Webtech Wireless Inc.

$WEW.TO - TSX - Computers and Electronic Equipment
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Webtech Wireless Announces Q4 and FY 2012 Results

VANCOUVER, BRITISH COLUMBIA -- (MARKET WIRE) -- 03/15/13 -- 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 period ended December 31, 2012.

On January 24, 2013, the Company closed the sale of its NextBus business to Cubic Transportation Systems, Inc., a division of Cubic Corporation, for total cash proceeds of $20.8 million. As a result, the results of the Nextbus business have been classified as discontinued operations. Going forward the Company is now completely focused on the continuing operations - its Telematics business.

Q4 2012 Financial and Operational Highlights

--  Adjusted EBITDA from continuing operations was $1.0 million for the year
    compared to a loss of $0.6 million in 2011 and $0.4 million in Q4 2012
    compared to $0.4 million in Q4 2011. The focus on high margin hardware
    and recurring revenue growth, combined with restructuring and cost
    management efforts, have materially increased the Company's operating
    profitability. Adjusted EBITDA from both continuing and discontinued
    operations amounted to $2.5 million in 2012 compared to $0.8 million in

--  Revenue from continuing operations was $28.8 million for 2012 compared
    to $33.0 million in 2011, and $7.1 million in Q4 2012 compared to $9.3
    million in Q4 2011. The Telematics revenue decrease was largely the
    result of a decreased focus on the low margin OEM and low average
    revenue per unit ("ARPU") theft recovery verticals. In addition,
    government one-time revenue dropped. Total revenue from continuing and
    discontinued operations amounted to $38.7 million compared to $41.4
    million in 2011.

--  Notable new sales, renewals and implementations during the quarter
    included Green Field Energy, Hino Trucks, uDrove, and City of Toronto.

--  Recurring revenue from continuing operations for 2012 was up 8% to $18.5
    million or 64% of total revenue in 2012 compared to $17.2 million or 52%
    of total revenue in 2011 due to ongoing sales and low churn. Q4 2012
    recurring revenue decreased 5% to $4.6 million or 66% of total revenue
    compared to $4.9 million or 53% for Q4 2011. The recurring revenue
    decrease was the result of the exit from the low ARPU, low margin theft
    recovery vertical. Recurring revenue from continuing and discontinued
    operations amounted to $24.0 million in 2012 compared to $21.9 million
    in 2011.

--  Subscribers from continuing operations at December 31, 2012 totalled
    approximately 72,000 (combined direct and enterprise), compared to
    72,000 at September 30, 2012 and 91,000 at December 31, 2011. The drop
    in telematics subscribers for the year is due to the exit in Q2 2012
    from the consumer theft recovery vertical in Mexico which has resulted
    in a reduction of 17,000 subscribers, and the cancelation of 6,000
    Brazilian subscribers as the Company has wound up operations in that
    jurisdiction. Offsetting that reduction in low ARPU telematics
    subscribers was the addition of 4,000 full service subscribers during
    the year. The Company's focus on high ARPU subscribers has increased
    annual recurring revenue despite the overall drop in subscribers.

--  Gross margins on continuing operations was 52% of total revenue for the
    year up from 49% in 2011, and 45% of total revenue in Q4 2012 compared
    to 46% in Q4 2011. Gross margins include a Q4 2012 obsolescence charge
    resulting from the annual detailed review of all inventories.

--  Cash operating expenses (sales and marketing, research and development,
    and general and administration excluding depreciation, amortization,
    share based payments and non-recurring items) decreased 15% to $14.2
    million in 2012 from $16.6 million in 2011 and 27% to $2.8 million in Q4
    2012 from $3.8 million in Q4 2011. The decreases were the direct result
    of restructuring efforts and reductions in discretionary spending.
    Recurring revenue was 131% of cash operating expenses in 2012 compared
    to 104% in 2011 and 168% of cash operating expenses in the quarter
    compared to 129% in 2011.

"We are very pleased to report Adjusted EBITDA from our telematics business on a stand-alone basis without contribution from NextBus," said Scott Edmonds, President and CEO. "We enter 2013 focused exclusively on telematics and our pursuit of sustainable, repeatable, high margin revenue from our core verticals in order to produce positive cash flows."

Mr. Edmonds continued, "With the sale of our NextBus business on January 24, 2013, Webtech is a profitable, growing business with a very strong balance sheet. As of today Webtech has cash of $21.1 million, restricted cash of $1.0 million and a holdback related to the transaction of $2.1 million. The cost and strategic changes we have made over the past 24 months are complete, and are working well. Our focus is now to continue building sales momentum in our commercial and government verticals and creating operating leverage. Our vision of "Fleet Intelligence Anywhere", is being well received by our customers and prospects and we will continue to deliver on it throughout the coming year."

Financial Highlights of Continuing Operations

                            Three months ended       Twelve months ended
                            December     December     December     December
('000 of Cdn $)             31, 2012     31, 2011     31, 2012     31, 2011
Hardware revenue          $    2,130   $    3,730   $    8,817   $   12,872
Recurring revenue              4,635        4,898       18,503       17,168
Services and other
 revenue                         296          649        1,506        2,936
                               7,061        9,277       28,826       32,976

Gross margin ($)               3,189        4,262       15,123       16,020
Gross margin (%)                  45%          46%          52%          49%

Total operating expenses       1,670        4,622       16,618       19,401

Net income (loss) from
 continuing operations    $    2,838   $   (1,158)  $     (614)  $   (8,032)

Adjusted EBITDA(1)        $      425   $      380   $    1,019   $     (648)


Revenue mix from continuing operations for the year and Q4 2012 continues to improve, however growth in subscriptions and hardware sales, was offset by declines in telematics hardware revenue due to a decreased focus on low margin OEM and low ARPU theft recovery verticals. The decrease in hardware and service revenue from the OEM and theft recovery verticals offset annual recurring revenue growth of 8%.

For the year, recurring revenue as a percentage of total revenue was 64% compared to 52% in 2011. Recurring revenue was 66% of total revenue for the quarter compared to 53% in Q4 2011. The increase in recurring revenue for the year is due to growth from the addition of new high ARPU subscribers from sales and implementations over the past 18 months across the Quadrant and InterFleet product lines. The continued shift away from hardware to a majority of subscription, software and services revenue reflects management's focus on developing the Software as a Service ("SaaS") model.

Gross Margin

Gross margin percentage for the year improved due to increased mix of recurring revenue. The drop in gross margin percentage in Q4 is the result of obsolescence charges resulting from the annual detailed review of all inventories. There were substantial margin percentage improvements on recurring revenues for the year and the quarter resulting from both increased high ARPU subscribers and realized cost savings.

Operating Expenses

Operating expenses for continuing operations excluding depreciation and amortization, share based payments, restructuring and non-recurring items, decreased by 27% and 15% over the prior three and twelve month periods, respectively. This decrease was the direct result of restructuring and cost management efforts to reduce both staff levels and administrative overhead.

Cash and Working Capital

As at December 31, 2012, the Company's unrestricted cash position amounted to $4.3 million, which consisted of cash and cash equivalents, compared with $5.1 million at September 30, 2012 and $5.9 million at December 31, 2011. In addition, the Company has $1.0 million USD of restricted cash used to secure its bonding facility.

As at December 31, 2012, the Company had net working capital of $9.6 million, compared with $15.5 million at September 30, 2012 and $11.9 million at December 31, 2011. The decline in working capital is largely due to the classification of Nextbus related assets as an Asset Held for Sale. As at March 13, 2012, Webtech Wireless had 105,457,078 common shares outstanding.

Adjusted EBITDA(1) from continuing operations

The Adjusted EBITDA from continuing operations was $1.0 million in 2012 compared to a loss from continuing operations of $0.6 million in 2011. In Q4, Adjusted EBITDA from continuing operation was $0.4 million compared to Adjusted EBITDA from continuing operations of $0.4 million in Q4 2011.

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   December   December   December
('000 of Cdn $)                   31, 2012   31, 2011   31, 2012   31, 2011
Net income (loss) from continuing
 operations as reported           $  2,838   $ (1,158)  $   (614)  $ (8,032)
Add (deduct)
  Finance expense                        7         29         46         89
  Income tax recovery               (1,969)       (22)    (1,971)      (415)
  Depreciation and amortization        241        309      1,380      1,328
  Share-based payments                  72        142        358        565
  Foreign exchange (gain) loss         (56)       346        196       (200)
  Restructuring cost including
   share-based payments                103        360        252      5,069
  Impairment of intangible assets      594          -        594          -
  Loss on sale of assets                 2          -          2         23
  Intellectual property and other
   litigation                          167         64        184        432
  Work force realignment                20          -        592          -
  Tax adjustment                         -        185          -        185
  Litigation settlement                  -        125          -        225
  One-time accounting fees               -          -          -         83
  One time items - reclassified
   to discontinued operations       (1,594)         -          -          -
Adjusted EBITDA(1) from
 continuing operations            $    425   $    380   $  1,019   $   (648)
(1) Adjusted EBITDA is not defined under IFRS. Adjusted EBITDA is defined by
    the Company as earnings (loss) before interest, taxes, depreciation,
    amortization, share based payments, foreign exchange 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, 2012 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 15, 2013, at 11:00 am ET hosted by Mr. Scott Edmonds, President and Chief Executive Officer and Mr. Andrew Morden, Chief Financial Officer to discuss the Company's financial results and corporate developments. To access the conference call by telephone, dial +1.416.340.2216 or +1.866.226.1792. A taped replay of the conference call will be archived on the Company's corporate 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. 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™. Our products are InterFleet®, for government winter maintenance, public works and waste management fleets; and Quadrant®, for commercial fleet operations and compliance (HOS, EOBR). Please visit www.webtechwireless.com.

All amounts in Canadian dollars (CAD$) unless otherwise noted. Trademarks are the property of their owners.

The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.

Webtech Wireless Inc. - Investor Relations
Andrew Morden
Chief Financial Officer
+1 604.434.7337
Webtech Wireless Inc. - Press and Media
David Greer
Vice President Marketing
+1 604.628.5194

Source: Webtech Wireless Inc.

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