- 4Q10 Revenue $24.5 million (increase 36% year over year)
- 4Q10 GAAP EPS: $0.00 vs. 4Q09 GAAP loss per share ($0.19)
- 4Q10 Non-GAAP EPS: $0.03 vs. 4Q09 Non-GAAP EPS: $0.04
- FY10 Revenue: $85.7 million (increase 20% year over year)
- FY10 GAAP EPS: $0.13 vs. FY09 GAAP loss per share ($1.01)
- FY10 Non-GAAP EPS: $0.17 vs. FY09 Non-GAAP EPS: $0.07
BROKEN ARROW, Okla., Dec. 30, 2010 (GLOBE NEWSWIRE) – XETA
Technologies, Inc. (Nasdaq:XETA), a national provider of converged
communications solutions for the enterprise marketplace, today
reported earnings of $15,000, or $0.00 per diluted share, on
revenue of $24.5 million for the fourth fiscal quarter ended Oct.
31, 2010. This compares to a loss of $1.9 million, or ($0.19)
per diluted share, on revenue of $18.1 million for the fourth
fiscal quarter ended Oct. 31, 2009. Excluding non-cash
goodwill impairment charges of $3.8 million, non-GAAP net income
for the fourth fiscal quarter of 2009 was $407,000, or $0.04 per
diluted share.
For the fiscal year ended Oct. 31, 2010, the Company reported
earnings of $1,373,000, or $0.13 per diluted share, on revenue of
$85.7 million compared to a net loss of $10.3 million, or ($1.01)
per diluted share on revenue of $71.6 million for the same period
ended Oct. 31, 2009. Excluding non-cash charges of $17.8
million in impairments to goodwill and the Company's ERP system,
non-GAAP net income for the fiscal year ended Oct. 31, 2009 was
$721,000, or $0.07 per diluted share.
During the third and fourth quarters of fiscal 2010, the Company
recorded $175,000 and $442,000, respectively, of non-recurring
expenses for professional fees and other costs related to recently
completed and new corporate development activities. Excluding
non-recurring expenses recorded during the fourth quarter ended
Oct. 31, 2010, non-GAAP net income was $285,000, or $0.03 per
diluted share. Excluding non-recurring expenses recorded
during the fiscal year ended Oct. 31, 2010, non-GAAP net income was
$1,749,000, or $0.17 per diluted share.
|
|
|
|
Line of Business |
4Q10 |
4Q09 |
% Change |
Maintenance &
Repair |
11,071 |
7,581 |
46% |
Design &
Integration |
3,479 |
2,483 |
40% |
Cabling |
1,093 |
658 |
66% |
Total Services |
15,643 |
10,722 |
46% |
Commercial |
7,797 |
5,453 |
43% |
Hospitality |
1,071 |
1,745 |
-39% |
Total Systems |
8,868 |
7,198 |
23% |
Other Revenue |
33 |
133 |
Nmf |
Total Revenue |
24,544 |
18,053 |
36% |
Total revenue increased 36% during the fourth fiscal quarter of
2010 due to continued growth in service revenue and contribution
from acquisitions announced during the third and fourth fiscal
quarters. "Acquisitions, along with double-digit organic
growth in our services business, added almost 50% to our service
base during the quarter," said Greg Forrest, CEO and president. "At
the same time, customer spending on equipment remained inconsistent
during the fourth quarter and we continue to experience delays in
large projects. Excluding equipment revenue from acquisitions,
organic equipment revenue comparisons were relatively flat
year-over-year."
Gross Margin
Table |
|
|
|
|
4Q10 |
4Q09 |
|
Line of
Business |
Gross
Margin |
Gross
Margin |
Change |
Services |
28.3% |
34.4% |
- 610 basis points |
Systems |
23.9% |
26.5% |
- 260 basis points |
Overall Gross
Margin |
24.9% |
29.5% |
- 460 basis points |
During the fourth quarter of fiscal 2010, overall gross margin
was 24.9% of revenue versus 29.5% during the fourth quarter of
fiscal 2009. "While systems margin declined year-over-year, it
remained within our targeted levels. Service gross margins
were temporarily affected by the integration of the acquisitions
during the quarter. We are in the process of completing the
integration of these businesses and expect service margins to
return to targeted levels during fiscal 2011," commented
Forrest.
Operating expenses for the fourth quarter ended Oct. 31, 2010
were $6.2 million and included $442,000 of non-recurring expenses
for professional fees and other costs related to recently completed
and new corporate development activities. "Excluding
non-recurring expenses from the year-over-year comparison, fourth
quarter operating expenses as a percentage of revenue improved 240
basis points to 23.3% of sales, which reflects part of the
efficiency efforts we put in place earlier in the year and
operating leverage of our business model. During the fourth
quarter we reorganized our sales organization to reflect
manufacturer consolidation in our market, our strategic initiatives
around advanced applications, and the addition of talented sales
professionals that came to us via acquisitions. We expect
these changes to drive a more efficient and productive sales
force. In addition, we continue to work on driving other
efficiencies in our business and expect to capture greater
operating leverage as acquisitions are fully integrated into our
operations."
Commenting on the outlook, Forrest said, "Through our strategic
efforts and recent acquisitions, we have significantly changed the
revenue profile of XETA, so that nearly two-thirds of our business
is service related. Our service business produces relatively
higher margin contribution and is recurring in nature. As
service revenue becomes a greater portion of our overall revenue
mix, predictability and profitably of our business should continue
to improve. We have also added technical competencies to
provide design, implementation, maintenance, repair, and network
monitoring services for data and video communications, which are
much larger markets than our historical voice focus and provide us
additional avenues to grow our top line."
"With the continued success in our recurring services business,
expanded addressable market, pent up demand, and contributions from
acquisitions, we feel confident in our ability to produce greater
than $100 million of revenue during fiscal 2011. Based on
improved visibility of acquired businesses, we have also narrowed
our range of fiscal 2011 earnings per share guidance to $0.35 to
$0.40 per share," concluded Forrest.
The Company will host a conference call and webcast to discuss
these results at 4 p.m. CT on Thursday, December 30,
2010. Interested parties may access the conference call via
telephone by dialing 877-407-8033. The call is being webcast and
can be accessed at XETA's website, www.xeta.com, under the Investor
Relations section. A replay of the webcast will be archived
on the Company's website for 60 days.
About XETA Technologies, Inc.
XETA Technologies, Inc., sells, installs and services advanced
communication technologies for small, medium and Fortune 1000
enterprise customers. The Company maintains the highest level of
technical competencies with multiple vendors, including
Avaya/Nortel, Mitel, Hitachi, Samsung, HP, Polycom, Microsoft,
Alcatel-Lucent, ShoreTel, LifeSize and Juniper. With a 29-year
operating history and over 16,000 customers from coast to coast,
XETA has maintained a commitment to extraordinary customer service.
The Company's in-house 24/7/365 contact center, combined with a
nationwide service footprint, offers customers comprehensive
equipment service programs that ensure network reliability and
maximized network up-time. More information about XETA Technologies
(Nasdaq:XETA) is available at www.xeta.com. Click on the following
link to join our e-mail alert list:
http://www.b2i.us/irpass.asp?BzID=1585&to=ea&s=0.
The XETA Technologies, Inc., logo is a registered trademark of
XETA Technologies and is available at:
http://www.globenewswire.com/newsroom/prs/?pkgid=7103
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These include statements concerning the outlook for service revenue
growth, earnings expectations, commercial systems revenue growth
and revenue run rates for fiscal 2011. These and other
forward-looking statements (generally identified by such words as
"expects," "plans," "believes," "likely," "anticipates" and similar
words or expressions) reflect management's current expectations,
assumptions, and beliefs based upon information currently available
to management. Investors are cautioned that all forward-looking
statements are subject to certain risks and uncertainties which are
difficult to predict and that could cause actual results to differ
materially from those projected. These risks and uncertainties
include, but are not limited to: the condition of the U.S. economy
and its impact on capital spending in the Company's markets; the
successful integration of recently acquired businesses into that of
the Company and realization of anticipated synergies and growth
opportunities from these transactions; changes in Avaya's
strategies regarding the provision of equipment and services to its
customers, and in its policies regarding the availability of tier
IV hardware and software support and the negative impact that may
have on the Company's services gross margins as well as on customer
satisfaction; the Nortel Networks bankruptcy filing
including the potential negative impact it may have on the
Company's prepetition accounts receivable claim against Nortel or
if Nortel succeeds in bringing a preference claim against the
Company; unpredictable quarter to quarter revenues; continuing
success of our Mitel product and service offerings; the
Company's ability to maintain and improve upon current gross profit
margins; intense competition and industry consolidation; dependence
upon a few large wholesale customers for the recent growth in the
Company's Managed Services offering; and the availability and
retention of revenue professionals and certified technicians.
Additional factors that could affect actual results are described
in the "Risk Factors" section of the Company's Form 10-K and Form
10-Q filings with the SEC.
|
|
|
|
|
|
Condensed Consolidated
Statements of Income |
Three Months Ended |
Fiscal Year Ended |
|
|
October 31, |
October 31, |
|
|
2010 |
2009 |
2010 |
2009 |
|
|
(Unaudited) |
|
(Unaudited) |
|
Sales |
Services |
$ 15,643 |
$ 10,722 |
$ 51,304 |
$ 41,081 |
|
Systems |
8,868 |
7,198 |
34,015 |
30,095 |
|
Other |
33 |
133 |
359 |
396 |
|
Total |
24,544 |
18,053 |
85,678 |
71,572 |
|
|
|
|
|
|
Cost of Sales |
Services |
11,214 |
7,033 |
35,451 |
28,291 |
|
Systems |
6,752 |
5,288 |
25,023 |
22,080 |
|
Other |
463 |
412 |
1,751 |
1,720 |
|
Total |
18,429 |
12,733 |
62,225 |
52,091 |
|
|
|
|
|
|
Gross Profit |
|
6,115 |
5,320 |
23,453 |
19,481 |
|
|
|
|
|
|
Gross Profit Margin |
|
25% |
29% |
27% |
27% |
|
|
|
|
|
|
Operating Expense |
|
|
|
|
|
Selling, General and
Administrative |
|
5,870 |
4,445 |
20,437 |
17,371 |
Amortization |
|
288 |
199 |
868 |
1,201 |
Impairment of Goodwill and
Other Assets |
|
-- |
3,800 |
-- |
17,800 |
Total Operating Expenses |
|
6,158 |
8,444 |
21,305 |
36,372 |
|
|
|
|
|
|
Income (Loss) from Operations |
|
(43) |
(3,124) |
2,148 |
(16,891) |
|
|
|
|
|
|
Interest Expense |
|
(21) |
(20) |
(36) |
(100) |
Interest and Other Income |
|
80 |
13 |
139 |
28 |
Total Interest and Other Income
(Expense) |
|
59 |
(7) |
103 |
(72) |
|
|
|
|
|
|
Income (Loss) Before Provision for Income
Taxes |
|
16 |
(3,131) |
2,251 |
(16,963) |
Provision (Benefit) for Income Taxes |
|
1 |
(1,228) |
878 |
(6,646) |
Net Income (Loss) after
Tax |
|
$ 15 |
$ (1,903) |
$ 1,373 |
$ (10,317) |
|
|
|
|
|
|
Basic Earnings (Loss) Per Share |
|
$ 0.00 |
$ (0.19) |
$ 0.13 |
$ (1.01) |
Diluted Earnings (Loss) Per Share |
|
$ 0.00 |
$ (0.19) |
$ 0.13 |
$ (1.01) |
Wt. Avg. Common Shares Outstanding |
|
10,630 |
10,223 |
10,402 |
10,224 |
Wt. Avg. Common Equivalent Shares |
|
10,743 |
10,223 |
10,478 |
10,224 |
|
|
|
|
|
|
(The information is
unaudited and is presented in thousands except percentages and
per-share data.) |
|
|
|
|
|
|
|
|
Consolidated Balance
Sheet Highlights |
|
|
|
|
|
(Unaudited) |
|
|
|
|
October 31, 2010 |
October 31, 2009 |
Assets |
Current |
Cash |
$ 1,003 |
$ 4,732 |
|
|
Receivables (net) |
17,806 |
13,832 |
|
|
Inventories (net) |
6,715 |
5,036 |
|
|
Other |
4,637 |
3,704 |
|
|
Subtotal |
30,161 |
27,304 |
|
|
|
|
|
|
Non-Current |
PPE (net) |
6,932 |
6,826 |
|
|
Goodwill & Intangibles (net) |
20,946 |
12,603 |
|
|
Noncurrent Deferred Tax Asset |
-- |
739 |
|
|
Other |
326 |
336 |
|
|
Subtotal |
28,204 |
20,504 |
|
|
|
|
|
|
Total Assets |
|
$ 58,365 |
$ 47,808 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
Current |
Revolving Line of Credit |
$ 1,756 |
$ -- |
|
|
Notes Payable |
338 |
1,183 |
|
|
Accounts Payable |
10,032 |
5,785 |
|
|
Accrued Liabilities |
4,006 |
3,599 |
|
|
Unearned Revenue |
6,529 |
5,195 |
|
|
Subtotal |
22,661 |
15,762 |
|
|
|
|
|
|
Non-Current |
Long Term Debt |
255 |
-- |
|
|
Noncurrent Deferred Tax Liability |
12 |
-- |
|
|
Other |
193 |
287 |
|
|
Subtotal |
460 |
287 |
|
|
|
|
|
|
Total Liabilities |
|
23,121 |
16,049 |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
$ 35,244 |
$ 31,759 |
|
|
|
|
|
(The information is unaudited and
is presented in thousands.) |
|
|
Reconciliation of Adjusted
EBITDA(1) to Net
Income |
Quarter Ending October
31, |
Fiscal Year Ending
October 31, |
|
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
Net Income (Loss) |
$ 15 |
$ (1,903) |
$ 1,373 |
$ (10,317) |
Interest |
21 |
20 |
36 |
100 |
Provision (Benefit) for Income Taxes |
1 |
(1,228) |
878 |
(6,646) |
Impact of Non-recurring Corporate
Development
Related Costs |
442 |
-- |
617 |
-- |
Impairment of Goodwill and Other Assets |
-- |
3,800 |
-- |
17,800 |
Depreciation |
343 |
303 |
1,250 |
1,026 |
Amortization |
288 |
199 |
868 |
1,201 |
Adjusted EBITDA(1) |
$ 1,110 |
$ 1,191 |
$ 5,022 |
$ 3,164 |
|
|
|
|
|
(The information is presented in
thousands.) |
|
|
1The Company uses Adjusted-EBITDA (earnings before net interest,
income taxes, depreciation and amortization), which excludes
non-cash charges for impairment of goodwill and other assets, as
part of its overall assessment and comparison of financial
performance between accounting periods. XETA believes that EBITDA
is often used by the financial community as a method of measuring
the Company's performance and of evaluating the market value of
companies considered to be in similar businesses. EBITDA is a
non-GAAP financial measure and should not be considered an
alternative to net income or cash provided by operating activities,
as defined by accounting principles generally accepted in the
United States ("GAAP"). A reconciliation of EBITDA to net income is
provided above.
The following table reconciles reported GAAP net income (loss)
per the income statement to non-GAAP net income:
|
|
|
|
Quarter Ending October
31, |
Fiscal Year Ending
October 31, |
|
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
Net Income (Loss) as Reported |
$ 15 |
$ (1,903) |
$ 1,373 |
$ (10,317) |
Non-recurring Corporate Development Related
Costs
(Net of Tax) |
270 |
-- |
376 |
-- |
Impairment of Goodwill and Other Assets
(Net of Tax) |
-- |
2,310 |
-- |
10,822 |
Reserve for Bad Debt (Net of Tax) |
-- |
-- |
-- |
216 |
Non-GAAP net income |
$ 285 |
$ 407 |
$ 1,749 |
$ 721 |
|
|
|
|
|
(The information is presented in
thousands.) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ending October
31, |
Fiscal Year Ending
October 31, |
|
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
EPS, Diluted - as Reported |
$ 0.00 |
$ (0.19) |
$ 0.13 |
$ (1.01) |
EPS Impact of Non-recurring Corporate
Development Related Costs (Net of
Tax) |
0.03 |
0.00 |
0.04 |
0.00 |
EPS Impact of Impairment of Goodwill and
Other Assets (Net of Tax) |
0.00 |
0.23 |
0.00 |
1.06 |
EPS Impact of Reserve for Bad Debt, Net of
Tax |
0.00 |
0.00 |
0.00 |
0.02 |
EPS, Diluted - Non-GAAP |
$ 0.03 |
$ 0.04 |
$ 0.17 |
$ 0.07 |
CONTACT: Three Part Advisors, LLC
Dave Mossberg
817-310-0051
dmossberg@threepa.com
Waller & Company Public Relations
Barrett Waller
918-587-1909
Barrett@wallerpr.com
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