EX-99.1 2 xt109855ex991.htm EXHIBIT 99.1

Exhibit 99.1

Message

NEWS RELEASE

Date:

November 30, 2005

 

FOR IMMEDIATE RELEASE

 

 

Contact:

Cheryl Moll

 

XETA Technologies

 

(918) 664-8200

XETA TECHNOLOGIES REPORTS
FOURTH QUARTER AND FISCAL 2005 RESULTS

Broken Arrow, OK - XETA Technologies (NASDAQ: XETA) today announced financial results for the fourth fiscal quarter and year ended October 31, 2005.  The Company reported revenues of $16.4 million for the fourth quarter and $58.0 million for the year.  Earnings were reported at $0.02 per diluted share for the quarter and $0.05 per diluted share for the year, compared to earnings of $0.03 per diluted share for the fourth quarter of last year and $0.16 per diluted share for fiscal 2004.  The reported results are unaudited and, although no material changes are expected, are subject to change.  The audit is expected to be complete by the end of December.

“We are very pleased with our fourth quarter results,” stated Jack Ingram, CEO of XETA Technologies.  “Strong revenue increases headed several notable highlights.  Our revenues of $16.4 million represent growth of 10% year-over-year and 21% quarter-over-quarter.  These increases were driven by solid gains in both new systems sales and after-market services, particularly our managed services segment.  Additionally, our margins remained solid so our fourth quarter income from operations and profit after tax came in at highs for the year.”

“A very encouraging highlight of the quarter was our 30% year-over-year and 127% quarter-over-quarter growth in Nortel systems sales,” said Greg Forrest, President and COO.  “We are also proud of our services department, as we qualified for Nortel’s “Elite Advantage Partner” status during the quarter.  This highest level of certification has been granted to less than 4% of Nortel’s business partner community.  With this “Elite Advantage” status, combined with our Avaya “Platinum” status, XETA now holds the highest certification levels from both of these major manufacturers.

“Attesting to our service excellence, our commercial managed services revenues have more than doubled over the last two fiscal years and we continue to see significant steady progress across the board in this major growth area.  Helping drive this growth was our completion of national roll-out projects for three new large customers during the quarter.”


Forrest continued, “Looking ahead to fiscal 2006, we have established seven priorities:

 

•

Start Fast and Aim High referring to our top line revenue growth;

 

•

Introduce the art of selling services, specifically our rapidly growing managed services offering;

 

•

Be opportunistic and remain flexible to changing market conditions;

 

•

Embrace the culture of change to capitalize on the pace of emerging technologies;

 

•

Drive efficiencies to increase productivity in our delivery model;

 

•

Develop human capital to enhance the customer experience;

 

•

Focus on results with core values in mind.

“I am pleased with the progress of the company and am excited about our future.  A foundation has been built internally; solid strategies have been established; execution will be the focus moving forward.”

According to Ingram, “We continue to express confidence in our objective to transport our highly successful lodging model to the full commercial marketplace, and our fourth quarter results support that confidence.  The magnitude of the results have yet to catch up with the level of operating costs we have invested in this initiative, an investment which significantly depressed earnings throughout fiscal 2005.  However, we believe this will gradually improve throughout fiscal 2006.  We have set a target to essentially maintain our high investment levels in operating expenses and still have year-over-year earnings improvements in every quarter of 2006.  Depending upon the timing and the magnitude of the ramp in revenue growth, we are targeting revenues to range from $60 to $70 million with earnings per share to range from $0.08 to $0.20 for the year.  Our first quarter is normally the slowest of the year and we expect it to be so in fiscal 2006.  We are setting earnings expectations for the first quarter at $0.01 to $0.05 per share.”

XETA Technologies will host a conference call regarding this announcement on Thursday, December 1, 2005 at 10:00 a.m. CST. 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. CST on December 1, 2005 until 11:59 p.m. December 8, 2005 by dialing 800-475-6701, access code 800554.

 

 

 

 

 

4th Quarter Ending Oct 31st

 

Year Ending Oct 31st

 

 

 

 

 

 

 

 

 

 

 

 

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

 

 

 

Sales

 

 

Systems

 

 

8,663

 

 

7,802

 

 

27,943

 

 

31,341

 

 

 

 

Services

 

 

7,309

 

 

6,532

 

 

28,241

 

 

26,493

 

 

 

 

Other

 

 

390

 

 

485

 

 

1,819

 

 

993

 

 

 

 

Total

 

 

16,362

 

 

14,819

 

 

58,003

 

 

58,827

 

Gross Profit Margin

 

 

 

 

 

23

%

 

25

%

 

24

%

 

24

%

Gross Profit

 

 

 

 

 

3,717

 

 

3,671

 

 

14,033

 

 

14,263

 

Operating Expense

 

 

 

 

 

3,385

 

 

3,216

 

 

13,275

 

 

11,652

 

Income from Operations

 

 

 

 

 

333

 

 

455

 

 

758

 

 

2,611

 

Interest and Other Income (Expense)

 

 

 

 

 

-22

 

 

-18

 

 

58

 

 

32

 

Net Income After Tax

 

 

 

 

 

188

 

 

265

 

 

494

 

 

1,608

 

Basic Earnings Per Share

 

 

 

 

$

0.02

 

$

0.03

 

$

0.05

 

$

0.16

 

Diluted Earnings Per Share

 

 

 

 

$

0.02

 

$

0.03

 

$

0.05

 

$

0.16

 

Wt. Avg. Common Shares Outstanding

 

 

 

 

 

10,178

 

 

10,013

 

 

10,087

 

 

10,009

 

Wt. Avg. Common Equivalent Shares

 

 

 

 

 

10,190

 

 

10,085

 

 

10,117

 

 

10,157

 

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


 

 

 

 

 

 

 

 

Oct 31, 2005

 

Oct 31, 2004

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

Current

 

 

Cash

 

 

177

 

 

141

 

 

 

 

 

 

 

Receivables (net)

 

 

11,634

 

 

9,529

 

 

 

 

 

 

 

Inventories (net)

 

 

5,650

 

 

4,845

 

 

 

 

 

 

 

Other

 

 

2,289

 

 

1,557

 

 

 

 

 

 

 

Subtotal

 

 

19,750

 

 

16,072

 

 

 

 

Non-Current

 

 

Receivables (net)

 

 

167

 

 

297

 

 

 

 

 

 

 

PPE (net)

 

 

10,411

 

 

10,727

 

 

 

 

 

 

 

Goodwill and Intangibles

 

 

26,656

 

 

26,414

 

 

 

 

 

 

 

Other

 

 

35

 

 

46

 

 

 

 

 

 

 

Subtotal

 

 

37,269

 

 

37,484

 

 

 

 

Total Assets

 

 

 

 

 

57,019

 

 

53,556

 

Liabilities

 

 

Current

 

 

Notes Payable

 

 

1,123

 

 

1,210

 

 

 

 

 

 

 

Revolving Line of Credit

 

 

4,395

 

 

3,850

 

 

 

 

 

 

 

Accounts Payable

 

 

4,848

 

 

2,452

 

 

 

 

 

 

 

Unearned Revenue

 

 

1,506

 

 

1,559

 

 

 

 

 

 

 

Accrued Liabilities

 

 

2,398

 

 

2,536

 

 

 

 

 

 

 

Subtotal

 

 

14,270

 

 

11,607

 

 

 

 

Non-Current

 

 

Long Term Debt

 

 

1,697

 

 

2,820

 

 

 

 

 

 

 

Other

 

 

3,954

 

 

2,825

 

 

 

 

 

 

 

Subtotal

 

 

5,651

 

 

5,645

 

 

 

 

Total Liabilities

 

 

 

 

 

19,921

 

 

17,252

 

Equity

 

 

 

 

 

 

 

 

37,098

 

 

36,304

 

(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 XETA’s expectations with regard to future revenues, operating costs and earnings expectations during the 2006 fiscal year.  These and other forward-looking statements (generally identified by such words as “expects,” “plans,” “believes,” “anticipates,” “targets” 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, market demand for the Company’s Nortel product and service offerings, recent financial and SEC problems at Nortel Corporation, any further negative


changes in various vendor incentive programs that support the Company’s sales and marketing efforts and the potential negative impact that such further changes would have on the Company’s gross margins, the long term success of the Company’s growth strategies, competition, inflation, and the availability and retention of sales professionals and trained technicians.  Additional factors which could affect actual results are described in the section entitled “Outlook and Risk Factors” contained in the Company’s Form 10-K for its fiscal year ended October 31, 2004 and in each of its quarterly reports on Form 10-Q filed during the 2005 fiscal year.