Operating Highlights and Business Update
Shared Wireless Infrastructure
Management Comments and Business Update
"Continued growth in our On Net program and the maturation of the sales force in our new
"Revenues for our
Selected Financial Data and Key Operating Metrics
(All dollars are in thousands except ARPU)
(Unaudited) | ||||||||||||||
Three Months Ended | ||||||||||||||
Revenues | $ | 7,798 | $ | 7,857 | $ | 8,302 | ||||||||
Gross margin | ||||||||||||||
Consolidated | 21 | % | 20 | % | 25 | % | ||||||||
Fixed wireless | 61 | % | 62 | % | 65 | % | ||||||||
Capital expenditures | ||||||||||||||
Fixed wireless | $ | 1,779 | $ | 2,422 | $ | 1,154 | ||||||||
Shared wireless infrastructure | 46 | 56 | 590 | |||||||||||
Corporate | 32 | 57 | 22 | |||||||||||
Churn rate (1) | 1.87 | % | 1.84 | % | 1.69 | % | ||||||||
ARPU (1) | $ | 768 | $ | 772 | $ | 769 | ||||||||
ARPU of new customers (1) | 627 | 620 | 651 | |||||||||||
Cash and cash equivalents | 20,309 | 26,117 | 11,891 | |||||||||||
(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 | Nine Months Ended | |||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||
Revenues | $ | 7,798 | $ | 8,302 | $ | 23,615 | $ | 24,946 | ||||||||||||
Operating Expenses | ||||||||||||||||||||
Cost of revenues | 6,187 | 6,211 | 18,907 | 18,169 | ||||||||||||||||
Depreciation and amortization | 3,436 | 3,318 | 10,224 | 10,295 | ||||||||||||||||
Customer support | 1,310 | 1,248 | 3,884 | 3,574 | ||||||||||||||||
Sales and marketing | 1,514 | 1,353 | 4,391 | 4,174 | ||||||||||||||||
General and administrative | 2,195 | 2,382 | 7,492 | 7,726 | ||||||||||||||||
Total Operating Expenses | 14,642 | 14,512 | 44,898 | 43,938 | ||||||||||||||||
Operating Loss | (6,844 | ) | (6,210 | ) | (21,283 | ) | (18,992 | ) | ||||||||||||
Other Expense | ||||||||||||||||||||
Interest expense, net | (1,665 | ) | (44 | ) | (5,000 | ) | (166 | ) | ||||||||||||
Total Other Expense | (1,665 | ) | (44 | ) | (5,000 | ) | (166 | ) | ||||||||||||
Net Loss | $ | (8,509 | ) | $ | (6,254 | ) | $ | (26,283 | ) | $ | (19,158 | ) | ||||||||
Net loss per common share - basic and diluted | $ | (0.13 | ) | $ | (0.09 | ) | $ | (0.39 | ) | $ | (0.29 | ) | ||||||||
Weighted average common shares outstanding - basic and diluted | 67,966 | 66,644 | 67,916 | 66,521 | ||||||||||||||||
Summary Condensed Balance Sheets
(All dollars are in thousands)
(Unaudited) | (Audited) | |||||||||
Assets | ||||||||||
Current Assets | ||||||||||
Cash and cash equivalents | $ | 20,309 | $ | 38,028 | ||||||
Other | 2,128 | 2,237 | ||||||||
Total Current Assets | 22,437 | 40,265 | ||||||||
Property and equipment, net | 30,041 | 33,905 | ||||||||
Other assets | 6,780 | 8,152 | ||||||||
Total Assets | 59,258 | 82,322 | ||||||||
Liabilities and Stockholders' Equity | ||||||||||
Current Liabilities | ||||||||||
Accounts payable and accrued expenses | 3,476 | 2,910 | ||||||||
Deferred revenues and other | 2,296 | 2,288 | ||||||||
Total Current Liabilities | 5,772 | 5,198 | ||||||||
Long-Term Liabilities | ||||||||||
Long-term debt | 34,061 | 32,101 | ||||||||
Other | 3,099 | 3,061 | ||||||||
Total Long-Term Liabilities | 37,160 | 35,162 | ||||||||
Total Liabilities | 42,932 | 40,360 | ||||||||
Stockholders' Equity | ||||||||||
Common stock | 67 | 67 | ||||||||
Additional paid-in-capital | 158,278 | 157,631 | ||||||||
Accumulated deficit | (142,019 | ) | (115,736 | ) | ||||||
Total Stockholders' Equity | 16,326 | 41,962 | ||||||||
Total Liabilities and Stockholders' Equity | $ | 59,258 | $ | 82,322 | ||||||
Summary Condensed Statements of Cash Flows (Unaudited)
Nine Months Ended | |||||||||||
2015 | 2014 | ||||||||||
Net Cash Used in Operating Activities | $ | (11,643 | ) | $ | (9,174 | ) | |||||
Net Cash Used in Investing Activities | (5,347 | ) | (6,547 | ) | |||||||
Net Cash Used in Financing Activities | (729 | ) | (570 | ) | |||||||
Net Decrease in Cash and Cash Equivalents | $ | (17,719 | ) | $ | (16,291 | ) | |||||
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 | ||||||||||||||||||||||||
Fixed Wireless | Infrastructure | Corporate | Eliminations | Total | ||||||||||||||||||||
Revenues | $ | 6,996 | $ | 850 | $ | - | $ | (48 | ) | $ | 7,798 | |||||||||||||
Operating Expenses | ||||||||||||||||||||||||
Cost of revenues | 2,735 | 3,484 | 16 | (48 | ) | 6,187 | ||||||||||||||||||
Depreciation and amortization | 2,214 | 1,006 | 216 | - | 3,436 | |||||||||||||||||||
Customer support | 379 | 179 | 752 | - | 1,310 | |||||||||||||||||||
Sales and marketing | 1,401 | 36 | 77 | - | 1,514 | |||||||||||||||||||
General and administrative | 110 | 100 | 1,985 | - | 2,195 | |||||||||||||||||||
Total Operating Expenses | 6,839 | 4,805 | 3,046 | (48 | ) | 14,642 | ||||||||||||||||||
Operating Income (Loss) | $ | 157 | $ | (3,955 | ) | $ | (3,046 | ) | $ | - | $ | (6,844 | ) | |||||||||||
Non-recurring expenses, primarily acquisition related | - | - | 8 | - | 8 | |||||||||||||||||||
Non-cash expenses (a) | 2,309 | 1,002 | 396 | - | 3,707 | |||||||||||||||||||
Adjusted EBITDA (b) | 2,466 | (2,953 | ) | (2,642 | ) | - | (3,129 | ) | ||||||||||||||||
Less: Capital expenditures | 1,779 | 46 | 32 | - | 1,857 | |||||||||||||||||||
Net Cash Flow (b) | $ | 687 | $ | (2,999 | ) | $ | (2,674 | ) | $ | - | $ | (4,986 | ) | |||||||||||
Three Months Ended | ||||||||||||||||||||||||
Fixed Wireless | Infrastructure | Corporate | Eliminations | Total | ||||||||||||||||||||
Revenues | $ | 7,554 | $ | 794 | $ | - | $ | (46 | ) | $ | 8,302 | |||||||||||||
Operating Expenses | ||||||||||||||||||||||||
Cost of revenues | 2,632 | 3,610 | 15 | (46 | ) | 6,211 | ||||||||||||||||||
Depreciation and amortization | 1,981 | 1,014 | 323 | - | 3,318 | |||||||||||||||||||
Customer support | 346 | 147 | 755 | - | 1,248 | |||||||||||||||||||
Sales and marketing | 1,239 | 38 | 76 | - | 1,353 | |||||||||||||||||||
General and administrative | 64 | 163 | 2,155 | - | 2,382 | |||||||||||||||||||
Total Operating Expenses | 6,262 | 4,972 | 3,324 | (46 | ) | 14,512 | ||||||||||||||||||
Operating Income (Loss) | $ | 1,292 | $ | (4,178 | ) | $ | (3,324 | ) | $ | - | $ | (6,210 | ) | |||||||||||
Non-cash expenses (a) | 2,096 | 1,084 | 501 | - | 3,681 | |||||||||||||||||||
Adjusted EBITDA (b) | 3,388 | (3,094 | ) | (2,823 | ) | - | (2,529 | ) | ||||||||||||||||
Less: Capital expenditures | 1,154 | 590 | 22 | - | 1,766 | |||||||||||||||||||
Net Cash Flow (b) | $ | 2,234 | $ | (3,684 | ) | $ | (2,845 | ) | $ | - | $ | (4,295 | ) | |||||||||||
Nine Months Ended | ||||||||||||||||||||||||
Fixed Wireless | Infrastructure | Corporate | Eliminations | Total | ||||||||||||||||||||
Revenues | $ | 21,294 | $ | 2,464 | $ | - | $ | (143 | ) | $ | 23,615 | |||||||||||||
Operating Expenses | ||||||||||||||||||||||||
Cost of revenues | 8,141 | 10,863 | 46 | (143 | ) | 18,907 | ||||||||||||||||||
Depreciation and amortization | 6,516 | 3,053 | 655 | - | 10,224 | |||||||||||||||||||
Customer support | 1,066 | 536 | 2,282 | - | 3,884 | |||||||||||||||||||
Sales and marketing | 4,039 | 123 | 229 | - | 4,391 | |||||||||||||||||||
General and administrative | 411 | 303 | 6,778 | - | 7,492 | |||||||||||||||||||
Total Operating Expenses | 20,173 | 14,878 | 9,990 | (143 | ) | 44,898 | ||||||||||||||||||
Operating Income (Loss) | $ | 1,121 | $ | (12,414 | ) | $ | (9,990 | ) | $ | - | $ | (21,283 | ) | |||||||||||
Non-recurring expenses, primarily acquisition related | - | - | 406 | - | 406 | |||||||||||||||||||
Non -cash expenses (a) | 6,828 | 3,109 | 1,241 | - | 11,178 | |||||||||||||||||||
Adjusted EBITDA (b) | 7,949 | (9,305 | ) | (8,343 | ) | - | (9,699 | ) | ||||||||||||||||
Less: Capital expenditures | 5,635 | 221 | 210 | - | 6,066 | |||||||||||||||||||
Net Cash Flow (b) | $ | 2,314 | $ | (9,526 | ) | $ | (8,553 | ) | $ | - | $ | (15,765 | ) | |||||||||||
Nine Months Ended | ||||||||||||||||||||||||
Fixed Wireless | Infrastructure | Corporate | Eliminations | Total | ||||||||||||||||||||
Revenues | $ | 22,811 | $ | 2,273 | $ | - | $ | (138 | ) | $ | 24,946 | |||||||||||||
Operating Expenses | ||||||||||||||||||||||||
Cost of revenues | 7,751 | 10,512 | 44 | (138 | ) | 18,169 | ||||||||||||||||||
Depreciation and amortization | 6,599 | 2,933 | 763 | - | 10,295 | |||||||||||||||||||
Customer support | 890 | 502 | 2,182 | - | 3,574 | |||||||||||||||||||
Sales and marketing | 3,754 | 178 | 242 | - | 4,174 | |||||||||||||||||||
General and administrative | 374 | 467 | 6,885 | - | 7,726 | |||||||||||||||||||
Total Operating Expenses | 19,368 | 14,592 | 10,116 | (138 | ) | 43,938 | ||||||||||||||||||
Operating Income (Loss) | $ | 3,443 | $ | (12,319 | ) | $ | (10,116 | ) | $ | - | $ | (18,992 | ) | |||||||||||
Non-recurring expenses, primarily acquisition related | - | - | 91 | - | 91 | |||||||||||||||||||
Non-cash expenses (a) | 6,896 | 3,136 | 1,478 | - | 11,510 | |||||||||||||||||||
Adjusted EBITDA (b) | 10,339 | (9,183 | ) | (8,547 | ) | - | (7,391 | ) | ||||||||||||||||
Less: Capital expenditures | 4,044 | 2,018 | 339 | - | 6,401 | |||||||||||||||||||
Net Cash Flow (b) | $ | 6,295 | $ | (11,201 | ) | $ | (8,886 | ) | $ | - | $ | (13,792 | ) | |||||||||||
(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.
Operating Outlook and Guidance
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 | $ | (3,129 | ) | $ | (2,529 | ) | ||||
Depreciation and amortization | (3,436 | ) | (3,318 | ) | ||||||
Stock-based compensation | (193 | ) | (185 | ) | ||||||
Loss on nonmonetary transactions | (60 | ) | (68 | ) | ||||||
Non-recurring expenses | (8 | ) | - | |||||||
Deferred rent | (18 | ) | (110 | ) | ||||||
Operating Income (Loss) | $ | (6,844 | ) | $ | (6,210 | ) | ||||
Interest expense, net | (1,665 | ) | (44 | ) | ||||||
Net loss | $ | (8,509 | ) | $ | (6,254 | ) |
Nine Months Ended | ||||||||||
2015 | 2014 | |||||||||
Adjusted EBITDA | $ | (9,699 | ) | $ | (7,391 | ) | ||||
Depreciation and amortization | (10,224 | ) | (10,295 | ) | ||||||
Stock-based compensation | (615 | ) | (740 | ) | ||||||
Loss on nonmonetary transactions | (193 | ) | (203 | ) | ||||||
Non-recurring expenses | (406 | ) | (91 | ) | ||||||
Deferred rent | (146 | ) | (272 | ) | ||||||
Operating Income (Loss) | $ | (21,283 | ) | $ | (18,992 | ) | ||||
Interest expense, net | (5,000 | ) | (166 | ) | ||||||
Net loss | $ | (26,283 | ) | $ | (19,158 | ) | ||||
II. Net Cash Flow to Net Cash Used in Operating Activities
Three Months Ended | ||||||||||
2015 | 2014 | |||||||||
Net cash flow | $ | (4,986 | ) | $ | (4,295 | ) | ||||
Capital expenditures | 1,857 | 1,766 | ||||||||
Non-recurring expenses | (8 | ) | - | |||||||
Changes in operating assets and liabilities, net | 136 | (737 | ) | |||||||
Other, net | (819 | ) | (37 | ) | ||||||
Net cash used in operating activities | $ | (3,820 | ) | $ | (3,303 | ) |
Nine Months Ended | ||||||||||
2015 | 2014 | |||||||||
Net cash flow | $ | (15,765 | ) | $ | (13,792 | ) | ||||
Capital expenditures | 6,066 | 6,401 | ||||||||
Non-recurring expenses | (406 | ) | (91 | ) | ||||||
Changes in operating assets and liabilities, net | 842 | (1,514 | ) | |||||||
Other, net | (2,380 | ) | (178 | ) | ||||||
Net cash used in operating activities | $ | (11,643 | ) | $ | (9,174 | ) | ||||
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
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
INVESTOR CONTACT:Source: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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