Webtech Wireless Announces Q4 and FY 2013 Results

Webtech Wireless Announces Q4 and FY 2013 Results 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 03/26/14 --   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 


 
 
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                      Three months ended           Twelve months ended      
----------------------------------------------------------------------------
                  December 31,   December 31,   December 31,   December 31, 
('000 of Cdn $)           2013           2012           2013           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 
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                         7,168          7,060         30,083         28,826 
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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 
 
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Net (loss)                                                                  
 income from                                                                
 continuing                                                                 
 operations       $       (250)  $      2,857   $        312   $       (511)
 
Adjusted                                                                    
 EBITDA(2)                                                                  
 from continuing                                                            
 operations       $        440   $          7   $      2,244   $      1,124 
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(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: 


 
 
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-----------
                         Three months ended         Twelve months ended     
                    --------------------------------------------------------
                     December 31,  December 31,  December 31,  December 31, 
('000 of Cdn $)              2013          2012          2013          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(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
Mike Cornford
Director of Marketing
+1 604.419.8162
press@webtechwireless.com
www.webtechwireless.com
 
 
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