Operating Highlights and Business Update
Shared Wireless Infrastructure
-
Executed contracts in
July 2015 with a leading carrier for the colocation of small cell equipment on shared wireless infrastructure. - Contract executed with a global cellular connectivity company for the Internet of Things (IoT) which includes minimum purchasing commitments.
- Entered agreement with Syscom to provide wireless connectivity for up to 45,000 billboards for digital displays and as additional small cell locations for carriers.
-
Revenues for the three months ended
June 30, 2015 increased 12% compared to the three months endedJune 30, 2014 . -
Number of Shared Wireless Infrastructure locations increased 4% during the twelve months ended
June 30, 2015 . -
Number of Access Points leased by major cable company increased 16% during the twelve months ended
June 30, 2015 .
-
47 buildings lit with On Net service of 100 Megabytes of bandwidth for
$699 , and the total has more than tripled in the first half of 2015 compared to all of 2014. - Number of On Net customers added in the first half of 2015 is more than 70% higher than all of 2014.
-
ARPU increased to
$772 atJune 30, 2015 compared to$760 atJune 30, 2014 representing an increase of$12 , or 2%. - Installations ramping under the wholesale agreement executed with a CLEC (Competitive Local Exchange Carrier) in the first quarter of 2015.
- New sales center staffed and closing customer contracts ahead of internal plan.
Management Comments and Business Update
"We are pleased to announce the recent signing of a contract with a leading carrier for our shared wireless infrastructure subsidiary,
"Our On Net platform generated strong growth in the number of lit buildings and total square footage as well as new and potential customers within those buildings," noted
Selected Financial Data and Key Operating Metrics
(All dollars are in thousands except ARPU)
| (Unaudited) | |||
| Three Months Ended | |||
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|
|
|
| Revenues |
|
|
|
| Gross margin | |||
| Consolidated | 20% | 20% | 26% |
| Fixed wireless | 62% | 62% | 65% |
| Capital expenditures | |||
| Fixed wireless |
|
|
|
| Shared wireless infrastructure | 56 | 119 | 490 |
| Corporate | 57 | 121 | 205 |
| Churn rate (1) | 1.84% | 1.85% | 1.71% |
| ARPU (1) |
|
|
|
| ARPU of new customers (1) | 620 | 628 | 626 |
| Cash and cash equivalents | 26,117 | 32,267 | 17,289 |
| (1) See Non-GAAP Measures below for the definitions of Churn, ARPU and ARPU of new customers. | |||
Consolidated Statements of Operations (Unaudited)
(All dollars are in thousands except per share amounts)
|
Three Months Ended |
Six Months Ended |
|||
| 2015 | 2014 | 2015 | 2014 | |
| Revenues | $ 7,857 | $ 8,265 | $ 15,817 | $ 16,645 |
| Operating Expenses | ||||
| Cost of revenues | 6,320 | 6,102 | 12,720 | 11,958 |
| Depreciation and amortization | 3,408 | 3,281 | 6,788 | 6,976 |
| Customer support | 1,333 | 1,151 | 2,574 | 2,326 |
| Sales and marketing | 1,548 | 1,399 | 2,877 | 2,821 |
| General and administrative | 2,428 | 2,667 | 5,297 | 5,345 |
| Total Operating Expenses | 15,037 | 14,600 | 30,256 | 29,426 |
| Operating Loss | (7,180) | (6,335) | (14,439) | (12,781) |
| Other Income/(Expense) | ||||
| Interest expense, net | (1,671) | (59) | (3,335) | (123) |
| Total Other Income/(Expense) | (1,671) | (59) | (3,335) | (123) |
| Net Loss | $ (8,851) | $ (6,394) | $ (17,774) | $ (12,904) |
| Net loss per common share - basic and diluted | $ (0.13) | $ (0.10) | $ (0.26) | $ (0.19) |
| Weighted average common shares outstanding - basic and diluted | 67,924 | 66,479 | 67,891 | 66,459 |
Summary Condensed Balance Sheets
(All dollars are in thousands)
| (Unaudited) | (Audited) | |
|
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|
|
| Assets | ||
| Current Assets | ||
| Cash and cash equivalents | $ 26,117 | $ 38,028 |
| Other | 2,329 | 2,237 |
| Total Current Assets | 28,446 | 40,265 |
| Property and equipment, net | 31,522 | 33,905 |
| Other assets | 7,217 | 8,152 |
| Total Assets | 67,185 | 82,322 |
| Liabilities and Stockholders' Equity | ||
| Current Liabilities | ||
| Accounts payable and accrued expenses | 3,458 | 2,910 |
| Deferred revenues and other | 2,349 | 2,288 |
| Total Current Liabilities | 5,807 | 5,198 |
| Long-Term Liabilities | ||
| Long-term debt | 33,415 | 32,101 |
| Other | 3,331 | 3,061 |
| Total Long-Term Liabilities | 36,746 | 35,162 |
| Total Liabilities | 42,553 | 40,360 |
| Stockholders' Equity | ||
| Common stock | 67 | 67 |
| Additional paid-in-capital | 158,075 | 157,631 |
| Accumulated deficit | (133,510) | (115,736) |
| Total Stockholders' Equity | 24,632 | 41,962 |
| Total Liabilities and Stockholders' Equity | $ 67,185 | $ 82,322 |
Summary Condensed Statements of Cash Flows (Unaudited)
|
Six Months Ended |
||
| 2015 | 2014 | |
| Net Cash Used in Operating Activities | $ (7,822) | $ (5,871) |
| Net Cash Used in Investing Activities | (3,614) | (4,631) |
| Net Cash Used in Financing Activities | (474) | (391) |
| Net Decrease in Cash and Cash Equivalents | $ (11,910) | $ (10,893) |
Statements of Operations - Segment Basis (Unaudited)
The Company has two reportable segments.
The Corporate group includes corporate overhead and centralized activities which support our overall operations. Corporate overhead includes administrative personnel, including executive management, and other support functions such as information technology and facilities. Centralized operations include network operations, customer care, and the management of network assets. Corporate costs are not allocated to the segments because such costs are managed on a centralized basis. Management also believes that not allocating these centralized costs provides a better reflection of the direct operating performance of each segment.
|
Three Months Ended |
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Fixed Wireless |
Infrastructure |
Corporate |
Eliminations |
Total |
|
| Revenues | $ 7,081 | $ 826 | $ -- | $ (50) | $ 7,857 |
| Operating Expenses | |||||
| Cost of revenues | 2,684 | 3,673 | 13 | (50) | 6,320 |
| Depreciation and amortization | 2,175 | 1,015 | 218 | -- | 3,408 |
| Customer support | 361 | 197 | 775 | -- | 1,333 |
| Sales and marketing | 1,428 | 43 | 77 | -- | 1,548 |
| General and administrative | 181 | 95 | 2,152 | -- | 2,428 |
| Total Operating Expenses | 6,829 | 5,023 | 3,235 | (50) | 15,037 |
| Operating Income (Loss) | $ 252 | $ (4,197) | $ (3,235) | $ -- | $ (7,180) |
| Non-recurring expenses, primarily acquisition related | -- | -- | 162 | -- | 162 |
| Non-cash expenses (a) | 2,281 | 1,026 | 416 | -- | 3,723 |
| Adjusted EBITDA (b) | 2,533 | (3,171) | (2,657) | -- | (3,295) |
| Less: Capital expenditures | 2,422 | 56 | 57 | -- | 2,535 |
| Net Cash Flow (b) | $ 111 | $ (3,227) | $ (2,714) | $ -- | $ (5,830) |
|
Three Months Ended |
|||||
|
Fixed Wireless |
Infrastructure |
Corporate |
Eliminations |
Total |
|
| Revenues | $ 7,572 | $ 739 | $ -- | $ (46) | $ 8,265 |
| Operating Expenses | |||||
| Cost of revenues | 2,620 | 3,514 | 14 | (46) | 6,102 |
| Depreciation and amortization | 2,081 | 977 | 223 | -- | 3,281 |
| Customer support | 272 | 179 | 700 | -- | 1,151 |
| Sales and marketing | 1,252 | 63 | 84 | -- | 1,399 |
| General and administrative | 202 | 158 | 2,307 | -- | 2,667 |
| Total Operating Expenses | 6,427 | 4,891 | 3,328 | (46) | 14,600 |
| Operating Income (Loss) | $ 1,145 | $ (4,152) | $ (3,328) | $ -- | $ (6,335) |
| Non-recurring expenses, primarily acquisition related | -- | -- | 91 | -- | 91 |
| Non-cash expenses (a) | 2,187 | 1,039 | 477 | -- | 3,703 |
| Adjusted EBITDA (b) | 3,332 | (3,113) | (2,760) | -- | (2,541) |
| Less: Capital expenditures | 1,403 | 490 | 205 | -- | 2,098 |
| Net Cash Flow (b) | $ 1,929 | $ (3,603) | $ (2,965) | $ -- | $ (4,639) |
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Six Months Ended |
|||||
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Fixed Wireless |
Infrastructure |
Corporate |
Eliminations |
Total |
|
| Revenues | $ 14,298 | $ 1,614 | $ -- | $ (95) | $ 15,817 |
| Operating Expenses | |||||
| Cost of revenues | 5,406 | 7,379 | 30 | (95) | 12,720 |
| Depreciation and amortization | 4,302 | 2,047 | 439 | -- | 6,788 |
| Customer support | 687 | 357 | 1,530 | -- | 2,574 |
| Sales and marketing | 2,638 | 87 | 152 | -- | 2,877 |
| General and administrative | 301 | 203 | 4,793 | -- | 5,297 |
| Total Operating Expenses | 13,334 | 10,073 | 6,944 | (95) | 30,256 |
| Operating Income (Loss) | $ 964 | $ (8,459) | $ (6,944) | $ -- | $ (14,439) |
| Non-recurring expenses, primarily acquisition related | -- | -- | 398 | -- | 398 |
| Non-cash expenses (a) | 4,519 | 2,107 | 845 | -- | 7,471 |
| Adjusted EBITDA (b) | 5,483 | (6,352) | (5,701) | -- | (6,570) |
| Less: Capital expenditures | 3,856 | 175 | 178 | -- | 4,209 |
| Net Cash Flow (b) | $ 1,627 | $ (6,527) | $ (5,879) | $ -- | $ (10,779) |
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Six Months Ended |
|||||
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Fixed Wireless |
Infrastructure |
Corporate |
Eliminations |
Total |
|
| Revenues | $ 15,258 | $ 1,479 | $ -- | $ (92) | $ 16,645 |
| Operating Expenses | |||||
| Cost of revenues | 5,119 | 6,902 | 29 | (92) | 11,958 |
| Depreciation and amortization | 4,618 | 1,919 | 439 | -- | 6,976 |
| Customer support | 543 | 355 | 1,428 | -- | 2,326 |
| Sales and marketing | 2,515 | 140 | 166 | -- | 2,821 |
| General and administrative | 311 | 304 | 4,730 | -- | 5,345 |
| Total Operating Expenses | 13,106 | 9,620 | 6,792 | (92) | 29,426 |
| Operating Income (Loss) | $ 2,152 | $ (8,141) | $ (6,792) | $ -- | $ (12,781) |
| Non-recurring expenses, primarily acquisition related | -- | -- | 91 | -- | 91 |
| Non-cash expenses (a) | 4,799 | 2,053 | 977 | -- | 7,829 |
| Adjusted EBITDA (b) | 6,951 | (6,088) | (5,724) | -- | (4,861) |
| Less: Capital expenditures | 2,890 | 1,428 | 317 | -- | 4,635 |
| Net Cash Flow (b) | $ 4,061 | $ (7,516) | $ (6,041) | $ -- | $ (9,496) |
| (a) Includes depreciation and amortization, stock-based compensation, deferred rent expense and loss on nonmonetary transactions. | |||||
| (b) See Non-GAAP Measures below for a definition and reconciliation of (i) Adjusted EBITDA to Net Loss and (ii) Net Cash Flow to Net Cash Used in Operating Activities. | |||||
Non-GAAP Measures and Reconciliations to GAAP Measures
We use certain Non-GAAP measures to monitor the Company's business performance and that of our segments. These Non-GAAP measures are not recognized under generally accepted accounting principles ("GAAP"). Accordingly, investors are cautioned about using or relying on these measures as alternatives to recognized GAAP measures. Our methods of calculating these measures may not be comparable to similar measures presented by other companies.
A definition of the Non-GAAP measures that we employ, and how we use them to monitor business performance, are as follows:
"Adjusted EBITDA" represents net income (loss) before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, deferred rent expense, other non-operating income or expenses, as well as gain or loss on (i) nonmonetary transactions, and (ii) business acquisitions.
"ARPU" refers to the monthly average revenue per user, or customer, being generated from those customers under contract at the end of each indicated period. We calculate ARPU by dividing our monthly recurring revenue ("MRR") at the end of a period by the number of customers generating that MRR.
"ARPU of new customers" is calculated in the same manner but only includes new customers who entered into contracts during the indicated period.
"Churn" and "Churn rate" refer to the percent of revenue lost on a monthly basis from customers disconnecting from our network or reducing the amount of their bandwidth.
"Corporate" includes corporate overhead and centralized activities which support our overall operations.
"EBITDA" represents net income (loss) before interest, income taxes, depreciation and amortization.
"Net Cash Flows" represents Adjusted EBITDA less capital expenditures.
A reconciliation of non-GAAP measures to GAAP financial measures is as follows (amounts in thousands):
I. Adjusted EBITDA to Net Loss
|
Three Months Ended |
||
| 2015 | 2014 | |
| Adjusted EBITDA | $ (3,295) | $ (2,541) |
| Depreciation and amortization | (3,408) | (3,281) |
| Stock-based compensation | (211) | (263) |
| Loss on nonmonetary transactions | (67) | (68) |
| Non-recurring expenses | (162) | (91) |
| Deferred rent | (37) | (91) |
| Operating Income (Loss) | $ (7,180) | $ (6,335) |
| Interest expense, net | (1,671) | (59) |
| Net loss | $ (8,851) | $ (6,394) |
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Six Months Ended |
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| 2015 | 2014 | |
| Adjusted EBITDA | $ (6,570) | $ (4,861) |
| Depreciation and amortization | (6,788) | (6,976) |
| Stock-based compensation | (422) | (555) |
| Loss on nonmonetary transactions | (133) | (136) |
| Non-recurring expenses | (398) | (91) |
| Deferred rent | (128) | (162) |
| Operating Income (Loss) | $ (14,439) | $ (12,781) |
| Interest expense, net | (3,335) | (123) |
| Net loss | $ (17,774) | $ (12,904) |
II. Net Cash Flow to Net Cash Used in Operating Activities
|
Three Months Ended |
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| 2015 | 2014 | |
| Net cash flow | $ (5,830) | $ (4,639) |
| Capital expenditures | 2,535 | 2,098 |
| Non-recurring expenses | (162) | (91) |
| Changes in operating assets and liabilities, net | 659 | 1,004 |
| Other, net | (1,133) | (20) |
| Net cash used in operating activities | $ (3,931) | $ (1,648) |
|
Six Months Ended |
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| 2015 | 2014 | |
| Net cash flow | $ (10,779) | $ (9,496) |
| Capital expenditures | 4,209 | 4,635 |
| Non-recurring expenses | (398) | (91) |
| Changes in operating assets and liabilities, net | 1,420 | (777) |
| Other, net | (2,274) | (142) |
| Net cash used in operating activities | $ (7,822) | $ (5,871) |
Conference Call and Webcast
A conference call led by President and Chief Executive Officer,
The call will also be webcast and can be accessed in a listen-only mode on the Company's website at http://ir.towerstream.com/events.cfm.
About
The
About
Safe Harbor
Certain statements contained in this press release are "forward-looking statements" within the meaning of applicable federal securities laws, including, without limitation, anything relating or referring to future financial results and plans for future business development activities, and are thus prospective. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified based on current expectations. Such risks and uncertainties include, without limitation, the risks and uncertainties set forth from time to time in reports filed by the Company with the
CONTACT: INVESTOR CONTACT:
Monica Gould The Blueshirt Group
212-871-3927
monica@blueshirtgroup.com
MEDIA CONTACT:
Todd Barrish
Indicate Media
917-861-0089
todd@indicatemedia.com
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