Wireless Matrix Corporation (TSX:WRX), the leading provider of service chain
performance management solutions targeting field service organizations, today
announced financial and operating results for the three months ended July 31,
2011.
All currency is expressed in U.S. dollars.
First Quarter 2012 Highlights
-- Ended the quarter with 85,106 total subscribers, compared to 83,679
three months earlier.
-- Application-related subscribers increased by 1,479 during the quarter to
61,304.
-- Small and medium business segment is now 15% of our application-related
subscriber base with over 9,100 subscribers.
-- Total revenues were $8.2 million, compared to $8.0 million in Q4 2011.
-- Application-related revenue was $3.3 million, compared to $3.2 million
in the prior quarter.
-- Service gross margin was 80%, with applications achieving 90% gross
margin resulting in overall gross margin of 63%.
-- Proforma Adjusted EBITDA of $1.2 million, a 2% increase compared to Q1
2011. Adjusted EBITDA(i) for Q1 2012 was $692,000 which includes the
impact of $508,000 of litigation-related expenses.
-- Proforma net loss of $166,000 in the first quarter of fiscal year 2012
versus net loss of $448,000 in the prior year. Net loss was $674,000 or
$0.01 per share, which includes the impact of $508,000 of litigation-
related expenses.
Subsequent to quarter end, Wireless Matrix announced the acquisition of certain
assets of SkyGuard, LLC which supports Wireless Matrix's priority to grow its
applications business through new subscriber additions with the addition of at
least 15,000 subscribers. Nearly 75% of Skyguard's subscribers are from
enterprise clients similar to the Wireless Matrix customer base. When coupled
with the Corporation's recent organic growth, the SkyGuard acquisition enables
Wireless Matrix to achieve its goal of attaining 100,000 subscribers.
The SkyGuard acquisition also enhances Wireless Matrix's position as the leading
and trusted provider of Mobile Resource Management (MRM) and GPS solutions to
enterprise service fleets in the utility and cable markets. In addition, this
opens up great growth opportunity for the Corporation to enter into the
construction vertical as well as grow its market share in municipality and local
government. The acquisition also doubles the Company's SMB subscriber base, a
key new growth avenue for Wireless Matrix. Furthermore, the acquisition adds new
features to Wireless Matrix's FleetOutlook(R) applications suite including asset
tracking with theft alerts, fuel tax reporting and posted speed limits.
"Our recent investments in organic growth are beginning to pay off with 3,185
gross subscriber adds this quarter," said J. Richard Carlson, president and
chief executive officer of Wireless Matrix. "We reversed the recent trend of
declining subscribers, and our sales pipeline has never been stronger. In
addition, we are seeing very encouraging results from a strategic partnership we
have been fostering. These activities, coupled with the addition of the SkyGuard
subscriber base, have enabled us to catapult to our goal of 100,000 subscribers
and to a much brighter future."
Financial Highlights
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Three months Three months Three months
All currency in thousands except ended ended ended
per share and ARPU data. July 31 April 30 July 31
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2011 2011 2010
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Application-related revenue $ 3,288 $ 3,213 $ 3,613
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Satellite-related revenue 2,634 2,559 3,178
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Total service revenue 5,922 5,772 6,791
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Hardware and license revenue 2,322 2,268 2,688
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Total revenue 8,244 8,040 9,479
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Gross margin(i) 5,178 5,010 5,938
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Operating expenses 3,978 3,813 4,760
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Litigation expenses 508 154 --
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Proforma adjusted EBITDA(i) 1,200 1,197 1,178
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Adjusted EBITDA(i) 692 1,043 1,178
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Net loss $ (674) $ (80) $ (416)
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Weighted average number of shares
outstanding 83,348,264 83,028,456 82,673,629
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Basic and diluted loss per share: $ (0.01) $ (0.04) $ (0.01)
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Cash balance $ 10,629 $ 11,982 $ 13,563
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Working Capital $ 12,898 $ 13,353 12,361
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Total subscribers 85,106 83,679 85,117
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Average Revenue Per Unit (ARPU)(i) $ 23.35 $ 22.85 $ 25.30
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(i) See Non-GAAP Measures below
Financial and Operating Review
Wireless Matrix ended the quarter with 85,106 subscribers, up from 83,679 at the
end of the previous quarter, and roughly equal to the 85,117 subscribers at July
31, 2010. Net subscriber additions during the first quarter totaled 1,427 units,
as 3,185 gross additions were partially offset by churn or disconnects of 1,758
units. The churn relates primarily to significant churn with the Company's
largest telecom customer. It is important to note that without this customer's
disconnects, churn would have been less than 0.5% a month, significantly lower
than the industry average.
Application-related service revenue was $3.3 million in the first quarter of
fiscal 2012, an increase of 2% over Q4 2011, however it was a decrease of 9%
from $3.6 million in Q1 2011 resulting from net churn over the past year that
was reversed in Q1 2011 with positive net adds of 1,427. The Corporation has
been transitioning historic satellite communication subscribers to higher gross
margin, lower cost application related services over the past several years; as
a result, satellite-related services revenues of $2.6 million were up 2% from
the previous quarter and down 17% from $3.2 million a year earlier. In
conjunction with the transition to SaaS-based application and cellular services,
hardware and license revenues have declined over time to $2.3 million as the mix
of hardware units sold has shifted from primarily higher priced satellite units
to lower priced wireless communication devices. Total revenues in the first
quarter of fiscal 2012 were $8.2 million, an improvement of 3% from $8,040 in Q4
2011 and a decrease of $1.2 million or 13% compared to Q1 2011 revenues.
Gross margin percentage of 63% in the first quarter of fiscal 2012 was an
improvement of 1% from the prior quarter and unchanged from a year earlier, as a
4% increase in hardware margins to 20% was offset by a 1% decrease in service
margins to 80%. Gross profit of $5.2 million was 3% greater than Q4 2011 gross
profit of $5,010 and 13% below Q1 2011 gross profit of $5.9 million due to the
decrease in revenue.
Proforma Adjusted EBITDA(i) was $1.2 million in Q1 2012, a slight increase over
both Q1 and Q4 2011. Adjusted EBITDA of $692 for Q1 2012 was negatively affected
by $508,000 of litigation-related expenses. The litigation expenses coupled with
the decrease in revenue and gross profit more than offset the impact of over
$500,000 of reductions in operating expenses achieved this quarter.
Wireless Matrix had a cash balance of $10.6 million at July 31, 2011, compared
to $12.0 million at April 30, 2011. The Corporation has no debt, and its $4
million line of credit remains unused.
Outlook
"In the second quarter we are planning a major product release that will add
important functionality for our customers and more effectively service key
niches within our subscriber base. We expect a strengthened product offering to
complement our expanded sales and marketing efforts," said Maria C. Izurieta,
chief financial officer of Wireless Matrix. "The SkyGuard acquisition provides
us with new subscribers in both the enterprise and SMB segments. We expect the
purchase to add approximately $2 million of annual recurring revenues, and to be
accretive to our bottom line within one year as we integrate their subscribers
into our FleetOutlook platform and obtain other scale economies."
Conference Call
Wireless Matrix has scheduled a conference call to begin at 10:00 a.m. ET on
Thursday, September 29, 2011, to discuss these results. The conference call
dial-in number is 800.705.1680. A replay of the conference call will be
available on the Company's website at www.wirelessmatrix.com or by dialing
800.558.5253 (code #21538270), shortly after the completion of the conference
call until 11:59 p.m. ET on October 1, 2011.
About Wireless Matrix
Wireless Matrix Corporation (TSX:WRX) is a leader in mobile resource management
providing service chain execution solutions to enterprises with service fleets.
Our solutions provide location intelligence for managing, measuring and
monitoring service execution, while at the same time increasing productivity and
reducing operating expenses within service fleet operations. The Wireless Matrix
solution suite includes FleetOutlook(R), a web-based platform that provides
management and fleet operators complete visibility into their operations,
enabled by real-time wireless data communication services and hardware devices.
Wireless Matrix is headquartered in Herndon, Va.
Non-GAAP measures
In addition to providing measures in accordance with International Financial
Reporting Standards, Wireless Matrix presents certain supplemental measures that
are used by Management to manage and measure operations. These are gross margin,
operating expenses, adjusted EBITDA, proforma adjusted EBITDA, current
liabilities before deferred product revenue, ARPU, and churn rates. These
measures do not have any standardized meaning prescribed by Canadian GAAP and
are therefore unlikely to be comparable to similar measures presented by other
companies. Investors are urged to refer to the "Supplemental Non-GAAP measures"
section in our Management Discussion and Analysis for more details.
Forward Looking Statements
General information regarding the Corporation set forth in this document,
including management's assessment of the Corporation's future plans and
operations, contains forward-looking statements that involve substantial known
and unknown risks and uncertainties, some of which are beyond the Corporation's
and management's control, including but not limited to, the impact of general
economic conditions, industry conditions, market demand, dependence on key
customers, and their contract renewals at existing ARPU and with the number of
their subscribers on our services, financial conditions and wherewithal of
customers, non-infringement on third-party technology, ability to grow through
acquisition, technological aptitude and scalability and reliability of products,
intellectual property rights, inventory management, fluctuation of commodity
prices, fluctuation of foreign exchange rates, imperfection of estimates,
industry competition, availability of qualified personnel and management,
ability for sales and marketing investments to garner intended results, stock
market volatility, timely and cost-effective access to sufficient capital from
internal and external sources, ability to integrate and realize anticipated
benefits from acquisitions, ability to procure, utilize and resell third party
network communications and hardware at favorable rates, ability to successfully
transition satellite wireless data communications subscribers to our other
service offerings including potentially a next generation broadband satellite
offering, ability to successfully defend ourselves in legal proceedings, and
ability to realize cost savings and margin improvements from restructuring
initiatives and outsourcing activities and to effectively manage growth. The
Corporation's actual results, performance or achievement could differ materially
from those expressed in or implied by, these forward-looking statements and
accordingly, no assurance can be given that any of the events anticipated to
occur or transpire from the forward-looking statements will provide what, if
any, benefits to the Corporation. All data presented herein should be read in
conjunction with the Corporation's regulatory filings, with the appropriate
Securities Commission and SEDAR. These filings, including the Corporation's AIF,
are located at www.sedar.com.
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