oti Reports Second Quarter 2016 Financial Results
Wed August 10, 2016 8:31 AM|Marketwire | About: OTIV
Q2 2016 Earnings Summary
8-K News
EPS of $-0.02 beats by $0.01 | Revenue of $5.1M (- 5.9% Y/Y) beats by $0.71M
ROSH PINA, ISRAEL -- (Marketwired) -- 08/10/16 -- On Track Innovations Ltd. (oti) (NASDAQ: OTIV), a global provider of near field communication (NFC) and cashless payment systems, reported financial results for the second quarter ended June 30, 2016.
Q2 2016 Operational Highlights
Partnered with Microtronic to bring world's first open and closed loop payment solution to the global vending market
Formed partnerships with vending distributors to the Romanian, Netherlands and Flanders markets
Unattended Card Payments (UCP) selected the SATURN 6500 TRIO reader and CONNECT 3000 telemetry controller as part of its portfolio of offerings for the North American unattended market
Partnered with Samsung Pay and other global point-of-sale providers to accelerate adoption of mobile payments
Introduced PayCapsule-Flex, one of the smallest payment cards designed to turn existing products and apparel into payment devices with Internet (HHH) of Things (IoT) capabilities
OTI PetroSmart partnered with Fuel Telematics Solutions to deliver secure mobile payment for corporate fleet vehicles
OTI PetroSmart received a follow-on order from Smart Applications International Ltd. for more than 500,000 MediSmart™ cards
Q2 2016 Financial Details
Total revenues increased 4% to $5.1 million from $4.9 million in the prior quarter, and decreased 6% from $5.4 million in the same year-ago period.
Gross profit was $2.66 million (52.2% of revenue) compared to $2.70 million (49.8% of revenue) in the same year-ago period.
Operating expenses decreased 30% to $3.2 million from $4.6 million in the same year-ago period.
Net loss from continuing operations totaled $639,000 or $(0.02) per share, an improvement from a net loss from continuing operations of $2.0 million or $(0.05) per share in the same year-ago period.
Net income totaled $1.3 million or $0.03 per share, an improvement from a net loss of $2.0 million or $(0.05) per share in the same year-ago period.
Adjusted EBITDA loss from continuing operations improved to $155,000 from a loss of $683,000 in the same year-ago period (see discussion about the presentation of adjusted EBITDA from continuing operations, a non-GAAP financial measure, below).
At quarter-end, cash and cash equivalents and short-term investments increased 16% to $11.2 million, compared to $9.6 million at the end of the prior quarter.
Management Commentary
"Our performance in Q2 demonstrated once again the positive impact of the financial and operational initiatives we have implemented over the last four quarters," said oti CEO, Shlomi Cohen. "In addition to the sequential increase in revenue, the quarter was highlighted by several milestones, including the fourth consecutive decrease in operating expenses and third consecutive improvement in adjusted EBITDA. In fact, due to the one-time payment we received in the second quarter related to the sale of our SmartID subsidiary, Q2 marked our first GAAP profitable quarter since Q4 2013.
"These significant improvements were the result of our efficiency program, which not only reduced costs and optimized our internal processes and manufacturing practices, but also established a solid foundation for our future growth. Along that line, we continue to execute on our plan to capture market share and drive growth across our business segments, particularly retail payments. In addition to the strategic partnerships we recently formed with companies like Samsung Pay and Microtronic, we made meaningful strides in our transition to a recurring revenue business model by focusing on selling a platform that includes telemetry systems and payment processing services. This was demonstrated by our ability to secure increased orders for otiMetry from the European market, which generated recurring revenue from the telemetry systems connected to our network. This platform approach allows us to target a significantly larger addressable market, while providing an opportunity to generate high-margin recurring revenue.
"We are implementing this same platform approach in Japan, which we believe presents a six-million-unit market opportunity for our industry-leading solutions given the untapped nature of the market and nationwide shift toward cashless payments. Last month we achieved a significant milestone by receiving FeliCa certification for our new SATURN 8700 reader. In fact, we were able to quickly capitalize on our early-mover advantage by already securing a letter of intent from a multi-billion dollar Japanese retailer to purchase 10,000 FeliCa-certified readers over the next three years. Our initial success in this important market reaffirms our belief that Japan will be a major market for oti in the years to come.
"Looking ahead, we plan to build on this momentum throughout the year and into 2017. We are confident in our continued ability to further penetrate our key markets and verticals, generate recurring revenue, and leverage our relatively fixed cost structure. We believe we have the right business model, partners, products, and team in place to further establish oti as the growing leader in cashless payment solutions globally."
Conference Call
oti will hold a conference call today (August 10, 2016) at 10:30 a.m. Eastern time to discuss these results. oti CEO Shlomi Cohen and CFO Yishay Curelaru will host the presentation, followed by a question and answer period.
