On Track Innovations (OTIV) 首席执行官,Assaf Cohen 在 2019年 第二季度业绩 - 收益电话会议记录

On Track Innovations Limited (NASDAQ:OTIV) Q2 2019 Earnings Conference Call August 12, 2019 9:00 AM ET

On Track Innovations Limited(纳斯达克股票代码:[OTIV])2019年第二季度收益电话会议2019年8月12日美国东部时间上午9:00

公司参与者

Assaf Cohen - Chief Executive Officer (interim), Chief Financial Officer
Ehud Helft - GK Investor Relations

  • Assaf Cohen - 首席执行官(临时),首席财务官
  • Ehud Helft - GK投资者关系

电话会议参与者

Welcome everyone to the On Track Innovations second quarter 2019 corporate update call. At this time, all participants are in a listen-only mode. A recorded question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star, zero on your telephone keypad. As a reminder, this conference is being recorded.
You should have all received by now the company’s results press release. If you have not received it, please contact On Track Innovations’ Investor Relations team at GK Investor and Public Relations at 1-646-688-3559, or view it in the News section of the company’s website.
I would now like to hand over the call to Mr. Ehud Helft of GK Investor Relations.

  • 欢迎大家参加On Track Innovations 2019年第二季度企业更新电话会议。 此时,所有参与者都处于只听模式。 记录的问答环节将遵循正式的介绍。 如果有人在会议期间需要操作员帮助,请按电话键盘上的星号,零。 提醒一下,这次会议正在录制中。
  • 你应该已经收到所有公司的结果新闻稿。 如果您还没有收到,请致电1-646-688-3559联系GK投资者和公共关系部的On Track Innovations投资者关系团队,或者在公司网站的新闻部分查看。
  • 我现在想把这个电话交给GK投资者关系部的Ehud Helft先生。

Ehud Helft

Thank you, Operator. Welcome to On Track Innovations’ 2019 second quarter conference call. I would like also to thank management for hosting this call. With us on the call today from OTI is Mr. Assaf Cohen, interim CEO and company CFO. Assaf will provide a summary with recent key highlights and review OTI’s financial performance for the 2019 second quarter. Following the prepared remarks, we will go to investors’ submitted questions and Assaf will provide the answers to those questions.
Please be advised that certain information discussed on this call will contain forward-looking statements. They can be identified by the use of terms such as may, will, expect, believe, intend, plan, and other comparable terms. While forward-looking statements reflect good faith belief and best judgment based upon current information, there are no guarantees of future performance. They are subject to known and unknown uncertainties and risk factors, including those detailed from time to time in the company’s filings with the SEC. OTI assumes no obligation to update any forward-looking statements or information which speaks as of their respective dates. The full Safe Harbor provisions are set forward in the press release we issued earlier.
With that, I would now like to hand over the call to the company’s interim CEO and continuing CFO, Assaf Cohen. Assaf, go ahead please.

谢谢运营商。欢迎参加On Track Innovations 2019年第二季度电话会议。我还要感谢管理层主办此次电话会议。 OTI今天致电我们的是临时首席执行官兼公司首席财务官Assaf Cohen先生。 Assaf将提供最新主要亮点的摘要,并审查OTI 2019年第二季度的财务业绩。在准备好的评论之后,我们将转到投资者提交的问题,Assaf将提供这些问题的答案。

请注意,本次电话会议中讨论的某些信息将包含前瞻性陈述。可以通过使用诸如可能,意志,期望,相信,打算,计划和其他可比条款等术语来识别它们。虽然前瞻性陈述反映了基于当前信息的诚信信念和最佳判断,但并不能保证未来的表现。它们受到已知和未知的不确定性和风险因素的影响,包括公司向美国证券交易委员会提交的文件中不时详述的信息。 OTI没有义务更新任何前瞻性陈述或在各自日期之前发表的信息。我们在之前发布的新闻稿中提出了完整的安全港规定。

有了这个,我现在想把这个电话交给公司的临时首席执行官和继续担任首席财务官Assaf Cohen。阿萨夫,请继续。

Assaf Cohen

Thank you Ehud. Welcome all and thank you for joining us today. As you all know, OTI is currently undergoing a leadership transition. While the board is working to bring on a new CEO and has appointed an interim CEO, we have temporarily changed the format of the conference call during this interim period whereby my prepared remarks have been prerecorded and we took questions from investors via email. Following my prepared remarks, I will provide the answers to your submitted questions. This is a temporary situation. Once we have a permanent CEO, we will go back to our normal format of the live conference call.
I would like to start by summarizing some of the key events of the quarter. Overall, we are pleased with the strong improvement in our results in the second quarter. Our strong growth in revenues, amounting to $4.1 million, up 37% over the prior quarter, gives us confidence that the issue we faced in the U.S. from the impact of the U.S. tariffs on Chinese manufactured products is now behind us, and we have begun to regain our positive momentum in the region.
Another positive aspect in our results and in line with our long term strategy is that the recurring portion of our revenues continues its growth trend, and this has allowed us to see a solid improvement in our gross margin, over 700 basis points above where it was in Q2 last year. Looking ahead, we expect to continue our [indiscernible] revenue growth in the coming quarters, and given the positive trends I expect [indiscernible] breakeven in 2020 and return to profitability.
On the sales front, we are also making progress. In early June, we announced an order for 2,000 advanced payment systems for use in Russian ticketing. We won this order based on our leading technological capabilities, and this is a demonstration of the highest level of security. This important customer has become another key reference for us in Russia. This additional order builds on our previous success in significant Russian markets, having delivered to date almost 20,000 cashless payment systems. Russia remains a long term growth market for us.
In middle June, we received a purchase order for 1,000 cashless payment systems from Japan via our partner, Billing System Corporation, a leading regional payment service provider. This new order gives us a substantial runway to continue our growth together with our strategic partner. We continue to broaden our footprint in the vast Japanese [indiscernible] retail market and we already have more than 10,000 OTI systems operational in the Japanese market. With a potential of 6 million units country-wide, the total size of the Japanese electronic vending machine market is very significant to us and we look forward to further growth in this market.
Last week, we announced an order for 10,000 of OTI’s UNO-8 advanced secure contactless NFC reader for the global smart ATM market to be delivered before the end of 2019. In this new order, we have already received orders for over 50,000 advanced reader systems which are being used throughout the world to provide smart ATMs with contactless NFC capabilities.

谢谢Ehud。欢迎大家,感谢您今天加入我们。众所周知,OTI目前正在进行领导层过渡。虽然董事会正在努力聘请新的首席执行官,并已任命临时首席执行官,但在此过渡期间我们暂时改变了电话会议的格式,我的预备备案已经预先录制,我们通过电子邮件向投资者提出问题。在我准备好的评论之后,我将提供您提交的问题的答案。这是暂时的情况。一旦我们有一位常任CEO,我们将回到正常的电话会议形式。

首先,我想总结一下本季度的一些重要事件。总体而言,我们对第二季度业绩的强劲改善感到高兴。我们的收入增长强劲,达到410万美元,比上一季度增长了37%,让我们相信我们在美国面临的问题是美国关税对中国制造产品的影响现在已经过去了,我们已经开始了重拾我们在该地区的积极势头。

我们的业绩和我们的长期战略的另一个积极方面是我们收入的经常性部分继续其增长趋势,这使我们看到我们的毛利率稳步提升,超过700个基点以上在去年的第二季度。展望未来,我们预计未来几个季度将继续保持[音频不清晰]的收入增长,并且考虑到我预计2020年盈亏平衡的积极趋势并恢复盈利。

在销售方面,我们也在取得进展。 6月初,我们宣布订购2000种用于俄罗斯票务的高级支付系统。我们基于我们领先的技术能力赢得了此订单,这是最高级别安全性的证明。这个重要客户已成为我们在俄罗斯的另一个重要参考。这个额外的订单建立在我们之前在俄罗斯重要市场取得的成功的基础上,已经交付了近20,000个无现金支付系统。俄罗斯仍然是我们的长期增长市场。

6月中旬,我们通过我们的合作伙伴Billing System Corporation(一家领先的区域支付服务提供商)收到了来自日本的1,000个无现金支付系统的采购订单。这一新订单为我们与战略合作伙伴共同继续发展奠定了坚实的基础。我们继续扩大在日本[音频不清晰]零售市场的业务范围,我们已经在日本市场上运营了超过10,000个OTI系统。在全国范围内拥有600万台潜力,日本电子自动售货机市场的总体规模对我们来说非常重要,我们期待这个市场的进一步增长。

上周,我们宣布订购10,000台OTI的UNO-8先进安全非接触式NFC读卡器,用于全球智能ATM市场,将于2019年底前交付。在这个新订单中,我们已收到超过50,000个先进读卡器系统的订单世界各地正在使用它们为智能ATM提供非接触式NFC功能。

Now I would like to cover the financial results. Last Wednesday, we issued the results from the second quarter of 2019 in a press release. A copy of the release is available in the Investor Relations section of our website. As usual, I’ll be covering some non-GAAP metrics, including adjusted EBITDA from continuing operations. We believe this provides a good understanding of our ongoing performance. Please see the earnings release on our website for further details about these non-GAAP metrics, including a reconciliation of adjusted EBITDA to our comparable GAAP results.
In addition, as you know, we announced the sale of MediSmart in December 2018. The results of MediSmart are therefore included as discontinued operations and all the prior period information has been reclassified to conform with the current period presentation.
Revenues in the second quarter of 2019 were $4.1 million. This is compared with $5.7 million in the second quarter of last year and $3 million in the prior quarter. In terms of breaking down of where revenues were derived in the second quarter of 2019, retail and mass transit ticketing revenues were $3.5 million or 84% of sales, and petroleum revenues were $0.6 million or 16% of sales.
Looking at geographic breakdown in the second quarter of 2019, the Americas accounted for $0.8 million or 21%, Europe was $2.3 million or 55%, Africa was $0.5 million or 12%, and APAC was $0.5 million or 12%. Recurring revenues in the second quarter of the year were $1.2 million or 29% of revenue versus 24% last year.
Gross margin in the second quarter was 58%, a solid improvement over the 60% recorded in Q2 last year and 55% in the prior quarter.
In the second quarter, operating expenses were $3.2 million versus $3.3 million in the second quarter of last year and $3.1 million in the prior quarter.
Net loss in the quarter was $0.9 million. This is compared to a $278,000 loss in the second quarter of last year and $1.7 million loss in the prior quarter.
Now turning to our non-GAAP results, adjusted EBITDA in the second quarter of 2019 was a loss of $442,000 compared with an adjusted EBITDA of $32,000 in the second quarter of last year and an adjusted EBITDA loss of $1.1 million in the prior quarter.
Looking at our balance sheet, OTI remains in a good position. At June 30, 2019, cash, cash equivalents and short term investments was $5.7 million and short and long term debt was $2.8 million. At year end 2018, we had $5.9 million in cash and equivalents and $0.4 million in debt.
Before concluding, I would like to take a moment to thank Shlomi Cohen, our former CEO, and wish him the best of luck in future with all endeavors. On behalf of the employees, management and the board, I would like to thank him for the years invested in OTI, stabilizing the business and advancing the strategy. As I mentioned earlier, the board is working to find a suitable replacement which we hope will be concluded in the coming months.
In summary, over the past few quarters, OTI has gone through a difficult period, but as the improvements in our results this quarter show, from a financial perspective we believe the issues we faced are now behind us. Apart from the strong sequential revenue growth, we have made strong progress in building recurring revenues as well as improvement to the gross margin, better positioning us going forward.

现在我想介绍财务结果。上周三,我们在新闻稿中公布了2019年第二季度的结果。我们网站的“投资者关系”部分提供了该版本的副本。像往常一样,我将介绍一些非GAAP指标,包括持续运营的调整后EBITDA。我们相信这可以很好地理解我们的持续表现。有关这些非GAAP指标的更多详细信息,请参阅我们网站上的收益发布,包括调整后的EBITDA与我们的可比GAAP结果的对账。

此外,如您所知,我们于2018年12月宣布了MediSmart的销售。因此,MediSmart的业绩被列为已终止业务,所有前期信息均已重新分类,以符合当期的业绩报告。

2019年第二季度的收入为410万美元。相比之下,去年第二季度为570万美元,上一季度为300万美元。在分析2019年第二季度的收入来源方面,零售和公共交通票务收入为350万美元,占销售额的84%,石油收入为60万美元,占销售额的16%。

从2019年第二季度的地理分布来看,美洲占80万美元或21%,欧洲为230万美元或55%,非洲为50万美元或12%,亚太地区为50万美元或12%。今年第二季度的经常性收入为120万美元,占收入的29%,而去年为24%。

第二季度的毛利率为58%,比去年第二季度的60%和上一季度的55%有了稳固的改善。

在第二季度,运营支出为320万美元,而去年第二季度为330万美元,上一季度为310万美元。

本季度净亏损为90万美元。相比之下,去年第二季度亏损278,000美元,上一季度亏损170万美元。

现在转向我们的非GAAP业绩,2019年第二季度的调整后EBITDA为442,000美元,而去年第二季度的调整后EBITDA为32,000美元,而上一季度的调整后EBITDA亏损为110万美元。

看看我们的资产负债表,OTI仍处于有利地位。截至2019年6月30日,现金,现金等价物和短期投资为570万美元,短期和长期债务为280万美元。截至2018年底,我们拥有590万美元的现金和等价物以及40万美元的债务。

在结束之前,我想花一点时间来感谢我们的前首席执行官Shlomi Cohen,并祝愿他今后一切顺利。我代表员工,管理层和董事会,感谢他多年来投资于OTI,稳定业务和推进战略。正如我之前提到的,董事会正在努力找到一个合适的替代品,我们希望在未来几个月内完成。

总之,在过去的几个季度中,OTI经历了一段艰难时期,但随着本季度业绩的改善表明,从财务角度来看,我们认为我们面临的问题现在已经过去。除了强劲的连续收入增长外,我们在建立经常性收入以及提高毛利率方面取得了很大进展,更好地定位了我们的未来。

Now we will respond to your questions. Ehud, please go ahead.

现在我们将回答您的问题。 埃胡德,请继续。

问答环节

Thank you. Our first question is from Robert Helft [ph], a private investor. He asks the following question. The new TRIO-IQ was already presented in detail in June 2018. At the same time, since then global orders except for Russia and ATMs have fallen. Is there a connection? Do customers prefer to wait for serial production of the IQ instead of ordering the old TRIO? When will the TRIO-IQ come onto the market?

谢谢。 我们的第一个问题来自私人投资者Robert Helft [ph]。 他问下面的问题。 新的TRIO-IQ已于2018年6月详细介绍。与此同时,从那时起,除俄罗斯和ATM之外的全球订单已经下降。 有连接吗? 客户是否更愿意等待IQ的批量生产而不是订购旧的TRIO? TRIO-IQ什么时候上市?

Assaf Cohen

We presented our latest cashless automatic payment solution, the TRIO-IQ in the second quarter at the NAMA Show in Las Vegas. In the past few months, we did find that some of our customers had held off purchase until the new release was launched, and this was especially true in Japanese markets where our customers want to use the latest and best technology. We believe that from the end of this year and beginning of 2020, we will start to see purchase orders are coming in. Japan and U.S. markets will be our major markets for the TRIO-IQ in the coming years.

我们在拉斯维加斯的NAMA展会上展示了我们最新的无现金自动付款解决方案,即第二季度的TRIO-IQ。 在过去的几个月里,我们确实发现我们的一些客户在新版本推出之前就已经暂停购买,在我们的客户希望使用最新和最好的技术的日本市场尤其如此。 我们相信,从今年年底到2020年初,我们将开始看到采购订单正在进入。日本和美国市场将成为我们未来几年TRIO-IQ的主要市场。

Ehud Helft

Same question from Robert. Please discuss OTI’s PetroSmart and when do you expect to see more revenue?

罗伯特的同样问题。 请讨论OTI的PetroSmart,您希望何时看到更多收入?

Assaf Cohen

As you know, OTI PetroSmart is our solution for integrated fuel and fleet management vehicle identification. Escalating costs of managing fleets is the driver for the customer to introduce more stringent controls when refueling. We do see demand and interest--sorry. In the first half of 2019, our revenue in this business was $1.4 million, down about 45% versus the first half of last year primarily due to lower revenues in the Americas, which in part was due to import tariffs placed on Chinese manufactured products into the United States. I do expect our revenues in the second half of the year in this business will be better than that of the first half.
Longer term, bringing OTI PetroSmart to the next stage of its potential will be something the new CEO will work on.

如您所知,OTI PetroSmart是我们的综合燃料和车队管理车辆识别解决方案。 管理车队的成本不断上升是客户在加油时引入更严格控制的动力。 我们确实看到需求和兴趣 - 抱歉。 在2019年上半年,我们的业务收入为140万美元,比去年上半年下降约45%,主要原因是美洲收入减少,部分原因是中国制造产品的进口关税降至 美国。 我确实预计今年下半年这项业务的收入将好于上半年的收入。

从长远来看,将OTI PetroSmart带入下一阶段的潜力将是新任CEO的工作。

Ehud Helft

Another question from Robert. Cubic successfully implemented a new fare payment technology for New York’s MTA rollout of their Omni system. Cubic is an old partner of OTI. Is OTI involved here?

罗伯特的另一个问题。 Cubic成功实施了新的票价支付技术,用于纽约的MTA部署Omni系统。 Cubic是OTI的老搭档。 OTI是否涉及这里?

Assaf Cohen

No, OTI is not involved here.

不,OTI不参与此处。

Ehud Helft

A follow-on question from Robert. Billing System Japan wanted to expand its relationship with OTI. [Indiscernible] company as founded especially for this purpose in September 2018; however, the orders of OTI to Japan have disappeared. Was there a dispute?

Robert的后续问题。 计费系统日本希望扩大与OTI的关系。 [Indiscernible]公司于2018年9月特别为此目的成立; 然而,OTI对日本的订单已经消失。 有争议吗?

Assaf Cohen

No. As I mentioned earlier, the Japanese market likes to use the latest and best technologies. When we started discussion on our new release of the TRIO-IQ, they held off new orders. We presented the TRIO-IQ at the end of April and interest from the Japanese market is quite significant.

没有。正如我前面提到的,日本市场喜欢使用最新最好的技术。 当我们开始讨论我们新发布的TRIO-IQ时,他们推迟了新的订单。 我们在4月底推出了TRIO-IQ,日本市场的兴趣非常大。

Ehud Helft

The last question from Robert, finally, what do you expect in terms of sales and order development through year end?

罗伯特的最后一个问题,最后,到年底,您对销售和订单开发的期望是什么?

Assaf Cohen

As I said earlier, we do expect to see annual sales growth from this point until year end 2019.

正如我之前所说,我们确实预计从这一点到2019年年底的年销售额增长。

Ehud Helft

Okay, our next question is from George Berberus [ph], private investor. It might be time that OTI should cease as an independent company and look to merge to create a company of scale that has better chances of success. Is this in the plan?

好的,我们的下一个问题来自私人投资者George Berberus [ph]。 OTI可能应该停止作为一家独立公司,并寻求合并,以创建一个具有更大成功机会的规模公司。 这是计划中的吗?

Assaf Cohen

The board and the management are always looking how shareholder value can best be achieved, though their short term goal is to grow sales and [indiscernible] breakeven in the coming quarters. A new CEO, when they join, will consider the longer term strategy of OTI together with the board.

董事会和管理层一直在关注如何最好地实现股东价值,尽管他们的短期目标是在未来几个季度增加销售额和[音频不清晰]盈亏平衡。 新任首席执行官在加入时,将与董事会一起考虑OTI的长期战略。

Ehud Helft

Our next question is from Ailon Grushkin from AZG Tangible Assets Fund. His first is as follows. What are the differences between Shlomi’s strategy and the board’s?

我们的下一个问题来自AZG有形资产基金的Ailon Grushkin。 他的第一个如下。 Shlomi的战略和董事会之间有什么区别?

Assaf Cohen

Unfortunately I can’t go into the specific points of this agreement other than what we already publicly announced to the market. We announced publicly that this related to a difference in opinions between Shlomi and the board with regard to the current strategy and operation of the company.

不幸的是,除了我们已经公开向市场宣布的内容之外,我不能进入该协议的具体要点。 我们公开宣布,这与Shlomi和董事会在公司当前战略和运营方面的意见分歧有关。

Ehud Helft

Another question from Ailon, is there a reason the board does not just hire a banker to sell the company and salvage some value?

Ailon的另一个问题是,董事会是否有理由不聘请银行家出售公司并挽回一些价值?

Assaf Cohen

The board considers OTI to be very undervalued in the market, therefore our immediate goal with the most direct impact on our valuation and creation of shareholder value is growing sales, which should lead to return of profitability. When the new CEO arrives, we will evaluate together with the board the longer term strategy for maximizing shareholder value.

董事会认为OTI在市场上被低估,因此我们对估值和创造股东价值产生最直接影响的直接目标是增加销售额,这将导致盈利能力的回归。 当新任首席执行官到任时,我们将与董事会一起评估最大化股东价值的长期战略。

Ehud Helft

A follow-on question, is there a strategy in place to keep expenses under control to avoid another capital raise that dilutes the current shareholder base?

一个后续问题是,是否制定了一项策略来控制开支以避免另一次稀释当前股东基础的资本筹集?

Assaf Cohen

Our expenses are under full control. It will continue to be like that. I would like to point out a few things. We have guided that we expect that revenues for the remainder of the year will continue to grow consistently. Our operating expenses in the first half of this year were $6.3 million versus $6.7 million in the first half of last year, so we are doing a good job on keeping a cap on lowering expenses. Our gross margin has increased 500 basis points from 51.3% in the first half of last year to 56.3% in the first half of this year, which effectively has lowered our revenue breakeven point.
With regard to the second point about raising capital, I don’t know what the growth strategy will be with a CEO who has not yet arrived. What I can say is that the immediate term, we have $5.7 million in cash on the balance sheet, which is enough for our short term working capital needs.

我们的开支完全受控制。 它会继续像那样。 我想指出一些事情。 我们已指导我们预计今年剩余时间的收入将继续保持增长。 我们今年上半年的营业费用为630万美元,去年上半年为670万美元,因此我们在降低费用方面做得很好。 我们的毛利率从去年上半年的51.3%增加500个基点至今年上半年的56.3%,这实际上降低了我们的收入盈亏平衡点。

关于筹集资金的第二点,我不知道一个尚未到来的CEO的增长策略是什么。 我可以说的是,就目前而言,我们在资产负债表上有570万美元的现金,足以满足我们的短期营运资金需求。

Ehud Helft

Thank you. That concludes the question and answer session. Assaf, please make your concluding statements.

谢谢。 问答环节结束了。 阿萨夫,请做出结论性陈述。

Assaf Cohen

On behalf of OTI, I would like to thank you for your continued interest and long term support of our business. I look forward to speaking with you next quarter and updating you on our progress. Thank you for your attendance. Have a good day.

我谨代表OTI,感谢您对我们业务的持续关注和长期支持。 我期待下个季度与您交谈并向您介绍我们的进展情况。 感谢您的出席。 祝你有美好的一天。

会议主持员

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

会议现已结束。 感谢您参加今天的演讲。 您现在可以断开连接。

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