XATA Xrs Corporation (MM)

A 35 percent earnings improvement as sales grew 91 percent in the first quarter of fiscal 2009 MINNEAPOLIS, Feb. 4 /PRNewswire-FirstCall/ -- XATA Corporation (NASDAQ: XATA), today reported a 91 percent increase in sales for the first quarter ended December 31, 2008, as sales increased to $14.6 million from $7.7 million for the same period in fiscal 2008. Comparable first quarter year-over-year sales increased 33 percent primarily driven by a 56 percent growth from the company's XATANET(TM) SaaS platform. For the first quarter of fiscal 2009, Geologic Solutions sales represented approximately $4.4 million of the total revenue. The company acquired 19 new customers in the first quarter of fiscal 2009. Recurring revenue for the first quarter of fiscal 2009, including monthly subscriptions from XATANET and monthly fees from our MobileMax and OpCenter(TM) product lines, accounted for 53 percent of total sales compared to 41 percent for the same quarter of fiscal 2008. For the first quarter of fiscal 2009 XATANET recurring subscription revenue increased by 68 percent compared to the same period of fiscal 2008. "We've entered fiscal 2009 strong with solid financial results -- increased revenue, improved gross margins, and another quarter of positive EBIDTA performance," said Jay Coughlan, chairman and president of XATA Corporation. "XATANET continues to be our primary vehicle for growth with 19 new customers added during the quarter. As the economic climate continues to challenge fleet operators to find ways to reduce cost, our recent rollout of XATANET 4.3 further demonstrates XATA is a prominent player in the private and for-hire segments of the trucking industry." Operationally, gross margins represented 54 percent of sales for the first quarter of fiscal 2009, compared to 51 percent of sales for the same period of fiscal 2008. This improvement was driven by a more heavily concentrated software subscription sales mix in the quarter, continued growth in higher margin recurring revenue subscriptions and improvement in the recurring margins contributed to this improvement. Selling, general and administrative costs were $6.9 million or 47 percent of sales and $4.0 million or 52 percent of sales for the first quarter of fiscal 2009 and 2008, respectively. For the first quarter of fiscal 2009 selling, general and administrative costs reflect costs of the consolidated operations, while the first quarter of fiscal 2008 did not include the costs associated with the Geologic Solutions acquisition. On a GAAP basis, the company reported an improvement in earnings for the first quarter of fiscal 2009 of 35 percent with a net loss to common shareholders of $0.7 million, or $0.08 per diluted share, compared to a net loss to common shareholders of $1.1 million, or $0.14 per diluted share for the same period of fiscal 2008. For the first quarter of fiscal 2009, the company improved EBITDA (earnings before interest (net), taxes, depreciation, amortization, stock based compensation and preferred stock dividends and deemed dividends) performance by $0.16 per diluted share, reporting positive EBITDA of $0.10 per diluted share compared to an EBITDA loss of $0.06 per diluted share for the same period of fiscal 2008. "We've reported our fourth consecutive quarter of positive EBITDA performance driven by continued revenue growth and improved gross margins," continued Coughlan. "While first quarter revenue was down sequentially, it was expected due to the cyclical nature of the business, but as we enter the second quarter, our pipeline is strong and we remain focused on our goal of achieving profitability." 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 66,000 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, 2008 (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) Three Months Ended December 31, 2008 2007 Net sales $14,643 $7,687 Cost of sales 6,688 3,779 Selling, general and administrative 6,931 3,995 Research and development 1,284 1,040 Total costs and expenses 14,903 8,814 Operating income (loss) (260) (1,127) Net interest income 38 131 Net interest expense (450) (17) Loss before income taxes (672) (1,013) Income tax expense - - Net loss (672) (1,013) Preferred stock dividends and deemed dividends (44) (90) Net loss to common shareholders $(716) $(1,103) Net loss per common share - basic and diluted $(0.08) $(0.14) Weighted average common and common share equivalents Basic and diluted 8,468 8,163 XATA CORPORATION CONDENSED BALANCE SHEETS (Amounts in thousands) December 31, September 30, 2008 2008 (Unaudited) Current assets Cash and cash equivalents $8,902 $8,904 Accounts receivable, net 8,818 11,365 Inventories 3,269 2,735 Deferred product costs 1,749 1,474 Current portion of investment in sales-type leases 695 768 Prepaid expenses and other current assets 461 691 Total current assets 23,894 25,937 Equipment and leasehold improvements, net 3,773 3,925 Intangible assets, net 11,996 12,420 Goodwill 3,011 3,011 Investment in sales-type leases, net of current portion 174 310 Deferred product costs, non-current 2,896 2,685 Debt financing costs, net 645 708 Total assets $46,389 $48,996 Current liabilities Current portion of long-term obligations $1,841 $1,845 Accounts payable 3,643 4,394 Accrued liabilities 4,968 6,574 Deferred revenue 5,458 4,996 Total current liabilities 15,910 17,809 Long-term obligations, net of current portion 16,095 16,342 Deferred revenue, non-current 7,694 7,848 Other long-term liabilities 778 805 Total liabilities 40,477 42,804 Shareholders' equity Preferred stock 16,056 15,963 Common stock 28,664 28,321 Accumulated deficit (38,808) (38,092) Total shareholders' equity 5,912 6,192 Total liabilities and shareholders' equity $46,389 $48,996 XATA CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Amounts in thousands, except per share amounts) (Unaudited) Three Months Ended December 31, 2008 2007 Net loss to common shareholders $(716) $(1,103) Adjustments: Net interest expense (income) 412 (114) Stock-based compensation 343 382 Depreciation and amortization expense 733 250 Preferred stock dividends and deemed dividends 44 90 Total adjustments 1,532 608 Non-GAAP EBITDA $816 $(495) Non-GAAP EBITDA per diluted share $0.10 $(0.06) Shares used in calculating non-GAAP EBITDA per diluted share 8,468 8,163 DATASOURCE: XATA Corporation CONTACT: Mark Ties, CFO of XATA Corporation, +1-952-707-5600, Web site: http://www.xata.com/

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