Webtech Wireless Announces Q1 2015 Results
VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 8, 2015) - Webtech Wireless Inc. (WEW.TO) ("Webtech Wireless" or the "Company"), a leading provider of GPS fleet management solutions, today announced its financial results for the three months ended March 31, 2015.
Q1 2015 Financial and Operational Highlights
EBITDA was $0.7 million for the three months ended March 31, 2015 compared to a loss of $0.4 million in the same quarter of the prior year. The Company is also reporting net income of $0.7 million or $0.03 per share for the three months ended March 31, 2015 compared to a net loss of $0.4 million or $0.02 per share in the prior comparable period.
Revenue was $8.1 million in the quarter compared to $6.7 million in the prior comparable period, with the increase primarily due to hardware revenues from government solution sales and deliveries to an enterprise fleet customer.
Recurring revenue decreased from $4.7 million in the prior comparable quarter to $4.5 million. While the subscriber count remained in line with the prior comparable period, the overall average revenue per unit "(ARPU") decreased due to the subscriber mix between full service, enterprise and data pump subscribers. Excluding enterprise and data pump subscribers, ARPU for full service subscribers of $25.19 per subscriber was consistent with the prior comparable period.
The Company's subscriber base at March 31, 2015 totalled approximately 79,900 compared to 78,300 at December 31, 2014 and 80,000 at March 31, 2014. The increase in total subscribers since December 31, 2014 was due to net additions of full service government subscribers from solution sales in Q4 2014 and Q1 2015.Gross margin was 52% for the three months ended March 31, 2015 compared to 56% in the prior comparable period as a result of a greater proportion of revenues being earned from lower margin hardware and services revenue.
Cash operating expenses (sales and marketing, research and development, and general and administrative expenses) decreased 15% from $4.1 million in Q1 2014 to $3.5 million in Q1 2015 due to headcount and facilities cost savings realized from the Company's restructuring efforts in 2014.
The Company repurchased 1,034,991 of its common shares in a Normal Course Issuer Bid effective from March 28, 2014 to March 27, 2015 for a total cost, including transaction fees, of $2.0 million. All of the re-purchased common shares were cancelled.
The Company renewed the Normal Course Issuer Bid effective March 30, 2015. As at March 31, 2015, the Company has not repurchased any common shares as part of the renewed Normal Course Issuer Bid.
"We are pleased with our top line and bottom line results this quarter," commented Andrew Gutman, Chairman of the Company and CEO. "Strong sales momentum with our industry leading government solution on the Webtech Fleet Center software platform and the success of our channel partnerships were primary drivers for this quarter's performance. When combined with the operating leverage we've created within our operations, the result is a much improved year over year EBITDA, a metric which we are committed to sustaining and growing in the future."
"In addition to the positive quarterly results, we are pleased to announce the appointment of Andrew Gutman to the position of CEO," commented Leonard Metcalfe, Chairman of the Compensation, Nominating and Corporate Governance Committee. "Over the last six months, the Board of Directors has considered its options related to the leadership team and have concluded that the current management structure, with the Office of the President reporting to Andrew as CEO, is performing well."
Financial Highlights
Three months ended | ||||||
('000 of CAD $) | March 31, | March 31, | ||||
Recurring revenue | $ | 4,471 | $ | 4,680 | ||
Hardware revenue | 3,129 | 1,795 | ||||
Services and other revenue | 541 | 259 | ||||
8,141 | 6,734 | |||||
Gross margin ($) | 4,208 | 3,740 | ||||
Gross margin (%) | 52 | % | 56 | % | ||
Total operating expenses | 3,783 | 4,371 | ||||
Net income (loss) | $ | 662 | $ | (363 | ) | |
EBITDA (1) | $ | 651 | $ | (433 | ) | |
(1) | EBITDA is a non-GAAP measure and is therefore not universally defined. EBITDA is defined as earnings before finance income, taxes, depreciation and amortization, foreign exchange gain, restructuring and insurance expense. |
Revenue
Hardware revenues for the quarter increased due to strong government solution sales and hardware deliveries to an enterprise fleet customer. Services and other revenues for the quarter increased over Q1 2014 due to implementation projects for government customers.
The Company's total subscriber base remained consistent at 79,900 in Q1 2015 as compared to 80,000 in the Q1 2014. However, recurring revenues for the three months ended March 31, 2015 decreased largely from a net reduction of full service commercial subscribers over the prior 12 months, which were replaced by lower margin enterprise and data pump subscribers. As a result, the Company's total ARPU decreased to $18.97 compared to $19.53 in the prior comparable quarter. ARPU from full service subscribers was flat at $25.19 per subscriber for the three months ended March 31, 2015 compared to the prior comparable period. The Company's focus continues to be on the acquisition and retention of high margin recurring revenue.
Gross Margin
Gross margin increased over the prior comparable period as a result of higher overall revenues; however, the margin percentage decreased due to a greater proportion of lower margin hardware and services revenues delivered during the period.
Operating Expenses
Cash operating expenses for the three months ended March 31, 2015 decreased 15% over the prior comparable period. The decrease in cash operating expenses for the quarter was due to lower headcount and facilities costs as a result of restructuring efforts, legal fees and settlement costs incurred in the prior comparable period and a reduced spend in discretionary consulting costs; this was partially offset by an increase in sales commissions resulting from the revenue performance for the quarter.
Cash and Working Capital
As at March 31, 2015, the Company's cash position amounted to $22.6 million, a decrease compared to $22.8 million at December 31, 2014 due to the re-purchase of common shares under the NCIB totaling $0.3 million for the period.
As at March 31, 2015, the Company had net working capital of $25.0 million, compared with $24.5 million at December 31, 2014. As at May 7, 2015, Webtech Wireless had 20,065,170 common shares outstanding.
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.
Financial Statements and Management's Discussion & Analysis
The Condensed Interim Consolidated Financial Statements for the three months ended March 31, 2015 and the related Management's Discussion and 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 8, 2015, at 11:00 am ET hosted by Mr. Andrew Gutman, Chief Executive Officer and Mr. Trevor Greene, Chief Financial Officer to discuss the Company's financial results and corporate developments. To access the conference call by telephone, dial +1.416.340.2216 or +1.866.225.0198. 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 solutions, Webtech Fleet Center™ and InterFleet®, and our products, Webtech Driver Center™ and Webtech 511®, provide advanced fleet management solutions for winter maintenance, public works and waste management fleets; and, for commercial fleet operations and compliance (HOS, ELD). Please visit www.webtechwireless.com.
All amounts in Canadian dollars (CAD$) unless otherwise noted. • The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release. • Trademarks are the property of their owners.
