SYS-CON MEDIA Authors: Elizabeth White, Liz McMillan, Pat Romanski, Esmeralda Swartz, Kevin Jackson

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Webtech Wireless Announces Q1 2014 Results

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 05/09/14 -- Webtech Wireless Inc. (TSX: WEW), ("Webtech Wireless" or the "Company"), a leading provider of vehicle fleet location-based services and telematics technology, today announced its financial results for the three months ended March 31, 2014.

Unless otherwise noted, figures quoted in this press release relate to the Company's Telematics business, referred to as continuing operations.

Q1 2014 Financial and Operational Highlights


--  EBITDA was a loss of $0.4 million for Q1 2014 compared to a loss of $0.1
    million in Q1 2013.

--  The Company is reporting a net loss of $0.4 million or $0.00 per share
    for the three months ended March 31, 2014 compared to a net loss of $0.0
    million or $0.00 per share in the prior comparable period.

--  Revenue was $6.7 million in Q1 2014 compared to $7.4 million in Q1 2013.
    The revenue decrease was largely the result of lower solution sales to
    Commercial customers and OEM hardware deliveries.

--  Recurring revenue was flat at $4.7 million in Q1 2014 or 69% of total
    revenue in Q1 2014 compared to $4.7 million or 63% of total revenue in
    Q1 2013.

--  Notable new sales, implementations and expansions during the quarter
    included new contracts with Vermont Department of Transportation,
    Gabriel Construction, Beck Brothers Oil Field, VAL Transport and ProTrux
    Systems; continued expansions of a Fortune 100 Fleet customer and Ville
    de Quebec; and repeat sales with Troyer Ventures, EMJ Metals, Trackyou,
    NI Business Communications, and the Town of Richmond Hill.

--  The Company's subscriber base at March 31, 2014 totalled approximately
    80,000 compared to 80,000 at December 31, 2013 and 78,000 at March 31,
    2013. The increase in total subscribers since March 31, 2013 is due to
    the net addition of full service Commercial subscribers, as well as
    enterprise and data pump subscribers.

--  Excluding enterprise and data pump subscribers, full service average
    revenue per unit ("ARPU") increased to $25.87 per subscriber for the
    quarter versus $25.19 per subscriber in the prior year. The increase is
    the result of solution implementations and additional service offerings
    provided to new and existing Commercial and Government customers over
    the period.

--  Gross margin was $3.7 million or 56% of total revenue for the quarter,
    compared to $4.2 million or 57% in Q1 2013. The decrease over the prior
    comparable period was driven by the impact of lower hardware revenues in
    the current period.

--  Cash operating expenses (sales and marketing, research and development,
    and general and administrative expenses) decreased 4% to $4.1 million in
    Q1 2014 from $4.3 million in Q1 2013.

--  To date, as part of the Normal Course Issuer Bid, the Company has
    repurchased 2,099,228 of its common shares for a total cost, including
    transaction fees, of $0.9 million. All common shares repurchased will be
    cancelled.

"We are disappointed with overall revenues, which were below target due to a delayed deal which has since closed, and a second which remains open", said Scott Edmonds, President and CEO, continuing, "That said, we are very pleased with the progress on our new products and channel management initiatives. For instance, the backlog and funnel for Driver Center, sold through AT&T is building strongly, and there is a great deal of excitement within that channel for the product. Our early installations of Driver Center have gone very well with very positive feedback from customers. The ease of install, the enhanced functionality in-cab and the new pricing structure - all-in-one for hardware, software and air-time make it a very competitive product for us."

Mr. Edmonds, continued, "We are also pleased with take up of our government solutions with the State of Vermont beginning installations on the project we won with them in late 2013, and our lead generation initiatives are building a strong high quality and very visible funnel, which gives us confidence that we can recover from this drop in quarterly revenue in the back half of this year."

Financial Highlights



------------------------------------------------------
                                 Three months ended
------------------------------------------------------
                                 March 31,   March 31,
('000 of Cdn $)                       2014        2013
------------------------------------------------------
Recurring revenue                  $ 4,680     $ 4,715
Hardware revenue                     1,795       2,419
Services and other revenue             259         284
------------------------------------------------------
                                     6,734       7,418
------------------------------------------------------

Gross margin ($)                     3,740       4,245
Gross margin (%)                       56%         57%

Total operating expenses             4,371       4,440
------------------------------------------------------
------------------------------------------------------

Net loss                           $ (363)      $ (18)

EBITDA (1)                         $ (433)      $ (61)
------------------------------------------------------
------------------------------------------------------
(1)   EBITDA is a non-GAAP measure and is therefore not universally defined.
      EBITDA is defined as earnings before finance income, taxes,
      depreciation and amortization, and foreign exchange gain.

Revenue

Recurring revenues were flat for the quarter compared to the prior comparable period. ARPU from full service subscribers increased to $25.87 per subscriber for the quarter versus $25.19 in the prior comparable period. The increase in ARPU was the result of solution sales to new customers and the sale of additional feature options to existing Commercial and Government customers, combined with a planned departure of low ARPU Commercial customers outside of North America. The Company's focus continues to be on the acquisition and retention of high margin recurring revenue and the development of a Software as a Service model.

Hardware revenues for the quarter decreased largely due to lower Commercial and hardware-only OEM deliveries.

Service and other revenues were flat for the quarter compared to the prior comparable period.

Gross Margin

Gross margin for the quarter was down compared to the prior comparable period due to the impact of lower hardware revenues combined with a relatively fixed cost base. The gross margin percentage for the quarter was flat compared to the prior comparable period due to a favourable high margin revenue mix, where recurring revenues comprised of 69% of total revenues for the quarter compared to 63% in 2013 Q1.

Operating Expenses

Cash operating expenses decreased by 4% over the prior comparable quarter. The decrease for the quarter was largely due to litigation and settlement expenditures, and strategic review costs in Q1 2013 which were not repeated in the current period. The Company has also redirected resources to sales and marketing activities to increase lead generation capacity following the launch of the Webtech Driver Center™ solution. Cash operating expenses have been maintained at a level below the Company's recurring revenue base, a key target for cost control.

Cash and Working Capital

As at March 31, 2014, the Company's unrestricted cash position amounted to $22.8 million compared with $23.2 million at December 31, 2013. In addition, the Company has $2.1 million USD in restricted cash related to the holdback from the sale of the NextBus business in January 2013.

As at March 31, 2014, the Company had net working capital of $26.7 million, compared with $27.1 million at December 31, 2013. As at May 8, 2014, Webtech Wireless had 103,605,603 common shares outstanding.

Non-GAAP Financial Measures

In addition to the results reported in accordance with IFRS, the Company uses various non-GAAP financial measures, which are not recognized under IFRS, as supplemental indicators of the Company's operating performance and financial position. These non-GAAP financial measures are provided to enhance the user's understanding of the Company's historical and current financial performance and its prospects for the future. Management believes that these measures provide useful information in that they exclude amounts that are not indicative of the Company's core operating results and ongoing operations and provide a more consistent basis for comparison between quarters. Details of such non-GAAP financial measures and how they are derived are provided in conjunction with the discussion of the financial information reported.

Financial Statements and Management's Discussion & Analysis

The Condensed Interim Consolidated Financial Statements for the three months ended March 31, 2014 and the related Management's Discussion & Analysis for the period has been filed on SEDAR at www.sedar.com, and also on the Company's website at www.webtechwireless.com.

Notice of Conference Call

Webtech Wireless will hold a conference call today, May 9, 2014, at 11:00 am ET hosted by Mr. Scott Edmonds, President and Chief Executive Officer and Mr. Trevor Greene, Chief Financial Officer to discuss the Company's financial results and corporate developments. To access the conference call by telephone, dial +1.416.340.8530 or +1.800.769.8320. A taped replay of the conference call will be archived on the Company's corporate website at: www.webtechwireless.com.

About Webtech Wireless®

Webtech Wireless (TSX: WEW) is a leader in providing fleet management telematics, GPS and automatic vehicle location (AVL) solutions that improve efficiency, accountability and reduce costs. Our end-to-end solutions automate record keeping and regulatory compliance, reduce fuel burn and idling, mitigate risk, and keep drivers safe. Managers trust us to ensure people are accountable and vehicles are visible. Through the cloud, in the office, or straight to mobile devices, we deliver Fleet Intelligence Anywhere™. Our products are InterFleet®, for government winter maintenance, public works and waste management fleets; and Quadrant®, for commercial fleet operations and compliance (HOS, EOBR). Please visit www.webtechwireless.com

All amounts in Canadian dollars (CAD$) unless otherwise noted. - The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release. - Trademarks are the property of their owners.

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