Profitable Year Driven by Solid Growth, Operational Execution
Agreement to be Acquired by Zebra Technologies

AUSTIN, Texas, July 05, 2018 (GLOBE NEWSWIRE) -- Xplore Technologies Corp. (NASDAQ:XPLR), a global leader in rugged computing, today reported increased revenue and positive net income for its fiscal year 2018, ended March 31, 2018, and the signing of a definitive agreement to be acquired by Zebra Technologies.

Fiscal Year 2018 and Recent Highlights:

• Reported revenue of $86.9 million, an increase of 11.6% year-over year;
• Achieved gross margin of 29.8%, increased from 28.2% in fiscal 2017;
• Maintained low operating expenses of $25.2 million, including $0.7 million in one-time charges;
• Reported a net profit of $300,000, or $0.03 per diluted share, and adjusted EBITDA of positive $3.8 million, compared with a net loss of $2.6 million, or ($0.23) per basic share, and negative adjusted EBITDA of $168,000 in fiscal 2017;
• Results for fiscal 2018 include $0.06 per share in one-time charges related to executive severance costs and $0.01 per share representing a one-time property tax payment related to assets acquired from Motion Computing in 2015;
• Transformed Xplore into a rugged mobility company with the launch of the XBOOK line of 2-in-1 devices and entry into the $2.5 billion rugged handheld device market;
• Continued to win orders across a number of targeted vertical markets, including manufacturing, industrial and government applications;
• Furthered the company’s focus on improved domestic and international distributor and reseller relationships with the rollout of new incentive and co-promotion programs; and
• Announced a definitive agreement for Zebra Technologies to acquire Xplore for $6.00 per share.

Chief Executive Officer Tom Wilkinson stated: “As promised, we reported a strong finish to fiscal 2018, delivering an almost 12% increase in annual sales, positive GAAP net income for the year and significant progress on our transformation into a diversified, profitable rugged mobility company serving an addressable market in excess of $4 billion. Our success as the #2 global provider of rugged tablets and strong growth outlook earned the notice of Zebra Technologies, the global leader in rugged mobile computers, barcode scanners and barcode printers. This morning we announced an agreement to be acquired by Zebra for $6.00 per share. We are excited to join Zebra, and believe this acquisition validates the incredible work our team does every day to develop innovative rugged mobility solutions to serve our customers. Our products are a natural fit for Zebra and gives them a highly complementary rugged tablet portfolio and customer base that stands strong against any competitor.”

Zebra Technologies Transaction
Xplore today announced a definitive agreement to be acquired by Zebra Technologies Corporation, a market leader in rugged mobile computers, barcode scanners and barcode printers enhanced with software and services to enable real-time enterprise visibility. Under terms of the agreement, Zebra will acquire all of the outstanding shares of Xplore for $6.00 per share. Zebra plans to effect the acquisition via commencing a tender offer. The transaction is subject to customary closing conditions and is expected to close in the third quarter of 2018. Xplore expects to file a Current Report on Form 8-K with the Securities and Exchange Commission later today providing further details regarding the terms of the transaction.

Full Year Financial Results
For the full fiscal year 2018, Xplore reported total revenue of $86.9 million, an increase of 11.6% from $77.9 million in fiscal 2017. The change in revenue reflected strong growth across Xplore’s customer base, increased international sales and rising adoption of rugged solutions in the mobile workplace. Gross margin in fiscal 2018 was 29.8%, an increase of 160 basis points from, 28.2% in fiscal 2017, reflecting changes in product mix and improved production efficiency.

Operating expenses for fiscal 2018 were $25.2 million, an increase of 5.0% from $24.0 million in fiscal 2017. The increase in operating expenses was primarily caused by $575,000 in severance costs associated with the resignations of Phillip Sassower as Chairman and Mark Holleran as CEO, and $91,000 as a one-time property tax settlement related to assets purchased from Motion Computing in 2015.

Net profit for fiscal 2018 was $300,000, or $0.03 per diluted share, compared to a net loss of $2.6 million, of ($0.23) per basic share in fiscal 2017. Adjusted EBITDA for fiscal 2018 was positive $3.8 million including one-time severance and tax charges, compared to negative $168,000 in fiscal 2017. The change in net income and adjusted EBITDA reflects Xplore’s successful transition to a sustainably profitable company through an emphasis on sales growth and operating efficiency.

Fiscal 2018 Fourth Quarter Financial Results
Xplore reported revenue of $20.3 million for the fiscal fourth quarter ended March 31, 2018, a 20% increase from $16.9 million in the year-ago fourth quarter. Revenue reflected increased demand for rugged tablets, increased international sales, fulfilment of large multi-quarter customer contracts. Additionally, revenue reflected a continued lessening of prior seasonal trends due to increased emphasis on long-term customer orders and diversification of the customer base.

Gross profit in the fourth quarter was $5.7 million, or 28.2% of revenue, compared with $4.8 million, or 28.1% of revenue, in the preceding year fourth quarter. The change in gross margin reflects a change in product mix and an overweighting of fulfillment for larger customers with negotiated pricing.

Operating expenses were $6.2 million for the fiscal fourth quarter, compared with $5.2 million in the prior year fourth quarter. Operating expenses reflect continued lean operating practices plus increased headcount in sales and marketing and expansion ahead of the company’s rugged handheld market entry.

For the quarter, Xplore reported a net loss of $638,000, or ($0.05) per share, compared to net loss of $488,000, or ($0.04) per share, in the prior year fourth quarter.  

EBITDA adjusted for non-cash compensation, severance and tax settlement charges was $171,000, compared with positive $1.7 million in the preceding quarter and positive $30,000 in the fiscal fourth quarter 2017. A reconciliation is provided in the tables included in this release and the previously disclosed fiscal third quarter release.

Cash Flow and Balance Sheet
For the year ended March 31, 2018 net cash used in operating activities was $16.5 million, primarily to finance increased accounts receivable due to revenue growth and added inventory to ensure fulfillment of large customer orders and minimum order quantities on certain legacy products. Net cash used by operating activities reflects accounts receivable balances of $18.9 million, compared with $10.5 million at year end fiscal 2017, and inventory of $25.6 million, compared with $12.9 million at the prior year end. At quarter end, cash was $46,000 and debt under the company’s line of credit was $14.2 million.

Conference Call
Due to the acquisition agreement with Zebra Technologies, Xplore is cancelling its results conference call previously planned for today at 11:00 a.m. ET. Further information will be available to Xplore shareholders in documentation associated with the Zebra tender offer.  

About Xplore Technologies
Xplore is The Rugged Tablet Authority™, exclusively manufacturing powerful, long-lasting, and customer-defined rugged tablet PCs since 1996. Today, Xplore offers the broadest portfolio of genuinely rugged tablets – and the most complete lineup of rugged tablet accessories – on Earth. Its mobility solutions are purpose-built for the energy, utilities, telecommunications, military and defense, manufacturing, distribution, public safety, healthcare, government, and field service sectors. The company’s award-winning military-grade computers are also among the most powerful and longest lasting in their class, built to withstand nearly any hazardous condition or environmental extreme for years without fail. Visit  www.xploretech.com for more information on how Xplore and its global channel partners engineer complete mobility solutions to meet specialized workflow demands. Follow us on  Twitter,  Facebook,  LinkedIn, and  YouTube.

Forward Looking Statements
This news release contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” and similar expressions are intended to identify forward-looking statements. Such statements reflect Xplore’s current views with respect to future events and are subject to such risks and uncertainties. Many factors could cause actual results to differ materially from the statements made including those factors detailed from time to time in filings made by Xplore with securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated or expected. Xplore does not intend and does not assume any obligation to update these forward-looking statements.