SOURCE: Alteva

Alteva

November 13, 2015 17:01 ET

Alteva Reports Third Quarter Financial Results

PHILADELPHIA, PA--(Marketwired - Nov 13, 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 third quarter ended September 30, 2015.

Third Quarter 2015 Financial Results Highlights

  • For the third quarter of 2015, the Company recorded Adjusted EBITDA* of $0.3 million, as compared to $0.1 million for the same period in 2014;
  • The Company recorded operating loss of $(2.1) million for the third quarter of 2015, as compared to $(1.6) million for the same period in 2014;
  • The Company had a net loss of $(1.8) million for the third quarter of 2015, as compared to $(1.3) million for the same period in 2014;
  • For the third quarter of 2015, UC revenues increased by 10% to $4.7 million from $4.3 million for the third quarter of 2014;
  • During the third quarter of 2015 the Company installed over 2,000 new users on its hosted platform, which brings the total users to over 57,000 at the end of the third quarter of 2015. This represented an increase of 15% compared to the end of third quarter 2014;
  • During the third quarter of 2015, the Company had new customer sales of approximately 3,800 users;
  • As of September 30, 2015, the Company had approximately 5,400 new customer users, or 9% of the installed base, sold and scheduled for implementation; and
  • Gross profit margin decreased to 60% in the third quarter of 2015 from 61% for the third quarter of 2014.

Third Quarter 2015 Results

Revenues increased to $8.0 million in the third quarter of 2015 as compared to $7.6 million for the third quarter of 2014.

UC revenues were $4.7 million in the third quarter of 2015, an increase of 10% from $4.3 million for the same period in 2014. As a percentage of consolidated revenue, the UC segment contributed approximately 59% of revenues in the third quarter of 2015, as compared with 57% for the same period in 2014. The increase in UC revenues was attributable to the addition of new clients and the increase in services to existing clients. Approximately 91% of third quarter 2015 UC revenues and 92% of the third quarter 2014 revenues were from licenses and services which are expected to be recurring in nature, with the balance of revenues derived primarily from equipment sales that were mostly related to new customer implementations.

Telephone revenues were $3.3 million in the third quarters of 2015 and 2014. The Telephone segment contributed approximately 41% of revenues in the third quarter 2015, as compared with 43% for the same period of 2014. Telephone revenues were flat year-over-year as a result of continued access line losses being offset by higher revenue from pooling arrangements, an increase in access line rates, and custom pole work.

UC cost of service expenses were $2.3 million in the third quarter of 2015, as compared to $1.9 million in the third quarter of 2014. The increase in UC cost of services expenses was due to the variable costs associated with the additional seats on the platform and the hiring of additional operations personnel to support the implementation of new users, including the growing implementation backlog.

Depreciation and amortization expenses were $0.9 million in the third quarter of 2015 as compared to $0.9 million for the same period of 2014.

Gross profit increased by 3% to $4.8 million in the third quarter of 2015, from $4.6 million for the same period in 2014. Gross profit margin was 60% in the third quarter of 2015 as compared to 61% for the same period of 2014.

Selling, general and administrative expenses in the third quarter of 2015 were $6.0 million, as compared with $4.7 million for the same period in 2014. The increase was primarily due to professional fees and other costs associated with the merger and review of strategic alternatives.

During the third quarter of 2014 the Company incurred $0.6 million of expense in connection with the settlement with the former Chief Executive Officer.

For the third quarter of 2015, the Company had income tax benefit of $0.3 million, or 14% of loss before income taxes, as compared to an income tax benefit of $0.3 million, or 17% of loss before income taxes, for the third quarter of 2014. 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. The estimated effective tax rate differed from the U.S. statutory rate primarily due to the expected increase in the valuation allowance, which resulted in an overall tax benefit recorded for the period ended September 30, 2015.

For the third quarter of 2015, the Company recorded a net loss of $(1.8) million and net loss of $(1.3) million for the third quarter of 2014.

Basic and diluted net loss per share was $(0.31) for the third quarter of 2015, as compared with basic and diluted net earnings of $(0.23) in the same period of 2014.

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, restructuring costs and other special charges, and merger and strategic alternatives expenses. 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.

   
   
ALTEVA, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited)  
(in thousands, except per share amounts)  
   
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2015     2014     2015     2014  
                                 
Operating revenues:                                
  Unified Communications   $ 4,718     $ 4,308     $ 13,703     $ 12,753  
  Telephone     3,252       3,263       9,915       9,946  
                                 
  Total operating revenues     7,970       7,571       23,618       22,699  
                                 
Operating expenses:                                
  Cost of services and products (exclusive of depreciation and amortization expense)    
3,201
     
2,924
     
9,687
     
8,843
 
  Selling, general and administrative expenses     6,015       4,726       16,664       15,686  
  Depreciation and amortization     891       931       3,383       2,753  
  Restructuring costs and other special charges     -       600       -       700  
                                 
  Total operating expenses     10,107       9,181       29,734       27,982  
                                 
Operating loss     (2,137 )     (1,610 )     (6,116 )     (5,283 )
                                 
Other income:                                
  Interest (expense) income, net     (2 )     20       10       (173 )
  Income from investment     -       -       -       52,373  
  Other income (expense), net     25       (4 )     1,515       23  
                                 
  Total other income, net     23       16       1,525       52,223  
                                 
(Loss) income before income taxes     (2,114 )     (1,594 )     (4,591 )     46,940  
                                 
Income tax (benefit) expense     (296 )     (264 )     (753 )     16,982  
                                 
Net (loss) income     (1,818 )     (1,330 )     (3,838 )     29,958  
                                 
Preferred dividends     6       6       19       19  
                                 
Net (loss) income applicable to common stock   $ (1,824 )   $ (1,336 )   $ (3,857 )   $ 29,939  
                                 
                                 
Basic (loss) earnings per common share   $ (0.31 )   $ (0.23 )   $ (0.66 )   $ 4.96  
                                 
Diluted (loss) earnings per common share   $ (0.31 )   $ (0.23 )   $ (0.66 )   $ 4.96  
                                 
Weighted average shares of common stock used to calculate loss per common share:                                
  Basic     5,871       5,826       5,853       5,802  
  Diluted     5,871       5,826       5,853       5,802  
                                 
Dividends declared per common share   $ -     $ -     $ 2.60     $ -  
   
   
   
ALTEVA, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(in thousands, except per share amounts)  
   
    September 30,     December 31,  
    2015     2014  
    (Unaudited)        
Assets                
                 
Current assets                
  Cash and cash equivalents   $ 6,471     $ 24,047  
  Trade accounts receivable - net of allowance for uncollectibles - $421 and $402 at September 30, 2015 and December 31, 2014, respectively     2,919       2,737  
  Other accounts receivable     598       488  
  Materials and supplies     273       167  
  Prepaid expenses     703       349  
  Prepaid income taxes     498       311  
  Receivable and deferred income taxes     1,190       43  
Total current assets     12,652       28,142  
                 
  Property, plant and equipment, net     11,050       12,384  
  Intangibles, net     4,382       5,020  
  Seat licenses, net     1,537       1,543  
  Goodwill     9,006       9,006  
  Other assets     1,474       1,023  
Total assets   $ 40,101     $ 57,118  
                 
Liabilities and shareholders' equity                
                 
Current liabilities                
  Short-term debt   $ 405     $ 325  
  Accounts payable     1,317       1,216  
  Advance billing and payments     317       274  
  Accrued taxes     947       1,056  
  Pension and post retirement benefit obligations     276       276  
  Accrued wages     914       1,036  
  Deferred revenue     857       705  
  Other accrued expenses     2,792       2,180  
Total current liabilities     7,825       7,068  
                 
  Long-term debt     403       295  
  Payable and deferred income taxes     1,008       766  
  Pension and postretirement benefit obligations     8,826       8,833  
Total liabilities     18,062       16,962  
                 
                 
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 shares of 6,903 and 6,826 at September 30, 2015 and December 31, 2014, respectively    
69
     
69
 
  Treasury stock - at cost, 902 and 885 common shares at September 30, 2015 and December 31, 2014, respectively     (8,202 )     (8,077 )
  Additional paid in capital     14,731       14,047  
  Accumulated other comprehensive loss     (3,215 )     (3,997 )
  Retained earnings     18,156       37,614  
Total shareholders' equity     22,039       40,156  
Total liabilities and shareholders' equity   $ 40,101     $ 57,118  
                 
         
   
ALTEVA, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Unaudited)  
(in thousands)  
   
    Nine Months Ended September 30,  
    2015     2014  
CASH FLOW FROM OPERATING ACTIVITIES                
                 
Net (loss) income   $ (3,838 )   $ 29,958  
  Adjustments to reconcile net (loss) income to net cash used in operating activities:                
    Depreciation and amortization     3,383       2,753  
    Stock based compensation expense     684       677  
    Distribution in excess of equity in earnings and gain on sale from equity investment     -       (49,776 )
    Other non-cash operating activities     (958 )     230  
  Changes in assets and liabilities:                
    Trade accounts receivable     (182 )     (269 )
    Prepaid expenses and other assets     (1,204 )     (272 )
    Accounts payable and accrued expenses     1,022       922  
    Accrued taxes     (109 )     4,029  
    Pension and postretirement benefit obligations     775       139  
                   
  Net cash used in operating activities     (427 )     (11,609 )
                 
CASH FLOW FROM INVESTING ACTIVITIES                
    Capital expenditures     (688 )     (222 )
    Purchase of seat licenses and other intangibles     (353 )     (115 )
    Proceeds from sale of assets     -       33  
    Proceeds received in excess of income from equity investments     -       49,776  
  Net cash (used in) provided by investing activities     (1,041 )     49,472  
                 
                 
CASH FLOW FROM FINANCING ACTIVITIES                
    Proceeds from debt     -       2,443  
    Repayment of debt and capital leases     (363 )     (12,575 )
    Purchase of treasury stock     (125 )     (399 )
    Dividends (Common and Preferred)     (15,620 )     (19 )
                   
  Net cash used in financing activities     (16,108 )     (10,550 )
                 
Net change in cash and cash equivalents     (17,576 )     27,313  
                 
Cash and cash equivalents at beginning of period     24,047       1,636  
                 
Cash and cash equivalents at end of period   $ 6,471     $ 28,949  
                 
Supplemental disclosure of non-cash investing activities:                
  Acquisition of equipment and seat licenses under capital leases   $ 368     $ 390  
  Seat licenses acquired but not paid   $ -     $ 188  
   
   
   
ALTEVA  
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 September 30,     Nine Months Ended September 30,  
    2015     2014     2015     2014  
Net income (loss)   $ (1,818 )   $ (1,330 )   $ (3,838 )   $ 29,958  
  Depreciation and amortization     891       931       3,383       2,753  
  Stock-based compensation     332       170       684       677  
  Severance related charges     -       11       -       307  
  Restructuring costs and other special charges     -       600       -       700  
  Merger and strategic alternatives expenses     1,209       -       1,852       -  
  Interest (income) expense, net     2       (20 )     (10 )     173  
  Income from investment     -       -       -       (52,373 )
  Income tax expense (benefit)     (296 )     (264 )     (753 )     16,982  
Adjusted EBITDA   $ 320     $ 98     $ 1,318     $ (823 )

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