MONTHS 2010 FINANCIAL RESULTS WITH THIRD CONSECUTIVE QUARTER OF NON-GAAP OPERATING PROFIT
- Revenues Increased by 91% from $22.8 Million to $43.6 Million
- Non GAAP Operating Profit of $4.6 Million
- Gross Margin Increased to 54%
Iselin, NJ – November 15, 2010 – On Track Innovations Ltd. (OTI) (Nasdaq GM: OTIV), a global leader in contactless microprocessor-based smart card solutions for homeland security, payments, petroleum payments and other applications, today announced that as previously forecasted, its planned turnaround is proceeding apace, with results of operations, revenues and gross margins all increasing substantially during the nine months ended September 30, 2010 while maintaining the same level of operating expenses. The following are various financial figures that compare the first nine months of 2010 to 2009.
- Total revenues of $43.6 million, a 91% increase compared to $22.8 million last year.
- Revenues from Licensing and Transaction Fees of $2.8 million, a 49% increase compared to $1.9 million last year.
- Gross margin increased to 54% vs. 50% last year.
- Non-GAAP operating expenses of $19.0 million, a 9% increase compared to $17.4 million last year. GAAP operating expenses of $22.2 million, a 6% increase compared to $21.0 million last year.
- Non-GAAP operating profit of $4.6 million, compared to non-GAAP operating loss of $6.0 million last year. GAAP operating profit of $1.4 million, compared to GAAP operating loss of $9.6 million last year.
- Strong balance sheet with cash, cash equivalents and short-term investments of $26.7 million as of September 30, 2010.
Oded Bashan, Chairman and CEO of OTI, said: “We are proud to report another successful quarter with improved results and solid profitability. The financial results for the first nine months reflect our continuing commitment to, and our successful implementation of, our planned turnaround , and we therefore maintain the previously provided revenue guidance for 2010. Our results reflect OTI’s unique story - that of a strong technology company with high growth potential, a proven track record and strong fundamentals.”
Mr. Bashan continued: “Our track record of successful execution of large scale projects has built additional credibility for the company. We are working diligently to leverage this success by expanding our relationships with existing customers and creating opportunities in strategic markets with new clients. Through the introduction of new products, establishment of strategic channel partnerships and expansion into new territories, we hope to further strengthen our pipeline of opportunities and establish new streams of revenues for the next two to three years.”
During the fourth calendar quarter of 2009, the Company signed an agreement for the sale of the assets of OTI’s subsidiary Millennium Card's Technology Ltd ("MCT") including the machinery and inlay production IP of OTI to SMARTRAC NV. Results for the discontinued operations have been separated and are presented separately for both 2009 and 2010 financial statements. We expect to complete the closing procedures for MCT and be able to cease having to include the results of these discontinued operations in our financial statements for periods after December 31, 2010.
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 operating expenses, operating income, net income and earnings per share, which are adjustments from results based on GAAP to exclude non-cash equity-based compensation charges related to employees and non employees in accordance with the requirements of Accounting Standards Codification (“ASC”) Topic 718 (originally issued as SFAS No. 123(R)) and ASC Subtopic 505-50 - Equity-Based Payments to Non-Employees (formerly EITF 96-18); amortization of intangible assets; and results from discontinued operations. 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. Reconciliations between GAAP measures and non-GAAP measures are provided later in this press release.
Conference call and Webcast Information
The Company has scheduled a conference call and simultaneous Web cast for November 15, 2010, at 9:30 AM ET to discuss operating results and future outlook. To participate, call:
1-888-668-9141 (U.S. toll free), 1-800-227-297 (Israel toll free). To listen to the Web cast, use the following link: http://www.otiglobal.com/Investors_Introduction
For those unable to participate, the teleconference will be available for replay until midnight November 22nd, by calling U.S 1-877-456-0009 or on the web at: http://www.otiglobal.com/Investors_Introduction
Established in 1990, OTI (NASDAQ GM: 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 and 2006 Company of the Year Award in the field of smart cards.
For more information on OTI, visit www.otiglobal.com, the content of which is not part of this press release.
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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. Forward-looking statements include statements regarding our goals, beliefs, future growth strategies, objectives, products, plans, future results of operations
or current expectations. For example, we are using forward looking statements when we discuss the company’s turnaround plan, potential, opportunities, expansion, pipeline, revenue guidance and regarding our expectation to be able to cease having to include the results of the discontinued operation at the end of 2010. 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, 2009 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.