EX-99.1 2 a06-18570_1ex99d1.htm EX-99

Exhibit 99.1

NEWS RELEASE

Date:

 

August 23, 2006

 

 

FOR IMMEDIATE RELEASE

 

 

 

Contact:

 

Cheryl Moll

 

 

XETA Technologies

 

 

(918) 588-4624

 

XETA TECHNOLOGIES ANNOUNCES
THIRD QUARTER RESULTS

Broken Arrow, OK —XETA Technologies (NASDAQ: XETA) today announced earnings of $0.286 million, or $0.03 per share diluted, on revenues of $15.7 million for the Company’s third fiscal quarter ending July 31, 2006.  This compares to earnings of $0.064 million, or $0.01 per share diluted, on revenues of $13.5 million for the third fiscal quarter of 2005.

For the nine months year-to-date, the Company reported earnings of $0.202 million, or $0.02 per share diluted, on revenues of $43.2 million compared to earnings of $0.306 million, or $0.03 per share diluted, on revenues of $41.6 million for the comparable period in fiscal 2005.

“We are very pleased with our third quarter results, stated Jack Ingram, XETA’s CEO.  “All segments of our business contributed significantly to our 16% revenue growth and 351% earnings growth.  These earnings are the strongest we have generated since our third quarter of fiscal 2004.  This strength demonstrates that we have absorbed the effects of the significant cost structure build-up of late 2004 incurred to complete the launch of our long-range Nortel initiative.  To a large extent this initiative is providing the opportunities that we are now capitalizing upon.”

According to Greg Forrest, President, “System sales remained strong in the third quarter, up 17% versus last year.  Year-to-date systems sales are up 9%, with both Avaya and Nortel sales steadily contributing to this growth.  Operationally, we have launched several new initiatives targeting business process improvements. We are encouraged with our progress as we are beginning to see results in all disciplines of our organization.”

“We are especially pleased to report that our Managed Services line of business continues to gain momentum,” continued Forrest.  “Our total Managed Services revenue is up 11% compared to the third quarter of last year, which is driven primarily in the commercial segment.  This commercial segment has demonstrated 38% year-over-year growth and is rapidly becoming a large percentage of our recurring revenues, now accounting for approximately one third of the Company’s total recurring revenue stream.  We continue to have success in the steady acquisition of new customers and we are beginning to penetrate deeper into existing customer accounts.

“Additionally, during the quarter we launched initiatives targeting a number of exciting new addressable markets.  The broad commercial marketplace presents many opportunities for XETA and we are matching our capabilities to new revenue opportunities. The opportunities which we are targeting will capitalize on our existing competencies in data and our installation expertise. We believe we can develop significant new revenues streams with minimal investment resulting in a short ramp to profit.”



“Given the strengths of the Company’s competencies and the opportunities presented by our marketplace we are positioned to generate regular success stories,” Ingram stated.  “We feel that momentum is on our side and should carry through the fourth quarter and beyond.  Insofar as the fourth quarter is concerned, system sales, as always, represent the wild card when it comes to estimating short term future results.  Assuming system sales remain at essentially the same level as we saw in the third quarter, we estimate our fourth quarter earnings to be in the 2 to 4 cents per share range with earnings for the year in the 4 to 6 cents per share range.”

XETA Technologies will host a conference call to discuss these fiscal 2006 third quarter results at 10 a.m. (TZ: Central) on Thursday, August 24, 2006.  The media, analysts and investors are invited to participate by dialing 877-209-0397.  A replay of the call will be available from 1:30 p.m. (TZ: Central) that day through 11:59 p.m. (TZ: Central) on August 31, 2006 by dialing 800-475-6701, access code 832815.

 

 

Quarter Ending July 31

 

Nine Months Ending July 31

 

 

 

2006

 

2005

 

2006

 

2005

 

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Systems

 

7,791

 

6,646

 

21,049

 

19,280

 

 

 

 

 

 

 

 

 

 

 

Services

 

7,778

 

6,632

 

21,446

 

20,932

 

 

 

 

 

 

 

 

 

 

 

Other

 

91

 

244

 

743

 

1,429

 

 

 

 

 

 

 

 

 

 

 

Total

 

15,660

 

13,522

 

43,237

 

41,641

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Margin

 

26.6

%

26.7

%

24.2

%

26.4

%

 

 

 

 

 

 

 

 

 

 

Operating Expense

 

3,678

 

3,494

 

10,024

 

10,586

 

 

 

 

 

 

 

 

 

 

 

Income From Operations

 

482

 

122

 

448

 

425

 

 

 

 

 

 

 

 

 

 

 

Interest And Other Income (Exp)

 

(11

)

(18

)

(90

)

79

 

 

 

 

 

 

 

 

 

 

 

Net Income After Tax

 

286

 

64

 

202

 

306

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

 

$

0.03

 

$

0.01

 

$

0.02

 

$

0.03

 

Diluted Earnings Per Share

 

$

0.03

 

$

0.01

 

$

0.02

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

Wt. Avg. Common Shares Outstanding

 

10,215

 

10,094

 

10,181

 

10,057

 

 

 

 

 

 

 

 

 

 

 

Wt. Avg. Common Equivalent Shares

 

10,215

 

10,117

 

10,209

 

10,092

 

 

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

 



 

 

 

 

 

 

 

July 31, 2006

 

October 31, 2005

Assets

 

Current

 

Cash

 

44

 

177

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivables (net)

 

12,537

 

11,634

 

 

 

 

 

 

 

 

 

 

 

 

 

Inventories (net)

 

4,986

 

5,650

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

1,385

 

2,289

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

18,952

 

19,750

 

 

 

 

 

 

 

 

 

 

 

Non-Current

 

Receivables (net)

 

116

 

167

 

 

 

 

 

 

 

 

 

 

 

 

 

PPE (net)

 

10,439

 

10,411

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill & Intangibles

 

26,586

 

26,656

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

5

 

35

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

37,146

 

37,269

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

 

 

56,098

 

57,019

 

 

 

 

 

 

 

 

 

Liabilities

 

Current

 

Notes Payable

 

345

 

1,123

 

 

 

 

 

 

 

 

 

 

 

 

 

Revolving Line of Credit

 

4,722

 

4,395

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

3,770

 

4,848

 

 

 

 

 

 

 

 

 

 

 

 

 

Unearned Revenue

 

1,978

 

1,506

 

 

 

 

 

 

 

 

 

 

 

 

 

Accrued Liabilities

 

2,435

 

2,398

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

13,250

 

14,270

 

 

 

 

 

 

 

 

 

 

 

Non-Current

 

Long Term Debt

 

1,569

 

1,697

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

3,910

 

3,954

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

5,479

 

5,651

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

 

 

18,729

 

19,921

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

37,369

 

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 new revenue stream opportunities, 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 continue to improve systems sales while maintaining gross profit margins; the Company’s ability to continue to add new service customers and produce acceptable gross margins on service revenues; increased competition; the Company’s ability to successfully exploit the Nortel  market, and the long term success of the Company’s growth strategies; the Company’s dependence upon a few significant customers for the recent growth in its managed service offering;  the impact of increased cell phone use by hotel guests upon the Company’s lodging customers’ decisions to maintain their call accounting service contracts; 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, as updated in its Form 10-Q for the fiscal quarter ended January 31, 2006.