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Press release from Business Wire

Wireless Matrix Announces Fourth Quarter and Year End Fiscal Year 2012 Results

Thursday, July 12, 2012

Wireless Matrix Announces Fourth Quarter and Year End Fiscal Year 2012 Results07:00 EDT Thursday, July 12, 2012 HERNDON, Va. (Business Wire) -- Wireless Matrix Corporation (TSX: WRX), the leading provider of software and communications to improve service fleet performance metrics, today announced financial and operating results for the three and twelve months ended April 30, 2012. All currency is expressed in U.S. dollars.Fiscal year 2012 Highlights Grew total subscriber base to 104,660, up from 83,679 subscribers a year earlier. Total revenues were $33.3 million in fiscal year 2012, compared to $34.7 million the previous year. Application-related revenue was $14.5 million, up from $13.6 million in fiscal year 2011. Overall gross margin was 65%, compared to 63% a year earlier. Service gross margin was 81%, unchanged from fiscal year 2011. Pro forma adjusted EBITDA* was $4.5 million, compared to $4.7 million in fiscal year 2011. Adjusted EBITDA* of $2.5 million includes $1.1 million of litigation-related expenses, $0.6 million in severance for departed executives and $0.3 million in SkyGuard LLC-related operating expenses that are not expected to recur in fiscal 2013. Pro forma net income was $196,000 in fiscal year 2012, compared to a pro forma net loss of $3.4 million in 2011. Introduced new product functionality highlighted by a full mobile capability, and FleetOutlook® Express, tailored to the needs of small and medium-sized businesses, and won an award for the second year in a row in the 10th annual Mobile Star Awards™ program, hosted by mobile technology news portal Mobile Village. Completed the acquisition of certain assets of SkyGuard, LLC, adding over 16,000 subscribers and approximately $2 million in annualized revenue, and strengthening the Corporation's position in certain key vertical markets. Fourth Quarter 2012 Highlights Application-related subscribers increased by 1,061 during the quarter to 81,190. Application-related revenue grew 19% from Q4 2011, satellite revenue grew by 30%, and overall service revenue was up 24% over the same period. Application-related revenue was $3.8 million, compared to $3.2 million in Q4 2011. Total revenues were $8.9 million, up from $8.0 million in the fourth quarter of last year. Service gross margin was 83%, up from 79% in Q4 2011, while overall gross margin was 71%, up from 62% a year earlier. Pro forma adjusted EBITDA* was $1.3 million in Q4 2012, compared to $1.0 million in Q4 2011. Adjusted EBITDA* of $728,000 includes $273,000 of litigation-related expenses, $359,000 in severance for departed executive officers and $7,000 for SkyGuard LLC-related operating expenses that are not expected to recur in fiscal 2013. Pro forma net income was $433,000 in Q4 2012, compared to net loss of $80,000 in Q4 2011. “We made important strides in four key areas this year,” said Maria C. Izurieta, acting chief executive officer and chief financial officer of Wireless Matrix. “We added a record number of subscribers totaling over 30,000 through our investments in our go-to-market strategy. We diversified our customer base by focusing on the small-to-medium business segment which now represents more than a quarter of our recurring monthly revenue and added new verticals including construction. We continued to add innovative new features and functionality to our FleetOutlook product suite that will position us for further market success. And we began to work with our satellite data communication customers to develop a unique next generation broadband satellite data communications solutions to bring to market in late fiscal year 2013.”         Financial Highlights               All currency in thousandsexcept per share and ARPUdata.Twelve months endedApril 30     Three months ended     2012   2011     April 30,2012   January 31,2012   April 30,2011 Application-related revenue     $14,472   $13,632     $3,830   $3,947   $3,213 Satellite-related revenue     11,542   11,188     3,332   3,006   2,559 Total service revenue     26,014   24,820     7,162   6,953   5,772 Hardware and license revenue     7,316   9,866     1,721   1,617   2,268 Total revenue     33,330   34,686     8,883   8,570   8,040 Gross margin*     22,293   21,970     6,342   5,862   5,010 Operating expenses     18,064   17,101     4,982   4,696   3,967 Litigation expenses     1,180   –     273   153   – Severance     586   –     359   –                               Pro forma adjusted EBITDA*     4,524   4,710     1,111   1,343   1,043                           Adjusted EBITDA*     2,463   4,710     728   1,013   1,043 Net loss     $(2,030)   $(3,348)     $(187)   $(207)   $(80)                           Weighted average number of shares outstanding     83,925,229   83,028,456     84,211,962   84,231,433   83,345,046 Basic and diluted income (loss) per share:     $(0.02)   $(0.04)     $(0.00)   $(0.00)   $(0.00)                           Cash balance     $8,781   $11,982     $8,781   $7,399   $11,982 Working Capital     $9,130   $13,346     $9,130   $9,745   $13,346 Total subscribers     104,660   83,679     104,660   103,404   83,679 Average Revenue Per Unit (ARPU)*     $21.94   $23.86     $20.80   $22.99   $22.85       * See Non-GAAP Measures below Financial and Operating Review Application-related service revenue was $14.5 million in fiscal year 2012, an increase of $0.8 million or 6% from $13.6 million in 2011. The increase is primarily due to significant net additions of application subscribers, including those added through the SkyGuard, LLC acquisition. Satellite-related service revenues of $11.5 million grew 3% from $11.2 million in 2011 due to increased usage by certain key customers. Hardware and license revenues of $7.3 million were down $2.5 million from a year ago, as customers whose revenue we deferred and recognized over the life of their contracts complete their initial contract terms. Excluding deferred revenue, hardware and license revenue declined by $0.3 million. Hardware shipments increased over fiscal year 2011, but the hardware mix has shifted away from higher priced satellite units in favor of lower cost cellular devices. Total revenues in fiscal year 2012 were $33.3 million, a decrease of $1.4 million from revenues of $34.7 million in 2011. Wireless Matrix ended the year with 104,660 total subscribers, a net increase of 20,981 from 83,679 at the end of fiscal year 2011. There were 81,190 application-related subscribers at year-end, following record gross additions of 30,396 units which included 16,246 subscribers added through the SkyGuard acquisition and 14,150 added organically. These additions were partially offset by churn or disconnects of 9,031 application-related subscribers relating primarily to a large telecommunications customer. Satellite subscribers remained relatively steady, declining to 23,470 from 23,854 during the year as gross additions of 1,163 subscribers were offset by churn of 1,547 units. An overall gross margin of 65% in fiscal year 2012 represented an improvement of 2% over the previous year. Hardware gross margin declined from 19% to 18%, while service gross margin was unchanged at 81%, but the overall margin improved as services comprised a higher proportion of total revenues. In addition, infrastructure investments led to cost reductions that helped offset transition costs related to the SkyGuard acquisition. Pro forma adjusted EBITDA* was $4.5 million in fiscal year 2012, compared to $4.7 million in the previous year. Pro forma adjusted EBITDA* excludes the impact of $1.2 million of litigation-related expenses, $0.6 million in severance for departed executive officers and $0.3 million of SkyGuard LLC-related operating expenses that are not expected to recur in fiscal 2013. Adjusted EBITDA* was $2.4 million, compared to $4.7 million in 2011. Wireless Matrix had a cash balance of $8.8 million at April 30, 2012, compared to $7.4 million at January 31, 2012. The Corporation has no debt, and its $4 million line of credit remains unused. Outlook “In the fourth quarter we reported sequential growth in revenue, gross margins and EBITDA, and we expect our positive momentum to continue into fiscal 2013,” said Izurieta. “We will remain focused growing our subscriber base, and improving our returns to shareholders by being innovative in both of our product lines: FleetOutlook for the mobile resource management market and in the satellite data communications market by developing a next generation broadband satellite solution to retain and expand our current satellite business.” Conference Call Wireless Matrix has scheduled a conference call to begin at 10:00 a.m. EDT on Thursday, July 12, 2012, to discuss these results. The conference call dial-in number is 888.612.1051. A replay of the conference call will be available on the Company's website at www.wirelessmatrix.com or by dialing 800.558.5253 (code #21598573), shortly after the completion of the conference call until 11:59 p.m. EDT on July 14, 2012. About Wireless Matrix Wireless Matrix Corporation (TSX: WRX) provides GPS fleet management software solutions for companies of all sizes to drive business metrics and improve real-time decision-making and field communication, thus enhancing overall business operations. The company's award-winning SaaS platform, FleetOutlook®, is engineered to deliver critical real-time location intelligence to desktops and mobile devices using a fleet tracking web application with in-vehicle hardware GPS devices and wireless communications. FleetOutlook helps distribution, cable, utilities, rail, oil and gas, government, and a host of other field service companies increase their mobile workforce's productivity, decrease operational costs, enhance customer service, and reduce safety-related incidents. FleetOutlook is an open, scalable platform designed for seamless integration with other applications, including workforce management and other back-office applications. Wireless Matrix is headquartered in Herndon, VA. For more information visit: www.wirelessmatrix.com. Non-GAAP measures In addition to providing measures in accordance with International Financial Reporting Standards, Wireless Matrix presents certain supplemental measures that are used by Management to manage and measure operations. These are gross margin, operating expenses, adjusted EBITDA, proforma adjusted EBITDA, ARPU, and churn rates. These measures do not have any standardized meaning prescribed by International Financial Reporting Standards (IFRS) and are therefore unlikely to be comparable to similar measures presented by other companies. Investors are urged to refer to the “Supplemental Non-GAAP measures” section in our Management Discussion and Analysis for more details. Forward Looking StatementsGeneral information regarding the Corporation set forth in this document, including management's assessment of the Corporation's future plans and operations, contains forward-looking statements that involve substantial known and unknown risks and uncertainties, some of which are beyond the Corporation's and management's control, including but not limited to, the impact of general economic conditions, industry conditions, market demand, dependence on key customers, and their contract renewals at existing ARPU and with the number of their subscribers on our services, financial conditions and wherewithal of customers, non-infringement on third-party technology, ability to grow through acquisition,technological aptitude and scalability and reliability of products, intellectual property rights, inventory management,fluctuation of commodity prices, fluctuation of foreign exchange rates, imperfection of estimates, industry competition, availability of qualified personnel and management, ability for sales and marketing investments to garner intended results, stock market volatility, timely and cost-effective access to sufficient capital from internal and external sources, ability to integrate and realize anticipated benefits from acquisitions, ability to procure, utilize and resell third party network communications and hardware at favorable rates, ability to successfully transition satellite wireless data communications subscribers to our next generation broadband satellite offering, ability to drive shareholder value through strategic initiatives, and ability to realize cost savings and margin improvements from restructuring initiatives and outsourcing activities and to effectively manage growth. The Corporation's actual results, performance or achievement could differ materially from those expressed in or implied by, these forward-looking statements and accordingly, no assurance can be given that any of the events anticipated to occur or transpire from the forward-looking statements will provide what, if any, benefits to the Corporation. All data presented herein should be read in conjunction with the Corporation's regulatory filings, with the appropriate Securities Commission and SEDAR. These filings, including the Corporation's AIF, are located at www.sedar.com.Investor RelationsWireless MatrixMaria C. Izurieta, 703-262-4020maria.izurieta@wirelessmatrix.comorThe Equicom GroupJeff Codispodi, 416-815-0700 ext 261jcodispodi@equicomgroup.com