PHILADELPHIA, PA--(Marketwired - Aug 12, 2013) - Alteva ("Alteva" or the "Company") (
- Significant progress made in achieving positive earnings before interest, taxes, depreciation and amortization ("EBITDA"), exclusive of O-P contributions, by the end of first quarter 2014
- Adjusted EBITDA* of $2.0 million in the second quarter 2013, an increase of 54% from $1.3 million during the same period of the prior year
- Discontinuation of quarterly common stock dividend payments to support future growth initiatives and strengthen financial position
- UC revenues net of eliminations were $3.9 million in second quarter 2013, an increase of 21% from $3.3 million in the same period last year; slight decrease in year-over-year Telephone segment revenue in-line with management expectations
- UC contributed 53% of second quarter consolidated revenues, up from 47% in second quarter of 2012
- 38,440 users on Alteva's hosted platform at the end of second quarter 2013, an increase of over 15% of installed base at the end of first quarter 2013
- Combined retail and wholesale seats in implementation equivalent to 7% of the installed base at end of second quarter of 2013
- Gross profit increased to $4.2 million in the second quarter 2013, up by 23% from the same period of the prior year
- Gross profit as a percentage of revenues of 57% in the second quarter 2013 increased from 50% in the same period of the prior year
- Net income of $40,000 in the second quarter 2013, as compared to a $(228,000) net loss in the same period of the prior year
- Alteva received $3.25 million in cash distributions from Orange County-Poughkeepsie Limited Partnership ("O-P") investment, which were recorded as other income in the second quarter of 2013
- Alteva paid a quarterly cash dividend of $0.27 per common share for the second quarter of 2013
- Proceeding with process improvements and expense reduction initiatives that are expected to yield $2.0 million in annualized cost savings; approximate 20% workforce reduction in the Warwick location
Management Comments
"We are very pleased with the results for the second quarter as we continued to experience increased momentum, delivering strong UCaaS recurring revenue growth, improved gross margin, positive net income for the first time since the implementation of our business transformation, and substantial growth in adjusted EBITDA," said David Cuthbert, Alteva's President and Chief Executive Officer. "This performance was driven by the successful execution of our strategy to improve our standing in the UCaaS market while solidifying our competitive position.
"As we continue to increase revenues and improve our operating performance, increases in cash flow will be used to strengthen the balance sheet and best position the Company for continued growth. Supporting these objectives, after the end of the quarter, the Company's Board of Directors approved the discontinuation of common stock dividend payments. We believe our operational performance improvements and the difficult corporate decisions we have made affecting our workforce and our shareholders in the near-term will deliver substantial returns for all of our stakeholders in the long-term. We will continue to carefully examine all aspects of our business to ensure maximum performance, profitability and return on our investment. We are proud of the accomplishments of the first half of 2013 and the trajectory that has been set."
Second Quarter 2013 Results
Revenues were $7.4 million in the second quarter of 2013, an increase of 8% from $6.9 million for the same period in 2012.
UC revenues, net of eliminations, were $3.9 million in the second quarter of 2013, an increase of 21% from $3.3 million for the same period in 2012. As a percentage of consolidated revenue, the UC segment contributed approximately 53% of revenues in the second quarter of 2013 as compared with 47% for the same period in 2012. The increase in UC revenues was attributable to organically generated UC services revenue growth.
Telephone services revenues, net of eliminations, were $3.5 million in the second quarter of 2013, as compared with $3.6 million for the same period in 2012. The Telephone segment contributed approximately 47% of revenues in the second quarter 2013 as compared with 53% for the same period of 2012 and 49% in the first quarter of 2013. Telephone services revenues were marginally lower as a result of access line losses which were partially offset by an increase in access lines rates and modest growth in broadband Internet services revenues.
Gross profit increased by 23% to $4.2 million in the second quarter of 2013 from $3.4 million in the same period of 2012. Gross profit as a percentage of revenues was 57% in the second quarter 2013, as compared with 50% for the same period of 2012. The continued improvement in gross profit primarily reflects the substantial increase in revenues contributed by the UC segment and the Company's ability to leverage its existing infrastructure.
Selling, general and administrative ("SG&A") expenses in the second quarter of 2013 were $6.3 million, as compared with $5.6 million for the same period of 2012. The increase in SG&A expenses was primarily attributable to $324,000 of nonrecurring severance charges related to the Company's Telephone workforce reduction and a $264,000 increase in non-cash stock-based compensation related to management changes.
Total other income for the second quarters of 2013 and 2012 was $3.1 million. Other income includes the income from the Company's O-P investment of $3.25 million and $3.1 million in the second quarters of 2013 and 2012, respectively.
For the second quarter of 2013, the Company had net income of $40,000, or $0.01 per basic and diluted common share, as compared to a net loss of $(228,000), or $(0.04) per basic and diluted common share, for the same period in 2012.
The Company also announced today that it has decided to discontinue future dividends. On an annual basis, this will result in cash savings of approximately $6 million, which will be used to support future growth initiatives and strengthen the Company's financial position.
Conference Call
The Company will conduct a conference call to discuss second quarter results today 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, no access code required, approximately 10 minutes prior to the start of the conference call. 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 877-344-7529 (toll free) or 412-317-0088, access code: 10032066, beginning 12:00 p.m. eastern on August 12, 2013 through September 2, 2013, and via the Company's website at www.alteva.com.
About Alteva
Alteva, Inc. (
*Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization adjusted to exclude non-cash stock-based compensation and severance related expense. A reconciliation of adjusted EBITDA to the most comparable GAAP measure can be found at the end of the following tables.
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, dividends, or strategies regarding the future. 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; reduction in cash distributions from the Orange County-Poughkeepsie Limited Partnership; 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 and forward-looking statements may be seen in Alteva's Annual Report on Form 10-K, as amended, 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 June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||||
| Net Revenue | |||||||||||||||||
| Unified Communications | $ | 3,920 | $ | 3,252 | $ | 7,876 | $ | 6,526 | |||||||||
| Telephone | 3,527 | 3,634 | 7,311 | 7,441 | |||||||||||||
| Total operating revenues | 7,447 | 6,886 | 15,187 | 13,967 | |||||||||||||
| Operating expenses | |||||||||||||||||
| Cost of services and products (exclusive of depreciation and amortization expense) | 3,215 |
3,434 |
7,004 |
6,982 |
|||||||||||||
| Selling, general and administrative expenses | 6,329 | 5,603 | 13,681 | 11,011 | |||||||||||||
| Depreciation and amortization | 961 | 1,296 | 1,963 | 2,575 | |||||||||||||
| Total operating expenses | 10,505 | 10,333 | 22,648 | 20,568 | |||||||||||||
| Operating loss | (3,058 | ) | (3,447 | ) | (7,461 | ) | (6,601 | ) | |||||||||
| Other income (expense) | |||||||||||||||||
| Interest income (expense) | (178 | ) | (112 | ) | (414 | ) | (169 | ) | |||||||||
| Income from equity method investment | 3,250 | 3,096 | 6,500 | 4,521 | |||||||||||||
| Other income (expense), net | 29 | 136 | 137 | 131 | |||||||||||||
| Total other income | 3,101 | 3,120 | 6,223 | 4,483 | |||||||||||||
| Income (loss) before income taxes | 43 | (327 | ) | (1,238 | ) | (2,118 | ) | ||||||||||
| Income tax expense (benefit) | 3 | (99 | ) | (445 | ) | (656 | ) | ||||||||||
| Net income (loss) | 40 | (228 | ) | (793 | ) | (1,462 | ) | ||||||||||
| Preferred dividends | 7 | 7 | 13 | 13 | |||||||||||||
| Income (loss) applicable to common stock | $ | 33 | $ | (235 | ) | $ | (806 | ) | $ | (1,475 | ) | ||||||
| Basic earnings (loss) per share | $ | 0.01 | $ | (0.04 | ) | $ | (0.14 | ) | $ | (0.26 | ) | ||||||
| Basic earnings (loss) per puttable common share | $ | - | $ | (0.04 | ) | $ | - | $ | (0.26 | ) | |||||||
| Diluted earnings (loss) per share | $ | 0.01 | $ | (0.04 | ) | $ | (0.14 | ) | $ | (0.26 | ) | ||||||
| Diluted earnings (loss) per puttable common share | $ | - | $ | (0.04 | ) | $ | - | $ | (0.26 | ) | |||||||
| Weighted average shares of common stock used to calculate earnings per share | |||||||||||||||||
| Basic | 5,775 | 5,731 | 5,760 | 5,723 | |||||||||||||
| Basic (puttable common) | - | 272 | - | 272 | |||||||||||||
| Diluted | 6,205 | 5,731 | 5,760 | 5,723 | |||||||||||||
| Diluted (puttable common) | - | 272 | - | 272 | |||||||||||||
| Dividends declared per common share | $ | 0.27 | $ | 0.27 | $ | 0.54 | $ | 0.54 | |||||||||
| ALTEVA | |||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
| (amounts in thousands, except per share amounts) | |||||||||
| June 30, | December 31, | ||||||||
| 2013 | 2012 | ||||||||
| Assets | (Unaudited) | ||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | 790 | $ | 1,799 | |||||
| Accounts receivable, net of allowance for uncollectibles - $463 and $638, respectively | 2,892 | 3,320 | |||||||
| Prepaid income taxes | 1,667 | 1,222 | |||||||
| Deferred income taxes | 268 | 268 | |||||||
| Other current assets | 1,682 | 1,844 | |||||||
| Total current assets | 7,299 | 8,453 | |||||||
| Property, plant and equipment, net | 15,535 | 16,446 | |||||||
| Seat licenses, net | 1,727 | 1,514 | |||||||
| Intangible assets, net | 6,256 | 6,617 | |||||||
| Goodwill | 9,121 | 9,121 | |||||||
| Deferred income taxes | 771 | 874 | |||||||
| Other assets | 613 | 420 | |||||||
| Total assets | $ | 41,322 | $ | 43,445 | |||||
| Liabilities and Shareholders' Equity | |||||||||
| Current liabilities | |||||||||
| Short-term debt | $ | 14,764 | $ | - | |||||
| Accounts payable | 1,139 | 886 | |||||||
| Advance billing and payments | 390 | 367 | |||||||
| Accrued taxes | 625 | 619 | |||||||
| Pension and postretirement benefit obligations, current portion | 1,089 | 1,089 | |||||||
| Accrued wages | 1,454 | 1,005 | |||||||
| Other accrued expenses | 2,629 | 2,754 | |||||||
| Total current liabilities | 22,090 | 6,720 | |||||||
| Long-term debt | 147 | 14,095 | |||||||
| Pension and postretirement benefit obligations | 7,929 | 8,095 | |||||||
| Total liabilities | 30,166 | 28,910 | |||||||
| 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 6,977 and 6,577 shares, respectively | 70 | 66 | |||||||
| Treasury stock - at cost, 830 and 818 shares, respectively of common stock | (7,612 | ) | (7,486 | ) | |||||
| Additional paid-in capital | 12,509 | 11,826 | |||||||
| Accumulated other comprehensive loss | (3,813 | ) | (3,999 | ) | |||||
| Retained earnings | 9,502 | 13,628 | |||||||
| Total shareholders' equity | 11,156 | 14,535 | |||||||
| Total liabilities and shareholders' equity | $ | 41,322 | $ | 43,445 | |||||
| ALTEVA, INC. | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
| (Unaudited) | ||||||||||
| (amounts in thousands) | ||||||||||
| Six Months Ended June 30, | ||||||||||
| 2013 | 2012 | |||||||||
| CASH FLOW FROM OPERATING ACTIVITIES | ||||||||||
| Net loss | $ | (793 | ) | $ | (1,462 | ) | ||||
| Adjustments to reconcile net loss to net cash provided (used) by operating activities: | ||||||||||
| Depreciation and amortization | 1,963 | 2,575 | ||||||||
| Write off of deferred financing fees | 61 | - | ||||||||
| Allowance (recoveries) for uncollectibles | (175 | ) | 160 | |||||||
| Write off obsolete inventory | 92 | - | ||||||||
| Stock based compensation expense | 687 | 398 | ||||||||
| Distribution in excess of income from equity investment included in net loss | (2,839 | ) | (1,384 | ) | ||||||
| Change in fair value of derivative liability | - | (65 | ) | |||||||
| Changes in assets and liabilities: | ||||||||||
| Trade accounts receivable | 603 | (970 | ) | |||||||
| Other current assets | (510 | ) | (841 | ) | ||||||
| Accounts payable | 253 | (121 | ) | |||||||
| Other accruals and liabilitites | 477 | (487 | ) | |||||||
| Net cash used in operating activities | (181 | ) | (2,197 | ) | ||||||
| CASH FLOW FROM INVESTING ACTIVITIES | ||||||||||
| Capital expenditures | (414 | ) | (1,499 | ) | ||||||
| Acquired intangibles | (57 | ) | - | |||||||
| Purchase of seat licenses | (333 | ) | (405 | ) | ||||||
| Distribution in excess of income from equity investment | 2,839 | 3,363 | ||||||||
| Net cash provided by investing activities | 2,035 | 1,459 | ||||||||
| CASH FLOW FROM FINANCING ACTIVITIES | ||||||||||
| Proceeds from borrowings | 17,593 | 1,725 | ||||||||
| Repayment of borrowings | (16,878 | ) | (759 | ) | ||||||
| Payment of fees for acquisition of debt | (119 | ) | - | |||||||
| Payment of amount due in connection with business acquisition | - | (118 | ) | |||||||
| Purchase of treasury stock | (126 | ) | (111 | ) | ||||||
| Dividends (Common and Preferred) | (3,333 | ) | (3,144 | ) | ||||||
| Net cash used in financing activities | (2,863 | ) | (2,407 | ) | ||||||
| Net change in cash and cash equivalents | (1,009 | ) | (3,145 | ) | ||||||
| Cash and cash equivalents at beginning of period | 1,799 | 4,575 | ||||||||
| Cash and cash equivalents at end of period | $ | 790 | $ | 1,430 | ||||||
| Supplemental disclosure of non-cash financing activities: | ||||||||||
| Capital lease obligations incurred for the acuisition of seat licenses | $ | 101 | $ | - | ||||||
| Treasury stock acquired in connection with cashless exercise of stock options | $ | - | $ | 677 | ||||||
| ALTEVA | |||||||
| RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME (LOSS) | |||||||
| AS IT IS PRESENTED ON THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
| (Unaudited) | |||||||
| (amounts in thousands) | |||||||
| Three Months Ended | |||||||
| March 31, | |||||||
| 2013 | 2012 | ||||||
| Net Income (loss) | $ | 40 | $ | (228 | ) | ||
| Depreciation and amortization | 961 | 1,296 | |||||
| Stock-based compensation | 469 | 205 | |||||
| Severance related charges | 324 | - | |||||
| Interest expense, net | 178 | 112 | |||||
| Income tax expense (benefit) | 3 | (99 | ) | ||||
| Adjusted EBITDA | $ | 1,975 | $ | 1,286 | |||