International Telecom and US Telecom Segments Contributed to Strong Operating Income and EBITDA Growth
Company Continues to Operate in all Markets as an “Essential Service” Under U.S. and International Government Directives, Observing Pandemic Protocols to Protect Employees and Communities
BEVERLY, Mass., April 29, 2020 (GLOBE NEWSWIRE) -- ATN International, Inc. (Nasdaq: ATNI) today reported results for the first quarter ended March 31, 2020.
Business Review and Outlook
“First quarter results represented a marked improvement over the comparable period last year. The recovery of our US Telecom business, combined with the continued positive performance of our International Telecom operations, resulted in significant consolidated operating income growth and EBITDA growth of 31% on a 7% revenue increase,” said Michael Prior, ATN’s Chief Executive Officer.
“In International Telecom, we continued to see strong demand for our broadband services across our markets paired with successful initiatives to drive operating efficiencies. In US Telecom, our results reflected the fixed nature of our carrier and federal support contracts entered into over the last year, which provide more consistent and predictable revenues. First quarter results included a modest impact from the novel coronavirus pandemic, as mobile revenues declined in some of our international markets due to travel bans and stay at home guidelines and orders implemented in the quarter.
“As a communications services provider, we are designated as an “Essential Service” under U.S. and international government directives and have been operational throughout this crisis. We have adopted protocols across the organization to prioritize the safety and well-being of our personnel and the communities in which we operate including requiring that the majority of our employees work remotely and reducing certain sales and installation activities. Additionally, we are prioritizing service continuity to those whose financial situations have been affected by the pandemic by lowered prices, increased speeds or capacity at no charge, extended payment terms and waived late fees for individuals, students and small business customers.
“Given the uncertainty surrounding the depth and duration of the global economic impact of the coronavirus pandemic, it is difficult to project the impact on our businesses in the coming periods. As a telecom services provider, our relative sensitivity to global economic downturns in the past has been less severe than for many other industries. That said, these are unprecedented times, and we expect revenue and profit margins for certain services and in certain markets to decline during this crisis and the broader economic impacts that result. For example, many of the markets we serve rely on tourism as a major source of economic activity and that sector of the economy may take longer to recover fully. In an effort to address these impacts and uncertainties, we are taking action now to conserve cash through cost savings and the deferral of certain capital spending projects. On a positive note, the changed environment has allowed us to make much faster gains in digital customer engagements such as mobile payments and paperless billing, which we anticipate will bring improved operating efficiencies and capabilities and better position our businesses post crisis.
“ATN’s strong balance sheet provides us with significant financial flexibility. From a competitive standpoint we believe this better positions us to weather this storm and to build brand equity by doing right by our customers and partners during this crisis. At the end of the first quarter, we had total liquidity of approximately $347 million, representing cash of $147 million and committed credit lines of $200 million, and negative net debt. In addition to affording us the resources to manage through difficult economic times, our financial position enables us to consider other opportunistic strategic actions we can take to re-position existing resources, and to add capacity and coverage that should have a lasting benefit to market share.
“We believe that the coronavirus pandemic will change future business and social behaviors. Increased teleworking and social distancing is likely to accelerate a shift to heavy telecom and data reliant activity, which may provide long-term growth opportunities for ATN’s established and emerging businesses,” Mr. Prior concluded.
First Quarter Results
First quarter 2020 consolidated revenues of $110.9 million were up 7% compared to the prior year quarter’s revenue of $103.3 million. Operating income for the quarter was $7.3 million, up $5.2 million compared with the prior year quarter’s $2.1 million. EBITDA1 was $29.8 million in the first quarter, up by 31% compared to $22.8 million in the prior year period, driven mainly by the increase in revenues for the quarter. Net loss attributable to ATN’s stockholders for the first quarter was $1.0 million, or $0.06 per share, and included approximately $2.9 million of minority investment write-downs and foreign currency losses in two of our markets. The prior year period’s net loss was $1.6 million, or $0.10 per share.
_________________________________________ 1 See Table 5 for reconciliation of Operating Income to EBITDA and Adjusted EBITDA, both non-GAAP measures
First Quarter 2020 Operating Highlights
The Company has three reportable segments: (i) International Telecom; (ii) US Telecom; and (iii) Renewable Energy.
Segment Results (in Thousands)
Three Months Ended March 31, 2020
International Telecom
US Telecom
Renewable Energy
Corporate and Other
Total
Revenue
$
82,284
$
27,299
$
1,322
$
-
$
110,905
Operating Income (loss)
$
13,477
$
2,193
$
(456
)
$
(7,915
)
$
7,299
EBITDA1
$
27,792
$
8,079
$
158
$
(6,212
)
$
29,817
Three Months Ended March 31, 2020
Capital Expenditures
$
10,465
$
1,972
$
720
$
904
$
14,061
Segment Results (in Thousands)
Three Months Ended March 31, 2019
International Telecom
US Telecom
Renewable Energy
Corporate and Other
Total
Revenue
$
80,317
$
21,493
$
1,490
$
-
$
103,300
Operating Income (loss)
$
13,878
$
(3,506
)
$
(203
)
$
(8,055
)
$
2,114
EBITDA1
$
26,893
$
2,092
$
413
$
(6,566
)
$
22,832
Three Months Ended March 31, 2019
Capital Expenditures
$
11,356
$
3,075
$
609
$
2,724
$
17,764
The Company has restructured its presentation of revenue in the Condensed Consolidated Statement of Operations and in the Selected Segment Financial Information tables. This change is intended to better align our reporting of financial performance with industry competitors and the views of Company Management, and to facilitate a more constructive dialogue with the investment community.
International Telecom
International Telecom consists of a broad range of communications services including fixed and mobile data, voice and video service revenues from our operations in Bermuda and the Caribbean. International Telecom revenues were $82.3 million for the quarter, an increase of 2% year-on-year mainly due to an increase in fixed broadband revenues in most of our markets. Operating income decreased 3% to $13.5 million from the prior year’s quarter as current year depreciation expense increased due to recent network investments, while International Telecom EBITDA1 increased 3% to $27.8 million from $26.9 million for the prior year quarter as a result of the higher fixed broadband revenues.
US Telecom
US Telecom revenues consist mainly of carrier services revenues and fixed and mobile communications services from our retail operations in the Southwestern United States, as well as communications services provided to enterprise customers. US Telecom segment revenues were $27.3 million in the quarter, an increase of 27% over the prior year period primarily due to federal support CAF II revenues, which began in the second quarter of 2019, and increased carrier services revenue as part of the FirstNet transaction. The network build portion of the FirstNet agreement has continued during the coronavirus outbreak, but the overall timing of the build schedule has been delayed. We currently expect construction revenues to begin in late-2020 and continue through 2021 but this may change due to pandemic related restrictions. As revenues from the build will be largely offset by construction costs, we do not expect a material impact on operating income or EBITDA1 from this delay. Operating income increased by $5.7 million from the prior year’s quarter to $2.2 million and EBITDA1 for this segment increased by $6.0 million to $8.1 million. The year over year increases were mainly driven by the revenue increases partially offset by additional operating costs related to our early stage business operations.
Renewable Energy
Renewable Energy segment revenues are principally the result of the generation and sale of energy from our commercial solar projects in India. We ended the first quarter of 2020 with 52 Megawatts (MWs) of revenue generating solar facilities and expect to finalize the development of additional MWs later in the year. The current quarter’s operating loss was $0.5 million and EBITDA1 was $0.2 million, both slightly below the prior year’s quarter. We expect segment revenue and EBITDA1 to be negatively impacted in the short term as power usage declined while many of our customers' operations have been shut down during the pandemic.
Balance Sheet and Cash Flow Highlights
Total cash, cash equivalents and restricted cash at March 31, 2020 was $147.0 million. Net cash provided by operating activities was $15.5 million for the three months ended March 31, 2020, compared with $18.8 million for the prior year period. The decrease in operating cash flow compared with the prior year is mostly the result of changes in net working capital activity partially offset by increased current year operating income. For the three months ended March 31, 2020, the Company used net cash of $30.7 million for investing and financing activities compared to $39.1 million for the prior year period. In the current year, this included $14.1 million in capital expenditures, $4.3 million of dividends on common stock and share repurchases, $2.8 million in purchases of strategic investments, and $4.2 million in minority partners distributions. Management expects full year 2020 capital expenditures to be lower than originally forecasted at the beginning of the year as a result of the pandemic. A substantial portion of our capital investment plans are discretionary and as we assess the impact of the pandemic on our businesses, we will reduce or defer certain investments. In addition, uncertainty around the timing of the shipment of equipment, contractor availability and governments re-opening makes it difficult to provide updated guidance at this time.
Conference Call Information
ATN will host a conference call on Thursday, April 30, 2020 at 11:30 a.m. Eastern Time (ET) to discuss its first quarter results and business outlook. 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 6171649. A replay of the call will be available at ir.atni.com beginning at 2:00 p.m. (ET) on April 30, 2020.
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 the impact of the novel coronavirus pandemic on our business and operations; revenue, operating income, EBITDA and Adjusted EBITDA expectations and capital expenditures for 2020; the competitive environment in our key markets, demand for our services and industry trends; the timing and impact of the CAF II federal support revenues and the FirstNet transaction; the impact of the novel coronavirus on the global economy and on our business; the impact of digital enhancements; our liquidity; and management’s plans and strategy for the future. These forward-looking statements are based on estimates, projections, beliefs, and assumptions and are not guarantees of future events or results. Actual future events and results could differ materially from the events and results indicated in these statements as a result of many factors, including, among others, (1) the general performance of our operations, including operating margins, revenues, capital expenditures, and the future growth and retention of our major customers and subscriber base and consumer demand for solar power; (2) our ability to maintain favorable roaming arrangements, receive roaming traffic and satisfy the needs and demands of our major wireless customers; (3) our ability to efficiently and cost-effectively upgrade our networks and IT platforms to address rapid and significant technological changes in the telecommunications industry; (4) government regulation of our businesses, which may impact our 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 and opportunities facing our operations, including the impact of the novel coronavirus on the global economy and on our business; (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, 2019, filed with the SEC on March 2, 2020 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.
Use of Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release also contains non-GAAP financial measures. Specifically, ATN has included EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin in this release and in the tables included herein.
EBITDA is defined as operating income (loss) before depreciation and amortization expense. Adjusted EBITDA is defined as operating income (loss) before depreciation and amortization expense, (gain) loss on disposition of long-lived assets, impairment of goodwill charges, restructuring charges and transaction-related charges. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by total revenue.
The Company believes that the inclusion of these non-GAAP financial measures helps investors gain a meaningful understanding of the Company's core operating results and enhances the usefulness of comparing such performance with prior periods. ATN’s management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring our core operating performance and comparing such performance to that of prior periods. The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. Reconciliations of these non-GAAP financial measures used in this press release to the most directly comparable GAAP financial measure are set forth in the text of, and the accompanying tables to, this press release. While our non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, we urge investors to review the reconciliation of these financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measure to evaluate our business.
Table 1
ATN International, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in Thousands)
March 31,
December 31,
2020
2019
Assets:
Cash and cash equivalents
$
145,913
$
161,287
Restricted cash
1,072
1,071
Short-term investments
104
416
Other current assets
88,253
65,949
Total current assets
235,342
228,723
Property, plant and equipment, net
592,927
605,581
Operating lease right-of-use assets
65,515
68,763
Goodwill and other intangible assets, net
161,392
161,818
Other assets
53,416
65,841
Total assets
$
1,108,592
$
1,130,726
Liabilities and Stockholders’ Equity:
Current portion of long-term debt
$
3,750
$
3,750
Taxes payable
9,625
8,517
Current portion of operating lease liabilities
11,179
11,406
Other current liabilities
88,890
95,996
Total current liabilities
113,444
119,669
Long-term debt, net of current portion
$
81,775
$
82,676
Deferred income taxes
7,545
8,680
Operating lease liabilities
53,721
56,164
Other long-term liabilities
59,028
57,454
Total liabilities
315,513
324,643
Total ATN International, Inc.’s stockholders’ equity
665,758
676,122
Non-controlling interests
127,321
129,961
Total equity
793,079
806,083
Total liabilities and stockholders’ equity
$
1,108,592
$
1,130,726
Table 2
ATN International, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in Thousands, Except per Share Data)
Three Months Ended
March 31,
2020
2019
Revenues:
Communications services
$
107,896
$
100,465
Other
3,009
2,835
Total revenue
110,905
103,300
Operating expenses:
Termination and access fees
28,113
27,888
Engineering and operations
18,489
19,032
Sales, marketing and customer service
9,504
9,390
General and administrative
24,923
23,816
Transaction-related charges
44
40
Depreciation and amortization
22,518
20,718
Loss on disposition of assets
15
302
Total operating expenses
103,606
101,186
Operating income
7,299
2,114
Other income (expense):
Interest expense, net
(913
)
(353
)
Other income (expense)
(2,901
)
187
Other income (expense), net
(3,814
)
(166
)
Income before income taxes
3,485
1,948
Income tax expense
1,109
1,213
Net Income (Loss)
2,376
735
Net income attributable to non-controlling interests, net
(3,390
)
(2,316
)
Net income (loss) attributable to ATN International, Inc. stockholders
$
(1,014
)
$
(1,581
)
Net income (loss) per weighted average share attributable to ATN International, Inc. stockholders:
Basic Net Income (Loss)
$
(0.06
)
$
(0.10
)
Diluted Net Income (Loss)
$
(0.06
)
$
(0.10
)
Weighted average common shares outstanding:
Basic
16,001
16,001
Diluted
16,001
16,001
Note: The Company has restructured its presentation of revenues - see Table 4
Effect of foreign currency exchange rates on total cash, cash equivalents and restricted cash
(115
)
15
Net change in total cash, cash equivalents and restricted cash
(15,373
)
(20,353
)
Total cash, cash equivalents and restricted cash, beginning of period
162,358
192,907
Total cash, cash equivalents and restricted cash, end of period
$
146,985
$
172,554
Table 4
ATN International, Inc.
Selected Segment Financial Information
(In Thousands)
For the three months ended March 31, 2020 is as follows:
International Telecom
US Telecom
Renewable Energy
Corporate and Other *
Total
Statement of Operations Data:
Revenue**
Mobility
$
19,667
$
4,125
$
-
$
-
$
23,792
Fixed
58,149
3,103
-
-
61,252
Carrier services
2,573
20,063
-
-
22,636
Other
216
-
-
-
216
Total communications services
$
80,605
$
27,291
$
-
$
-
$
107,896
Renewable Energy
$
-
$
-
$
1,322
$
-
$
1,322
Managed Services
1,679
8
-
-
1,687
Total Other
$
1,679
$
8
$
1,322
$
-
$
3,009
Total Revenue
$
82,284
$
27,299
$
1,322
$
-
$
110,905
Operating Income (Loss)
$
13,477
$
2,193
$
(456
)
$
(7,915
)
$
7,299
Stock-based compensation
$
(37
)
$
-
$
-
$
1,197
$
1,160
Non-controlling interest ( net income or (loss) )
$
(2,544
)
$
(1,033
)
$
187
$
-
$
(3,390
)
Non GAAP measures:
EBITDA (1)
$
27,792
$
8,079
$
158
$
(6,212
)
$
29,817
Adjusted EBITDA (2)
$
27,805
$
8,081
$
172
$
(6,182
)
$
29,876
Balance Sheet Data (at March 31, 2020):
Cash, cash equivalents and investments
$
48,222
$
36,052
$
23,858
$
37,885
$
146,017
Total current assets
95,764
61,191
26,455
51,932
235,342
Fixed assets, net
462,275
64,710
45,233
20,709
592,927
Total assets
645,987
224,363
72,405
165,837
1,108,592
Total current liabilities
71,129
26,910
1,660
13,745
113,444
Total debt
85,525
-
-
-
85,525
* Corporate and Other refer to corporate overhead expenses and consolidating adjustments
** The Company restructured its presentation of revenue to better align financial reporting with industry competitors, and the view of investors and company management.
ATN International, Inc.
Selected Segment Financial Information
(In Thousands)
For the three months ended March 31, 2019 is as follows:
International Telecom
US Telecom
Renewable Energy
Corporate and Other *
Total
Statement of Operations Data:
Revenue**
Mobility
$
19,755
$
3,909
$
-
$
-
$
23,664
Fixed
56,694
763
-
-
57,457
Carrier services
2,471
16,686
-
-
19,157
Other
187
-
-
-
187
Total communications services
$
79,107
$
21,358
$
-
$
-
$
100,465
Renewable Energy
$
-
$
-
$
1,490
$
-
$
1,490
Managed Services
1,210
135
-
-
1,345
Total Other
$
1,210
$
135
$
1,490
$
-
$
2,835
Total Revenue
$
80,317
$
21,493
$
1,490
$
-
$
103,300
Operating Income (Loss)
$
13,878
$
(3,506
)
$
(203
)
$
(8,055
)
$
2,114
Stock-based compensation
11
-
-
1,290
1,301
Non-controlling interest ( net income or (loss) )
$
(2,397
)
$
81
$
-
$
-
$
(2,316
)
Non GAAP measures:
EBITDA (1)
$
26,893
$
2,092
$
413
$
(6,566
)
$
22,832
Adjusted EBITDA (2)
$
26,886
$
2,263
$
551
$
(6,526
)
$
23,174
* Corporate and Other refer to corporate overhead expenses and consolidating adjustments
** The Company restructured its presentation of revenue to better align financial reporting with industry competitors, and the view of investors and company management.
ATN International, Inc.
Selected Segment Financial Information
(In Thousands)
at December 31, 2019
International Telecom
US Telecom
Renewable Energy
Corporate and Other *
Total
Balance Sheet Data (at December 31, 2019):
Cash, cash equivalents and investments
$
43,125
$
38,240
$
25,054
$
55,284
$
161,703
Total current assets
91,497
54,207
27,534
55,484
228,723
Fixed assets, net
466,523
69,184
48,421
21,452
605,581
Total assets
647,228
222,356
76,723
184,419
1,130,726
Total current liabilities
77,644
24,905
2,745
14,374
119,669
Total debt
86,426
-
-
-
86,426
(1) See Table 5 for reconciliation of Operating Income to EBITDA
(2) See Table 5 for reconciliation of Operating Income to Adjusted EBITDA
* Corporate and Other refer to corporate overhead expenses and consolidating adjustments
ATN International, Inc.
Selected Segment Financial Information
(In Thousands)
at March 31, 2020
Quarter ended
March 31,
June 30,
September 30,
December 31,
March 31,
2019
2019
2019
2019
2020
International Telecom Operational Data:
Fixed - Voice
171,200
171,200
170,200
167,300
169,100
Fixed - Data Subscribers
123,600
124,700
127,200
129,900
133,400
Fixed - Video Subscribers
41,000
39,700
38,600
38,200
37,800
Mobile - Subscribers *
293,500
290,400
285,000
284,100
282,100
* Counts were adjusted for all periods presented based upon a change in methodology and process
Table 5
ATN International, Inc.
Reconciliation of Non-GAAP Measures
(In Thousands)
For the three months ended March 31, 2020 is as follows:
International Telecom
U.S. Telecom
Renewable Energy
Corporate and Other *
Total
Operating income (loss)
$
13,477
$
2,193
$
(456
)
$
(7,915
)
$
7,299
Depreciation and amortization expense
14,315
5,886
614
1,703
22,518
EBITDA
$
27,792
$
8,079
$
158
$
(6,212
)
$
29,817
Transaction-related charges
-
-
14
30
44
(Gain) Loss on disposition of assets
13
2
-
-
15
ADJUSTED EBITDA
$
27,805
$
8,081
$
172
$
(6,182
)
$
29,876
Revenue
82,284
27,299
1,322
-
110,905
ADJUSTED EBITDA MARGIN
33.8
%
29.6
%
13.0
%
NA
26.9
%
For the three months ended March 31, 2019 is as follows:
International Telecom
U.S. Telecom
Renewable Energy
Corporate and Other *
Total
Operating income (loss)
$
13,878
$
(3,506
)
$
(203
)
$
(8,055
)
$
2,114
Depreciation and amortization expense
13,015
5,598
616
1,489
20,718
EBITDA
$
26,893
$
2,092
$
413
$
(6,566
)
$
22,832
Transaction-related charges
-
-
-
40
40
(Gain) Loss on disposition of assets
(7
)
171
138
-
302
ADJUSTED EBITDA
$
26,886
$
2,263
$
551
$
(6,526
)
$
23,174
Revenue
80,317
21,493
1,490
-
103,300
ADJUSTED EBITDA MARGIN
33.5
%
10.5
%
37.0
%
NA
22.4
%
Contact:
978-619-1300 Michael T. Prior Chairman and Chief Executive Officer
