SOURCE: Alteva

Alteva

March 16, 2015 20:48 ET

Alteva Reports Fourth Quarter and Full Year 2014 Financial Results

PHILADELPHIA, PA--(Marketwired - Mar 16, 2015) - Alteva, Inc. ("Alteva" or the "Company") (NYSE MKT: ALTV), a premier provider of hosted Unified-Communications-as-a-Service ("UCaaS"), today announced selected financial results for the fourth quarter and year ended December 31, 2014. 

2014 Financial Results Highlights

  • For the fourth quarter of 2014, the Company achieved Adjusted EBITDA* of $(0.4) million, an improvement from $(0.8) million for the same period in 2013; for the full year 2014, the Company achieved Adjusted EBITDA* of $(1.2) million, an improvement from $(4.4) million in 2013;
  • The Company reduced its operating loss for the fourth quarter of 2014 to $(1.3) million, as compared to $(2.3) million for the same period in 2013; the operating loss for the full year 2014 decreased to $(6.6) million from $(11.6) million for 2013;
  • The Company recorded $0.0 million and $3.25 million of income from its former investment in the O-P partnership for the fourth quarters of 2014 and 2013, respectively; the Company recorded $52.4 million and $13.0 million of income from its former investment in the O-P partnership for the full years 2014 and 2013, respectively;
  • The Company had a net loss for the fourth quarter of 2014 of $(0.5) million, as compared to $(0.3) million for the same period in 2013; the Company had net income of $29.4 million for the full year 2014, as compared to a net loss of $(0.6) million for the full year of 2013;
  • For the fourth quarter of 2014, UC revenues increased by 8% to $4.2 million from $3.9 million for the fourth quarter of 2013;
  • For full year 2014, UC revenues increased by 7%, which includes the impact of the Syracuse operations that were sold in September 2013, to $17.0 million from $15.8 million for full year 2013; excluding the Syracuse operations, UC revenues increased 18% for full year 2014 compared to full year 2013;
  • At the end of 2014, there were over 50,000 users on Alteva's hosted platform, which represents an increase of 18% of the installed base compared to the end of 2013;
  • As of December 31, 2014, the Company had approximately 3,000 new users, or 6% of the installed base, sold and scheduled for implementation;
  • Gross profit margin increased to 60% in the fourth quarter of 2014 from 55% for the same period in 2013; gross profit margin increased to 61% for full year 2014 from 55% for full year 2013.

Fourth Quarter 2014 Results

Revenues were flat at $7.4 million in the fourth quarter of 2014. 

UC revenues were $4.2 million in the fourth quarter of 2014, an increase of 8% from $3.9 million for the same period in 2013. As a percentage of consolidated revenue, the UC segment contributed approximately 57% of revenues in the fourth quarter of 2014 as compared with 53% for the same period in 2013. The increase in UC revenues was attributable to the addition of new clients and the increase in services to existing clients. Approximately 92% of fourth quarter 2014 UC revenues and 89% of the fourth quarter 2013 revenues were from licenses and services which are expected to be recurring in nature, with the balance of revenues derived from equipment sales that were primarily related to new customer implementations. 

Telephone revenues were $3.2 million in the fourth quarter of 2014, as compared with $3.5 million for the same period in 2013. The Telephone segment contributed approximately 43% of revenues in the fourth quarter 2014 as compared with 47% for the same period of 2013. Telephone revenues were slightly lower year-over-year as a result of continued access line losses and lower revenue from pooling arrangements. These decreases were partially offset by an increase in access line rates earlier in the year and modest growth in broadband Internet services revenues.

Gross profit increased by 9% to $4.5 million in the fourth quarter of 2014, from $4.1 million for the same period in 2013. Gross profit as a percentage of revenues was 60% in the fourth quarter of 2014, as compared with 55% for the same period in 2013. The improvement in gross profit primarily reflects the increase in revenues contributed by the UC segment, the Company's ability to leverage its existing infrastructure, and the impact of cost reduction initiatives. 

Selling, general and administrative ("SG&A") expenses in the fourth quarter of 2014 were $5.1 million, as compared with $5.4 million for the same period in 2013. The decrease was due to the impact from the expense management initiatives implemented throughout 2014.

Other income for the fourth quarter of 2013 included $3.25 million from the Company's former equity investment in the O-P partnership, which was sold in April 2014.

For the fourth quarter of 2014, the Company had income tax benefit of $0.8 million, or 60% of loss before income taxes, as compared to an income tax expense of $1.1 million, or 137% of income before income taxes, for the fourth quarter of 2013. The estimated effective tax rate for each period includes projections of tax expense on the expected change in our valuation allowance for deferred tax assets. 

For the fourth quarter of 2014, the Company's net loss was $(0.5) million, as compared to a net loss of $(0.3) million for the same period of 2013.

Basic and diluted net loss per share was $(0.09) for the fourth quarter of 2014, as compared with basic and diluted net loss per share of $(0.05) in the same period of 2013.

Conference Call

The Company will conduct a conference call to discuss fourth quarter results on Thursday, March 19, 2015 at 10:00 a.m. eastern. Investors and other interested parties can listen to the call by dialing the participant number of 412-317-6789 or 877-317-6789 (toll free), no access code required. A simultaneous webcast of the conference call can be accessed through Alteva's website at www.alteva.com in the Investors section.

A replay of this conference call will also be available by dialing 412-317-0088 or 877-344-7529 (toll free), access code: 10062458, at approximately 12:00 p.m. eastern on March 19, 2015 through 9:00 a.m. eastern April 20, 2015, and via the Company's website at www.alteva.com.

About Alteva
Alteva (NYSE MKT: ALTV) is a premier provider of Unified Communications and Collaboration solutions for business. Alteva's Unified-Communications-as-a-Service (UCaaS) solution integrates and optimizes best-in-class cloud-based technologies and business applications to deliver a comprehensive voice, video and collaboration service for the office and mobile workforce. Alteva is committed to delivering meaningful value to our customers through a consistent, high quality and unified user experience across multiple devices, platforms and operating systems. These attributes have positioned Alteva as a leading hosted communications provider and the partner of choice for a growing number of business customers nationwide and internationally. To learn more about Alteva, please visit www.alteva.com. You can also follow Alteva on Twitter @AltevaInc or LinkedIn.

*Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization adjusted to exclude non-cash stock-based compensation, severance related expense, income from equity method investment, and the loss on disposal, restructuring costs and other special charges. A reconciliation of adjusted EBITDA to net income (loss) can be found at the end of the following tables. Adjusted EBITDA is commonly used by management and investors as an indicator of operating performance and liquidity. Adjusted EBITDA is not considered a measure of financial performance under GAAP and it should not be considered as an alternative to net income (loss), or other financial statement data presented in accordance with GAAP in our consolidated financial statements.

Safe Harbor Statement

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements, without limitation, regarding expectations, beliefs, intentions, growth, profitability, or strategies regarding the future. Such statements include, without limitation, statements containing the words "believes," "anticipates," "intends," "expects," "will" and words of similar import. Alteva intends that such forward-looking statements be subject to the safe-harbor provided by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Alteva's actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: expectations of future profitability; general economic and business conditions, both nationally and in the geographic regions in which Alteva operates; industry capacity; demographic changes; technological changes and changes in consumer demand; the successful integration of Alteva's acquired businesses; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; legislative proposals relating to the businesses in which Alteva operates; competition; or the loss of any significant ability to attract and retain qualified personnel. Given these uncertainties, current and prospective investors should be cautioned in their reliance on such forward-looking statements. Except as required by law, Alteva disclaims any obligation to update any such factors or to publicly announce the results of any revision to any of the forward-looking statements contained herein to reflect future events or developments. A more comprehensive discussion of risks, uncertainties, financial reporting restatements, and forward-looking statements may be seen in Alteva's Annual Report on Form 10-K and other periodic filings with the U.S. Securities and Exchange Commission.

(tables follow)

   
ALTEVA, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited)  
(amounts in thousands, except per share amounts)  
                                 
             
    Three Months Ended December 31,     Year Ended
December 31,
 
    2014     2013     2014     2013  
                                 
Net Revenue                                
  Unified Communications   $ 4,236     $ 3,915     $ 16,989     $ 15,834  
  Telephone     3,170       3,470       13,116       14,268  
  Total operating revenues     7,406       7,385       30,105       30,102  
                                 
Operating expenses                                
  Cost of services and products (exclusive of                                
  depreciation and amortization expense)     2,948       3,307       11,791       13,465  
  Selling, general and administrative expenses     5,080       5,400       20,766       23,989  
  Loss on disposal, restructuring costs and other special charges     -       43       700       447  
  Depreciation and amortization     711       896       3,464       3,815  
  Total operating expenses     8,739       9,646       36,721       41,716  
  Operating loss     (1,333 )     (2,261 )     (6,616 )     (11,614 )
                                 
Other income (expense)                                
  Interest income (expense), net     11       (163 )     (162 )     (756 )
  Income from investment     -       3,250       52,373       13,000  
  Other income (expense), net     3       4       26       166  
  Total other income     14       3,091       52,237       12,410  
  Income (loss) before income taxes     (1,319 )     830       45,621       796  
                                 
Income tax expense (benefit)     (795 )     1,139       16,187       1,442  
  Net income (loss)     (524 )     (309 )     29,434       (646 )
                                 
Preferred dividends     6       6       25       25  
Income (loss) applicable to common stock and participating securities   $ (530 )   $ (315 )   $ 29,409     $ (671 )
                                 
Basic earnings (loss) per share   $ (0.09 )   $ (0.05 )   $ 4.89     $ (0.11 )
                                 
Diluted earnings (loss) per share   $ (0.09 )   $ (0.05 )   $ 4.89     $ (0.11 )
                                 
Weighted average shares of common stock                                
used to calculate earnings per share                                
  Basic     5,824       6,191       5,808       6,112  
  Diluted     5,824       6,191       5,808       6,112  
                                 
Dividends declared per common share   $ -     $ -     $ -     $ 0.54  
                                 
                                 
   
ALTEVA, INC.  
CONSOLIDATED BALANCE SHEETS  
   
    As of December 31,  
    2014     2013  
             
    (in thousands, except per share amounts)  
ASSETS            
Current assets:            
  Cash and cash equivalents   $ 24,047     $ 1,636  
  Trade accounts receivable - net of allowance for uncollectibles -                
    $402 and $378 at December 31, 2014 and 2013, respectively     2,737       2,836  
  Other accounts receivable     488       480  
  Materials and supplies     167       237  
  Prepaid expenses     349       774  
  Prepaid income taxes     311       -  
  Deferred income taxes     43       108  
Total current assets     28,142       6,071  
  Property, plant and equipment, net     12,384       13,837  
  Intangibles, net     5,020       5,856  
  Seat licenses, net     1,543       1,749  
  Goodwill     9,006       9,006  
  Other assets     1,023       744  
Total assets   $ 57,118     $ 37,263  
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
  Short-term debt   $ 325     $ 10,126  
  Accounts payable     1,216       944  
  Advance billing and payments     274       341  
  Accrued taxes     1,056       1,692  
  Pension and post retirement benefit obligations     276       267  
  Accrued wages     1,036       1,007  
  Other accrued expenses     2,885       2,927  
Total current liabilities     7,068       17,304  
  Long-term debt     295       297  
  Deferred income taxes     766       649  
  Pension and postretirement benefit obligations     8,833       6,007  
Total liabilities     16,962       24,257  
                 
Commitments and contingencies                
                 
Shareholders' equity                
  Preferred Shares - $100 par value, authorized and issued shares of 5;                
    $0.01 par value, authorized and unissued shares of 10,000     500       500  
  Common stock - $0.01 par value, authorized shares of 10,000; issued                
    6,826 and 6,971 shares issued at December 31, 2014 and 2013, respectively     69       70  
  Treasury stock - at cost, 885 and 830 common shares at December 31, 2014 and 2013, respectively     (8,077 )     (7,612 )
  Additional paid in capital     14,047       13,279  
  Accumulated other comprehensive loss     (3,997 )     (1,436 )
  Retained earnings     37,614       8,205  
Total shareholders' equity     40,156       13,006  
Total liabilities and shareholders' equity   $ 57,118     $ 37,263  
                 
                 
   
ALTEVA, INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
   
                 
    For the Years Ended December 31,  
    2014     2013  
    (in thousands)  
CASH FLOW FROM OPERATING ACTIVITIES:                
Net income (loss)   $ 29,434     $ (646 )
  Adjustments to reconcile net income (loss) to net cash provided                
  by (used in) operating activities:                
  Depreciation and amortization     3,464       3,815  
  Stock based compensation expense     767       1,457  
  Deferred income taxes     182       544  
  Other non-cash operating activities     130       326  
  Distribution in excess of equity in earnings and gain on sale from equity investment     (49,776 )     (5,729 )
  Loss on disposal     -       447  
  Changes in assets and liabilities, net of effects of business acquisitions:                
    Trade and other receivables     58       64  
    Prepaid expenses and other assets     140       92  
    Accounts payable and accrued expenses     3       210  
    Accrued taxes     (947 )     1,997  
    Pension and post retirement benefit obligations     274       (353 )
Net cash (used in) provided by operating activities     (16,271 )     2,224  
CASH FLOW FROM INVESTING ACTIVITIES:                
  Capital expenditures     (274 )     (544 )
  Proceeds from sale of assets     33       550  
  Purchase of seat licenses and other intangibles     (117 )     (471 )
  Proceeds received in excess of income from equity investments     49,776       5,729  
Net cash provided by investing activities     49,418       5,264  
CASH FLOW FROM FINANCING ACTIVITIES:                
  Proceeds from debt     2,400       19,419  
  Repayment of debt and capital leases     (12,646 )     (23,541 )
  Payment of fees for acquisition of debt     -       (63 )
  Dividends     (25 )     (3,340 )
  Purchase of treasury stock     (465 )     (126 )
Net cash used in financing activities     (10,736 )     (7,651 )
Net increase (decrease) in cash and cash equivalents     22,411       (163 )
Cash and cash equivalents at beginning of year     1,636       1,799  
Cash and cash equivalents at end of year   $ 24,047     $ 1,636  
Supplemental disclosure of cash flow information:                
  Interest paid   $ 195     $ 572  
  Income taxes paid (received)   $ 17,509     $ (910 )
                 
Supplemental disclosure of non-cash investing and financing activities:                
  Capitalization of loan financing costs   $ -     $ 93  
  Acquisition of equipment and seat licenses under capital leases   $ 444     $ 357  
  Seat licenses acquired, but not paid   $ 188     $ -  
                 
                 
   
ALTEVA  
RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME (LOSS)  
AS IT IS PRESENTED ON THE CONSOLIDATED STATEMENTS OF OPERATIONS  
                         
(in thousands)  
                         
                         
    Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
    2014     2013     2014     2013  
Net income (loss)   $ (524 )   $ (309 )   $ 29,434     $ (646 )
Depreciation and amortization     711       896       3,464       3,815  
Stock-based compensation     90       436       767       1,457  
Severance related charges     104       116       411       1,284  
Other Gains (Losses) & Special Charges     -       43       700       447  
Interest (income) expense, net     (11 )     163       162       756  
Income from investment     -       (3,250 )     (52,373 )     (13,000 )
Income tax expense (benefit)     (795 )     1,139       16,187       1,442  
Adjusted EBITDA   $ (425 )   $ (766 )   $ (1,248 )   $ (4,445 )