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Spok Reports 2017 First Quarter Operating Results; Software Bookings and Backlog Increase, Wireless Trends Improve

April 26, 2017 4:10 PM

Board Declares Regular Quarterly Dividend, Authorizes $10 Million Stock Repurchase Program

SPRINGFIELD, Va.--(BUSINESS WIRE)-- Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced operating results for the first quarter ended March 31, 2017. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on June 23, 2017 to stockholders of record on May 23, 2017.

2017 First-Quarter Results:

In the 2017 first quarter, consolidated revenue was $41.4 million, compared to $45.4 million in the first quarter of 2016 and $44.2 million in the fourth quarter of 2016. Software revenue was $15.6 million in the first quarter of 2017, compared to $17.2 million in the first quarter of 2016. Wireless revenue totaled $25.8 million in the first quarter, compared to $26.5 million in the prior quarter and $28.2 million in the prior-year quarter.

Net income for the first quarter of 2017 was $0.9 million, or $0.04 per share, compared to $3.4 million, or $0.17 per share, in the first quarter of 2016.

First quarter EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $4.6 million, or 11.1 percent of revenue, down from $7.9 million, or 17.8 percent of revenue, in the prior quarter, and $9.1 million, or 20.1 percent of revenue, in the first quarter of 2016.

Other key results and highlights for the first quarter of 2017 included:

Management Commentary:

“We are encouraged with our performance in the first quarter of 2017 and believe that it provides a solid base for the remainder of the year,” said Vincent D. Kelly, chief executive officer. “We posted the largest first quarter software bookings result in our history and saw strong year-over-year performance in a number of other key operating measures, including average deal size, number of new logo deals, backlog levels, as well as wireless subscriber retention. We achieved these results, as we increased our investment in our business by enhancing and upgrading our product development team and tools, as well as our sales infrastructure and management. As we have previously outlined, while these investments will lower our margins over the next several years, we believe this effort will yield significant future benefits in the form of our improved, integrated communication platform, Spok Care Connect®, as well as higher future bookings levels, and ultimately margins, supported by our enhanced and upgraded sales team. Overall, we continued to operate profitably, enhance our product offerings, and operate as a debt-free company. We also executed against our capital allocation strategy, by continuing to make key strategic investments in our business while returning cash to our stockholders during the quarter in the form of dividends.”

Commenting on software results, Kelly said: “We were particularly pleased with the strong software bookings levels, as we posted the largest first quarter results in our company’s history.” Kelly also attributed a more than 99 percent renewal rate on software maintenance contracts as a key driver of software revenue levels. Similar to Spok’s wireless revenue stream, software maintenance revenue is a largely recurring revenue stream that provides the Company with a more stable revenue base.

Kelly said first quarter bookings of $19.8 million included record highs for both operations and maintenance, while the software backlog of $40.6 million at March 31st was up more than 10 percent from the prior year quarter. “We will continue to focus on generating activity through the remainder of the year and are encouraged as bookings included sales to both new and current customers, with existing customers adding products and applications to expand their portfolio of communications solutions. Customer demand remained strongest for upgrades to call center solutions, healthcare applications to increase patient safety, and improved nursing workflows.” Kelly added: “We continue to see growing demand for our software solutions for smartphone communications, secure texting, emergency management, and clinical alerting.”

Kelly noted that in addition to the Company’s quarterly financial performance, progress was made in several other areas, including product development, sales strategy and key strategic partnership agreements. “Spok continues to build an industry-leading reputation, and is generating sales momentum at the conferences we attend,” commented Kelly. “During the quarter, we generated tremendous activity from tradeshows and positioned Spok as a thought-leader in our industry. At the American Organization of Nurse Executives (AONE) conference, our chief nursing officer hosted a focus group to discuss nursing challenges in the current healthcare environment. We also continue to benefit from the leads generated at the 2017 HIMSS Annual Conference that we attended in late February. Our sales teams intend to carry the momentum generated at these conferences and tradeshows throughout 2017. The combination of Spok’s strong team, solid financial base and industry-leading products and services, positions us to capture the opportunity in our chosen markets and stimulate sustainable growth.”

The Company posted solid results for its wireless products and services in the first quarter. Gross pager placements of 28,000 and gross disconnects of 48,000 were in-line with the year-earlier quarter. “As a result, annual net pager losses declined to an historical low of 5.4 percent, on a twelve-month trailing basis, and were 1.8 percent in the first quarter, in-line with the prior-year quarter,” continued Kelly. “Overall, wireless sales efforts continued to focus primarily on our core market segments of Healthcare, Government and Large Enterprise, which represented approximately 92.3 percent of our subscriber base and 90.5 percent of our paging revenue at quarter end. Healthcare comprised 79.7 percent of our subscriber base, and continued to be our best performing market segment with the highest rate of gross placements and lowest rate of unit disconnects.”

Spok returned capital to stockholders, totaling $7.7 million, in the first quarter of 2017. During the period, the Company paid $2.6 million in regular quarterly dividends and $5.1 million in the special dividend that was declared in December 2016 and paid in January 2017. Kelly added, “Throughout 2017, we will remain focused on returning value to our shareholders through our capital allocation strategy, which includes dividends and key strategic investments in our products and business that will create sustainable growth. We continue to evaluate our capital allocation strategy on a quarterly basis and will communicate our plans to you with respect to dividends, potential share repurchases and other uses of capital.”

Stock Repurchase Authorization:

The Company also announced that its Board of Directors has authorized the repurchase of up to $10 million of the Company’s common stock through 2017 on the open market or in privately negotiated transactions. “Spok’s management team and Board of Directors firmly believe in our long-term growth prospects,” said Kelly. “We intend to utilize our healthy balance sheet and the ability to generate operating cash flow to fund the new repurchase program, which we believe will create further value for our stockholders.”

The timing and the amount of any repurchases of common stock will be determined by Spok’s board based on its evaluation of market conditions and other factors. Repurchases of common stock will be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The repurchase program may be suspended or discontinued at any time. Any repurchased common stock will be available for use in connection with the Company's stock plans and for other corporate purposes.

Chief Financial Officer (CFO) Transition:

Late in the first quarter, Spok announced that Michael W. Wallace had joined the Company as its new CFO. He succeeded Shawn E. Endsley in that position, who has continued with the company in the role of Chief Accounting Officer. Wallace brings with him a proven ability to manage the finance function in a rapidly growing and changing environment and implementing strategies for improving revenue and profitability. “I am excited to welcome Mike to Spok’s management team, where he has already had an immediate impact as we continue our transition from a telecom-based wireless company to a software provider that delivers industry-leading unified healthcare communications solutions,” said Kelly. “We are particularly impressed with Mike’s deep experience in medical diagnostic services, software development, digital/interactive marketing and regulatory compliance.”

Business Outlook:

Commenting on the Company’s previously provided financial guidance for 2017, Wallace noted: “We are pleased that quarterly results were consistent with our expectations and we are maintaining the 2017 guidance range that we provided last quarter.” With regard to financial guidance for 2017, Wallace reiterated that the Company expects total revenue to range from $161 million to $177 million, operating expenses (excluding depreciation, amortization and accretion) to range from $153 million to $159 million, and capital expenditures to range from $8 million to $12 million.

2017 First-Quarter Call and Replay:

The Company plans to host a conference call for investors to discuss its 2017 first quarter results at 10:00 a.m. ET on Thursday, April 27, 2017. Dial-in numbers for the call are 719-325-2126 or 800-210-9006. The pass code for the call is 6321677. A replay of the call will be available from 1:00 p.m. ET on April 27, 2017 until 1:00 p.m. ET on Thursday, May 11, 2017. To listen to the replay, please register at http://tinyurl.com/spokQ1earningsreplay. Please cut and paste this address into your browser, enter the registration information, and you will be given access to the replay.

About Spok

Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Springfield, Va., is proud to be the global leader in healthcare communications. We deliver clinical information to care teams when and where it matters most to improve patient outcomes. Top hospitals rely on the Spok Care Connect® platform to enhance workflows for clinicians, support administrative compliance, and provide a better experience for patients. Our customers send over 100 million messages each month through their Spok® solutions. When seconds count, count on Spok. For more information, visit spok.com or follow @spoktweets on Twitter.

Safe Harbor Statement under the Private Securities Litigation Reform Act: Statements contained herein or in prior press releases which are not historical fact, such as statements regarding Spok’s future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause Spok’s actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, declining demand for paging products and services, continued demand for our software products and services, our ability to develop additional software solutions for our customers and manage our development as a global organization, the ability to manage operating expenses, future capital needs, competitive pricing pressures, competition from both traditional paging services and other wireless communications services, competition from other software providers, government regulation, reliance upon third-party providers for certain equipment and services, as well as other risks described from time to time in our periodic reports and other filings with the Securities and Exchange Commission. Although Spok believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Spok disclaims any intent or obligation to update any forward-looking statements.

SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
For the three months ended

3/31/2017

3/31/2016

Revenue:
Wireless $ 25,860 $ 28,172
Software 15,584 17,216
Total revenue 41,444 45,388
Operating expenses:
Cost of revenue 7,036 8,017
Research and development 4,105 2,908
Service, rental and maintenance 8,066 8,305
Selling and marketing 5,922 6,529
General and administrative 11,710 10,506
Depreciation, amortization and accretion 3,223 3,323
Total operating expenses 40,062 39,588
% of total revenue 96.7 % 87.2 %
Operating income 1,382 5,800
% of total revenue 3.3 % 12.8 %
Interest income 122 49
Other income (30 ) 254
Income before income tax expense 1,474 6,103
Income tax benefit (expense) (620 ) (2,659 )
Net income $ 854 $ 3,444
Basic and diluted net income per common share $ 0.04 $ 0.17
Basic weighted average common shares outstanding 20,530,739 20,706,082
Diluted weighted average common shares outstanding 20,585,542 20,706,082
Key statistics:
Units in service 1,091 1,153
Average revenue per unit (ARPU) $ 7.56 $ 7.77
Bookings $ 19,788 $ 15,106
Backlog $ 40,555 $ 36,766
(a) Slight variations in totals are due to rounding.
SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
For the three months ended

3/31/2017

12/31/2016

9/30/2016

6/30/2016

3/31/2016

12/31/2015

9/30/2015

6/30/2015

Revenue:
Wireless $ 25,860

$

26,535 $ 27,024 $ 27,859 $ 28,172 $ 28,727 $ 29,375 $ 30,222
Software 15,584 17,649 18,331 16,776 17,216 18,612 16,806 17,747
Total revenue 41,444 44,184 45,355 44,635 45,388 47,339 46,181 47,969
Operating expenses:
Cost of revenue 7,036 7,482 7,639 7,513 8,017 8,035 7,871 9,131
Research and development 4,105 3,702 3,645 3,211 2,908 2,608 2,525 2,579
Service, rental and maintenance 8,066 7,989 8,253 8,187 8,305 8,416 8,590 8,425
Selling and marketing 5,922 5,855 5,955 6,429 6,529 7,036 6,572 6,790
General and administrative 11,710 9,839 10,593 10,439 10,510 10,276 10,410 10,472
Severance — 1,438 12 — (4 ) 1,056 141 1,504
Depreciation, amortization and accretion 3,223 3,176 3,229 3,235 3,323 3,362 3,413 3,448
Total operating expenses 40,062 39,481 39,326 39,014 39,588 40,789 39,522 42,349
% of total revenue 96.7 % 89.4 % 86.7 % 87.4 % 87.2 % 86.2 % 85.6 % 88.3 %
Operating income 1,382 4,703 6,029 5,621 5,800 6,550 6,659 5,620
% of total revenue 3.3 % 10.6 % 13.3 % 12.6 % 12.8 % 13.8 % 14.4 % 11.7 %
Interest income (expense), net 122 99 67 61 49 13 1 3
Other income, net (30 ) 100 85 104 254 71 784 264
Income before income tax expense 1,474 4,902 6,181 5,786 6,103 6,634 7,444 5,887
Income tax benefit (expense) (620 ) (1,876 ) (2,123 ) (2,334 ) (2,659 ) 62,098 (3,222 ) (2,512 )
Net income $ 854 $ 3,026 $ 4,058 $ 3,452 $ 3,444 $ 68,732 $ 4,222 $ 3,375
Basic and diluted net income per common share $ 0.04 $ 0.15 $ 0.20 $ 0.17 $ 0.17 $ 3.28 $ 0.20 $ 0.16
Basic weighted average common shares outstanding 20,530,739 20,529,958 20,541,275 20,568,058 20,706,082 20,949,484 21,324,068 21,700,566
Diluted weighted average common shares outstanding 20,585,542 20,529,958 20,541,275 20,568,058 20,706,082 20,949,484 21,324,068 21,700,566
Key statistics:
Units in service 1,091 1,111 1,124 1,144 1,153 1,173 1,192 1,211
Average revenue per unit (ARPU) $ 7.56 $ 7.59 $ 7.63 $ 7.71 $ 7.77 $ 7.79 $ 7.82 $ 7.86
Bookings $ 19,788 $ 20,025 $ 18,659 $ 20,063 $ 15,106 $ 18,511 $ 16,746 $ 21,027
Backlog $ 40,555 $ 38,295 $ 38,812 $ 39,475 $ 36,766 $ 38,650 $ 41,639 $ 43,524
(a) Slight variations in totals are due to rounding.
SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(In thousands)

3/31/2017

12/31/2016

(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 118,947 $ 125,816
Accounts receivable, net 24,079 23,666
Prepaid expenses and other 4,650 4,384
Inventory 1,841 1,996
Total current assets 149,517 155,862
Property and equipment, net 13,600 12,818
Goodwill 133,031 133,031
Other intangible assets, net 9,796 10,803
Deferred income tax assets, net 72,802 73,068
Other non-current assets 2,519 2,505
Total non-current assets 231,748 232,225
Total assets $ 381,265 $ 388,087
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 1,976 $ 1,909
Accrued compensation and benefits 11,080 13,268
Accrued dividends payable 11 5,140
Accrued taxes 4,047 4,132
Deferred revenue 30,663 29,145
Other current liabilities 2,560 2,733
Total current liabilities 50,337 56,327
Non-current liabilities
Deferred revenue 749 752
Other long-term liabilities 8,774 8,921
Total non-current liabilities 9,523 9,673
Total liabilities 59,860 66,000
Commitments and contingencies
Stockholders' equity:
Preferred stock — —
Common stock 2 2
Additional paid-in capital 105,766 104,810
Retained earnings 215,637 217,275
Total stockholders' equity 321,405 322,087
Total liabilities and stockholders' equity $ 381,265 $ 388,087
(a) Slight variations in totals are due to rounding.
SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a)
(Unaudited and in thousands)
For the three months ended

3/31/2017

3/31/2016

Cash flows provided by operating activities:
Net income $ 854 $ 3,444
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 3,223 3,323
Deferred income tax expense 279 2,327
Stock based compensation 955 637
Provision for doubtful accounts, service credits and other 223 238
Adjustment of non-cash transaction taxes (122 ) (81 )
Changes in assets and liabilities:
Accounts receivable (636 ) 1,322
Prepaid expenses and other assets (146 ) 595
Accounts payable, accrued liabilities and other (2,473 ) (2,653 )
Deferred revenue 1,515 367
Net cash provided by operating activities 3,672 9,519
Cash flows used in investing activities:
Purchase of property and equipment, net of proceeds from disposals of property and equipment (2,851 ) (1,445 )
Net cash used in investing activities (2,851 ) (1,445 )
Cash flows used in financing activities:
Cash distributions to stockholders (7,694 ) (2,580 )
Purchase of common stock (including commissions), net of proceeds from issuance of common stock 4 (4,905 )
Net cash used in financing activities (7,690 ) (7,485 )
Net decrease in cash and cash equivalents (6,869 ) 589
Cash and cash equivalents, beginning of period 125,816 111,332
Cash and cash equivalents, end of period $ 118,947 $ 111,921
Supplemental disclosure:
Income taxes paid $ 180 $ 352
(a) Slight variations in totals are due to rounding.
SPOK HOLDINGS, INC.
CONSOLIDATED REVENUE
SUPPLEMENTAL INFORMATION (a)
(Unaudited and in thousands)
For the three months ended

3/31/2017

12/31/2016

9/30/2016

6/30/2016

3/31/2016

12/31/2015

9/30/2015

6/30/2015

Revenue
Paging $ 24,972 $ 25,441 $ 25,944 $ 26,564 $ 27,101 $ 27,637 $ 28,196 $ 28,782
Non-paging 888 1,094 1,080 1,295 1,071 1,090 1,179 1,440
Total wireless revenue 25,860 26,535 27,024 27,859 28,172 28,727 29,375 30,222
Subscription 543 551 560 503 498 471 392 419
License 1,171 1,594 1,842 1,691 1,593 2,733 1,457 3,011
Services 3,354 4,500 5,578 4,202 4,315 4,610 4,600 4,609
Equipment 973 1,402 1,091 1,250 1,729 1,764 1,434 1,301
Operations revenue 6,041 8,047 9,071 7,646 8,135 9,578 7,883 9,340
Maintenance revenue 9,543 9,602 9,260 9,130 9,081 9,034 8,923 8,407
Total software revenue 15,584 17,649 18,331 16,776 17,216 18,612 16,806 17,747
Total revenue $ 41,444 $ 44,184 $ 45,355 $ 44,635 $ 45,388 $ 47,339 $ 46,181 $ 47,969
(a) Slight variations in totals are due to rounding.
SPOK HOLDINGS, INC.
CONSOLIDATED OPERATING EXPENSES
SUPPLEMENTAL INFORMATION (a)
(Unaudited and in thousands)
For the three months ended

3/31/2017

12/31/2016

9/30/2016

6/30/2016

3/31/2016

12/31/2015

9/30/2015

6/30/2015

Cost of revenue
Payroll and related $ 4,489 $ 4,612 $ 4,468 $ 4,406 $ 4,634 $ 4,414 $ 4,277 $ 4,274
Cost of sales 1,910 2,309 2,480 2,227 2,673 2,902 2,549 3,801
Stock based compensation 58 (108 ) 57 58 49 33 33 34
Other 579 669 634 822 661 686 1,012 1,022
Total cost of revenue 7,036 7,482 7,639 7,513 8,017 8,035 7,871 9,131
Research and development
Payroll and related 3,396 3,198 2,940 2,478 2,325 2,025 1,889 1,936
Outside services 516 511 569 580 428 480 516 491
Stock based compensation 55 (82 ) 46 48 40 21 21 21
Other 138 75 90 105 115 82 99 131
Total research and development 4,105 3,702 3,645 3,211 2,908 2,608 2,525 2,579
Service, rental and maintenance
Payroll and related 2,670 2,689 2,641 2,647 2,747 2,790 2,723 2,619
Site rent 3,620 3,618 3,626 3,668 3,660 3,664 3,763 3,783
Telecommunications 1,069 1,088 1,152 1,117 1,213 1,269 1,377 1,271
Stock based compensation 20 (29 ) 15 15 13 7 7 7
Other 687 623 819 740 672 686 720 745
Total service, rental and maintenance 8,066 7,989 8,253 8,187 8,305 8,416 8,590 8,425
Selling and marketing
Payroll and related 3,103 3,575 3,502 3,510 3,666 3,780 3,664 3,732
Commissions 1,202 1,248 1,317 1,559 1,525 1,754 1,858 1,792
Stock based compensation 101 (131 ) 75 75 48 (7 ) 16 51
Other 1,516 1,163 1,061 1,285 1,290 1,509 1,034 1,215
Total selling and marketing 5,922 5,855 5,955 6,429 6,529 7,036 6,572 6,790
General and administrative
Payroll and related 4,442 4,542 4,142 4,306 4,392 4,029 4,320 4,611
Stock based compensation 721 (863 ) 507 534 488 316 316 548
Facility rent 819 817 848 810 839 856 868 841
Outside services 2,287 2,277 1,946 1,921 1,726 1,783 1,864 1,728
Taxes, licenses and permits 989 976 1,164 1,060 1,055 1,132 1,068 1,150
Other 2,452 2,090 1,986 1,808 2,010 2,160 1,974 1,594
Total general and administrative 11,710 9,839 10,593 10,439 10,510 10,276 10,410 10,472
Severance — 1,438 12 — (4 ) 1,056 141 1,504
Depreciation, amortization and accretion 3,223 3,176 3,229 3,235 3,323 3,362 3,413 3,448
Operating expenses $ 40,062 $ 39,481 $ 39,326 $ 39,014 $ 39,588 $ 40,789 $ 39,522 $ 42,349
Capital expenditures 2,851 1,878 1,396 1,537 1,445 2,024 1,318 1,992
(a) Slight variations in totals are due to rounding.
SPOK HOLDINGS, INC.
UNITS IN SERVICE ACTIVITY, MARKET SEGMENT, CHURN
AND AVERAGE REVENUE PER UNIT (ARPU) (a)

(Unaudited and in thousands)

For the three months ended

3/31/2017

12/31/2016

9/30/2016

6/30/2016

3/31/2016

12/31/2015

9/30/2015

6/30/2015

Paging units in service

Beginning units in service (000's) 1,111 1,124 1,144 1,153 1,173 1,192 1,211 1,230
Gross placements 28 36 34 39 28 31 36 40
Gross disconnects (48 ) (49 ) (54 ) (48 ) (48 ) (50 ) (55 ) (59 )
Net change (20 ) (13 ) (20 ) (9 ) (20 ) (19 ) (19 ) (19 )
Ending units in service 1,091 1,111 1,124 1,144 1,153 1,173 1,192 1,211
End of period units in service % of total (b)
Healthcare 79.7 % 79.3 % 78.6 % 78.2 % 77.5 % 77.0 % 76.3 % 75.9 %
Government 6.4 % 6.5 % 6.7 % 6.8 % 6.9 % 7.2 % 7.2 % 7.3 %
Large enterprise 6.1 % 6.2 % 6.5 % 6.6 % 6.9 % 6.9 % 7.1 % 7.3 %
Other(b) 7.7 % 8.0 % 8.2 % 8.3 % 8.7 % 9.0 % 9.3 % 9.5 %
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Account size ending units in service (000's)
1 to 100 units 102 106 110 114 118 123 128 134
101 to 1,000 units 214 217 222 228 238 243 250 256
>1,000 units 775 788 792 802 797 807 814 821
Total 1,091 1,111 1,124 1,144 1,153 1,173 1,192 1,211
Account size net loss rate(c)
1 to 100 units (3.4 )% (3.9 )% (3.5 )% (4.0 )% (4.3 )% (3.9 )% (4.4 )% (3.4 )%
101 to 1,000 units (1.3 )% (2.3 )% (2.6 )% (4.0 )% (2.0 )% (2.9 )% (2.4 )% (3.8 )%
>1,000 units (1.7 )% (0.5 )% (1.2 )% 0.6 % (1.2 )% (0.9 )% (0.8 )% (0.6 )%
Total (1.8 )% (1.2 )% (1.7 )% (0.8 )% (1.7 )% (1.6 )% (1.5 )% (1.6 )%
Account size ARPU
1 to 100 units $ 12.22 $ 12.25 $ 12.34 $ 12.48 $ 12.57 $ 12.52 $ 12.49 $ 12.57
101 to 1,000 units 8.66 8.63 8.64 8.65 8.70 8.65 8.69 8.72
>1,000 units 6.64 6.67 6.68 6.75 6.77 6.79 6.80 6.81
Total $ 7.56 $ 7.59 $ 7.63 $ 7.71 $ 7.77 $ 7.79 $ 7.82 $ 7.86
(a) Slight variations in totals are due to rounding.
(b) Other includes hospitality, resort and indirect units
(c) Net loss rate is net current period placements and disconnected units in service divided by prior period ending units in service.
SPOK HOLDINGS, INC.
RECONCILIATION FROM NET INCOME TO EBITDA (a)
(Unaudited and in thousands)
For the three months ended

3/31/2017

12/31/2016

9/30/2016

6/30/2016

3/31/2016

12/31/2015

9/30/2015

6/30/2015

Reconciliation of net income to EBITDA (b) (c):
Net income $ 854 $ 3,026 $ 4,058 $ 3,452 $ 3,444 $ 68,732 $ 4,222 $ 3,375
Plus (less): Income tax expense (benefit) 620 1,876 2,123 2,334 2,659 (62,098 ) 3,222 2,512
Less: Other income 30 (100 ) (85 ) (104 ) (254 ) (71 ) (784 ) (264 )
Plus (less): Interest expense (income) (122 ) (99 ) (67 ) (61 ) (49 ) (13 ) (1 ) (3 )
Operating income 1,382 4,703 6,029 5,621 5,800 6,550 6,659 5,620
Plus: depreciation, amortization and accretion 3,223 3,176 3,229 3,235 3,323 3,362 3,413 3,448
EBITDA (as defined by the Company) 4,605 7,879 9,258 8,856 9,123 9,912 10,072 9,068
Less: Purchases of property and equipment (2,851 ) (1,878 ) (1,396 ) (1,537 ) (1,445 ) (2,024 ) (1,318 ) (1,992 )
Plus: Severance — 1,438 12 — (4 ) 1,056 141 1,504
Adjusted OCF (as defined by the Company) $ 1,754 $ 7,439 $ 7,874 $ 7,319 $ 7,674 $ 8,944 $ 8,895 $ 8,580
(a) Slight variations in totals are due to rounding.
(b) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for analytical purposes only.
(c) EBITDA is the starting point for calculation of operating cash flow for purposes of the Company’s short term and long term incentive plans. Management and the Board of Directors also rely on EBITDA for purposes of determining the Company’s capital allocation policies.

Spok Holdings, Inc.

Al Galgano, 952-567-0295

[email protected]

Source: Spok Holdings, Inc.

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