ATN Reports First Quarter 2019 Results
First Quarter Results
- International Telecom Operations Continued to Show Strong Growth
- U.S. Telecom Comparisons Reflected Impact of Lower Year-on-Year Wholesale Revenue and
$3.5 Million Aggregate Effect of Asset Sale, Expiration of Certain Federal Subsidies, and Early Stage Business Expenses
Business Review and Outlook
“Overall financial results in the quarter benefited from our diversified business model,” said
“The strong revenue growth in our International Telecom operations was broad-based, driven by data growth and share gains in certain markets and improved results from our
“Our U.S. Telecom business continued to manage through a difficult operating environment. Roughly 35%, or
“Looking ahead, we expect our International Telecom businesses to continue to perform well, reflecting investments that we have made over the last several years in our networks, which have resulted in significant improvements in customer experience and the reach and breadth of our service offerings. We expect that the steady recovery of our
“Based on our current portfolio of businesses, we expect 2019 to be a year of strong cash flow generation for ATN as much of our major network investment in the International Telecom segment has been completed. We continue to closely monitor our domestic telecom capital expenditures to address reduced revenues as we work through other initiatives to grow revenue in the segment. In addition to our ongoing investments in promising earlier stage companies, we continue to evaluate opportunities within our areas of expertise that have the potential to be value-creating for ATN and its shareholders.”
1 See Table 5 for reconciliation of Net Income to Adjusted EBITDA.
First Quarter 2019 Financial Results
First quarter 2019 revenues of
First Quarter 2019 Operating Highlights
The Company has three reportable segments: (i) U.S. Telecom; (ii) International Telecom; and (iii) Renewable Energy.
Segment Results | ||||||||||||||
Three Months Ended March 31, 2019 (in Thousands) | ||||||||||||||
U.S. Telecom | International Telecom |
Renewable Energy |
Corporate and Other |
Total | ||||||||||
Revenue | $ | 21,493 | $ | 80,317 | $ | 1,490 | $ | - | $ | 103,300 | ||||
Operating Income (loss) | $ | (3,506 | ) | $ | 13,878 | $ | (203 | ) | $ | (8,055 | ) | $ | 2,114 | |
Adjusted EBITDA1 | $ | 2,263 | $ | 26,886 | $ | 551 | $ | (6,526 | ) | $ | 23,174 | |||
Capital Expenditures | $ | 3,075 | $ | 11,356 | $ | 609 | $ | 2,724 | $ | 17,764 | ||||
Three Months Ended March 31, 2018 (in Thousands) | ||||||||||||||
U.S. Telecom | International Telecom |
Renewable Energy |
Corporate and Other |
Total | ||||||||||
Revenue | $ | 28,499 | $ | 70,145 | $ | 5,831 | $ | - | $ | 104,475 | ||||
Operating Income (loss) | $ | 5,224 | $ | 5,640 | $ | 1,936 | $ | (8,591 | ) | $ | 4,209 | |||
Adjusted EBITDA1 | $ | 11,992 | $ | 17,793 | $ | 3,739 | $ | (7,217 | ) | $ | 26,307 | |||
Capital Expenditures | $ | 4,751 | $ | 43,995 | $ | 854 | $ | 2,292 | $ | 51,892 | ||||
U.S. Telecom
U.S. Telecom revenues consist mainly of wireless revenues from our voice and data wholesale wireless operations and our smaller retail operations in the
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
Balance Sheet and Cash Flow Highlights
Total cash and cash equivalents at
Conference Call Information
ATN will host a conference call on
About ATN
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; our growth opportunities; our priorities for 2019; 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; our future financial expectations; the estimated timeline for an increase in revenues from our customers in the
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 Adjusted EBITDA in this release and in the tables included herein.
Adjusted EBITDA is defined as net income attributable to ATN stockholders before (gain) loss on disposition of long-lived assets, restructuring charges, interest, taxes, depreciation and amortization, transaction-related charges, other income or expense, loss on damaged assets and other hurricane charges, net of insurance recovery and net income attributable to non-controlling interests.
The Company believes that the inclusion of these non-GAAP financial measures helps investors gain a meaningful understanding of the Company's core operating results and enhances the usefulness of 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 measures included in this press release are 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. While our non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, we urge investors to review the reconciliation of these financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measure to evaluate our business.
Table 1 | ||||||
ATN International, Inc. | ||||||
Unaudited Condensed Consolidated Balance Sheets | ||||||
(in Thousands) | ||||||
March 31, | December 31, | |||||
2019 | 2018 | |||||
Assets: | ||||||
Cash and cash equivalents | $ | 171,483 | $ | 191,836 | ||
Restricted cash | 1,071 | 1,071 | ||||
Short-term investments | 5,280 | 393 | ||||
Other current assets | 83,310 | 82,465 | ||||
Total current assets | 261,144 | 275,765 | ||||
Property, plant and equipment, net | 619,798 | 626,852 | ||||
Operating lease right-of-use assets | 68,185 | - | ||||
Goodwill and other intangible assets, net | 166,439 | 166,979 | ||||
Other assets | 47,264 | 37,708 | ||||
Total assets | $ | 1,162,830 | $ | 1,107,304 | ||
Liabilities and Stockholders’ Equity: | ||||||
Current portion of long-term debt | $ | 4,688 | $ | 4,688 | ||
Taxes payable | 32,099 | 31,795 | ||||
Current portion of operating lease liabilities | 8,351 | - | ||||
Other current liabilities | 96,179 | 104,167 | ||||
Total current liabilities | 141,317 | 140,650 | ||||
Long-term debt, net of current portion | $ | 85,380 | $ | 86,294 | ||
Deferred income taxes | 8,362 | 10,276 | ||||
Operating lease liabilities | 58,835 | - | ||||
Other long-term liabilities | 48,952 | 46,760 | ||||
Total long-term liabilities | 201,529 | 143,330 | ||||
Total liabilities | 342,846 | 283,980 | ||||
Total ATN International, Inc.’s stockholders’ equity | 691,021 | 695,387 | ||||
Non-controlling interests | 128,963 | 127,937 | ||||
Total equity | 819,984 | 823,324 | ||||
Total liabilities and stockholders’ equity | $ | 1,162,830 | $ | 1,107,304 | ||
Table 2 | ||||||||
ATN International, Inc. | ||||||||
Unaudited Condensed Consolidated Statements of Operations | ||||||||
(in Thousands, Except per Share Data) | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2019 | 2018 | |||||||
Revenues: | ||||||||
Wireless | $ | 41,613 | $ | 50,548 | ||||
Wireline | 60,197 | 48,096 | ||||||
Renewable energy | 1,490 | 5,831 | ||||||
Total revenue | 103,300 | 104,475 | ||||||
Operating expenses: | ||||||||
Termination and access fees | 27,888 | 25,914 | ||||||
Engineering and operations | 19,032 | 18,152 | ||||||
Sales, marketing and customer service | 9,390 | 8,562 | ||||||
General and administrative | 23,816 | 25,540 | ||||||
Transaction-related charges | 40 | 27 | ||||||
Depreciation and amortization | 20,718 | 21,305 | ||||||
Loss on disposition of assets | 302 | 284 | ||||||
Loss on damaged assets and other hurricane related charges, net of insurance recovery | - | 482 | ||||||
Total operating expenses | 101,186 | 100,266 | ||||||
Operating income | 2,114 | 4,209 | ||||||
Other income (expense): | ||||||||
Interest expense, net | (353 | ) | (1,838 | ) | ||||
Other income (expense) | 187 | (753 | ) | |||||
Other income (expense), net | (166 | ) | (2,591 | ) | ||||
Income before income taxes | 1,948 | 1,618 | ||||||
Income tax expense | 1,213 | 3,921 | ||||||
Net Income (Loss) | 735 | (2,303 | ) | |||||
Net income attributable to non-controlling interests, net | (2,316 | ) | (3,252 | ) | ||||
Net loss attributable to ATN International, Inc. stockholders | $ | (1,581 | ) | $ | (5,555 | ) | ||
Net loss per weighted average share attributable to ATN International, Inc. stockholders: | ||||||||
Basic Net Loss | $ | (0.10 | ) | $ | (0.35 | ) | ||
Diluted Net Loss | $ | (0.10 | ) | $ | (0.35 | ) | ||
Weighted average common shares outstanding: | ||||||||
Basic | 16,001 | 16,019 | ||||||
Diluted | 16,001 | 16,019 | ||||||
Table 3 | |||||||
ATN International, Inc. | |||||||
Unaudited Condensed Consolidated Cash Flow Statement | |||||||
(in Thousands) | |||||||
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net income (loss) | $ | 735 | $ | (2,303 | ) | ||
Depreciation and amortization | 20,718 | 21,305 | |||||
Provision for doubtful accounts | 1,285 | 796 | |||||
Loss on disposition of assets | 302 | 284 | |||||
Stock-based compensation | 1,306 | 1,576 | |||||
Deferred income taxes | (1,914 | ) | (1,089 | ) | |||
Change in prepaid and accrued income taxes | 6,778 | 3,292 | |||||
Change in other operating assets and liabilities | (10,519 | ) | (1,963 | ) | |||
Other non-cash activity | 79 | 646 | |||||
Net cash provided by operating activities | 18,770 | 22,544 | |||||
Capital expenditures | (17,641 | ) | (21,041 | ) | |||
Hurricane rebuild capital expenditures | (123 | ) | (30,851 | ) | |||
Hurricane insurance proceeds | - | 34,606 | |||||
Purchases of other investments | (10,000 | ) | - | ||||
Proceeds from sale of investments | 141 | 4,809 | |||||
Purchase of short-term investments | (5,000 | ) | - | ||||
Government grants | - | 5,400 | |||||
Net cash used in investing activities | (32,623 | ) | (7,077 | ) | |||
Dividends paid on common stock | (2,720 | ) | (2,724 | ) | |||
Distributions to non-controlling interests | (1,540 | ) | (12,424 | ) | |||
Principal repayments of term loan | (949 | ) | (938 | ) | |||
Stock-based compensation share repurchases | (1,569 | ) | (2,041 | ) | |||
Repurchases of non-controlling interests | (225 | ) | (3 | ) | |||
Investments made by minority shareholders | 488 | - | |||||
Net cash used in financing activities | (6,515 | ) | (18,130 | ) | |||
Effect of foreign currency exchange rates on total cash, cash equivalents and restricted cash | 15 | (31 | ) | ||||
Net change in total cash, cash equivalents and restricted cash | (20,353 | ) | (2,694 | ) | |||
Total cash, cash equivalents and restricted cash, beginning of period | 192,907 | 219,890 | |||||
Total cash, cash equivalents and restricted cash, end of period | $ | 172,554 | $ | 217,196 | |||
Table 4 | |||||||||||||||
ATN International, Inc. | |||||||||||||||
Selected Segment Financial Information | |||||||||||||||
(In Thousands) | |||||||||||||||
For the three months ended March 31, 2019 is as follows: | |||||||||||||||
U.S. Telecom |
International Telecom |
Renewable Energy |
Corporate and Other * |
Total | |||||||||||
Statement of Operations Data: | |||||||||||||||
Revenue | |||||||||||||||
Wireless | $ | 20,437 | $ | 21,176 | $ | - | $ | - | $ | 41,613 | |||||
Wireline | 1,056 | 59,141 | - | - | 60,197 | ||||||||||
Renewable Energy | - | - | 1,490 | - | 1,490 | ||||||||||
Total Revenue | $ | 21,493 | $ | 80,317 | $ | 1,490 | $ | - | $ | 103,300 | |||||
Operating Income (Loss) | $ | (3,506 | ) | $ | 13,878 | $ | (203 | ) | $ | (8,055 | ) | $ | 2,114 | ||
Stock-based compensation | $ | - | 11 | $ | - | 1,295 | $ | 1,306 | |||||||
Non-controlling interest ( net income or (loss) ) | $ | 81 | $ | (2,397 | ) | $ | - | $ | - | $ | (2,316 | ) | |||
Non GAAP measure: | |||||||||||||||
Adjusted EBITDA (1) | $ | 2,263 | $ | 26,886 | $ | 551 | $ | (6,526 | ) | $ | 23,174 | ||||
Statement of Cash Flows Data: | |||||||||||||||
Capital expenditures | $ | 3,075 | $ | 11,356 | $ | 609 | $ | 2,724 | $ | 17,764 | |||||
Balance Sheet Data (at March 31, 2019): | |||||||||||||||
Cash, cash equivalents and investments | $ | 14,858 | $ | 40,731 | $ | 56,874 | $ | 64,300 | $ | 176,763 | |||||
Total current assets | 38,580 | 89,785 | 74,533 | 58,246 | 261,144 | ||||||||||
Fixed assets, net | 75,004 | 477,147 | 44,866 | 22,781 | 619,798 | ||||||||||
Total assets | 217,756 | 648,736 | 123,624 | 172,714 | 1,162,830 | ||||||||||
Total current liabilities | 25,517 | 78,649 | 2,149 | 35,002 | 141,317 | ||||||||||
Total debt | - | 90,068 | - | - | 90,068 | ||||||||||
ATN International, Inc. | |||||||||||||||
Selected Segment Financial Information | |||||||||||||||
(In Thousands) | |||||||||||||||
For the three months ended March 31, 2018 is as follows: | |||||||||||||||
U.S. Telecom |
International Telecom |
Renewable Energy |
Corporate and Other * |
Total | |||||||||||
Statement of Operations Data: | |||||||||||||||
Revenue | |||||||||||||||
Wireless | $ | 27,401 | $ | 23,147 | $ | - | $ | - | $ | 50,548 | |||||
Wireline | 1,098 | 46,998 | - | - | 48,096 | ||||||||||
Renewable Energy | - | - | 5,831 | - | 5,831 | ||||||||||
Total Revenue | $ | 28,499 | $ | 70,145 | $ | 5,831 | $ | - | $ | 104,475 | |||||
Operating Income (Loss) | $ | 5,224 | $ | 5,640 | $ | 1,936 | $ | (8,591 | ) | $ | 4,209 | ||||
Stock-based compensation | - | 29 | 29 | 1,518 | 1,576 | ||||||||||
Non-controlling interest ( net income or (loss) ) | $ | (683 | ) | $ | (2,269 | ) | $ | (300 | ) | $ | - | $ | (3,252 | ) | |
Non GAAP measure: | |||||||||||||||
Adjusted EBITDA (1) | $ | 11,992 | $ | 17,793 | $ | 3,739 | $ | (7,217 | ) | $ | 26,307 | ||||
Statement of Cash Flows Data: | |||||||||||||||
Capital expenditures | $ | 4,751 | $ | 43,995 | $ | 854 | $ | 2,292 | $ | 51,892 | |||||
ATN International, Inc. | |||||||||||||||
Selected Segment Financial Information | |||||||||||||||
(In Thousands) | |||||||||||||||
at December 31, 2018 | |||||||||||||||
U.S. Telecom |
International Telecom |
Renewable Energy |
Corporate and Other * |
Total | |||||||||||
Balance Sheet Data (at December 31, 2018): | |||||||||||||||
Cash, cash equivalents and investments | $ | 19,118 | $ | 32,390 | $ | 62,678 | $ | 78,043 | $ | 192,229 | |||||
Total current assets | 36,801 | 75,304 | 80,553 | 83,107 | 275,765 | ||||||||||
Fixed assets, net | 78,102 | 482,770 | 45,599 | 20,381 | 626,852 | ||||||||||
Total assets | 172,634 | 622,454 | 130,427 | 181,789 | 1,107,304 | ||||||||||
Total current liabilities | 15,783 | 82,575 | 3,465 | 38,827 | 140,650 | ||||||||||
Total debt | - | 90,970 | 12 | - | 90,982 | ||||||||||
(1) See Table 5 for reconciliation of Net Income to Adjusted EBITDA | |||||||||||||||
* Corporate and Other refer to corporate overhead expenses and consolidating adjustments | |||||||||||||||
Quarter ended | |||||||||||||||
March 31, | June 30, | September 30, | December 31, | March 31, | |||||||||||
2018** | 2018** | 2018** | 2018** | 2019 | |||||||||||
U.S. Telecom Operational Data: | |||||||||||||||
Wireless - Total Domestic Base Stations | 1,122 | 1,121 | 1,035 | 1,045 | 1,046 | ||||||||||
International Telecom Operational Data: | |||||||||||||||
Wireline - Voice / Access lines* | 165,100 | 167,900 | 170,400 | 171,100 | 171,200 | ||||||||||
Wireline - Data Subscribers* | 112,000 | 114,900 | 116,800 | 119,800 | 125,600 | ||||||||||
Wireline - Video Subscribers | 46,200 | 45,000 | 43,600 | 41,700 | 41,000 | ||||||||||
Wireless - Subscribers* | 309,900 | 308,600 | 300,600 | 300,400 | 293,500 | ||||||||||
* Subscriber counts were adjusted for all periods presented based upon a change in methodology | |||||||||||||||
** For the presented 2018 quarters, subscribers for wireline voice, data and video in the U.S. Virgin Islands are included as active and in the subscriber count, but many were not billed post-hurricane | |||||||||||||||
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, 2019 and 2018 | |||||||||||||||
Three Months Ended March 31, 2019 | |||||||||||||||
U.S. Telecom |
Renewable Energy |
Corporate and Other * |
Total | ||||||||||||
International Telecom |
|||||||||||||||
Net income (loss)attributable to ATN International, Inc. stockholders | $ | (1,581 | ) | ||||||||||||
Net income attributable to non-controlling interests, net of tax | 2,316 | ||||||||||||||
Income tax expense | 1,213 | ||||||||||||||
Other (income) expense, net | (187 | ) | |||||||||||||
Interest expense, net | 353 | ||||||||||||||
Operating income | $ | (3,506 | ) | $ | 13,878 | $ | (203 | ) | $ | (8,055 | ) | $ | 2,114 | ||
Depreciation and amortization | 5,598 | 13,015 | 616 | 1,489 | 20,718 | ||||||||||
(Gain) Loss on disposition of assets | 171 | (7 | ) | 138 | - | 302 | |||||||||
Transaction-related charges | - | - | - | 40 | 40 | ||||||||||
Adjusted EBITDA | $ | 2,263 | $ | 26,886 | $ | 551 | $ | (6,526 | ) | $ | 23,174 | ||||
Three Months Ended March 31, 2018 | |||||||||||||||
U.S. Telecom |
Renewable Energy |
Corporate and Other * |
Total | ||||||||||||
International Telecom |
|||||||||||||||
Net Income (loss) attributable to ATN International, Inc. stockholders | $ | (5,555 | ) | ||||||||||||
Net income attributable to non-controlling interests, net of tax | 3,252 | ||||||||||||||
Income tax benefit | 3,921 | ||||||||||||||
Other expense, net | 753 | ||||||||||||||
Interest expense, net | 1,838 | ||||||||||||||
Operating income | $ | 5,224 | $ | 5,640 | $ | 1,936 | $ | (8,591 | ) | $ | 4,209 | ||||
Depreciation and amortization | 6,513 | 11,671 | 1,774 | 1,347 | 21,305 | ||||||||||
Loss on disposition of assets | 255 | - | 29 | - | 284 | ||||||||||
Loss on damaged assets and other hurricane related charges , net of insurance recovery | - | 482 | - | - | 482 | ||||||||||
Transaction-related charges | - | - | - | 27 | 27 | ||||||||||
Adjusted EBITDA | $ | 11,992 | $ | 17,793 | $ | 3,739 | $ | (7,217 | ) | $ | 26,307 | ||||
* Corporate and Other refer to corporate overhead expenses and consolidating adjustments | |||||||||||||||
Contact:
978-619-1300
Chairman and
Chief Executive Officer
Chief Financial Officer
Source: ATN International, Inc.