Press release from Marketwire
Webtech Wireless Announces Q1 2012 Results
Friday, May 11, 2012
Webtech Wireless Announces Q1 2012 Results09:00 EDT Friday, May 11, 2012VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 11, 2012) - Webtech Wireless Inc. (TSX:WEW) ("Webtech Wireless" or the "Company"), a leading provider of vehicle fleet location-based services and telematics technology, today announced its financial results for the three month period ended March 31, 2012. Q1 2012 Financial and Operational Highlights Total revenue increased 9% to $10.2 million in Q1 2012 compared to $9.3 million in Q1 2011. The increase was driven by growth of recurring revenue from the additions of new subscribers of Quadrant transportation solutions, sales in the theft recovery segment, and several large InterFleet and NextBus projects that were implemented in the prior twelve months. Adjusted EBITDA was $0.4 million in Q1 2012 compared to a loss of $1.2 million in Q1 2011. Notable new sales, renewals and implementations during the quarter included Masternaut Limited, Port Metro Vancouver, University of Minnesota, and Regional Municipality of Wood Buffalo, Transit Department (Fort McMurray). Recurring revenue for Q1 2012 increased 19% to $6.2 million or 61% of total revenue compared to $5.2 million or 56% of total revenue for Q1 2011. Recurring revenue increased compared to the prior period due to the increase in subscribers. Subscribers at March 31, 2012 totalled approximately 102,000 (combined direct and enterprise), compared to 102,000 at December 31, 2011, and 87,000 at March 31, 2011. Insurance subscribers were 16,400 at March 31, 2012 compared to 16,900 at December 31, 2011. NextBus subscribers were 11,500 at March 31, 2012 compared to 11,250 at December 31, 2011. Gross margin increased to 51% of total revenue from 45% in Q1 2011 due to the improved recurring revenue mix. Cash operating expenses (sales and marketing, research and development, and general and administration excluding depreciation, amortization, share based payments and one-time items) declined 10% to $4.9 million in Q1 2012 from $5.4 million in Q1 2011. The decrease for the quarter was the direct result of restructuring efforts undertaken in 2011. On January 12, 2012, the Company announced that it was considering strategic alternatives with respect to its NextBus operations. The Company is undertaking a process to consider the various options including a possible sale of the NextBus business. The Company has not yet made a determination regarding NextBus and will issue another news release once there is a material development. "We are pleased to report our fourth consecutive quarter of positive Adjusted EBITDA," said Scott Edmonds, President and Chief Executive Officer. "Improving revenue mix and the resultant margins, when combined with the operational efficiencies we have implemented over the past year continue to pay off for us, and we intend to continue our focus on the highest margin verticals that attract extended recurring subscription agreements. Our key business metrics continue to be positive - Gross Margins, Inventory as a percentage of trailing twelve months hardware sales and the ratio of subscription revenue to cash operating expenses, and we hope to sustain these measures. We have strategic advantages in the areas we know best - winter maintenance and municipal fleets for InterFleet, Transport and Oil and Gas for Quadrant, and Predictive Arrival for NextBus, and we will achieve the best results by continuing to mine opportunities in these very attractive vertical markets." Financial Highlights Three months ended('000 of Cdn $)Q1 2012Q1 2011Hardware revenue$2,827$3,278Recurring revenue6,1925,195Services and other revenue1,16685910,1859,332Gross margin ($)5,2314,169Gross margin (%)51%45%Total operating expenses5,7796,328Net income (loss) for the period$(591)$(6,263)Adjusted EBITDA (Loss)$386$(1,237) Revenue The increase in revenue in Q1 2012 compared to the prior period is largely due to growth in recurring revenue from the additions of new subscribers of Quadrant transportation solutions, sales in the theft recovery segment and several large InterFleet and NextBus projects that were implemented in the prior twelve months.Recurring revenue as a percentage of total revenue was 61% for the quarter compared to 56% in Q1 2011. The increase in recurring revenue is due to improved recurring revenues across all business units from the addition of new subscribers. Recurring revenue has benefited over the past year from sales of the Quadrant theft recovery solution in Mexico and implementations of NextBus at several large customers. Finally, InterFleet recurring revenues have shown significant year over year improvement evidencing the recovery of the business unit. The continued shift away from hardware to a majority of subscription, software and services revenue reflects management's focus on developing the Software as a Service ("SaaS") model. Gross Margin The increase in gross margins relative to Q1 2011 is due to the revenue mix as high margin recurring revenues made up a larger portion of total revenue. Margins on recurring revenues also improved year over year resulting largely from an increase in subscription revenue and realized cost savings in Q1 2012. In addition, there were significant sales of high margin predictive arrival services in the current quarter. Operating Expenses Operating expenses in Q1 2012 excluding non-cash charges for depreciation and amortization, share based payments and one-time expenses (as defined below), decreased by 10% over the prior period. This decrease was the direct result of restructuring efforts undertaken in 2011 to reduce both staff levels and administrative overhead. Adjusted EBITDA (1)The Adjusted EBITDA was $0.4 million in Q1 2012 compared to Adjusted EBITDA loss of $1.2 million in Q1 2011.Results on a non-GAAP EBITDA basis are determined as follows:Three months endedMarch 31, 2012March 31, 2011Net loss as reported$(591)$(6,263)Add (deduct)Depreciation and amortization533522NextBus strategic review144-Work force realignment139-Share based payments118145Interest and other expenses2234Foreign exchange loss21163Restructuring cost, including sharebased payments-4,040Intellectual property litigation-253Tax recovery-(131)Adjusted EBITDA (Loss) (1)$386$(1,237)(1)Adjusted EBITDA (Loss) is not defined under IFRS and is therefore not universally defined. Adjusted EBITDA is defined by the Company as earnings (loss) before interest, tax, depreciation, amortization, share based payments, foreign exchange loss on operations, restructuring charges, and one-time expenses. Non-GAAP Financial Measures In addition to the results reported in accordance with IFRS, the Company uses various non-GAAP financial measures, which are not recognized under IFRS, as supplemental indicators of the Company's operating performance and financial position. These non-GAAP financial measures are provided to enhance the user's understanding of the Company's historical and current financial performance and its prospects for the future. Management believes that these measures provide useful information in that they exclude amounts that are not indicative of the Company's core operating results and ongoing operations and provide a more consistent basis for comparison between quarters. Details of such non-GAAP financial measures and how they are derived are provided in conjunction with the discussion of the financial information reported. Cash and Working Capital As at March 31, 2012, the Company's unrestricted cash position amounted to $4.9 million, which consisted of cash, cash equivalents and short-term investments, compared with $5.9 million at December 31, 2011.As at March 31, 2012, the Company had net working capital of $12.1 million, compared with $11.9 million at December 31, 2011. The Company has historically invested in product and market development, and as a result had negative cash flows but has recently taken a number of steps to improve its ability to generate cash from operations and as a result, has improved its working capital position.As at May 10, 2012, Webtech Wireless had 105,424,265 common shares outstanding. Financial Statements and Management Discussion & Analysis The Condensed Interim Consolidated Financial Statements for the three months ended March 31, 2012 and the related Management Discussion & Analysis for the period has been filed on SEDAR at www.sedar.com, and also on the Company's website at www.webtechwireless.com. Notice of Conference Call Webtech Wireless will hold a conference call today, May 11, 2012, at 10:30 am ET hosted by Mr. Scott Edmonds, President and Chief Executive Officer and Mr. Andrew Morden, Chief Financial Officer to discuss the Company's financial results and corporate developments. To access the conference call by telephone, dial +1.416.340.8530 or +1.877.240.9772. A taped replay of the conference call will be archived on the Company's corporate website at: www.webtechwireless.com. About Webtech Wireless ®Webtech Wireless Inc. (TSX:WEW) is a provider of vehicle fleet location-based services (LBS) and telematics technology. It develops, manufactures and supports end-to-end wireless solutions that improve the productivity, profitability, environmental compliance and safety of vehicle fleets. Its comprehensive suite of products and services include: automatic vehicle location (AVL), mapping, vehicle diagnostics, CO2 reporting, navigation, messaging, and mobile resource management. The Company serves customers of all sizes in the transport, government, service, insurance and OEM markets in over forty-one countries, including Fortune 500 companies. Specialized products include: Quadrant® commercial fleet solutions, InterFleet® solutions for government, and NextBus® real-time passenger information services for transit fleets. For more information, please visit www.webtechwireless.com.All amounts in Canadian dollars (CAD$) unless otherwise noted. Trademarks are the property of their owners.FOR FURTHER INFORMATION PLEASE CONTACT: Andrew MordenWebtech Wireless Inc. - Investor RelationsChief Financial Officer+1 firstname.lastname@example.orgORDavid GreerWebtech Wireless Inc. - Press and MediaVice President Marketing+1 email@example.comThe Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.