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Atlantic Tele-Network, Inc. Reports Third Quarter and Nine Month 2014 Results(GlobeNewswire - Canada Via Acquire Media NewsEdge) Third Quarter Financial Highlights: Revenues increased 13% to $89.4 million Adjusted EBITDA was up 17% to $41.0 million Operating income reached $28.2 million, up 41% Net income attributable to ATN's stockholders was $16.2 million, or $1.01 per diluted share Cash flow from operations for the first nine months was $55.7 million BEVERLY, Mass., Oct. 29, 2014 (GLOBE NEWSWIRE) -- Atlantic Tele-Network, Inc. (Nasdaq:ATNI), today reported results for the third quarter and nine months ended September 30, 2014. Unless otherwise indicated, the discussion of the Company's results is focused on its continuing operations, and comparisons are to the same period in the prior year. Results for all periods presented reflect classification of the Company's U.S. retail wireless business operated under the "Alltel" name as discontinued operations as a result of the completion of the Company's sale of this business to AT&T Mobility LLC on September 20, 2013. Third Quarter 2014 Financial Results "Our strong revenue and earnings growth in the first half of the year continued in the third quarter, led by our domestic wireless business," said Michael Prior, Chief Executive Officer. "Domestic data traffic increased significantly across our U.S. wholesale network, more than offsetting the expected decline in pricing that we have cited in earlier quarters of this year. This volume growth primarily results from our capital investments to upgrade network capacity and coverage, and we see additional opportunities to invest in 2015. In the last eighteen months alone, we have increased the number of 3G or higher base stations from under 5% of our network to over 65% today. "We are pleased with the share gains we have achieved year-to-date in most of the markets within our international wireless portfolio and believe there are improvements we can make to enhance our competitive positioning and additional efficiencies we can achieve to optimize these assets. Wireline results for the first nine months of this year were slightly ahead of the comparable period last year, as revenues from U.S. wholesale transport activities and international broadband more than offset the decline in voice and other legacy revenues in our wireline markets. "Cash from operations reached $55.7 million in the first nine months, and we remain committed to a steady, long-term approach to capital expenditures and investments in our existing portfolio," Mr. Prior noted. Third quarter revenues were $89.4 million, 13% above the $79.4 million reported for the third quarter of 2013. Adjusted EBITDA1 for the 2014 third quarter was $41.0 million, a 17% increase over the $35.0 million reported for the 2013 third quarter. Operating income was $28.2 million, up 41% compared to last year's $20.0 million. Net income from continuing operations attributable to ATN's stockholders was $16.2 million or $1.01 per diluted share, compared to $1.6 million, or $0.10 per diluted share, for the third quarter of 2013. Net income for 2013 was inclusive of $2.7 million in transaction-related charges, as well as $10.4 million of interest rate swap contract termination charges and the write off of deferred financing costs, which were both related to the pre-payment of the Company's long term debt under its credit facility. On September 19, 2014, ATN's Board of Directors increased the Company's cash dividend for the sixteenth consecutive year. The quarterly dividend was increased 7% to $0.29 per share. Nine Month 2014 Financial Results Nine month revenues were $247.8 million, 15% above the $215.8 million reported for the same period in 2013. Adjusted EBITDA was $104.1 million, up 21% from $86.1 million in the prior year period; operating income increased 37% to $66.0 million; and net income from continuing operations attributable to ATN's stockholders was $35.5 million, or $2.22 per diluted share, as compared with the same period in 2013 of $12.8 million, or $0.81 per diluted share, inclusive of the special charges noted above. For the first nine months of 2013, net income attributable to ATN's stockholders from discontinued operations was $4.6 million, or $0.29 per diluted share, and the net gain attributable to ATN's stockholders on the disposal of the Alltel business was $276.5 million, or $17.51 per share. Third Quarter 2014 Operating Highlights U.S. Wireless U.S. wireless revenues primarily consist of voice and data revenues from the Company's wholesale roaming operations. Total revenues from the U.S. wireless business were $44.3 million in the third quarter of 2014, an increase of 35% from the $32.8 million reported in the third quarter of 2013. This strong revenue performance was driven by increased data traffic across the Company's expanded domestic wireless network. We expect to see significantly lower average wholesale data pricing in 2015 which should be offset in part, as we continue to expand our network capabilities, reach and capacity. Data revenues accounted for 68% of U.S. wireless revenues in the 2014 third quarter compared to 56% in the similar year-ago period. The Company ended the third quarter with 716 wholesale-only base stations in service compared to 579 at the end of last year's third quarter. International Wireless International wireless revenues include retail and wholesale voice and data wireless revenues from international operations in Bermuda and the Caribbean. International wireless revenues were $21.6 million, a decrease of 6% over the $22.9 million reported in the third quarter of 2013, as a result of market share losses in Guyana and lower wholesale roaming revenues in many of our Island properties resulting from anticipated rate declines. We continue to expect retail revenues to continue to grow but wholesale revenues to decline in our international markets over time. Wireline Wireline revenues are generated by the Company's wireline operations in Guyana, including international telephone calls into and out of that country, by its integrated voice and data and wholesale transport operations in New England and New York State, and by its U.S. based wholesale long-distance voice services. Wireline revenues of $21.5 million, were flat compared with the third quarter of 2013 resulting from domestic unit price declines in enterprise offerings and decreases in voice traffic in all wireline markets, offset by an increase in broadband subscribers in Guyana and in U.S. wholesale transport revenue. Reportable Operating Segments The Company has four reportable segments: (i) U.S. Wireless; (ii) International Integrated Telephony, which operates in Guyana; (iii) Island Wireless, which generates its revenues and has its assets located in Bermuda and the Caribbean (including the U.S. Virgin Islands); and (iv) U.S. Wireline. Financial data on our reportable operating segments for the three months ended September 30, 2014 and 2013 are as follows (in thousands): For the three months ended September 30, 2014: U.S. WirelessInternational Integrated TelephonyIsland WirelessU.S. WirelineReconciling Items 2Total Total Revenue $ 44,736 $ 21,831 $ 16,627 $ 6,199 $ -- $ 89,393 Adjusted EBITDA 31,242 9,462 4,827 722 (5,280) 40,973 Operating Income (Loss) 27,585 5,065 2,231 (471) (6,252) 28,158 For the three months ended September 30, 2013: U.S. WirelessInternational Integrated TelephonyIsland WirelessU.S. WirelineReconciling Items 2Total Total Revenue $ 33,057 $ 23,075 $ 17,443 $ 5,775 $ -- $ 79,350 Adjusted EBITDA 22,332 11,579 5,843 561 (5,332) 34,983 Operating Income (Loss) 18,293 7,028 3,292 (255) (8,320) 20,038Balance Sheet and Cash Flow Highlights Cash and cash equivalents at September 30, 2014 were $384.4 million. In addition, the Company holds $39.3 million of restricted cash primarily related to proceeds from the sale of Alltel in an indemnity escrow account as of September 30, 2014. Net cash provided by operating activities of continuing operations was $55.7 million for the first nine months of 2014, which was impacted by $41.2 million in cash paid for income taxes, primarily related to the gain on the sale of Alltel. Capital expenditures were $41.7 million in the first nine months of 2014. The Company expects full year 2014 capital expenditures in the range of $60.0 million to $65.0 million. Conference Call Information Atlantic Tele-Network will host a conference call on Thursday, October 30, 2014 at 9:30 a.m. Eastern Time (ET) to discuss its 2014 third quarter results. The call will be hosted by Michael Prior, President and Chief Executive Officer, and Justin Benincasa, Chief Financial Officer. The dial-in numbers are US/Canada: (877) 734-4582 and International: (678) 905-9376, conference ID 16886272. A replay of the call will be available at ir.atni.com beginning at 1:00 p.m. (ET) on Thursday, October 30, 2014. About Atlantic Tele-Network Atlantic Tele-Network, Inc. (Nasdaq:ATNI), headquartered in Beverly, Massachusetts, provides telecommunications services to rural, niche and other under-served markets and geographies in the United States, Bermuda and the Caribbean. Through our operating subsidiaries, we provide both wireless and wireline connectivity to residential and business customers, including a range of mobile wireless solutions, local exchange services and broadband internet services and are the owner and operator of terrestrial and submarine fiber optic transport systems. For more information, please visit www.atni.com. Cautionary Language Concerning Forward Looking Statements This press release contains forward-looking statements relating to, among other matters, our future financial performance and results of operations; the competitive environment in our key markets, demand for our services and industry trends; the outcome of regulatory matters; the pace of our network expansion and improvement, including our level of estimated future capital expenditures and our realization of the benefits of these investments; and management's plans and strategy for the future. These forward-looking statements are based on estimates, projections, beliefs, and assumptions and are not guarantees of future events or results. Actual future events and results could differ materially from the events and results indicated in these statements as a result of many factors, including, among others, (1) the general performance of our operations, including operating margins, revenues, and the future growth and retention of our subscriber base; (2) government regulation of our businesses, which may impact our FCC and other telecommunications licenses; (3) economic, political and other risks facing our foreign operations; (4) our ability to maintain favorable roaming arrangements; (5) our ability to efficiently and cost-effectively upgrade our networks and IT platforms to address rapid and significant technological changes in the telecommunications industry; (6) the loss of or our inability to recruit skilled personnel in our various jurisdictions, including key members of management; (7) our ability to find investment or acquisition or disposition opportunities that fit our strategic goals for the Company; (8) increased competition; (9) our reliance on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure; (10) the adequacy and expansion capabilities of our network capacity and customer service system to support our customer growth; (11) the occurrence of severe weather and natural catastrophes; (12) our continued access to capital and credit markets; and (13) our ability to realize the value that we believe exists in our businesses. These and other additional factors that may cause actual future events and results to differ materially from the events and results indicated in the forward-looking statements above are set forth more fully under Item 1A "Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on March 17, 2014 and the other reports we file from time to time with the SEC. The Company undertakes no obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors that may affect such forward-looking statements. Use of Non-GAAP Financial Measures In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this news release also contains non-GAAP financial measures. Specifically, ATN has presented an Adjusted EBITDA measure. Adjusted EBITDA is defined as net income attributable to ATN stockholders before income from discontinued operations, gain on disposal of discontinued operations, interest, taxes, depreciation and amortization, transaction-related charges, gain on disposition of long-lived assets, other income or expense, unrealized loss on interest rate swap contracts and net income attributable to non-controlling interests. The Company believes that the inclusion of this non-GAAP financial measure helps investors to gain a meaningful understanding of the Company's core operating results and enhances comparing such performance with prior periods. ATN's management uses this non-GAAP measure, in addition to GAAP financial measures, as the basis for measuring our core operating performance and comparing such performance to that of prior periods. The non-GAAP financial measure included in this news release is not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. Reconciliations of the non-GAAP financial measure used in this news release to the most directly comparable GAAP financial measure is set forth in the text of, and the accompanying tables to, this press release. 1 See Table 4 for reconciliation of Net Income to Adjusted EBITDA. 2 Reconciling items are comprised of corporate general and administrative costs and transaction-related charges Table 1ATLANTIC TELE-NETWORK, INC.Unaudited Condensed Consolidated Balance Sheets (in Thousands) September 30, December 31, 2014 2013 Assets: Cash and cash equivalents $ 384,426 $ 356,607 Restricted cash 39,293 39,000 Assets of discontinued operations 175 4,748 Other current assets 68,503 71,648 Total current assets 492,397 472,003 Long-term restricted cash -- 39,000 Property, plant and equipment, net 253,508 254,632 Goodwill and other intangible assets, net 91,311 86,988 Other assets 6,215 7,096 Total assets $ 843,431 $ 859,719 Liabilities and Stockholders' Equity: Accrued taxes $ 3,331 $ 36,081 Liabilities of discontinued operations 2,002 11,187 Other current liabilities 66,685 73,805 Total current liabilities 72,018 121,073 Deferred income taxes 27,554 26,007 Other long-term liabilities 18,940 12,784 Total long-term liabilities 46,494 38,791 Total liabilities 118,512 159,864 Total Atlantic Tele-Network, Inc.'s stockholders' equity 668,269 643,330 Non-controlling interests 56,650 56,525 Total equity 724,919 699,855 Total liabilities and stockholders' equity $ 843,431 $ 859,719 Table 2ATLANTIC TELE-NETWORK, INC.Unaudited Condensed Consolidated Statements of Operations(in Thousands, Except per Share Data) Three Months Ended Nine Months Ended September 30, September 30, 2014 2013 (a) 2014 2013 (a) Revenues: U.S. wireless $ 44,306 $ 32,796 $ 110,153 $ 80,597 International wireless 21,557 22,895 67,127 66,162 Wireline 21,531 21,504 64,344 62,945 Equipment and other 1,999 2,155 6,212 6,103 Total revenue 89,393 79,350 247,836 215,807 Operating expenses: Termination and access fees 16,018 14,112 48,110 40,768 Engineering and operations 9,788 9,509 28,939 28,349 Sales, marketing and customer service 5,489 4,370 15,440 13,646 Equipment expense 2,912 2,549 8,897 8,050 General and administrative 14,213 13,827 42,343 38,856 Transaction-related charges (27) 2,610 341 2,674 Depreciation and amortization 12,842 12,335 37,752 36,517 Gain on disposal of long-lived assets -- -- -- (1,076) Total operating expenses 61,235 59,312 181,822 167,784 Operating income 28,158 20,038 66,014 48,023 Other income (expense): Interest expense, net (13) (7,141) (220) (12,126) Unrealized loss on interest rate swap contracts -- (5,675) -- (5,675) Other income (expense) 338 (226) 302 (198) Other income (expense), net 325 (13,042) 82 (17,999) Income from continuing operations before income taxes 28,483 6,996 66,096 30,024 Income tax expense 9,569 2,481 22,460 11,294 Income from continuing operations 18,914 4,515 43,636 18,730 Income from discontinued operations, net of tax -- (1,960) -- 5,166 Gain on disposal of discontinued operations, net of tax -- 305,197 -- 305,197 Net income 18,914 307,752 43,636 329,093 Net income attributable to non-controlling interests, net of tax: Continuing operations (2,747) (2,945) (8,116) (5,934) Discontinued operations -- 116 -- (601) Disposal of discontinued operations -- (28,699) -- (28,699) Net income attributable to non-controlling interests, net of tax (2,747) (31,528) (8,116) (35,234) Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 16,167 $ 276,224 $ 35,520 $ 293,859 Basic net income per weighted average share attributable to Atlantic Tele-Network, Inc. stockholders: Income from continuing operations $ 1.02 $ 0.10 $ 2.24 $ 0.82 Income from discontinued operations -- (0.12) -- 0.29 Gain on disposal of discontinued operations -- 17.57 -- 17.64 Net income $ 1.02 $ 17.55 $ 2.24 $ 18.75 Diluted net income per weighted average share attributable to Atlantic Tele-Network, Inc. stockholders: Income from continuing operations $ 1.01 $ 0.10 $ 2.22 $ 0.81 Income from discontinued operations -- (0.12) -- 0.29 Gain on disposal of discontinued operations -- 17.45 -- 17.51 Net income $ 1.01 $ 17.43 $ 2.22 $ 18.61 Weighted average common shares outstanding: Basic 15,923 15,738 15,890 15,678 Diluted 16,030 15,845 16,001 15,789 a) All previously reported amounts have been reclassified to reflect the Company's Alltel business, which was sold in September 2013, as a discontinued operation Table 3ATLANTIC TELE-NETWORK, INC.Unaudited Condensed Consolidated Cash Flow Statements (in Thousands) Nine Months Ended September 30, 2014 2013 Net income $ 43,636 $ 329,093 Gain on disposal of discontinued operations -- (305,197) Income from discontinued operations -- (5,166) Unrealized loss on interest rate swap contracts -- 5,675 Depreciation and amortization 37,752 36,517 Gain on disposal of long-lived assets -- (1,076) Change in prepaid and accrued taxes (18,401) (23,668) Change in other operating assets and liabilities (12,092) 11,623 Other non-cash activity 4,766 10,961 Net cash provided by operating activities of continuing operations 55,661 58,762 Net cash provided by (used in) operating activities of discontinued operations (4,612) 25,751 Net cash provided by operating activities 51,049 84,513 Capital expenditures, net (41,699) (55,171) Proceeds from disposition of long-lived assets 1,371 1,500 Change in restricted cash 38,707 -- Net cash used in investing activities of continuing operations (1,621) (53,671) Net cash provided by investing activities of discontinued operations -- 711,541 Net cash provided by (used in) investing activities (1,621) 657,870 Principal repayments of term loans -- (272,137) Dividends paid on common stock (12,873) (7,839) Distributions to non-controlling interests (7,931) (3,321) Other (805) 285 Net cash used in financing activities of continuing operations (21,609) (283,012) Net cash used in financing activities of discontinued operations -- (1,678) Net cash used in financing activities (21,609) (284,690) Net change in cash and cash equivalents 27,819 457,693 Cash and cash equivalents, beginning of period 356,607 136,647 Cash and cash equivalents, end of period $ 384,426 $ 594,340 Table 4ATLANTIC TELE-NETWORK, INC.Reconciliation of Non-GAAP Measures(In Thousands) Reconciliation of Net Income to Adjusted EBITDA for the Three Months Ended September 30, 2013 and 2014 Three Months Ended September 30, 2013 U.S WirelessInternational Integrated TelephonyIsland WirelessU.S. WirelineReconciling ItemsTotal Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 276,224 Net income attributable to non-controlling interests, net of tax 31,528 Gain on disposal of discontinued operations, net of tax (305,197) Loss from discontinued operations, net of tax 1,960 Income tax expense 2,481 Other income 226 Unrealized loss on interest rate swap contracts 5,675 Interest expense, net 7,141 Operating income (loss) $ 18,293 $ 7,028 $ 3,292 $ (255) $ (8,320) $ 20,038 Depreciation and amortization 4,039 4,551 2,551 816 378 12,335 Transaction-related charges -- -- -- -- 2,610 2,610 Adjusted EBITDA $ 22,332 $ 11,579 $ 5,843 $ 561 $ (5,332) $ 34,983 Three Months Ended September 30, 2014 U.S WirelessInternational Integrated TelephonyIsland WirelessU.S. WirelineReconciling ItemsTotal Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 16,167 Net income attributable to non-controlling interests, net of tax 2,747 Income tax expense 9,569 Other income (338) Interest expense, net 13 Operating income (loss) $ 27,585 $ 5,065 $ 2,231 $ (471) $ (6,252) $ 28,158 Depreciation and amortization 3,657 4,397 2,596 1,193 999 12,842 Transaction-related charges -- -- -- -- (27) (27) Adjusted EBITDA $ 31,242 $ 9,462 $ 4,827 $ 722 $ (5,280) $ 40,973 Reconciliation of Net Income to Adjusted EBITDA for the Nine Months Ended September 30, 2013 and 2014 Nine Months Ended September 30, 2013 U.S WirelessInternational Integrated TelephonyIsland WirelessU.S. WirelineReconciling ItemsTotal Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 293,859 Net income attributable to non-controlling interests, net of tax 35,234 Gain on disposal of discontinued operations, net of tax (305,197) Income from discontinued operations, net of tax (5,166) Income tax expense 11,294 Other income 198 Unrealized loss on interest rate swap contracts 5,675 Interest expense, net 12,126 Operating income (loss) $ 40,472 $ 19,596 $ 7,226 $ (786) $ (18,485) $ 48,023 Depreciation and amortization 12,119 13,476 7,705 2,252 965 36,517 Transaction-related charges -- -- -- -- 2,674 2,674 Gain on disposal of long-lived assets (1,076) -- -- -- -- (1,076) Adjusted EBITDA $ 51,515 $ 33,072 $ 14,931 $ 1,466 $ (14,846) $ 86,138 Nine Months Ended September 30, 2014 U.S WirelessInternational Integrated TelephonyIsland WirelessU.S. WirelineReconciling ItemsTotal Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 35,520 Net income attributable to non-controlling interests, net of tax 8,116 Income tax expense 22,460 Other expense (302) Interest expense, net 220 Operating income (loss) $ 63,826 $ 15,293 $ 8,210 $ (2,511) $ (18,804) $ 66,014 Depreciation and amortization 10,413 13,111 7,810 3,519 2,899 37,752 Transaction-related charges -- -- -- -- 341 341 Adjusted EBITDA $ 74,239 $ 28,404 $ 16,020 $ 1,008 $ (15,564) $ 104,107 CONTACT: Michael T. Prior Chief Executive Officer 978-619-1300 Justin D. Benincasa Chief Financial Officer 978-619-1300 Source: Atlantic Tele-Network, Inc. 2014 GlobeNewswire, Inc. |