Webtech Wireless Inc.
TSX : WEW

Webtech Wireless Inc.

March 26, 2014 06:00 ET

Webtech Wireless Announces Q4 and FY 2013 Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - March 26, 2014) - 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 and twelve-month periods ended December 31, 2013.

The Company is reporting net income of $13.6 million for the twelve months ended December 31, 2013, including $13.2 million in net income from discontinued operations related to the sale of the Company's NextBus business to Cubic Transportation Systems, Inc., a division of Cubic Corporation on January 24, 2013.

Unless otherwise noted, figures quoted in this press release relate to the Company's continuing operations.

Q4 2013 and 2013 Financial and Operational Highlights

  • Adjusted EBITDA was $2.2 million for the year compared to $1.1 million in 2012 and $0.4 million in Q4 2013 compared to $0.0 million in Q4 2012. The continued focus on high margin revenue and cost management efforts have materially increased the Company's operating profitability.
  • The Company is reporting a net loss of $0.3 million or $0.00 per share and net income of $0.3 million or $0.00 per share from continuing operations for the three and twelve months ended December 31, 2013 compared to net income of $2.9 million or $0.03 per share and a net loss of $0.5 million or $0.00 per share in the prior comparable periods, respectively.
  • Revenue was $30.1 million for 2013 compared to $28.8 million in 2012, and $7.2 million in Q4 2013 compared to $7.1 million in Q4 2012. The revenue increase was largely the result of hardware sales to a Fortune 100 fleet customer and to the recently sold NextBus business.
  • Recurring revenue was relatively flat at $18.4 million in 2013 or 61% of total revenue in 2013 compared to $18.5 million or 64% of total revenue in 2012. Q4 2013 recurring revenue was also relatively flat at $4.7 million or 65% of total revenue for the period compared to $4.6 million or 66% for Q4 2012.
  • Notable new sales, implementations and expansions during the quarter included continued expansion of the City of Cleveland and Commonwealth of Kentucky fleets; repeat sales with Strike Construction, Herzog Contracting, Wood Group Duval and Spady Transport; new contracts with the District of North Vancouver, Slegg Lumber, Zip Truck Lines and Empire Recycling Corporation; and continued sales to the new owners of NextBus.
  • The Company's subscriber base at December 31, 2013 totalled approximately 80,000 compared to 79,000 at September 30, 2013 and 72,000 at December 31, 2012. The increase in subscribers since September 30, 2013 and December 31, 2012 is due to the addition of subscribers from sales and implementations in 2013, as well as new data pump subscribers from the recently sold NextBus business.
  • Excluding the NextBus data pump subscribers, ARPU decreased to $20.00 per subscriber for the year versus $21.45 per subscriber in the prior year, and $20.44 for Q4 2013 compared to $21.49 in Q4 2012. The decrease is the result of fleet expansions at Enterprise customers, which garnered a lower ARPU than pure SaaS subscribers.
  • Gross margin was 58% of total revenue for the year, an increase from 53% in 2012 and 58% of total revenue in Q4 2013 compared to 46% in Q4 2012. The increase over the prior comparable periods were driven by a higher proportion of high margin hardware delivered and cost savings initiatives relating to recurring revenues.
  • Cash operating expenses (sales and marketing, research and development, and general and administrative excluding non-recurring items) increased 7% to $15.1 million in 2013 from $14.2 million in 2012 and 16% to $3.7 million in Q4 2013 from $3.2 million in Q4 2012. The increase was due to an increase in R&D aimed at our new Driver Center product and sales and marketing headcount costs.

"We are pleased to be reporting positive income results from continuing operations for the year, as well as the large gain reported from the sale of NextBus", said Scott Edmonds, President and CEO, continuing, "Our product suite, led by our new Android solutions; our channel strategy, anchored by AT&T in the US and by Bell in Canada; and our focus on our three chosen verticals of winter maintenance, transport and oil and gas service fleets are all aligned at achieving our business goal of acquiring and retaining recurring revenue. Notable contracts in this quarter, include Strike Construction and City of Cleveland where we expanded the size of the fleet under subscription. Our Government team won new business with the District of North Vancouver and with the State of Vermont - wins which will add new subscribers in 2014, and our Commercial group continues to grow its customer base with sales to Slegg Lumber and Zip Truck Lines in the quarter, which again will have a long term impact on our subscriber numbers and revenues. We saw flat to little growth in our full service subscriber counts and recurring revenues in 2013 as we completed the flush out of non-strategic businesses and historical clients whose requirements do not necessarily align with our long term business vision."

Mr. Edmonds continued, "As we look toward 2014, we expect to see our two solutions - Quadrant and InterFleet become more tightly integrated and eventually merged, allowing us to continually add new subscribers without significantly impacting our expense line, and making the user experience richer and more flexible for our users."

Financial Highlights of Continuing Operations

Three months ended Twelve months ended
('000 of Cdn $) December 31,
2013
December 31,
2012
December 31,
2013
December 31,
2012
Hardware revenue $ 2,073 $ 2,130 $ 10,107 $ 8,818
Recurring revenue 4,652 4,634 18,415 18,502
Services and other revenue 443 296 1,561 1,506
7,168 7,060 30,083 28,826
Gross margin ($) 4,146 3,223 17,325 15,265
Gross margin (%) 58 % 46 % 58 % 53 %
Total operating expenses(1) 4,608 1,683 17,726 16,657
Net (loss) income from continuing operations $ (250 ) $ 2,857 $ 312 $ (511 )
Adjusted EBITDA(2) from continuing operations $ 440 $ 7 $ 2,244 $ 1,124
(1) Total operating expenses, including non-recurring items.
(2) 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 year increased 15% largely due to deliveries of hardware solutions to major customers, including a Fortune 100 corporate fleet customer and to the recently sold NextBus business. Hardware revenues for the quarter were in line with the prior year.

Recurring revenues were flat for the year and Q4 2013 compared to the prior periods. The Company has replaced the lost subscription revenue from the planned exit of the theft recovery vertical with subscribers from sales and implementations to both end users and enterprise customers over the past 12 months. 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.

Service and other revenues for the year and Q4 2013 increased 4% and 50% respectively, over the prior comparable periods as a result of higher volumes of Government project management and customization services provided.

Gross Margin

Gross margin percentage for the year and Q4 2013 were stronger compared to the prior comparable periods due to a higher proportion of high margin hardware revenue delivered and cost savings initiatives related to recurring revenue.

Operating Expenses

Operating expenses for continuing operations excluding depreciation and amortization, share-based payments and non-recurring items increased by 16% and 7% over the prior three and twelve month periods, respectively. The increase for the quarter and year was largely due to research and development projects primarily focused on the new Webtech Driver Center product and an increase in sales and marketing employee costs.

Cash and Working Capital

As at December 31, 2013, the Company's unrestricted cash position amounted to $23.2 million compared with $22.2 million at September 30, 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.

As at December 31, 2013, the Company had net working capital of $27.1 million, compared with $26.4 million at September 30, 2013 and $9.6 million at December 31, 2012. As at March 25, 2014, Webtech Wireless had 105,579,268 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 Twelve months ended
('000 of Cdn $) December 31, 2013 December 31, 2012 December 31, 2013 December 31, 2012
Net (loss) income from continuing operations $ (250 ) $ 2,857 $ 312 $ (511 )
Add (deduct)
Finance (income) expense (25 ) 9 (340 ) 48
Income tax (recovery) expense (5 ) (1,968 ) 34 (1,971 )
Depreciation and amortization 194 (200 ) 619 1,380
Share-based payments (5 ) 71 65 358
Foreign exchange (gain) loss (182 ) (56 ) (407 ) 196
Work force realignment 581 20 688 592
Strategic review costs 93 - 666 -
Litigation settlement and other one-time costs 39 170 607 186
Impairment of intangible assets - 594 - 594
Restructuring cost including share-based payments - 104 - 252
One-time costs reclassified to discontinued operations - (1,594 ) - -
Adjusted EBITDA(1) from continuing operations $ 440 $ 7 $ 2,244 $ 1,124
(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 Consolidated Financial Statements for the three and twelve months ended December 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, March 26, 2014, at 11:00 am ET hosted by Mr. Scott Edmonds, President and 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 +1.416.340.8527 or +1.800.769.8320. 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 (TSX:WEW) 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. • The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release. • Trademarks are the property of their owners.

Contact Information