Attached files
| file | filename |
|---|---|
| 8-K - 8-K - XRS Corp | form8k-fy13q1xearningsrele.htm |
FOR IMMEDIATE RELEASE
CONTACT:
Michael Weber
Chief Financial Officer, XRS Corporation
952-707-5600
XRS Reports Fiscal 2013 First Quarter Results
Net income of $0.3 million drives free cash flow of $1.6 million for the first quarter of fiscal 2013
MINNEAPOLIS, February 7, 2013 — XRS Corporation (formerly Xata Corporation, NASDAQ:XRSC) reported its results for its fiscal 2013 first quarter ended December 31, 2012.
The Company reported net income to common shareholders for the first quarter of fiscal 2013 of $0.3 million, or $0.01 per diluted share, compared to net loss to common shareholders of $1.7 million, or $0.16 per diluted share, for the comparable period in fiscal 2012. Total revenue was $14.2 million for the quarter ended December 31, 2012, compared to $16.6 million for the comparable period in fiscal 2012. Further highlights for the quarter include:
• | Growth in Turnpike software revenue of 19 percent year-over-year drove total software revenue to $11.8 million for the first quarter of fiscal 2013. |
• | Fiscal 2013 first quarter software revenue accounted for approximately 83 percent of total revenue, compared to 70 percent percent for the same period of fiscal 2012 contributing to a 15 percentage point improvement in overall margins. |
• | The Company acquired 109 new customers in the first quarter of fiscal 2013, all of whom selected the Turnpike solution. |
• | Net income of $0.3 million contributed to free cash flow of $1.6 million for the first quarter of fiscal 2013, compared to negative free cash flow of $0.7 million for the same period in fiscal 2012. |
"We are pleased with the first quarter financial performance. We are also encouraged by the progress we are making in the testing of our new XRS mobile platform which is now in its beta phase," said Jay Coughlan, chairman, president and CEO of XRS Corporation. "Customers are eager to begin using the XRS solution, and we anticipate rollout of this new mobile solution in the spring of 2013."
For the first quarter of fiscal 2013, selling, general and administrative expenses decreased to $5.5 million compared to $6.1 million for the first quarter of fiscal 2012. The intangible asset impairment and business realignment events which occurred in the third quarter of fiscal 2012 contributed to a reduction in amortization and personnel expenses, respectively, driving the fiscal 2013 favorability.
XRS Releases Fiscal 2013 First Quarter Results – Page 2
Research and development expenses were $3.1 million and $3.5 million for the first quarter of fiscal 2013 and 2012, respectively, or 21 percent of revenue. Research and development expenses reflect the Company's continued investment in the successful development and roll out of the new XRS mobile solution.
The Company reported non-GAAP earnings of $2.2 million, or $0.08 per diluted share for the first quarter of fiscal 2013, compared to non-GAAP earnings of $0.5 million, or $0.02 per diluted share, for the same period in fiscal 2012, an increase of $1.7 million. The increase in non-GAAP earnings is a reflection of improved margins and a reduced cost structure.
During the first quarter of fiscal 2013, the Company used cash generated from operations to pay down all outstanding debt facilities, resulting in a debt-free balance sheet as of December 31, 2012 as compared to debt of $2.3 million recorded as of September 30, 2012. In addition, the Company generated positive free cash flow of $1.6 million for the first quarter of fiscal 2013, compared to negative free cash flow of $0.7 million in the comparable period in fiscal 2012, resulting in an improvement of $0.7 million in working capital, which was $10.3 million at December 31, 2012.
“Looking ahead, we remain focused on the successful launch of our XRS mobile solution, as well as continuing to serve our existing customer base to ensure that our solutions are able to meet their needs now and into the future," Coughlan said. "As we move the new solution to market in fiscal 2013, the Company will also continue to strive for operational effectiveness."
XRS Releases Fiscal 2013 First Quarter Results – Page 3
Summary of revenue and gross margins (deficits) is as follows (in thousands, except percentage data):
For the Three Months Ended December 31, | ||||||||||
2012 | 2011 | Change | ||||||||
Revenue: | ||||||||||
Software | $ | 11,769 | $ | 11,686 | 1 | % | ||||
Hardware systems | 2,191 | 4,464 | (51 | %) | ||||||
Services | 235 | 451 | (48 | %) | ||||||
Total revenue | $ | 14,195 | $ | 16,601 | (15 | %) | ||||
For the Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
Gross margins (deficits): | |||||||
Software | 74 | % | 73 | % | |||
Hardware systems | 21 | % | (7 | %) | |||
Services | (122 | %) | (48 | %) | |||
Total gross margin | 63 | % | 48 | % | |||
Non-GAAP vs. GAAP Financial Measures
To assist investors in understanding the Company’s financial performance, the Company supplements the financial results that are generated in accordance with the accounting principles generally accepted in the United States, or GAAP, with non-GAAP financial measures, including non-GAAP earnings, non-GAAP earnings per diluted share, working capital and free cash flow. These non-GAAP financial measures are useful to investors for evaluating the Company’s historical and prospective financial performance, as well as our performance relative to competitors. Management regularly uses these non-GAAP financial measures internally to understand, manage and evaluate its ongoing business operations and to make operating decisions. These non-GAAP financial measures are among the primary factors management uses in planning for and forecasting future period performance. Management believes that these non-GAAP financial measures reflect an additional way of analyzing aspects of the Company’s ongoing operations that, when viewed with our GAAP results, provides a more complete understanding of the factors and trends affecting our business.
The specific non-GAAP financial measures, along with a reconciliation to the nearest comparable GAAP measures and further explanation of their usefulness to investors can be found at the end of this release.
XRS Releases Fiscal 2013 First Quarter Results – Page 4
About XRS
XRS Corporation (formerly Xata Corporation) delivers fleet management and compliance software solutions to the trucking industry to help maintain regulatory compliance and reduce operating costs. XRS is leading the trucking industry's migration to mobile devices for collecting and analyzing compliance and management data. Its existing mobility-based products have no upfront hardware costs and run on smartphones, tablets and rugged handhelds. XRS has sales and distribution partnerships with the major wireless carriers supporting the U.S. and Canadian trucking industries.
Through XRS' solutions: XataNet, Turnpike and XRS, we are currently serving 114,000 subscriptions through 1,400 customers. Our various solutions help fleet managers, dispatchers and drivers collect, sort, view and analyze data to help reduce costs, increase safety, attain compliance with governmental regulations and improve customer satisfaction.
For more information, visit www.xrscorp.com or call 1-800-745-9282.
Cautionary note regarding forward-looking statements
This announcement includes forward-looking statements. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Such statements are based on current expectations, and actual results may differ materially. The forward-looking statements in this announcement are subject to a number of risks and uncertainties including, but not limited to, the possibility of continuing operating losses, the ability to adapt to rapid technological change, the ability of our solutions to be compliant with future regulations, dependence on propriety technology and communication networks owned and controlled by others, the failure to renew contracts or failure to sell additional solutions or services to existing customers, the timely introduction and market acceptance of new products, the ability to fund future research and development activities, the ability to establish and maintain strategic partner relationships and the other factors discussed under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2012 (as updated in our subsequent reports filed with the SEC). These reports are available under the “Investors” section of our website at www.xrscorp.com and through the SEC website at www.sec.gov. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events.
XRS Releases Fiscal 2013 First Quarter Results – Page 5
XRS Corporation
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended December 31, | |||||||
(In thousands, except per share data) | 2012 | 2011 | |||||
Revenue | |||||||
Software | $ | 11,769 | $ | 11,686 | |||
Hardware systems | 2,191 | 4,464 | |||||
Services | 235 | 451 | |||||
Total revenue | 14,195 | 16,601 | |||||
Cost of goods sold | 5,306 | 8,651 | |||||
Selling, general and administrative | 5,497 | 6,120 | |||||
Research and development | 3,050 | 3,488 | |||||
Total costs and expenses | 13,853 | 18,259 | |||||
Operating income (loss) | 342 | (1,658 | ) | ||||
Net interest and other expense | (18 | ) | (111 | ) | |||
Income (loss) before income taxes | 324 | (1,769 | ) | ||||
Income tax expense (benefit) | 5 | (100 | ) | ||||
Net income (loss) | 319 | (1,669 | ) | ||||
Preferred stock dividends and deemed dividends | (58 | ) | (6 | ) | |||
Net income (loss) to common shareholders | $ | 261 | $ | (1,675 | ) | ||
Net income (loss) per common share: | |||||||
Basic | $ | 0.02 | $ | (0.16 | ) | ||
Diluted | $ | 0.01 | $ | (0.16 | ) | ||
Weighted average common and common share equivalents: | |||||||
Basic | 10,809 | 10,675 | |||||
Diluted | 27,357 | 10,675 | |||||
XRS Releases Fiscal 2013 First Quarter Results – Page 6
XRS Corporation
Consolidated Balance Sheets
December 31, | September 30, | ||||||
(In thousands) | 2012 | 2012 | |||||
(Unaudited) | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 6,398 | $ | 7,120 | |||
Accounts receivable, net | 7,543 | 7,835 | |||||
Inventories | 3,684 | 3,811 | |||||
Deferred product costs | 784 | 770 | |||||
Prepaid expenses and other current assets | 1,348 | 1,406 | |||||
Total current assets | 19,757 | 20,942 | |||||
Equipment and leasehold improvements, net | 6,917 | 7,313 | |||||
Intangible assets, net | 5,987 | 6,487 | |||||
Goodwill | 17,082 | 17,288 | |||||
Deferred product costs, net of current portion | 369 | 425 | |||||
Other assets | 315 | 351 | |||||
Total assets | $ | 50,427 | $ | 52,806 | |||
Current liabilities | |||||||
Revolving line of credit | $ | — | $ | 2,300 | |||
Accounts payable | 3,896 | 3,436 | |||||
Accrued expenses | 4,756 | 4,832 | |||||
Deferred revenue | 1,995 | 2,314 | |||||
Total current liabilities | 10,647 | 12,882 | |||||
Deferred revenue, net of current portion | 870 | 1,077 | |||||
Deferred tax liabilities | — | 9 | |||||
Other long-term liabilities | 252 | 314 | |||||
Total liabilities | 11,769 | 14,282 | |||||
Shareholders' equity | |||||||
Preferred stock | 44,275 | 44,292 | |||||
Common stock | 108 | 108 | |||||
Additional paid-in capital | 50,386 | 50,226 | |||||
Accumulated deficit | (57,305 | ) | (57,566 | ) | |||
Accumulated other comprehensive income | 1,194 | 1,464 | |||||
Total shareholders' equity | 38,658 | 38,524 | |||||
Total liabilities and shareholders' equity | $ | 50,427 | $ | 52,806 | |||
XRS Releases Fiscal 2013 First Quarter Results – Page 7
XRS Corporation
Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended December 31, | |||||||
(In thousands) | 2012 | 2011 | |||||
Operating activities | |||||||
Net income (loss) | $ | 319 | $ | (1,669 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 1,690 | 1,955 | |||||
Amortization of deferred financing costs | 12 | — | |||||
Deferred income taxes | (9 | ) | — | ||||
Loss on sale or disposal of equipment and leased equipment | 5 | 64 | |||||
Stock-based compensation | 160 | 249 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable, net | 287 | 222 | |||||
Inventories, net | 117 | 115 | |||||
Deferred product costs | 42 | 79 | |||||
Prepaid expenses and other assets | 57 | (109 | ) | ||||
Accounts payable | 230 | (455 | ) | ||||
Accrued expenses and other liabilities | (204 | ) | 74 | ||||
Deferred revenue | (524 | ) | (345 | ) | |||
Net cash provided by operating activities | 2,182 | 180 | |||||
Investing activities | |||||||
Purchase of equipment and leasehold improvements | (613 | ) | (907 | ) | |||
Proceeds from the sale of equipment | 7 | 2 | |||||
Net cash used in investing activities | (606 | ) | (905 | ) | |||
Financing activities | |||||||
Revolving line of credit | (2,300 | ) | — | ||||
Payments on debt obligations | — | (512 | ) | ||||
Net cash used in financing activities | (2,300 | ) | (512 | ) | |||
Effects of exchange rate on cash | 2 | (4 | ) | ||||
Decrease in cash and cash equivalents | (722 | ) | (1,241 | ) | |||
Cash and cash equivalents | |||||||
Beginning | 7,120 | 12,407 | |||||
Ending | $ | 6,398 | $ | 11,166 | |||
XRS Releases Fiscal 2013 First Quarter Results – Page 8
XRS Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
Non-GAAP Earnings and Non-GAAP Earnings Per Diluted Share
For the Three Months Ended December 31, | |||||||
(In thousands, except per share data) | 2012 | 2011 | |||||
Net income (loss) to common shareholders | $ | 261 | $ | (1,675 | ) | ||
Adjustments: | |||||||
Depreciation & amortization expense | 1,690 | 1,955 | |||||
Stock-based compensation | 160 | 249 | |||||
Net interest expense | 16 | 109 | |||||
Preferred stock dividends and deemed dividends | 58 | 6 | |||||
Income taxes | 5 | (100 | ) | ||||
Total adjustments | 1,929 | 2,219 | |||||
Non-GAAP earnings | $ | 2,190 | $ | 544 | |||
Non-GAAP earnings per diluted share | $ | 0.08 | $ | 0.02 | |||
Shares used in calculating non-GAAP earnings per diluted share | 27,357 | 27,146 | |||||
Working Capital
December 31, | September 30, | ||||||
(In thousands) | 2012 | 2012 | |||||
Current assets | $ | 19,757 | $ | 20,942 | |||
Current liabilities | (10,647 | ) | (12,882 | ) | |||
Net current assets | 9,110 | 8,060 | |||||
Current portion of deferred revenue net deferred costs | 1,211 | 1,544 | |||||
Working capital | $ | 10,321 | $ | 9,604 | |||
XRS Releases Fiscal 2013 First Quarter Results – Page 9
XRS Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited)
Free Cash Flow
For the Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
Net cash provided by operating activities | $ | 2,182 | $ | 180 | |||
Net cash provided by investing activities: | |||||||
Purchase of equipment and leasehold improvements | (114 | ) | (907 | ) | |||
Purchase of Relay assets | (499 | ) | — | ||||
Proceeds from the sale of equipment | 7 | 2 | |||||
Net cash provided by investing activities | (606 | ) | (905 | ) | |||
Free cash flow | $ | 1,576 | $ | (725 | ) | ||
Footnotes to GAAP to Non-GAAP Reconciliation
(Unaudited)
The non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. The methods of calculation and explanations of the adjustments to the most comparable GAAP measures are set forth below:
Non-GAAP Earnings
This measure provides a supplemental view of earnings trends. Non-GAAP earnings excludes depreciation, amortization, stock-based compensation, net interest expense, preferred stock dividends and deemed dividends, income taxes, acquisition and financing related costs and litigation settlement costs from GAAP net income (loss) to common shareholders. We believe our investors benefit from understanding these exclusions when comparing current to historical results from operations.
Non-GAAP Earnings per Diluted Share
We believe investors benefit by understanding the Company’s non-GAAP operating performance as reflected in a per share calculation as a way of measuring non-GAAP operating performance by ownership in the Company. Non-GAAP earnings per diluted share is based on non-GAAP earnings, as defined above, divided by the sum of the weighted average common and dilutive common shares equivalents, such as options, restricted stock awards, restricted stock units, warrants or convertible
XRS Releases Fiscal 2013 First Quarter Results – Page 10
preferred stock, assuming they were exercised or converted into common stock that then shared in the non-GAAP earnings of the Company, as defined by GAAP. Non-GAAP loss per diluted share is based on non-GAAP loss, as defined above, divided by only the weighted average number of common shares outstanding for the period, as defined by GAAP. The non-GAAP loss per diluted common share is equal to basic non-GAAP loss per common share because the effect of including such securities or obligations would be antidilutive. We believe that these exclusions provide investors a useful view of current operations when comparing current to historical non-GAAP diluted earnings per share.
Working Capital
Working capital represents current assets, less current liabilities, excluding the current portion of deferred revenue, net of deferred costs. We believe working capital provides investors with an additional view of the Company’s liquidity and ability to repay current obligations.
Free Cash Flow
Free cash flow represents net cash provided by operating activities reduced by net cash used in investing activities. We believe free cash flow provides investors insight into the Company's ability to generate cash to support operating and investing activities.