ROSH PINA, ISRAEL--(Marketwired - Nov 26, 2013) - On Track Innovations Ltd. (OTI) (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.
Q3 2013 Operational Highlights
•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.
Q3 2013 Financial Highlights
•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.
Management Commentary "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." |