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® 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®, 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.
Contacts: Investor Relations: Wireless Matrix Corporation Maria
C. Izurieta (703) 262-4020 maria.izurieta@wirelessmatrix.com
www.wirelessmatrix.com The Equicom Group Jeff Codispodi
416-815-0700 ext 261 jcodispodi@equicomgroup.com The Equicom Group
Craig Armitage 416-815-0700 ext 278 carmitage@equicomgroup.com
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