UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
| (State or other | (Commission File Number) | (IRS Employer | ||
| jurisdiction of incorporation) | Identification No.) |
(Address of principal executive offices and zip code)
(
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
| Item 2.02 | Results of Operations and Financial Condition. |
On October 23, 2019, ATN International, Inc. (the “Company”) issued a press release announcing financial results for the three and nine months ended September 30, 2019. A copy of the press release is furnished herewith as Exhibit 99.1.
Exhibit 99.1 is furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| 99.1 | Press Release of the Company, dated October 23, 2019. |
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ATN International, Inc. | ||
| By: | /s/ Justin D. Benincasa | |
| Justin D. Benincasa | ||
| Chief Financial Officer | ||
| Dated October 23, 2019 | ||
3
Exhibit 99.1
News Release
| For Immediate Release | Contact: | 978-619-1300 | |
| Wednesday October 23, 2019 | Michael T. Prior | ||
| Chairman and | |||
| Chief Executive Officer | |||
| Justin D. Benincasa | |||
| Chief Financial Officer |
ATN Reports
Third Quarter 2019 Results
Third Quarter Results
| · | Revenue was $115.6 million compared to prior year of $121.1 million |
| · | Excluding one-time items and a sale transaction, revenue increased year-on-year |
| · | International Telecom operations continue strong cash flow trends |
| · | US Telecom operations benefitted from new long-term contracts |
Beverly, MA (October 23, 2019) -- ATN International, Inc. (Nasdaq: ATNI) today reported results for the third quarter ended September 30, 2019.
Business Review and Outlook
“Our third quarter performance reflects both continued organic growth in our International Telecom businesses and the improved performance of our US Telecom segment,” said Michael Prior, Chairman, and Chief Executive Officer. “While reported revenues and operating income declined year-on-year, adjusting for non-recurring items included in the year-ago quarter, consolidated recurring revenue¹ increased at a mid-single digit rate, driving even higher year-on-year growth in Adjusted EBITDA.
“We continued to achieve positive operating results in our International Telecom segment, where we are benefitting from leadership positions in key markets and the network investments made in the past several years to expand fiber coverage and data capacity. Additionally, the steady recovery of our U.S. Virgin Islands business is evident as more hotels and residential housing units come back online in the market, and we take back market share. Adjusting for non-recurring items that were included in the year-ago quarter, our International Telecom segment revenue increased 6%, and we anticipate continued year-on-year revenue growth for the segment in the fourth quarter. More important, quarterly results for this segment again showed a significant improvement in free cash flow compared to 2018 levels.
“US Telecom segment revenues also increased at a mid-single digit rate in the third quarter, and we were pleased to see a positive year-over-year comparison for the quarter. The positive revenue performance this quarter benefitted from a full quarter of Connect America Fund Phase ll (CAF II) federal support revenue and the new contract signed in August as part of a comprehensive agreement to support AT&T’s partnership with the First Responder Network Authority, known as FirstNet. The infrastructure services and support deliverables of this agreement will provide ATN with stable, long-term recurring revenue and consistent cash flows. We expect year-on-year US Telecom segment comparisons to continue to be favorable in this year’s fourth quarter.
“With respect to our Renewable Energy segment, we are building part of our shovel ready pipeline and adding additional capacity, while at the same time holding preliminary discussions with potential strategic partners interested in investing through the Vibrant Energy platform.”
Third Quarter 2019 Financial Results
Third quarter 2019 revenues of $115.6 million were down 5% compared to last year’s reported revenues of $121.1 million. Compared with third quarter 2018 recurring revenues[1] of $109.7 million, third quarter 2019 recurring revenues[1] increased by 5%. Last year’s reported revenues included $4.2 million from the Company’s U.S. solar portfolio sold in late 2018 and non-recurring revenue of $7.2 million for additional hurricane related USF high cost support funding from the FCC for our U.S. Virgin Islands business. Operating income for the third quarter of 2019 was $10.2 million compared with the prior year’s $30.8 million, and Adjusted EBITDA2 was $33.0 million, compared to $38.9 million in the prior year period. In addition to the $11.4 million of 2018 non-recurring revenue items noted above, the operating income comparison was also negatively affected by the prior year’s gain of $13.5 million from the sale of certain US Telecom assets. Other income (expense) also includes a $2.1 million mark-to-market write-down of a non-controlling equity investment. Net income attributable to ATN’s stockholders for the third quarter was $1.4 million, or $0.09 per diluted share, compared with the prior year period’s net income of $17.0 million, or $1.06 per diluted share.
______________________________________________________________________
1 See Table 6 for reconciliation of Revenue to Recurring Revenue, which is a non-GAAP measure
2 See Table 5 for reconciliation of Net Income to Adjusted EBITDA.
| 2 |
Third Quarter 2019 Operating Highlights
The Company has three reportable segments: (i) US Telecom; (ii) International Telecom; and (iii) Renewable Energy.
Segment Results (in Thousands)
| Three Months Ended September 30, 2019 | ||||||||||||||||||||
| US Telecom | International Telecom | Renewable Energy | Corporate and Other | Total | ||||||||||||||||
| Revenue | $ | 32,893 | $ | 81,285 | $ | 1,438 | $ | - | $ | 115,616 | ||||||||||
| Operating Income (Loss) | $ | 7,912 | $ | 10,867 | $ | (714 | ) | $ | (7,817 | ) | $ | 10,248 | ||||||||
| Adjusted EBITDA2 | $ | 13,779 | $ | 24,956 | $ | 337 | $ | (6,068 | ) | $ | 33,004 | |||||||||
| Nine Months Ended September 30, 2019 | ||||||||||||||||||||
| Capital Expenditures | $ | 8,533 | $ | 33,159 | $ | 2,183 | $ | 5,611 | $ | 49,486 | ||||||||||
| Three Months Ended September 30, 2018 | ||||||||||||||||||||
| US Telecom | International Telecom | Renewable Energy | Corporate and Other | Total | ||||||||||||||||
| Revenue | $ | 31,808 | $ | 83,912 | $ | 5,418 | $ | - | $ | 121,138 | ||||||||||
| Operating Income (Loss) | $ | 22,773 | $ | 16,239 | $ | (177 | ) | $ | (8,011 | ) | $ | 30,824 | ||||||||
| Adjusted EBITDA2 | $ | 13,529 | $ | 28,645 | $ | 3,090 | $ | (6,374 | ) | $ | 38,890 | |||||||||
| Nine Months Ended September 30, 2018 | ||||||||||||||||||||
| Capital Expenditures | $ | 9,460 | $ | 136,791 | $ | 1,641 | $ | 6,386 | $ | 154,278 | ||||||||||
The following is the reconciliation of Revenue to Recurring Revenue for the three months ended September 30, 2019 and September 30, 2018:
Reconciliation of Revenue to Recurring Revenue1 (in Thousands)
| Three Months Ended September 30, 2019 | ||||||||||||||||||||
| US Telecom | International Telecom | Renewable Energy | Corporate and Other | Total | ||||||||||||||||
| Revenue | $ | 32,893 | $ | 81,285 | $ | 1,438 | $ | - | $ | 115,616 | ||||||||||
| Adjustments | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
| Recurring Revenue1 | $ | 32,893 | $ | 81,285 | $ | 1,438 | $ | - | $ | 115,616 | ||||||||||
| Three Months Ended September 30, 2018 | ||||||||||||||||||||
| US Telecom | International
Telecom | Renewable Energy | Corporate
and Other | Total | ||||||||||||||||
| Revenue | $ | 31,808 | $ | 83,912 | $ | 5,418 | $ | - | $ | 121,138 | ||||||||||
| USF Incremental high cost support funding | $ | - | $ | (7,219 | ) | $ | - | $ | - | $ | (7,219 | ) | ||||||||
| US Solar portfolio revenues | $ | - | $ | - | $ | (4,182 | ) | $ | - | $ | (4,182 | ) | ||||||||
| Recurring Revenue1 | $ | 31,808 | $ | 76,693 | $ | 1,236 | $ | - | $ | 109,737 | ||||||||||
| 3 |
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. International Telecom revenues decreased 3% year-on-year mainly due to the non-recurring $7.2 million of USF high cost support funding from the FCC received in the third quarter of 2018. Offsetting the loss of those non-recurring revenues has been a strong increase in broadband revenues in most of our markets, including the U.S. Virgin Islands, where the market and our operations continue to recover from the 2017 hurricanes. We expect continued year-on-year revenue improvement in this segment in the fourth quarter of 2019. International Telecom operating income decreased 33% to $10.9 million from the prior year’s quarter and Adjusted EBITDA2 decreased 13% to $25.0 million from the prior year’s quarter, both as a result of the $7.2 million non-recurring revenue received in the third quarter of 2018. This was partially offset by higher broadband revenues in multiple markets and the post-storm recovery in the U.S. Virgin Islands.
US Telecom
US Telecom revenues consist mainly of wireless revenues from our voice and data wholesale wireless operations and our smaller retail operations in the Southwestern United States, as well as enterprise and wholesale wireline revenues. US Telecom segment revenues increased by 3% primarily due to the CAF II federal support revenues, which began earlier in 2019. US Telecom revenues increased 25% sequentially over the prior quarter, reflecting higher seasonal traffic volumes and the commencement of the FirstNet agreement. We expect construction revenues under the network build portion of the FirstNet agreement to begin in the fourth quarter and continue through mid-2021. As revenues from the build will be largely offset by construction costs, it should not have a material impact on Adjusted EBITDA2 or operating income. Adjusted EBITDA2 for this segment increased by 2% to $13.8 million year-on-year due to the impact of the CAF II revenues offset partially by Mobility Fund expense offsets discontinued from the prior year and additional operating costs related to early stage business investments. The decrease in this segment’s operating income from the prior year’s $22.8 million to $7.9 million was mostly due to the $13.5 million gain on sale of certain wholesale wireless cell sites in the third quarter of 2018.
Renewable Energy
Renewable Energy segment revenues are principally the result of the generation and sale of energy from our commercial solar projects in India. In the fourth quarter of 2018, ATN completed the sale of its portfolio of solar projects in the United States. As a result, third quarter 2019 revenues were $1.4 million, compared to $5.4 million in the prior year quarter, operating loss was $0.7 million compared to an operating loss of $0.2 million in the prior year quarter and Adjusted EBITDA2 amounted to $0.3 million, compared to $3.1 million in the third quarter of 2018. Year-on-year revenue, operating income and Adjusted EBITDA2 comparisons for this segment will also be negative for the fourth quarter as a result of the sale transaction.
Balance Sheet and Cash Flow Highlights
Total cash, cash equivalents and restricted cash at September 30, 2019 was $166.4 million. Additionally, the Company ended the third quarter with $3.3 million in short-term investments. Net cash provided by operating activities was $56.8 million for the first nine months of 2019, compared with $98.0 million for the prior year period. The decrease in operating cash flow compared with the prior year is mostly the result of lower net income, the current year income tax payments of $28.5 million primarily related to the gain on the 2018 sale of the U.S. Solar asset portfolio, and other working capital activity in the current year. For the first nine months of 2019, the Company used net cash of $83.4 million for investing and financing activities compared to $143.6 million for the first nine months of 2018. This included $49.5 million in capital expenditures, $10.3 million for minority investments and $8.2 million of dividends on common stock. Management expects full year 2019 capital expenditures in International Telecom to be approximately $50 million which would be approximately $110 million below 2018 levels. In the US Telecom segment, we expect capital expenditures to be approximately $10 - $15 million, including some required capital spending related to towers and backhaul in conjunction with the FirstNet contract. In the Renewable Energy segment, we expect $6 - $7 million of project costs in 2019 related to building additional capacity.
| 4 |
Conference Call Information
ATN will host a conference call on Thursday, October 24, 2019 at 9:30 a.m. Eastern Time (ET) to discuss its third quarter 2019 results. The call will be hosted by Michael Prior, Chairman 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 4758768. A replay of the call will be available at ir.atni.com beginning at 1:00 p.m. (ET) on October 24, 2019.
About ATN
ATN International, Inc. (Nasdaq: ATNI), headquartered in Beverly, Massachusetts, invests in and operates communications, energy and technology businesses in the United States and internationally, including the Caribbean region and Asia-Pacific, with a particular focus on markets with a need for significant infrastructure investments and improvements. Our operating subsidiaries today primarily provide: (i) advanced 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) distributed solar electric power to corporate and government customers and (iii) wholesale communications infrastructure services such as terrestrial and submarine fiber optic transport, communications tower facilities, managed mobile networks, and in-building 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 including revenue and adjusted EBITDA expectations
and capital expenditures for 2019; the competitive environment in our key markets, demand for our services and industry trends; our growth opportunities; the estimated increase in revenues from our customers in the U.S. Virgin Islands following the hurricanes; 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 FCC and other telecommunications licenses or our renewables businesses; (5) our reliance on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure; (6) economic, political and other risks facing our operations; (7) the loss of or an inability to recruit skilled personnel in our various jurisdictions, including key members of management; (8) our ability to expand and obtain funding for our renewable energy business; (9) our ability to find investment or acquisition or disposition opportunities that fit the strategic goals of the Company; (10) the occurrence of weather events and natural catastrophes; (11) increased competition; (12) the adequacy and expansion capabilities of our network capacity and customer service system to support our customer growth; (13) our continued access to capital and credit markets; and (14) the risk of currency fluctuation for those markets in which we operate. 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, 2018, filed with the SEC on February 28, 2019 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, except as required by law.
| 5 |
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 Recurring Revenue and Adjusted EBITDA in this release and in the tables included herein.
Recurring Revenue is defined as total revenue adjusted to exclude the receipt of incremental USF support funds in support of the Company’s restoration of its network following the 2017 hurricanes in the U.S. Virgin Islands, revenues from our U.S. solar asset portfolio that was sold in Q4 2018, and revenues from the sale of certain US Telecom wholesale wireless cell sites in Q2 2018.
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.
| 6 |
| Table 1 |
| ATN International, Inc. |
| Unaudited Condensed Consolidated Balance Sheets |
| (in Thousands) |
| September
30, 2019 | December
31, 2018 | |||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | 165,280 | $ | 191,836 | ||||
| Restricted cash | 1,071 | 1,071 | ||||||
| Short-term investments | 3,250 | 393 | ||||||
| Other current assets | 88,210 | 82,465 | ||||||
| Total current assets | 257,811 | 275,765 | ||||||
| Property, plant and equipment, net | 605,501 | 626,852 | ||||||
| Operating lease right-of-use assets | 71,111 | - | ||||||
| Goodwill and other intangible assets, net | 165,521 | 166,979 | ||||||
| Other assets | 62,856 | 37,708 | ||||||
| Total assets | $ | 1,162,800 | $ | 1,107,304 | ||||
| Liabilities and Stockholders’ Equity: | ||||||||
| Current portion of long-term debt | $ | 4,688 | $ | 4,688 | ||||
| Taxes payable | 9,999 | 31,795 | ||||||
| Current portion of operating lease liabilities | 9,912 | - | ||||||
| Other current liabilities | 116,431 | 104,167 | ||||||
| Total current liabilities | 141,030 | 140,650 | ||||||
| Long-term debt, net of current portion | $ | 83,577 | $ | 86,294 | ||||
| Deferred income taxes | 3,989 | 10,276 | ||||||
| Operating lease liabilities | 59,663 | - | ||||||
| Other long-term liabilities | 56,242 | 46,760 | ||||||
| Total liabilities | 344,501 | 283,980 | ||||||
| Total ATN International, Inc.’s stockholders’ equity | 688,083 | 695,387 | ||||||
| Non-controlling interests | 130,216 | 127,937 | ||||||
| Total equity | 818,299 | 823,324 | ||||||
| Total liabilities and stockholders’ equity | $ | 1,162,800 | $ | 1,107,304 | ||||
| 7 |
| Table 2 |
| ATN International, Inc. |
| Unaudited Condensed Consolidated Statements of Operations |
| (in Thousands, Except per Share Data) |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenues: | ||||||||||||||||
| Wireless | $ | 54,555 | $ | 52,003 | $ | 143,705 | $ | 153,046 | ||||||||
| Wireline | 59,623 | 63,717 | 178,555 | 173,083 | ||||||||||||
| Renewable energy | 1,438 | 5,418 | 4,377 | 17,272 | ||||||||||||
| Total revenue | 115,616 | 121,138 | 326,637 | 343,401 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Termination and access fees | 27,622 | 29,866 | 83,440 | 84,037 | ||||||||||||
| Engineering and operations | 20,095 | 18,177 | 58,234 | 54,738 | ||||||||||||
| Sales, marketing and customer service | 9,785 | 8,995 | 29,048 | 25,969 | ||||||||||||
| General and administrative | 25,110 | 25,210 | 75,518 | 77,470 | ||||||||||||
| Transaction-related charges | 21 | 178 | 89 | 642 | ||||||||||||
| Depreciation and amortization | 22,603 | 21,384 | 64,870 | 64,602 | ||||||||||||
| (Gain) loss on disposition of assets | 132 | (13,496 | ) | 321 | (15,509 | ) | ||||||||||
| Loss on damaged assets and other hurricane related charges | - | - | - | 666 | ||||||||||||
| Total operating expenses | 105,368 | 90,314 | 311,520 | 292,615 | ||||||||||||
| Operating income | 10,248 | 30,824 | 15,117 | 50,786 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense, net | (884 | ) | (1,661 | ) | (1,983 | ) | (5,339 | ) | ||||||||
| Other income (expense) | (2,686 | ) | (1,244 | ) | (2,755 | ) | (3,042 | ) | ||||||||
| Other income (expense), net | (3,570 | ) | (2,905 | ) | (4,738 | ) | (8,381 | ) | ||||||||
| Income before income taxes | 6,678 | 27,919 | 10,379 | 42,405 | ||||||||||||
| Income tax expense | 1,834 | 7,010 | 2,774 | 13,018 | ||||||||||||
| Net Income | 4,844 | 20,909 | 7,605 | 29,387 | ||||||||||||
| Net income attributable to non-controlling interests, net | (3,459 | ) | (3,887 | ) | (8,657 | ) | (10,705 | ) | ||||||||
| Net income (loss) attributable to ATN International, Inc. stockholders | $ | 1,385 | $ | 17,022 | $ | (1,052 | ) | $ | 18,682 | |||||||
| Net income (loss) per weighted average share attributable to ATN International, Inc. stockholders: | ||||||||||||||||
| Basic Net Income (Loss) | $ | 0.09 | $ | 1.07 | $ | (0.07 | ) | $ | 1.17 | |||||||
| Diluted Net Income (Loss) | $ | 0.09 | $ | 1.06 | $ | (0.07 | ) | $ | 1.16 | |||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 16,000 | 15,958 | 15,984 | 15,987 | ||||||||||||
| Diluted | 16,007 | 16,021 | 15,984 | 16,042 | ||||||||||||
| 8 |
| Table 3 |
| ATN International, Inc. |
| Unaudited Condensed Consolidated Cash Flow Statement |
| (in Thousands) |
| Nine Months Ended September 30, | ||||||||
| 2019 | 2018 | |||||||
| Net income | $ | 7,605 | $ | 29,387 | ||||
| Depreciation and amortization | 64,870 | 64,602 | ||||||
| Provision for doubtful accounts | 3,796 | 4,199 | ||||||
| (Gain) Loss on disposition of assets | 321 | (15,509 | ) | |||||
| Stock-based compensation | 4,881 | 5,071 | ||||||
| Deferred income taxes | (6,287 | ) | (3,062 | ) | ||||
| Investment loss | 2,313 | - | ||||||
| Change in prepaid and accrued income taxes | (13,889 | ) | 10,557 | |||||
| Change in other operating assets and liabilities | (7,444 | ) | (19 | ) | ||||
| Other non-cash activity | 681 | 2,788 | ||||||
| Net cash provided by operating activities | 56,847 | 98,014 | ||||||
| Capital expenditures | (49,363 | ) | (75,375 | ) | ||||
| Hurricane rebuild capital expenditures | (123 | ) | (78,903 | ) | ||||
| Hurricane insurance proceeds | - | 34,606 | ||||||
| Purchases of strategic investments | (10,285 | ) | (3,000 | ) | ||||
| Proceeds from sale of short-term investments | 5,141 | 6,564 | ||||||
| Purchase of short-term investments | (8,028 | ) | - | |||||
| Proceeds from sale of assets | - | 4,130 | ||||||
| Divestiture of business | - | 926 | ||||||
| Government grants | - | 5,400 | ||||||
| Net cash used in investing activities | (62,658 | ) | (105,652 | ) | ||||
| Dividends paid on common stock | (8,160 | ) | (8,153 | ) | ||||
| Distributions to non-controlling interests | (5,760 | ) | (15,271 | ) | ||||
| Principal repayments of term loan | (2,825 | ) | (5,723 | ) | ||||
| Payment of debt issuance costs | (1,340 | ) | - | |||||
| Stock-based compensation share repurchases | (1,607 | ) | (2,101 | ) | ||||
| Purchases of common stock - share buyback | (162 | ) | (1,576 | ) | ||||
| Repurchases of non-controlling interests | (1,353 | ) | (5,196 | ) | ||||
| Investments made by minority shareholders | 488 | - | ||||||
| Other | - | 72 | ||||||
| Net cash used in financing activities | (20,719 | ) | (37,948 | ) | ||||
| Effect of foreign currency exchange rates on total cash, cash equivalents and restricted cash | (26 | ) | (353 | ) | ||||
| Net change in total cash, cash equivalents and restricted cash | (26,556 | ) | (45,939 | ) | ||||
| Total cash, cash equivalents and restricted cash, beginning of period | 192,907 | 219,890 | ||||||
| Total cash, cash equivalents and restricted cash, end of period | $ | 166,351 | $ | 173,951 | ||||
| 9 |
| Table 4 |
| ATN International, Inc. |
| Selected Segment Financial Information |
| (In Thousands) |
| For the three months ended September 30, 2019 is as follows: | ||||||||||||||||||||
| US Telecom | International Telecom | Renewable Energy | Corporate and Other * | Total | ||||||||||||||||
| Statement of Operations Data: | ||||||||||||||||||||
| Revenue | ||||||||||||||||||||
| Wireless | $ | 32,168 | $ | 22,387 | $ | - | $ | - | $ | 54,555 | ||||||||||
| Wireline | 725 | 58,898 | - | - | 59,623 | |||||||||||||||
| Renewable Energy | - | - | 1,438 | - | 1,438 | |||||||||||||||
| Total Revenue | $ | 32,893 | $ | 81,285 | $ | 1,438 | $ | - | $ | 115,616 | ||||||||||
| Operating Income (Loss) | $ | 7,912 | $ | 10,867 | $ | (714 | ) | $ | (7,817 | ) | $ | 10,248 | ||||||||
| Stock-based compensation | $ | - | $ | 285 | $ | - | $ | 1,263 | $ | 1,548 | ||||||||||
| Non-controlling interest ( net income or (loss) ) | $ | (1,342 | ) | $ | (2,154 | ) | $ | 37 | $ | - | $ | (3,459 | ) | |||||||
| Non GAAP measure: | ||||||||||||||||||||
| Adjusted EBITDA (1) | $ | 13,779 | $ | 24,956 | $ | 337 | $ | (6,068 | ) | $ | 33,004 | |||||||||
| Balance Sheet Data (at September 30, 2019): | ||||||||||||||||||||
| Cash, cash equivalents and investments | $ | 36,738 | $ | 51,178 | $ | 21,030 | $ | 59,585 | $ | 168,530 | ||||||||||
| Total current assets | 60,782 | 101,113 | 38,696 | 57,220 | 257,811 | |||||||||||||||
| Fixed assets, net | 69,642 | 470,338 | 43,497 | 22,024 | 605,501 | |||||||||||||||
| Total assets | 230,585 | 660,367 | 86,224 | 185,624 | 1,162,800 | |||||||||||||||
| Total current liabilities | 30,870 | 75,348 | 1,354 | 33,458 | 141,030 | |||||||||||||||
| Total debt | - | 88,265 | - | - | 88,265 | |||||||||||||||
* Corporate and Other refer to corporate overhead expenses and consolidating adjustments
ATN International, Inc.
Selected Segment Financial Information
(In Thousands)
| For the three months ended September 30, 2018 is as follows: | ||||||||||||||||||||
| US Telecom | International Telecom | Renewable Energy | Corporate and Other * | Total | ||||||||||||||||
| Statement of Operations Data: | ||||||||||||||||||||
| Revenue | ||||||||||||||||||||
| Wireless | $ | 29,784 | $ | 22,219 | $ | - | $ | - | $ | 52,003 | ||||||||||
| Wireline | 2,024 | 61,693 | - | - | 63,717 | |||||||||||||||
| Renewable Energy | - | - | 5,418 | - | 5,418 | |||||||||||||||
| Total Revenue | $ | 31,808 | $ | 83,912 | $ | 5,418 | $ | - | $ | 121,138 | ||||||||||
| Operating Income (Loss) | $ | 22,773 | $ | 16,239 | $ | (177 | ) | $ | (8,011 | ) | $ | 30,824 | ||||||||
| Stock-based compensation | - | 20 | 29 | 1,344 | 1,393 | |||||||||||||||
| Non-controlling interest ( net income or (loss) ) | $ | (1,299 | ) | $ | (2,375 | ) | $ | (213 | ) | $ | - | $ | (3,887 | ) | ||||||
| Non GAAP measure: | ||||||||||||||||||||
| Adjusted EBITDA (1) | $ | 13,529 | $ | 28,645 | $ | 3,090 | $ | (6,374 | ) | $ | 38,890 | |||||||||
| 10 |
| ATN International, Inc. |
| Selected Segment Financial Information |
| (In Thousands) |
| For the nine months ended September 30, 2019 is as follows: | ||||||||||||||||||||
| US Telecom | International Telecom | Renewable Energy | Corporate and Other * | Total | ||||||||||||||||
| Statement of Operations Data: | ||||||||||||||||||||
| Revenue | ||||||||||||||||||||
| Wireless | $ | 78,261 | $ | 65,444 | $ | - | $ | - | $ | 143,705 | ||||||||||
| Wireline | 2,538 | 176,017 | - | - | 178,555 | |||||||||||||||
| Renewable Energy | - | - | 4,377 | - | 4,377 | |||||||||||||||
| Total Revenue | $ | 80,799 | $ | 241,461 | $ | 4,377 | $ | - | $ | 326,637 | ||||||||||
| Operating Income (Loss) | $ | 5,927 | $ | 35,802 | $ | (750 | ) | $ | (25,862 | ) | $ | 15,117 | ||||||||
| Stock-based compensation | $ | - | 306 | $ | - | 4,575 | $ | 4,881 | ||||||||||||
| Non-controlling interest ( net income or (loss) ) | $ | (1,864 | ) | $ | (6,810 | ) | $ | 17 | $ | - | $ | (8,657 | ) | |||||||
| Non GAAP measure: | ||||||||||||||||||||
| Adjusted EBITDA (1) | $ | 23,007 | $ | 76,497 | $ | 1,693 | $ | (20,800 | ) | $ | 80,397 | |||||||||
| Statement of Cash Flows Data: | ||||||||||||||||||||
| Capital expenditures | $ | 8,533 | $ | 33,159 | $ | 2,183 | $ | 5,611 | $ | 49,486 | ||||||||||
ATN International, Inc.
Selected Segment Financial Information
(In Thousands)
| For the nine months ended September 30, 2018 is as follows: | ||||||||||||||||||||
| US Telecom | International Telecom | Renewable Energy | Corporate and Other * | Total | ||||||||||||||||
| Statement of Operations Data: | ||||||||||||||||||||
| Revenue | ||||||||||||||||||||
| Wireless | $ | 85,767 | $ | 67,279 | $ | - | $ | - | $ | 153,046 | ||||||||||
| Wireline | 4,824 | 168,259 | - | - | 173,083 | |||||||||||||||
| Renewable Energy | - | - | 17,272 | - | 17,272 | |||||||||||||||
| Total Revenue | $ | 90,591 | $ | 235,538 | $ | 17,272 | $ | - | $ | 343,401 | ||||||||||
| Operating Income (Loss) | $ | 35,839 | $ | 37,449 | $ | 3,687 | $ | (26,189 | ) | $ | 50,786 | |||||||||
| Stock-based compensation | - | 68 | 86 | 4,917 | 5,071 | |||||||||||||||
| Non-controlling interest ( net income or (loss) ) | $ | (2,771 | ) | $ | (7,209 | ) | $ | (725 | ) | $ | - | $ | (10,705 | ) | ||||||
| Non GAAP measure: | ||||||||||||||||||||
| Adjusted EBITDA (1) | $ | 38,208 | $ | 74,055 | $ | 10,691 | $ | (21,767 | ) | $ | 101,187 | |||||||||
| Statement of Cash Flows Data: | ||||||||||||||||||||
| Capital expenditures | $ | 9,460 | $ | 136,791 | $ | 1,641 | $ | 6,386 | $ | 154,278 | ||||||||||
| 11 |
ATN International, Inc.
Selected Segment Financial Information
(In Thousands)
at December 31, 2018
| US 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 | ||||||||||||||||||||
| September 30, | December 31, | March 31, | June 30, | September 30, | ||||||||||||||||
| 2018** | 2018** | 2019 | 2019 | 2019 | ||||||||||||||||
| US Telecom Operational Data: | ||||||||||||||||||||
| Wireless - Total Domestic Base Stations | 1,035 | 1,045 | 1,046 | 1,048 | 1,048 | |||||||||||||||
| International Telecom Operational Data: | ||||||||||||||||||||
| Wireline - Voice / Access lines* | 170,400 | 171,100 | 171,200 | 171,200 | 170,200 | |||||||||||||||
| Wireline - Data Subscribers* | 116,800 | 119,800 | 123,600 | 124,700 | 127,100 | |||||||||||||||
| Wireline - Video Subscribers | 43,600 | 41,700 | 41,000 | 39,700 | 38,600 | |||||||||||||||
| Wireless - Subscribers* | 300,600 | 300,400 | 293,500 | 290,400 | 284,800 | |||||||||||||||
* 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
12
Table 5
ATN International, Inc.
Reconciliation of Non-GAAP Measures
(In Thousands)
Reconciliation of Net Income to Adjusted EBITDA for the Three Months Ended September 30, 2019 and 2018
| Three Months Ended September 30, 2019 | ||||||||||||||||||||
| US Telecom | International Telecom | Renewable Energy | Corporate and Other * | Total | ||||||||||||||||
| Net income (loss)attributable to ATN International, Inc. stockholders | $ | 1,385 | ||||||||||||||||||
| Net income attributable to non-controlling interests, net of tax | 3,459 | |||||||||||||||||||
| Income tax expense | 1,834 | |||||||||||||||||||
| Other (income) expense, net | 2,686 | |||||||||||||||||||
| Interest expense, net | 884 | |||||||||||||||||||
| Operating income | $ | 7,912 | $ | 10,867 | $ | (714 | ) | $ | (7,817 | ) | $ | 10,248 | ||||||||
| Depreciation and amortization | 5,770 | 14,089 | 1,016 | 1,728 | 22,603 | |||||||||||||||
| (Gain) Loss on disposition of assets | 97 | - | 35 | - | 132 | |||||||||||||||
| Transaction-related charges | - | - | - | 21 | 21 | |||||||||||||||
| Adjusted EBITDA | $ | 13,779 | $ | 24,956 | $ | 337 | $ | (6,068 | ) | $ | 33,004 | |||||||||
| Three Months Ended September 30, 2018 | ||||||||||||||||||||
| US Telecom | International Telecom | Renewable Energy | Corporate and Other * | Total | ||||||||||||||||
| Net Income (loss) attributable to ATN International, Inc. stockholders | $ | 17,022 | ||||||||||||||||||
| Net income attributable to non-controlling interests, net of tax | 3,887 | |||||||||||||||||||
| Income tax benefit | 7,010 | |||||||||||||||||||
| Other expense, net | 1,244 | |||||||||||||||||||
| Interest expense, net | 1,661 | |||||||||||||||||||
| Operating income | $ | 22,773 | $ | 16,239 | $ | (177 | ) | $ | (8,011 | ) | $ | 30,824 | ||||||||
| Depreciation and amortization | 5,665 | 12,441 | 1,819 | 1,459 | 21,384 | |||||||||||||||
| (Gain) loss on disposition of assets | (14,909 | ) | (35 | ) | 1,448 | - | (13,496 | ) | ||||||||||||
| Transaction-related charges | - | - | - | 178 | 178 | |||||||||||||||
| Adjusted EBITDA | $ | 13,529 | $ | 28,645 | $ | 3,090 | $ | (6,374 | ) | $ | 38,890 | |||||||||
* Corporate and Other refer to corporate overhead expenses and consolidating adjustments
13
| Reconciliation of Net Income to Adjusted EBITDA for the Nine Months Ended September 30, 2019 and 2018 | ||||||||||||||||||||
| Nine Months Ended September 30, 2019 | ||||||||||||||||||||
| US | International | Renewable | Corporate | |||||||||||||||||
| Telecom | Telecom | Energy | and Other * | Total | ||||||||||||||||
| Net income attributable to ATN International, Inc. stockholders | $ | (1,052 | ) | |||||||||||||||||
| Net income attributable to non-controlling interests, net of tax | 8,657 | |||||||||||||||||||
| Income tax expense | 2,774 | |||||||||||||||||||
| Other (income) expense, net | 2,755 | |||||||||||||||||||
| Interest expense, net | 1,983 | |||||||||||||||||||
| Operating income | $ | 5,927 | $ | 35,802 | $ | (750 | ) | $ | (25,862 | ) | $ | 15,117 | ||||||||
| Depreciation and amortization | 16,919 | 40,709 | 2,269 | 4,973 | 64,870 | |||||||||||||||
| (Gain) Loss on disposition of long-lived assets | 161 | (14 | ) | 174 | - | 321 | ||||||||||||||
| Transaction-related charges | - | - | - | 89 | 89 | |||||||||||||||
| Adjusted EBITDA | $ | 23,007 | $ | 76,497 | $ | 1,693 | $ | (20,800 | ) | $ | 80,397 | |||||||||
| Nine Months Ended September 30, 2018 | ||||||||||||||||||||
| US | International | Renewable | Corporate | |||||||||||||||||
| Telecom | Telecom | Energy | and Other * | Total | ||||||||||||||||
| Net Income attributable to ATN International, Inc. stockholders | $ | 18,682 | ||||||||||||||||||
| Net income attributable to non-controlling interests, net of tax | 10,705 | |||||||||||||||||||
| Income tax expense | 13,018 | |||||||||||||||||||
| Other (income) expense, net | 3,042 | |||||||||||||||||||
| Interest expense, net | 5,339 | |||||||||||||||||||
| Operating income | $ | 35,839 | $ | 37,449 | $ | 3,687 | $ | (26,189 | ) | $ | 50,786 | |||||||||
| Depreciation and amortization | 19,013 | 35,907 | 5,492 | 4,190 | 64,602 | |||||||||||||||
| (Gain) Loss on disposition of long-lived assets | (17,054 | ) | 33 | 1,512 | - | (15,509 | ) | |||||||||||||
| Loss on damaged assets and other hurricane related charges, net of insurance recovery | - | 666 | - | - | 666 | |||||||||||||||
| Transaction-related charges | 410 | - | - | 232 | 642 | |||||||||||||||
| Adjusted EBITDA | $ | 38,208 | $ | 74,055 | $ | 10,691 | $ | (21,767 | ) | $ | 101,187 | |||||||||
| 14 |
| Table 6 | |||||||||||
| ATN International, Inc. | |||||||||||
| Reconciliation of Non GAAP Measures | |||||||||||
| (in Thousands) | |||||||||||
| Reconciliation of Revenue to Recurring Revenue for the Three Months Ended September 30, 2019 and 2018 | |||||||||||
| Three Months Ended September 30, 2019 | |||||||||||
| US | International | Renewable | ||||||||||||||
| Telecom | Telecom | Energy | Total | |||||||||||||
| Revenue | $ | 32,893 | $ | 81,285 | $ | 1,438 | $ | 115,616 | ||||||||
| Adjustments for Recurring Revenue: | - | - | - | - | ||||||||||||
| Recurring Revenue | $ | 32,893 | $ | 81,285 | $ | 1,438 | $ | 115,616 | ||||||||
| Three Months Ended September 30, 2018 | ||||||||||||||||
| US | International | Renewable | ||||||||||||||
| Telecom | Telecom | Energy | Total | |||||||||||||
| Revenue | $ | 31,808 | $ | 83,912 | $ | 5,418 | $ | 121,138 | ||||||||
| Less: USF incremental high cost support funding | - | (7,219 | ) | - | (7,219 | ) | ||||||||||
| Less: Revenues of US Solar asset portfolio, sold in Q4 2018 | - | - | (4,182 | ) | (4,182 | ) | ||||||||||
| Recurring Revenue | $ | 31,808 | $ | 76,693 | $ | 1,236 | $ | 109,737 | ||||||||
| Reconciliation of Revenue to Recurring Revenue for the Nine Months Ended September 30, 2019 and 2018 | ||||||||||||||||
| Nine Months Ended September 30, 2019 | ||||||||||||||||
| US | International | Renewable | ||||||||||||||
| Telecom | Telecom | Energy | Total | |||||||||||||
| Revenue | $ | 80,799 | $ | 241,461 | $ | 4,377 | $ | 326,637 | ||||||||
| Adjustments for Recurring Revenue: | - | - | - | - | ||||||||||||
| Recurring Revenue | $ | 80,799 | $ | 241,461 | $ | 4,377 | $ | 326,637 | ||||||||
| Nine Months Ended September 30, 2018 | ||||||||||||||||
| US | International | Renewable | ||||||||||||||
| Telecom | Telecom | Energy | Total | |||||||||||||
| Revenue | $ | 90,591 | $ | 235,538 | $ | 17,272 | $ | 343,401 | ||||||||
| Less: USF incremental high cost support funding | - | (15,400 | ) | - | (15,400 | ) | ||||||||||
| Less: Revenues of US Solar asset portfolio, sold in Q4 2018 | - | - | (13,282 | ) | (13,282 | ) | ||||||||||
| Less: Revenues from US Telecom wholesale wireless cell sites sold in Q2 2018 | (4,052 | ) | - | - | (4,052 | ) | ||||||||||
| Recurring Revenue | $ | 86,539 | $ | 220,138 | $ | 3,990 | $ | 310,667 | ||||||||
| 15 |