Atlantic Tele-Network, Inc. Reports Fourth Quarter and Full Year 2014 Results
Fourth Quarter 2014 Highlights:
-
Revenues increased 15% to
$88.5 million -
Adjusted EBITDA1 was
$35.7 million , up 26% -
Operating Income, exclusive of transaction-related charges of
$2.6 million , was$22.2 million , up 38% -
Net Income attributable to ATN's stockholders was
$12.6 million , or$0.79 per diluted share
Full Year 2014 Highlights:
-
Revenues increased 15% to
$336.3 million -
Adjusted EBITDA1 was
$139.8 million , up 22% -
Operating income, exclusive of transaction-related charges of
$3.0 million , was$88.5 million , up 33% -
Net income attributable to ATN's stockholders was
$48.2 million , or$3.01 per diluted share -
Net cash provided by operating activities was
$82.0 million -
Cash position at year-end was
$371.4 million
Entered Distributed Solar Energy Market with Fourth Quarter Acquisition of 46MW of Producing Projects
Fourth Quarter 2014 Results
"This was another very strong quarter for ATN, led by more double-digit growth in our domestic wireless business," said
"Late in the fourth quarter, we announced ATN's entrance into the distributed generation solar power market through an acquisition that provides growth potential as well as the opportunity to generate attractive returns for investors. Similar to our initial investments in wholesale wireless and fiber operations, Ahana Renewables represents a high quality infrastructure-based business with solid cash flows from long-term Power Purchase Agreements (PPAs) with high-credit quality counterparties and offers the potential for expansion through additional investments or acquisition opportunities."
Fourth quarter revenues were
Full Year 2014 Financial Results and Outlook
Commenting on full year results,
Full year revenues were
"In the 2015 first quarter, we expect to finalize a new, long-term contract with a major carrier offering a significant reduction in the rates we charge and other enhanced features to ensure we are able to continue to deliver an attractive value proposition to our major customers, while earning reasonable risk-adjusted returns on our extensive capital investments. This reduced contract pricing is expected to lead to a decline in U.S. wireless revenues, beginning in the second quarter of 2015, which will be partially offset by expanded network capabilities, reach and capacity. We believe that this new model is much lower risk in that the extended term and reduced pricing create a long-lived shared infrastructure solution that increases the ultimate value of our wholesale business.
"In addition to expanding and upgrading our U.S wireless business in 2015, we are also making network investments to add to the capabilities of our other telecommunications businesses, including expansion of our fiber networks and expansions and upgrades to some of our international wireless networks. Also, we expect to make further investments in our new renewables business in 2015, where we are evaluating opportunities to expand upon the Ahana Renewables acquisition by developing or acquiring new revenue-producing projects. Excluding the effect of any such investments, we expect this business to produce revenues of approximately
Fourth Quarter 2014 Operating Highlights
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
International wireless revenues include retail and wholesale voice and data wireless revenues from international operations in
Wireline
Wireline revenues are generated by the Company's wireline operations in
Reportable Operating Segments
The Company has five reportable segments: (i)
For the three months ended |
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|
International Integrated Telephony |
|
U.S. Wireline |
Renewable Energy 2 |
Reconciling Items 3 |
Total | |
Total Revenue | $ 43,319 | $ 21,906 | $ 16,720 | $ 6,117 | $ 449 | $ -- | $ 88,511 |
Adjusted EBITDA | 29,295 | 8,631 | 3,698 | 49 | 384 | (6,395) | 35,662 |
Operating Income (Loss) | 25,362 | 4,334 | 837 | (1,157) | (2,218) | (7,596) | 19,562 |
For the three months ended |
|||||||
|
International Integrated Telephony |
|
U.S. Wireline |
Renewable Energy 2 |
Reconciling Items 3 |
Total | |
Total Revenue | $ 27,638 | $ 25,473 | $ 17,352 | $ 6,565 | N/A | $ -- | $ 77,028 |
Adjusted EBITDA | 16,584 | 12,565 | 3,983 | 641 | N/A | (5,453) | 28,320 |
Operating Income (Loss) | 12,978 | 8,066 | 1,384 | (289) | N/A | (6,076) | 16,063 |
Balance Sheet and Cash Flow Highlights
Cash and cash equivalents at
1 See Table 4 for reconciliation of Net Income to Adjusted EBITDA.
2 Reflects results of operations from the date of acquisition,
3 Reconciling items are comprised of corporate general and administrative costs and transaction-related charges
Conference Call Information
About
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 and consumer demand for solar power; (2) government regulation of our businesses, which may impact our
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.
Table 1 | ||
|
||
Unaudited Condensed Consolidated Balance Sheets | ||
(in Thousands) | ||
|
|
|
2014 | 2013 | |
Assets: | ||
Cash and cash equivalents | $ 322,216 | $ 356,607 |
Restricted cash | 43,703 | 39,000 |
Assets of discontinued operations | 175 | 4,748 |
Other current assets | 82,786 | 71,648 |
Total current assets | 448,880 | 472,003 |
Long-term restricted cash | 5,475 | 39,000 |
Property, plant and equipment, net | 369,582 | 254,632 |
Goodwill and other intangible assets, net | 91,080 | 86,988 |
Other assets | 7,519 | 7,096 |
Total assets | $ 922,536 | $ 859,719 |
Liabilities and Stockholders' Equity: | ||
Current portion of long-term debt | $ 6,083 | $ -- |
Income taxes payable | 5,667 | 36,081 |
Liabilities of discontinued operations | 1,247 | 11,187 |
Other current liabilities | 91,072 | 73,805 |
Total current liabilities | 104,069 | 121,073 |
Long-term debt, net of current portion | 32,794 | -- |
Deferred income taxes | 27,872 | 26,007 |
Other liabilities | 19,619 | 12,784 |
Total liabilities | 184,354 | 159,864 |
|
677,222 | 643,330 |
Non-controlling interests | 60,960 | 56,525 |
Total equity | 738,182 | 699,855 |
Total liabilities and stockholders' equity | $ 922,536 | $ 859,719 |
Table 2 | ||||
|
||||
Unaudited Condensed Consolidated Statements of Operations | ||||
(in Thousands, Except per Share Data) | ||||
Three Months Ended | Year Ended | |||
|
|
|||
2014 | 2013 (a) | 2014 | 2013 (a) | |
Revenues: | ||||
U.S. wireless | $ 42,887 | $ 27,333 | $ 153,040 | $ 107,930 |
International wireless | 21,522 | 25,270 | 88,650 | 91,432 |
Wireline | 20,941 | 21,640 | 85,284 | 84,585 |
Equipment and other | 3,161 | 2,785 | 9,373 | 8,888 |
Total revenue | 88,511 | 77,028 | 336,347 | 292,835 |
Operating expenses: | ||||
Termination and access fees | 16,067 | 14,979 | 64,177 | 55,747 |
Engineering and operations | 11,330 | 10,555 | 40,269 | 38,904 |
Sales, marketing and customer service | 5,554 | 4,111 | 20,994 | 17,757 |
Equipment expense | 4,393 | 4,826 | 13,290 | 12,876 |
General and administrative | 15,505 | 14,237 | 57,848 | 53,093 |
Transaction-related charges | 2,618 | 38 | 2,959 | 2,712 |
Depreciation and amortization | 13,482 | 12,219 | 51,234 | 48,737 |
Impairment of intangible assets | -- | -- | -- | -- |
Gain on disposal of long-lived assets | -- | -- | -- | (1,076) |
Total operating expenses | 68,949 | 60,965 | 250,771 | 228,750 |
Operating income | 19,562 | 16,063 | 85,576 | 64,085 |
Other income (expense): | ||||
Interest income (expense), net | (200) | 193 | (420) | (11,933) |
Gain (loss) on interest rate swap contracts | -- | 267 | -- | (5,408) |
Other income (expense) | 710 | (74) | 1,012 | (271) |
Other income (expense), net | 510 | 386 | 592 | (17,612) |
Income from continuing operations before income taxes | 20,072 | 16,449 | 86,168 | 46,473 |
Income tax expense (benefit) | 5,688 | (1,758) | 28,148 | 9,536 |
Income from continuing operations | 14,384 | 18,207 | 58,020 | 36,937 |
Income from discontinued operations, net of tax | -- | -- | -- | 5,166 |
Gain on disposal of discontinued operations, net of tax | 1,102 | 1,905 | 1,102 | 307,102 |
Net income | 15,486 | 20,112 | 59,122 | 349,205 |
Net income attributable to non-controlling interests, net of tax: | ||||
Continuing operations | (2,854) | (2,055) | (10,970) | (7,989) |
Discontinued operations | -- | -- | -- | (601) |
Disposal of discontinued operations | -- | (200) | -- | (28,899) |
Net income attributable to non-controlling interests, net | (2,854) | (2,255) | (10,970) | (37,489) |
Net income attributable to |
$ 12,632 | $ 17,857 | $ 48,152 | $ 311,716 |
Basic net income per weighted average share attributable to |
||||
Income from continuing operations | $ 0.72 | $ 1.02 | $ 2.96 | $ 1.84 |
Income from discontinued operations | -- | -- | -- | 0.29 |
Gain on disposal of discontinued operations | 0.07 | 0.11 | 0.07 | 17.72 |
Net income | $ 0.79 | $ 1.13 | $ 3.03 | $ 19.85 |
Diluted net income per weighted average share attributable to |
||||
Income from continuing operations | $ 0.72 | $ 1.02 | $ 2.94 | $ 1.83 |
Income from discontinued operations | -- | -- | -- | 0.29 |
Gain on disposal of discontinued operations | 0.07 | 0.11 | 0.07 | 17.59 |
Net income | $ 0.79 | $ 1.13 | $ 3.01 | $ 19.71 |
Weighted average common shares outstanding: | ||||
Basic | 15,923 | 15,783 | 15,898 | 15,704 |
Diluted | 16,049 | 15,896 | 16,014 | 15,817 |
a) All previously reported amounts have been reclassified to reflect the Company's Alltel business as a discontinued operation | ||||
Table 3 | ||
|
||
Unaudited Condensed Consolidated Cash Flow Statement | ||
(in Thousands) | ||
Year ended |
||
2014 | 2013 | |
Net income | $ 59,122 | $ 349,205 |
Gain on disposal of discontinued operations | (1,102) | (307,102) |
Income from discontinued operations | -- | (5,166) |
Loss on interest rate swap contracts | -- | 5,408 |
Depreciation and amortization | 51,234 | 48,737 |
Gain on disposal of long-lived assets | -- | (1,076) |
Deferred income taxes | -- | 53,707 |
Change in prepaid and accrued income taxes | (18,270) | (301,252) |
Change in other operating assets and liabilities | (12,565) | 13,957 |
Other | 8,280 | 12,186 |
Net cash provided by (used in) operating activities of continuing operations | 86,699 | (131,396) |
Net cash provided by (used in) operating activities of discontinued operations | (4,719) | 19,394 |
Net cash provided by (used in) operating activities | 81,980 | (112,002) |
Capital expenditures | (58,300) | (69,316) |
Acquisition of business net of operating cash acquired of |
(54,361) | -- |
Change in restricted cash | 38,707 | -- |
Restricted cash from acquisition of business | (9,884) | -- |
Proceeds from disposition of long-lived assets | 1,371 | 1,500 |
Net cash used in investing activities of continuing operations | (82,467) | (67,816) |
Net cash provided by investing activities of discontinued operations | -- | 710,934 |
Net cash provided by (used in) investing activities | (82,467) | 643,118 |
Principal repayments of term loans | -- | (272,137) |
Dividends paid on common stock | (17,488) | (12,096) |
Distributions to non-controlling interests | (16,331) | (26,155) |
Other | (85) | 1,592 |
Net cash used in financing activities of continuing operations | (33,904) | (308,796) |
Net cash used in financing activities of discontinued operations | -- | (1,678) |
Net cash used in financing activities | (33,904) | (310,474) |
Effect of foreign currency exchange rates on cash and cash equivalents | -- | (682) |
Net change in cash and cash equivalents | (34,391) | 219,960 |
Cash and cash equivalents, beginning of period | 356,607 | 136,647 |
Cash and cash equivalents, end of period | $ 322,216 | $ 356,607 |
Cash paid for income taxes | $ 48,943 | $ 256,819 |
Table 4 | |||||||
|
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Reconciliation of Non-GAAP Measures | |||||||
(In Thousands) | |||||||
Reconciliation of Net Income to Adjusted EBITDA for the Three Months Ended |
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Three Months Ended |
|||||||
U. |
International Integrated Telephony |
Island Wireless |
U.S. Wireline |
Renewable Energy |
Reconciling Items |
Total | |
Net income attributable to |
$ 17,857 | ||||||
Net income attributable to non-controlling interests, net of tax | 2,255 | ||||||
Gain on disposal of discontinued operations, net of tax | (1,905) | ||||||
Income tax benefit | (1,758) | ||||||
Other expense | 74 | ||||||
Gain on interest rate swap contracts | (267) | ||||||
Interest expense, net | (193) | ||||||
Operating income (loss) | $ 12,978 | $ 8,066 | $ 1,384 | $ (289) | N/A | $ (6,076) | $ 16,063 |
Depreciation and amortization | 3,606 | 4,499 | 2,599 | 930 | N/A | 585 | 12,219 |
Transaction-related charges | -- | -- | -- | -- | N/A | 38 | 38 |
Adjusted EBITDA | $ 16,584 | $ 12,565 | $ 3,983 | $ 641 | N/A | $ (5,453) | $ 28,320 |
Three Months Ended |
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U. |
International Integrated Telephony |
Island Wireless |
U.S. Wireline |
Renewable Energy |
Reconciling Items |
Total | |
Net income attributable to |
$ 12,632 | ||||||
Net income attributable to non-controlling interests, net of tax | 2,854 | ||||||
Gain on disposal of discontinued operations, net of tax | (1,102) | ||||||
Income tax expense | 5,688 | ||||||
Other income | (710) | ||||||
Interest expense, net | 200 | ||||||
Operating income (loss) | $ 25,362 | $ 4,334 | $ 837 | $ (1,157) | $ (2,218) | $ (7,596) | $ 19,562 |
Depreciation and amortization | 3,933 | 4,297 | 2,861 | 1,206 | 105 | 1,080 | 13,482 |
Transaction-related charges | -- | -- | -- | -- | 2,497 | 121 | 2,618 |
Adjusted EBITDA | $ 29,295 | $ 8,631 | $ 3,698 | $ 49 | $ 384 | $ (6,395) | $ 35,662 |
Reconciliation of Net Income to Adjusted EBITDA for the Years Ended |
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Year Ended |
|||||||
U. |
International Integrated Telephony |
Island Wireless |
U.S. Wireline |
Renewable Energy |
Reconciling Items |
Total | |
Net income attributable to |
$ 311,716 | ||||||
Net income attributable to non-controlling interests, net of tax | 37,489 | ||||||
Gain on disposal of discontinued operations, net of tax | (307,102) | ||||||
Income from discontinued operations, net of tax | (5,166) | ||||||
Income tax expense | 9,536 | ||||||
Other income | 271 | ||||||
Loss on interest rate swap contracts | 5,408 | ||||||
Interest expense, net | 11,933 | ||||||
Operating income (loss) | $ 54,867 | $ 27,662 | $ 8,610 | $ (1,076) | N/A | $ (25,978) | $ 64,085 |
Depreciation and amortization | 14,308 | 17,975 | 10,305 | 3,182 | N/A | 2,967 | 48,737 |
Transaction-related charges | -- | -- | -- | -- | N/A | 2,712 | 2,712 |
Gain on disposal of long-lived assets | (1,076) | -- | -- | -- | N/A | -- | (1,076) |
Adjusted EBITDA | $ 68,099 | $ 45,637 | $ 18,915 | $ 2,106 | N/A | $ (20,299) | $ 114,458 |
Year Ended |
|||||||
U. |
International Integrated Telephony |
Island Wireless |
U.S. Wireline |
Renewable Energy |
Reconciling Items |
Total | |
Net income attributable to |
$ 48,152 | ||||||
Net income attributable to non-controlling interests, net of tax | 10,970 | ||||||
Gain on disposal of discontinued operations, net of tax | (1,102) | ||||||
Income tax expense | 28,148 | ||||||
Other income | (1,012) | ||||||
Interest expense, net | 420 | ||||||
Operating income (loss) | $ 89,187 | $ 19,628 | $ 9,046 | $ (3,668) | $ (2,218) | $ (26,399) | $ 85,576 |
Depreciation and amortization | 14,345 | 17,408 | 10,671 | 4,725 | 105 | 3,980 | 51,234 |
Transaction-related charges | -- | -- | -- | -- | 2,497 | 462 | 2,959 |
Adjusted EBITDA | $ 103,532 | $ 37,036 | $ 19,717 | $ 1,057 | $ 384 | $ (21,957) | $ 139,769 |
CONTACT:Source:Michael T. Prior Chief Executive Officer 978-619-1300Justin D. Benincasa Chief Financial Officer 978-619-1300
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