VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 10, 2013) - Webtech Wireless Inc. (WEW.TO) ("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, 2013.
On January 24, 2013, the Company closed the sale of its NextBus business ("NextBus") to Cubic Transportation Systems, Inc., a division of Cubic Corporation, for $20.8 million resulting in income from discontinued operations of $13.1 million or $0.12 per share ($15.1 million or $0.14 excluding a non-cash tax charge).
The Company is reporting break even net income from continuing operations vs. a loss of $1.0 million or $0.01 per share in the prior year.
Figures quoted in this press release relate to the Company's business excluding NextBus unless otherwise noted.
Q1 2013 Financial and Operational Highlights
- Adjusted EBITDA was $0.5 million for the quarter compared to $nil in Q1 2012.
- Revenue was $7.4 million in Q1 2013 compared to $7.7 million in Q1 2012. The revenue decrease was the result of a previously announced exit from the theft recovery vertical.
- Hardware revenue increased 6% over the prior comparable period. The hardware revenue increase was the result of commercial and OEM deliveries in the quarter. Excluding the theft recovery vertical, hardware revenues increased 26% over Q1 2012.
- Recurring revenue was relatively flat at $4.7 million in Q1 2013 compared to $4.8 million in Q1 2012 but rose to 64% of total revenue from 63% year on year. The recurring revenue decrease was the result of the exit from the low average revenue per unit ("ARPU") theft recovery vertical. Excluding theft recovery recurring revenue rose 2% year on year.
- Notable sales during the quarter included Port Metro Vancouver, Arctic Slope Regional Corporation, Pacific SouthWest Irrigation Corp., PerforMix Nutrition Systems, JS West & Companies, a first sale of hardware to the new owners of NextBus and a previously announced repeat sale to a Fortune 100 fleet client.
- The Company's subscriber base at March 31, 2013 totalled approximately 78,000 compared to 72,000 at December 31, 2012 and 91,000 at March 31, 2012. The increase in telematics subscribers since December 31, 2012 is due to the addition of subscribers from sales and implementations across both the Quadrant and InterFleet product lines, as well as 5,000 new data pump subscribers from the recently sold NextBus business. The drop in telematics subscribers from Q1 2012 is due to the exit from the consumer theft recovery vertical in Mexico and the cancelation of certain Brazilian subscribers for a combined total of a reduction of 22,000 subscribers.
- ARPU increased to $21.52 per subscriber vs. $17.83 per subscriber in the prior year. A combination of the exit from the low ARPU theft recovery business, and the addition of a number of high ARPU subscribers on the Quadrant and InterFleet portals resulted in the year over year improvement.
- Gross margins were 57% for the quarter, an improvement over 52% in the prior comparable period. The improvement over the prior comparable period was driven by a favourable product mix and the exit from the low margin theft recovery vertical.
- Cash operating expenses (sales and marketing, research and development, and general and administration excluding non-recurring items) decreased 8% to $3.8 million in Q1 2013 from $4.1 million in Q1 2012, a direct result of past restructuring efforts and reductions in discretionary spending.
- During the quarter, the Company introduced its Winter Maintenance solution to the AT&T reseller channel - the first InterFleet product to be added to the AT&T price list.
- On April 30, 2013, Mr. Chris Jackson was appointed to the newly created position of Vice-President of Government Operations, adding leading of the Company's Government Sales Team to his portfolio of responsibilities. Mr. Jackson first joined the Company's InterFleet subsidiary in 2004 and has served in a variety of increasingly responsible positions including Senior Project Manager, Vice President, Operations & Project Management and most recently Business Development where he has been very active in adding to the Company's third party sales channels as well as leading in the development of the Company's Fleet Intelligence Anywhere strategy.
"We are very pleased to report growing Adjusted EBITDA from continuing operations and the completion of a highly successful sale of NextBus," said Scott Edmonds, President and CEO. "We will continue to focus on our pursuit of sustainable, repeatable, high margin revenue from our core verticals in order to accelerate growth and drive free cash flow."
Mr. Edmonds continued. "Webtech expects to produce free cash, grow its core business, continue to improve its bottom line performance, and build on a very strong balance sheet. As of today, Webtech has cash of $21.8 million, restricted cash of $1.0 million and a holdback of $2.1 million related to the NextBus sale. Our vision of 'Fleet Intelligence Anywhere' is being well received by our customers and prospects and we will continue to deliver on it throughout the coming year to produce growth and cash flow for our shareholders."
Financial Highlights of Continuing Operations
|Three months ended|
|('000 of Cdn $)||March 31, |
|March 31, |
|Services and other revenue||284||549|
|Gross margin ($)||4,245||3,986|
|Gross margin (%)||57||%||52||%|
|Total operating expenses||4,440||4,947|
|Net income (loss) from continuing operations||$||(18||)||$||(1,004||)|
|Adjusted EBITDA (1)||$||483||$||(35||)|
Hardware revenues for the quarter increased 6% over the prior year. Excluding the revenues of the theft recovery vertical, which the Company exited in Q2 2012, hardware revenues increased 26% over the prior year. The growth was due to significant commercial and OEM deliveries in the quarter. However, commercial service revenue and both government hardware and service revenues declined due to project deliveries in the prior year that were not repeated in 2013.
Recurring revenues were down 3% over the same quarter of the prior year. The performance was due to a decline in low ARPU subscribers from the planned exit of the theft recovery vertical and departure from Brazil in Q2 2012. Despite the decrease, the Company has added new, high ARPU subscribers from sales and implementations over the past nine months across the Quadrant and InterFleet product lines. The Company's shift away from hardware to a majority of subscription, software and services revenue continues to reflect management's focus on developing the Software as a Service ("SaaS") model.
Gross margin percentage improvement for the quarter was driven by a favourable product mix and the exit from and winding down of the theft recovery vertical and Brazil operations, both yielding historically low margins.
Operating expenses for continuing operations excluding depreciation and amortization, share-based payments and non-recurring items, decreased by 8% over the prior year three month period. This decrease was the direct result of cost management efforts to reduce staff levels, administrative overhead and discretionary spending.
Cash and Working Capital
As at March 31, 2013, the Company's unrestricted cash position amounted to $21.1 million compared with $4.3 million at December 31, 2012. In addition, the Company has $2.1 million in restricted cash related to the holdback from the NextBus transaction and $1.0 million USD of restricted cash used to secure a bonding facility with a US client.
As at March 31, 2013, the Company had net working capital of $26.3 million, compared with $9.6 million at December 31, 2012. As at May 9, 2013, Webtech Wireless had 105,457,078 common shares outstanding.
Adjusted EBITDA(1) from continuing operations
The Adjusted EBITDA from continuing operations was $0.5 million in Q1 2013 compared to $nil in Q1 2012.
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.
Results on a non-GAAP EBITDA basis are determined as follows:
|Three months ended|
|('000 of Cdn $)||March 31, 2013||March 31, 2012|
|Net loss from continuing operations||$||(18||)||$||(1,004||)|
|Finance (income) expense||(14||)||22|
|Income tax expense||7||-|
|Depreciation and amortization||134||525|
|Foreign exchange (gain) loss||(170||)||21|
|Litigation settlement and other one-time costs||539||144|
|Work force realignment||-||139|
|Adjusted EBITDA (1)from continuing operations||$||483||$||(35||)|
|(1)||Adjusted EBITDA is not defined under IFRS. Adjusted EBITDA is defined by the Company as earnings (loss) before interest, taxes, depreciation, amortization, share-based payments, foreign exchange (gain) loss on operations, restructuring charges, and one-time expenses.|
Financial Statements and Management Discussion & Analysis
The Condensed Interim Consolidated Financial Statements for the three months ended March 31, 2013 and the related Management Discussion & Analysis for the period has been filed on SEDAR at www.sedar.com, and also on the Company's website at www.webtechwireless.com.
Notice of Conference Call
Webtech Wireless will hold a conference call today, May 10, 2013, at 11:00 am ET hosted by Mr. Scott Edmonds, President and Chief Executive Officer and Mr. Andrew Morden, Chief Financial Officer to discuss the Company's financial results and corporate developments. To access the conference call by telephone, dial +1.416.340.2218 or +1.866.226.1793. A taped replay of the conference call will be archived on the Company's corporate website at: www.webtechwireless.com.
About Webtech Wireless®
Webtech Wireless (WEW.TO) is a leader in providing fleet management telematics, GPS and automatic vehicle location (AVL) solutions that improve efficiency, accountability and reduce costs. Our end-to-end solutions automate record keeping and regulatory compliance, reduce fuel burn and idling, mitigate risk, and keep drivers safe. Managers trust us to ensure people are accountable and vehicles are visible. Through the cloud, in the office, or straight to mobile devices, we deliver Fleet Intelligence Anywhere™. Our products are InterFleet®, for government winter maintenance, public works and waste management fleets; and Quadrant®, for commercial fleet operations and compliance (HOS, EOBR). Please visit www.webtechwireless.com.
All amounts in Canadian dollars (CAD$) unless otherwise noted.
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