ATN Reports First Quarter 2020 Results
International Telecom and US Telecom Segments Contributed to Strong Operating Income and EBITDA Growth- Company Continues to Operate in all Markets as an “Essential Service” Under
U.S. and International Government Directives, Observing Pandemic Protocols to Protect Employees and Communities - Strong Balance Sheet Provides Significant Financial Flexibility
Business Review and Outlook
“First quarter results represented a marked improvement over the comparable period last year. The recovery of our
“In International Telecom, we continued to see strong demand for our broadband services across our markets paired with successful initiatives to drive operating efficiencies. In
“As a communications services provider, we are designated as an “Essential Service” under
“Given the uncertainty surrounding the depth and duration of the global economic impact of the coronavirus pandemic, it is difficult to project the impact on our businesses in the coming periods. As a telecom services provider, our relative sensitivity to global economic downturns in the past has been less severe than for many other industries. That said, these are unprecedented times, and we expect revenue and profit margins for certain services and in certain markets to decline during this crisis and the broader economic impacts that result. For example, many of the markets we serve rely on tourism as a major source of economic activity and that sector of the economy may take longer to recover fully. In an effort to address these impacts and uncertainties, we are taking action now to conserve cash through cost savings and the deferral of certain capital spending projects. On a positive note, the changed environment has allowed us to make much faster gains in digital customer engagements such as mobile payments and paperless billing, which we anticipate will bring improved operating efficiencies and capabilities and better position our businesses post crisis.
“ATN’s strong balance sheet provides us with significant financial flexibility. From a competitive standpoint we believe this better positions us to weather this storm and to build brand equity by doing right by our customers and partners during this crisis. At the end of the first quarter, we had total liquidity of approximately
“We believe that the coronavirus pandemic will change future business and social behaviors. Increased teleworking and social distancing is likely to accelerate a shift to heavy telecom and data reliant activity, which may provide long-term growth opportunities for ATN’s established and emerging businesses,”
First Quarter Results
First quarter 2020 consolidated revenues of
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1 See Table 5 for reconciliation of Operating Income to EBITDA and Adjusted EBITDA, both non-GAAP measures
First Quarter 2020 Operating Highlights
The Company has three reportable segments: (i)
Segment Results (in Thousands) | |||||||||||||||
Three Months Ended |
|||||||||||||||
International Telecom |
Renewable Energy |
Corporate and Other |
Total | ||||||||||||
Revenue | $ | 82,284 | $ | 27,299 | $ | 1,322 | $ | - | $ | 110,905 | |||||
Operating Income (loss) | $ | 13,477 | $ | 2,193 | $ | (456 | ) | $ | (7,915 | ) | $ | 7,299 | |||
EBITDA1 | $ | 27,792 | $ | 8,079 | $ | 158 | $ | (6,212 | ) | $ | 29,817 | ||||
Three Months Ended |
|||||||||||||||
Capital Expenditures | $ | 10,465 | $ | 1,972 | $ | 720 | $ | 904 | $ | 14,061 |
Segment Results (in Thousands) | |||||||||||||||
Three Months Ended |
|||||||||||||||
International Telecom |
Renewable Energy |
Corporate and Other |
Total | ||||||||||||
Revenue | $ | 80,317 | $ | 21,493 | $ | 1,490 | $ | - | $ | 103,300 | |||||
Operating Income (loss) | $ | 13,878 | $ | (3,506 | ) | $ | (203 | ) | $ | (8,055 | ) | $ | 2,114 | ||
EBITDA1 | $ | 26,893 | $ | 2,092 | $ | 413 | $ | (6,566 | ) | $ | 22,832 | ||||
Three Months Ended |
|||||||||||||||
Capital Expenditures | $ | 11,356 | $ | 3,075 | $ | 609 | $ | 2,724 | $ | 17,764 | |||||
The Company has restructured its presentation of revenue in the Condensed Consolidated Statement of Operations and in the Selected Segment Financial Information tables. This change is intended to better align our reporting of financial performance with industry competitors and the views of Company Management, and to facilitate a more constructive dialogue with the investment community.
Renewable Energy
Renewable Energy segment revenues are principally the result of the generation and sale of energy from our commercial solar projects in India. We ended the first quarter of 2020 with 52 Megawatts (MWs) of revenue generating solar facilities and expect to finalize the development of additional MWs later in the year. The current quarter’s operating loss was
Balance Sheet and Cash Flow Highlights
Total cash, cash equivalents and restricted cash at
Conference Call Information
ATN will host a conference call on
About ATN
ATN International, Inc. (Nasdaq: ATNI), headquartered in Beverly,
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 including the impact of the novel coronavirus pandemic on our business and operations; revenue, operating income, EBITDA and Adjusted EBITDA expectations and capital expenditures for 2020; the competitive environment in our key markets, demand for our services and industry trends; the timing and impact of the CAF II federal support revenues and the FirstNet transaction; the impact of the novel coronavirus on the global economy and on our business; the impact of digital enhancements; our liquidity; 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, capital expenditures, and the future growth and retention of our major customers and subscriber base and consumer demand for solar power; (2) our ability to maintain favorable roaming arrangements, receive roaming traffic and satisfy the needs and demands of our major wireless customers; (3) our ability to efficiently and cost-effectively upgrade our networks and IT platforms to address rapid and significant technological changes in the telecommunications industry; (4) 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 press release also contains non-GAAP financial measures. Specifically, ATN has included EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin in this release and in the tables included herein.
EBITDA is defined as operating income (loss) before depreciation and amortization expense. Adjusted EBITDA is defined as operating income (loss) before depreciation and amortization expense, (gain) loss on disposition of long-lived assets, impairment of goodwill charges, restructuring charges and transaction-related charges. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by total revenue.
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 are 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 | |||||||
Unaudited Condensed Consolidated Balance Sheets | |||||||
(in Thousands) | |||||||
2020 | 2019 | ||||||
Assets: | |||||||
Cash and cash equivalents | $ | 145,913 | $ | 161,287 | |||
Restricted cash | 1,072 | 1,071 | |||||
Short-term investments | 104 | 416 | |||||
Other current assets | 88,253 | 65,949 | |||||
Total current assets | 235,342 | 228,723 | |||||
Property, plant and equipment, net | 592,927 | 605,581 | |||||
Operating lease right-of-use assets | 65,515 | 68,763 | |||||
161,392 | 161,818 | ||||||
Other assets | 53,416 | 65,841 | |||||
Total assets | $ | 1,108,592 | $ | 1,130,726 | |||
Liabilities and Stockholders’ Equity: | |||||||
Current portion of long-term debt | $ | 3,750 | $ | 3,750 | |||
Taxes payable | 9,625 | 8,517 | |||||
Current portion of operating lease liabilities | 11,179 | 11,406 | |||||
Other current liabilities | 88,890 | 95,996 | |||||
Total current liabilities | 113,444 | 119,669 | |||||
Long-term debt, net of current portion | $ | 81,775 | $ | 82,676 | |||
Deferred income taxes | 7,545 | 8,680 | |||||
Operating lease liabilities | 53,721 | 56,164 | |||||
Other long-term liabilities | 59,028 | 57,454 | |||||
Total liabilities | 315,513 | 324,643 | |||||
Total ATN International, Inc.’s stockholders’ equity | 665,758 | 676,122 | |||||
Non-controlling interests | 127,321 | 129,961 | |||||
Total equity | 793,079 | 806,083 | |||||
Total liabilities and stockholders’ equity | $ | 1,108,592 | $ | 1,130,726 | |||
Table 2 |
|||||||
Unaudited Condensed Consolidated Statements of Operations | |||||||
(in Thousands, Except per Share Data) | |||||||
Three Months Ended | |||||||
2020 | 2019 | ||||||
Revenues: | |||||||
Communications services | $ | 107,896 | $ | 100,465 | |||
Other | 3,009 | 2,835 | |||||
Total revenue | 110,905 | 103,300 | |||||
Operating expenses: | |||||||
Termination and access fees | 28,113 | 27,888 | |||||
Engineering and operations | 18,489 | 19,032 | |||||
Sales, marketing and customer service | 9,504 | 9,390 | |||||
General and administrative | 24,923 | 23,816 | |||||
Transaction-related charges | 44 | 40 | |||||
Depreciation and amortization | 22,518 | 20,718 | |||||
Loss on disposition of assets | 15 | 302 | |||||
Total operating expenses | 103,606 | 101,186 | |||||
Operating income | 7,299 | 2,114 | |||||
Other income (expense): | |||||||
Interest expense, net | (913 | ) | (353 | ) | |||
Other income (expense) | (2,901 | ) | 187 | ||||
Other income (expense), net | (3,814 | ) | (166 | ) | |||
Income before income taxes | 3,485 | 1,948 | |||||
Income tax expense | 1,109 | 1,213 | |||||
Net Income (Loss) | 2,376 | 735 | |||||
Net income attributable to non-controlling interests, net | (3,390 | ) | (2,316 | ) | |||
Net income (loss) attributable to |
$ | (1,014 | ) | $ | (1,581 | ) | |
Net income (loss) per weighted average share attributable to |
|||||||
Basic Net Income (Loss) | $ | (0.06 | ) | $ | (0.10 | ) | |
Diluted Net Income (Loss) | $ | (0.06 | ) | $ | (0.10 | ) | |
Weighted average common shares outstanding: | |||||||
Basic | 16,001 | 16,001 | |||||
Diluted | 16,001 | 16,001 | |||||
Note: The Company has restructured its presentation of revenues - see Table 4 | |||||||
Table 3 | |||||||
Unaudited Condensed Consolidated Cash Flow Statement | |||||||
(in Thousands) | |||||||
Three Months Ended |
|||||||
2020 |
2019 |
||||||
Net income | $ | 2,376 | $ | 735 | |||
Depreciation and amortization | 22,518 | 20,718 | |||||
Provision for doubtful accounts | 1,260 | 1,285 | |||||
(Gain) Loss on disposition of assets | 15 | 302 | |||||
Stock-based compensation | 1,160 | 1,301 | |||||
Deferred income taxes | (1,135 | ) | (1,914 | ) | |||
Loss on investments | 1,775 | - | |||||
Unrealized loss on foreign currency | 739 | (64 | ) | ||||
Change in prepaid and accrued income taxes | 754 | 6,778 | |||||
Change in other operating assets and liabilities | (14,129 | ) | (10,514 | ) | |||
Other non-cash activity | 126 | 143 | |||||
Net cash provided by operating activities | 15,459 | 18,770 | |||||
Capital expenditures | (14,061 | ) | (17,764 | ) | |||
Purchases of strategic investments | (2,768 | ) | (10,000 | ) | |||
Purchase of short-term investments | - | (5,000 | ) | ||||
Sale of short-term investments | - | 141 | |||||
Net cash used in investing activities | (16,829 | ) | (32,623 | ) | |||
Dividends paid on common stock | (2,721 | ) | (2,720 | ) | |||
Distributions to non-controlling interests | (4,220 | ) | (1,540 | ) | |||
Principal repayments of term loan | (938 | ) | (949 | ) | |||
Payment of debt issuance costs | (1,010 | ) | - | ||||
Stock-based compensation share repurchases | (1,625 | ) | (1,569 | ) | |||
Purchases of common stock - share buyback | (1,600 | ) | - | ||||
Repurchases of non-controlling interests | (1,774 | ) | (225 | ) | |||
Investments made by minority shareholders | - | 488 | |||||
Net cash used in financing activities | (13,888 | ) | (6,515 | ) | |||
Effect of foreign currency exchange rates on total cash, cash equivalents and restricted cash | (115 | ) | 15 | ||||
Net change in total cash, cash equivalents and restricted cash | (15,373 | ) | (20,353 | ) | |||
Total cash, cash equivalents and restricted cash, beginning of period | 162,358 | 192,907 | |||||
Total cash, cash equivalents and restricted cash, end of period | $ | 146,985 | $ | 172,554 | |||
Table 4 | |||||||||||||||
Selected Segment Financial Information | |||||||||||||||
(In Thousands) | |||||||||||||||
For the three months ended |
|||||||||||||||
International Telecom |
Renewable Energy |
Corporate and Other * |
Total | ||||||||||||
Statement of Operations Data: | |||||||||||||||
Revenue** | |||||||||||||||
Mobility | $ | 19,667 | $ | 4,125 | $ | - | $ | - | $ | 23,792 | |||||
Fixed | 58,149 | 3,103 | - | - | 61,252 | ||||||||||
Carrier services | 2,573 | 20,063 | - | - | 22,636 | ||||||||||
Other | 216 | - | - | - | 216 | ||||||||||
Total communications services | $ | 80,605 | $ | 27,291 | $ | - | $ | - | $ | 107,896 | |||||
Renewable Energy | $ | - | $ | - | $ | 1,322 | $ | - | $ | 1,322 | |||||
Managed Services | 1,679 | 8 | - | - | 1,687 | ||||||||||
Total Other | $ | 1,679 | $ | 8 | $ | 1,322 | $ | - | $ | 3,009 | |||||
Total Revenue | $ | 82,284 | $ | 27,299 | $ | 1,322 | $ | - | $ | 110,905 | |||||
Operating Income (Loss) | $ | 13,477 | $ | 2,193 | $ | (456 | ) | $ | (7,915 | ) | $ | 7,299 | |||
Stock-based compensation | $ | (37 | ) | $ | - | $ | - | $ | 1,197 | $ | 1,160 | ||||
Non-controlling interest ( net income or (loss) ) | $ | (2,544 | ) | $ | (1,033 | ) | $ | 187 | $ | - | $ | (3,390 | ) | ||
Non GAAP measures: | |||||||||||||||
EBITDA (1) | $ | 27,792 | $ | 8,079 | $ | 158 | $ | (6,212 | ) | $ | 29,817 | ||||
Adjusted EBITDA (2) | $ | 27,805 | $ | 8,081 | $ | 172 | $ | (6,182 | ) | $ | 29,876 | ||||
Balance Sheet Data (at |
|||||||||||||||
Cash, cash equivalents and investments | $ | 48,222 | $ | 36,052 | $ | 23,858 | $ | 37,885 | $ | 146,017 | |||||
Total current assets | 95,764 | 61,191 | 26,455 | 51,932 | 235,342 | ||||||||||
Fixed assets, net | 462,275 | 64,710 | 45,233 | 20,709 | 592,927 | ||||||||||
Total assets | 645,987 | 224,363 | 72,405 | 165,837 | 1,108,592 | ||||||||||
Total current liabilities | 71,129 | 26,910 | 1,660 | 13,745 | 113,444 | ||||||||||
Total debt | 85,525 | - | - | - | 85,525 | ||||||||||
* Corporate and Other refer to corporate overhead expenses and consolidating adjustments | |||||||||||||||
** The Company restructured its presentation of revenue to better align financial reporting with industry competitors, and the view of investors and company management. | |||||||||||||||
Selected Segment Financial Information | |||||||||||||||
(In Thousands) | |||||||||||||||
For the three months ended |
|||||||||||||||
International Telecom |
Renewable Energy |
Corporate and Other * |
Total | ||||||||||||
Statement of Operations Data: | |||||||||||||||
Revenue** | |||||||||||||||
Mobility | $ | 19,755 | $ | 3,909 | $ | - | $ | - | $ | 23,664 | |||||
Fixed | 56,694 | 763 | - | - | 57,457 | ||||||||||
Carrier services | 2,471 | 16,686 | - | - | 19,157 | ||||||||||
Other | 187 | - | - | - | 187 | ||||||||||
Total communications services | $ | 79,107 | $ | 21,358 | $ | - | $ | - | $ | 100,465 | |||||
Renewable Energy | $ | - | $ | - | $ | 1,490 | $ | - | $ | 1,490 | |||||
Managed Services | 1,210 | 135 | - | - | 1,345 | ||||||||||
Total Other | $ | 1,210 | $ | 135 | $ | 1,490 | $ | - | $ | 2,835 | |||||
Total Revenue | $ | 80,317 | $ | 21,493 | $ | 1,490 | $ | - | $ | 103,300 | |||||
Operating Income (Loss) | $ | 13,878 | $ | (3,506 | ) | $ | (203 | ) | $ | (8,055 | ) | $ | 2,114 | ||
Stock-based compensation | 11 | - | - | 1,290 | 1,301 | ||||||||||
Non-controlling interest ( net income or (loss) ) | $ | (2,397 | ) | $ | 81 | $ | - | $ | - | $ | (2,316 | ) | |||
Non GAAP measures: | |||||||||||||||
EBITDA (1) | $ | 26,893 | $ | 2,092 | $ | 413 | $ | (6,566 | ) | $ | 22,832 | ||||
Adjusted EBITDA (2) | $ | 26,886 | $ | 2,263 | $ | 551 | $ | (6,526 | ) | $ | 23,174 | ||||
* Corporate and Other refer to corporate overhead expenses and consolidating adjustments | |||||||||||||||
** The Company restructured its presentation of revenue to better align financial reporting with industry competitors, and the view of investors and company management. | |||||||||||||||
Selected Segment Financial Information | |||||||||||||||
(In Thousands) | |||||||||||||||
at |
|||||||||||||||
International Telecom |
Renewable Energy |
Corporate and Other * |
Total | ||||||||||||
Balance Sheet Data (at |
|||||||||||||||
Cash, cash equivalents and investments | $ | 43,125 | $ | 38,240 | $ | 25,054 | $ | 55,284 | $ | 161,703 | |||||
Total current assets | 91,497 | 54,207 | 27,534 | 55,484 | 228,723 | ||||||||||
Fixed assets, net | 466,523 | 69,184 | 48,421 | 21,452 | 605,581 | ||||||||||
Total assets | 647,228 | 222,356 | 76,723 | 184,419 | 1,130,726 | ||||||||||
Total current liabilities | 77,644 | 24,905 | 2,745 | 14,374 | 119,669 | ||||||||||
Total debt | 86,426 | - | - | - | 86,426 | ||||||||||
(1) See Table 5 for reconciliation of Operating Income to EBITDA | |||||||||||||||
(2) See Table 5 for reconciliation of Operating Income to Adjusted EBITDA | |||||||||||||||
* Corporate and Other refer to corporate overhead expenses and consolidating adjustments | |||||||||||||||
Selected Segment Financial Information | |||||||||||||||
(In Thousands) | |||||||||||||||
at |
|||||||||||||||
Quarter ended | |||||||||||||||
2019 | 2019 | 2019 | 2019 | 2020 | |||||||||||
International Telecom Operational Data: | |||||||||||||||
Fixed - Voice | 171,200 | 171,200 | 170,200 | 167,300 | 169,100 | ||||||||||
Fixed - Data Subscribers | 123,600 | 124,700 | 127,200 | 129,900 | 133,400 | ||||||||||
Fixed - Video Subscribers | 41,000 | 39,700 | 38,600 | 38,200 | 37,800 | ||||||||||
Mobile - Subscribers * | 293,500 | 290,400 | 285,000 | 284,100 | 282,100 | ||||||||||
* Counts were adjusted for all periods presented based upon a change in methodology and process | |||||||||||||||
Table 5 | |||||||||||||||
Reconciliation of Non-GAAP Measures | |||||||||||||||
(In Thousands) | |||||||||||||||
For the three months ended |
|||||||||||||||
International Telecom |
Renewable Energy |
Corporate and Other * |
Total | ||||||||||||
Operating income (loss) | $ | 13,477 | $ | 2,193 | $ | (456 | ) | $ | (7,915 | ) | $ | 7,299 | |||
Depreciation and amortization expense | 14,315 | 5,886 | 614 | 1,703 | 22,518 | ||||||||||
EBITDA | $ | 27,792 | $ | 8,079 | $ | 158 | $ | (6,212 | ) | $ | 29,817 | ||||
Transaction-related charges | - | - | 14 | 30 | 44 | ||||||||||
(Gain) Loss on disposition of assets | 13 | 2 | - | - | 15 | ||||||||||
ADJUSTED EBITDA | $ | 27,805 | $ | 8,081 | $ | 172 | $ | (6,182 | ) | $ | 29,876 | ||||
Revenue | 82,284 | 27,299 | 1,322 | - | 110,905 | ||||||||||
ADJUSTED EBITDA MARGIN | 33.8 | % | 29.6 | % | 13.0 | % | NA | 26.9 | % | ||||||
For the three months ended |
|||||||||||||||
International Telecom |
Renewable Energy |
Corporate and Other * |
Total | ||||||||||||
Operating income (loss) | $ | 13,878 | $ | (3,506 | ) | $ | (203 | ) | $ | (8,055 | ) | $ | 2,114 | ||
Depreciation and amortization expense | 13,015 | 5,598 | 616 | 1,489 | 20,718 | ||||||||||
EBITDA | $ | 26,893 | $ | 2,092 | $ | 413 | $ | (6,566 | ) | $ | 22,832 | ||||
Transaction-related charges | - | - | - | 40 | 40 | ||||||||||
(Gain) Loss on disposition of assets | (7 | ) | 171 | 138 | - | 302 | |||||||||
ADJUSTED EBITDA | $ | 26,886 | $ | 2,263 | $ | 551 | $ | (6,526 | ) | $ | 23,174 | ||||
Revenue | 80,317 | 21,493 | 1,490 | - | 103,300 | ||||||||||
ADJUSTED EBITDA MARGIN | 33.5 | % | 10.5 | % | 37.0 | % | NA | 22.4 | % | ||||||
Contact:
978-619-1300
Chairman and
Chief Executive Officer
Chief Financial Officer
Source: ATN International, Inc.