XATA Xrs Corporation (MM)

XATA reports 91-percent earnings improvement as sales grow 163 percent in the fourth quarter MINNEAPOLIS, Nov. 6 /PRNewswire-FirstCall/ -- XATA Corporation (NASDAQ:XATA), today reported a 163-percent increase in sales for the fourth quarter, ended September 30, 2008 as sales increased to $17.7 million from $6.8 million for the same period in fiscal 2007. Comparable fourth quarter year-over-year sales increased 80 percent, primarily driven by a 104-percent growth from the company's XATANET(TM) software-as-a-service (SaaS) platform. For the fourth quarter, Geologic Solutions sales represented approximately $5.6 million of the total revenue. The company acquired 9 new customers in the fourth quarter. Recurring revenue for the fourth quarter of fiscal 2008, including monthly subscriptions from XATANET and monthly fees from our MobileMax and OpCenter(TM) product lines, accounted for 42 percent of total sales. Fourth quarter XATANET recurring subscription revenue increased by 65 percent, compared to the same period of fiscal 2007. Operationally, gross margins totaled 46 percent of sales for the fourth quarter of fiscal 2008, compared to 44 percent of sales for the same period of fiscal 2007. Improvements in recurring revenue margins were partially offset by growth in lower gross margin systems sales during the fourth quarter of fiscal 2008. Selling, general and administrative costs were $6.1 million and $6.6 million for the fourth quarter of fiscal 2008 and 2007, respectively. For the fourth quarter of fiscal 2007, selling, general and administrative costs reflected litigation and settlement costs of $1.1 million and write-off of capitalized system development costs of $1.8 million. For the fourth quarter of fiscal 2008 selling, general and administrative costs reflect costs of the consolidated operations, including amortization expense of $0.4 million relating to acquired intangible assets. On a GAAP basis, the company reported a fourth quarter net loss to common shareholders of $0.4 million, or $0.05 per diluted share, a significant improvement from the reported net loss of $4.5 million, or $0.57 per diluted share, for the same period of fiscal 2007. For the fourth quarter of fiscal 2008, the company improved EBITDA (earnings before interest (net), taxes, depreciation, amortization, stock based compensation and preferred stock dividends and deemed dividends) performance by $0.64 per diluted share, reporting positive EBITDA of $0.14 per diluted share, compared to an EBITDA loss of $0.50 per diluted share for the same period of fiscal 2007. Fourth quarter fiscal 2007 EBITDA loss included a charge for litigation settlement and impairment loss on capitalized development costs of $2.9 million, or $0.36 loss per diluted share. "Our fourth quarter results reflect our continued commitment to achieving profitability," said Jay Coughlan, chairman and president of XATA Corporation. "With our XATANET SaaS platform sales reaching another record high for the fifth consecutive quarter -- a considerable achievement -- we continue to demonstrate the value-added benefits and cost savings XATANET offers our customers as they optimize their fleet operations, especially during a weak economy." Fiscal 2008 Performance XATA reported a 75-percent increase in sales for fiscal 2008 as sales increased to $53.7 million from $30.7 million for fiscal 2007. Comparable year-over-year sales increased 29 percent, primarily driven by a 49-percent growth from the company's XATANET SaaS platform. Geologic Solutions sales represented approximately $14.1 million of the total revenue for fiscal 2008. Fiscal 2008 recurring revenue, including monthly subscriptions from XATANET and monthly fees from our MobileMax and OpCenter product lines, accounted for 44 percent of total sales, compared to 35 percent for the same period in fiscal 2007. "Fiscal 2008 was an excellent year for XATA," continued Coughlan. "We've demonstrated a year of steady growth with four quarters of consecutive EBITDA improvement; successfully expanded into the for-hire segment through the acquisition of GeoLogic Solutions, Inc.; executed on our product strategy with enhancements to our XATANET platform; and, added many new customers allowing us to increase our recurring revenue stream. We believe with our size and operational performance that the company is well positioned for the future." Gross margins improved during fiscal 2008 to 47 percent of sales, compared to 45 percent of sales for fiscal 2007 as the result of improved XATANET subscription margins and the fact that a larger portion of the total revenue stream now consists of higher-margin recurring revenue. Selling, general and administrative costs were $21.8 million and $16.7 million for fiscal 2008 and 2007, respectively. The increase is driven by additional costs of the combined entity, investments in our brand strategy, professional services and direct sales model and amortization expenses of $1.1 million relating to acquired intangible assets offset by fiscal 2007 charges for litigation settlement and impairment of capitalized system development costs of $3.3 million. For the fiscal year 2008, the company reported a net loss to common shareholders of $3.6 million, or $0.44 per diluted share, a sizeable improvement from the reported net loss of $7.8 million, or $0.99 per diluted share, for the same twelve-month period in 2007. The company reported EBITDA improvement of $0.79 per diluted share for fiscal 2008, reporting positive EBITDA of $0.21 per diluted share, compared to an EBITDA loss of $0.58 per diluted share for the same period of fiscal 2007. Non-GAAP vs. GAAP Financials To supplement the company's consolidated financial statements presented in accordance with GAAP, the company provides certain non-GAAP measures of financial performance. These non-GAAP measures include EBITDA, which is earnings before interest (net), taxes, depreciation, amortization, stock based compensation and preferred stock dividends and deemed dividends, and EBITDA per diluted share. The company's reference to these non-GAAP measures should be considered, in addition to results prepared under current accounting standards, but are not a substitute for, or superior to, GAAP results. These non-GAAP measures are provided to enhance investors' overall understanding of the company's current financial performance and ability to generate cash flow. In many cases, non -GAAP financial measures are used by analysts and investors to evaluate the company's performance. Reconciliation to the nearest GAAP measure of all non-GAAP measures included in this press release can be found in a financial table included below in this press release. About XATA Based in Minneapolis, MN, XATA Corporation (NASDAQ:XATA) is an expert in optimizing fleet operations by reducing costs and ensuring regulatory compliance for the trucking industry. Our customers have access to vehicle data anywhere, anytime, through XATANET, our fee-based subscription service. Our software and professional services help companies manage fleet operations, enhance driver safety and deliver a higher level of customer satisfaction. XATA provides expert services to develop the business processes required to deliver the profitability, safety and service level demanded by today's competitive transportation environments. Today, XATA systems increase the productivity of approximately 64,000 trucks across North America. For more information, visit http://www.xata.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, cost and difficulties we may face in integrating the businesses of XATA and GeoLogic Solutions, dependence on positioning systems and communication networks owned and controlled by others, the receipt and fulfillment of new orders for current products, 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 IA, Item 1 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2007 (as updated in our subsequent reports filed with the SEC). These reports are available under the "Investors" section of our Web site at http://www.xata.com/ and through the SEC Web site at http://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. XATA CORPORATION CONDENSED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share amounts) (Unaudited) Twelve Months Three Months Ended Ended September 30, September 30, 2008 2007 2008 2007 Net sales $17,743 $6,756 $53,726 $30,676 Cost of sales 9,637 3,799 28,246 16,932 Selling, general and administrative 6,084 6,587 21,777 16,702 Research and development 1,949 1,093 6,027 4,351 Total costs and expenses 17,670 11,479 56,050 37,985 Operating income (loss) 73 (4,723) (2,324) (7,309) Net interest income 77 227 404 525 Net interest expense (523) (6) (1,441) (24) Loss before income taxes (373) (4,502) (3,361) (6,808) Income tax expense - - - - Net loss (373) (4,502) (3,361) (6,808) Preferred stock dividends and deemed dividends (49) (47) (261) (1,002) Net loss to common shareholders $(422) $(4,549) $(3,622) $(7,810) Net loss per common share - basic and diluted $(0.05) $(0.57) $(0.44) $(0.99) Weighted average common and common share equivalents Basic and Diluted 8,431 7,964 8,326 7,922 XATA CORPORATION CONDENSED BALANCE SHEETS (Amounts in thousands) September 30, 2008 2007 (Unaudited) Current assets Cash and cash equivalents $8,904 $13,675 Accounts receivable, net 11,365 3,280 Inventories 2,735 2,672 Deferred product costs 1,474 752 Current portion of investment in sales-type leases 768 - Prepaid expenses and other current assets 691 393 Total current assets 25,937 20,772 Equipment and leasehold improvements, net 3,925 1,583 Intangible assets, net 12,420 - Goodwill 3,011 - Investment in sales-type leases, net of current portion 310 - Deferred product costs, non-current 2,685 1,798 Debt financing costs, net 708 - Total assets $48,996 $24,153 Current liabilities Current portion of long-term obligations $1,845 $161 Accounts payable 4,394 3,419 Accrued liabilities 6,574 3,548 Deferred revenue 4,996 3,105 Total current liabilities 17,809 10,233 Long-term obligations, net of current portion 16,342 220 Deferred revenue, non-current 7,848 6,524 Other long-term liabilities 805 98 Total liabilities 42,804 17,075 Shareholders' equity Preferred stock 15,963 15,703 Common stock 28,321 25,845 Accumulated deficit (38,092) (34,470) Total shareholders' equity 6,192 7,078 Total liabilities and shareholders' equity $48,996 $24,153 XATA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Amounts in thousands, except per share amounts) (Unaudited) Three Months Twelve Months Ended Ended September 30, September 30, 2008 2007 2008 2007 Net loss to common shareholders ($422) ($4,549) ($3,622) ($7,810) Adjustments: Net interest expense (income) 446 (221) 1,037 (501) Stock-based compensation 350 524 1,588 2,021 Depreciation and amortization expense 769 185 2,470 664 Preferred stock dividends and deemed dividends 49 47 261 1,002 Total adjustments 1,614 535 5,356 3,186 Non-GAAP EBITDA $1,192 ($4,014) $1,734 ($4,624) Non-GAAP EBITDA per diluted share $0.14 ($0.50) $0.21 ($0.58) Shares used in calculating non-GAAP EBITDA per diluted share 8,431 7,964 8,326 7,922 DATASOURCE: XATA Corporation CONTACT: Mark Ties, CFO of XATA Corporation, +1-952-707-5600, Web site: http://www.xata.com/

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