Xplore Tech (XPLR) Prelim. Q2 Revenue Tops Views

October 24, 2016 4:27 PM EDT
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Xplore Technologies Corp. (Nasdaq: XPLR) reported preliminary results for its fiscal 2017 second quarter ended September 30, 2016. The company also updated its revenue outlook for Fiscal 2017 and stated that it anticipates second half profitability to drive approximately breakeven net income for the full year. The company will report its full results on November 10.

Mark Holleran, Xplore’s president and chief operating officer, stated: “We anticipate revenue of approximately $20.0 million in our fiscal second quarter, which included only initial shipments against our large telecommunications customer purchase order previously announced. As a result, we entered the December quarter with record backlog of more than $11 million.

**** The Street was looking for revenue of $17.8 million.

“During the quarter we significantly reduced operating expenses to approximately $6.0 million, down more than $1.7 million from the prior year quarter. We anticipate the combination of higher revenue and greatly reduced operating expenses will drive solid profitability and increased cash flows throughout the last six months of the year.

“We continue to generate steady sales with new and existing customers across our addressable markets, as well as sign new purchase agreements with major global corporations. These include recent agreements with a global leading restaurant group, a growing high speed fiber to the premises company and entry to the vehicle emissions testing market, all of which are expected to generate orders in future quarters. Additionally, our sales pipeline has further expanded based on our success with multiple global leading customers and now represents the highest level in company history.”

Gross margin for the first fiscal quarter is expected to be approximately 28%, reflecting initial shipments of the company’s large Android rugged tablet order, and within guidance of 28-30%. Operating expenses are expected to decline more than $1.7 million year-over-year, to approximately $6.0 million for the quarter, due to success from the aggressive cost reductions initiated in August 2016. The company anticipates a GAAP net loss for the quarter of approximately $500 thousand and adjusted EBITDA of $200 thousand. These results are preliminary and subject to revision during the standard financial closing process.

“In August we announced a major cost reduction initiative designed to pivot Xplore to sustained profitability across all revenue cycles,” said Tom Wilkinson, chief financial officer for Xplore. “We have executed more swiftly than anticipated on immediate cost savings and continue to progress on a number of initiatives designed to bring greater manufacturing and operating cost efficiency over the next 12 to 18 months. As a result, we have greatly reduced our breakeven point and see significant opportunities for operating profit leverage as we continue to increase revenue. We also anticipate generating greater cash flows from the business over the coming quarters.”

For the full fiscal year, Xplore now anticipates revenue to be at the lower end of its initial $85 million to $95 million outlook, including the impact of the temporary global slowdown in rugged tablet shipments in the first fiscal quarter plus continued slower sales in Europe. Gross margin for the fiscal year is expected to be between 28% and 30%. Operating expenses are expected to be between $25 and $27 million, compared to original expectations of $27 to $29 million, as a result of cost reductions previously initiated plus additional operating efficiency measures.

“We anticipate significantly larger third and fourth quarters driving profitable operations in spite of continued headwinds in Europe,” concluded Mark Holleran. “We see not only large opportunities with new customers, but also the increasing benefit of refresh and follow-on orders from existing customers. We are also working aggressively with our channel partners to increase Xplore’s presence and share long term. As we continue to execute on revenue growth across our lower cost base, we see substantial opportunity for operating profit, net income and cash flow growth.”

Additionally, the company announced that executives have purchased approximately 14,000 shares of Xplore’s common stock through the company’s employee stock purchase plan (ESPP) through the first two quarters. These recurring purchases are not reported via traditional insider purchase filings.

The company will release its full results on Thursday, November 10, 2016 after the market close. The company will subsequently conduct a conference call and webcast to review its results at 4:30 p.m. ET.

Participants can pre-register for the conference call by navigating to http://dpregister.com/10094843. Callers who pre-register in advance of the call will be given a conference passcode and unique PIN to gain immediate access to the call and bypass the live operator.

Interested parties in the United States can access the live call by dialing 866-777-2509; interested parties outside the United States can access the call by dialing +1-412-317-5413. 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 November 24, 2016, by calling 877-344-7529 from the United States or +1-412-317-0088 from outside the United States and entering conference ID number 10094843.

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