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Xplore Technologies Announces Preliminary Fiscal First Quarter Results,  Expects Fiscal 2017 Revenue of $85 to $95 Million

AUSTIN, Texas - July 12, 2016 - Xplore Technologies Corp. (NASDAQ: XPLR), a global leader in rugged computing, today reported preliminary revenue results for its fiscal 2017 first quarter ended June 30, 2016. The company also provided certain financial targets for Fiscal 2017 as well as anticipated long-term financial targets.

Mark Holleran, Xplore’s President/Chief Operating Officer, stated: “As a result of continued lower worldwide shipments of rugged tablets, which according to VDC declined 21% in the quarter ended March 31, 2016, we experienced slower orders in the quarter and expect to report revenue of approximately $16 million for the June quarter. We had a telecommunications customer delay shipment of a significant first quarter order and experienced delays in orders due to BREXIT and related global economic uncertainty.

“Lumpy quarterly revenue and changes in customer timing are inherent to the nature of our business. We believe most of the affected orders will be fulfilled starting later in the fiscal year. We continue to work closely with our customers and sales channel partners to maximize our revenue opportunities and gain further market share, even through the slowdown. We also remain closely focused on the bottom line, including taking additional measures to reduce operating expenses and position Xplore for profitability through all market cycles.”

Gross margin for the first fiscal quarter is expected to be approximately 29%, at the mid-point of the company’s previously stated target range. Operating expenses are expected to decline more than $900 thousand sequentially, to approximately $6.8 million, reflecting the headcount reductions and other cost savings initiated at the start of the quarter. These results are preliminary and subject to revision during the standard financial closing process.

For the full fiscal year, Xplore conservatively anticipates revenue to range between $85 million and $95 million, including the impact of the temporary global slowdown in rugged tablet shipments and the delays experienced during the first fiscal quarter. Gross margin for the fiscal year is expected to be between 28% and 30%. Operating expenses are expected to be between $27 and $29 million, reflecting $2 million in reduced headcount expenses previously initiated plus additional operating efficiency measures.

“Over the past year we have taken significant steps to improve the gross margin of our acquired product lines, reduce expenses and improve financial performance across Xplore’s significantly larger revenue base,” said Tom Wilkinson, chief financial officer for Xplore. “We remain committed to further operating cost reductions during fiscal 2017 and implementing additional business efficiency actions. Cost reductions will be implemented over a 12- to 18-month period including efficiency gains from new systems, movement of more costs from fixed to variable and changes to Xplore’s operating structure. As a result, we see significant opportunities for operating profit leverage on a lower cost base as revenue returns to more normalized levels.”

In addition to its fiscal 2017 outlook, the company released the following operating targets for its business 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%

EBITDA Margin  9-11%

Also, Xplore anticipates significant bottom line contribution from sales growth beyond fiscal year 2017 revenue targets, reflecting both the scale provided by such growth and the cost structure the company is building around that revenue.

“In Fiscal 2016 we completed an aggressive operational turnaround in the acquired Motion assets, achieved the #2 global market share in rugged tablets and significantly expanded our sales presence in key industry and geographic markets,” concluded Mark Holleran. “Even so, we have not yet reached full penetration in our targeted end markets, and see significant growth opportunities in industrial, utility, railroad, warehousing, public safety and other markets where rugged hardware provides a compelling value proposition. While we reported record revenue and more than doubled adjusted EBITDA year-over-year in fiscal 2016, we recognize that is not enough. We are committed to making Xplore profitable through all market cycles. We have made significant progress toward that goal and remain focused on the next steps to further grow revenue, profitability and cash flow within the business.”

The company expects to release its complete fiscal first quarter results on August 10, 2016.

About Xplore Technologies
Established in 1996, Xplore Technologies Corp. is the number two provider of rugged tablet computers worldwide. With its recent acquisition of the Motion product line, the company now has the broadest range of purpose-built tablets for a variety of industries including energy, utilities, telecommunications, military operations, manufacturing, distribution, public services, public safety, healthcare, government and other areas with hazardous work conditions. The company’s tablets are among the most powerful and longest lasting in their class – able to withstand nearly any hazardous condition or environmental extreme. Xplore's products are sold and serviced on a global basis across the Americas, Europe, Middle East, Africa, and Asia Pacific regions. For more information, visit the Xplore Technologies website at www.xploretech.com.

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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Contact Information:

Tom Wilkinson, Chief Financial Officer
Phone: (512) 637-1162
Email: twilkinson@xploretech.com

Darrow Associates Investor Relations
Phone: (512) 696-6401
Email: xplr@darrowir.com

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