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VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 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 2011.-- 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.
