Tellza Communications Inc.
TSX : TEL

Tellza Communications Inc.

August 05, 2016 16:24 ET

Tellza Announces 2016 Q2 Financial Results

Revenue for the First Half of 2016 Is US$202 Million, Up 58% Year Over Year

TORONTO, ONTARIO--(Marketwired - Aug. 5, 2016) - Tellza Communications Inc. (TSX:TEL) announced its unaudited financial results for the six months ended June 30, 2016.

2016 Highlights

Communications Business

  • Revenue for Q2 - 2016 is up 61% from Q2-2015 to USD $110 million (2015 - $68 million)
  • Revenue on a YTD basis is up 58% from the comparable period in 2015 to USD $202 million (2015 - $128 million)
  • YTD EBITDA* was USD $1.5 million or $0.13/share (2015 - $1.3 million or $0.11/share)
  • YTD Net Income was USD $0.6 million or $0.05/share (2015 - $0.1 million or $0.01/share)

Technology Business

  • Signed a licensing agreement with Canadian Telco customer

Investment Business

  • Acquired a 33% interest in Rightway Funding Group LLC
  • Acquired a 9.9% interest in Merkez Faktoring A.S.

Corporate

  • Consolidated common stock on a 15:1 basis reducing the number of shares outstanding from 168.6 million to 11.2 million.
  • Acquired restricted marketable securities in exchange for net assets of Tel3.

While we conduct our business primarily in USD and report our financial results in USD, our common shares are listed and trade on the Toronto Stock Exchange in CDN dollars. Expressed in CDN dollars, YTD EBITDA* was $2.0 million or $0.16/share and Net Income was $0.7 million or $0.06/share.

Tellza's communications business operates in the "nearly free" market for international communications. Our investment in systems and processes over the last few years has allowed us to remain profitable, while many of our competitors have commenced exiting the business. We believe that the "nearly free" communications market will remain strong and sizeable into the future.

"Tellza's strategy is to invest excess cash flows from its core business into new business activities and adjacent markets aimed at improving our cash flows and profitability, while continuing to acquire up to 5% annually of its outstanding common stock for cancellation when market conditions permit," said Gary Clifford, Executive Chairman, Tellza Communications Inc.

The Company's financial statements and other disclosures are available on SEDAR.

The Company's corporate profile is located at www.tellza.com/investors.html.

About Tellza

Tellza is a technology company operating primarily in the communication market. The business is organized into three business units: Tellza Communications, Tellza Technologies and Tellza Investments. Tellza Communications is a global communications company operating under several brands including Phonetime, and MatchCom. Tellza Technologies provides real-time big data management tools for the telecommunications market. Tellza Investments is focused on the financial products support business through our portfolio investments in Merkez and Rightway. Tellza is a public company listed on the Toronto Stock Exchange (TEL).

Caution Regarding Forward Looking Information:

This press release contains forward-looking statements, which may be identified by words like "expects", "anticipates", "plans", "intends", "indicates" or similar expressions. These statements are not a guarantee of future performance and are inherently subject to risks and uncertainties. Tellza's actual results could differ materially from those currently anticipated due to a number of factors set forth in reports and other documents filed by the Company with Canadian securities regulatory authorities from time to time. See www.sedar.com which contains all securities files.

*We define EBITDA and Cash Profits as earnings before taxes, depreciation and amortization, stock based compensation, and interest. EBITDA, which is a non-GAAP financial measure, it is a standard measure used in the telecommunications industry to assist in understanding and comparing operating results. EBITDA is reviewed regularly by management and our Board of Directors in assessing performance and in making decisions regarding the ongoing operations of the business and the ability to generate cash flows. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with IFRS. EBITDA is not a measure of financial performance nor does it have a standardized meaning under IFRS. In evaluating these measures, investors should consider that the methodology applied in calculating as such measures may differ among companies and analysts. Below is a reconciliation of "EBITDA" to net income for the periods presented:

Six months ended June 30, 2016 2015
Net income and comprehensive income for the period $ 516 $ 127
Provision for income taxes $ 273 $ 50
Depreciation of property and equipment $ 251 $ 246
Amortization of intangible assets $ 330 $ 810
Equity Pick-up from non-controlled investment $ (37 ) $ -
Interest and debt costs $ 69 $ 59
EBITDA $ 1,402 $ 1,292

Financial summary:

Tellza Communications Inc. Three months Six months
For the three and six months ended June 30,
($000s USD)
2016
$
2015
$
2016
$
2015
$
Revenue 109,752 68,343 202,495 127,980
Cost of revenue 107,970 65,966 197,893 123,539
Gross margin 1,782 2,377 4,602 4,441
Operating expenses 1,135 1,559 3,200 3,149
Income before undernoted: 647 818 1,402 1,292
Depreciation of property and equipment 127 123 251 246
Amortization of intangible assets 130 405 330 810
Equity Pick-up of non-controlling interests (37 ) - (37 ) -
Interest and debt costs 42 42 69 59
262 570 613 1,115
Income before income taxes 385 248 789 177
Provision for income taxes
Current - - - -
Deferred 168 80 273 50
168 80 273 50
Net income and comprehensive income 217 168 516 127
Net income and comprehensive income attributable to
Shareholders 191 140 442 99
Non-controlling interests 26 28 74 28
217 168 516 127
Earnings per share attributable to shareholders
- basic and diluted continuing and discontinued operations $ 0.02 $ 0.01 $ 0.05 $ 0.01
Weighted average number of common shares outstanding
- basic and diluted 11,240,707 11,827,641 11,240,707 11,827,641
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
[amounts in thousands of U.S. dollars]
As at June 30,
2016
$
December 31,
2015
$
ASSETS
Current
Cash and cash equivalents 1,613 1,425
Marketable Securities 728 -
Accounts receivable, net 42,328 36,792
Prepaid expenses and deposits 2,093 2,239
Total current assets 46,762 40,456
Deferred tax assets 403 403
Property and equipment, net 1,666 1,856
Intangible assets, net 2,763 4,137
Investment in Portfolio Companies 5,471 -
Goodwill 10,569 10,569
67,634 57,421
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Line of credit 1,045 -
Accounts payable 17,286 12,854
Accrued liabilities 26,070 24,457
Customer deposits 273 1,198
Income taxes payable 714 755
Current portion of non recourse loan payable 1,000 -
Total current liabilities 46,388 39,264
Deferred tax liabilities 889 616
Non-recourse loan payable 2,363 -
Total liabilities 49,640 39,880
Commitments and contingencies
Shareholders' equity
Common shares 15,393 15,393
Contributed surplus 2,690 2,690
Deficit (294 ) (736 )
Equity attributable to shareholders 17,789 17,347
Non-controlling interest 205 194
Total shareholders' equity 17,994 17,541
67,634 57,421

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