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Webtech Wireless Announces Q3 2013 Results

Webtech Wireless Announces Q3 2013 Results 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 11/14/13 -- 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 nine month periods ended September 30, 2013.  
The Company is reporting Adjusted EBITDA of $0.2 million and $1.8
million for the three and nine months ended September 30, 2013, and a
net loss of $0.4 million and net income of $0.6 million from
continuing operations, respectively. 
Unless otherwise noted, 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. 
Q3 2013 and YTD 2013 Financial and Operational Highlights 


 
--  Adjusted EBITDA was $0.2 million and $1.8 million for the three and nine
    months ended September 30, 2013 compared to $0.5 million and $0.7
    million in the prior comparable periods. 
--  The Company is reporting a net loss of $0.4 million or $0.00 per share
    and net income of $0.6 million or $0.01 per share from continuing
    operations for the three and nine months ended September 30, 2013
    compared to a loss of $1.5 million or $0.01 per share and $3.4 million
    or $0.03 per share in the prior comparable periods, respectively. 
--  Revenue was $7.4 million in the quarter compared to $6.9 million in the
    prior year, and $22.9 million year to date compared to $21.8 million
    year to date in 2012. 
--  Recurring revenue was relatively flat at $4.4 million in Q3 2013
    compared to $4.5 million in Q3 2012, and $13.8 million year to date
    compared to $13.9 million year to date in 2012. The recurring revenue
    decrease was the result of the exit from the low average revenue per
    unit ("ARPU") theft recovery vertical. Excluding the theft recovery,
    recurring revenue rose 2% year on year. 
--  Notable new sales, implementations and expansions during the quarter
    included continued expansion of the City of Cleveland and City of
    Toronto fleets; repeat sales with Strike Construction, Coach Canada and
    a Fortune 100 fleet client; new contracts with Vedder Transport, MTS
    Freight, AG Data Services and Direct Traffic Control; and continued
    sales to the new owners of NextBus. 
--  The Company's subscriber base at September 30, 2013 totalled
    approximately 79,000 compared to 72,000 at December 31, 2012, and 72,000
    at September 30, 2012. The increase in subscribers since September 30,
    2012 and December 31, 2012 is due to the addition of subscribers from
    sales and implementations to both end users and enterprise customers in
    2013, as well as new data pump subscribers from the recently sold
    NextBus business. 
--  Excluding the NextBus data pump subscribers, ARPU decreased to $19.18
    per subscriber for the quarter versus $20.75 per subscriber in the prior
    comparable quarter, and $20.06 year to date in 2013 compared to $21.30
    year to date in 2012. The decrease is the result of fleet expansions at
    Enterprise customers, which garnered a lower ARPU than pure SaaS
    subscribers. 
--  Gross margin was 54% for the quarter, a decline from 58% in the prior
    comparable period. The decrease over the prior comparable period was
    driven by a lower proportion of high margin recurring revenue in
    relation to total revenue. 
--  Cash operating expenses (sales and marketing, research and development,
    and general and administration excluding non-recurring items) increased
    to $3.8 million in Q3 2013 versus $3.5 million in Q3 2012 due to an
    increased focus on sales and marketing and R&D aimed at our new Driver
    Center product. 

 
"Q3 has traditionally been our slowest revenue quarter each year, so
revenue and EBITDA results are in line with our expectations", said
Scott Edmonds, President and CEO, continuing, "We are pleased with
the growth in subscriber count and the overall mix of revenues from
subscriptions and the overall increase in hardware margins we are
producing. We are looking forward to the roll-out and market launch
of the Webtech Drive Center in Q4 and in early 2014. With this
product, we believe that we will be able to increase throughput and
repeatable sales on a cost effective basis, increasing not just our
overall revenue but more importantly, our subscriber count and
recurring revenue each quarter". 
Mr Edmonds continued, "Since the sale of the NextBus business in
January 2013, the board of directors along with management have been
actively considering options to maximize the value of the company,
including determining the use of its excess cash. At the present
time, we are focused on growing and improving the profitability of
our current telematics operations and considering the best use of our
available cash. The results of these deliberations will be reported
to shareholders as soon as they are completed." 
Financial Highlights of Continuing Operations 


 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                           Three months ended             Nine months ended 
----------------------------------------------------------------------------
                     September      September      September      September 
                           30,            30,            30,            30, 
('000 of Cdn $)           2013           2012           2013           2012 
----------------------------------------------------------------------------
Hardware revenue $       2,674  $       2,066  $       8,034  $       6,688 
Recurring                                                                   
 revenue                 4,437          4,505         13,763         13,868 
Services and                                                                
 other revenue             263            342          1,118          1,210 
----------------------------------------------------------------------------
                         7,374          6,913         22,915         21,766 
----------------------------------------------------------------------------
                                                                            
Gross margin ($)         3,990          3,982         13,179         12,042 
Gross margin (%)            54%            58%            58%            55%
                                                                            
Total operating                                                             
 expenses                4,173          5,103         13,118         14,974 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net (loss)                                                                  
 income from                                                                
 continuing                                                                 
 operations      $        (411) $      (1,527) $         562  $      (3,368)
                                                                            
Adjusted                                                                    
 EBITDA(1) from                                                             
 continuing                                                                 
 operations      $         205  $         531  $       1,804  $         674 
----------------------------------------------------------------------------
(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 nine months ended September 30,
2013 increased 29% and 20%, respectively, over the prior comparable
periods largely due to hardware deliveries to new and repeat
customers and to the new owners of the recently sold NextBus
business.  
Recurring revenues were flat for the quarter and year to date
compared to the prior periods. 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 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. Excluding the theft recovery vertical, recurring revenues for
the quarter and year to date increased 2% over the prior period. 
Service and other revenues for the three and nine months ended
September 30, 2013 decreased 23% and 8% respectively, over the prior
comparable periods as a result of lower volumes of installations.  
Gross Margin 
Gross margin percentage for the three months ended September 30, 2013
was weaker compared to the prior comparable period due to a lower
proportion of high margin recurring revenue in relation to total
revenue. The improvement in the gross margin percentage for the nine
months ended September 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 nine months ended September 30, 2013 increased 10% and
were flat compared to the prior periods, respectively. The increase
for the quarter was largely due to research and development projects
primarily focused on the new Webtech Driver Center product and an
increased sales and marketing spend.  
Cash and Working Capital 
As at September 30, 2013, the Company's unrestricted cash position
amounted to $22.2 million compared with $21.3 million at June 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 and $1.0 million USD in restricted cash used
to secure a bonding facility with a US client. 
As at September 30, 2013, the Company had net working capital of
$26.4 million, compared with $9.6 million at December 31, 2012. As at
November 12, 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             Nine months ended 
                ------------------------------------------------------------
                     September      September      September      September 
('000 of Cdn $)       30, 2013       30, 2012       30, 2013       30, 2012 
----------------------------------------------------------------------------
Net (loss)                                                                  
 income from                                                                
 continuing                                                                 
 operations      $        (411) $      (1,527) $         562  $      (3,368)
Add (deduct)                                                                
  Finance                                                                   
   (income)                                                                 
   expense                 (29)            11           (315)            39 
  Income tax                                                                
   expense                                                                  
   (recovery)               20             (6)            39             (3)
  Depreciation                                                              
   and                                                                      
   amortization            154            525            425          1,580 
  Share-based                                                               
   payments                 29             84             70            287 
  Foreign                                                                   
   exchange loss                                                            
   (gain)                  238            253           (225)           252 
  Restructuring                                                             
   cost                                                                     
   including                                                                
   share-based                                                              
   payments                  -            148              -            148 
  Litigation                                                                
   settlement                                                               
   and other                                                                
   one-time                                                                 
   costs                   205            705          1,141          1,167 
  Work force                                                                
   realignment               -            338            107            572 
----------------------------------------------------------------------------
Adjusted                                                                    
 EBITDA(1) from                                                             
 continuing                                                                 
 operations      $         205  $         531  $       1,804  $         674 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(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 nine months ended September 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, November 14,
2013, 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 +1.416.695-7806 or
+1.888.789.9572, participant passcode 7860622. 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. The
Toronto Stock Exchange does not accept responsibility for the
adequacy or accuracy of this release. Trademarks are the property of
their owners.
Contacts:
Webtech Wireless Inc. - Investor Relations
Trevor Greene
Chief Financial Officer
+1 604.628.5195
investors@webtechwireless.com 
Webtech Wireless Inc. - Press and Media
David Greer
Vice President Marketing
+1 604.628.5194
press@webtechwireless.com
www.webtechwireless.com
 
 
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