XRS Reports Fiscal 2013 Third Quarter Results Company records mobile software revenue growth of 21 percent, free cash flow of $1.7 million and third consecutive quarter of profitability PR Newswire MINNEAPOLIS, Aug. 8, 2013 MINNEAPOLIS, Aug. 8, 2013 /PRNewswire/ -- XRS Corporation (formerly Xata Corporation, NASDAQ:XRSC) reported results for its fiscal 2013 third quarter ended June30, 2013. For a third consecutive quarter, the Company reported net income to common shareholders. Specifically, for the third quarter of fiscal 2013, net income to common shareholders was $0.2 million, or $0.01 per diluted share, an increase of $6.4 million compared to a fiscal 2012 third quarter net loss to common shareholders of $6.2 million, or $0.58 per diluted share. The third quarter of fiscal 2012 included impairment and business realignment charges of $5.7 million, or $0.54 per diluted share. Fiscal 2013 third quarter mobile software revenue grew 21 percent. The Company reported total software revenue and total revenue of $11.3 million and $13.4 million, respectively, for the third quarter of fiscal 2013, compared to total software revenue and total revenue of $11.8 million and $15.6 million, respectively, for the comparable period in fiscal 2012. Further highlights for the quarter include: oFiscal 2013 third quarter software revenue accounted for approximately 84 percent of total revenue, compared to 76 percent for the same period of fiscal 2012, contributing to continuing improvement in overall gross margins. oThe Company signed 69 new mobile customers in the third quarter of fiscal 2013. oNet income of $0.2 million contributed to free cash flow of $1.7 million for the third quarter of fiscal 2013, compared to free cash flow of $29,000 for the same period in fiscal 2012. "A significant highlight this past quarter was bringing our new XRS mobile solution to market and the high level of interest it has already received," said Jay Coughlan, XRS Corporation chairman and chief executive officer. "At the same time, we were able to achieve three consecutive quarters of profitability and positive cash flow." For the third quarter of fiscal 2013, selling, general and administrative expenses decreased to $5.1 million, compared to $6.5 million for the comparable period in fiscal 2012. The intangible asset impairment and workforce reduction charges recorded in the third quarter of fiscal 2012 continue to drive favorability in the Company's amortization and personnel expenses. Research and development expenses were $2.9 million and $4.0 million for the third quarter of fiscal 2013 and 2012, respectively. During the third quarter of fiscal 2013, the Company capitalized $0.1 million in software development costs associated with the Company's XRS mobile solution. Continued investment in the enhancement of the XRS mobile solution's functionality and maintenance releases to the Company's legacy solutions to ensure compliance with continually changing governmental regulations drove the research and development expenses recorded in the third quarter of fiscal 2013. The Company reported non-GAAP earnings of $2.1 million, or $0.07 per diluted share for the third quarter of fiscal 2013, compared to a non-GAAP loss of $0.3 million, or $0.03 per diluted share for the same period in fiscal 2012. Fiscal 2012 non-GAAP earnings was impacted by $1.8 million of business realignment charges. The improvement in non-GAAP earnings is a reflection of improved overall gross margins and a reduced cost structure. "Consistent with our strategy, XRS Corporation will continue to invest in mobile revenue growth while continuing to meet the current needs of our existing customers and working with them to transition to the XRS solution," said Coughlan. For the nine months ended June 30, 2013, mobile software revenue increased 22 percent, while total software revenue remained relatively consistent with the comparable period in fiscal 2012. Total revenue was $42.1 million for the nine months ended June 30, 2013, compared to $48.1 million for the comparable period in fiscal 2012 as a result of decreased hardware revenue as customers continue to adopt mobile solutions with no upfront hardware costs. For the nine months ended June 30, 2013, the Company reported non-GAAP earnings of $6.5 million, or $0.23 per diluted share, compared to $0.4 million, or $0.01 per diluted share, for the comparable period in fiscal 2012, an increase of $6.1 million. Business realignment charges recorded in fiscal 2012 contributed $1.8 million to the increase in non-GAAP earnings, and the remaining improvement is a reflection of mobile revenue growth, improved overall gross margins and a reduced cost structure. As of June30, 2013, the Company maintained a debt-free balance sheet and reported an increase of $2.6 million in working capital to $12.2 million, compared to $9.6 million in working capital as of September30, 2012. Free cash flow was $4.5 million for the nine months ended June 30, 2013, compared to negative $2.9 million for the comparable period in fiscal 2012. Summary of revenue and gross margins (deficits) is as follows (in thousands, except percentage data): For the Three Months Ended For the Nine Months Ended June 30, June 30, 2013 2012 2013 2012 Revenue: Software $ 11,266 $ 11,833 $ 34,613 $ 35,222 Hardware systems 1,798 3,480 6,569 11,568 Services 340 329 913 1,312 Total revenue $ 13,404 $ 15,642 $ 42,095 $ 48,102 Gross margins (deficits): Software 73% 71% 73% 71% Hardware systems 18% (14%) 14% (8%) Services (94%) (74%) (88%) (45%) Total gross margin 61% 49% 61% 49% Non-GAAP vs. GAAP Financial Measures To assist investors in understanding the Company's financial performance, the Company supplements the financial results that are generated in accordance with the accounting principles generally accepted in the United States, or GAAP, with non-GAAP financial measures, including non-GAAP earnings, non-GAAP earnings per diluted share, working capital and free cash flow. These non-GAAP financial measures are useful to investors for evaluating the Company's historical and prospective financial performance, as well as our performance relative to competitors. Management regularly uses these non-GAAP financial measures internally to understand, manage and evaluate its ongoing business operations and to make operating decisions. These non-GAAP financial measures are among the primary factors management uses in planning for and forecasting future period performance. Management believes that these non-GAAP financial measures reflect an additional way of analyzing aspects of the Company's ongoing operations that, when viewed with our GAAP results, provides a more complete understanding of the factors and trends affecting our business. The end of this release contains a reconciliation of the specific non-GAAP financial measures to the nearest comparable GAAP measures. About XRS XRS Corporation (formerly Xata Corporation) delivers fleet management and compliance software solutions to the trucking industry to help maintain regulatory compliance and reduce operating costs. XRS is leading the trucking industry's migration to mobile devices for collecting and analyzing compliance and management data. Its mobility-based products have no upfront hardware costs and run on smartphones, tablets and rugged handhelds. XRS has sales and distribution partnerships with the major wireless carriers supporting the U.S. and Canadian trucking industries. Through XRS' solutions: XataNet, Turnpike, MobileMax and XRS, we are currently serving 112,000 subscriptions through 1,400 customers. Our various solutions help fleet managers, dispatchers and drivers collect, sort, view and analyze data to help reduce costs, increase safety, attain compliance with governmental regulations and improve customer satisfaction. For more information, visitwww.xrscorp.comor call 1-800-745-9282. Cautionary note regarding forward-looking statements This announcement includes forward-looking statements. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Such statements are based on current expectations, and actual results may differ materially. The forward-looking statements in this announcement are subject to a number of risks and uncertainties including, but not limited to, the possibility of continuing operating losses, the ability to adapt to rapid technological change, the ability of our solutions to be compliant with future regulations, dependence on propriety technology and communication networks owned and controlled by others, the failure to renew contracts or failure to sell additional solutions or services to existing customers, the timely introduction and market acceptance of new products, the ability to fund future research and development activities, the ability to establish and maintain strategic partner relationships and the other factors discussed under "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September30, 2012 (as updated in our subsequent reports filed with the SEC). These reports are available under the "Investors" section of our website at www.xrscorp.com and through the SEC website at www.sec.gov. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events. XRS Corporation Consolidated Statements of Operations (Unaudited) (In thousands, except per For the Three Months Ended For theNine Months share data) June 30, Ended June 30, 2013 2012 2013 2012 Revenue Software $ 11,266 $ 11,833 $ 34,613 $ 35,222 Hardware systems 1,798 3,480 6,569 11,568 Services 340 329 913 1,312 Total revenue 13,404 15,642 42,095 48,102 Cost of goods sold 5,225 8,015 16,577 24,500 Selling, general and 5,094 6,463 15,940 19,172 administrative Research and development 2,873 3,983 8,721 10,979 Impairment of intangible — 3,500 — 3,500 asset Total costs and expenses 13,192 21,961 41,238 58,151 Operating income (loss) 212 (6,319) 857 (10,049) Net interest and other (35) (33) (82) (297) expense Income (loss) before income 177 (6,352) 775 (10,346) taxes Income tax (benefit) expense (52) (192) 51 (470) Net income (loss) 229 (6,160) 724 (9,876) Preferred stock dividends and (59) (57) (175) (119) deemeddividends Net income (loss) to common $ 170 $ (6,217) $ 549 $ (9,995) shareholders Net income (loss) per common share: Basic $ 0.02 $ (0.58) $ 0.05 $ (0.93) Diluted $ 0.01 $ (0.58) $ 0.03 $ (0.93) Weighted average common and common share equivalents: Basic 10,858 10,753 10,831 10,714 Diluted 28,345 10,753 27,766 10,714 XRS Corporation Consolidated Balance Sheets June 30, September 30, (In thousands) 2013 2012 (Unaudited) Current assets Cash and cash equivalents $ 9,309 $ 7,120 Accounts receivable, net 6,760 7,835 Inventories 2,607 3,811 Deferred product costs 692 770 Prepaid expenses and other current assets 2,004 1,406 Total current assets 21,372 20,942 Equipment and leasehold improvements, net 6,172 7,313 Intangible assets, net 4,940 6,487 Goodwill 16,386 17,288 Deferred product costs, net of current portion 261 425 Other assets 663 351 Total assets $ 49,794 $ 52,806 Current liabilities Revolving line of credit $ — $ 2,300 Accounts payable 3,523 3,436 Accrued expenses 4,925 4,832 Deferred revenue 1,928 2,314 Total current liabilities 10,376 12,882 Deferred revenue, net of current portion 619 1,077 Deferred tax liabilities — 9 Other long-term liabilities 132 314 Total liabilities 11,127 14,282 Shareholders' equity Preferred stock 44,524 44,292 Common stock 108 108 Additional paid-in capital 50,490 49,979 Accumulated deficit (56,770) (57,319) Accumulated other comprehensive income 315 1,464 Total shareholders' equity 38,667 38,524 Total liabilities and shareholders' equity $ 49,794 $ 52,806 XRS Corporation Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended June 30, (In thousands) 2013 2012 Operating activities Net income (loss) $ 724 $ (9,876) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 5,080 6,318 Impairment of intangible asset — 3,500 Amortization of deferred financing costs 57 20 Deferred income taxes (9) (532) Loss on sale or disposal of equipment and leased 48 75 equipment Stock-based compensation 498 628 Changes in assets and liabilities: Accounts receivable, net 1,056 1,290 Inventories, net 1,165 (363) Deferred product costs 242 661 Prepaid expenses and other assets (672) (403) Accounts payable (162) (874) Accrued expenses and other liabilities (10) 779 Deferred revenue (837) (1,546) Net cash provided by (used in) operating 7,180 (323) activities Investing activities Purchase of equipment and leasehold improvements (2,324) (2,536) Capitalized software development (355) — Proceeds from the sale of equipment 16 2 Net cash used in investing activities (2,663) (2,534) Financing activities Revolving line of credit (2,300) 2,100 Payments on debt obligations — (3,627) Deferred financing costs (50) (97) Proceeds from exercise of options 13 — Net cash used in financing activities (2,337) (1,624) Effects of exchange rate on cash 9 (14) Increase (decrease) in cash and cash 2,189 (4,495) equivalents Cash and cash equivalents Beginning 7,120 12,407 Ending $ 9,309 $ 7,912 XRS Corporation Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited) Non-GAAP Earnings and Non-GAAP Earnings Per Diluted Share For the Three Months Ended June For the Nine Months Ended 30, June 30, (In thousands, except per share 2013 2012 2013 2012 data) Net income (loss) to common $ 170 $ (6,217) $ 549 $ (9,995) shareholders Adjustments: Depreciation & amortization 1,718 2,351 5,080 6,318 expense Impairment of — 3,500 — 3,500 intangible asset Stock-based 150 135 498 628 compensation Net interest 27 31 68 304 expense Preferred stock dividends and 59 57 175 119 deemed dividends Income tax (52) (192) 51 (470) (expense) benefit Other — — 50 — Total adjustments 1,902 5,882 5,922 10,399 Non-GAAP earnings $ 2,072 $ (335) $ 6,471 $ 404 (loss) Non-GAAP earnings (loss) per diluted $ 0.07 $ (0.03) $ 0.23 $ 0.01 share Shares used in calculating non-GAAP earnings 28,345 10,753 27,766 27,238 (loss) per diluted share Working Capital June 30, September 30, (In thousands) 2013 2012 Current assets $ 21,372 $ 20,942 Current liabilities (10,376) (12,882) Net current assets 10,996 8,060 Current portion of deferred revenue net deferred 1,236 1,544 costs Working capital $ 12,232 $ 9,604 XRS Corporation Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited) Free Cash Flow For the Three Months Ended For the Nine Months Ended June 30, June 30, 2013 2012 2013 2012 Net cash provided by (used in) operating $ 2,933 $ 583 $ 7,180 $ (323) activities Net cash used in investing activities: Purchase of equipment and leasehold (95) (62) (319) (1,977) improvements Purchase of Relay assets (843) (492) (2,005) (559) Capitalized software (270) — (355) — development Proceeds from the sale — — 16 2 of equipment Net cash used in (1,208) (554) (2,663) (2,534) investing activities Free cash flow $ 1,725 $ 29 $ 4,517 $ (2,857) SOURCE XRS Corporation Website: http://www.xrscorp.com Contact: Michael Weber, Chief Financial Officer, XRS Corporation, 952-707-5600
XRS Reports Fiscal 2013 Third Quarter Results
Press spacebar to pause and continue. Press esc to stop.