VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug 6, 2015) - Webtech Wireless Inc. (TSX:WEW) ("Webtech Wireless" or the "Company"), a leading provider of GPS fleet management solutions, today 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 (the "Arrangement Agreement") with BSM Technologies Inc. ("BSM"). 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

  • EBITDA was $1.1 million and $1.7 million for the three and six months ended June 30, 2015 compared to $Nil and a loss of $0.5 million in the prior comparable periods. The Company is also reporting net income of $0.7 million or $0.04 per share and $1.4 million or $0.07 per share for the three and six months ended June 30, 2015 compared to a net loss of $1.6 million or $0.08 per share and $1.9 million or $0.09 in the prior comparable periods.

  • Revenue was $7.8 million in the quarter compared to $7.0 million in the prior comparable period, with the increase primarily due to hardware revenues from deliveries to an enterprise fleet customer, and $15.9 million year to date compared to $13.7 million year to date in 2014 with the increase largely the result of hardware revenues from government solution sales and continued deliveries to an enterprise fleet customer.

  • The Company's subscriber base at June 30, 2015 totalled approximately 79,500 compared to 78,300 at December 31, 2014 and 79,900 at June 30, 2014. The increase in total subscribers since December 31, 2014 was due to net additions of full service government subscribers from solution sales in Q4 2014 and Q1 2015.

  • Recurring revenue decreased 3% from $4.4 million to $4.2 million, and 4% from $9.0 million to $8.7 million year over year for the three and six months respectively. While the subscriber count remained in line with the prior comparable period, the overall average revenue per unit "(ARPU") decreased from $18.45 to $17.71 for the quarter and $18.99 to $18.33 for the year to date due to net additions of lower ARPU enterprise and data pump subscribers replacing churn of higher ARPU commercial subscribers.

  • Gross margin was 58% and 55% for the three and six months ended June 30, 2015 compared to 54% and 55% in the prior comparable periods as a result of effective cost controls and a greater proportion of revenues being earned from higher margin hardware.

  • Cash operating expenses (sales and marketing, research and development, and general and administrative expenses) decreased 11% from $3.8 million to $3.4 million in Q2 2015 and 13% from $7.9 million to $6.9 million for the year to date due to headcount and facilities cost savings realized from the Company's restructuring efforts in 2014 and 2015.

  • The Company renewed the Normal Course Issuer Bid effective March 30, 2015. As at June 30, 2015, the Company had re-purchased 30,609 of its common shares for a total cost, including transaction fees, of $0.1 million. As at June 30, 2015, all of the re-purchased common shares had been cancelled.

"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."

Financial Highlights

Three months endedSix months ended
('000 of CAD $)June 30,
2015		June 30,
2014		June 30,
2015		June 30,
2014
Recurring revenue $ 4,223 $ 4,358 $ 8,694 $ 9,038
Hardware revenue 3,087 2,221 6,216 4,016
Services and other revenue 474 379 1,015 638
7,7846,95815,92513,692
Gross margin ($)4,4793,7858,6877,525
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 (1)$1,060$(49)$1,711$(482)
(1) 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.

Revenue

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

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.

Operating Expenses

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 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, August 6, 2015, at 11:00 am ET hosted by Mr. Andrew Gutman, 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 +1.416.340.2219 or +1.866.223.7781. 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. 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.