On Track Innovations Ltd. Reports Fourth Quarter & Full Year 2020 Financial Results

YOKNEAM, Israel, March 31, 2021 /PRNewswire/ -- On Track Innovations Ltd. ("OTI") (OTCQX: OTIVF) (the "Company" or "OTI"), a global provider of near field communication (NFC) and cashless payment solutions, today provided a business update and announced financial results for the fourth quarter and full year ended December 31, 2020.

Management Comments

Mr. Yehuda Holtzman, OTI's CEO, commented, "During 2020, we grew our continuing core business revenues by 20% year-over-year, and more than 35% in our Retail segment despite significant headwinds from the Covid-19 pandemic. I am pleased with this performance. It suggests that our underlying business remains strong and that our new strategy is gaining traction. This bodes well for 2021, when, like everyone, we hope the major global impact of the pandemic diminishes." 

Continued Mr. Holtzman, "Part of our strategy continues to be the emphasis on sales which lead to a sustainable and recurring revenue stream. We are pleased that in line with this strategy, in the fourth quarter, our licensing and transaction fees revenues (of which a major portion results in a recurring revenue stream) grew by 26% compared to the fourth quarter of 2019 and by 19% compared to the third quarter of 2020. Furthermore, in the fourth quarter we saw strongly increased traction in key regions which has led to a relatively large number of new customers for OTI. While the financial results do not yet show the full story, as our focus is now future recurring revenue streams, we have indeed seen early and initial sales from these new customers. In fact, a large portion have solid and significant potential for ongoing growth, and all will potentially generate recurring revenue for OTI over the coming years."

Concluded Mr. Holtzman, "Looking ahead, I expect that 2021 will be another growth year for OTI. Our goal is increased sales while maintaining tight control over expenses. We anticipate that the revenue growth, combined with our improved operational efficiencies, will enable us to reach profitability during the second half of 2021."

Added Mr. Holtzman, "We plan to complete the sale of our Polish subsidiary ASEC that includes the Mass Transit Ticketing segment, very soon. This will allow us to better focus on our core business of unattended cashless payment systems. This is another element of our strategy to better align and focus our business structure for accelerated future growth in the unattended cashless payment sector. In addition, we have engaged an investment bank to explore strategic options and are investing resources in this process."

Following OTI's sale of ASEC in Poland, the financial results of ASEC were included as discontinued operations and all the prior periods' information has been reclassified to conform with the current period's presentation.

Fourth Quarter 2020 Financial Results Summary

• Revenue in the quarter was $2.1 million, compared to $2.8 million in the fourth quarter of 2019.
• Licensing and transaction fees amounted to $430 thousand, compared with $340 thousand in the fourth quarter of last year.
• Gross profit in the quarter was $0.6 million, or 30% of revenues, compared to $0.8 million, or 29% of revenues, in the fourth quarter of 2019.
• Operating expenses totaled $2.5 million in the quarter, compared to operating expenses of $2.3 million in the same year-ago quarter.
• Net loss from continuing operations was $2.2 million, compared to a net loss of $1.6 million in the same year-ago quarter.
• Net loss was $2.7 million, or loss of $0.05 per share, compared to a net loss of $2.0 million, or loss of $0.05 per share, in the same year-ago quarter.
• Adjusted EBITDA loss from continuing operations was $1.7 million in the quarter, compared to adjusted EBITDA loss of $1.3 million in the same year-ago quarter. 

Full Year 2020 Financial Results Summary

• Total revenue in 2020 was $12.7 million, compared to $10.6 million in 2019.
• Licensing and transaction fees amounted to $1.6 million, compared with $1.5 million in 2019.
• Gross profit in 2020 was $5.1 million, or 40% of revenues, compared to $4.2 million, or 40% of revenues in 2019.
• Operating expenses totaled $9.8 million in 2020, compared to operating expenses of $9.3 million in 2019. Operating expenses in 2019 included a gain of $0.3 million related to the sale of a building by OTI's South African subsidiary.
• Net loss from continuing operations in 2020 was $5.0 million, compared to a net loss of $5.3 million in 2019.
• Net loss in 2020 was $6.1 million, or loss of $0.12 per share, compared to a net loss of $5.9 million, or loss of $0.14 per share, in 2019.
• Adjusted EBITDA loss from continuing operations in 2020 was $4.2 million, compared to an adjusted EBITDA loss of $4.9 million in 2019. 
• As of December 31, 2020, the company had cash and cash equivalents and short-term investments of $1.5 million.

Conference Call

Management will host a live investor conference call at 9:00 a.m. ET on April 1, 2021, to discuss OTI's financial results, provide a corporate update, and conclude with a Q&A session taking live questions from participants as well as answering many of the previously submitted questions by investors.

To participate, please use the following information:

U.S. Dial-in: 1 888 668 9141
International Dial-in: +972 3 918 0609
Webcast: http://veidan-stream.com/otiq4-2020.html

Please dial in a few minutes before the start of the call and request to join the "On Track Innovations Earnings Conference Call" to ensure timely participation.

The conference call will also be available for replay by clicking on the above webcast link or via a link on the investor relations section of the Company's website.

About On Track Innovations Ltd
On Track Innovations (OTI) is a global leader in the design, manufacture, and sale of secure cashless payment solutions using contactless NFC technology. OTI's field-proven innovations have been deployed around the world to address cashless payment, automated retail and petroleum markets. OTI distributes and supports its solutions through a global network of regional offices and alliances. For more information, visit www.otiglobal.com.

Safe Harbor / Forward-Looking Statements
This press release contains express or implied 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 "will," "look forward," "expect," "anticipate," "intend," "plan," "estimate," "believe," "should," "can" or similar expressions, we are making forward-looking statements. For example, we are using forward-looking statements when we discuss, among others: the Company's long-term strategy, the closing of the sale of ASEC, the realization of the Company's potential and goals and focus on its core business, the Company's expected growth, future recurring revenue and the outcome of the strategic process the Company is undergoing. 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, including those as a result of the current COVID-19 pandemic. Performance or achievements of OTI could differ materially from those described in or implied by the statements in this press release. Factors that could cause actual results to differ materially from those anticipated by our forward-looking statements are stated under the captions "Risk Factors" in our most recent Annual Report (Form 10-K) and other known and unknown uncertainties and risk factors including those detailed from time to time in the Company's filings with the Securities and Exchange Commission.  Forward-looking statements are made as of the date of this release, and we expressly disclaim any obligation or undertaking to update forward-looking statements. The reader is cautioned not to place undue reliance on forward-looking statements.

Use of Non-GAAP Financial Information
This press release contains certain non-GAAP measures, namely, adjusted EBITDA from continuing operations, or adjusted earnings from continuing operations before interest, income tax, depreciation and amortization. Adjusted EBITDA from continuing operations represents earnings before interest or financing expenses, income tax, depreciation and amortization, and further eliminates the effect of stock-based compensation expense and other (income) expenses, net. OTI believes that adjusted EBITDA from continuing operations should be considered in evaluating the Company's operations since it provides a clear indication of the Company's operating results. This measure should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for the U.S. GAAP results. The non-GAAP measures included in this press release have been reconciled to the U.S. GAAP results in the table below.

RECONCILIATION OF NON-GAAP ADJUSTMENT

The following table reflects selected On Track Innovations Ltd. non-GAAP results reconciled to GAAP results (US dollars in thousands):

SOURCE On Track Innovations Ltd. (OTI)

Related Links

http://www.otiglobal.com

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