ATN International, Inc.
Apr 26, 2017

ATN Reports First Quarter 2017 Results

 

BEVERLY, Mass., April 26, 2017 (GLOBE NEWSWIRE) -- In the press release issued earlier today with the same headline, please note that a clerical error has been corrected in table 2. All other information remains the same.

First Quarter Financial Highlights:

ATN (NASDAQ:ATNI) today reported results for the first quarter ended March 31, 2017. 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.

Business Review and Outlook

"In the 2017 first quarter, we saw a continuation of the trends discussed at the end of 2016 with strong year over year revenue growth overall along with growing income," said Michael Prior, Chief Executive Officer. "Profitability improved considerably from 2016 fourth quarter levels, with much of the integration and related administrative expenses associated with our recent transactions behind us.  Revenues for each segment were consistent with our expectations of a relatively stable telecom subscriber base and growth in international telecom offset in part by lower revenue from U.S. wholesale telecom and domestic solar operations.

"As planned, we continued to make investments in network performance improvements and service upgrades in our major international telecom properties, particularly in our recently-acquired service areas.  We also made changes to our service offerings and customer facing activities within a challenging competitive environment in the sector, and those activities will continue in 2017 as we work to perfect our value proposition in multiple markets.  Pricing pressure remains a factor in our domestic wireless business.  While we were able to offset part of that impact through improved operating efficiencies, we could see a further decline in revenue and margins in coming quarters.  As much of the expense in wholesale wireless is around capital investment," Mr. Prior continued, "in such a scenario, we would expect to see lower capital spending as well.

"In renewable energy, our construction of solar facilities in India has picked up pace after a slow start in 2016. We are bringing a number of plants into service, which will generate revenue and should move this operation to an EBITDA neutral position by mid-year.

"In summary, performance in the first quarter was basically on plan, with the full benefits of our recent investments still to come," Mr. Prior concluded.

First Quarter 2017 Financial Results

First quarter 2017 revenues were $128.1 million, a 43% increase from the $89.7 million reported for the first quarter of 2016. Revenue growth resulted primarily from a $41.4 million, or 109%, increase in our International Telecom segment revenues mostly due to the impact of the 2016 Bermuda and U.S. Virgin Islands acquisitions. Adjusted EBITDA1 for the first quarter was $42.1 million, 23% above the prior year period, primarily from the impact of our 2016 acquisitions and reduced operating expenses in Guyana and in U.S. Telecom, partially offset by a decline in Renewable Energy operating results. Operating income for the first quarter, which included a $7.9 million increase in depreciation and amortization expense primarily due to the recent acquisitions, was $17.8 million, an increase of 12% when compared to the prior year period.

Net income attributable to ATN's stockholders for the first quarter was $6.9 million or $0.42 per diluted share, an increase of 12% compared with the prior year period of $6.1 million, or $0.38 per diluted share.

First Quarter 2017 Operating Highlights

The Company has three reportable segments: (i) U.S. Telecom; (ii) International Telecom; and (iii) Renewable Energy. 

U.S. Telecom

U.S. Telecom revenues consist of wireless revenues from our voice and data wholesale roaming operations and our smaller retail operations in the Southwestern United States and wireline revenues from our wholesale transport and enterprise business in the Northeastern United States.  Total U.S. Telecom segment revenues were $43.8 million in the first quarter of 2017, a 5% decrease from the $46.2 million reported in the first quarter of 2016.  U.S. Wireless revenues declined 6% to $37.2 million compared with $39.5 million in the prior year quarter, due mostly to lower wholesale roaming rates, partially offset by growth in base stations and data traffic volumes.   U.S. Wireline revenues were $6.0 million in the first quarter of both 2016 and 2017. Included in the current quarter was $4.2 million of revenue related to our Northeastern U.S. wireline business that was sold in early March 2017. The Company ended the first quarter of 2017 with 1,019 domestic base stations in service compared to 883 at the end of last year's first quarter. 

U.S. Telecom Adjusted EBITDA1 of $23.2 million in the first quarter of 2017 increased 3% compared to the prior year's $22.4 million.  The increase was primarily due to a reduction in segment operating expenses which offset lower wholesale wireless revenues in the current year quarter.  The recently sold U.S. wireline business also contributed to the increase.  

International Telecom

International Telecom consists of a broad range of information and communications services including wireline and wireless data, internet, voice and video service revenues from our operations in Bermuda and the Caribbean including the U.S. Virgin Islands. International Telecom revenues were $79.3 million in the first quarter of 2017, a 109% increase from the $37.9 million reported in the first quarter of 2016.  Our recent acquisitions in Bermuda and the Virgin Islands together added $44.8 million of incremental revenues during the current year quarter and were responsible for this increase.

International Telecom Adjusted EBITDA1 of $23.0 million in the first quarter increased 63% from $14.1 million in the prior year period.  The increase is the result of the impact of the 2016 acquisitions and lower year over year operating expenses in Guyana.    

Renewable Energy

Renewable Energy segment revenues are generated principally by the sale of energy and solar renewable energy credits from our 28 commercial solar projects in the United States.  For the first quarter of 2017, revenues from our renewable energy business were $5.0 million, down 10% from the $5.6 million in the prior year mostly due to the expiration of certain renewable energy credits and weather conditions in California.  Adjusted EBITDA1 for the Renewable Energy segment was $2.9 million in the first quarter, a decrease of 32% from the prior year quarter due to the decline in revenues and increased operating expenses from the ramp up of our new solar business in India without offsetting revenue.   

Balance Sheet and Cash Flow Highlights

Cash and cash equivalents at March 31, 2017 were $265.5 million.  In addition, the Company held $8.7 million of short-term investments and $16.9 million of restricted cash.  Net cash provided by operating activities was $32.1 million for the first quarter of 2017, compared with $28.3 million for the first quarter of 2016.  The increase in net cash provided by operating activities is due to revenue growth in the first quarter of 2017 partially offset by the net impact of changes in operating assets and liabilities.  During the quarter the Company received $22.6 million upon the closing of the sale of its U.S. wireline business and other smaller international telecom business lines.  Capital expenditures were $45.7 million for the first quarter of 2017. Timing can be somewhat hard to predict, but the Company expects full year 2017 capital expenditures for its Telecom businesses, including the recent Bermuda and USVI acquisitions, to be in the lower end of the $95 million to $115 million range estimated at the end of last year.  Capital expenditures in the domestic and international telecom segments are higher than what we would expect in the ordinary course due to concurrent network expansions and upgrades in multiple markets. These projects include extensive fiber builds and upgrades and market-wide mobile data network upgrades.  Once complete, we expect aggregate capital expenditures in existing telecom markets to decline significantly in 2018.  In addition, capital expenditures for our Renewable Energy business are expected to be in the range of $40 million to $60 million for the full year 2017, primarily related to ongoing construction of our solar projects in India.

Conference Call Information

ATN will host a conference call on Thursday, April 27, 2017 at 9:30 a.m. Eastern Time (ET) to discuss its first quarter 2017 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 9971054. A replay of the call will be available at ir.atni.com beginning at 1:00 p.m. (ET) on Thursday, April 27, 2017.

About ATN

ATN International, 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 and owns and operates solar power systems in various locations in the United States and India. Through our operating subsidiaries, we (i) provide both wireless and wireline connectivity to residential and business customers, including a range of mobile wireless solutions, high speed internet services, video services and local exchange services, (ii) provide distributed solar electric power to corporate, utility and municipal customers and (iii) 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 pace of expansion and improvement of our telecommunications network and renewable energy operations including our level of estimated future capital expenditures and our realization of the benefits of these investments; the anticipated timing of our build schedule and the commencement of energy production of our India renewable energy projects; 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) our ability to operate our newly acquired businesses in Bermuda and the U.S. Virgin Islands and integrate these operations into our existing operations; (2) the general performance of our operations, including operating margins, revenues, capital expenditures, and the future growth and retention of our major customers and subscriber base and consumer demand for solar power; (3) government regulation of our businesses, which may impact our FCC and other telecommunications licenses or our renewables business; (4) economic, political and other risks facing our operations; (5) our ability to maintain favorable roaming arrangements; (6) our ability to efficiently and cost-effectively upgrade our networks and IT platforms to address  rapid and significant technological changes in the telecommunications industry; (7) the loss of or an inability to recruit skilled personnel in our various jurisdictions, including key members of management; (8) our ability to find investment or acquisition or disposition opportunities that fit our strategic goals for the Company; (9) increased competition; (10) our ability to expand our renewable energy business; (11) our reliance on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure; (12) the adequacy and expansion capabilities of our network capacity and customer service system to support our customer growth; (13) the occurrence of weather events and natural catastrophes; (14) our continued access to capital and credit markets; (15) the risk of currency fluctuation for those markets in which we operate and (16) 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, 2016, filed with the SEC on March 1, 2017 and the other reports we file from time to time with the SEC.  The Company undertakes no obligation and has no intention 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 press 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, bargain purchase gain, impairment of long-lived assets, restructuring charges, interest, taxes, depreciation and amortization, transaction-related charges, other income or expense, and net income attributable to non-controlling interests.  The Company believes that the inclusion of this non-GAAP financial measure helps investors gain a meaningful understanding of the Company's core operating results and enhances comparing such performance with prior periods. ATN's management uses these non-GAAP measures, 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 press release is not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. Reconciliations of these non-GAAP financial measures used in this press 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
  ATN International, Inc.
  Unaudited Condensed Consolidated Balance Sheets
  (in Thousands)
         
    March 31,   December 31,
   2017  2016
  Assets:      
    Cash and cash equivalents $   265,537   $   269,721
    Restricted cash     714       524
    Short-term investments     8,711       9,237
    Other current assets     101,668       87,887
         
    Total current assets     376,630       367,369
         
    Long-term restricted cash     16,153       18,113
    Property, plant and equipment, net     639,223       647,712
    Goodwill and other intangible assets, net     125,082       126,193
    Other assets     36,312       38,831
         
  Total assets $   1,193,400   $   1,198,218
         
  Liabilities and Stockholders' Equity:      
    Current portion of long-term debt $   12,529   $   12,440
    Taxes payable     22,099       13,531
    Other current liabilities     127,197       124,134
         
    Total current liabilities     161,825       150,105
         
    Long-term debt, net of current portion $   139,870   $   144,383
    Deferred income taxes     46,146       46,622
    Other long-term liabilities     31,606       47,939
         
    Total long-term liabilities     217,622       238,944
         
  Total liabilities     379,447       389,049
         
    Total ATN International, Inc.'s stockholders' equity     679,553       677,055
    Non-controlling interests     134,400       132,114
         
  Total equity     813,953       809,169
         
    Total liabilities and stockholders' equity $   1,193,400   $   1,198,218
         

 

            Table 2
  ATN International, Inc.
  Unaudited Condensed Consolidated Statements of Operations
  (in Thousands, Except per Share Data)
           
        Three Months Ended
      March 31,
         2017    2016
  Revenues:          
    Wireless   $   56,230     $   58,878  
    Wireline       63,800         22,445  
    Renewable energy         4,900         5,589  
    Equipment and other       3,185         2,774  
    Total revenue       128,115         89,686  
           
  Operating expenses:        
    Termination and access fees       30,458         19,717  
    Engineering and operations       19,667         10,510  
    Sales, marketing and customer service       9,021         5,756  
    Equipment expense       2,545         3,229  
    General and administrative       24,349         16,372  
    Transaction-related charges       677         3,655  
    Depreciation and amortization         22,494         14,554  
    Loss on disposition of long-lived assets       1,111         -   
  Total operating expenses       110,322         73,793  
           
  Operating income        17,793         15,893  
           
  Other income (expense):        
    Interest expense, net       (2,030 )       (478 )
    Loss on deconsolidation of subsidiary       (529 )       -   
    Other income (expense), net       (522 )       14  
    Other expense, net       (3,081 )       (464 )
           
  Income before income taxes       14,712         15,429  
    Income tax expense       3,128         4,631  
           
  Net income         11,584         10,798  
             
  Net income attributable to non-controlling interests, net       (4,725 )       (4,678 )
             
  Net income attributable to ATN International, Inc. stockholders   $   6,859     $   6,120  
           
  Basic net income per weighted average share attributable to ATN International, Inc. stockholders:        
           
    Net income     $   0.42     $   0.38  
             
  Diluted net income per weighted average share attributable to ATN International, Inc. stockholders:        
           
    Net income     $   0.42     $   0.38  
             
  Weighted average common shares outstanding:        
  Basic       16,157         16,092  
  Diluted       16,246         16,198  
             

 

   
  Table 3
  ATN International, Inc.
  Unaudited Condensed Consolidated Cash Flow Statement
  (in Thousands)
     
    Three Months Ended March 31,
     2017    2016
         
    Net income $   11,584     $   10,798  
    Depreciation and amortization     22,494         14,554  
    Loss on disposition of long-lived assets     1,111         -   
    Loss on deconsolidation of subsidiary     529         -   
    Change in prepaid and accrued income taxes     5,336         4,363  
    Change in other operating assets and liabilities     (11,973 )       (3,303 )
    Other non-cash activity     3,008         1,917  
         
    Net cash provided by operating activities     32,089         28,329  
         
    Capital expenditures     (45,702 )       (16,445 )
    Sale of businesses, net of transferred cash of $2,097     22,597         -   
    Sale of short-term investments     484         -   
    Purchase of securities     -          (2,000 )
    Change in restricted cash     1,769         653  
         
         
    Net cash used in investing activities     (20,852 )       (17,792 )
         
    Dividends paid on common stock     (5,487 )       (5,145 )
    Distributions to non-controlling interests     (2,828 )       (3,036 )
    Repayments of long-term debt      (4,442 )       (1,535 )
    Purchases of common stock     (2,121 )       (1,929 )
    Other     (750 )       165  
         
    Net cash used in financing activities     (15,628 )       (11,480 )
         
  Effect of foreign currency exchange rates on cash and cash equivalents     207         -   
         
  Net change in cash and cash equivalents     (4,184 )       (943 )
         
  Cash and cash equivalents, beginning of period     269,721         392,045  
         
  Cash and cash equivalents, end of period $   265,537     $   391,102  
         

 

            Table 4  
  ATN International, Inc.  
  Selected Segment Financial Information  
  (In Thousands)  
               
  For the three months ended March 31, 2017 is as follows:  
               
    U.S.
  Telecom 
International
Telecom
 
Renewable
Energy
 
Reconciling
Items
Total  
               
  Statement of Operations Data:            
  Revenue            
    Wireless $   37,162   $   19,068   $   -    $   -    $   56,230    
    Wireline     6,051       57,749       -        -        63,800    
    Renewable Energy     -        -        4,900       -        4,900    
    Equipment and Other     579       2,474       132       -        3,185    
    Total Revenue $   43,792   $   79,291   $   5,032   $   -    $   128,115    
               
  Operating Income (Loss) $   16,617   $   9,966   $   1,441   $   (10,231 ) $   17,793    
               
  Non-controlling interest (net income or (loss) ) $   (2,397 ) $   (2,009 ) $   (319 ) $   -    $   (4,725 )  
               
  Non GAAP measure:            
  Adjusted EBITDA  $   23,168   $   22,963   $   2,895   $   (6,951 ) $   42,075    
               
  Statement of Cash Flow Data:            
  Capital expenditures $   6,044   $   16,666   $   21,788   $   1,204   $   45,702    
               
  Balance Sheet Data:            
  Cash, cash equivalents and investments $   16,143   $   97,104   $   18,312   $   142,689   $   274,248    
  Total current assets     46,955       146,696       27,177       155,802       376,630    
  Fixed assets, net     102,366       368,372       152,891       15,594       639,223    
  Total assets     209,026       595,135       198,858       190,381       1,193,400    
  Total current liabilities     38,469       85,774       16,108       21,474       161,825    
  Total debt     -        88,120       64,279       -        152,399    
               
               
  ATN International, Inc.  
  Selected Segment Financial Information  
  (In Thousands)  
               
  For the three months ended March 31, 2016 is as follows:  
               
    U.S. 
Telecom 
International
Telecom
 
Renewable
Energy
 
Reconciling
Items
Total  
               
  Statement of Operations Data:            
  Revenue            
    Wireless $   39,464   $   19,414   $   -    $   -    $   58,878    
    Wireline     6,046       16,399       -        -        22,445    
    Renewable Energy     -        -        5,589       -        5,589    
    Equipment and Other     688       2,086       -        -        2,774    
    Total Revenue $   46,198   $   37,899   $   5,589   $   -    $   89,686    
               
  Operating Income (Loss) $   16,746   $   7,737   $   63   $   (8,653 ) $   15,893    
               
  Non-controlling interest ( net income or (loss) ) $   (1,588 ) $   (2,353 ) $   (737 ) $   -    $   (4,678 )  
               
  Non GAAP measure:            
  Adjusted EBITDA  $   22,400   $   14,078   $   4,242   $   (6,618 ) $   34,102    
               
  Statement of Cash Flow Data:            
  Capital expenditures $   7,561   $   7,775   $   -    $   1,109   $   16,445    
               
               
               
               
  ATN International, Inc.  
  Selected Segment Financial Information  
  (In Thousands)  
  At December 31, 2016 is as follows:  
               
    U.S. 
Telecom 
International
Telecom
 
Renewable
Energy
 
Reconciling
Items
 
Total  
               
  Balance Sheet Data:            
  Cash, cash equivalents and investments $   22,235   $   97,681   $   27,378   $   131,664   $   278,958    
  Total current assets     50,983       143,201       37,440       135,745       367,369    
  Fixed assets, net     129,274       372,741       130,268       15,429       647,712    
  Total assets     240,006       597,454       190,253       170,505       1,198,218    
  Total current liabilities     23,162       95,502       12,603       18,838       150,105    
  Total debt     -        91,316       65,507       -        156,823    
               
               
               
               
               
  ATN International, Inc.  
  Selected Segment Operational Data  
     
               
    Quarter ended        
    March 31, December 31,        
     2017 2016 *        
               
  U.S. Telecom Operational Data:            
  Wireless - Total Domestic Base Stations     1,019       1,006          
               
               
  International Telecom Operational Data:            
  Wireline - Voice / Access lines     176,900       179,700          
  Wireline - Data Subscribers     99,900       97,400          
  Wireline - Video Subscribers     53,800       54,600          
  Wireless - Subscribers     302,900       304,700          
               
               
  * Adjusted subscriber counts for the sale of St Maarten and transfer of ownership of Aruba business      
               

 

            Table 5  
  ATN International, Inc.  
  Reconciliation of Non-GAAP Measures  
  (In Thousands)  
               
               
  Reconciliation of Net Income to Adjusted EBITDA for the Three Months Ended March 31, 2017 and 2016  
               
  Three Months Ended March 31, 2017  
    U.S. 
Telecom 
 International
Telecom
Renewable
Energy
Reconciling
Items
Total  
   
               
  Net income attributable to ATN International, Inc. stockholders         $   6,859    
  Net income attributable to non-controlling interests, net of tax             4,725    
  Income tax expense             3,128    
  Other expense, net             522    
  Loss on deconsolidation of subsidiary             529    
  Interest expense, net             2,030    
  Operating income $   16,617 $   9,966   $   1,441 $   (10,231 ) $   17,793    
  Depreciation and amortization     6,551     13,117       1,454     1,372       22,494    
  (Gain) loss on disposition of long-lived assets     -      (120 )     -      1,231       1,111    
  Transaction-related charges     -      -        -      677       677    
  Adjusted EBITDA  $   23,168 $   22,963   $   2,895 $   (6,951 ) $   42,075    
               
               
               
               
  Three Months Ended March 31, 2016  
    U.S. 
Telecom 
 International
Telecom
Renewable
Energy
Reconciling
Items
Total  
   
               
  Net income attributable to ATN International, Inc. stockholders         $   6,120    
  Net income attributable to non-controlling interests, net of tax             4,678    
  Income tax expense             4,631    
  Other income, net             (14 )  
  Interest expense, net             478    
  Operating income $   16,746 $   7,737   $   63 $   (8,653 ) $   15,893    
  Depreciation and amortization     5,654     6,341       1,207     1,352       14,554    
  Transaction-related charges     -      -        2,972     683       3,655    
  Adjusted EBITDA  $   22,400 $   14,078   $   4,242 $   (6,618 ) $   34,102    
               
               
               

See Table 5 for reconciliation of Net Income to Adjusted EBITDA.

CONTACT:

978-619-1300
Michael T. Prior
Chief Executive Officer

Justin D. Benincasa
Chief Financial Officer