ATN Reports First Quarter 2021 Results
- International Telecom Continues Steady Performance
- US Telecom Results Reflect Expected Increase in Operating Costs
- Acquisition of Alaska Communications Expected to Close in Mid-2021
Business Review and Outlook
“First quarter results were in line with the business trends we saw at the time of our fourth quarter earnings release. In our
“We are implementing additional cost reduction initiatives in an effort to reduce the operating expense levels experienced in the first quarter. At the same time, we continue to invest in expanding and upgrading our high speed fixed and mobile data and enterprise solutions to capitalize on the continuing macro trends of an increasing need for bandwidth and reliable connectivity across our markets.
“US Telecom results also reflected increased expense levels, which, as discussed last quarter, were planned and associated with the transition of this business from primarily a wholesale roaming operation to a broader communications infrastructure platform. This new business model will result in lower year-on-year operating income and Adjusted EBITDA2 comparisons in this segment until we complete the acquisition of Alaska Communications, which is expected to close in the middle of this year. A portion of the higher costs represent the expansion of our fiber and broadband infrastructure for customers under contract as well as into new areas that we believe have unmet demand. We expect this expansion to result in increased fixed data revenue over time. In addition, we have accelerated our investments and activity in private network solutions, which, while still early stage with respect to contracted revenue, represents a large market opportunity for us.
“The shareholders of Alaska Communications’ approved our acquisition of their company in March. We look forward to gaining the remaining regulatory approvals over the coming months and expect to close the acquisition in the middle of this year. Beyond the immediate and substantial increase in revenue and EBITDA this will bring to our platform, we are excited about the potential to build value through Alaska Communications’ growing fiber infrastructure, including in the lower-48, with the depth and quality of their anchor tenants and other business and wholesale customers.”
First Quarter 2021 Results
First quarter 2021 consolidated revenues of
First Quarter 2021 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 | $ | 83,820 | $ | 40,272 | $ | 418 | $ | - | $ | 124,510 |
Operating Income (loss) | $ | 13,116 | $ | (534) | $ | (662) | $ | (8,571) | $ | 3,349 |
EBITDA1 | $ | 26,942 | $ | 4,659 | $ | (474) | $ | (7,270) | $ | 23,857 |
Adjusted EBITDA2 | $ | 26,941 | $ | 4,648 | $ | (1) | $ | (6,884) | $ | 24,704 |
Capital Expenditures | $ | 10,506 | $ | 14,939* | $ | - | $ | 235 | $ | 25,680* |
Three Months Ended |
||||||||||
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 |
Adjusted EBITDA2 | $ | 27,805 | $ | 8,081 | $ | 172 | $ | (6,182) | $ | 29,876 |
Capital Expenditures | $ | 10,465 | $ | 1,972* | $ | 720 | $ | 904 | $ | 14,061* |
*Includes reimbursable capital expenditures of
By the end of the first quarter of 2021, the Company had completed and activated approximately 30% of the total sites related to the network build portion of its FirstNet Agreement and expects to complete an additional 35% of the total build by the end of 2021. As revenues from the build will be largely offset by construction costs, the Company does not expect a material impact on operating income from this activity.
Renewable Energy
Renewable Energy segment revenues were principally the result of the sale of electric power generated by commercial solar projects in
In the first quarter of 2021, we recorded one month of operating activity for this segment and correspondingly, revenue of
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 the economies of the markets we serve, and on our business and operations; expectations regarding future revenue, operating income, EBITDA and capital expenditures; the competitive environment in our key markets, demand for our services and industry trends; our expectations regarding construction progress under our FirstNet agreement and the effect such progress will have on our financial results; our expectations regarding the benefits and timing of our pending acquisition of Alaska Communications; the impact of federal support program revenues and the FirstNet transaction; 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 retention of and future growth of our subscriber base, including growth in our private networks business; (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, the Company has included EBITDA and Adjusted EBITDA 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, transaction-related charges, impairment of goodwill and the gain (loss) on disposition of assets. The Company believes that the inclusion of these non-GAAP financial measures help investors gain a meaningful understanding of the Company's core operating results and enhances the usefulness of comparing such performance with prior periods. Management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring the Company’s 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 to the most directly comparable GAAP financial measures are set forth in the text of, and the accompanying tables to, this press release. While non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating the Company’s own operating results over different periods of time, the Company urges 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 its business.
1 See Table 5 for reconciliation of Operating Income to EBITDA, a non-GAAP measure.
2 See Table 5 for reconciliation of Operating Income to Adjusted EBITDA, a non-GAAP measure.
Table 1 | |||||||
Unaudited Condensed Consolidated Balance Sheets | |||||||
(in Thousands) | |||||||
2021 | 2020 | ||||||
Assets: | |||||||
Cash and cash equivalents | $ | 91,259 | $ | 103,925 | |||
Restricted cash | 1,072 | 1,072 | |||||
Assets held-for-sale | - | 34,735 | |||||
Customer receivable | 2,365 | 1,227 | |||||
Other current assets | 100,581 | 99,106 | |||||
Total current assets | 195,277 | 240,065 | |||||
Property, plant and equipment, net | 528,071 | 536,462 | |||||
Operating lease right-of-use assets | 61,762 | 63,235 | |||||
Customer receivable - long term | 21,056 | 9,614 | |||||
180,333 | 180,687 | ||||||
Other assets | 71,223 | 53,648 | |||||
Total assets | $ | 1,057,722 | $ | 1,083,711 | |||
Liabilities and Stockholders’ Equity: | |||||||
Current portion of long-term debt | $ | 3,750 | $ | 3,750 | |||
Current portion of customer receivable credit facility | 1,101 | - | |||||
Taxes payable | 8,495 | 7,501 | |||||
Current portion of lease liabilities | 12,446 | 12,371 | |||||
Liabilities held-for-sale | - | 717 | |||||
Other current liabilities | 101,964 | 123,589 | |||||
Total current liabilities | 127,756 | 147,928 | |||||
Long-term debt, net of current portion | $ | 68,173 | $ | 69,073 | |||
Customer receivable credit facility, net of current portion | 9,713 | - | |||||
Deferred income taxes | 8,171 | 10,675 | |||||
Lease liabilities | 50,902 | 51,082 | |||||
Other long-term liabilities | 50,738 | 50,617 | |||||
Total liabilities | 315,453 | 329,375 | |||||
Total ATN International, Inc.’s stockholders’ equity | 642,591 | 645,649 | |||||
Non-controlling interests | 99,678 | 108,687 | |||||
Total equity | 742,269 | 754,336 | |||||
Total liabilities and stockholders’ equity | $ | 1,057,722 | $ | 1,083,711 | |||
Table 2 | |||||||||||||||
Unaudited Condensed Consolidated Statements of Operations | |||||||||||||||
(in Thousands, Except per Share Data) | |||||||||||||||
Three Months Ended | |||||||||||||||
2021 | 2020 | ||||||||||||||
Revenues: | |||||||||||||||
Communications services | $ | 110,636 | $ | 107,904 | |||||||||||
Other | 13,874 | 3,001 | |||||||||||||
Total revenue | 124,510 | 110,905 | |||||||||||||
Operating expenses (excluding depreciation and amortization unless otherwise indicated): | |||||||||||||||
Cost of services | 49,507 | 46,602 | |||||||||||||
Cost of construction revenue | 12,606 | - | |||||||||||||
Selling, general and administrative | 37,693 | 34,427 | |||||||||||||
Transaction-related charges | 730 | 44 | |||||||||||||
Depreciation and amortization | 20,508 | 22,518 | |||||||||||||
Loss on disposition of long-lived assets | 117 | 15 | |||||||||||||
Total operating expenses | 121,161 | 103,606 | |||||||||||||
Operating income | 3,349 | 7,299 | |||||||||||||
Other income (expense): | |||||||||||||||
Interest expense, net | (1,153 | ) | (913 | ) | |||||||||||
Other income (expense) | 2,375 | (2,901 | ) | ||||||||||||
Other income (expense), net | 1,222 | (3,814 | ) | ||||||||||||
Income before income taxes | 4,571 | 3,485 | |||||||||||||
Income tax expense | 295 | 1,109 | |||||||||||||
Net Income | 4,276 | 2,376 | |||||||||||||
Net income attributable to non-controlling interests, net | (1,570 | ) | (3,390 | ) | |||||||||||
Net income (loss) attributable to |
$ | 2,706 | $ | (1,014 | ) | ||||||||||
Net income (loss) per weighted average share attributable to |
|||||||||||||||
Basic Net Income (Loss) | $ | 0.17 | $ | (0.06 | ) | ||||||||||
Diluted Net Income (Loss) | $ | 0.17 | $ | (0.06 | ) | ||||||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 15,902 | 16,001 | |||||||||||||
Diluted | 15,952 | 16,001 | |||||||||||||
Table 3 | |||||||||
Unaudited Condensed Consolidated Cash Flow Statement | |||||||||
(in Thousands) | |||||||||
Three Months Ended |
|||||||||
2021 | 2020 | ||||||||
Net income | $ | 4,276 | $ | 2,376 | |||||
Depreciation and amortization | 20,508 | 22,518 | |||||||
Provision for doubtful accounts | 1,122 | 1,260 | |||||||
Amortization of debt discount and debt issuance costs | 168 | 126 | |||||||
Loss on disposition of assets and assets held-for-sale | 117 | 15 | |||||||
Stock-based compensation | 1,336 | 1,160 | |||||||
Deferred income taxes | (2,504 | ) | (1,135 | ) | |||||
(Gain) loss on equity investments | (2,188 | ) | 1,775 | ||||||
Unrealized (gain) loss on foreign currency | (81 | ) | 739 | ||||||
Change in prepaid and accrued income taxes | 1,810 | 754 | |||||||
Change in other operating assets and liabilities | (19,241 | ) | (14,129 | ) | |||||
Net cash provided by operating activities | 5,323 | 15,459 | |||||||
Capital expenditures | (19,495 | ) | (14,061 | ) | |||||
Reimbursable capital expenditures | (6,185 | ) | - | ||||||
Purchases of strategic investments | (4,155 | ) | (2,768 | ) | |||||
Receipt of government grants | 3,292 | - | |||||||
Sale of business, net of transferred cash of |
18,597 | - | |||||||
Net cash used in investing activities | (7,946 | ) | (16,829 | ) | |||||
Dividends paid on common stock | (2,703 | ) | (2,721 | ) | |||||
Distributions to non-controlling interests | (3,530 | ) | (4,220 | ) | |||||
Principal repayments of term loan | (938 | ) | (938 | ) | |||||
Payment of debt issuance costs | 53 | (1,010 | ) | ||||||
Proceeds from debt | 10,814 | - | |||||||
Purchases of common stock - stock-based compensation | (1,677 | ) | (1,625 | ) | |||||
Purchases of common stock - share repurchase plan | (540 | ) | (1,600 | ) | |||||
Repurchases of non-controlling interests | (11,522 | ) | (1,774 | ) | |||||
Net cash used in financing activities | (10,043 | ) | (13,888 | ) | |||||
Effect of foreign currency exchange rates on total cash, cash equivalents and restricted cash | - | (115 | ) | ||||||
Net change in total cash, cash equivalents and restricted cash | (12,666 | ) | (15,373 | ) | |||||
Total cash, cash equivalents and restricted cash, beginning of period | 104,997 | 162,358 | |||||||
Total cash, cash equivalents and restricted cash, end of period | $ | 92,331 | $ | 146,985 | |||||
Table 4 | ||||||||||||||||
Selected Segment Financial Information | ||||||||||||||||
(In Thousands) | ||||||||||||||||
For the three months ended |
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Renewable Energy | Corporate and Other * | Total | ||||||||||||||
Statement of Operations Data: | ||||||||||||||||
Revenue | ||||||||||||||||
Mobility | $ | 21,821 | $ | 2,860 | $ | - | $ | - | $ | 24,681 | ||||||
Fixed | 58,748 | 6,370 | - | - | 65,118 | |||||||||||
Carrier services | 1,883 | 18,736 | - | - | 20,619 | |||||||||||
Other | 218 | - | - | - | 218 | |||||||||||
Total communications services | $ | 82,670 | $ | 27,966 | $ | - | $ | - | $ | 110,636 | ||||||
Renewable Energy | $ | - | $ | - | $ | 418 | $ | - | $ | 418 | ||||||
Managed Services | 1,150 | - | - | - | 1,150 | |||||||||||
Construction | - | 12,306 | - | - | 12,306 | |||||||||||
Total Other | $ | 1,150 | $ | 12,306 | $ | 418 | $ | - | $ | 13,874 | ||||||
Total Revenue | $ | 83,820 | $ | 40,272 | $ | 418 | $ | - | $ | 124,510 | ||||||
Operating Income (Loss) | $ | 13,116 | $ | (534 | ) | $ | (662 | ) | $ | (8,571 | ) | $ | 3,349 | |||
Stock-based compensation | 37 | 15 | 22 | 1,262 | 1,336 | |||||||||||
Non-controlling interest ( net income or (loss) ) | $ | (1,690 | ) | $ | (676 | ) | $ | 796 | $ | - | $ | (1,570 | ) | |||
Non GAAP measures: | ||||||||||||||||
EBITDA (1) | $ | 26,942 | $ | 4,659 | $ | (474 | ) | $ | (7,270 | ) | $ | 23,857 | ||||
Adjusted EBITDA (2) | $ | 26,941 | $ | 4,648 | $ | (1 | ) | $ | (6,884 | ) | $ | 24,704 | ||||
Balance Sheet Data (at |
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Cash, cash equivalents and investments | $ | 40,505 | $ | 29,389 | $ | 5,822 | $ | 15,543 | $ | 91,259 | ||||||
Total current assets | 100,470 | 67,739 | 9,716 | 17,352 | 195,277 | |||||||||||
Fixed assets, net | 448,690 | 67,829 | - | 11,552 | 528,071 | |||||||||||
Total assets | 634,344 | 302,966 | 22,369 | 98,043 | 1,057,722 | |||||||||||
Total current liabilities | 77,100 | 33,216 | 356 | 17,084 | 127,756 | |||||||||||
Total debt | 71,923 | 10,814 | - | - | 82,737 | |||||||||||
* Corporate and Other refer to corporate overhead expenses and consolidating adjustments | ||||||||||||||||
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 | $ | 20,230 | $ | 2,403 | $ | - | $ | - | $ | 22,633 | ||||||
Fixed | 57,741 | 4,825 | - | - | 62,566 | |||||||||||
Carrier services | 2,298 | 20,071 | - | - | 22,369 | |||||||||||
Other | 336 | - | - | - | 336 | |||||||||||
Total communications services | $ | 80,605 | $ | 27,299 | $ | - | $ | - | $ | 107,904 | ||||||
Renewable Energy | $ | - | $ | - | $ | 1,322 | $ | - | $ | 1,322 | ||||||
Managed Services | 1,679 | - | - | - | 1,679 | |||||||||||
Total Other | $ | 1,679 | $ | - | $ | 1,322 | $ | - | $ | 3,001 | ||||||
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 | |||||
* Corporate and Other refer to corporate overhead expenses and consolidating adjustments | ||||||||||||||||
Selected Segment Financial Information | ||||||||||||||||
(In Thousands) | ||||||||||||||||
at |
||||||||||||||||
International Telecom |
Renewable Energy |
Corporate and Other * |
Total | |||||||||||||
Balance Sheet Data (at |
||||||||||||||||
Cash, cash equivalents and investments | $ | 45,848 | $ | 26,921 | $ | 4,311 | $ | 26,845 | $ | 103,925 | ||||||
Total current assets | 107,315 | 65,806 | 39,057 | 27,887 | 240,065 | |||||||||||
Fixed assets, net | 449,888 | 73,717 | - | 12,857 | 536,462 | |||||||||||
Total assets | 642,834 | 265,797 | 39,045 | 136,035 | 1,083,711 | |||||||||||
Total current liabilities | 80,875 | 43,200 | 1,038 | 22,815 | 147,928 | |||||||||||
Total debt | 72,823 | - | - | - | 72,823 | |||||||||||
(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 |
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Quarter ended | ||||||||||||||||
2020 | 2020 | 2020 | 2020 | 2021 | ||||||||||||
International Telecom Operational Data: | ||||||||||||||||
Mobile - Subscribers * | ||||||||||||||||
Pre-Paid | 242,600 | 234,300 | 244,000 | 256,800 | 261,200 | |||||||||||
Post-Paid | 39,000 | 41,500 | 44,400 | 46,500 | 45,700 | |||||||||||
Total | 281,600 | 275,800 | 288,400 | 303,300 | 306,900 | |||||||||||
Fixed - Subscribers* | ||||||||||||||||
Data | 131,300 | 135,200 | 137,400 | 140,700 | 143,000 | |||||||||||
Video | 38,100 | 36,300 | 35,800 | 35,800 | 35,300 | |||||||||||
Voice | 166,200 | 166,600 | 167,100 | 167,900 | 165,600 | |||||||||||
* 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) | $ | 13,116 | $ | (534 | ) | $ | (662 | ) | $ | (8,571 | ) | $ | 3,349 | |||
Depreciation and amortization expense | 13,826 | 5,193 | 188 | 1,301 | 20,508 | |||||||||||
EBITDA | $ | 26,942 | $ | 4,659 | $ | (474 | ) | $ | (7,270 | ) | 23,857 | |||||
Transaction-related charges | - | - | 566 | 164 | 730 | |||||||||||
(Gain) Loss on disposition of assets | (1 | ) | (11 | ) | (93 | ) | 222 | 117 | ||||||||
ADJUSTED EBITDA | $ | 26,941 | $ | 4,648 | $ | (1 | ) | $ | (6,884 | ) | 24,704 | |||||
Revenue | 83,820 | 40,272 | 418 | - | 124,510 | |||||||||||
ADJUSTED EBITDA MARGIN | 32.1 | % | 11.5 | % | -0.2 | % | NA | 19.8 | % | |||||||
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 | % | |||||||
CONTACT: | 978-619-1300 |
Chairman and | |
Chief Executive Officer | |
Chief Financial Officer |
Source: ATN International, Inc.