PHILADELPHIA, PA--(Marketwired - Nov 12, 2013) - Alteva ("Alteva" or the "Company") (
- Adjusted EBITDA* of $2.9 million in the third quarter 2013, an increase of 220% from $0.9 million for the same period in 2012
- UC revenues increased to $4.0 million in the third quarter of 2013, an increase of 27% excluding the USA Datanet business that was sold
- UC contributed a record level of 54% of third quarter consolidated revenues, up from 51% for the same period in 2012
- 38,787 users on Alteva's hosted platform at the end of third quarter 2013, an increase of 11% of the installed base at the end of second quarter 2013 excluding USA Datanet seats
- Combined retail and wholesale seats in implementation equivalent to 4% of the installed base at end of third quarter of 2013
- Gross profit increased to $4.4 million in the third quarter 2013, an increase of 21% from $3.6 million for the same period in 2012
- Gross profit as a percentage of revenues increased to 58% in the third quarter of 2013 from 51% for the same period in 2012
- SG&A decreased to $5.2 million in the third quarter of 2013, a decrease of $1.0 million, or 16%, from $6.2 million for the same period in 2012
- Net income of $563,000 in the third quarter of 2013, or $0.09 per share, as compared to a $(922,000) net loss, or $(0.16) per share, for the same period in 2012
- 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 third quarter of 2013
- Reduced bank debt at September 30, 2013 by $2.2 million or 15% from June 30, 2013
- Completed the sale of substantially all of the assets of the USA Datanet business effective September 1, 2013 for approximately $600,000. Resulted in the elimination of approximately $2 million non-core legacy UC revenue annually and approximately $3 million of expenses annually. Incurred $404,000 of non-recurring charges during the third quarter of 2013 related to the sale.
Management Comments
"Alteva's third quarter results reflect our focus on profitable growth, financial strength, and the delivery of exceptional service to our customers. This focus continued to enhance our position within the most attractive segment of the Unified Communications market," said David Cuthbert, Alteva's President and Chief Executive Officer. "Our leading Unified-Communications-as-a-Service platform continues to demonstrate its value to our target markets, while offering substantial leverage that enables growth in our top and bottom lines.
"For the third quarter we continued to deliver strong UCaaS revenue growth and improved profitability. While we expect our UC revenues to increase at an annual growth rate comparable to that of the overall UC market, we are committed to this growth with an emphasis on profitability and margin enhancements. Our sales and marketing efforts are successfully positioning Alteva as a premium service provider for middle market business customers. This is evidenced by the numerous record performance levels achieved in the third quarter of 2013 since entering the UC market, including new records for UC seats in service and UC revenues. At the same time, we reduced our bank debt by 15% from the end of the second quarter of 2013. Across the board, the third quarter was a success and sets us on a course for further improvement in the future as we continue to grow."
Third Quarter 2013 Results
Revenues were $7.5 million in the third quarter of 2013, an increase of 7% from $7.1 million for the same period in 2012. Revenue increased 13% excluding the revenue from the USA Datanet business that was sold.
UC revenues were $4.0 million in the third quarter of 2013, an increase of 12% from $3.6 million for the same period in 2012. UC revenues increased 27% excluding the revenue from the USA Datanet business that was sold. As a percentage of consolidated revenue, the UC segment contributed approximately 54% of revenues in the third quarter of 2013 as compared with 51% for the same period in 2012. The increase in UC revenues was attributable to the addition of new clients and the increase in services to existing clients.
Telephone revenues were $3.5 million in the third quarter of 2013, as compared with $3.4 million for the same period in 2012. The Telephone segment contributed approximately 46% of revenues in the third quarter 2013 as compared with 49% for the same period of 2012. Telephone revenues were slightly higher as a result of an increase in access lines rates and modest growth in broadband Internet services revenues, partially offset by access line losses.
Gross profit increased by 21% to $4.4 million in the third quarter of 2013 from $3.6 million for the same period in 2012. Gross profit as a percentage of revenues was 58% in the third quarter 2013, as compared with 51% for the same period in 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, and impact of the cost reduction initiatives, including the USA Datanet sale and the previously disclosed workforce reduction in the Telephone segment.
Selling, general and administrative ("SG&A") expenses in the third quarter of 2013 were $5.2 million, as compared with $6.2 million for the same period in 2012. The $1 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, other expense management initiatives implemented throughout the year, and higher severance charges incurred in the third quarter of 2012.
The Company incurred a $404,000 charge during the three months ended September 30, 2013 due to the disposal the USA Datanet operations.
Total other income for the third quarters of 2013 and 2012 was $3.1 million and $2.7 million, respectively. Other income included the income from the Company's O-P investment of $3.25 million in the third quarters of 2013 and 2012.
For the third quarter of 2013, the Company had net income of $563,000, or $0.09 per basic and diluted common share, as compared to a net loss of $(922,000), or $(0.16) per basic and diluted common share, for the same period in 2012.
Conference Call
The Company will conduct a conference call to discuss second quarter results on November 13 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: 10036080, beginning 12:00 p.m. eastern on November 13, 2013 through December 6, 2013, 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 USA Datanet. A reconciliation of adjusted EBITDA to net income (loss) 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||||
| Net Revenue | |||||||||||||||||
| Unified Communications | $ | 4,043 | $ | 3,621 | $ | 11,919 | $ | 10,147 | |||||||||
| Telephone | 3,487 | 3,429 | 10,798 | 10,870 | |||||||||||||
| Total operating revenues | 7,530 | 7,050 | 22,717 | 21,017 | |||||||||||||
| Operating expenses | |||||||||||||||||
| Cost of services and products (exclusive of depreciation and amortization expense) | 3,154 | 3,428 | 10,158 | 10,410 | |||||||||||||
| Selling, general and administrative expenses | 5,218 | 6,230 | 18,899 | 17,241 | |||||||||||||
| Loss on disposal and restructuring costs | 404 | - | 404 | - | |||||||||||||
| Depreciation and amortization | 956 | 1,411 | 2,919 | 3,986 | |||||||||||||
| Total operating expenses | 9,732 | 11,069 | 32,380 | 31,637 | |||||||||||||
| Operating loss | (2,202 | ) | (4,019 | ) | (9,663 | ) | (10,620 | ) | |||||||||
| Other income (expense) | |||||||||||||||||
| Interest expense, net | (179 | ) | (123 | ) | (593 | ) | (292 | ) | |||||||||
| Income from equity method investment | 3,250 | 3,250 | 9,750 | 7,771 | |||||||||||||
| Other income (expense), net | 25 | (468 | ) | 162 | (337 | ) | |||||||||||
| Total other income | 3,096 | 2,659 | 9,319 | 7,142 | |||||||||||||
| Income (loss) before income taxes | 894 | (1,360 | ) | (344 | ) | (3,478 | ) | ||||||||||
| Income taxes expense (benefit) | 331 | (438 | ) | (114 | ) | (1,094 | ) | ||||||||||
| Net income (loss) | 563 | (922 | ) | (230 | ) | (2,384 | ) | ||||||||||
| Preferred dividends | 6 | 6 | 19 | 19 | |||||||||||||
| Income (loss) applicable to common stock | $ | 557 | $ | (928 | ) | $ | (249 | ) | $ | (2,403 | ) | ||||||
| Basic earnings per common share: | |||||||||||||||||
| Basic earnings (loss) per share | $ | 0.09 | $ | (0.16 | ) | $ | (0.04 | ) | $ | (0.42 | ) | ||||||
| Basic earning (loss) per puttable common share | $ | - | $ | (0.16 | ) | $ | - | $ | (0.42 | ) | |||||||
| Diluted earnings per common share: | |||||||||||||||||
| Diluted earning (loss) per share | $ | 0.09 | $ | (0.16 | ) | $ | (0.04 | ) | $ | (0.42 | ) | ||||||
| Diluted earnings (loss) per puttable common share | $ | - | $ | (0.16 | ) | $ | - | $ | (0.42 | ) | |||||||
| Weighted average shares of common stock used to calculate loss per share: | |||||||||||||||||
| Basic | 5,776 | 5,744 | 5,765 | 5,732 | |||||||||||||
| Basic (puttable common) | - | 251 | - | 265 | |||||||||||||
| Diluted | 5,776 | 5,744 | 5,765 | 5,732 | |||||||||||||
| Diluted (puttable common) | - | 251 | - | 265 | |||||||||||||
| Dividends declared per common share | $ | - | $ | 0.27 | $ | 0.54 | $ | 0.81 | |||||||||
| ALTEVA, INC. | |||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
| (amounts in thousands except per share amounts) | |||||||||
| September 30, | December 31, | ||||||||
| 2013 | 2012 | ||||||||
| Assets | (Unaudited) | ||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | 719 | $ | 1,799 | |||||
| Accounts receivable - net of allowance for uncollectibles - $451 and $638, respectively | 3,043 | 3,320 | |||||||
| Prepaid income taxes | 1,272 | 1,222 | |||||||
| Deferred Income taxes | 268 | 268 | |||||||
| Other current assets | 2,110 | 1,844 | |||||||
| Total current assets | 7,412 | 8,453 | |||||||
| Property, plant and equipment, net | 14,392 | 16,446 | |||||||
| Seat licenses, net | 1,876 | 1,514 | |||||||
| Intangible assets, net | 6,046 | 6,617 | |||||||
| Goodwill | 9,006 | 9,121 | |||||||
| Deferred income taxes | 797 | 874 | |||||||
| Other assets | 691 | 420 | |||||||
| Total assets | $ | 40,220 | $ | 43,445 | |||||
| Liabilities and Shareholders' Equity | |||||||||
| Current liabilities | |||||||||
| Short-term debt | $ | 12,613 | $ | - | |||||
| Accounts payable | 1,472 | 886 | |||||||
| Advance billing and payments | 385 | 367 | |||||||
| Accrued taxes | 653 | 619 | |||||||
| Pension and postretirement benefit obligations, current portion | 1,089 | 1,089 | |||||||
| Accrued wages | 1,237 | 1,005 | |||||||
| Other accrued expenses | 2,720 | 2,754 | |||||||
| Total current liabilities | 20,169 | 6,720 | |||||||
| Long-term debt | 245 | 14,095 | |||||||
| Pension and postretirement benefit obligations | 7,661 | 8,095 | |||||||
| Total liabilities | 28,075 | 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 6,971 and 6,577 shares, respectively | 70 | 66 | |||||||
| Treasury stock - at cost, 830 and 818 shares of common stock, respectively | (7,612 | ) | (7,486 | ) | |||||
| Additional paid-in capital | 12,842 | 11,826 | |||||||
| Accumulated other comprehensive loss | (3,720 | ) | (3,999 | ) | |||||
| Retained earnings | 10,065 | 13,628 | |||||||
| Total shareholders' equity | 12,145 | 14,535 | |||||||
| Total liabilities and shareholders' equity | $ | 40,220 | $ | 43,445 | |||||
| ALTEVA, INC. | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (Unaudited) | |||||||||
| ($ in thousands) | |||||||||
| Nine Months Ended | |||||||||
| September 30, | |||||||||
| 2013 | 2012 | ||||||||
| CASH FLOW FROM OPERATING ACTIVITIES | |||||||||
| Net loss | $ | (230 | ) | $ | (2,384 | ) | |||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||
| Depreciation and amortization | 2,919 | 3,986 | |||||||
| Write off of deferred financing fees | 61 | - | |||||||
| Allowance (recoveries) for uncollectibles | (187 | ) | 368 | ||||||
| Write off obsolete inventory | 108 | - | |||||||
| Stock-based compensation expense | 1,020 | 688 | |||||||
| Distribution in excess of income from equity investment included in net loss | (4,209 | ) | (2,989 | ) | |||||
| Loss on disposal and restructuring cots | 404 | - | |||||||
| Other | (78 | ) | (40 | ) | |||||
| Changes in assets and liabilities | |||||||||
| Trade accounts receivable | 304 | (1,199 | ) | ||||||
| Other assets | (289 | ) | (41 | ) | |||||
| Accounts payable | 586 | (423 | ) | ||||||
| Other accruals and liabilities | 248 | 825 | |||||||
| Net cash provided by (used in) operating activities | 657 | (1,209 | ) | ||||||
| CASH FLOW FROM INVESTING ACTIVITIES | |||||||||
| Capital expenditures | (499 | ) | (3,509 | ) | |||||
| Proceeds from sale of assets | 175 | - | |||||||
| Acquired intangibles | (58 | ) | - | ||||||
| Purchase of seat licenses | (501 | ) | (544 | ) | |||||
| Sale of short-term investments | - | 259 | |||||||
| Distribution in excess of income from equity investment | 4,209 | 4,968 | |||||||
| Net cash provided by investing activities | 3,326 | 1,174 | |||||||
| CASH FLOW FROM FINANCING ACTIVITIES | |||||||||
| Proceeds from borrowings | 18,896 | 6,400 | |||||||
| Repayment of borrowings | (20,381 | ) | (1,139 | ) | |||||
| Payment of fees for acquisition of debt | (119 | ) | - | ||||||
| Amounts due in connection with business acquisition, net | - | (2,420 | ) | ||||||
| Treasury stock purchases | (126 | ) | (107 | ) | |||||
| Dividends (Common and Preferred) | (3,333 | ) | (4,715 | ) | |||||
| Net cash used in financing activities | (5,063 | ) | (1,981 | ) | |||||
| Net change in cash and cash equivalents | (1,080 | ) | (2,016 | ) | |||||
| Cash and cash equivalents at beginning of period | 1,799 | 4,575 | |||||||
| Cash and cash equivalents at end of period | $ | 719 | $ | 2,559 | |||||
| Supplemental disclosure of non-cash investing and financing activities: | |||||||||
| Capital lease obligations incurred for the acquisition of seat licenses & capital equipment | $ | 248 | $ | - | |||||
| Receivables from sale of assets | $ | 408 | $ | - | |||||
| Treasury stock acquired in connection with cashless exercise of stock options | $ | - | $ | 677 | |||||
| Capitalization of loan financing costs | $ | - | $ | 63 | |||||
| Reclassification of puttable common stock to equity | $ | - | $ | 3,756 | |||||
| ALTEVA, INC. | |||||||
| 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 September 30, | |||||||
| 2013 | 2012 | ||||||
| Net income (loss) | $ | 563 | $ | (922 | ) | ||
| Depreciation and amortization | 956 | 1,411 | |||||
| Stock-based compensation | 333 | 291 | |||||
| Severance related charges | 129 | 439 | |||||
| Loss on disposal and restructuring costs | 404 | - | |||||
| Interest expense, net | 179 | 123 | |||||
| Income tax expense (benefit) | 331 | (438 | ) | ||||
| Adjusted EBITDA | $ | 2,895 | $ | 904 | |||