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Alteva Reports Fourth Quarter 2012 Financial Results and Significant Corporate Developments
WARWICK, NY, Mar 18, 2013 (MARKETWIRE via COMTEX) --
Alteva ("Alteva" or the "Company") (NYSE MKT: ALTV), a leading cloud
communications pioneer, today announced financial results for its
fourth quarter ended December 31, 2012, as well as recent significant
corporate developments, including:
-- The rebranding and transformation of Alteva into a cloud-based Unified
Communications ("UC") provider by: (1) conducting business as Alteva
as of January 2013; (2) changing our ticker symbol to ALTV in January
2013; and (3) the corporate reorganization of the Company into an
unregulated holding company as of November 2012 and the corresponding
transfer of the Company's regulated telephone assets and businesses to
one of the Company's subsidiaries
-- The appointment of David Cuthbert as Alteva's Chief Executive Officer
in March 2013
-- UC revenues net of eliminations were $3.4 million in fourth quarter
2012, an increase of 10.7% from $3.1 million in the same period last
year; Telephone segment revenue declined 13.0%
-- UC contributed nearly 50% of fourth quarter consolidated revenues, up
from 43% in fourth quarter of 2011
-- The continued growth and development of our UC segment and a record
level number of new customers for UC services which will be
implemented during the first half of 2013
-- Achievement of the highest level of new UC equipment orders in fourth
quarter that will be realized in first half of 2013
-- Combined retail and wholesale seats in implementation equivalent to
30% of the installed base at end of fourth quarter, double the target
rate of 15%
-- Contracted seat sales increased by over 8% of installed base at end of
fourth quarter 2012
-- An $8.9 million non-cash write down of fixed asset in Telephone
segment related to the historical legacy business of Warwick Valley
Telephone
-- A net loss, excluding the asset write down, of $(1.2) million in the
fourth quarter 2012, a decrease from net loss of $(1.9) million in the
fourth quarter of 2011
-- 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 fourth quarter of 2012
-- Alteva paid a quarterly cash dividend of $0.27 per common share for
the fourth quarter of 2012 and declared a dividend of $0.27 per common
share for the first quarter of 2013
-- The immediate and ongoing implementation of process improvements and
expense reduction initiatives that are expected to yield $2.0 million
in annualized cost savings
-- Alteva significantly increased working capital by entering into a new
long-term credit agreement with increasing borrowing capacity to $17
million with potential to increase to $20 million
-- Management sets goal of achieving positive earnings before interest,
taxes, depreciation and amortization ("EBITDA"), exclusive of O-P
contributions, by end of first quarter 2014
Management Comments
"I am very pleased to report on the important progress achieved by
Alteva in 2012 and year-to-date in 2013. I fully appreciate the trust
that our Board of Directors has placed in me by naming me Alteva's
Chief Executive Officer. I am confident that together we will
continue our pursuit of profitable growth and increased value for our
shareholders in 2013 and beyond," said David Cuthbert.
"We have made significant investments in the Company's future and a
platform for growth has been built. Benefiting from the established
presence of the Alteva brand in the communications industry and
embracing a singular vision for generating profitable growth
throughout the organization, the entire Company began conducting
business as Alteva in January 2013. Additionally, we have reorganized
our corporate structure, significantly bolstered and reformulated our
management team, and invested in creating a business infrastructure
with flexible processes and systems.
"During the course of 2012, our UC revenues increased to
approximately half of our consolidated revenues for the first time in
Alteva's history. Furthermore, we achieved the highest level of
quarterly UC contract volume in the Company's history. This is an
exciting and promising inflection point but we have only begun to tap
into the large and growing market for cloud-based UC services and
applications. We are now razor focused on setting our sights on
growing our top line such that we may leverage our infrastructure to
return the Company back to profitability on an operating basis. Only
then may we begin to say that our transition has achieved meaningful
success. The unified Alteva team is ready for this challenge and we
are energized by the opportunities that lie ahead in 2013. With our
plans for aggressive top line growth, leveraging the investments made
in the Company during 2012 and ongoing management of expenses, we
have set a goal of achieving positive EBITDA, exclusive of O-P
contributions, by the end of first quarter 2014."
Fourth Quarter 2012 Results
Revenues for the three-month period ended December 31, 2012 were $6.9
million, as compared to $7.1 million for the same period in 2011.
In the first quarter of 2012, the Company realigned its segment
reporting and management structure as a result of the Alteva
acquisition in 2011. The Company's segments are strategic business
units that offer different products and services and are now managed
as Unified Communications ("UC"), and Telephone. Revenues discussed
in this press release for periods prior to the first quarter of 2012
have been presented on the basis of the new segment reporting.
Revenues from UC services, net of eliminations, were $3.4 million in
the fourth quarter of 2012, an increase of 10.7% from $3.1 million in
the prior year period. As a percentage of consolidated revenue, the
UC segment contributed nearly 50% of revenues in the fourth quarter
of 2012 as compared with 43% in the same period of the prior year.
The increase in UC revenues was primarily attributable to organically
generated UC services revenue growth.
Telephone services revenues, net of eliminations, were $3.5 million
in the fourth quarter of 2012, a decrease from $4.0 million in the
corresponding 2011 period. The Telephone segment contributed
approximately 50% of revenues in the fourth quarter 2012 as compared
with 57% in the fourth quarter of 2011. The decrease was primarily
due to lower Universal Service Fund revenues. Lower Telephone
services revenues also resulted from losses due to wireless
substitution and competition for other triple play service providers,
partially offset by an increase in access lines rates.
Gross profit increased by 21.6% to $3.2 million in the fourth quarter
of 2012 from $2.6 million in the same period of 2011. Gross profit as
a percentage of revenues increased to 46.2% in the fourth quarter
2012 from 37.0% in the 2011 period. The improvement in gross profit
in dollars as well as on a margin basis primarily reflects (i) the
substantial increase in revenues contributed by the UC segment in the
fourth quarter of 2012 compared to the same period last year, (ii)
and the Company's ability to leverage its infrastructure.
Selling, general and administrative ("SG&A") expenses in the fourth
quarter of 2012 increased to $6.5 million from $5.1 million in the
corresponding period of 2011. The 27% increase in SG&A expenses
reflects the additional operating expenses for Alteva as well as the
current and ongoing requirements to support the Company's cloud
communications growth strategies.
Operating expenses in the fourth quarter of 2012 included an $8.9
million non-cash write down of fixed assets in the Telephone segment
due to the continued decline in this segment's operating performance.
Total other income for the three-month period ended December 31, 2012
was $3.2 million as compared to $1.0 million for the same period in
2011. This increase is primarily due to the accounting treatment of
O-P distributions of $3.25 million in the fourth quarter of 2012 as
compared with $1.2 million in the prior year period which was
recorded based on the amount in excess of the Company's share of the
O-P earnings for that period as opposed to being applied to the
investment account.
For the three-month period ended December 31, 2012, the Company had a
net loss of $(7.1) million, or $(1.24) per basic and diluted common
share, as compared to a net loss of $(1.9) million, or $(0.34) per
basic and diluted common share, for the three-month period ended
December 31, 2011. Excluding the non-cash fixed asset write down in
the Telephone segment, the fourth quarter 2012 net loss would have
been $(1.2) million, or $(0.21) per basic and diluted common share,
as compared to a net loss of $(1.9) million, or $(0.34) per basic and
diluted common share, in the same period of the prior year.
Restatement of Financial Statements
On March 12, 2013, the Company's Audit Committee of its Board of
Directors, in consultation with management, determined that our
consolidated balance sheets for the first three quarters of 2012 and
for 2009, 2010 and 2011 should be restated due to an error in the
calculation of the deferred income taxes related to the temporary
difference of accumulated depreciation of fixed assets. The total
adjustment relating to the correction of the deferred income taxes
was an increase in non-current deferred tax liability and a reduction
in retained earnings of $1.3 million, and did not impact statement of
operations or cash flows for any of those periods. The restated
financial statements are included in the Company's 2012 Annual Report
on Form 10-K.
Conference Call
The Company will conduct a conference call to discuss fourth quarter
results on Tuesday, March 19, 2013, at 10:00 a.m. eastern. Investors
and other interested parties can listen to the call by dialing the
participant numbers of 877-317-6789 (toll free) or 412-317-6789, no
access code required, approximately 10 minutes prior to the start of
the conference call. The conference call webcast 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: 10011309,
beginning 12:00 p.m. eastern on March 19 through April 9, and via the
Company's website at www.alteva.com.
About Alteva
Alteva (the trade name for Warwick Valley Telephone Company, and
previously referred to as WVT Communications Group) is a world
technology leader in providing cloud-based Unified Communications
(UC) solutions for small, medium and enterprise businesses. Founded
in 1902, the Company has continued to adapt and remain on the
forefront of technology, chiseling its position among the most stable
and respected communications vendors around the globe. Alteva
continues to forge the new model that communications providers, large
and small, are striving to emulate. Alteva continues to integrate new
innovations with proven technology from industry leaders like
Microsoft, Cisco, BroadSoft, Level 3, and Polycom to provide
best-in-class hosted unified communications solutions.
Alteva is enabling businesses of any size to communicate more
efficiently with hassle-free communications tools. By overlaying a UC
division on its stable, regional broadband company, Alteva has
positioned itself in front of its peer group of companies and created
an evolutionary change in its strategy. Visit www.alteva.com or call
855-U-GO-CLOUD for more information.
All trademarks are the properties of their respective owners.
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 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 and other periodic filings with the U.S. Securities and
Exchange Commission.
(tables follow)
WARWICK VALLEY TELEPHONE COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended
December 31,
------------------------
2012 2011
----------- -----------
($ in thousands except
share & per share
amounts)
Operating revenues:
Unified Communications $ 13,569 $ 8,360
Telephone 14,373 17,576
----------- -----------
Total operating revenues 27,942 25,936
Operating expenses:
Cost of services and products (exclusive of
depreciation and amortization expense) 14,134 14,701
Selling, general and administrative expenses 23,702 17,558
Depreciation and amortization 5,476 5,266
Impairment of fixed assets 8,883 -
----------- -----------
Total operating expenses 52,195 37,525
----------- -----------
Operating loss (24,253) (11,589)
Other income (expense):
Interest income (expense) (415) (64)
Income from equity method investment 11,021 7,898
Other income (expense), net (286) (51)
----------- -----------
Total other income, net 10,320 7,783
----------- -----------
Income (loss) before income taxes (13,933) (3,806)
Income tax expense (benefit) (4,481) (885)
----------- -----------
Net income (loss) (9,452) (2,921)
Preferred dividends 25 25
----------- -----------
Net income (loss) applicable to common stock $ (9,477) $ (2,946)
=========== ===========
Basic earnings (loss) per common share $ (1.66) $ (0.54)
=========== ===========
Basic earnings (loss) per puttable common share $ - $ (0.54)
=========== ===========
Diluted earnings (loss) per common share $ (1.66) $ (0.54)
=========== ===========
Diluted earnings (loss) per puttable common share $ - $ (0.54)
=========== ===========
Weighted average shares of common stock used to
calculate earnings (loss) per share
Basic (common) 5,786,399 5,413,144
=========== ===========
Basic (puttable common) - 186
=========== ===========
Diluted (common) 5,786,399 5,413,144
=========== ===========
Diluted (puttable common) - 186
=========== ===========
Dividends declared per common share $ 1.08 $ 1.04
=========== ===========
WARWICK VALLEY TELEPHONE COMPANY
CONSOLIDATED BALANCE SHEETS
December 31,
------------------------
2012 2011
----------- -----------
(as
restated)
($ in thousands, except
share and per share
amounts)
ASSETS
Current assets:
Cash and cash equivalents $ 1,799 $ 4,575
Short term investments - 259
Accounts receivable - net of allowance for
uncollectibles - $638 and $759 in 2012 and
2011, respectively 3,320 2,717
Other accounts receivable 187 174
Materials and supplies 512 832
Prepaid expenses 1,145 731
Prepaid income taxes 1,222 2,715
Deferred income taxes 268 405
----------- -----------
Total current assets 8,453 12,408
----------- -----------
Property, plant and equipment, net 16,446 25,425
Unamortized debt issuance costs 84 45
Intangibles, net 8,131 8,605
Investments - 1,979
Goodwill 9,121 9,121
Deferred income taxes 874 -
Other assets 336 333
----------- -----------
Total assets $ 43,445 $ 57,916
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ - $ 5,600
Current maturities of long-term debt - 1,139
Accounts payable 886 1,715
Amounts due in connection with business
acquisition - 2,377
Derivative liability in connection with business
acquisition - 131
Advance billing and payments 367 390
Accrued taxes 619 521
Pension and post retirement benefit obligations 1,089 622
Other accrued expenses 3,759 3,398
----------- -----------
Total current liabilities 6,720 15,893
----------- -----------
Long-term debt 14,095 -
Amounts due in connection with business
acquisition - 472
Deferred income taxes - 2,635
Pension and postretirement benefit obligations 8,095 9,915
----------- -----------
Total liabilities 28,910 28,915
----------- -----------
Commitments and contingencies
Puttable common stock, $0.01 par value, 0 and
272,479 shares issued and outstanding at at
December 31, 2012 and 2011, respectively - 4,125
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 6,576,542 and
6,217,839 shares at December 31, 2012 and 2011,
respectively 66 62
Treasury stock - at cost, 817,700 and 735,391
common shares at (7,486) (6,262)
December 31, 2012 and 2011, respectively
Additional paid in capital 11,826 6,191
Accumulated other comprehensive loss (3,999) (4,979)
Retained earnings 13,628 29,364
----------- -----------
Total shareholders' equity 14,535 24,876
----------- -----------
Total liabilities and shareholders' equity $ 43,445 $ 57,916
=========== ===========
SOURCE: Alteva
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