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XRS Reports Fiscal 2013 Third Quarter Results

                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