Xplore Technologies Reports Profitable First Quarter Results
Xplore Technologies Reports Profitable First Quarter Results
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  • 승인 2017.08.10 05:05
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AUSTIN, Texas, Aug. 09, 2017 (GLOBE NEWSWIRE) -- Xplore Technologies Corp. (NASDAQ:XPLR), a global leader in rugged computing, today reported results for its fiscal 2018 first quarter, ended June 30, 2017.

Fiscal First Quarter 2018 and Recent Highlights:

  • Reported revenue of $20.0 million, an increase of 21.4% from $16.5 million in the year-ago first quarter, reflecting increased sales of rugged tablets as well as resolution of previously disclosed supply chain constraints;
  • Ended the quarter with backlog of $4.5 million compared with $7.4 million at March 31, 2017, reflecting shipment of orders previously held up by supply chain constraints;
  • Achieved gross margin of 30.9%, compared with 28.1% for the previous quarter and 29.5% in the first quarter 2017;
  • Reported continued low operating expenses of $6.0 million, a further reduction of 7.3% from the prior year first quarter, reflecting Xplore’s lower operating expense business model implemented throughout fiscal 2017;
  • Reported GAAP net profit of $239,000, or $0.02 per share, compared with a net loss of $1.7 million, or $0.16 per share in the previous year first quarter;
  • Generated adjusted EBITDA of $839,000, Xplore’s fourth consecutive quarter of positive adjusted EBITDA, compared with adjusted EBITDA of negative $1.1 million in the prior year first quarter;
  • Furthered restructuring of Xplore’s management and corporate governance with the appointment of Mark Holleran as CEO and the decision of Brian Usher-Jones to not stand for re-election as an independent director;
  • Secured a $16 million, two-year customer refresh agreement as a major telecommunications customer standardizes its construction and engineering division field workers on Xplore rugged tablets;
  • Won multiple additional large follow-on orders, including US manufacturing employees at an automotive customer, conversion of another group at an existing telecommunications customer, and property assessment field workers at a Canadian customer;
  • Launched an upgraded XSALTE D10 with Android 6.0.1 Marshmallow operating system; and
  • Secured a new $15 million line of credit from Bank of America, including expanded support for inventory financing.

CEO Mark Holleran stated: “We are pleased to begin fiscal 2018 with a profitable fiscal first quarter driven by a 21% increase in revenue and continued low operating expenses under our leaner, more cost-efficient business model,” said Mark Holleran, CEO of Xplore. “Demand for rugged tablets improved as customers continue to realize the unique cost and time efficiencies inherent to our devices, and we secured a number of notable sales wins as both existing and new customers increase their adoption of rugged technologies for a growing number of workforce roles.

“We also secured a number of key wins for a strong start to our fiscal year, including a two-year refresh project for a major telecommunications customer, an expansion into a new working group at this customer, an expansion by a European customer into its US manufacturing facilities, a refresh with a Canadian property assessment customer and others. These and other customers continue to find improved reliability, performance and ROI through the adoption of rugged tablet computing, further documenting the value proposition Xplore brings to a growing number of vertical industries. We continue to focus on expanding sales in key markets, including telecommunications, logistics and international opportunities, as well as working closely with a number of partners on additional initiatives to further our sales reach.”  

Fiscal 2018 First Quarter Financial Results
Xplore reported revenue of $20.0 million for the fiscal first quarter ended June 30, 2017, compared to revenue of $16.9 million in the fiscal fourth quarter of 2017 and compared to $16.5 million in the year-ago first quarter. The change in revenue reflected increased sales as demand for rugged tablets improved, combined with further resolution of the previously disclosed short-term supply chain constraints that limited shipments during the March 2017 quarter.

Gross profit in the first quarter was $6.2 million, or 30.9% of revenue, compared to $4.8 million, or 28.1% of revenue, in the preceding quarter and $4.9 million, or 29.5% of revenue, in the prior year first quarter. The change in gross margin was primarily attributable to product mix and improved efficiencies as revenue scales.

Operating expenses were $6.0 million for the fiscal first quarter, a further 7.3% reduction from $6.4 million in the prior year first quarter. The company believes the reduction in operating expenses by more than 20% year-over-year throughout fiscal 2017 reflects the company’s focus on operating efficiency to drive profitability as revenue grows. A portion of the cost reduction benefit is being reinvested in new sales hires and marketing initiatives to drive revenue growth into fiscal 2018 and beyond.

For the quarter, Xplore reported net income of $239,000, or $0.02 per share, compared to a net loss of $488,000, or ($0.04) per basic share in the fiscal fourth quarter 2017, and a net loss of $1.7 million, or ($0.16) per basic share, in the first quarter of fiscal 2017. The shift to profitable operations reflects improved revenue and significantly lower expenses under Xplore’s new operating model.

EBITDA adjusted for non-cash compensation and historical integration costs was $839,000, compared with $30,000 in the preceding quarter and negative adjusted EBITDA of $1.1 million in the fiscal first quarter 2017. A reconciliation is provided in the tables included in this release.

“The first quarter of fiscal 2018 further documented the capabilities of our profit focused, low opex model implemented throughout fiscal 2017. With our significantly lower break-even point and more efficient balance sheet, we anticipate multiple profitable quarters in Fiscal 2018 on improving revenue, as well as solid free cash flow to fund operations and investment in planned platform refreshes,” said Tom Wilkinson, CFO of Xplore.

Cash Flow and Balance Sheet
Net cash used in operating activities was $5.4 million for the three months ended June 30, 2017, compared to net cash generated by operating activities of $4.9 million for the three months ended March 31, 2017 and net cash used in operating activities of $6.6 million for the three months ended June 30, 2016. Net cash used by operating activities in the first quarter of fiscal 2018 was impacted by a $6.4 million increase in accounts receivable, to $16.8 million from $10.5 million at March 31, 2017, and a $3.6 million increase in inventory, to $16.5 million from $12.9 million at March 31, 2017.  At quarter end, cash was $648,000 and debt under the company’s line of credit was $3.1 million. 

Executive Compensation and Corporate Governance
Xplore previously announced that a committee of independent board directors had engaged outside consultants to assist in a review of executive and board compensation practices, consistent with recent changes in the company’s executive structure.  Upon completion of the review, the board of directors determined that effective August 1, 2017 the services of Mr. Sassower as chairman of the board will be paid directly at a rate of $92,000 per year.  The previous contract with SG Phoenix LLC through which Mr. Sassower had previously been compensated expired on its own terms.

Additionally, on June 21, 2017, the company filed a Form 8-K announcing that Brian Usher-Jones, an independent director, had notified the board of directors that he intends to not stand for reelection at the next annual meeting of the company’s stockholders. The nomination and governance committee of the board is presently reviewing potential candidates to serve as an independent director in Mr. Usher-Jones’ place.

For fiscal 2018, Xplore maintained its revenue outlook in a range of $75 million to $85 million. Gross margin for the fiscal year is expected to be between 28% and 30%. Operating expenses are expected to be approximately $23-25 million, reflecting a full year of the company’s reduced operating expense profile. The company anticipates multiple profitable quarters and positive cash flow for the full fiscal year 2018.

Xplore also maintained its previously disclosed business operating targets as revenue scales to a $120 million run-rate, assuming both organic growth and cost reduction initiatives are achieved in future periods: gross margin 28-30%, operating margin 8-10%, profit margin 6-8% and EBITDA margin 9-11%.

Conference Call
The company will conduct a conference call and webcast to review the results on Wednesday, August 9, 2017, at 4:30 p.m. ET.  Interested parties in the United States can access the call by dialing 844-854-4410; interested parties outside the United States can access the call by dialing +1-412-858-4610. Callers should dial in at least 5 minutes prior to the all start time. A live and archived webcast will be available online in the investor relations section of Xplore’s website at www.xploretech.com. A replay of the conference call will be available until 5 p.m. ET on August 23, 2017, by calling 877-344-7529 from the United States or +1-412-317-0088 from outside the United States and entering conference ID number 10111074.

About Xplore Technologies
Xplore is The Rugged Tablet Authority™, exclusively manufacturing powerful, long-lasting, and customer-defined rugged tablet PCs since 1996. Today, Xplore offers the broadest portfolio of genuinely rugged tablets – and the most complete lineup of rugged tablet accessories – on Earth. Its mobility solutions are purpose-built for the energy, utilities, telecommunications, military and defense, manufacturing, distribution, public safety, healthcare, government, and field service sectors. The company’s award-winning military-grade computers are also among the most powerful and longest lasting in their class, built to withstand nearly any hazardous condition or environmental extreme for years without fail. Visit www.xploretech.com for more information on how Xplore and its global channel partners engineer complete mobility solutions to meet specialized workflow demands. Follow us on Twitter, Facebook, LinkedIn, and YouTube.

Forward Looking Statements
This news release contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” and similar expressions are intended to identify forward-looking statements. Such statements reflect Xplore’s current views with respect to future events and are subject to such risks and uncertainties. Many factors could cause actual results to differ materially from the statements made including those factors detailed from time to time in filings made by Xplore with securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated or expected. Xplore does not intend and does not assume any obligation to update these forward-looking statements. 

Consolidated Balance Sheets 
(in thousands) 
  June 30,
  March 31,
ASSETS (unaudited)    
Cash and cash equivalents $648  $3,460 
Accounts receivable, net  16,761   10,452 
Inventory, net  16,497   12,858 
Prepaid expenses and other current assets  553   469 
Total current assets  34,459   27,239 
Fixed assets, net  2,011   1,862 
Intangible assets, net  1,335   1,425 
Goodwill  15,159   15,159 
  $52,964  $45,685 
Short-term indebtedness with bank $3,060  $ 
Accounts payable  8,706   7,342 
Accrued liabilities  5,153   2,266 
Deferred revenue and current warranty liabilities  2,836   3,145 
Total current liabilities  19,755   12,753 
Deferred revenue and non-current warranty liabilities  3,548   3,650 
Total liabilities  23,303   16,403 
Commitments and contingencies      
Preferred Stock, par value $0.001 per share; authorized 5,000; no shares issued      
Common Stock, par value $0.001 per share; authorized 15,000; shares issued 10,990 and 10,908, respectively  11   11 
Additional paid-in capital  171,925   171,784 
Accumulated deficit  (142,275)  (142,513)
   29,661   29,282 
  $52,964  $45,685 

Consolidated Statements of Loss—Unaudited 
(in thousands of dollars, except share and per share amounts) 
  Three Months Ended 
  June 30,
  June 30,
Revenue $19,998  $16,473 
Cost of revenue  13,812   11,609 
Gross profit  6,186   4,864 
Sales, marketing and support  3,201   3,435 
Product research, development and engineering  807   953 
General administration  1,950   2,039 
   5,958   6,427 
Income (loss) from operations  228   (1,563)
Other income (expense):        
Other  36   (96)
Interest expense  (25)  (8)
   11   (104)
Income (loss) before income taxes  239   (1,667)
Income tax (expense)     (80)
Net income (loss) $239  $(1,747)
Income (loss) per common share $.02  $(0.16)
Weighted average number of common shares outstanding, basic and fully diluted  10,989,780   10,908,355 

Consolidated Statements of Cash Flows—Unaudited 
(in thousands) 
  Three Months Ended
June 30,
  2017  2016 
Cash used in operations:      
Net income (loss) $239  $(1,747)
Items not affecting cash:        
Depreciation and amortization  473   348 
Provision for doubtful accounts  61   15 
Stock-based compensation expense  102   175 
Changes in operating assets and liabilities:        
Accounts receivable  (6,370)  4,270 
Inventory  (3,639)  (6,272)
Prepaid expenses and other current assets  (84)  425 
Accounts payable and accrued liabilities  3,840   (3,820)
Net cash used in operating activities  (5,378)  (6,606)
Change in liabilities assumed in purchase of business     (287)
Additions to fixed assets  (532)  (407)
Net cash used in investing activities  (532)  (694)
Proceeds from short-term borrowings  8,586   11,600 
Repayment of short-term indebtedness  (5,526)  (5,476)
Net proceeds from issuance of Common Stock  38    
Net cash provided by financing activities  3,098   6,124 
Payments for interest $25  $8 
Payments for income taxes $  $80 

Adjusted EBITDA Reconciliation—Unaudited  
(in thousands)  
  Three Months Ended
March 31,
  2017 2016
Net income (loss) $239 $(1,747)  
Income taxes - 80   
Interest expense 25 8   
Depreciation and amortization 473 348   
Stock-based compensation expense 102 175   
ADJUSTED EBITDA $839 $(1,136)  

 Xplore Technologies Quarterly Historical Information 
  FY 2017 
  1st Qtr2nd Qtr3rd Qtr4th QtrYTD 
Revenue$16,473 $20,007 $24,499 $16,949 $77,928  
Cost of revenue 11,609  14,31  17,784  12,192  55,956  
 Gross profit 4,864  5,636  6,715  4,757  21,972  
 Sales, marketing and support 3,435  2,896  3,153  2,886  12,370  
 Product research, development & engineering 953  1,317  1,303  889  4,462  
 General administrative 2,039  1,868  1,816  1,470  7,193  
Total expenses 6,427  6,081  6,272  5,245  24,025  
 Profit/(loss) from operations (1,563) (445) 443  (488) (2,053) 
Other expenses                
 Interest expense (8) (69) (79) (17) (173) 
 Other income/expenses (96) (22) (96) 17  (197) 
   (104) (91) (175) -  (370) 
 Income/(loss) before taxes (1,667) (536) 268  (488) (2,423) 
 Income taxes (80) -  (49) -  (129) 
Net income$(1,747)$(536)$219 $(488)$(2,552) 
 Depreciation & amortization 348  456  364  403  1,571  
 Interest expense 8  69  79  17  173  
 Income taxes 80  -  49  -  129  
 EBITDA (1,311) (11) 711  (632) (679) 
 Non-cash compensation 175  127  111  98  511  
 Adjusted EBITDA$(1,136)$116 $822 $30 $(168) 

  FY 2016
  1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Revenue$24,043 $28,853 $27,023 $20,611 $100,530 
Cost of revenue 15,893  20,744  18,181  14,365  69,183 
 Gross profit 8,150  8,109  8,842  6,246  31,347 
 Sales, marketing and support 3,620  3,642  3,925  3,909  15,096 
 Product research, development & engineering 1,830  1,577  1,129  1,235  5,771 
 General administrative 2,331  2,487  2,521  2,088  9,427 
Total operating expenses 7,781  7,706  7,575  7,232  30,294 
 Profit/(loss) from operations 369  403  1,267  (986) 1,053 
Other expenses     
 Interest expense (6) (52) -  -  (58)
 Cost of integration (670) (122) (95) (26) (913)
 Other income/expenses 63  (131) (317) (65) (450)
   (613) (305) (412) (91) (1,421)
 Income/(loss) before taxes (244) 98  855  (1,077) (368)
 Income taxes -  -  (69) 75  6 
Net income$(244)$98 $786 $(1,002)$(362)
 Depreciation & amortization 358  457  498  417  1,730 
 Interest expense 6  52  -  -  58 
 Income taxes -  -  69  (75) (6)
 EBITDA 120  607  1,353  (660) 1,420 
 Non-cash compensation 607  492  535  522  2,156 
 Cost of integration 670  122  95  26  913 
 Adjusted EBITDA$1,397 $1,221 $1,983 $(112)$4,489 

Xplore Technologies Quarterly Key Statistics
 FY 2017
 1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Gross margin29.5%28.2%27.4%28.1%28.2%
Operating margin-9.5%-2.2%1.8%-2.9%-2.6%
Periodic revenue %21.1%25.7%31.4%21.7%100.0%
Quarter over Quarter     
Revenue Change %-20.1%21.5%22.5%-30.8% 

 FY 2016
 1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Gross margin33.9%28.1%32.7%30.3%31.2%
Operating margin1.5%1.4%4.7%-4.8%1.0%
Periodic revenue %23.9%28.7%26.9%20.5%100.0%
Quarter over Quarter     
Revenue Change %131.0%20.0%-6.3%-23.7% 

 FY 2015
 1st Qtr2nd Qtr3rd Qtr4th QtrYTD
Gross margin37.1%30.1%35.7%29.9%33.6%
Operating margin-6.4%-15.5%14.9%-4.1%0.8%
Periodic revenue %19.4%17.6%38.6%24.4%100.0%
Quarter over Quarter     
Revenue Change %-0.9%-9.0%118.6%-36.7% 

CONTACT: Contact Information:

Tom Wilkinson  
Chief Financial Officer
(512) 637-1162
Matt Kreps, Darrow Associates Investor Relations
(512) 696-6401

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