EX-99.1 2 a06-5624_1ex99d1.htm EXHIBIT 99

Exhibit 99.1

 

 

NEWS RELEASE

 

Date:

February 22, 2006

 

FOR IMMEDIATE RELEASE

 

 

Contact:

Cheryl Moll

 

XETA Technologies

 

(918) 664-8200

 

XETA TECHNOLOGIES REPORTS

FIRST QUARTER RESULTS

 

Broken Arrow, OK - XETA Technologies (NASDAQ: XETA) today announced a fiscal 2006 first-quarter loss of $0.141 million, or $0.01 per share diluted, on revenues of $12.7 million.  This compares to earnings of $0.078 million, or $0.01 per share diluted, on revenues of $13.9 million for the period ending January 31, 2005.

 

According to Jack Ingram, CEO, “For five consecutive quarters we have been maximizing our investment in the sales force buildup to accommodate our new Nortel product line.  This aggressive strategy has resulted in our intentionally operating the Company at close to a break-even level with very little margin for error.  We have been able to successfully negotiate within this constrained environment until this quarter.

 

“The substandard results for the first quarter come primarily from a single source.  Systems sales were disappointingly low even though order booking rates for the quarter were actually as expected.  We began the quarter with a typical backlog level of approximately $2.4 million.  Bookings for the quarter were up approximately 3% compared to the first quarter of last year.  Because of the nature of two very large orders and the timing specified by these two new customers, neither order was shipped during the quarter.  In fact shipments associated with both of these large orders will more than likely extend into the third quarter of the year.  As a consequence, the long range picture was acceptable, but the first quarter results suffered.  Compounding the issue, our overall gross profit margin was negatively impacted by the delay in installation revenue associated with these orders.”

 

“Our sales funnel is a leading indicator of future sales results,” stated Greg Forrest, President and COO.  “We have put tremendous emphasis toward building a balanced pipeline of business.  The sales funnel is growing with diversity in all of our three lines of business - Avaya and Nortel systems sales and our managed services initiatives.  We fully expect systems sales to rebound inside our second quarter.  Due to the growth and continued momentum by our sales organization, we remain confident that our targets will be met.”

 

According to Ingram, “This is the first quarterly loss the Company has incurred in 17 years and all of us at Xeta are disappointed in the results.  The plan for this year is to gradually re-establish a reasonable balance between income and expense, as we see the ultimate level of sales resulting from of our heavy investment in the startup of the sale of the Nortel product.  Despite the first quarter results, we believe our overall plan for the year in still on track.  Therefore we are maintaining our guidance for annual revenues in the $60 to $70 million range with earnings of 8 to 20 cents per share for the year.”

 

XETA Technologies will host a conference call to discuss fiscal 2006 first quarter results at 10 a.m. CST on Thursday, February 23.  The media, analysts and investors are invited to participate by dialing 800-553-0358.  A replay of the call will be available from 1:30 p.m. CST that day through 11:59 p.m. CST on March 2, 2006 by dialing 800-475-6701, access code 815381.

 


 

 

 

 

 

Quarter Ending Jan 31st

 

 

 

 

 

2006

 

2005

 

 

 

 

 

 

 

 

 

Sales

 

Systems

 

5,701

 

6,352

 

 

 

Services

 

6,419

 

6,931

 

 

 

Other

 

562

 

632

 

 

 

Total

 

12,682

 

13,915

 

 

 

 

 

 

 

 

 

Gross Profit Margin

 

 

 

22

%

25

%

 

 

 

 

 

 

 

 

Operating Expense

 

 

 

2,928

 

3,490

 

 

 

 

 

 

 

 

 

Income from Operations

 

 

 

(152

)

17

 

Interest and Other Income (Expense)

 

 

 

(64

)

112

 

 

 

 

 

 

 

 

 

Net Income (Loss) After Tax

 

 

 

(141

)

78

 

Basic Earnings (Loss) Per Share

 

 

 

$

(0.01

)

$

0.01

 

Diluted Earnings (Loss) Per Share

 

 

 

$

(0.01

)

$

0.01

 

Wt. Avg. Common Shares Outstanding

 

 

 

10,189

 

10,027

 

Wt. Avg. Common Equivalent Shares

 

 

 

10,189

 

10,074

 

 

(The information is presented in thousands except percentages and per-share data.)

 

 

 

 

 

 

 

Jan 31, 2006

 

Oct 31, 2005

 

Assets

 

Current

 

Cash

 

625

 

177

 

 

 

 

 

Receivables (net)

 

9,618

 

11,634

 

 

 

 

 

Inventories (net)

 

4,924

 

5,650

 

 

 

 

 

Other

 

3,060

 

2,289

 

 

 

 

 

Subtotal

 

18,227

 

19,750

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Current

 

Receivables (net)

 

157

 

167

 

 

 

 

 

PPE (net)

 

10,436

 

10,411

 

 

 

 

 

Goodwill & Intangibles

 

26,632

 

26,656

 

 

 

 

 

Other

 

33

 

35

 

 

 

 

 

Subtotal

 

37,258

 

37,269

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

 

 

55,485

 

57,019

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

Current

 

Notes Payable

 

864

 

1,123

 

 

 

 

 

Revolving Line of Credit

 

4,600

 

4,395

 

 

 

 

 

Accounts Payable

 

2,721

 

4,848

 

 

 

 

 

Unearned Revenue

 

2,469

 

1,506

 

 

 

 

 

Accrued Liabilities

 

1,956

 

2,398

 

 

 

 

 

Subtotal

 

12,610

 

14,270

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Current

 

Long Term Debt

 

1,654

 

1,697

 

 

 

 

 

Other

 

4,205

 

3,954

 

 

 

 

 

Subtotal

 

5,859

 

5,651

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

 

 

18,469

 

19,921

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

37,016

 

37,098

 

 

(The information is presented in thousands.)

 


 

# # #

 

About XETA Technologies

 

XETA Technologies is a leading provider of enterprise-class communications solutions, installation and service in the emerging, highly technical world of converged communications solutions for voice and data applications.  XETA has sales and service locations nationwide.  XETA is one of the largest providers of Avaya voice and data communication solutions and has recently added the Nortel voice and data product line.  XETA markets a line of proprietary call accounting systems to the hospitality industry and has long been recognized as the leading provider of call accounting solutions to that industry.  More information about XETA (NASDAQ:  XETA) is available at www.xeta.com.

 

This news release contains forward-looking statements, which are made subject to the provisions of the Private Securities Litigation Reform Act of 1995.  These statements include statements concerning systems sales, the Company’s business plan, and revenues and earnings expectations.  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 Company’s ability to improve systems sales while maintaining gross profit margins; increased competition; the Company’s ability to successfully exploit the Nortel Networks market, and the long term success of the Company’s growth strategies; the inability to reverse the decline in gross margins on service revenues; the impact of any additional operating losses upon the Company’s ability to comply with the financial covenants in its credit facility; and the availability and retention of sales professionals and certified technicians.  Additional factors that could affect actual results are described in Item 1.A entitled “ Risk Factors” contained in Part I of the Company’s Form 10-K for its fiscal year ended October 31, 2005.