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Xplore Technologies Reports Increased Profit in Second Quarter

$0.04 EPS as Revenue Grows 14% Year-over-Year

AUSTIN, Texas - November 8, 2017 - Xplore Technologies Corp. (NASDAQ: XPLR), a global leader in rugged computing, today reported increased revenue and net income for its fiscal 2018 second quarter, ended September 30, 2017.

Fiscal Second Quarter 2018 and Recent Highlights:

  • Reported revenue of $22.7 million, an increase of 13.7% from $20.0 million in the year-ago second quarter, reflecting increased sales of rugged tablets and ongoing fulfillment against multiple large customer order programs;
  • Ended the quarter with backlog of $11.9 million compared with $4.5 million at June 30, 2017;
  • Achieved gross margin of 27.9%, compared with 28.2% for the prior-year quarter;
  • Reported continued low operating expenses of $5.9 million, a reduction of 3.4% from the prior year second quarter;
  • Reported GAAP net profit of $397,000, or $0.04 per share, compared with a net loss of $536,000, or $0.05 per share, in the previous year second quarter;
  • Generated adjusted EBITDA of $1.0 million, Xplore’s fifth consecutive quarter of positive adjusted EBITDA, compared with adjusted EBITDA of positive $116,000 in the prior year second quarter;
  • Announced the retirement of Philip S. Sassower, 77, as chairman of the board, and the appointment of Thomas B. Pickens, III as Lead Independent Director;
  • Announced the resignation of Mark Holleran, as President and Chief Executive Officer, and the appointment of Tom Wilkinson as Acting Chief Executive Officer;
  • Secured multi-million dollar expansion orders from both major telecommunications customers for XSLATE R12 and XSLATE D10 devices going to new divisions;
  • Won an additional 200-unit Bobcat order to a Class I railroad customer;
  • Expanded international activity with several contracts, particularly in Latin America, including a $1 million Bobcat order to a Latin American law enforcement agency and an XSLATE D10 order for field inspection services;
  • Continued to secure additional warehousing and logistics orders, including conversion of a customer’s US facility to XSLATE R12 devices and a recent win with a global dietary supplements manufacturer; and
  • Secured a $3.2 million follow on order for ultra-rugged tablets in support of an ongoing US military project.

Acting CEO Tom Wilkinson stated : “We are pleased to significantly increase profitability on improved revenue in the second fiscal quarter, demonstrating the high operating profit leverage embedded in Xplore’s cost-efficient business model. Demand for rugged tablets continues to rise across multiple end markets, including telecommunications, railroad, warehousing and logistics and military. We also drove increased international sales activity, a key growth area for Xplore, particularly in new Latin America markets where our rugged mobile workforce solutions provide high value.

“In addition to new sales wins and expansions at existing customers, we also continued to execute against multi-year refresh projects as customers upgrade to our newest platforms based on Xplore’s best-in-class rugged mobility, computing performance, security and accessory capabilities. Customers are increasingly recognizing Xplore’s unparalleled value proposition in terms of highest ROI and lowest total cost of ownership. We remain focused on expanding sales in key markets, growing our international business and leveraging our highly scalable operating base to maximize profitability and cash flows.”

Fiscal 2018 Second Quarter Financial Results
Xplore reported revenue of $22.8 million for the fiscal second quarter ended September 30, 2017, a 13.8% sequential increase from revenue of $20.0 million in the fiscal first quarter of 2018 and compared to $20.0 million in the year-ago second quarter. Revenue reflected increased sales momentum as demand for rugged tablets continues to increase, as well as fulfillment of large multi-quarter customer contracts.

Gross profit in the second quarter was $6.4 million, or 27.9% of revenue, compared to $6.2 million, or 30.9% of revenue, in the preceding quarter and $5.6 million, or 28.2% of revenue, in the prior year second quarter. The change in gross margin reflects product mix and increased contribution from large customer orders.

Operating expenses were $5.9 million for the fiscal second quarter, a further 1.4% reduction from $6.0 million in the first quarter and a 3.4% reduction from $6.1 million in the prior year second quarter. Operating expenses reflect continued lean operating practices implemented in Fiscal 2017 to drive increased profitability as revenue scales. Xplore expects to reinvest in additional sales hires and marketing initiatives to drive revenue growth in fiscal 2018 and beyond.

For the quarter, Xplore reported net income of $397,000, or $0.04 per share, compared to net income of $239,000, or $0.02 per share, in the prior quarter and a net loss of $536,000, or ($0.05) per basic share in the fiscal second quarter 2017. The shift to continued profitable operations reflects improved revenue and significantly lower expenses under Xplore’s new operating model.

EBITDA adjusted for non-cash compensation and historical integration costs was $1.0 million, compared with $839,000 in the preceding quarter and $116,000 in the fiscal second quarter 2017. Xplore has now reported five consecutive quarters of positive adjusted EBITDA, totaling $2.9 million. A reconciliation is provided in the tables included in this release.

“Profit increased significantly as revenue ramped in the second fiscal quarter, demonstrating the scalability of our profit focused, cost-efficient operating model. We continue to anticipate multiple profitable quarters in Fiscal 2018, as well as solid free cash flow to fund operations and investment in our platforms,” said Wilkinson.

Cash Flow and Balance Sheet
Net cash used in operating activities was $5.4 million both the quarter ended September 30, 2017, and the prior quarter. The change in net cash reflects the acceleration of revenue and increased inventory to ensure fulfillment of large customer orders. Net cash used by operating activities in the first half of fiscal 2018 reflects an $8.9 million increase in accounts receivable, to $19.3 million, and a $9.7 million increase in inventory, to $22.5 million. At quarter end, cash was $260,000 and debt under the company’s line of credit was $8.4 million.

Corporate Governance
Xplore recently announced the retirement of its long-term chairman, Philip Sassower, and the resignation of its President, and CEO, Mark Holleran.

The board of directors of Xplore has appointed Tom Wilkinson as Acting Chief Executive Officer. A highly respected executive, Mr. Wilkinson brings 25 years of experience to the company. Prior to joining Xplore in 2015, he served as Chief Financial Officer for Amherst Holdings and as Managing Partner of a regional public accounting and marketing firm. His prior experience also includes business development for a subsidiary of Credit Suisse First Boston, and work at both Dell and KPMG. Mr. Wilkinson has been working with Xplore for over ten years, first as an auditor and business advisor, and most recently as CFO.

The board of directors of Xplore has appointed Thomas B. Pickens, III as Lead Independent Director, with delegated authority to serve in lieu of a chairman until such time as a chairman is appointed. Mr. Pickens has been serving as the Chairman and Chief Executive of Astrotech Corporation (NASDAQ: ASTC) since 2007. His professional work history began while in College where he was the founder of Beta Computer Systems, Inc. from 1982 to 1985. From 1986 to 1988 he was the founder and General Partner of Grace Pickens Acquisition Partners L.P.; from 1988 to 1989 founder and Managing Partner of Sumpter Partners. From 1988 to 1994 Mr. Pickens was the CEO of Catalyst Energy Corporation and CEO of United Thermal Corporation (NYSE); from 1995 to 2003 Mr. Pickens was the founder and CEO of U.S. Utilities. Mr. Pickens is currently the Chairman of the Board of Astrotech Corporation, 1st Detect Corporation, Astrogenetix Corporation and Astral Images, Inc. and is the Lead Independent Director of Xplore Technologies Corporation. Over the years he has served as a board member of Century Power Corporation, Vidilia Hydroelectric Corporation, U.S. Utilities, Trenwick America Reinsurance Corporation, Spacehab Inc. (NASDAQ), Advocate MD, Optifab, Inc. (NASDAQ), Astrotech Space Operations, Inc., and was the New York chapter Chairman of United Shareholders Association, a shareholders rights organization.

For fiscal 2018, Xplore maintained its revenue outlook in a range of $75 million to $85 million. Gross margin for the fiscal year is expected to be between 28% and 30%. Operating expenses are expected to be approximately $23-25 million, reflecting a full year of the company’s reduced operating expense profile. The company anticipates multiple profitable quarters and positive cash flow for the full fiscal year 2018.

Xplore also maintained its previously disclosed business operating targets as revenue scales to a $120 million run-rate, assuming both organic growth and cost reduction initiatives are achieved in future periods: gross margin 28-30%, operating margin 8-10%, profit margin 6-8% and EBITDA margin 9-11%.

“We have an incredibly engaged and competent management team that is ready to take the company forward,” said Tom Wilkinson. “Our financial condition is solid, as are our projections for the current fiscal year. Xplore is positioned to not only continue building on our strong operating results, but also to apply our capabilities in rugged devices to meet additional customer needs that exist in our served markets.”

Conference Call
The company will conduct a conference call and webcast to review the results on Wednesday, November 8, 2017, at 4:30 p.m. ET. Interested parties in the United States can access the call by dialing 844-854-4410; interested parties outside the United States can access the call by dialing +1-412-858-4610. Callers should dial in at least 5 minutes prior to the all start time. A live and archived webcast will be available online in the investor relations section of Xplore’s website at A replay of the conference call will be available until 5 p.m. ET on November 22, 2017, by calling 877-344-7529 from the United States or +1-412-317-0088 from outside the United States and entering conference ID number 10114114.

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 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.

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Xplore Contact Information:

Tom Wilkinson, Acting Chief Executive Officer
Phone: (512) 637-1162

Matt Kreps, Darrow Associates Investor Relations
Phone: (214) 597-8200

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