Webtech Wireless Announces Q2 2015 ResultsFriday, August 21, 2015
Vancouver, BC, August 21, 2015--(T-Net)--Webtech Wireless Inc. (TSX:WEW), a leading provider of GPS fleet management solutions, announced its financial results for the three and six month periods ended June 30, 2015.
On July 30, 2015, the Company announced it had entered into a definitive arrangement agreement with BSM Technologies Inc..
Subject to the terms of the Arrangement Agreement, BSM will acquire all of the outstanding common shares of the Company for $0.52 in cash plus 2.136 BSM common shares for each common share of Webtech Wireless (the “Arrangement”).
The transaction is structured as a merger of equals and upon completion, existing BSM and Webtech Wireless shareholders will own approximately 51% and 49% of the combined company, respectively.
The transaction is scheduled to be completed on September 30, 2015, pending receipt of certain approvals including the approval of the shareholders of each company, approval of the Supreme Court of British Columbia as well as certain regulatory approvals.
Q2 2015 and YTD 2015 Financial and Operational Highlights
“We began this fiscal year 2015 with a commitment to all of our stakeholders that we would return Webtech Wireless to consistent profitability levels as we released industry leading telematics solutions, rebuilt our sales pipeline through new sales leadership and renewed our focus on customer satisfaction,” commented Andrew Gutman, Chairman of the Company and CEO.
“We are pleased that these efforts delivered tangible results in terms of revenue and EBITDA performance this quarter. Every member of the Webtech Wireless team deserves credit for helping to deliver our best EBITDA quarter to date. We remain disappointed that recurring revenue continues to lag behind our objectives, but we believe we are making great strides towards generating subscriber growth in our government and commercial markets, and reducing ongoing churn. Finally, it goes without saying that we are also excited about the recently announced merger of equals transaction with BSM Technologies and are confident that the scale inherent in this transaction will allow us to continue building on our Q2 success.”
|Three months ended||Six months ended|
|(‘000 of CAD $)||June 30,
|Services and other revenue||474||379||1,015||638|
|Gross margin ($)||4,479||3,785||8,687||7,525|
|Gross margin (%)||58%||54%||55%||55%|
|Total operating expenses||3,625||4,042||7,408||8,413|
|Net income (loss)||$||736||$||(1,577||)||$||1,398||$||(1,940||)|
EBITDA is a non-GAAP measure and is therefore not universally defined. The Company defines EBITDA as earnings before finance income, taxes, depreciation and amortization, foreign exchange loss, restructuring expense and insurance recovery.
Hardware revenues for the three and six months ended June 30, 2015 increased due to hardware deliveries to an enterprise fleet customer, along with strong government solution sales from Q1 2015. Services and other revenues for the quarter and year to date increased over the prior comparable periods due to implementation projects for government customers.
The Company's total subscriber base remained consistent at 79,500 in Q2 2015 as compared to 79,900 in Q2 2014. However, recurring revenues for the three months ended June 30, 2015 decreased largely from a net reduction of full service commercial subscribers over the prior 12 months, which were replaced by lower margin enterprise and data pump subscribers. As a result, the Company's total ARPU for the three and six months ended June 30, 2015 decreased to $17.71 and $18.33 compared to $18.45 and $18.99 in the prior comparable periods. The Company's focus continues to be on the acquisition and retention of high margin recurring revenue.
Gross margin for the quarter and year to date increased over the prior comparable periods as a result of higher overall revenues. The margin percentage for the quarter increased due to a greater proportion of higher margin hardware revenues delivered during the period, while the margin percentage for the year to date remained in line with the prior comparable period.
Cash operating expenses for the three and six months ended June 30, 2015 decreased 11% and 13% compared to the prior periods, respectively. The $416 decrease in cash operating expenses for the quarter and $1,031 year to date was due to lower headcount and facilities costs as a result of restructuring efforts; this was partially offset by an increase in sales commissions resulting from the revenue performance for the period and consultants for ongoing R&D projects.
Cash and Working Capital
As at June 30, 2015, the Company's cash position amounted to $23.8 million, an increase compared to $22.8 million at December 31, 2014 due to the Company's operating performance for the period.
As at June 30, 2015, the Company had net working capital of $25.8 million, compared with $24.5 million at December 31, 2014. As at August 5, 2015, Webtech Wireless had 20,184,634 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.
Financial Statements and Management's Discussion & Analysis
The Condensed Interim Consolidated Financial Statements for the three and six months ended June 30, 2015 and the related Management's Discussion and Analysis for the period has been filed on SEDAR atwww.sedar.com, and also on the Company's website at www.webtechwireless.com.
About Webtech Wireless®
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. Customers trust us to ensure people are accountable and vehicles are visible, through the cloud, in the office, or straight to mobile devices. Our Webtech Fleet Center™ software solution, and our supporting product suite, including Webtech Driver Center™ and Webtech 511®, provides advanced fleet management capabilities for winter maintenance, public works and waste management fleets within government markets; and fleet performance, driver behavior, Hours of Service (HOS), and Electronic Logging Device (ELD) technology for commercial fleet operations and compliance.
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.
Burnaby, BC (Wireless)
BSM Technologies Ltd.
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