On Track Innovations Ltd.
Q4 2020 Earnings Call Transcript
Published:
- Operator:
- Ladies and gentlemen, thank you for standing by. Welcome to OTI's Fourth Quarter and Full Year 2020 Results Conference Call. All participants are present in a listen-only mode. Following management’s formal presentation, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded. You should have all received by now the company's press release. If you have not received it, please contact OTI's Investor Relations team at GK Investor & Public Relations at 1-646-688-3559 or view it in the News section of the company's website at www.otiglobal.com. I'd now like to hand over the call to Mr. Ehud Helft of GK Investor Relations. Mr. Helft, would you like to begin, please?
- Ehud Helft:
- Yehuda Holtzman:
- Thank you, Ehud. Welcome all, and thank you for joining us today. Looking at 2020 as a whole, we are pleased with our results and the progress we have made on our strategy over the year. I believe looking forward to 2021, we are now well positioned to continue our growth and become profitable later in the year. In this call, I aim to delve further into the details. But first, I want to highlight that in the fourth quarter, we started the process of divesting our Mass Transit Ticketing business in Poland. We decided to exit from this activity as it is not our core focus and we are in the process of completing its sale. The sale of this activity will strengthen our balance sheet, particularly due to the debt held within our Polish subsidiary. Its sale will also allow management to better focus on our core activities and growth strategy, thereof penetrating our target sales region with recurring revenue solution for our cashless payment systems. Therefore, in our current results and in prior periods, this business has been accounted for as discontinued operations.
- Assaf Cohen:
- Thank you, Yehuda. As usual, I will be covering some non-GAAP metrics, including adjusted EBITDA from continuing operations. We believe this provides a better 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. Furthermore, as Yehuda mentioned, we have decided to sell our Polish subsidiary ASEC that includes the Mass Transit Ticketing segment, and 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. Our revenues in the fourth quarter amounted to $2.1 million, a 26% decrease when compared to $2.8 million in the fourth quarter of last year. For 2020, revenues were $12.7 million, a 20% increase when compared to $10.6 million in 2019. In terms of the breakdown from where revenues were derived in 2020. Retail revenues were $10.2 million in 2020 or 80% of total revenues compared with $7.4 million last year or 70% of total revenues. And Petroleum revenues were $2.6 million or 20% of total revenues in 2020 compared with $3.2 million or 30% of total revenues last year. Looking at geographic breakdown in 2020. The Americas accounted for $4.6 million or 36% of revenues compared with $3.6 million last year or 34% of revenues. Europe was $4.2 million or 33% of revenues compared with $3.9 million last year or 36% of revenues. Africa was $1.5 million or 12% of revenues compared with $2.1 million last year or 20% of revenues. And APAC was $2.4 million or 19% of revenues compared with $1.1 million last year or 10% of revenues. Licensing and transaction fees in the fourth quarter were $430,000 or 21% of revenue versus $340,000 or 12% of revenue last year. Licensing transaction fees in 2020 were $1.6 million or 12% of revenue versus $1.5 million or 14% of revenue last year. Gross margin in the fourth quarter was 30% compared to 29% reported in the fourth quarter of last year. Gross margin for 2020 was 40% at a similar level to that of last year. In the fourth quarter, operating expenses were $2.5 million. This is compared to $2.3 million in the fourth quarter of last year. For 2020, operating expenses were $9.8 million compared with $9.3 million in 2019. Net loss in the quarter was $2.7 million. This is compared to a net loss of $2 million in the fourth quarter of last year. For 2020, net loss was $6.1 million compared to a net loss of $5.9 million last year.
- A - Ehud Helft:
- Okay. We see a number of questions from a number of investors ahead of this call, and we very much thank our investors for their continued interest in our business. We will now endeavor to answer your questions. Our first question is from Ailon Grushkin of A.Z.G Capital. The question is, are you doing anything with Bitcoin or any other cryptocurrencies such as -- as you mentioned in December 2017 press release?
- Yehuda Holtzman:
- Currently, we are not doing with Bitcoin or any other cryptocurrency.
- Ehud Helft:
- Thank you for that, Yehuda. Our next question is from . He's asking, why hasn't there been a message to give to shareholders on a regular basis?
- Yehuda Holtzman:
- One second. So -- could you repeat the question, Ehud, sorry?
- Ehud Helft:
- is asking why there wasn't any message to give to shareholders on a regular basis?
- Yehuda Holtzman:
- So currently, we are focusing on making the changes to meet our strategy, and we will for sure update our shareholders as important information is available.
- Ehud Helft:
- Thank you. Another question is about Orpak, which is valued at $255 million. And the question is why is OTI including PetroSmart valued so low?
- Yehuda Holtzman:
- So, I cannot speak with regards to another company valuation. As for OTI, we need to continue and demonstrate high-growth rate, especially with our recurring revenue stream and reach profitability soon. And that, I believe, will drive the increase in our value.
- Ehud Helft:
- Thank you for that. And the last question is, what happens to the small investors if owns over 50% of OTI?
- Yehuda Holtzman:
- All shareholders of OTI have the aligned interest that the company should grow, become profitability and shareholder value will be created.
- Ehud Helft:
- Thank you. That concludes the questions we have received so far. And we will now open the call for live questions, if any questions remain. Operator, please open the call for live questions-and-answer session.
- Operator:
- Operator:
- There are no further questions at this time. Mr. Holtzman, would you like to make your concluding statement?
- Yehuda Holtzman:
- Sure. So on behalf of OTI, I would like to thank you for your continued interest and long-term support of our business. I would also like to especially thank those of you that submitted questions on our call today to make it more interesting for all of us. We look forward to speaking with you next quarter and updating you on our progress. Thank you, and have a good day.
- Operator:
- Thank you. This concludes OTI's fourth quarter and full year 2020 results conference call. Thank you for your participation. You may go ahead and disconnect.