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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        ----------------------------------------------------------------------- ----- ----------------------------------------------------------------- -----------                       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  ----------------------------------------------------------------------------                          7,168          7,060         30,083         28,826  ----------------------------------------------------------------------------   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    ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Net (loss)                                                                    income from                                                                  continuing                                                                   operations       $       (250)  $      2,857   $        312   $       (511)   Adjusted                                                                      EBITDA(2)                                                                    from continuing                                                              operations       $        440   $          7   $      2,244   $      1,124  ---------------------------------------------------------------------------- (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:        ----------------------------------------------------------------------- ----- ----------------------------------------------------------------- -----------                          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