PHILADELPHIA, PA--(Marketwired - Aug 11, 2014) - Alteva, Inc. ("Alteva" or the "Company") (
Second Quarter 2014 Financial Results Highlights
- For the second quarter of 2014, UC revenues increased by 8% to $4.2 million from $3.9 million for the second quarter of 2013, which included the results of the Syracuse, NY operations that were sold in September 2013; excluding the Syracuse operations, UC revenues increased 27% for the second quarter of 2014 as compared to the same period in 2013;
- Gross profit margin increased to 62% in the second quarter of 2014 from 57% for the same period in 2013;
- Alteva recorded a $49.8 million gain on the sale of its interest in the O-P partnership;
- For the second quarter of 2014, the Company achieved Adjusted EBITDA* of $50.2 million, an improvement from $2.1 million from the same period in 2013; Adjusted EBITDA* included $50.3 million and $3.25 million of income from the Company's O-P investment for the second quarters of 2014 and 2013, respectively;
- The Company narrowed its operating loss for the second quarter of 2014 to $(1.4) million, as compared to $(3.0) million for the same period in 2013;
- The Company had net income of $31.5 million, or $5.19 per share, for the second quarter of 2014, as compared to a net loss of $(9,000), or $0.00 per share, for the same period in 2013;
- There were over 47,000 users on Alteva's hosted platform at the end of the second quarter of 2014, which represented an increase of 17% of the installed base compared to the end of the second quarter of 2013; excluding the seats associated with the divested Syracuse operations, users on Alteva's hosted platform increased 28%.
O-P Partnership
On April 30, 2014, the Company exercised the put option to sell its interest in the Orange County-Poughkeepsie Limited Partnership (the "O-P"). The gross proceeds of $50 million, which the Company received on April 30, 2014, will be used to pay taxes on the related gain, repay outstanding senior debt, fund working capital needs and support growth initiatives, including supporting Alteva's current customers and deploying solutions for new customers. After April 30, 2014, the Company will no longer have any interest in the O-P and will no longer receive any income from the O-P.
Second Quarter 2014 Results
Revenues were $7.6 million in the second quarter of 2014, an increase of 2% from $7.4 million for the same period in 2013. Revenues increased 11% year-over-year excluding the revenue from the Syracuse operations that were sold in September 2013.
UC revenues were $4.2 million in the second quarter of 2014, an increase of 8% from $3.9 million for the same period in 2013. UC revenues in the second quarter of 2014 increased 27% on a year-over-year basis excluding the revenue from the Syracuse operations, which were sold in September 2013. As a percentage of consolidated revenue, the UC segment contributed approximately 56% of revenues in the second 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 91% of second quarter UC 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 $3.4 million in the second quarter of 2014, as compared with $3.5 million for the same period in 2013. The Telephone segment contributed approximately 44% of revenues in the second 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. 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 12% to $4.7 million in the second quarter of 2014 from $4.2 million for the same period in 2013. Gross profit as a percentage of revenues was 62% in the second quarter 2014, as compared with 57% 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 the cost reduction initiatives. The cost reduction initiatives included the sale of the Syracuse operations and the previously disclosed workforce reduction in the Telephone segment.
Selling, general and administrative ("SG&A") expenses in the second quarter of 2014 were $5.3 million, as compared with $6.2 million for the same period in 2013. The $0.9 million, or 16%, decrease in SG&A expenses was primarily associated with a reduction in wages, including the impact from the restructuring of the Telephone segment in the second quarter of 2013, the sale of the Syracuse operations, severance charges in the second quarter of 2013, and other expense management initiatives implemented throughout the year.
Total other income for the second quarters of 2014 and 2013 was $50.3 million and $3.1 million, respectively. Other income included the income from the Company's equity investment in the O-P partnership in the second quarters of 2014 and 2013 of $50.3 million and $3.25 million, respectively. In 2013, the Company received guaranteed annual distributions of $13 million. In 2014, in accordance with the O-P agreement, the guaranteed distribution levels stopped and the Company received income from the equity investment only for its ownership share of 8.108% of the O-P's net income. The $50.3 million of income from the O-P partnership in the second quarter of 2014 included a $49.8 million gain on the sale of the Company's interest in the O-P partnership on April 30, 2014.
For the second quarter of 2014, the Company had income tax expense of $17.3 million, or 35% of income before income taxes, as compared to an income tax expense of $0.2 million, or 106% of income before income taxes, for the second 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 second quarter of 2014, the Company's net income was $31.5 million, as compared to a net loss of $(9,000) for the same period of 2013.
Basic and diluted net income per share was $5.19 for the second quarter of 2014, as compared with basic and diluted net loss per share of $0.00 in the same period of 2013.
Conference Call
The Company will conduct a conference call to discuss second quarter results on Tuesday, August 12, 2014 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, 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 412-317-0088 or 877-344-7529 (toll free), access code: 10050899, beginning 12:00 p.m. eastern on August 13, 2014 through 9:00 a.m. eastern August 27, 2014, and via the Company's website at www.alteva.com.
About Alteva
Alteva (
*Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization adjusted to exclude non-cash stock-based compensation, severance related expense, and nonrecurring charges associated with the disposal of the Syracuse operations. 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. 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 June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||
| Net Revenue | |||||||||||||||||
| Unified Communications | $ | 4,234 | $ | 3,920 | $ | 8,445 | $ | 7,876 | |||||||||
| Telephone | 3,370 | 3,527 | 6,683 | 7,311 | |||||||||||||
| Total operating revenues | 7,604 | 7,447 | 15,128 | 15,187 | |||||||||||||
| Operating expenses | |||||||||||||||||
| Cost of services and products (exclusive of depreciation and amortization expense) | 2,867 |
3,215 |
5,919 |
7,004 |
|||||||||||||
| Selling, general and administrative expenses | 5,262 | 6,226 | 11,060 | 13,474 | |||||||||||||
| Depreciation and amortization | 919 | 961 | 1,822 | 1,963 | |||||||||||||
| Total operating expenses | 9,048 | 10,402 | 18,801 | 22,441 | |||||||||||||
| Operating loss | (1,444 | ) | (2,955 | ) | (3,673 | ) | (7,254 | ) | |||||||||
| Other income (expense) | |||||||||||||||||
| Interest income (expense), net | (54 | ) | (178 | ) | (193 | ) | (414 | ) | |||||||||
| Income from investment | 50,333 | 3,250 | 52,373 | 6,500 | |||||||||||||
| Other income (expense), net | 6 | 29 | 27 | 137 | |||||||||||||
| Total other income | 50,285 | 3,101 | 52,207 | 6,223 | |||||||||||||
| Income (loss) before income taxes | 48,841 | 146 | 48,534 | (1,031 | ) | ||||||||||||
| Income tax expense (benefit) | 17,304 | 155 | 17,246 | (351 | ) | ||||||||||||
| Net income (loss) | 31,537 | (9 | ) | 31,288 | (680 | ) | |||||||||||
| Preferred dividends | 7 | 7 | 13 | 13 | |||||||||||||
| Income (loss) applicable to common stock and participating securities | $ | 31,530 | $ | (16 | ) | $ | 31,275 | $ | (693 | ) | |||||||
| Basic earnings (loss) per share | $ | 5.19 | $ | - | $ | 5.11 | $ | (0.12 | ) | ||||||||
| Diluted earnings (loss) per share | $ | 5.19 | $ | - | $ | 5.11 | $ | (0.12 | ) | ||||||||
| Weighted average shares of common stock used to calculate earnings per share | |||||||||||||||||
| Basic | 5,917 | 5,775 | 5,842 | 5,760 | |||||||||||||
| Diluted | 5,917 | 5,775 | 5,842 | 5,760 | |||||||||||||
| Dividends declared per common share | $ | 0.00 | $ | 0.27 | $ | 0.00 | $ | 0.54 | |||||||||
| ALTEVA, INC. | |||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
| (in thousands, except per share amounts) | |||||||||
| June 30, | December 31, | ||||||||
| 2014 | 2013 | ||||||||
| (Unaudited) | |||||||||
| Assets | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | 40,095 | $ | 1,636 | |||||
| Trade accounts receivable - net of allowance for uncollectibles - $354 and $378 at June 30, 2014 and December 31, 2013, respectively | 3,335 | 2,836 | |||||||
| Other accounts receivable | 1,135 | 480 | |||||||
| Materials and supplies | 221 | 237 | |||||||
| Prepaid expenses | 796 | 774 | |||||||
| Deferred income taxes | 108 | 108 | |||||||
| Total current assets | 45,690 | 6,071 | |||||||
| Property, plant and equipment, net | 13,172 | 13,837 | |||||||
| Intangibles, net | 5,446 | 5,856 | |||||||
| Seat licenses | 1,608 | 1,749 | |||||||
| Goodwill | 9,006 | 9,006 | |||||||
| Other assets | 934 | 744 | |||||||
| Total assets | $ | 75,856 | $ | 37,263 | |||||
| Liabilities and Shareholders' Equity | |||||||||
| Current liabilities | |||||||||
| Short-term debt | $ | 401 | $ | 10,126 | |||||
| Accounts payable | 917 | 944 | |||||||
| Advance billing and payments | 356 | 341 | |||||||
| Accrued taxes | 17,692 | 1,692 | |||||||
| Pension and post retirement benefit obligations | 267 | 267 | |||||||
| Other accrued expenses | 4,510 | 3,934 | |||||||
| Total current liabilities | 24,143 | 17,304 | |||||||
| Long-term debt | 408 | 297 | |||||||
| Deferred income taxes | 773 | 649 | |||||||
| Pension and post retirement benefit obligations | 5,846 | 6,007 | |||||||
| Total liabilities | 31,170 | 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 6,858 and 6,971 shares issued at June 30, 2014 and December 31, 2013, respectively | 70 | 70 |
|||||||
| Treasury stock - at cost, 875 and 830 common shares at June 30, 2014 and December 31, 2013, respectively | (8,011 | ) | (7,612 | ) | |||||
| Additional paid in capital | 13,786 | 13,279 | |||||||
| Accumulated other comprehensive loss | (1,139 | ) | (1,436 | ) | |||||
| Retained earnings | 39,480 | 8,205 | |||||||
| Total shareholders' equity | 44,686 | 13,006 | |||||||
| Total liabilities and shareholders' equity | $ | 75,856 | $ | 37,263 | |||||
| ALTEVA, INC. | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (Unaudited) | |||||||||
| (in thousands) | |||||||||
| Six Months Ended June 30, | |||||||||
| 2014 | 2013 | ||||||||
| CASH FLOW FROM OPERATING ACTIVITIES | |||||||||
| Net income (loss) | $ | 31,288 | $ | (680 | ) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||
| Depreciation and amortization | 1,822 | 1,963 | |||||||
| Stock based compensation expense | 507 | 687 | |||||||
| Unpaid distributions and gain on sale from equity investment included in net income | (50,284 | ) | (2,839 | ) | |||||
| Other non-cash operating activities | 218 | 468 | |||||||
| Changes in assets and liabilities | |||||||||
| Trade accounts receivable | (499 | ) | 428 | ||||||
| Other assets | (470 | ) | (731 | ) | |||||
| Accrued taxes | 16,000 | (149 | ) | ||||||
| Accounts payable | (27 | ) | 253 | ||||||
| Other accruals and liabilities | 727 | 419 | |||||||
| Net cash used in operating activities | (718 | ) | (181 | ) | |||||
| CASH FLOW FROM INVESTING ACTIVITIES | |||||||||
| Capital expenditures | (151 | ) | (414 | ) | |||||
| Proceeds from sale of assets | 33 | - | |||||||
| Acquired intangibles | (16 | ) | (57 | ) | |||||
| Purchase of seat licenses | (74 | ) | (333 | ) | |||||
| Proceeds received in excess of income from equity investments | 49,776 | 2,839 | |||||||
| Net cash provided by investing activities | 49,568 | 2,035 | |||||||
| CASH FLOW FROM FINANCING ACTIVITIES | |||||||||
| Proceeds from debt | 2,443 | 17,593 | |||||||
| Repayment of debt and capital leases | (12,422 | ) | (16,878 | ) | |||||
| Payment of fees for acquisition of debt | - | (119 | ) | ||||||
| Purchase of treasury stock | (399 | ) | (126 | ) | |||||
| Dividends (Common and Preferred) | (13 | ) | (3,333 | ) | |||||
| Net cash used in financing activities | (10,391 | ) | (2,863 | ) | |||||
| Net change in cash and cash equivalents | 38,459 | (1,009 | ) | ||||||
| Cash and cash equivalents at beginning of period | 1,636 | 1,799 | |||||||
| Cash and cash equivalents at end of period | $ | 40,095 | $ | 790 | |||||
| Supplemental disclosure of non-cash investing activities: Acquisition of seat licenses and equipment under capital leases | $ | 365 | $ | 101 | |||||
| ALTEVA, INC. | ||||||||||||||
| RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME (LOSS) | ||||||||||||||
| AS IT IS PRESENTED ON THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||
| (Unaudited) | ||||||||||||||
| (in thousands) | ||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||
| Net income (loss) | $ | 31,537 | $ | (9 | ) | $ | 31,288 | $ | (680 | ) | ||||
| Depreciation and amortization | 919 | 961 | 1,822 | 1,963 | ||||||||||
| Stock-based compensation | 201 | 469 | 507 | 687 | ||||||||||
| Severance related charges | 227 | 324 | 396 | 1,039 | ||||||||||
| Interest (income) expense, net | 54 | 178 | 193 | 414 | ||||||||||
| Income tax expense (benefit) | 17,304 | 155 | 17,246 | (351 | ) | |||||||||
| Adjusted EBITDA | $ | 50,242 | $ | 2,078 | $ | 51,452 | $ | 3,072 | ||||||