Webtech Wireless Announces Q4 and FY 2012 Results

Webtech Wireless Announces Q4 and FY 2012 Results 
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 03/15/13 -- 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 period ended December 31, 2012.  
On January 24, 2013, the Company closed the sale of its NextBus
business to Cubic Transportation Systems, Inc., a division of Cubic
Corporation, for total cash proceeds of $20.8 million. As a result,
the results of the Nextbus business have been classified as
discontinued operations. Going forward the Company is now completely
focused on the continuing operations - its Telematics business. 
Q4 2012 Financial and Operational Highlights 


 
--  Adjusted EBITDA from continuing operations was $1.0 million for the year
    compared to a loss of $0.6 million in 2011 and $0.4 million in Q4 2012
    compared to $0.4 million in Q4 2011. The focus on high margin hardware
    and recurring revenue growth, combined with restructuring and cost
    management efforts, have materially increased the Company's operating
    profitability. Adjusted EBITDA from both continuing and discontinued
    operations amounted to $2.5 million in 2012 compared to $0.8 million in
    2011. 
    
--  Revenue from continuing operations was $28.8 million for 2012 compared
    to $33.0 million in 2011, and $7.1 million in Q4 2012 compared to $9.3
    million in Q4 2011. The Telematics revenue decrease was largely the
    result of a decreased focus on the low margin OEM and low average
    revenue per unit ("ARPU") theft recovery verticals. In addition,
    government one-time revenue dropped. Total revenue from continuing and
    discontinued operations amounted to $38.7 million compared to $41.4
    million in 2011. 
    
--  Notable new sales, renewals and implementations during the quarter
    included Green Field Energy, Hino Trucks, uDrove, and City of Toronto. 
    
--  Recurring revenue from continuing operations for 2012 was up 8% to $18.5
    million or 64% of total revenue in 2012 compared to $17.2 million or 52%
    of total revenue in 2011 due to ongoing sales and low churn. Q4 2012
    recurring revenue decreased 
5% to $4.6 million or 66% of total revenue
    compared to $4.9 million or 53% for Q4 2011. The recurring revenue
    decrease was the result of the exit from the low ARPU, low margin theft
    recovery vertical. Recurring revenue from continuing and discontinued
    operations amounted to $24.0 million in 2012 compared to $21.9 million
    in 2011. 
    
--  Subscribers from continuing operations at December 31, 2012 totalled
    approximately 72,000 (combined direct and enterprise), compared to
    72,000 at September 30, 2012 and 91,000 at December 31, 2011. The drop
    in telematics subscribers for the year is due to the exit in Q2 2012
    from the consumer theft recovery vertical in Mexico which has resulted
    in a reduction of 17,000 subscribers, and the cancelation of 6,000
    Brazilian subscribers as the Company has wound up operations in that
    jurisdiction. Offsetting that reduction in low ARPU telematics
    subscribers was the addition of 4,000 full service subscribers during
    the year. The Company's focus on high ARPU subscribers has increased
    annual recurring revenue despite the overall drop in subscribers. 
    
--  Gross margins on continuing operations was 52% of total revenue for the
    year up from 49% in 2011, and 45% of total revenue in Q4 2012 compared
    to 46% in Q4 2011. Gross margins include a Q4 2012 obsolescence charge
    resulting from the annual detailed review of all inventories. 
    
--  Cash operating expenses (sales and marketing, research and development,
    and general and administration excluding depreciation, amortization,
    share based payments and non-recurring items) decreased 15% to $14.2
    million in 2012 from $16.6 million in 2011 and 27% to $2.8 million in Q4
    2012 from $3.8 million in Q4 2011. The decreases were the direct result
    of restructuring efforts and reductions in discretionary spending.
    Recurring revenue was 131% of cash operating expenses in 2012 compared
    to 104% in 2011 and 168% of cash operating expenses in the quarter
    compared to 129% in 2011. 

 
"We are very pleased to report Adjusted EBITDA from our telematics
business on a stand-alone basis without contribution from NextBus,"
said Scott Edmonds, President and CEO. "We enter 2013 focused
exclusively on telematics and our pursuit of sustainable, repeatable,
high margin revenue from our core verticals in order to produce
positive cash flows."  
Mr. Edmonds continued, "With the sale of our NextBus business on
January 24, 2013, Webtech is a profitable, growing business with a
very strong balance sheet. As of today Webtech has cash of $21.1
million, restricted cash of $1.0 million and a holdback related to
the transaction of $2.1 million. The cost and strategic changes we
have made over the past 24 months are complete, and are working well.
Our focus is now to continue building sales momentum in our
commercial and government verticals and creating operating leverage.
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." 
Financial Highlights of Continuing Operations 


 
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                            Three months ended       Twelve months ended    
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                            December     December     December     December 
('000 of Cdn $)             31, 2012     31, 2011     31, 2012     31, 2011 
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Hardware revenue          $    2,130   $    3,730   $    8,817   $   12,872 
Recurring revenue              4,635        4,898       18,503       17,168 
Services and other                                                          
 revenue                         296          649        1,506        2,936 
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                               7,061        9,277       28,826       32,976 
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Gross margin ($)               3,189        4,262       15,123       16,020 
Gross margin (%)                  45%          46%          52%          49%
                                                                            
Total operating expenses       1,670        4,622       16,618       19,401 
                                                                            
Net income (loss) from                                                      
 continuing operations    $    2,838   $   (1,158)  $     (614)  $   (8,032)
                                                                            
Adjusted EBITDA(1)        $      425   $      380   $    1,019   $     (648)
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Revenue  
Revenue mix from continuing operations for the year and Q4 2012
continues to improve, however growth in subscriptions and hardware
sales, was offset by declines in telematics hardware revenue due to a
decreased focus on low ma
rgin OEM and low ARPU theft recovery
verticals. The decrease in hardware and service revenue from the OEM
and theft recovery verticals offset annual recurring revenue growth
of 8%.  
For the year, recurring revenue as a percentage of total revenue was
64% compared to 52% in 2011. Recurring revenue was 66% of total
revenue for the quarter compared to 53% in Q4 2011. The increase in
recurring revenue for the year is due to growth from the addition of
new high ARPU subscribers from sales and implementations over the
past 18 months across the Quadrant and InterFleet product lines. The
continued shift away from hardware to a majority of subscription,
software and services revenue reflects management's focus on
developing the Software as a Service ("SaaS") model.  
Gross Margin  
Gross margin percentage for the year improved due to increased mix of
recurring revenue. The drop in gross margin percentage in Q4 is the
result of obsolescence charges resulting from the annual detailed
review of all inventories. There were substantial margin percentage
improvements on recurring revenues for the year and the quarter
resulting from both increased high ARPU subscribers and realized cost
savings.  
Operating Expenses  
Operating expenses for continuing operations excluding depreciation
and amortization, share based payments, restructuring and
non-recurring items, decreased by 27% and 15% over the prior three
and twelve month periods, respectively. This decrease was the direct
result of restructuring and cost management efforts to reduce both
staff levels and administrative overhead. 
Cash and Working Capital  
As at December 31, 2012, the Company's unrestricted cash position
amounted to $4.3 million, which consisted of cash and cash
equivalents, compared with $5.1 million at September 30, 2012 and
$5.9 million at December 31, 2011. In addition, the Company has $1.0
million USD of restricted cash used to secure its bonding facility.  
As at December 31, 2012, the Company had net working capital of $9.6
million, compared with $15.5 million at September 30, 2012 and $11.9
million at December 31, 2011. The decline in working capital is
largely due to the classification of Nextbus related assets as an
Asset Held for Sale. As at March 13, 2012, Webtech Wireless had
105,457,078 common shares outstanding. 
Adjusted EBITDA(1) from continuing operations  
The Adjusted EBITDA from continuing operations was $1.0 million in
2012 compared to a loss from continuing operations of $0.6 million in
2011. In Q4, Adjusted EBITDA from continuing operation was $0.4
million compared to Adjusted EBITDA from continuing operations of
$0.4 million in Q4 2011.  
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: 


 
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                                  Three months ended   Twelve months ended  
                                 -------------------------------------------
                                  December   December   December   December 
('000 of Cdn $)                   31, 2012   31, 2011   31, 2012   31, 2011 
----------------------------------------------------------------------------
Net income (loss) from continuing                                           
 operations as reported           $  2,838   $ (1,158)  $   (614)  $ (8,032)
Add (deduct)                                                                
  Finance expense                        7         29         46         89 
  Income tax recovery               (1,969)       (22)    (1,971)      (415)
  Depreciation and amortization        241        309      1,380      1,328 
  Share-based payments                  72        142        358        565 
  Foreign exchange (gain) loss         (56)       346        196       (200)
  Restructuring cost including                                              
   share-based payments                103        360        252      5,069 
  Impairment of intangible assets      594          -        594          - 
  Loss on sale of assets                 2          -          2         23 
  Intellectual property and other                                           
   litigation                          167         64        184        432 
  Work force realignment                20          -        592          - 
  Tax adjustment                         -        185          -        185 
  Litigation settlement                  -        125          -        225 
  One-time accounting fees               -          -          -         83 
  One time items - reclassified                                             
   to discontinued operations       (1,594)         -          -          - 
----------------------------------------------------------------------------
Adjusted EBITDA(1) from                                                     
 continuing operations            $    425   $    380   $  1,019   $   (648)
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(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 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, 2012 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 15, 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 +1.416.340.2216 or
+1.866.226.1792. A taped replay of the conference call will be
archived on the Company's corporate website at:
www.webtechwireless.com.  
About Webtech Wireless(R) 
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(TM). Our products are
InterFleet(R), for government winter maintenance, public works and
waste management fleets; and Quadrant(R), for commercial fleet
operations and compliance (HOS, EOBR). Please visit
www.webtechwireless.com. 
All amounts in Canadian dollars (CAD$) unless otherwise noted.
Trademarks are the property of their owners. 
The Toronto Stock Exchange does not accept responsibility for the
adequacy or accuracy of this release. 
Contacts:
Webtech Wireless Inc. - Investor Relations
Andrew Morden
Chief Financial Officer
+1 604.434.7337
investors@webtechwireless.com 
Webtech Wireless Inc. - Press and Media
David Greer
Vice Presi
dent Marketing
+1 604.628.5194
press@webtechwireless.com
www.webtechwireless.com