On Track Innovations (NASDAQ:OTIV)
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Revenues up 38% with Gross Profit up 103% Compared to the Same Period Last Year; Positive Cash Flow from Operating Activities
FORT LEE, N.J., May 30 /PRNewswire-FirstCall/ -- On Track Innovations Ltd. (OTI) (NASDAQ:OTIV), a global leader in contactless microprocessor-based smart card solutions for homeland security, payments, petroleum payments and other applications, today announced its consolidated financial results for the first quarter ended March 31, 2006.
-- Revenues: $9.06 million, an increase of 38% compared to $6.55 million
in the first quarter last year, including revenues from licensing and
transaction fees of $1.04 million, an increase of 26% from $0.83
million in the first quarter last year.
-- GAAP Gross Profit: $4.48 million, an increase of 103% compared to
$2.20 million in the first quarter of 2005. GAAP gross margin was 49%
compared to 34% in the first quarter of 2005.
-- Non-GAAP Gross Profit: $4.49 million, an increase of 104% compared to
$2.20 million in the first quarter of 2005. Non-GAAP gross margin was
50% compared to 34% in the first quarter of 2005.
-- GAAP Net Loss: $(1.96) million, an increase of 17% compared to $(1.67)
million in the first quarter last year.
-- Non-GAAP Net Loss: $(1.11) million a decrease of 28% compared to
$(1.55) million in the first quarter last year.
-- GAAP Loss per Share: $(0.16), compared to $(0.20) in the first quarter
of 2005.
-- Non-GAAP Loss per Share: $(0.09), compared to $(0.18) for the same
period last year.
-- Cash flow: $0.39 million from operating activities.
Non-GAAP results for the first quarter of 2006 excludes the impact of SFAS 123(R) and amortization of intangible assets. Non-GAAP results for the first quarter of 2005 excludes amortization of intangible assets. Please see the attached table for a full reconciliation of GAAP to Non-GAAP results.
"We are continuing to execute on our strategy to position ourselves as a leader in our major vertical markets," said Oded Bashan, President and CEO of OTI.
"We generated positive cash flow from operations this quarter, and we strengthened our balance sheet with our cash position reaching $52 million. We are investing in order to be prepared to meet demand as the adoption of contactless solutions accelerates. We continue to pursue a strategy of both internal and external investment to meet these objectives."
Operational Highlights
-- OTI delivers Taipei Fubon Bank key fobs as part of 2006 FIFA World
Cup(TM) promotion. MasterCard(R) PayPass(TM) contactless payment
featured on a 3-D Soccer Ball key chain
-- OTI acquired InSeal SAS to enhance support of contactless payments
market
-- OTI received Vital Class A approval for Saturn 5000 contactless reader
-- OTI EasyFuel(TM) enters Costa Rica and Peru -- expanding presence in
Latin America
Mr. Bashan continued, "We are pleased with our progress, and all our major programs are on track. Although visibility is low in terms of precise timing of full-scale roll-outs, we believe the key indicators that we have previously announced all remain positive."
Conference call and Webcast Information
The Company has scheduled a conference call and simultaneous Web cast for Tuesday, May 30, 2006, which will be hosted by Oded Bashan, President and CEO, Guy Shafran, CFO, and Ohad Bashan, Chief Marketing Officer and President OTI America, for 10:00 AM EDT to discuss operating results and future outlook. To participate, call: 1-888-858-4723 (U.S. toll free) 1-809-245-917 (Israel toll free) 0-800-180-8316 (Germany toll free) 1-973-935-8508 (standard international) ID Code: OTI Q1 Conference call. To attend the Web cast, use the following links: http://www.otiglobal.com/content.aspx?id=226.
For those unable to participate, the teleconference will be available for replay until midnight June 6th, by calling U.S.: 877-519-4471 or International; 973-341-3080 and entering the PIN number # 7405168 or on the web at: http://www.otiglobal.com/content.aspx?id=226.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, OTI uses non-GAAP measures of gross profit, net income and earnings per share, which are adjustments from results based on GAAP to exclude non-cash equity-based compensation charges in accordance with SFAS 123(R) and amortization of intangible assets. OTI management believes the non-GAAP financial information provided in this release provides meaningful supplemental information regarding our performance and enhances the understanding of the Company's on-going economic performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in evaluating and operating the business and as such deemed it important to provide all this information to investors.
About OTI
Established in 1990, OTI (NASDAQ:OTIV) designs, develops and markets secure contactless microprocessor-based smart card technology to address the needs of a wide variety of markets. Applications developed by OTI include product solutions for petroleum payment systems, homeland security solutions, electronic passports and IDs, payments, mass transit ticketing, parking and loyalty programs. OTI has a global network of regional offices to market and support its products. The company was awarded the Frost & Sullivan 2005 Company of the Year Award in the field of smart cards. For more information on OTI, visit http://www.otiglobal.com/.
OTI Contact: Media Relations
Galit Mendelson Adam Handelsman
Director of Corporate Communications 5W Public Relations
201 944 5200 ext. 111 212 999 5585
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. For example, forward-looking statements include statements regarding our goals, beliefs, future growth strategies, objectives, plans or current expectations. Forward-looking statements could be impacted by market acceptance of new and existing products and our ability to execute production on orders, as well as the other risk factors discussed in OTI's Annual Report on Form 20-F for the year ended December 31, 2005, which is on file with the Securities and Exchange Commission. Although OTI believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved. 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.
ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
Three months ended March 31
2006 2005
(Unaudited) (Unaudited)
Revenues
Sales $8,017 $5,724
Licensing and transaction fees 1,038 825
Total revenues 9,055 6,549
Cost of Revenues
Cost of sales 4,573 4,346
Total cost of revenues 4,573 4,346
Gross profit 4,482 2,203
Operating Expenses
Research and development 1,828 1,240
Less - participation by the Office of the
Chief Scientist - 154
Research and development, net 1,828 1,086
Selling and marketing 1,429 1,392
General and administrative 3,146 1,742
Amortization of intangible assets 186 121
Gain from sale of a subsidiary - (510)
Total operating expenses 6,589 3,831
Operating loss (2,107) (1,628)
Financial income (expenses), net 326 (13)
Other income, net 19 4
Loss before taxes on income and minority
interests (1,762) (1,637)
Taxes on income (11) (37)
Minority interest 7 -
Equity in loss of affiliate (196) -
Net loss $(1,962) $(1,674)
Basic and diluted net loss per ordinary share $(0.16) $(0.20)
Weighted average number of ordinary shares
used in computing basic and diluted net
loss per ordinary share 12,365,227 8,530,008
ON TRACK INNOVATIONS LTD
CONDENSED NON-GAAP CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
Three months ended March 31
2006 2005
(Unaudited) (Unaudited)
Revenues
Sales $8,017 $5,724
Licensing and transaction fees 1,038 825
Total revenues 9,055 6,549
Cost of Revenues
Cost of sales 4,569 4,346
Total cost of revenues 4,569 4,346
Gross profit 4,486 2,203
Operating Expenses
Research and development 1,544 1,240
Less - participation by the Office of the
Chief Scientist - 154
Research and development, net 1,544 1,086
Selling and marketing 1,387 1,392
General and administrative 2,814 1,742
Gain from sale of a subsidiary - (510)
Total operating expenses 5,745 3,710
Operating loss (1,259) (1,507)
Financial income (expenses), net 326 (13)
Other income, net 19 4
Loss before taxes on income and minority
interests (914) (1,516)
Taxes on income (11) (37)
Minority interest 7 -
Equity in loss of affiliate (196) -
Net loss $(1,114) $(1,553)
Basic and diluted net loss per ordinary share $(0.09) $(0.18)
Weighted average number of ordinary shares
used in computing basic and diluted net
loss per ordinary share 12,365,227 8,530,008
See next tables for full reconciliation of GAAP to Non-GAAP results.
ON TRACK INNOVATIONS LTD
RECONCILIATION BETWEEN GAAP TO NON-GAAP
STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
Three Months
Ended
March 31, 2006
GAAP Adjustments Non-GAAP
(unaudited) (unaudited) (unaudited)
Revenues
Sales $8,017 - $8,017
Licensing and transaction
fees 1,038 - 1,038
Total revenues 9,055 9,055
Cost of Revenues
Cost of sales 4,573 (4)(a) 4,569
Total cost of revenues 4,573 (4) 4,569
Gross profit 4,482 4 4,486
Operating Expenses
Research and development 1,828 (284)(a) 1,544
Selling and marketing 1,429 (42)(a) 1,387
General and administrative 3,146 (332)(a) 2,814
Amortization of intangible
assets 186 (186)(b) -
Total operating expenses 6,589 844 5,745
Operating loss (2,107) 848 (1,259)
Financial income, net 326 - 326
Other income, net 19 - 19
Loss before taxes on income
and minority interests (1,762) 848
(914)
Taxes on income (11) - (11)
Minority interest 7 - 7
Equity in loss of affiliate (196) - (196)
Net loss $ (1,962) $848 $ (1,114)
Basic and diluted net loss
per ordinary share $(0.16) $0.07 $(0.09)
Weighted average number of
ordinary shares used in
computing basic and
diluted net loss per
ordinary share 12,365,227 12,365,227
(a) The effect of stock-based compensation. The Company adopted the
provisions of Statement of Financial Accounting Standards No. 123(R),
"Share-Based Payment" on January 1, 2006 using the modified-
prospective transition method.
(b) The effect of amortization of intangible assets.
ON TRACK INNOVATIONS LTD
RECONCILIATION BETWEEN GAAP TO NON-GAAP
STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
Three Months
Ended
March 31, 2005
GAAP Adjustments Non-GAAP
(unaudited) (unaudited) (unaudited)
Revenues
Sales $5,724 - $5,724
Licensing and transaction fees 825 - 825
Total revenues 6,549 - 6,549
Cost of Revenues
Cost of sales 4,346 - 4,346
Total cost of revenues 4,346 - 4,346
Gross profit 2,203 - 2,203
Operating Expenses
Research and development 1,240 - 1,240
Less - participation by the
Office of the Chief
Scientist 154 - 154
Research and development, net 1,086 - 1,086
Selling and marketing 1,392 - 1,392
General and administrative 1,742 - 1,742
Amortization of intangible
assets 121 (121)(b) -
Gain from sale of a
subsidiary (510) - (510)
Total operating expenses 3,831 121 3,710
Operating loss (1,628) 121 1,507
Financial expense, net 13 - 13
Other income, net (4) - (4)
Loss before taxes on income
and minority interests (1,637) 121 (1,516)
Taxes on income 37 - 37
Net loss (1,674) $121 (1,553)
Basic and diluted net loss
per ordinary share $(0.20) $0.02 $(0.18)
Weighted average number of
ordinary shares used in
computing basic and
diluted net loss per
ordinary share 8,530,008 8,530,008
(b) The effect of amortization of intangible assets.
ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
March 31 December 31
2006 2005
(Unaudited) (Audited)
Assets
Current Assets
Cash and cash equivalents $42,115 $29,657
Short-term investments 9,743 20,004
Trade receivables (net of allowance for
doubtful accounts of $ 785 as of March 31,
2006 and December 31, 2005) 8,004 8,350
Other receivables and prepaid expenses 2,871 3,156
Inventories 7,254 6,747
Total current assets 69,987 67,914
Severance Pay Deposits Fund 584 583
Long-Term Receivables 827 878
Investment in an affiliated company 2,411 2,607
Property, Plant and Equipment, Net 7,669 7,009
Intangible Assets, Net 1,735 1,921
Goodwill 4,146 4,146
Total Assets $87,359 $85,058
ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and per share data)
March 31 December 31
2006 2005
(Unaudited) (Audited)
Liabilities and Shareholders' Equity
Current Liabilities
Short-term bank credit and current maturities
of long-term bank loans $1,191 $760
Trade payables 5,982 4,245
Other current liabilities 4,422 5,771
Total current liabilities 11,595 10,776
Long-Term Liabilities
Long-term loans, net of current maturities 1,529 1,535
Accrued severance pay 2,243 1,909
Deferred tax liabilities 350 293
Total long-term liabilities 4,122 3,737
Total liabilities 15,717 14,513
Minority interests 303 310
Shareholders' Equity
Ordinary shares of NIS 0.1 par value: authorized -
30,000,000 shares as of March 31, 2006 and
December 31, 2005; issued and outstanding -
12,520,835 and 11,932,074 shares as of
March 31, 2006 and December 31, 2005, respectively 289 274
Additional paid-in capital 130,985 128,761
Deferred compensation - (833)
Accumulated other comprehensive income 226 232
Accumulated deficit (60,161) (58,199)
Total shareholders' equity 71,339 70,235
Total Liabilities and Shareholders' Equity $87,359 $85,058
ON TRACK INNOVATIONS LTD
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands, except share and per share data)
Three months ended March 31
2006 2005
(Unaudited)(Unaudited)
Cash flows from operating activities
Net loss $(1,962) $(1,674)
Adjustments required to reconcile net loss to
net cash provided by operating activities:
Stock-based compensation related to options and
shares issued to employees and others 943 1,261
Equity in loss of affiliate 196 -
Gain from sale of a subsidiary - (510)
Amortization of intangible assets 186 145
Depreciation 364 136
Minority interests (7) -
Accrued severance pay, net 333 256
Decrease (increase) in trade receivables 360 (1,331)
Decrease in other receivables and prepaid expenses 291 185
Decrease (increase) in inventories (520) 27
Increase in trade payables 1,608 316
Increase (decrease) in other current liabilities (1,349) 1,306
Other, net (53) (20)
Net cash provided by operating activities 390 97
Cash flows from investing activities
Proceeds from maturity of available-for sale
securities 12,387 -
Purchase of available-for sale securities (2,044) (4,987)
Purchase of property and equipment (1,039) (157)
Receipts on account of loans and receivables 86 705
Other, net 10 (1)
Net cash provided by (used in) investing activities 9,400 (4,440)
Cash flows from financing activities
Increase in short-term bank credit, net 616 219
Repayment of long-term bank loans (203) (224)
Exercise of options and warrants 2,253 947
Net cash provided by financing activities 2,666 942
Effect of exchange rate changes on cash 2 (42)
Increase (decrease) in cash and cash equivalents 12,458 (3,443)
Cash and cash equivalents at the beginning of
the period 29,657 23,917
Cash and cash equivalents at the end of the $42,115 $20,474
DATASOURCE: On Track Innovations Ltd.
CONTACT: Galit Mendelson, Director of Corporate Communications for OTI,
+1-201-944-5200 ext. 111, ; Media Relations - Adam
Handelsman of 5W Public Relations, +1-212-999-5585,
Web site: http://www.otiglobal.com/