EX-99.1 2 a07-30331_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

NEWS RELEASE

 

Date:

 

November 28, 2007

 

 

FOR IMMEDIATE RELEASE

 

 

 

Contact:

 

Dave Mossberg

 

 

Beacon Street Group

 

 

817-310-0051

 

XETA TECHNOLOGIES REPORTS FOURTH QUARTER AND FISCAL 2007
FINANCIAL RESULTS

 

•                  Q407 Revenue: $19.1 million (increase of 14% year over year)

•                  Q407 EPS of $0.07 vs. Q406 EPS of $0.05

•                  FY07 Revenue: $70.1 million (increase of 17% year over year)

•                  FY07 EPS of $0.14 vs. FY06 EPS of $0.07

 

Broken Arrow, OK - XETA Technologies (NASDAQ: XETA) today announced fourth quarter earnings of $677,000, or $0.07 per diluted share, on revenue of $19.1 million for the quarter ended October 31, 2007.  This compares to earnings of $516,000, or $0.05 per diluted share, on revenue of $16.7 million for the quarter ended October 31, 2006.

 

For the fiscal year ended October 31, 2007, the company reported earnings of $1,432,000, or $0.14 per diluted share, on revenue of $70.1 million compared to net income of $719,000, or $0.07 per diluted share, on revenue of $60.0 million for the same period ended October 31, 2006.

 

The reported results are un-audited and, although no material changes are expected, are subject to change.  The audit is expected to be complete by the end of December 2007.

 

During the fourth quarter of fiscal 2007, services revenue increased 21.5% to $10.2 million from $8.4 million posted during the fiscal fourth quarter of 2006.  “This marks the first time in our history that quarterly services revenue has exceeded $10 million and illustrates the attractiveness of building a recurring revenue stream.   Since we initiated our strategic objectives to expand our wholesale services offering and focus on large customer opportunities with multiple locations, our services revenue has shown six quarters of year-over-year improvement,” commented Greg Forrest, President and CEO of XETA.  In fiscal 2007, services revenue increased 24.8% to $37.3 million from $29.9 million posted during fiscal 2006.

 

 

 


 

 

Fourth quarter 2007 systems revenue grew 2.4% to $8.4 million from $8.2 million posted during the same period last year.  Comparing systems revenue on an annual basis, revenue increased 8.9% year over year.

 

Fourth quarter 2007 gross margin increased 340 basis points to 28.9% of revenue versus 25.5% of revenue during the same period last year.  Improvements in services revenue profitability combined with significantly higher services revenue were primarily responsible for the increase in fourth quarter gross margin.  The increase in gross margin was partially offset by increased SG&A costs during the fourth quarter.  Fourth quarter net margin increased to 3.5% of fiscal 2007 revenue, versus 3.1% of fourth quarter of fiscal 2006 revenue.

 

Commenting on fiscal 2007, Mr. Forrest said “Our main objectives for this past year were to acquire significant market share and to grow revenue faster than the market.  By focusing on our key strategies we were able to grow our top line by 17% during the fiscal year, clearly outpacing the growth of the telephony equipment market as well as our annual target of 15%.  Our profitability also improved primarily due to the previously mentioned gross margin improvement.  As a percentage of revenue, net margin grew to 2.0% of 2007 revenue versus 1.2% of fiscal 2006 revenue.”

 

The company has set targets to grow revenue 15% annually and show incremental improvements in profitability for the next three to five years.  For fiscal 2008 however, the company expects its revenue growth to exceed 15%, reflecting recent announcements regarding the orders received from Miami-Dade County Public Schools and the acquisition of HCI’s commercial division.  The company is setting earnings per share expectations for fiscal 2008 in the range of $0.22 to $0.28.

 

The company expects 1Q08 earnings per share to be in the range of $0.03 to $0.05.

 

The company will host a conference call and webcast to discuss these results at 10:00 a.m. Central Time on Thursday, November 29, 2007. 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 portion of the website.  A replay of the webcast will be archived on the company’s website for 60 days.

 

 

 


 

Condensed Consolidated Statements of Income

 

Three Months Ended
October 31,

 

Fiscal Year Ended
October 31,

 

 

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

Services

 

$

10,264

 

$

8,449

 

$

37,296

 

$

29,894

 

 

 

Systems

 

8,399

 

8,200

 

31,846

 

29,249

 

 

 

Other

 

442

 

79

 

951

 

822

 

 

 

Total

 

19,105

 

16,728

 

70,093

 

59,965

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales

 

Services

 

6,855

 

6,230

 

25,877

 

21,645

 

 

 

Systems

 

6,297

 

6,165

 

24,216

 

22,162

 

 

 

Other

 

425

 

70

 

1,792

 

1,424

 

 

 

Total

 

13,577

 

12,465

 

51,885

 

45,231

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

5,528

 

4,263

 

18,208

 

14,734

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Margin

 

 

 

29

%

25

%

26

%

25

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expense

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

 

4,188

 

3,252

 

15,134

 

12,969

 

Amortization

 

 

 

186

 

122

 

657

 

428

 

Total operating expenses

 

 

 

4,374

 

3,374

 

15,791

 

13,397

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from Operations

 

 

 

1,154

 

889

 

2,417

 

1,337

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

(54

)

(47

)

(93

)

(170

)

Interest and other income

 

 

 

14

 

8

 

49

 

42

 

Total Interest and Other Expense

 

 

 

(40

)

(39

)

(44

)

(128

)

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

 

1,114

 

850

 

2,373

 

1,209

 

Provision for income taxes

 

 

 

437

 

334

 

941

 

490

 

Net Income after Tax

 

 

 

$

677

 

$

516

 

$

1,432

 

$

719

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share

 

 

 

$

0.07

 

$

0.05

 

$

0.14

 

$

0.07

 

Diluted Earnings Per Share

 

 

 

$

0.07

 

$

0.05

 

$

0.14

 

$

0.07

 

Wt. Avg. Common Shares Outstanding

 

 

 

10,215

 

10,215

 

10,215

 

10,208

 

Wt. Avg. Common Equivalent Shares

 

 

 

10,215

 

10,215

 

10,215

 

10,210

 

 

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

 

 


Consolidated Balance Sheet Highlights

 

 

 

 

 

 

October 31, 2007

 

October 31, 2006

 

Assets

 

Current

 

Cash

 

$

403

 

$

174

 

 

 

 

 

Receivables (net)

 

16,236

 

12,246

 

 

 

 

 

Inventories (net)

 

4,297

 

4,943

 

 

 

 

 

Other

 

1,944

 

1,362

 

 

 

 

 

Subtotal

 

22,880

 

18,725

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Current

 

PPE (net)

 

10,611

 

10,485

 

 

 

 

 

Goodwill & Intangibles

 

26,469

 

26,563

 

 

 

 

 

Other

 

136

 

140

 

 

 

 

 

Subtotal

 

37,216

 

37,188

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

 

 

$

60,096

 

$

55,913

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

Current

 

Revolving Line of Credit

 

$

2,759

 

$

3,119

 

 

 

 

 

Accounts Payable

 

5,670

 

4,326

 

 

 

 

 

Accrued Liabilities

 

3,565

 

2,994

 

 

 

 

 

Unearned Revenue

 

2,212

 

1,803

 

 

 

 

 

Notes Payable

 

171

 

172

 

 

 

 

 

Subtotal

 

14,377

 

12,414

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Current

 

Long Term Debt

 

1,355

 

1,526

 

 

 

 

 

Noncurrent deferred tax liability

 

4,632

 

3,572

 

 

 

 

 

Other

 

293

 

516

 

 

 

 

 

Subtotal

 

6,280

 

5,614

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

 

 

20,657

 

18,028

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

39,439

 

37,885

 

 

 

 

 

 

 

 

 

 

 

(The information is unaudited and is presented in thousands.)

 

 

 

Reconciliation of EBITDA to Net Income

 

Quarter Ending Oct 31st

 

Fiscal Year Ending Oct 31st

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

677

 

$

516

 

$

1,432

 

$

719

 

Interest

 

54

 

47

 

93

 

170

 

Provision (benefit) for income taxes

 

437

 

334

 

941

 

490

 

Depreciation

 

158

 

127

 

552

 

507

 

Amortization

 

186

 

122

 

657

 

429

 

EBITDA(*)

 

$

1,512

 

$

1,146

 

$

3,675

 

$

2,315

 

 

 

 

 

 

 

 

 

 

 

(The information is presented in thousands.)

###

 


 

About XETA Technologies

XETA is a leading provider of communication technologies with a comprehensive array of products and services available from industry leaders. The company has earned and continues to maintain the industry’s most prestigious certifications as an Avaya Platinum National Business Partner, Nortel Elite Advantage Partner, and Mitel premium PARTNER. Being able to provide solutions and service for these leading vendors is a unique value proposition for Fortune 1000 customers with multiple locations and complex networks. With a 25 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 call center, combined with a nationwide service footprint offers customers comprehensive maintenance programs that ensure network reliability and maximized network up-time. More information about XETA (NASDAQ: XETA) is available at www.xeta.com.

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*The Company uses EBITDA (earnings before net interest, income taxes, depreciation and amortization) 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.

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements concerning revenue targets 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 maintain and improve upon current gross profit margins; the Company’s ability to acquire and retain the technical competencies needed to implement new advanced communications technologies; intense competition and industry consolidation; dependence upon a single customer for the recent growth in the Company’s Managed Services offering; the availability and retention of revenue professionals and certified technicians; and capital spending trends in the Company’s markets.  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, 2006, as updated in its subsequently filed Form 10-Qs for the first three quarters of fiscal 2007.