PHILADELPHIA, PA--(Marketwired - Mar 28, 2014) - Alteva ("Alteva" or the "Company") (
2013 Financial Results Highlights
- For the fourth quarter of 2013, the Company achieved Adjusted EBITDA* of $2.5 million, an improvement from $337,000 from the same period in 2012; Adjusted EBITDA* for the fourth quarter of 2013 and 2012 included $3.25 million of income from the Company's O-P investment;
- For the full year 2013, the Company achieved Adjusted EBITDA* of $8.6 million, an improvement from $2.3 million in 2012; Adjusted EBITDA* for the full year 2013 and 2012 included $13.0 million and $11.0 million, respectively, of income from the Company's O-P investment;
- The Company narrowed its operating loss for the fourth quarter of 2013 to $(2.3) million, as compared to $(13.6) million for the same period in 2012; the operating loss for the full year 2013 also narrowed to $(11.6) million from $(24.3) million for 2012;
- The Company narrowed its net loss for the fourth quarter of 2013 to $(0.3) million, as compared to $(8.5) million for the same period in 2012; the net loss for the full year 2013 also narrowed to $(0.6) million from $(10.9) million for 2012;
- For the fourth quarter of 2013, UC revenues increased by 14%, which includes the results of the Syracuse, NY operations that were sold in September 2013, to $3.9 million from $3.4 million for the fourth quarter of 2012; excluding the Syracuse operations, UC revenues increased 37% for the fourth quarter of 2013 as compared to the same period in 2012;
- For full year 2013, UC revenues increased by 17%, which includes the results of the Syracuse operations that were sold in September 2013, to $15.8 million from $13.6 million for full year 2012; excluding the Syracuse operations, UC revenues increased 27% for full year 2013 compared to full year 2012;
- At the end of 2013, there were over 39,000 users on Alteva's hosted platform, which represents an increase of 33% of the installed base compared to the end of 2012; excluding the seats associated with the divested Syracuse operations, users on Alteva's hosted platform increased 51%;
- Gross profit margin increased to 55% in the fourth quarter of 2013 from 46% for the same period in 2012; gross profit margin increased to 55% for full year 2013 from 49% for full year 2012;
- Senior debt was reduced to $9.7 million at December 31, 2013, a decrease of $4.4 million, or 31%, from December 31, 2012;
- In 2013, the Company continued to invest in its UCaaS platform technologies while strengthening its financial position; accordingly the Company has made enhancements to its service offerings to add new mobile applications that seamlessly integrate Alteva's HD voice with Microsoft's Lync Communication services, Google Apps for Business and leading cloud-based CRM applications like Salesforce.com;
- The Company intends to continue its focus on profitable growth and we expect Adjusted EBITDA* to improve with rationalization of the business model, focused channel growth and business development.
Restatement
The Company restated its consolidated financial statements as of and for the year ended December 31, 2012, and the condensed consolidated financial statements for the first three interim periods of the year ended December 31, 2013, related to the determination of the valuation allowance needed to reflect the deferred tax assets at the amount that is more than likely than not realizable under U.S. generally accepted accounting principles ("GAAP") for income taxes.
Where applicable, comparisons in this press release reflect the restated figures.
Exercise of O-P Put Option
The Company intends to exercise the O-P Put option in April 2014. The expected gross proceeds of $50 million will be used to pay taxes on the related gain, repay outstanding senior debt, fund working capital needs and support growth initiatives, including supporting its current customers and deploying solutions for new customers. Following the exercise of the O-P Put, the Company will no longer have any interest in the O-P Partnership and will no longer receive any income.
Fourth Quarter 2013 Results
Revenues were $7.4 million in the fourth quarter of 2013, an increase of 6.6% from $6.9 million for the same period in 2012. Revenues increased 16% year-over-year excluding the revenue from the Syracuse operations that were sold in September 2013.
UC revenues were $3.9 million in the fourth quarter of 2013, an increase of 14% from $3.4 million for the same period in 2012. UC revenues in the fourth quarter of 2013 increased 37% on a year-over-year basis excluding the revenue from the Syracuse operations, and improved by 6% from the third quarter on a similar comparison. As a percentage of consolidated revenue, the UC segment contributed approximately 53% of revenues in the fourth quarter of 2013 as compared with 49% 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. Approximately 89% of fourth 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 for UC customer implementations.
Telephone revenues were $3.5 million in the fourth quarter of 2013, as compared with $3.5 million for the same period in 2012. The Telephone segment contributed approximately 47% of revenues in the fourth quarter 2013 as compared with 51% for the same period of 2012. Telephone revenues were slightly lower year-over-year as a result of continued access line losses, which 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 28% to $4.1 million in the fourth quarter of 2013 from $3.2 million for the same period in 2012. Gross profit as a percentage of revenues was 55% in the fourth quarter 2013, as compared with 46% for the same period in 2012. The 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, which 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 fourth quarter of 2013 were $5.4 million, as compared with $6.5 million for the same period in 2012. The $1.1 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, the sale of the Syracuse operations, and other expense management initiatives implemented throughout the year.
Total other income for the fourth quarters of 2013 and 2012 was $3.1 million and $3.2 million, respectively. Other income included the income from the Company's equity investment in the O-P partnership of $3.25 million in the fourth quarters of 2013 and 2012.
For the fourth quarter of 2013, the Company had an income tax expense of $1.1 million, or 137% of income before income taxes, as compared to an income tax benefit of $2.0 million, or 19% of loss before income taxes, for the fourth quarter of 2012. The fourth quarter 2013 income tax expense was negatively impacted by expense of $0.6 million for an additional valuation allowance against deferred tax assets. The fourth quarter 2012 income tax benefit was negatively impacted by expense of $2.5 million for an additional valuation allowance against deferred tax assets.
The fourth quarter 2013 net loss was negatively impacted by income tax expense of $0.4 million for an additional valuation allowance against deferred tax assets. The fourth quarter 2012 net loss was negatively impacted by income tax expense of $2.5 million for valuation allowance against deferred tax assets.
For the fourth quarter of 2013, the Company's net loss was $(0.3) million, as compared to a net loss of $(8.5) million for the same period of 2012, which included an $8.9 million charge for impairment of fixed assets in our Telephone segment.
Basic and diluted net loss per share was $(0.05) for the fourth quarter of 2013, as compared with basic and diluted net loss per share of $(1.49) in the same period of the prior year.
Conference Call
The Company will conduct a conference call to discuss fourth quarter results on April 1st 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: 10043614, beginning 12:00 p.m. eastern on April 1, 2014 through April 23, 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, 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, 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. | |||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
Three Months Ended December 31, | For the Years Ended December 31, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
(as restated) | (as restated) | ||||||||||||||||
(in thousands, except share and per share amounts) | |||||||||||||||||
Operating revenues: | |||||||||||||||||
Unified Communications | $ | 3,915 | $ | 3,422 | $ | 15,834 | $ | 13,569 | |||||||||
Telephone | 3,470 | 3,503 | 14,268 | 14,373 | |||||||||||||
Total operating revenues | 7,385 | 6,925 | 30,102 | 27,942 | |||||||||||||
Operating expenses: | |||||||||||||||||
Cost of services and products (exclusive of depreciation and amortization expense) | 3,307 | 3,724 | 13,465 | 14,134 | |||||||||||||
Selling, general and administrative expenses | 5,400 | 6,461 | 23,989 | 23,702 | |||||||||||||
Depreciation and amortization | 896 | 1,490 | 3,815 | 5,476 | |||||||||||||
Loss on disposal and restructuring costs | 43 | - | 447 | - | |||||||||||||
Impairment of fixed assets | - | 8,883 | - | 8,883 | |||||||||||||
Total operating expenses | 9,646 | 20,558 | 41,716 | 52,195 | |||||||||||||
Operating loss | (2,261 | ) | (13,633 | ) | (11,614 | ) | (24,253 | ) | |||||||||
Other income (expense): | |||||||||||||||||
Interest (expense) | (163 | ) | (123 | ) | (756 | ) | (415 | ) | |||||||||
Income from equity method investment | 3,250 | 3,250 | 13,000 | 11,021 | |||||||||||||
Other income (expense), net | 4 | 51 | 166 | (286 | ) | ||||||||||||
Total other income, net | 3,091 | 3,178 | 12,410 | 10,320 | |||||||||||||
Income (loss) before income taxes | 830 | (10,455 | ) | 796 | (13,933 | ) | |||||||||||
Income tax expense (benefit) | 1,139 | (1,950 | ) | 1,442 | (3,044 | ) | |||||||||||
Net loss | (309 | ) | (8,505 | ) | (646 | ) | (10,889 | ) | |||||||||
Preferred dividends | 6 | 6 | 25 | 25 | |||||||||||||
Net loss applicable to common stock | $ | (315 | ) | $ | (8,511 | ) | $ | (671 | ) | $ | (10,914 | ) | |||||
Basic loss per common share | $ | (0.05 | ) | $ | (1.49 | ) | $ | (0.11 | ) | $ | (1.91 | ) | |||||
Basic loss per puttable common share | $ | - | $ | - | $ | - | $ | - | |||||||||
Diluted loss per common share | $ | (0.05 | ) | $ | (1.49 | ) | $ | (0.11 | ) | $ | (1.91 | ) | |||||
Diluted loss per puttable common share | $ | - | $ | - | $ | - | $ | - | |||||||||
Weighted average shares of common stock used to calculate loss per share | |||||||||||||||||
Basic (common) | 6,191,121 | 5,702,738 | 6,111,608 | 5,711,815 | |||||||||||||
Basic (puttable common) | - | - | - | - | |||||||||||||
Diluted (common) | 6,191,121 | 5,702,738 | 6,111,608 | 5,711,815 | |||||||||||||
Diluted (puttable common) | - | - | - | - | |||||||||||||
ALTEVA, INC. | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
(as restated) | |||||||||
(in thousands, except share and per share amounts) | |||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 1,636 | $ | 1,799 | |||||
Accounts receivable - net of allowance for uncollectibles - $378 and $638 at December 31, 2013 and 2012, respectively | 2,836 | 3,320 | |||||||
Other accounts receivable | 480 | 187 | |||||||
Materials and supplies | 237 | 512 | |||||||
Prepaid expenses | 774 | 1,145 | |||||||
Prepaid income taxes | - | 924 | |||||||
Deferred income taxes | 108 | 117 | |||||||
Total current assets | 6,071 | 8,004 | |||||||
Property, plant and equipment, net | 13,837 | 16,446 | |||||||
Intangibles, net | 5,856 | 6,617 | |||||||
Seat licenses, net | 1,749 | 1,514 | |||||||
Goodwill | 9,006 | 9,121 | |||||||
Other assets | 744 | 420 | |||||||
Total assets | $ | 37,263 | $ | 42,122 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Short-term debt | $ | 10,126 | $ | - | |||||
Accounts payable | 944 | 886 | |||||||
Advance billing and payments | 341 | 367 | |||||||
Accrued taxes | 1,692 | 619 | |||||||
Pension and post retirement benefit obligations | 267 | 1,089 | |||||||
Other accrued expenses | 3,934 | 3,759 | |||||||
Total current liabilities | 17,304 | 6,720 | |||||||
Long-term debt | 297 | 14,095 | |||||||
Deferred income taxes | 649 | 114 | |||||||
Pension and postretirement benefit obligations | 6,007 | 8,095 | |||||||
Total liabilities | 24,257 | 29,024 | |||||||
Commitments and contingencies | |||||||||
Shareholders' equity | |||||||||
Preferred Shares - $100 par value; authorized and issued shares of 5,000; $0.01 par value authorized and unissued shares of 10,000,000 | 500 | 500 | |||||||
Common stock - $0.01 par value; authorized shares of 10,000,000; issued 6,970,626 and 6,576,542 shares at December 31, 2013 and 2012, respectively | 70 | 66 | |||||||
Treasury stock - at cost, 829,723 and 817,700 common shares at December 31, 2013 and 2012, respectively | (7,612 | ) | (7,486 | ) | |||||
Additional paid in capital | 13,279 | 11,826 | |||||||
Accumulated other comprehensive loss | (1,436 | ) | (3,999 | ) | |||||
Retained earnings | 8,205 | 12,191 | |||||||
Total shareholders' equity | 13,006 | 13,098 | |||||||
Total liabilities and shareholders' equity | $ | 37,263 | $ | 42,122 | |||||
ALTEVA, INC. | ||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
For the Years Ended December 31, | ||||||||||
2013 | 2012 | |||||||||
(as restated) | ||||||||||
(in thousands) | ||||||||||
CASH FLOW FROM OPERATING ACTIVITIES: | ||||||||||
Net loss | $ | (646 | ) | $ | (10,889 | ) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 3,815 | 5,476 | ||||||||
Write off obsolete material and supplies | 166 | 216 | ||||||||
Stock based compensation expense | 1,457 | 867 | ||||||||
Deferred income taxes | 544 | (2,810 | ) | |||||||
Non cash interest and finance expenses | 160 | 103 | ||||||||
Impairment loss on fixed assets | - | 8,883 | ||||||||
Distribution in excess of income from equity investments included in net loss | (5,729 | ) | (4,731 | ) | ||||||
Change in fair value of derivative liability | - | (131 | ) | |||||||
Loss on disposal and restructuring costs | 447 | - | ||||||||
Changes in assets and liabilities, net of effects of business acquisitions | ||||||||||
Accounts receivable | 324 | (603 | ) | |||||||
Other accounts receivable | (260 | ) | (13 | ) | ||||||
Materials and supplies | 53 | 104 | ||||||||
Prepaid income taxes | 924 | 1,791 | ||||||||
Prepaid expenses | 367 | (414 | ) | |||||||
Other assets | (328 | ) | (216 | ) | ||||||
Accounts payable | 58 | (829 | ) | |||||||
Advance billing and payment | (17 | ) | (23 | ) | ||||||
Accrued taxes | 1,073 | 98 | ||||||||
Pension and post retirement benefit obligations | (353 | ) | 177 | |||||||
Other accrued expenses | 169 | 361 | ||||||||
Net cash provided by (used in) operating activities | 2,224 | (2,583 | ) | |||||||
CASH FLOW FROM INVESTING ACTIVITIES: | ||||||||||
Capital expenditures | (544 | ) | (4,031 | ) | ||||||
Proceeds from sale of assets | 550 | - | ||||||||
Acquired intangibles | (79 | ) | - | |||||||
Purchase of seat licenses | (392 | ) | (700 | ) | ||||||
Sales of short-term investments | - | 259 | ||||||||
Distribution in excess of income from equity investments | 5,729 | 6,710 | ||||||||
Business acquisition, net of cash acquired | - | - | ||||||||
Net cash provided by (used in) investing activities | 5,264 | 2,238 | ||||||||
CASH FLOW FROM FINANCING ACTIVITIES: | ||||||||||
Proceeds from long-term debt | 1,902 | 8,463 | ||||||||
Proceeds from short-term borrowings | 17,517 | - | ||||||||
Repayment of long-term debt and short-term borrowings | (23,504 | ) | (1,139 | ) | ||||||
Payment of fees for acquisition of debt | (63 | ) | - | |||||||
Payments of amount due in connection with business acquisition | - | (2,924 | ) | |||||||
Repayment of capital leases | (37 | ) | - | |||||||
Dividends (Common and Preferred) | (3,340 | ) | (6,284 | ) | ||||||
Purchase of treasury stock | (126 | ) | (547 | ) | ||||||
Net cash used in financing activities | (7,651 | ) | (2,431 | ) | ||||||
Net decrease in cash and cash equivalents | (163 | ) | (2,776 | ) | ||||||
Cash and cash equivalents at beginning of year | 1,799 | 4,575 | ||||||||
Cash and cash equivalents at end of year | $ | 1,636 | $ | 1,799 | ||||||
Supplemental disclosure of cash flow information: | ||||||||||
Interest paid | $ | 572 | $ | 343 | ||||||
Income taxes paid (received) | $ | (910 | ) | $ | 21 | |||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||||
Non-cash consideration used in business acquisition | $ | - | $ | - | ||||||
Treasury stock acquired in connection with cashless exercise of stock options | $ | - | $ | 677 | ||||||
Reclassification of puttable common stock to equity | $ | - | $ | 4,125 | ||||||
Capitalization of loan financing costs | $ | 93 | $ | 63 | ||||||
Acquisition of equipment and seat licenses under capital leases | $ | 357 | $ | - | ||||||
ALTEVA, INC. | ||||||||||||||||
RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME (LOSS) | ||||||||||||||||
AS IT IS PRESENTED ON THE CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(in thousands) | ||||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(as restated | ) | (as restated | ) | |||||||||||||
Net loss | $ | (309 | ) | $ | (8,505 | ) | $ | (646 | ) | $ | (10,889 | ) | ||||
Depreciation and amortization | 896 | 1,490 | 3,815 | 5,476 | ||||||||||||
Stock-based compensation | 436 | 141 | 1,457 | 866 | ||||||||||||
Severance related charges | 116 | 155 | 1,284 | 594 | ||||||||||||
Loss on disposal and restructuring costs | 43 | - | 447 | - | ||||||||||||
Impairment of fixed assets | - | 8,883 | - | 8,883 | ||||||||||||
Interest expense, net | 163 | 123 | 756 | 415 | ||||||||||||
Income tax expense (benefit) | 1,139 | (1,950 | ) | 1,442 | (3,044 | ) | ||||||||||
Adjusted EBITDA | $ | 2,484 | $ | 337 | $ | 8,555 | $ | 2,301 | ||||||||