toll Free 1-888-326-9310 (U.S.) or 1-800-270-077 (Israel)
Webcast: http://www.otiglobal.com/Investors_Introduction

About On Track Innovations Ltd.

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 payment solutions, national electronic ID systems, 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. Visit the website: www.otiglobal.com.

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 Company's efforts to decrease operating expenses, implementation of a strategy and exhausting ways to capitalize on the Company's IP, increase revenues and generate growth and build shareholders equity. 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 20-F for the year ended December 31, 2012, 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.

The content of websites or website links mentioned or provided herein is not part of this press release.

1 "Financial expenses"

ON TRACK INNOVATIONS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
March 31 December 31
2013 2012
(Unaudited) (Audited)
Assets
Current assets
Cash and cash equivalents $ 8,930 $ 9,304
Short-term investments 8,065 8,712
Trade receivables (net of allowance for doubtful accounts of $430 and $431 as of March 31, 2013 and December 31, 2012, respectively) 4,245 7,516
Other receivables and prepaid expenses 3,541 5,349
Short term restricted deposit for employees benefit 2,745 2,922
Inventories 6,416 7,049
Total current assets 33,942 40,852
Long term restricted deposit for employees benefit 1,072 1,099
Severance pay deposits 870 836
Property, plant and equipment, net 12,429 13,074
Intangible assets, net 627 656
Goodwill 485 485
Total Assets $ 49,425 $ 57,002
ON TRACK INNOVATIONS LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
March 31 December 31
2013 2012
(Unaudited) (Audited)
Liabilities and Equity
Current Liabilities
Short-term bank credit and current maturities of long-term bank loans $ 6,542 $ 7,368
Trade payables 8,158 10,696
Accrued severance pay 3,326 3,539
Other current liabilities 9,780 10,971
Total current liabilities 27,806 32,574
Long-Term Liabilities
Long-term loans, net of current maturities 2,147 2,224
Accrued severance pay 2,114 2,032
Deferred tax liability 50 53
Total long-term liabilities 4,311 4,309
Total Liabilities 32,117 36,883
Equity
Shareholders' Equity
Ordinary shares of NIS 0.1 par value: Authorized – 50,000,000 shares as of March 31, 2013 and December 31, 2012; issued: 33,273,011 and 32,938,011 shares as of March 31, 2013 and December 31, 2012, respectively; outstanding: 32,094,312 and 31,759,312 shares as of March 31, 2013 and December 31, 2012, respectively 829 820
Additional paid-in capital 211,112 210,853
Treasury shares at cost - 1,178,699 shares as of March 31, 2013 and December 31, 2012. (2,000) (2,000)
Accumulated other comprehensive income (loss) (9) 36
Accumulated deficit (192,137) (189,131)
Shareholder's equity 17,795 20,578
Non-controlling interest (487) (459)
Total Equity 17,308 20,119
Total Liabilities and Equity $ 49,425 $ 57,002
ON TRACK INNOVATIONS LTD.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
Three months ended March 31
2013 2012
(Unaudited) (Unaudited)
Revenues
Sales $ 7,549 $ 11,342
Licensing and transaction fees 1,078 1,262
Total revenues 8,627 12,604
Cost of revenues
Cost of sales 4,367 6,322
Total cost of revenues 4,367 6,322
Gross profit 4,260 6,282
Operating expenses
Research and development 1,712 2,343
Selling and marketing 2,721 3,633
General and administrative 2,067 2,728
Amortization of intangible assets 25 49
Total operating expenses 6,525 8,753
Operating loss (2,265) (2,471)
Financial expense, net (*) (601) (96)
Loss before taxes on income (2,866) (2,567)
Taxes on income (173) (21)
Net loss (3,039) (2,588)
Net loss attributable to noncontrolling interest 33 34
Net loss attributable to shareholders $ (3,006) $ (2,554)
(*) includes in Q1 2013, $437 finance expenses resulted from exchange rate differentials.
Basic and diluted net loss attributable to shareholders per ordinary share
$ (0.09)
$ (0.08)
Weighted average number of ordinary shares used in computing basic and diluted net loss per ordinary share 32,440,428 32,065,343
ON TRACK INNOVATIONS LTD.
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 March 31
2013 2012
(Unaudited) (Unaudited)
Net Loss $ (3,039) $ (2,588)
Financial expenses, net 601 96
Depreciation 400 386
Taxes on income 173 21
Amortization expenses 25 49
TOTAL EBITDA $ (1,840) $ (2,036)
Stock based compensation $ 84 $ 294
TOTAL ADJUSTED EBITDA $ (1,756) $ (1,742)
ON TRACK INNOVATIONS LTD.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands, except share and per share data)
Three months ended March 31
2013 2012
(Unaudited) (Unaudited)
Cash flows from operating activities
Net loss $ (3,039) $ (2,588)
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation related to options and shares issued to employees and others 84 294
Amortization of intangible assets 25 49
Depreciation 400 386
Changes in operation assets and liabilities:
Accrued severance pay, net (20) 460
Accrued interest and linkage differences (90) 2
Decrease in deferred tax liability (3) (3)
Decrease (Increase) in trade receivables, net 3,239 (122)
Decrease (Increase) in other receivables and prepaid expenses 1,596 (522)
Decrease in inventories 555 1,235
Decrease in trade payables (2,121) (517)
Increase (decrease) in other current liabilities (1,133) 1,254
Net cash used in continuing operating activities (507) (72)
Cash flows from investing activities
Purchase of property and equipment (165) (115)
Purchase of short term investments (243) (295)
Proceeds from restricted deposit for employee benefit 306 --
Proceeds from maturity and sale of short term investments 924 6,945
Net cash provided by investing activities 822 6,535
Cash flows from financing activities
Decrease in short-term bank credit, net (221) (242)
Proceeds from long-term bank loans 26 275
Repayment of long-term bank loans (587) (613)
Proceeds from exercise of options and warrants, net 184 4
Net cash used in) financing activities (598) (576)
Cash flows from discontinued operations
Net cash used in discontinued operating activities -- (150)
Total net cash used in discontinued activities -- (150)
Effect of exchange rate changes on cash (91) 177
Increase (decrease) in cash and cash equivalents (374) 5,914
Cash and cash equivalents at the beginning of the period 9,304 12,517
Cash and cash equivalents at the end of the period $ 8,930 $ 18,431

CONTACT: Galit Mendelson VP, Corporate Relations 732 429 1900 ext. 111 galit@otiglobal.com

Source:On Track Innovations Ltd.