ROSH PINA, ISRAEL — (Marketwired) — 11/26/13 — (NASDAQ: OTIV), a global leader in cashless payment solutions based on contactless transactions and near-field communication (NFC), reported financial results for the third quarter ended September 30, 2013.
Signed a definitive agreement to sell its SmartID division to SuperCom Ltd. Following a successful due diligence process by SuperCom, OTI will receive $10 million in secured cash after the closing, with an additional $12.5 million subject to performance-based milestones. Accordingly, SmartID results and cash flows for the third quarter ended September 30, 2013 are presented separately in the statement of operations and statement of cash flows as discontinued operations.
Received follow-on orders for commercial quantities of EasyFuel Plus from Tokheim, a leading global provider of fuel dispensing and automation equipment. EasyFuel Plus equipment for Tokheim has been supplied to more than 250 locations, which includes more than 1,000 nozzles and 7,500 vehicles to date.
U.S. District Court for the Southern District of New York denied T-Mobile USA-s request for reconsideration of the claim construction (Markman) decision in OTI-s patent infringement lawsuit alleging that NFC-enabled phones sold by T-Mobile USA infringe OTI-s U.S. Patent No. 6,045,043.
Divested the operations of Parx France, a distributor of EasyPark electronic parking solutions in French speaking markets for OTI-s subsidiary, Parx Ltd. The divestiture is expected to reduce OTI-s operating expenses by more than $800,000 annually, while allowing Parx Ltd. to continue selling OTI-s patented EasyPark solutions through Parx France under new ownership in diverse European markets and the opportunity to share future profits.
Shlomi Eytan was appointed to the new position of chief sales and marketing officer. Eytan is applying more than 15 years- experience managing sales organizations to accelerate global sales of OTI-s contactless and NFC products.
Several members of OTI-s board of directors purchased OTI common stock in the open market (per Rule 10b5-1 plans executed in June 2013 and/or during open trading windows per OTI-s insider trading policy). Including additional purchases made subsequent to the end of the third quarter, totaling approximately 985,152 shares as of November 19, 2013.
Revenues in the third quarter of 2013 increased 27% to $6.8 million from $5.3 million in the same year-ago period. The increase was primarily driven by a 133% increase in payment products revenues from NFC readers sold to the U.S. market, as well as the expansion of company-s mass transit projects in Poland.
Gross margin in the third quarter of 2013 was 46.5% compared to 53.5% in the third quarter of 2012.
Operating expenses in the third quarter of 2013 totaled $733,000 compared to $5.5 million in the same year-ago period. Operating expenses in Q3 2013 were offset by $4.3 million other operating income mainly due to a write-off of provision for former employees termination following a settlement during the quarter. Excluding the other operating income, operating expenses declined $467,000 or 8.5% to $5.0 million, with the decrease primarily attributable to lower headcount and reduced management costs compared to the year-ago period.
Net income from continuing operations in the third quarter of 2013 totaled $2.1 million or $0.06 per share versus a net loss of $2.6 million or $(0.08) per share in the same period last year. The improvement was due to the $4.3 million in other operating income, as well as increased revenues and reduced operating expenses.
Adjusted EBITDA from continuing operations in the third quarter of 2013 totaled $3.0 million, an improvement from an adjusted EBITDA loss from continuing operations of $2.2 million in the third quarter of 2012 (see discussion about the presentation of adjusted EBITDA from continuing operations, a non-GAAP term, below).
Cash and cash equivalents, and short-term investments at September 30, 2013 totaled $9.7 million.
“We are encouraged by our performance in the third quarter as it reflects our continued focus on adding new customers, establishing key relationships, and effectively penetrating target markets,” said Ofer Tziperman, OTI-s CEO. “Our continued successful execution was demonstrated by several key wins, including multiple purchase orders for EasyFuel Plus, as well as a recent $10 million purchase contract from one of our U.S. channel partners for NFC readers.
“The $10 million contract represents the largest single reader win for our company, and is the result of OTI-s strategic shift to focus on building our core cashless payment solutions and NFC technology business. This win also reveals increasing traction for greater adoption of NFC. In fact, we have doubled the number of readers we have shipped globally to-date, and expect total shipments to surpass 110,000 units this year. We-re confident the adoption of our patented NFC solutions will continue to expand over the months and years ahead.
“Altogether, our expectations for the future remain high as we build upon the momentum we-ve established and see a widening pipeline of growth opportunities, particularly within our new customer and partner relationships.”
OTI will hold a conference call today (November 26, 2013) at 10:30 a.m. Eastern time to discuss these results. The company-s CEO Ofer Tziperman and CFO Shay Tomer 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.
U.S. dial-in: 1-877-941-1427
International dial-in: 1-480-629-9664
Conference ID: 4649642
The conference call will be broadcast simultaneously and available for replay via the investor section of the company-s website at .
Please call the conference telephone number 5-10 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 Group at 1-949-574-3860.
A replay of the call will be available after 1:30 p.m. Eastern time on the same day through December 26, 2013.
U.S. replay dial-in: 1-877-870-5176
International replay dial-in: 1-858-384-5517
Replay ID: 4649642
Due to the changes in the composition of the company-s board of directors, including the election of eight new U.S. directors on December 30, 2012, the company no longer qualifies as a “Foreign Private Issuer” as of June 30, 2013, and will be required to report as a domestic issuer commencing on January 1, 2014. As reported on May 31, 2012 and 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 adopted US GAAP for the fiscal year ended December 31, 2012 and thereafter.
It should be noted that the financial results for the periods ended March 31, 2012, June 30, 2012, and September 30, 2012 were previously published in accordance with IFRS. The financial results for the period ended September 30, 2012 that appear in this press release were prepared in accordance with US GAAP.
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 interest(1), income tax, depreciation and amortization, and further eliminates the effect of share-based compensation expense. 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.
(1) “Financial expenses”
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 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. Visit the website: , the content of it does not form a part of this press release.
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 timing of closing, receipt of consideration and amounts of consideration from the sale of the SmartID division to SuperCom, if such transaction is closed at all, future reduction of operating expenses, total shipments of NFC solutions and future pipeline and growth opportunities. 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.
Scott Liolios or Matt Glover
Liolios Group, Inc.
949 574 3860
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