Alteva Reports Second Quarter Financial Results
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E-mailPHILADELPHIA, PA -- (Marketwired) -- 08/14/15 -- Alteva, Inc. ("Alteva" or the "Company") (NYSE MKT: ALTV), a premier provider of hosted Unified-Communications-as-a-Service ("UCaaS"), today announced selected financial results for the second quarter ended June 30, 2015.
Second Quarter 2015 Financial Results Highlights
- For the second quarter of 2015, the Company recorded Adjusted EBITDA* of $(0.4) million, as compared to $(0.1) million for the same period in 2014;
- The Company recorded operating loss of $(2.3) million for the second quarter of 2015, as compared to $(1.4) million for the same period in 2014;
- The Company had a net loss of $(1.8) million for the second quarter of 2015 and net income of $31.5 million for the same period in 2014;
- For the second quarter of 2015, UC revenues increased by 7% to $4.5 million from $4.2 million for the second quarter of 2014;
- During the second quarter of 2015 the Company installed over 2,000 new users on its hosted platform, which brings the total users to over 55,000 at the end of the second quarter of 2015. This represented an increase of 16% compared to the end of second quarter 2014;
- During the second quarter of 2015, the Company had new customer sales of approximately 2,600 users;
- As of June 30, 2015, the Company had approximately 3,400 new customer users, or 6% of the installed base, sold and scheduled for implementation; and
- Gross profit margin decreased to 58% in the second quarter of 2015 from 62% for the second quarter of 2014.
Second Quarter 2015 Results
Revenues increased to $7.9 million in the second quarter of 2015 as compared to $7.6 million for the second quarter of 2014.
UC revenues were $4.5 million in the second quarter of 2015, an increase of 7% from $4.2 million for the same period in 2014. As a percentage of consolidated revenue, the UC segment contributed approximately 57% of revenues in the second quarter of 2015, as compared with 56% for the same period in 2014. The increase in UC revenues was attributable to the addition of new clients and the increase in services to existing clients. Approximately 90% of second quarter 2015 UC revenues and 91% of the second quarter 2014 revenues were from licenses and services which are expected to be recurring in nature, with the balance of revenues derived primarily from equipment sales that were mostly related to new customer implementations.
Telephone revenues were $3.4 million in the second quarters of 2015 and 2014. The Telephone segment contributed approximately 43% of revenues in the second quarter 2015, as compared with 44% for the same period of 2014. Telephone revenues were flat year-over-year as a result of continued access line losses being offset by higher revenue from pooling arrangements, an increase in access line rates, and modest growth in broadband Internet services revenues.
UC cost of service expenses were $2.3 million in the second quarter of 2015, as compared to $1.9 million in the second quarter of 2014. The increase in UC cost of services expenses was due to the variable costs associated with the additional seats on the platform and the hiring of additional operations personnel to support the implementation of new users, including the growing implementation backlog.
Depreciation and amortization expenses were $1.3 million in the second quarter of 2015 as compared to $0.9 million for the same period of 2014. The increase was due to the accelerated depreciation of leasehold improvements to be written off in connection with the relocation of the Philadelphia offices.
Gross profit decreased by 4% to $4.6 million in the second quarter of 2015, from $4.7 million for the same period in 2014. Gross profit margin was 58% in the second quarter of 2015 as compared to 62% for the same period of 2014.
Selling, general and administrative expenses in the second quarter of 2015 were $5.6 million, as compared with $5.3 million for the same period in 2014. The increase was primarily due to professional fees and other costs associated with the review of strategic alternatives.
Other income for the second quarter of 2014 included $50.3 million from the Company's former equity investment in the O-P partnership, which was sold in April 2014.
For the second quarter of 2015, the Company had income tax benefit of $0.5 million, or 21% of loss before income taxes, as compared to an income tax expense $17.3 million, or 35% of income before income taxes, for the second quarter of 2014. The estimated effective tax rate for each period includes projections of tax expense on the expected change in our valuation allowance for deferred tax assets. The estimated effective tax rate differed from the U.S. statutory rate primarily due to the expected increase in the valuation allowance, which resulted in an overall tax benefit recorded for the period ended June 30, 2015.
For the second quarter of 2015, the Company recorded a net loss of $(1.8) million and net income of $31.5 million for the second quarter of 2014.
Basic and diluted net loss per share was $(0.31) for the second quarter of 2015, as compared with basic and diluted net earnings of $5.19 in the same period of 2014.
Conference Call
The Company will conduct a conference call to discuss second quarter results on Wednesday, August 19, 2015 at 10:00 a.m. eastern. Investors and other interested parties can listen to the call by dialing the participant number of 877-317-6789 (toll free) or 412-317-6789 (international), no access code required. A simultaneous webcast of the conference call can be accessed through Alteva's website at www.alteva.com in the Investors section.
A replay of this conference call will also be available by dialing 877-344-7529 (toll free) or 412-317-0088 (international), access code: 10071088, at approximately 12:00 p.m. eastern on August 19, 2015 through 9:00 a.m. eastern September 19, 2015, and via the Company's website at www.alteva.com.
About Alteva Alteva [NYSE MKT: ALTV] is a premier provider of Unified Communications and Collaboration solutions for business. Alteva's Unified-Communications-as-a-Service (UCaaS) solution integrates and optimizes best-in-class cloud-based technologies and business applications to deliver a comprehensive voice, video and collaboration service for the office and mobile workforce. Alteva is committed to delivering meaningful value to our customers through a consistent, high quality and unified user experience across multiple devices, platforms and operating systems. These attributes have positioned Alteva as a leading hosted communications provider and the partner of choice for a growing number of business customers nationwide and internationally. To learn more about Alteva, please visit www.alteva.com. You can also follow Alteva on Twitter @AltevaInc or LinkedIn.
*Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization adjusted to exclude non-cash stock-based compensation, severance related expense, income from equity method investment, and restructuring costs and other special charges. A reconciliation of adjusted EBITDA to net income (loss) can be found at the end of the following tables. Adjusted EBITDA is commonly used by management and investors as an indicator of operating performance and liquidity. Adjusted EBITDA is not considered a measure of financial performance under GAAP and it should not be considered as an alternative to net income (loss), or other financial statement data presented in accordance with GAAP in our consolidated financial statements.
Safe Harbor Statement
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements, without limitation, regarding expectations, beliefs, intentions, growth, profitability, or strategies regarding the future. Such statements include, without limitation, statements containing the words "believes," "anticipates," "intends," "expects," "will" and words of similar import. Alteva intends that such forward-looking statements be subject to the safe-harbor provided by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Alteva's actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: expectations of future profitability; general economic and business conditions, both nationally and in the geographic regions in which Alteva operates; industry capacity; demographic changes; technological changes and changes in consumer demand; the successful integration of Alteva's acquired businesses; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; legislative proposals relating to the businesses in which Alteva operates; competition; or the loss of any significant ability to attract and retain qualified personnel. Given these uncertainties, current and prospective investors should be cautioned in their reliance on such forward-looking statements. Except as required by law, Alteva disclaims any obligation to update any such factors or to publicly announce the results of any revision to any of the forward-looking statements contained herein to reflect future events or developments. A more comprehensive discussion of risks, uncertainties, financial reporting restatements, and forward-looking statements may be seen in Alteva's Annual Report on Form 10-K and other periodic filings with the U.S. Securities and Exchange Commission.
ALTEVA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2015 2014 2015 2014
--------- --------- --------- ---------
Operating revenues:
Unified Communications $ 4,524 $ 4,234 $ 8,985 $ 8,445
Telephone 3,370 3,370 6,663 6,683
--------- --------- --------- ---------
Total operating revenues 7,894 7,604 15,648 15,128
Operating expenses:
Cost of services and products
(exclusive of depreciation
and amortization expense) 3,343 2,867 6,486 5,919
Selling, general and
administration expenses 5,594 5,262 10,649 10,960
Depreciation and amortization 1,250 919 2,492 1,822
Restructuring costs and other
special charges - - - 100
--------- --------- --------- ---------
Total operating expenses 10,187 9,048 19,627 18,801
--------- --------- --------- ---------
Operating loss (2,293) (1,444) (3,979) (3,673)
Other income:
Interest income (expense), net 3 (54) 12 (193)
Income from investment - 50,333 - 52,373
Other (expense) income, net (11) 6 1,490 27
--------- --------- --------- ---------
Total other (expense) income,
net (8) 50,285 1,502 52,207
--------- --------- --------- ---------
(Loss) income before income
taxes (2,301) 48,841 (2,477) 48,534
Income tax (benefit) expense (475) 17,304 (457) 17,246
--------- --------- --------- ---------
Net (loss) income (1,826) 31,537 (2,020) 31,288
Preferred dividends 7 7 13 13
--------- --------- --------- ---------
Net (loss) income applicable to
common stock $ (1,833) $ 31,530 $ (2,033) $ 31,275
========= ========= ========= =========
Basic (loss) earnings per common
share $ (0.31) $ 5.19 $ (0.35) $ 5.11
========= ========= ========= =========
Diluted (loss) earnings per
common share $ (0.31) $ 5.19 $ (0.35) $ 5.11
========= ========= ========= =========
Weighted average shares of
common stock used to calculate
loss per common share:
Basic 5,859 5,917 5,844 5,842
========= ========= ========= =========
Diluted 5,859 5,917 5,844 5,842
========= ========= ========= =========
Dividends declared per common
share $ 2.60 $ - $ 2.60 $ -
========= ========= ========= =========
ALTEVA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
June 30, December 31,
2015 2014
------------- -------------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 7,709 $ 24,047
Trade accounts receivable - net of allowance
for uncollectibles - $433 and $402 at June
30, 2015 and December 31, 2014,
respectively 2,913 2,737
Other accounts receivable 576 488
Materials and supplies 198 167
Prepaid expenses 512 349
Prepaid income taxes 502 311
Deferred income taxes 627 43
------------- -------------
Total current assets 13,037 28,142
------------- -------------
Property, plant and equipment, net 11,308 12,384
Intangibles, net 4,595 5,020
Seat licenses, net 1,689 1,543
Goodwill 9,006 9,006
Other assets 1,290 1,023
------------- -------------
Total assets $ 40,925 $ 57,118
============= =============
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt $ 394 $ 325
Accounts payable 1,020 1,216
Advance billing and payments 357 274
Accrued taxes 978 1,056
Pension and post retirement benefit
obligations 276 276
Accrued wages 847 1,036
Deferred revenue 789 705
Other accrued expenses 2,971 2,180
------------- -------------
Total current liabilities 7,632 7,068
------------- -------------
Long-term debt 323 295
Deferred income taxes 892 766
Pension and postretirement benefit
obligations 8,808 8,833
------------- -------------
Total liabilities 17,655 16,962
------------- -------------
Shareholders' equity
Preferred shares - $100 par value,
authorized and issued shares of 5; $0.01
par value, authorized and unissued shares
of 10,000 500 500
Common stock - $0.01 par value, authorized
shares of 10,000; issued shares of 6,903
and 6,826 at June 30, 2015 and December 31,
2014, respectively 69 69
Treasury stock - at cost, 902 and 885 common
shares at June 30, 2015 and December 31,
2014, respectively (8,202) (8,077)
Additional paid in capital 14,399 14,047
Accumulated other comprehensive loss (3,476) (3,997)
Retained earnings 19,980 37,614
------------- -------------
Total shareholders' equity 23,270 40,156
------------- -------------
Total liabilities and shareholders' equity $ 40,925 $ 57,118
============= =============
ALTEVA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended June 30,
--------------------------
2015 2014
------------ ------------
CASH FLOW FROM OPERATING ACTIVITIES
Net (loss) income $ (2,020) $ 31,288
Adjustments to reconcile net (loss) income to
net cash provided by (used in) operating
activities:
Depreciation and amortization 2,492 1,822
Stock based compensation expense 352 507
Undistributed earnings from equity
investment - (50,284)
Other non-cash operating activities (458) 218
Changes in assets and liabilities:
Trade accounts receivable (176) (499)
Prepaid expenses and other assets (737) (470)
Accounts payable and accrued expenses 761 564
Accrued taxes (78) 16,000
Pension and postretirement benefit
obligations 496 136
------------ ------------
Net cash provided by (used in) operating
activities 632 (718)
------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures (668) (151)
Purchase of seat licenses and other
intangibles (330) (90)
Proceeds from sale of assets - 33
Proceeds received in excess of income from
equity investments - 49,776
------------ ------------
Net cash (used in) provided by investing
activities (998) 49,568
------------ ------------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from debt - 2,443
Repayment of debt and capital leases (233) (12,422)
Purchase of treasury stock (125) (399)
Dividends (Common and Preferred) (15,614) (13)
------------ ------------
Net cash used in financing activities (15,972) (10,391)
------------ ------------
Net change in cash and cash equivalents (16,338) 38,459
Cash and cash equivalents at beginning of period 24,047 1,636
------------ ------------
Cash and cash equivalents at end of period $ 7,709 $ 40,095
============ ============
Supplemental disclosure of non-cash investing
activities:
Acquisition of equipment and seat licenses
under capital leases $ 330 $ 365
ALTEVA
RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME (LOSS)
AS IT IS PRESENTED ON THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2015 2014 2015 2014
--------- --------- --------- ---------
Net income (loss) $ (1,826) $ 31,537 $ (2,020) $ 31,288
Depreciation and amortization 1,250 919 2,492 1,822
Stock-based compensation 193 201 352 507
Severance related charges - 227 - 296
Restructuring costs and other
special charges - - - 100
Review of strategic
alternatives expenses 475 - 643 -
Interest (income) expense, net (3) 54 (12) 193
Income from investment - (50,333) - (52,373)
Income tax expense (benefit) (475) 17,304 (457) 17,246
--------- --------- --------- ---------
Adjusted EBITDA $ (386) $ (91) $ 998 $ (921)
========= ========= ========= =========
Source: Alteva
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