Towerstream Corporation (Nasdaq:TWER) (the "Company"), a Fixed
Wireless Fiber Alternative provider, announced results for the
first quarter ended March 31, 2015.
First Quarter Operating Highlights
HetNets Tower Corporation Subsidiary
- Revenues for the three months ended March 31, 2015 were $0.8
million compared to $0.7 million for the three months ended March
31, 2014 representing an increase of $0.1 million, or 6%.
- Number of Shared Wireless Infrastructure locations increased by
6% during the twelve months ended March 31, 2015.
- Number of Access Points leased by major cable company increased
by 25% during the twelve months ended March 31, 2015.
Towerstream Corporation
- Number of buildings lit with Cogent-like service of 100
Megabytes of bandwidth for $699 more than doubled in the first
quarter of 2015 compared to all of 2014.
- ARPU increased to $773 at March 31, 2015 compared to $758 at
March 31, 2014 representing an increase of $15, or 2%.
- Customer churn for the three months ended March 31, 2015
totaled 1.85% compared to 2.33% for the three months ended March
31, 2014.
- Executed a wholesale agreement with a CLEC (Competitive Local
Exchange Carrier).
Management Comments
"With the completion of recent spectrum auctions, carriers are
now focused on utilizing small cell architectures and the
densification of their networks, which is driving increased demand
for our rooftop locations," said Jeffrey Thompson, President and
Chief Executive Officer. "We are also excited to see Google enter
the WiFi cellular model as it will likely spur demand for our
network. Moreover, the addition of LTE-Unlicensed is increasing the
value of our beach front rooftops."
"Our On Net program offering of 100 megabytes of bandwidth for
$699 per month continues to gain traction as evidenced by the
strong growth in lit buildings and customers," noted Joseph Hernon,
Chief Financial Officer. "Our new sales center location in Southern
Florida is open and staffed, and we expect that a higher base of
experienced account executives will drive growth in the Fixed
Wireless segment over the course of the year."
Selected Financial Data
and Key Operating Metrics |
(All dollars are in thousands
except ARPU) |
|
(Unaudited) |
|
Three Months
Ended |
|
3/31/2015 |
12/31/2014 |
3/31/2014 |
|
|
|
|
Revenues |
$ 7,960 |
$ 8,090 |
$ 8,380 |
Gross margin |
|
|
|
Consolidated |
20% |
21% |
30% |
Fixed wireless |
62% |
63% |
67% |
Capital expenditures |
|
|
|
Fixed wireless |
$ 1,434 |
$ 1,524 |
$ 1,486 |
Shared wireless
infrastructure |
119 |
202 |
938 |
Corporate |
121 |
43 |
113 |
Churn rate (1) |
1.85% |
1.65% |
2.33% |
ARPU (1) |
$ 773 |
$ 772 |
$ 758 |
ARPU of new customers (1) |
628 |
639 |
636 |
Cash and cash equivalents |
32,267 |
38,028 |
21,206 |
|
|
|
|
(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
March 31, |
|
2015 |
2014 |
|
|
|
Revenues |
$ 7,960 |
$ 8,380 |
|
|
|
Operating Expenses |
|
|
Cost of revenues |
6,400 |
5,856 |
Depreciation and
amortization |
3,380 |
3,695 |
Customer support |
1,241 |
1,176 |
Sales and marketing |
1,329 |
1,422 |
General and administrative |
2,869 |
2,678 |
Total Operating Expenses |
15,219 |
14,827 |
Operating Loss |
(7,259) |
(6,447) |
Other Income/(Expense) |
|
|
Interest expense, net |
(1,664) |
(63) |
Total Other
Income/(Expense) |
(1,664) |
(63) |
Net Loss |
$ (8,923) |
$ (6,510) |
|
|
|
Net loss per common share – basic
and diluted |
$ (0.13) |
$ (0.10) |
Weighted average common shares outstanding –
basic and diluted |
67,857 |
66,439 |
|
Statements of Operations
- Segment Basis (Unaudited) |
|
|
|
|
|
|
|
Three Months
Ended March 31, 2015 |
|
Fixed Wireless |
Shared Wireless
Infrastructure |
Corporate |
Eliminations |
Total |
|
|
|
|
|
|
Revenues |
$ 7,217 |
$ 788 |
$ -- |
$ (45) |
$ 7,960 |
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
Cost of revenues |
2,722 |
3,706 |
17 |
(45) |
6,400 |
Depreciation and
amortization |
2,127 |
1,032 |
221 |
-- |
3,380 |
Customer support |
326 |
160 |
755 |
-- |
1,241 |
Sales and marketing |
1,210 |
44 |
75 |
-- |
1,329 |
General and administrative |
120 |
108 |
2,641 |
-- |
2,869 |
Total Operating
Expenses |
6,505 |
5,050 |
3,709 |
(45) |
15,219 |
|
|
|
|
|
|
Operating Income (Loss) |
$ 712 |
$ (4,262) |
$ (3,709) |
$ -- |
$ (7,259) |
Non-recurring expenses,
primarily acquisition related |
-- |
-- |
236 |
-- |
236 |
Non-cash expenses (a) |
2,238 |
1,081 |
429 |
-- |
3,748 |
Adjusted EBITDA (b) |
2,950 |
(3,181) |
(3,044) |
-- |
(3,275) |
Less: Capital expenditures |
1,434 |
119 |
121 |
-- |
1,674 |
Net Cash Flow (b) |
$ 1,516 |
$ (3,300) |
$ (3,165) |
$ -- |
$ (4,949) |
|
|
|
|
|
|
|
Three Months
Ended March 31, 2014 |
|
Fixed Wireless |
Shared Wireless
Infrastructure |
Corporate |
Eliminations |
Total |
|
|
|
|
|
|
Revenues |
$ 7,686 |
$ 740 |
$ -- |
$ (46) |
$ 8,380 |
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
Cost of revenues |
2,499 |
3,389 |
14 |
(46) |
5,856 |
Depreciation and
amortization |
2,538 |
940 |
217 |
-- |
3,695 |
Customer support |
273 |
176 |
727 |
-- |
1,176 |
Sales and marketing |
1,263 |
77 |
82 |
-- |
1,422 |
General and administrative |
108 |
147 |
2,423 |
-- |
2,678 |
Total Operating
Expenses |
6,681 |
4,729 |
3,463 |
(46) |
14,827 |
|
|
|
|
|
|
Operating Income (Loss) |
$ 1,005 |
$ (3,989) |
$ (3,463) |
$ -- |
$ (6,447) |
Non-cash expenses (a) |
2,612 |
1,014 |
500 |
-- |
4,126 |
Adjusted EBITDA (b) |
3,617 |
(2,975) |
(2,963) |
-- |
(2,321) |
Less: Capital expenditures |
1,486 |
938 |
113 |
-- |
2,537 |
Net Cash Flow (b) |
$ 2,131 |
$ (3,913) |
$ (3,076) |
$ -- |
$ (4,858) |
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
The Company has two reportable segments. The Fixed Wireless
segment provides fixed wireless broadband services to commercial
customers and delivers access over a wireless network transmitting
over both regulated and unregulated radio spectrum. The Shared
Wireless Infrastructure segment offers a range of rental options on
street level rooftops related to (i) the installation of customer
owned Small Cells, (ii) Wi-Fi access and the offloading of mobile
data, and (iii) backhaul, power and other related
telecommunications.
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.
Summary Condensed Balance
Sheets |
(All dollars are in
thousands) |
|
|
|
|
(Unaudited) |
(Audited) |
|
March 31, 2015 |
December 31,
2014 |
Assets |
|
|
Current Assets |
|
|
Cash and cash equivalents |
$ 32,267 |
$ 38,028 |
Other |
2,529 |
2,237 |
Total Current Assets |
34,796 |
40,265 |
|
|
|
Property and equipment, net |
32,298 |
33,905 |
|
|
|
Other assets |
7,673 |
8,152 |
|
|
|
Total Assets |
74,767 |
82,322 |
|
|
|
Liabilities and Stockholders' Equity |
|
|
Current Liabilities |
|
|
Accounts payable and accrued
expenses |
3,470 |
2,910 |
Deferred revenues and
other |
2,270 |
2,288 |
Total Current Liabilities |
5,740 |
5,198 |
|
|
|
Long-Term Liabilities |
|
|
Long-term debt |
32,761 |
32,101 |
Other |
3,004 |
3,061 |
Total Long-Term
Liabilities |
35,765 |
35,162 |
|
|
|
Total Liabilities |
41,505 |
40,360 |
|
|
|
Stockholders' Equity |
|
|
Common stock |
67 |
67 |
Additional paid-in-capital |
157,854 |
157,631 |
Accumulated deficit |
(124,659) |
(115,736) |
Total Stockholders' Equity |
33,262 |
41,962 |
Total Liabilities and
Stockholders' Equity |
$ 74,767 |
$ 82,322 |
|
Summary Condensed
Statements of Cash Flows (Unaudited) |
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
2015 |
2014 |
Net Cash Used in Operating Activities |
$ (3,891) |
$ (4,222) |
Net Cash Used in Investing Activities |
(1,657) |
(2,557) |
Net Cash Used in Financing Activities |
(212) |
(197) |
Net Decrease in Cash and Cash
Equivalents |
$ (5,760) |
$ (6,976) |
Operating Outlook and Guidance
- Revenues for the second quarter 2015 are expected to range
between $7.2 million to $7.5 million for the Fixed Wireless
segment.
- Revenues for the second quarter 2015 are expected to range
between $0.8 million to $1.0 million for the Shared Wireless
Infrastructure segment.
- Adjusted EBITDA, on a segment basis, for the second quarter
2015 is expected to range between profitability of $2.8 million to
$3.1 million for the Fixed Wireless segment.
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
March 31, |
|
2015 |
2014 |
Adjusted EBITDA |
$ (3,275) |
$ (2,321) |
Depreciation and amortization |
(3,380) |
(3,695) |
Stock-based compensation |
(211) |
(292) |
Loss on nonmonetary transactions |
(66) |
(68) |
Non-recurring expenses |
(236) |
-- |
Deferred rent |
(91) |
(71) |
Operating Income (Loss) |
$ (7,259) |
$ (6,447) |
Interest expense, net |
(1,664) |
(63) |
Net loss |
$ (8,923) |
$ (6,510) |
|
|
|
|
|
|
II. Net Cash Flow to Net
Cash Used in Operating Activities |
|
|
|
|
Three Months Ended
March 31, |
|
2015 |
2014 |
Net cash flow |
$ (4,949) |
$ (4,858) |
Capital expenditures |
1,674 |
2,537 |
Non-recurring expenses |
(236) |
-- |
Changes in operating assets and liabilities,
net |
761 |
(1,780) |
Other, net |
(1,141) |
(121) |
Net cash used in operating activities |
$ (3,891) |
$ (4,222) |
Conference Call and Webcast
A conference call led by President and Chief Executive Officer,
Jeff Thompson, and Chief Financial Officer, Joseph Hernon, will be
held on May 11, 2015 at 5:00 p.m. ET to review our financial
results and provide an update on current business developments.
Interested parties may participate in the conference by dialing
877-755-7423 or 678-894-3069 (for
international callers). A telephonic replay
of the conference may be accessed approximately two hours after the
call through May 18, 2015 at 11:59 p.m. ET by dialing
855-859-2056 or 404-537-3406 (for
international callers) using pass code
31087467.
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 Towerstream Corporation
Towerstream Corporation (Nasdaq:TWER) is a leading Fixed
Wireless Fiber Alternative company delivering high-speed Internet
access to businesses. To date the company offers its broadband
services in 12 urban markets including New York City, Boston, Los
Angeles, Chicago, Philadelphia, the San Francisco Bay area, Miami,
Seattle, Dallas-Fort Worth, Houston, Las Vegas-Reno, and the
greater Providence area. In 2014, Towerstream launched its On-Net
fixed wireless service offering building owners and property
managers a redundant and reliable dense urban network that directly
connects with Towerstream's fiber backbone. On-Net building tenants
have access to 100 Mbps of dedicated, symmetrical Internet
connectivity, with a premier SLA, for an industry-leading price of
$699/month. For more information on Towerstream services,
please visit www.towerstream.com and/or follow us
@Towerstream.
The Towerstream Corporation logo is available at:
http://www.globenewswire.com/newsroom/prs/?pkgid=6570
About HetNets Tower Corporation
HetNets Tower Corporation ("HetNets") was formed in January 2013
as a wholly owned subsidiary of Towerstream Corporation
(Nasdaq:TWER), and offers a neutral host, shared wireless
infrastructure solution, either independently or as a turnkey
service. Its wireless communications infrastructure is available to
wireless carriers, cable and Internet companies in major urban
markets where the explosion in mobile data is creating significant
demand for additional capacity and coverage. HetNets offers a
carrier-class Wi-Fi network for Internet access and the offloading
of mobile data. Its street level rooftop locations are ideal for
the installation of customer owned small cells including DAS, Metro
and Pico cells. Other solutions provided by HetNets include
backhaul, power, and related small cell requirements. More
information is available at http://www.hetnets.com.
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
Securities and Exchange Commission, including, without limitation,
risk related to our ability to deploy and expand small cell rooftop
tower locations in the New York City and other key markets.
Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct.
Consequently, future events and actual results could differ
materially from those set forth in, contemplated by, or underlying
the forward-looking statements contained herein. The Company
undertakes no obligation to correct or update any forward-looking
statements, whether as a result of new information, future events
or otherwise.
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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