VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug 8, 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 and six month periods ended June 30, 2013.
The Company is reporting net income of $1.0 million or $0.01 per share from continuing operations for the three and six months ended June 30, 2013 vs. a loss of $0.8 million or $0.01 per share and $1.8 million or $0.02 per share in the prior comparable periods, respectively.
Figures quoted in this press release relate to the Company's business excluding the NextBus business which was sold to Cubic Transportation Systems, Inc., a division of Cubic Corporation on January 24, 2013 unless otherwise noted.
Q2 2013 and YTD 2013 Financial and Operational Highlights
-
Adjusted EBITDA was $1.1 million and $1.6 million for the three and six months ended June 30, 2013 compared to $0.2 million and $0.1 million in the prior comparable periods.
-
Revenue was $8.1 million in the quarter compared to $7.2 million in the prior year, and $15.5 million year to date compared to $14.9 million year to date in 2012. The revenue increase was the result of significant hardware deliveries to a Fortune 100 fleet client in both the quarter and for the year to date periods.
-
Recurring revenue increased for the quarter to $4.6 million in Q2 2013 compared to $4.5 million in Q2 2012 and was flat for the year to date at $9.3 million in 2013 compared to $9.4 million in 2012. The year to date recurring revenue performance was the result of the exit from the low average revenue per unit ("ARPU") theft recovery vertical. Excluding the theft recovery, recurring revenue rose 3% year on year.
-
Notable new sales, implementations and expansions during the quarter included continued expansion of the Commonwealth of Kentucky and the City of Cleveland fleets; custom reporting services for Metrolinx; continued hardware sales to the new owners of NextBus; and aforementioned repeat sale to a Fortune 100 fleet client.
-
The Company's subscriber base at June 30, 2013 totalled approximately 79,000 compared to 72,000 at December 31, 2012, and 74,000 at June 30, 2012. The increase in subscribers since June 30, 2012 and 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 new data pump subscribers from the recently sold NextBus business.
-
Excluding the NextBus data pump subscribers, ARPU decreased to $20.30 per subscriber for the quarter vs. $20.58 per subscriber in the prior comparable quarter, and $20.54 year to date in 2013 compared to $21.14 year to date in 2012. The decrease is the result of fleet expansions at Enterprise customers.
-
Gross margin was 61% for the quarter, an improvement over 57% in the prior comparable period. The improvement over the prior comparable period was driven by sales of high margin hardware.
-
Cash operating expenses (sales and marketing, research and development, and general and administration excluding non-recurring items) were flat at $3.8 million in Q2 2013 vs. Q2 2012 as the Company continues the focus of keeping the cost base and discretionary spending aligned with the revenue performance.
"Our focus on the highest margin most sophisticated client solutions is continuing to pay off, and we believe we have a scalable cost base and business model which will allow us to continue to produce positive results," said Scott Edmonds, President and CEO.
Mr. Edmonds continued. "Both our government and our commercial sales groups are focused on the right verticals with the right products to produce a superior return on the investment our customers make in Webtech Wireless, and we believe our product roadmap will provide long term results for our customers and our investors as the telematics industry continues to evolve and adapt to new technologies, devices and customer demands."
Financial Highlights of Continuing Operations
| | | Three months ended | | | Six months ended | |
| ('000 of Cdn $) | | June 30,
2013 | | | June 30,
2012 | | | June 30,
2013 | | | June 30,
2012 | |
| Hardware revenue | | $ | 2,941 | | | $ | 2,335 | | | $ | 5,360 | | | $ | 4,622 | |
| Recurring revenue | | | 4,611 | | | | 4,523 | | | | 9,326 | | | | 9,363 | |
| Services and other revenue | | | 571 | | | | 319 | | | | 855 | | | | 868 | |
| | | | 8,123 | | | | 7,177 | | | | 15,541 | | | | 14,853 | |
| | | | | | | | | | | | | | | | | |
| Gross margin ($) | | | 4,944 | | | | 4,074 | | | | 9,189 | | | | 8,060 | |
| Gross margin (%) | | | 61 | % | | | 57 | % | | | 59 | % | | | 54 | % |
| | | | | | | | | | | | | | | | | |
| Total operating expenses | | | 4,505 | | | | 4,923 | | | | 8,945 | | | | 9,871 | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) from continuing operations | | $ | 991 | | | $ | (837 | ) | | $ | 973 | | | $ | (1,841 | ) |
| | | | | | | | | | | | | | | | | |
| Adjusted EBITDA (1)from continuing operations | | $ | 1,117 | | | $ | 179 | | | $ | 1,599 | | | $ | 143 | |
| (1) | Adjusted EBITDA is not defined under IFRS. Adjusted EBITDA is defined by the Company as earnings (loss) before interest expense (income), taxes, depreciation, amortization, share-based payments, foreign exchange (gain) loss on operations, restructuring charges, and one-time expenses. |
Revenue
Hardware revenues for the three and six months ended June 30, 2013 increased 26% and 16%, respectively, over the prior comparable periods. Service and other revenues also improved, increasing 79% for the three months ended June 30, 2013 as compared to the prior comparable period, largely due to the completion of a custom reporting project for a government customer and certain other one time revenues. Service revenues for the six months ended June 30, 2013 were in line with the prior comparable period.
Recurring revenues were up 2% (3% excluding prior period theft recovery revenues) over the same quarter of the prior year and flat for the year to date. The Company has replaced the lost subscription revenue from the planned exit of the theft recovery vertical with new, higher ARPU subscribers from sales and implementations over the past twelve 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
The improvement in the gross margin percentage for the three and six months ended June 30, 2013 was driven by high margin hardware sales and the exit from and winding down of the theft recovery vertical which yielded historically low margins.
Operating Expenses
Operating expenses for continuing operations excluding depreciation and amortization, share-based payments and non-recurring items for the three and six months ended June 30, 2013 decreased by 1% and 5% over the prior comparable periods. 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 June 30, 2013, the Company's unrestricted cash position amounted to $21.3 million compared with $21.1 million at March 31, 2013 and $4.3 million at December 31, 2012. In addition, the Company has $2.1 million USD in restricted cash related to the holdback from the NextBus transaction and $1.0 million USD in restricted cash used to secure a bonding facility with a US client.
As at June 30, 2013, the Company had net working capital of $27.0 million, compared with $9.6 million at December 31, 2012. As at August 7, 2013, Webtech Wireless had 105,471,783 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.
Results on a non-GAAP EBITDA basis are determined as follows:
| | | Three months ended | | | Six months ended | |
| ('000 of Cdn $) | | June 30, 2013 | | | June 30, 2012 | | | June 30, 2013 | | | June 30, 2012 | |
| Net income (loss) from continuing operations | | $ | 991 | | | $ | (837 | ) | | $ | 973 | | | $ | (1,841 | ) |
| Add (deduct) | | | | | | | | | | | | | | | | |
| | Finance (income) expense | | | (272 | ) | | | 7 | | | | (286 | ) | | | 28 | |
| | Income tax expense | | | 12 | | | | 3 | | | | 19 | | | | 3 | |
| | Depreciation and amortization | | | 137 | | | | 530 | | | | 271 | | | | 1,055 | |
| | Share-based payments | | | 36 | | | | 85 | | | | 41 | | | | 203 | |
| | Foreign exchange gain | | | (292 | ) | | | (22 | ) | | | (462 | ) | | | (1 | ) |
| | Litigation settlement and other one-time costs | | | 398 | | | | 318 | | | | 936 | | | | 462 | |
| | Work force realignment | | | 107 | | | | 95 | | | | 107 | | | | 234 | |
| Adjusted EBITDA (1)from continuing operations | | $ | 1,117 | | | $ | 179 | | | $ | 1,599 | | | $ | 143 | |
| (1) | Adjusted EBITDA is not defined under IFRS. Adjusted EBITDA is defined by the Company as earnings (loss) before interest expense (income), 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 and six months ended June 30, 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, August 8, 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).
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.
