First Quarter Results

  • International Telecom Operations Continued to Show Strong Growth
  • U.S. Telecom Comparisons Reflected Impact of  Lower Year-on-Year Wholesale Revenue and $3.5 Million Aggregate Effect of  Asset Sale, Expiration of Certain Federal Subsidies, and Early Stage Business Expenses

BEVERLY, Mass., April 24, 2019 (GLOBE NEWSWIRE) -- ATN International, Inc. (Nasdaq: ATNI) today reported results for the first quarter ended March 31, 2019.

Business Review and Outlook

“Overall financial results in the quarter benefited from our diversified business model,” said Michael Prior, Chairman, and Chief Executive Officer. “Similar to the 2018 fourth quarter, the strong performance of our International Telecom operations partially offset the impact of lower domestic telecom revenues on our consolidated Adjusted EBITDA1 in the first quarter, a period in which year-over-year comparisons for the U.S. Telecom segment were especially difficult.  

“The strong revenue growth in our International Telecom operations was broad-based, driven by data growth and share gains in certain markets and improved results from our U.S. Virgin Islands business following the 2017 hurricanes. This in turn led to improving margins and growth in Adjusted EBITDA1.

“Our U.S. Telecom business continued to manage through a difficult operating environment. Roughly 35%, or $3.5 million, of the year-on-year U.S. Telecom Adjusted EBITDA1 decline was due to the combined effect of the sale of 100 wholesale sites in mid- 2018, the end of the FCC Mobility Fund subsidies, and additional expenses related to the operations of our early stage business investments.   Continued pressure on wholesale traffic volumes and rates, in what is already a typically a low seasonal traffic quarter for that business, accounted for the rest of the decline in Adjusted EBITDA1.

“Looking ahead, we expect our International Telecom businesses to continue to perform well, reflecting investments that we have made over the last several years in our networks, which have resulted in significant improvements in customer experience and the reach and breadth of our service offerings.  We expect that the steady recovery of our U.S. Virgin Islands business will increase its contribution to overall operating segment results. In the second quarter, we expect our domestic wholesale revenues to improve sequentially and there are several initiatives underway to increase U.S. Telecom segment Adjusted EBITDA1 levels over the longer term.  Additionally, we expect the funding of our award of the Connect America Fund ll program to begin to benefit U.S. Telecom segment’s revenues in the second half of 2019.

“Based on our current portfolio of businesses, we expect 2019 to be a year of strong cash flow generation for ATN as much of our major network investment in the International Telecom segment has been completed.  We continue to closely monitor our domestic telecom capital expenditures to address reduced revenues as we work through other initiatives to grow revenue in the segment. In addition to our ongoing investments in promising earlier stage companies, we continue to evaluate opportunities within our areas of expertise that have the potential to be value-creating for ATN and its shareholders.”

1 See Table 5 for reconciliation of Net Income to Adjusted EBITDA.

First Quarter 2019 Financial Results

First quarter 2019 revenues of $103.3 million were comparable with the prior year revenues of $104.5 million.  The $10.2 million or 15% increase in International Telecom revenues offset a $7.0 million or 25% decline in U.S. Telecom revenues, with approximately 70% of the decline due to lower wholesale traffic and the remaining 30% reflecting the effect of the prior year sale of wholesale wireless cell sites.  Additionally, Renewable Energy segment revenues of $1.5 million were down $4.3 million from the prior year, reflecting the sale of the U.S. solar asset portfolio in late 2018.  Operating income for the first quarter was $2.1 million compared with last year’s first quarter operating income of $4.2 million.  Adjusted EBITDA1 for the first quarter of 2019 was $23.2 million, compared to $26.3 million in the prior year period, primarily reflecting the revenue decline in the U.S. Telecom segment and the sale of the U.S. solar portfolio.  Net loss attributable to ATN’s stockholders for the first quarter was $1.6 million, or $0.10 loss per share compared with the prior year period’s loss of $5.6 million or $0.35 loss per share.   

First Quarter 2019 Operating Highlights

The Company has three reportable segments: (i) U.S. Telecom; (ii) International Telecom; and (iii) Renewable Energy. 

 
Segment Results
 Three Months Ended March 31, 2019 (in Thousands)
 U.S. TelecomInternational
Telecom
Renewable
Energy
Corporate
and Other
Total
Revenue$21,493 $80,317 $1,490 $- $103,300
Operating Income (loss)$(3,506)$13,878 $(203)$(8,055)$2,114
Adjusted EBITDA1$2,263 $26,886 $551 $(6,526)$23,174
Capital Expenditures$3,075 $11,356 $609 $2,724 $17,764
 Three Months Ended March 31, 2018 (in Thousands)
 U.S. TelecomInternational
Telecom
Renewable
Energy
Corporate
and Other
Total
Revenue$28,499 $70,145 $5,831 $- $104,475
Operating Income (loss)$5,224 $5,640 $1,936 $(8,591)$4,209
Adjusted EBITDA1$11,992 $17,793 $3,739 $(7,217)$26,307
Capital Expenditures$4,751 $43,995 $854 $2,292 $51,892
               

U.S. Telecom

U.S. Telecom revenues consist mainly of wireless revenues from our voice and data wholesale wireless operations and our smaller retail operations in the Southwestern United States, as well as enterprise and wholesale wireline revenues.  Lower U.S. Telecom segment revenues reflected a 25% decline in U.S. wireless revenues to $20.4 million, primarily due to the lower wholesale traffic, and the sale of approximately 100 wholesale wireless cell sites early in the third quarter of 2018.  In addition to these factors, the decline in U.S. Telecom Adjusted EBITDA1  was due to the completion of our Mobility Fund I program and cessation of the related expense offsets, as well as the additional operating costs related to early stage business investments made in 2018.    

International Telecom

International Telecom consists of a broad range of information and communications services including wireline and wireless data, internet, voice and video service revenues from our operations in Bermuda and the Caribbean.  International Telecom revenues increased 15% year-on-year mainly due to higher broadband revenues in several of our businesses including the U.S. Virgin Islands, as our operations recover from the 2017 hurricanes.  While we expect continued sequential revenue improvement in 2019, exclusive of the additional non-recurring revenue from FCC support received in the second and third quarters of 2018, the level of damage to the U.S. Virgin Islands economy may impact our ability to fully return to pre-storm levels in that market.  International Telecom Adjusted EBITDA1 increased 51%, primarily as a result of higher data revenues and the post-storm recovery.

Renewable Energy

Renewable Energy segment revenues are principally the result of the generation and sale of energy from our commercial solar projects in India.  During the fourth quarter of 2018, ATN completed the sale of its portfolio of solar projects in the United States. As a result, first quarter 2019 revenues were $1.5 million, compared to $5.8 million in the prior year quarter, and Adjusted EBITDA1 amounted to $0.6 million, compared to $3.7 million in the first quarter of 2018.  Year-on-year revenue and Adjusted EBITDA1  comparisons for this segment will be negative for the remainder of 2019 as a result of this transaction.

Balance Sheet and Cash Flow Highlights

Total cash and cash equivalents at March 31, 2019 was $172.6 million.  Additionally, the Company ended the first quarter with $5.3 million in short-term investments.  Net cash provided by operating activities was $18.8 million for the first quarter of 2019, compared with $22.5 million for the prior year period.  The decrease in operating cash flow compared with the prior year is mostly the result of the use of cash for working capital activity in the current year, partially offset by a $3.0 million increase in net income after tax.  For the first quarter of 2019, the Company used net cash of $39.1 million for investing and financing activities.  This included $17.8 million in capital expenditures, $10.0 million for the purchases of other investments and $5.0 million for the purchase of short-term investments.  Management reaffirms its estimate for International Telecom capital expenditures to range from $50.0 million to $55.0 million for the full year 2019, approximately $100.0 million below 2018 levels.  In the U.S. Telecom segment, we expect capital expenditures to be similar to 2018 levels, excluding new initiatives and early stage business spending.      

Conference Call Information

ATN will host a conference call on Thursday, April 25, 2019 at 9:30 a.m. Eastern Time (ET) to discuss its first quarter 2019 results. 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 7269628. A replay of the call will be available at ir.atni.com beginning at 1:00 p.m. (ET) on April 25, 2019.

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; the competitive environment in our key markets, demand for our services and industry trends; our growth opportunities; our priorities for 2019; the pace of expansion and improvement of our telecommunications network and renewable energy operations including our level of estimated future capital expenditures and our realization of the benefits of these investments; our future financial expectations; the estimated timeline for an increase in revenues from our customers in the U.S. Virgin Islands following the hurricanes; our future receipt and timing of funding in connection with the Connect America Fund II program; our ability and timing to receive financial support from the government for our rebuild in the U.S. Virgin Islands and the timing of such support; the anticipated timing of our build schedule and energy production of our India renewable energy projects; 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 facing our operations; (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 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, 2018, filed with the SEC on February 28, 2019 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 Adjusted EBITDA in this release and in the tables included herein. 

Adjusted EBITDA is defined as net income attributable to ATN stockholders before (gain) loss on disposition of long-lived assets, restructuring charges, interest, taxes, depreciation and amortization, transaction-related charges, other income or expense, loss on damaged assets and other hurricane charges, net of insurance recovery and net income attributable to non-controlling interests. 

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 is 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, 
 2019 2018 
Assets:    
  Cash and cash equivalents$  171,483 $  191,836 
  Restricted cash   1,071    1,071 
  Short-term investments   5,280    393 
  Other current assets   83,310    82,465 
     
Total current assets   261,144    275,765 
     
  Property, plant and equipment, net   619,798    626,852 
  Operating lease right-of-use assets   68,185    -  
  Goodwill and other intangible assets, net   166,439    166,979 
  Other assets   47,264    37,708 
     
Total assets$  1,162,830 $  1,107,304 
     
Liabilities and Stockholders’ Equity:    
  Current portion of long-term debt$  4,688 $  4,688 
  Taxes payable   32,099    31,795 
  Current portion of operating lease liabilities   8,351    -  
  Other current liabilities   96,179    104,167 
     
Total current liabilities   141,317    140,650 
     
  Long-term debt, net of current portion$  85,380 $  86,294 
  Deferred income taxes   8,362    10,276 
  Operating lease liabilities   58,835    -  
  Other long-term liabilities   48,952    46,760 
     
Total long-term liabilities   201,529    143,330 
     
Total liabilities   342,846    283,980 
     
  Total ATN International, Inc.’s stockholders’ equity   691,021    695,387 
  Non-controlling interests   128,963    127,937 
     
Total equity   819,984    823,324 
     
  Total liabilities and stockholders’ equity$  1,162,830 $  1,107,304 
     

 

     
    Table 2
ATN International, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in Thousands, Except per Share Data)
     
  Three Months Ended
 March 31,
   2019   2018 
Revenues:    
  Wireless $  41,613  $  50,548 
  Wireline    60,197     48,096 
  Renewable energy    1,490     5,831 
  Total revenue    103,300     104,475 
     
Operating expenses:    
  Termination and access fees    27,888     25,914 
  Engineering and operations    19,032     18,152 
  Sales, marketing and customer service    9,390     8,562 
  General and administrative    23,816     25,540 
  Transaction-related charges    40     27 
  Depreciation and amortization    20,718     21,305 
  Loss on disposition of assets    302     284 
  Loss on damaged assets and other hurricane related charges, net of insurance recovery    -      482 
Total operating expenses    101,186     100,266 
     
Operating income    2,114     4,209 
     
Other income (expense):    
  Interest expense, net    (353)    (1,838)
  Other income (expense)     187     (753)
  Other income (expense), net    (166)    (2,591)
     
Income before income taxes    1,948     1,618 
  Income tax expense     1,213     3,921 
     
Net Income (Loss)    735     (2,303)
     
Net income attributable to non-controlling interests, net    (2,316)    (3,252)
     
Net loss attributable to ATN International, Inc. stockholders $  (1,581) $  (5,555)
     
Net loss per weighted average share attributable to ATN International, Inc. stockholders:    
     
  Basic Net Loss $  (0.10) $  (0.35)
     
     
  Diluted Net Loss $  (0.10) $  (0.35)
     
Weighted average common shares outstanding:    
Basic    16,001     16,019 
Diluted     16,001     16,019 
     


 
Table 3
ATN International, Inc.
Unaudited Condensed Consolidated Cash Flow Statement
(in Thousands)
  
 Three Months Ended March 31,
  2019   2018 
    
  Net income (loss)$  735  $  (2,303)
  Depreciation and amortization   20,718     21,305 
  Provision for doubtful accounts   1,285     796 
  Loss on disposition of assets   302     284 
  Stock-based compensation   1,306     1,576 
  Deferred income taxes   (1,914)    (1,089)
  Change in prepaid and accrued income taxes   6,778     3,292 
  Change in other operating assets and liabilities   (10,519)    (1,963)
  Other non-cash activity   79     646 
    
  Net cash provided by operating activities   18,770     22,544 
    
  Capital expenditures   (17,641)    (21,041)
  Hurricane rebuild capital expenditures   (123)    (30,851)
  Hurricane insurance proceeds   -      34,606 
  Purchases of other investments   (10,000)    -  
  Proceeds from sale of investments   141     4,809 
  Purchase of short-term investments   (5,000)    -  
  Government grants   -      5,400 
    
    
  Net cash used in investing activities   (32,623)    (7,077)
    
  Dividends paid on common stock   (2,720)    (2,724)
  Distributions to non-controlling interests   (1,540)    (12,424)
  Principal repayments of term loan   (949)    (938)
  Stock-based compensation share repurchases   (1,569)    (2,041)
  Repurchases of non-controlling interests   (225)    (3)
  Investments made by minority shareholders   488     -  
    
  Net cash used in financing activities   (6,515)    (18,130)
    
Effect of foreign currency exchange rates on total cash, cash equivalents and restricted cash   15     (31)
    
Net change in total cash, cash equivalents and restricted cash   (20,353)    (2,694)
    
Total cash, cash equivalents and restricted cash, beginning of period   192,907     219,890 
    
Total cash, cash equivalents and restricted cash, end of period$  172,554  $  217,196 
    

 

     Table 4
ATN International, Inc.
Selected Segment Financial Information
(In Thousands)
 
For the three months ended March 31, 2019 is as follows:
 
 U.S. 
Telecom 
International
Telecom
 
Renewable
Energy
 
Corporate
and Other
  *
Total
      
Statement of Operations Data:     
Revenue     
  Wireless$  20,437 $  21,176 $  -  $  -  $  41,613 
  Wireline   1,056    59,141    -     -     60,197 
  Renewable Energy   -     -     1,490    -     1,490 
  Total Revenue$  21,493 $  80,317 $  1,490 $  -  $  103,300 
      
Operating Income (Loss)$  (3,506)$  13,878 $  (203)$  (8,055)$  2,114 
Stock-based compensation$  -     11 $  -     1,295 $  1,306 
Non-controlling interest ( net income or (loss) )$  81 $  (2,397)$  -  $  -  $  (2,316)
      
Non GAAP measure:     
Adjusted EBITDA (1)$  2,263 $  26,886 $  551 $  (6,526)$  23,174 
      
Statement of Cash Flows Data:     
Capital expenditures$  3,075 $  11,356 $  609 $  2,724 $  17,764 
      
Balance Sheet Data (at March 31, 2019):     
Cash, cash equivalents and investments$  14,858 $  40,731 $  56,874 $  64,300 $  176,763 
Total current assets   38,580    89,785    74,533    58,246    261,144 
Fixed assets, net   75,004    477,147    44,866    22,781    619,798 
Total assets   217,756    648,736    123,624    172,714    1,162,830 
Total current liabilities   25,517    78,649    2,149    35,002    141,317 
Total debt   -     90,068    -     -     90,068 
      
ATN International, Inc.
Selected Segment Financial Information
(In Thousands)
      
For the three months ended March 31, 2018 is as follows:
 
 U.S. 
Telecom 
International
Telecom
 
Renewable
Energy
 
Corporate
and Other
  *
Total
      
Statement of Operations Data:     
Revenue     
  Wireless$  27,401 $  23,147 $  -  $  -  $  50,548 
  Wireline   1,098    46,998    -     -     48,096 
  Renewable Energy   -     -     5,831    -     5,831 
  Total Revenue$  28,499 $  70,145 $  5,831 $  -  $  104,475 
      
Operating Income (Loss)$  5,224 $  5,640 $  1,936 $  (8,591)$  4,209 
Stock-based compensation   -     29    29    1,518    1,576 
Non-controlling interest ( net income or (loss) )$  (683)$  (2,269)$  (300)$  -  $  (3,252)
      
Non GAAP measure:     
Adjusted EBITDA (1)$  11,992 $  17,793 $  3,739 $  (7,217)$  26,307 
      
Statement of Cash Flows Data:     
Capital expenditures$  4,751 $  43,995 $  854 $  2,292 $  51,892 
      
      
 
 
      
ATN International, Inc.
Selected Segment Financial Information
(In Thousands)
at December 31, 2018
      
 U.S. 
Telecom 
International
Telecom
 
Renewable
Energy
 
Corporate
and Other
  *
Total
      
      
Balance Sheet Data (at December 31, 2018):     
Cash, cash equivalents and investments$  19,118 $  32,390 $  62,678 $  78,043 $  192,229 
Total current assets   36,801    75,304    80,553    83,107    275,765 
Fixed assets, net   78,102    482,770    45,599    20,381    626,852 
Total assets   172,634    622,454    130,427    181,789    1,107,304 
Total current liabilities   15,783    82,575    3,465    38,827    140,650 
Total debt   -     90,970    12    -     90,982 
      
(1) See Table 5 for reconciliation of Net Income to Adjusted EBITDA    
*  Corporate and Other refer to corporate overhead expenses and consolidating adjustments 
      
      
      
 Quarter ended
 March 31,June 30,September 30,December 31,March 31,
 2018**2018**2018**2018** 2019 
      
U.S. Telecom Operational Data:     
Wireless - Total Domestic Base Stations   1,122    1,121    1,035    1,045    1,046 
      
      
International Telecom Operational Data:     
Wireline - Voice / Access lines*   165,100    167,900    170,400    171,100    171,200 
Wireline - Data Subscribers*   112,000    114,900    116,800    119,800    125,600 
Wireline - Video Subscribers   46,200    45,000    43,600    41,700    41,000 
Wireless - Subscribers*   309,900    308,600    300,600    300,400    293,500 
      
* Subscriber counts were adjusted for all periods presented based upon a change in methodology  
      
**  For the presented 2018 quarters, subscribers for wireline voice, data and video in the U.S. Virgin Islands are included as active and in the subscriber count, but many were not billed post-hurricane
  


     Table 5
ATN International, Inc.
Reconciliation of Non-GAAP Measures
(In Thousands)
      
      
Reconciliation of Net Income to Adjusted EBITDA for the Three Months Ended March 31, 2019 and 2018
      
Three Months Ended March 31, 2019
 U.S.
Telecom 
 Renewable
Energy
Corporate
and Other *
Total
International
Telecom
      
Net income (loss)attributable to ATN International, Inc. stockholders    $  (1,581)
Net income attributable to non-controlling interests, net of tax       2,316 
Income tax expense       1,213 
Other (income) expense, net       (187)
Interest expense, net       353 
Operating income$  (3,506)$  13,878 $  (203)$  (8,055)$  2,114 
Depreciation and amortization   5,598    13,015    616    1,489    20,718 
(Gain) Loss on disposition of assets   171    (7)   138    -     302 
Transaction-related charges   -     -     -     40    40 
Adjusted EBITDA $  2,263 $  26,886 $  551 $  (6,526)$  23,174 
      
      
      
      
Three Months Ended March 31, 2018
 U.S. 
Telecom 
 Renewable
Energy
Corporate
and Other *
Total
International
Telecom
      
Net Income (loss) attributable to ATN International, Inc. stockholders    $  (5,555)
Net income attributable to non-controlling interests, net of tax       3,252 
Income tax benefit       3,921 
Other expense, net       753 
Interest expense, net       1,838 
Operating income$  5,224 $  5,640 $  1,936 $  (8,591)$  4,209 
Depreciation and amortization   6,513    11,671    1,774    1,347    21,305 
Loss on disposition of assets   255    -     29    -     284 
Loss on damaged assets and other hurricane related charges , net of insurance recovery   -     482    -     -     482 
Transaction-related charges   -     -     -     27    27 
Adjusted EBITDA $  11,992 $  17,793 $  3,739 $  (7,217)$  26,307 
      
      
*  Corporate and Other refer to corporate overhead expenses and consolidating adjustments  
   

Contact:       
978-619-1300
Michael T. Prior
Chairman and
Chief Executive Officer

Justin D. Benincasa
Chief Financial Officer