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Wireless Matrix Posts 4th Quarter and Year End Fiscal 2011 Financial Results [Professional Services Close - Up](Professional Services Close - Up Via Acquire Media NewsEdge) Wireless Matrix Corp., a provider of service chain performance management solutions targeting field service organizations, announced financial and operating results for the three and twelve months ended April 30. In a release on July 21, the company noted fiscal 2011 highlights: -Application-related subscribers increased to 59,825, now representing 71 percent of total subscribers. -Application-related revenue was $13.6 million, an increase of 17 percent over 2010. -Total revenues were $34.7 million. -Overall gross margin was 63 percent, compared to 54 percent a year earlier. -Service gross margin was 81 percent, compared to 72 percent a year earlier. -Adjusted EBITDA* was $4.7 million, a 17 percent increase from $4.0 million in 2010. -Successfully completed a reorganization exercise that resulted in a consolidation of facilities, outsourcing of hardware production, and improved operating model. -Pro forma net income excluding reorganization costs was $182 or $0.00 per share in 2011. -Net loss was $3.5 million or $0.04 per share, compared to a net loss of $682,000 or $0.01 per share in 2010. Fourth Quarter 2011 Highlights -Application-related revenue was $3.2 million. -Total revenues were $8.0 million. -Overall gross margin was 62 percent compared to 52 percent a year earlier. -Service gross margin was 79 percent, compared to 72 percent a year earlier. -Adjusted EBITDA* was $1.0 million, a 26 percent increase from $0.8 million in Q4 2010. -Net loss was $100,000 or $0.00 per share, compared to a net loss of $183,000 or $0.00 per share in Q4 2010. "We are excited to have fully executed our five-year strategy to transition into a leading software-as-a-service provider, having grown our application business to $18.6 million in revenues since launching services in fiscal 2007," said J. Richard Carlson, president and chief executive officer of Wireless Matrix. "Our continued investment in our application platform has positioned us very well competitively and we are now poised to convert that advantage into subscriber growth through an increased focus on our go-to-market strategy." Carlson continued: "Our priority in fiscal 2012 is to continue to grow our applications business through new subscriber additions. We recently strengthened our sales and marketing team so that we can further capitalize on opportunities in the SMB space as well as our traditional strength in the enterprise space. We began to significantly focus on the small-to- medium business segment in the past year as it represents a large market opportunity that further leverages the FleetOutlook platform. We have added over 3,200 SMB subscribers and more than doubled our total number of customer accounts thereby further diversifying our customer base. While we expect this additional investment to begin to pay off in the second half of fiscal 2012, we have already seen improved sales momentum in the first few months of the fiscal year." Financial and Operating Review Application-related service revenue was $13.6 million in fiscal 2011, an increase of $2.0 million or 17 percent from $11.6 million in fiscal 2010. The growth was primarily due to a 22 percent increase in wireless services subscribers during the year. Application-related revenue growth was offset by a $5.6 million decrease in satellite-related services revenues, and by a $4.1 million decrease in hardware and license revenues. Satellite service revenues have been declining as anticipated as the Company has transitioned its legacy subscriber base to higher gross margin application subscriptions enabled by lower cost wireless communication services, while hardware and license revenues have declined over time as the mix of hardware units sold has shifted from primarily higher priced satellite units to lower priced wireless communication devices. Total revenues in fiscal 2011 were $34.7 million, a decrease of $7.7 million or 18 percent compared to 2010 revenues. Wireless Matrix ended the year with 83,679 subscribers, a decrease of 3,446 units compared to 87,125 one year earlier. Application-related subscribers increased to 59,825 at year-end from 59,322 at the end of fiscal 2010, as gross additions of 9,916 subscribers were sufficient to offset unusually high churn or disconnects of 9,413 units. The churn relates primarily to the ongoing economic challenges for several customers as well as unprecedented churn with the Corp.'s largest telecom customer who is reducing their fleet, sold certain of its regions to a competitor who does not currently use location-based services and has a need for technology that we do not currently provide. As expected, satellite subscribers decreased by 3,949 units during the year to 23,854 units, due to the ongoing transition of legacy customers to application subscriptions. Gross margin percentage grew to 63 percent in fiscal 2011 from 54 percent in 2010. Margin improvement was driven by the reduction of costs to support and retain a relatively fixed infrastructure, as well as renegotiating existing contracts or switching vendors to reduce cost of goods. Gross margins on service revenues were 81 percent in fiscal 2011, up from 72 percent in the previous year, while hardware margins were flat at 19 percent. Adjusted EBITDA was a record $4.7 million in fiscal 2011, an increase of 17 percent from $4.0 million in the previous year, despite the decrease in revenues. As a percentage of total revenue, adjusted EBITDA grew from 9.5 percent to 13.6 percent. The improvement is primarily attributable to cost savings realized from the restructuring exercise undertaken during the year. In addition to amounts charged to operating expense, the Corp. incurred $3.7 million of corporate restructuring costs in fiscal 2011 as a result of the closing and relocation of certain facilities, compared to $0.7 million in 2010. These costs contributed to a net loss of $3.5 million in 2011, compared to a net loss of $0.7 million the previous year. Wireless Matrix had a cash balance of $12.0 million at April 30, compared to $13.5 million at January 31, 2010. The Corp. has no debt, and its $4 million line of credit remains unused. Outlook "We completed a significant restructuring of our operations in fiscal 2011, and saw tangible evidence of an improved business model as a result. Our gross margins grew materially, and EBITDA margins improved to 13.6 percent from 9.5 percent last year," said Maria C. Izurieta, chief financial officer of Wireless Matrix. "We did face churn issues related to ongoing economic sluggishness and challenges with a single customer, but we have systematically added new subscribers throughout the year and have had added almost 2,400 new subscribers since year end." Normal Course Issuer Bid Wireless Matrix also announced that its Board of Directors has approved the purchase by the Company of Common Shares by way of a Normal Course Issuer Bid (NCIB) through the facilities of the Toronto Stock Exchange (TSX) to repurchase for cancellation up to $1 million of outstanding Common Shares of the Company or such lesser number of Common Shares as determined in accordance with the rules of the TSX. This NCIB is subject to regulatory approvals, including by the TSX, and entering into a definitive agreement with a designated broker. "In light of our recent successes and our outlook for fiscal 2012 and beyond, we consider the market price of our shares to be attractive," said Izurieta. "We believe a share repurchase program offers potential benefits to remaining shareholders and represents a good use of the Corp.'s cash resources. Our existing cash balance and our ongoing ability to generate cash from operations are sufficient to fund not only our near-term growth strategies, but also our acquisition strategy." Wireless Matrix is headquartered in Herndon, Va. ((Comments on this story may be sent to [email protected])) (c) 2011 ProQuest Information and Learning Company; All Rights Reserved. |