GlobeNewswire
ATN Reports First Quarter 2021 Results
International Telecom Continues Steady PerformanceUS Telecom Results Reflect Expected Increase in Operating CostsAcquisition of Alaska Communications Expected to Close in Mid-2021 BEVERLY, Mass., April 27, 2021 (GLOBE NEWSWIRE) — ATN International, Inc. (Nasdaq: ATNI) today reported results for the first quarter ended March 31, 2021. Business Review and Outlook “First quarter results were in line with the business trends we saw at the time of our fourth quarter earnings release. In our International Telecom segment, we continued to grow both broadband and mobile subscriber levels and revenue, while operating income and Adjusted EBITDA2 were relatively flat year-on-year as a result of higher expense levels, a portion of which was tied to network investments. “We are implementing additional cost reduction initiatives in an effort to reduce the operating expense levels experienced in the first quarter. At the same time, we continue to invest in expanding and upgrading our high speed fixed and mobile data and enterprise solutions to capitalize on the continuing macro trends of an increasing need for bandwidth and reliable connectivity across our markets. “US Telecom results also reflected increased expense levels, which, as discussed last quarter, were planned and associated with the transition of this business from primarily a wholesale roaming operation to a broader communications infrastructure platform. This new business model will result in lower year-on-year operating income and Adjusted EBITDA2 comparisons in this segment until we complete the acquisition of Alaska Communications, which is expected to close in the middle of this year. A portion of the higher costs represent the expansion of our fiber and broadband infrastructure for customers under contract as well as into new areas that we believe have unmet demand. We expect this expansion to result in increased fixed data revenue over time. In addition, we have accelerated our investments and activity in private network solutions, which, while still early stage with respect to contracted revenue, represents a large market opportunity for us. “The shareholders of Alaska Communications’ approved our acquisition of their company in March. We look forward to gaining the remaining regulatory approvals over the coming months and expect to close the acquisition in the middle of this year. Beyond the immediate and substantial increase in revenue and EBITDA this will bring to our platform, we are excited about the potential to build value through Alaska Communications’ growing fiber infrastructure, including in the lower-48, with the depth and quality of their anchor tenants and other business and wholesale customers.” Mr. Prior concluded. First Quarter 2021 Results First quarter 2021 consolidated revenues of $124.5 million were up 12% compared to the prior year quarter’s revenue of $110.9 million. The first quarter of 2021 had operating income of $3.3 million and Adjusted EBITDA2 of $24.7 million which were both down compared with the prior year’s operating income of $7.3 million and Adjusted EBITDA2 of $29.9 million. Net income attributable to ATN’s stockholders for the first quarter was $2.7 million, or $0.17 per diluted share, compared with the prior year period’s net loss of $1.0 million, or $0.06 loss per share. First Quarter 2021 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, 2021 International TelecomUS TelecomRenewable EnergyCorporate and OtherTotalRevenue$83,820$40,272$418$-$124,510Operating Income (loss)$13,116$(534)$(662)$(8,571)$3,349EBITDA1$26,942$4,659$(474)$(7,270)$23,857Adjusted EBITDA2$26,941$4,648$ (1)$(6,884)$24,704Capital Expenditures$10,506$14,939*$-$235$25,680* Three Months Ended March 31, 2020Revenue$82,284$27,299$1,322$-$110,905Operating Income (loss)$13,477$2,193$(456)$(7,915)$7,299EBITDA1$27,792$8,079$158$(6,212)$29,817Adjusted EBITDA2$27,805$8,081$172$(6,182)$29,876Capital Expenditures$10,465$1,972*$720$904$14,061* *Includes reimbursable capital expenditures of $6,185 and $0 for the three months ended March 31, 2021 and 2020, respectively. International Telecom International Telecom revenues are generated by delivery of a broad range of communications services, including data, voice and video services from the Company’s fixed and mobile network operations in Bermuda and the Caribbean. International Telecom revenues were $83.8 million for the quarter, a 2% increase year-on-year mainly due to increases in fixed broadband and mobility revenues in multiple markets partially offset by lower carrier services and enterprise revenues related to the continued COVID-19 pandemic related restrictions. Compared to the prior year quarter, operating income decreased 3% to $13.1 million and Adjusted EBITDA2 decreased 3% to $26.9 million, respectively, primarily due to increased operating costs resulting from higher regulatory and license fees and repairs and network maintenance expenses in multiple markets. During the first quarter of 2021 we increased our equity ownership in One Communications, the Company’s Bermuda and Cayman based subsidiary, through the purchase of an additional approximate 5% stake. This transaction increased the Company’s total ownership in this business to approximately 77% of the outstanding equity and was accretive to overall Company earnings this quarter. For the first quarter of 2021, ATN ownership represented 83% of the $26.9 million of Adjusted EBITDA2 for the segment. US Telecom US Telecom revenues consist mainly of carrier services revenues and fixed and mobile retail revenues from the Company’s networks and operations in the western United States, as well as revenue from providing private networks for connectivity and automation to business and government customers nationwide. US Telecom segment revenues were $40.3 million in the quarter, an increase of 48% from the prior year period due mostly to $12.3 million of FirstNet construction revenues. Additionally, increases in fixed enterprise and residential revenues and increases in private network revenues were partially offset by reductions in carrier services due to lower contractual roaming revenues. For the segment, the operating loss of $0.5 million and Adjusted EBITDA2 of $4.6 million compared unfavorably to the prior year’s quarter by $2.7 million and $3.4 million, respectively. This was a result of the anticipated operating expense increases to further fund the development of the private networks business and increased network operating costs from the FirstNet sites and the CARES sites that have come on line. By the end of the first quarter of 2021, the Company had completed and activated approximately 30% of the total sites related to the network build portion of its FirstNet Agreement and expects to complete an additional 35% of the total build by the end of 2021. As revenues from the build will be largely offset by construction costs, the Company does not expect a material impact on operating income from this activity. Renewable Energy Renewable Energy segment revenues were principally the result of the sale of electric power generated by commercial solar projects in India under the “Vibrant Energy” name. As previously announced, the Company completed the sale during the quarter of approximately 67% of the outstanding equity interests of the Vibrant Energy business for consideration of approximately $21.0 million at closing and the potential for up to $5.5 million of additional “earn out” consideration. The Company retained an approximate 33% ownership interest in Vibrant Energy which will be recorded through the equity method of accounting within the Corporate and Other operating segment. In future reports, our consolidated financial statements will no longer include revenue and operating expenses from Vibrant Energy. Instead, “other income (expense)” within the Corporate and Other operating segment will include our 33% share of Vibrant Energy’s profits and losses. We will continue to present the historical results of our Renewable Energy segment for comparative purposes. In the first quarter of 2021, we recorded one month of operating activity for this segment and correspondingly, revenue of $0.4 million and Adjusted EBITDA2 of $0.1 million were both down from the prior year’s quarter. Balance Sheet and Cash Flow Highlights Total cash, cash equivalents and restricted cash at March 31, 2021 totaled $92.3 million. Net cash provided by operating activities was $5.3 million for the three months ended March 31, 2021, compared with $15.5 million for the prior year quarter. The decline in operating cash flow compared with the prior year is the result of an increase in current year working capital investments made as part of customer receivables and prepaid construction project costs, as well as increased payments of accounts payable and accrued expenses. For the three months ended March 31, 2021, the Company used net cash of $18.0 million for investing and financing activities compared to $30.7 million for the prior year period. For the three months ended March 31, 2021, the net use of cash was primarily from $25.7 million in capital expenditures, which included $6.2 million of capital expenditures that are or will be reimbursable to us, $11.5 million of repurchases of minority equity interests in our subsidiaries, $3.5 million in minority partner distributions and $2.7 million of dividends to Company stockholders. These uses of cash were partially offset by $18.6 million in net proceeds received from the completion of the Vibrant Energy sale and $10.8 million in new borrowings under the FirstNet receivables credit facility Conference Call Information ATN will host a conference call on Wednesday, April 28, 2021 at 9:30 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 5067947. A replay of the call will be available at ir.atni.com beginning at approximately 1:00 p.m. (ET) on Wednesday, April 28, 2021. 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, 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 high-speed internet services, mobile wireless solutions, video services and local exchange services, and (ii) wholesale communications infrastructure services such as terrestrial and submarine fiber optic transport, communications tower facilities, managed mobile networks, and in-building wireless 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 the economies of the markets we serve, and on our business and operations; expectations regarding future revenue, operating income, EBITDA and capital expenditures; the competitive environment in our key markets, demand for our services and industry trends; our expectations regarding construction progress under our FirstNet agreement and the effect such progress will have on our financial results; our expectations regarding the benefits and timing of our pending acquisition of Alaska Communications; the impact of federal support program revenues and the FirstNet transaction; 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 retention of and future growth of our subscriber base, including growth in our private networks business; (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; (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 those resulting from the pandemic; (7) the loss of or an inability to recruit skilled personnel in our various jurisdictions, including key members of management; (8) our ability to successfully complete our pending acquisition of Alaska Communications and recognize the expected benefits of such acquisition; (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 and our ability to secure the appropriate level of insurance coverage for these assets; (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, 2020, filed with the SEC on March 1, 2021, 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, the Company has included EBITDA and Adjusted EBITDA 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, transaction-related charges, impairment of goodwill and the gain (loss) on disposition of assets. The Company believes that the inclusion of these non-GAAP financial measures help investors gain a meaningful understanding of the Company’s core operating results and enhances the usefulness of comparing such performance with prior periods. Management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring the Company’s 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 to the most directly comparable GAAP financial measures are set forth in the text of, and the accompanying tables to, this press release. While non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating the Company’s own operating results over different periods of time, the Company urges 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 its business. 1 See Table 5 for reconciliation of Operating Income to EBITDA, a non-GAAP measure.2 See Table 5 for reconciliation of Operating Income to Adjusted EBITDA, a non-GAAP measure. Table 1 ATN International, Inc. Unaudited Condensed Consolidated Balance Sheets (in Thousands) March 31, December 31, 2021 2020 Assets: Cash and cash equivalents$91,259 $103,925 Restricted cash 1,072 1,072 Assets held-for-sale – 34,735 Customer receivable 2,365 1,227 Other current assets 100,581 99,106 Total current assets 195,277 240,065 Property, plant and equipment, net 528,071 536,462 Operating lease right-of-use assets 61,762 63,235 Customer receivable – long term 21,056 9,614 Goodwill and other intangible assets, net 180,333 180,687 Other assets 71,223 53,648 Total assets$1,057,722 $1,083,711 Liabilities and Stockholders’ Equity: Current portion of long-term debt$3,750 $3,750 Current portion of customer receivable credit facility 1,101 – Taxes payable 8,495 7,501 Current portion of lease liabilities 12,446 12,371 Liabilities held-for-sale – 717 Other current liabilities 101,964 123,589 Total current liabilities 127,756 147,928 Long-term debt, net of current portion$68,173 $69,073 Customer receivable credit facility, net of current portion 9,713 – Deferred income taxes 8,171 10,675 Lease liabilities 50,902 51,082 Other long-term liabilities 50,738 50,617 Total liabilities 315,453 329,375 Total ATN International, Inc.’s stockholders’ equity 642,591 645,649 Non-controlling interests 99,678 108,687 Total equity 742,269 754,336 Total liabilities and stockholders’ equity$1,057,722 $1,083,711 Table 2 ATN International, Inc. Unaudited Condensed Consolidated Statements of Operations (in Thousands, Except per Share Data) Three Months Ended March 31, 2021 2020 Revenues: Communications services $110,636 $107,904 Other 13,874 3,001 Total revenue 124,510 110,905 Operating expenses (excluding depreciation and amortization unless otherwise indicated): Cost of services 49,507 46,602 Cost of construction revenue 12,606 – Selling, general and administrative 37,693 34,427 Transaction-related charges 730 44 Depreciation and amortization 20,508 22,518 Loss on disposition of long-lived assets 117 15 Total operating expenses 121,161 103,606 Operating income 3,349 7,299 Other income (expense): Interest expense, net (1,153) (913) Other income (expense) 2,375 (2,901) Other income (expense), net 1,222 (3,814) Income before income taxes 4,571 3,485 Income tax expense 295 1,109 Net Income 4,276 2,376 Net income attributable to non-controlling interests, net (1,570) (3,390) Net income (loss) attributable to ATN International, Inc. stockholders $2,706 $(1,014) Net income (loss) per weighted average share attributable to ATN International, Inc. stockholders: Basic Net Income (Loss) $0.17 $(0.06) Diluted Net Income (Loss) $0.17 $(0.06) Weighted average common shares outstanding: Basic 15,902 16,001 Diluted 15,952 16,001 Table 3 ATN International, Inc. Unaudited Condensed Consolidated Cash Flow Statement (in Thousands) Three Months Ended March 31, 2021 2020 Net income$4,276 $2,376 Depreciation and amortization 20,508 22,518 Provision for doubtful accounts 1,122 1,260 Amortization of debt discount and debt issuance costs 168 126 Loss on disposition of assets and assets held-for-sale 117 15 Stock-based compensation 1,336 1,160 Deferred income taxes (2,504) (1,135) (Gain) loss on equity investments (2,188) 1,775 Unrealized (gain) loss on foreign currency (81) 739 Change in prepaid and accrued income taxes 1,810 754 Change in other operating assets and liabilities (19,241) (14,129) Net cash provided by operating activities 5,323 15,459 Capital expenditures (19,495) (14,061) Reimbursable capital expenditures (6,185) – Purchases of strategic investments (4,155) (2,768) Receipt of government grants 3,292 – Sale of business, net of transferred cash of $0.9 million and $0 million, respectively 18,597 – Net cash used in investing activities (7,946) (16,829) Dividends paid on common stock (2,703) (2,721) Distributions to non-controlling interests (3,530) (4,220) Principal repayments of term loan (938) (938) Payment of debt issuance costs 53 (1,010) Proceeds from debt 10,814 – Purchases of common stock – stock-based compensation (1,677) (1,625) Purchases of common stock – share repurchase plan (540) (1,600) Repurchases of non-controlling interests (11,522) (1,774) Net cash used in financing activities (10,043) (13,888) Effect of foreign currency exchange rates on total cash, cash equivalents and restricted cash – (115) Net change in total cash, cash equivalents and restricted cash (12,666) (15,373) Total cash, cash equivalents and restricted cash, beginning of period 104,997 162,358 Total cash, cash equivalents and restricted cash, end of period$92,331 $146,985 Table 4 ATN International, Inc. Selected Segment Financial Information (In Thousands) For the three months ended March 31, 2021 is as follows: International Telecom US Telecom Renewable Energy Corporate and Other *Total Statement of Operations Data: Revenue Mobility$21,821 $2,860 $- $- $24,681 Fixed 58,748 6,370 – – 65,118 Carrier services 1,883 18,736 – – 20,619 Other 218 – – – 218 Total communications services$82,670 $27,966 $- $- $110,636 Renewable Energy$- $- $418 $- $418 Managed Services 1,150 – – – 1,150 Construction – 12,306 – – 12,306 Total Other$1,150 $12,306 $418 $- $13,874 Total Revenue$83,820 $40,272 $418 $- $124,510 Operating Income (Loss)$13,116 $(534)$(662)$(8,571)$3,349 Stock-based compensation 37 15 22 1,262 1,336 Non-controlling interest ( net income or (loss) )$(1,690)$(676)$796 $- $(1,570) Non GAAP measures: EBITDA (1)$26,942 $4,659 $(474)$(7,270)$23,857 Adjusted EBITDA (2)$26,941 $4,648 $(1)$(6,884)$24,704 Balance Sheet Data (at March 31, 2021): Cash, cash equivalents and investments$40,505 $29,389 $5,822 $15,543 $91,259 Total current assets 100,470 67,739 9,716 17,352 195,277 Fixed assets, net 448,690 67,829 – 11,552 528,071 Total assets 634,344 302,966 22,369 98,043 1,057,722 Total current liabilities 77,100 33,216 356 17,084 127,756 Total debt 71,923 10,814 – – 82,737 * Corporate and Other refer to corporate overhead expenses and consolidating adjustments 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$20,230 $2,403 $- $- $22,633 Fixed 57,741 4,825 – – 62,566 Carrier services 2,298 20,071 – – 22,369 Other 336 – – – 336 Total communications services$80,605 $27,299 $- $- $107,904 Renewable Energy$- $- $1,322 $- $1,322 Managed Services 1,679 – – – 1,679 Total Other$1,679 $- $1,322 $- $3,001 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 * Corporate and Other refer to corporate overhead expenses and consolidating adjustments ATN International, Inc. Selected Segment Financial Information (In Thousands) at December 31, 2020 International Telecom US Telecom Renewable Energy Corporate and Other *Total Balance Sheet Data (at December 31, 2020): Cash, cash equivalents and investments$45,848 $26,921 $4,311 $26,845 $103,925 Total current assets 107,315 65,806 39,057 27,887 240,065 Fixed assets, net 449,888 73,717 – 12,857 536,462 Total assets 642,834 265,797 39,045 136,035 1,083,711 Total current liabilities 80,875 43,200 1,038 22,815 147,928 Total debt 72,823 – – – 72,823 (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, 2021 Quarter ended March 31,June 30,September 30,December 31,March 31, 2020 2020 2020 2020 2021 International Telecom Operational Data: Mobile – Subscribers * Pre-Paid 242,600 234,300 244,000 256,800 261,200 Post-Paid 39,000 41,500 44,400 46,500 45,700 Total 281,600 275,800 288,400 303,300 306,900 Fixed – Subscribers* Data 131,300 135,200 137,400 140,700 143,000 Video 38,100 36,300 35,800 35,800 35,300 Voice 166,200 166,600 167,100 167,900 165,600 * 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, 2021 is as follows: International Telecom US Telecom Renewable Energy Corporate and Other *Total Operating income (loss)$13,116 $(534)$(662)$(8,571)$3,349 Depreciation and amortization expense 13,826 5,193 188 1,301 20,508 EBITDA$ 26,942 $ 4,659 $ (474)$ (7,270) 23,857 Transaction-related charges – – 566 164 730 (Gain) Loss on disposition of assets (1) (11) (93) 222 117 ADJUSTED EBITDA$ 26,941 $ 4,648 $ (1)$ (6,884) 24,704 Revenue 83,820 40,272 418 – 124,510 ADJUSTED EBITDA MARGIN 32.1% 11.5% -0.2%NA 19.8% For the three months ended March 31, 2020 is as follows: International Telecom US 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% CONTACT:978-619-1300 Michael T. Prior Chairman and Chief Executive Officer Justin D. Benincasa Chief Financial Officer