On Track Innovations Ltd. (NASDAQ:OTIV) Q1 2019 Earnings Conference Call Transcript

May 07, 2019 • 09:00 am ET


On Track Innovations Ltd. (NASDAQ:OTIV) Q1 2019 Earnings Conference Call Transcript


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Ladies and gentlemen, thank you for standing by. Welcome to On Track Innovations First Quarter 2019 Results Conference Call. All participants are at present in 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 review it in the Investor Relations section of the Company's website or contact the Investor Relations team at GK Investor and Public Relations.

I would now like to hand over the call to Mr. Ehud Helft of GK Investor and Public Relations. Mr. Helft, would you like to begin.

Ehud Helft

Thank you, operator. Welcome to On Track Innovations 2019 first quarter conference call. I would like also to thank management for hosting this call. With us on the call today are Mr. Shlomi Cohen, the CEO; and Mr. Assaf Cohen, the CFO. Shlomi will provide some of the recent key highlights and Assaf will briefly review OTI's financial performance for 2019 first quarter. Following the prepared remarks, we will then open the call for the question-and-answer session.

Please be advised that certain information discussed on this conference 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 unknown -- to known and unknown uncertainties and risk factors, including those detailed from time to time in the Company's filing with the SEC. OTI assume no obligation to update any forward-looking statements or information, which speaks as for their respective dates. The full safe harbor provision are set forth in the press release, we issued this morning.

And with that, I would now like to hand over the call to the Company's CEO, Shlomi Cohen. Shlomi, go ahead, please.

Shlomi Cohen

Thank you, Ehud. Welcome all and thank you for joining us today. As we've discussed during the last earning call, our first quarter of 2019 was weak from the revenue standpoint. The lower sales we experienced were mainly due to the impact of 10% US tariff on Chinese manufactured product, which started in Q3 of last year. This impacted our product sales to many of our customers. And it became clear last year that our sales would be impacted, we began the process of shifting production out of China to another manufacturing zone, the Philippines, where there is no impact from US tariffs on imports.

I am pleased to say that as of the end the first quarter, we had successfully completed the process. I recently returned from the new production facility in the Philippines and it was up and running as of the beginning of second quarter. I, therefore, believe that this short-term issue is finally behind us.

While the recent lower revenue levels were indeed significant short-term