Tucows Reports Financial Results for Second Quarter 2019
August 07 2019 - 5:05PM
Tucows Inc. (NASDAQ:TCX, TSX:TC), a provider of network access,
domain names and other Internet services, today reported its
financial results for the second quarter ended June 30, 2019. All
figures are in U.S. dollars.
|
|
|
Summary Financial Results |
(In Thousands of US Dollars, Except Per Share
Data) |
|
|
|
|
3 Months Ended June 30 |
6 Months Ended June 30 |
2019(Unaudited) |
2018(Unaudited) |
% Change |
2019(Unaudited) |
2018(Unaudited) |
% Change |
Net revenue |
84,117 |
81,087 |
4% |
163,070 |
176,882 |
-8% |
Net income |
2,616 |
3,608 |
-28% |
5,415 |
7,352 |
-26% |
Basic Net earnings per common share |
0.25 |
0.34 |
-26% |
0.51 |
0.69 |
-26% |
Adjusted EBITDA1,2 |
11,486 |
11,188 |
3% |
20,917 |
21,567 |
-3% |
Net cash provided by operating activities |
6,979 |
5,754 |
21% |
15,970 |
15,327 |
4% |
- This Non-GAAP financial measure is described below and
reconciled to GAAP net income in the accompanying table.
- Adjusted EBITDA for the second quarter and first six months of
2019 reflect the impact of the purchase price accounting adjustment
related to the fair value write down of deferred revenue from the
Ascio acquisition on March 18, 2019, which lowered Adjusted EBITDA
by $0.7 million and $0.8 million, respectively.
|
|
|
Summary of Revenues and Gross profit |
(In Thousands of US Dollars) |
|
|
|
|
Revenue |
Gross Profit |
|
3 Months ended June 30 |
3 Months ended June 30 |
|
2019(Unaudited) |
2018(Unaudited) |
2019(Unaudited) |
2018(Unaudited) |
Network Access Services: |
Mobile Services |
20,986 |
22,411 |
10,180 |
|
10,433 |
|
Other Services |
2,644 |
1,895 |
1,688 |
|
605 |
|
Total Network Access Services |
23,630 |
24,306 |
11,868 |
|
11,038 |
|
|
|
|
|
|
Domain Services: |
Wholesale |
|
|
|
|
Domain Services |
46,485 |
42,540 |
8,668 |
|
6,696 |
|
Value Added Services |
4,775 |
4,601 |
4,037 |
|
3,853 |
|
Total Wholesale |
51,260 |
47,141 |
12,705 |
|
10,549 |
|
|
|
|
|
|
Retail |
8,783 |
8,477 |
4,374 |
|
4,031 |
|
Portfolio |
444 |
1,163 |
297 |
|
968 |
|
Total Domain Services |
60,487 |
56,781 |
17,376 |
|
15,548 |
|
|
|
|
|
|
Network Expenses: |
Network, other costs |
- |
- |
(2,385 |
) |
(2,701 |
) |
Network, depreciation and amortization costs |
- |
- |
(2,352 |
) |
(1,727 |
) |
Total Network expenses |
- |
- |
(4,737 |
) |
(4,428 |
) |
|
|
|
|
|
Total |
84,117 |
81,087 |
24,507 |
|
22,158 |
|
|
|
|
|
|
|
|
“The second quarter of 2019 was highlighted by
year-over-year growth in revenue and gross margin as our domains
and Ting Mobile businesses continued to generate strong cash flows
to invest in our long-term Ting Internet growth opportunity,” said
Elliot Noss, President and Chief Executive Officer, Tucows
Inc. “The second quarter saw continued steady progress at
Ting Internet, marked by our best quarter ever in terms of new
subscribers, continued expansion in the number of serviceable
addresses, and our highest ever level of capital expenditure as we
continue to build out the network for the long-term growth of the
business.”
Financial Results
Net revenue for the second quarter of 2019 increased 4% to $84.1
million from $81.1 million for the second quarter of 2018.
Net income for the second quarter of 2019 was $2.6 million, or
$0.25 per share compared with $3.6 million, or $0.34 per share, for
the second quarter of 2018.
Adjusted EBITDA1 for the second quarter of 2019 increased 3% to
$11.5 million from $11.2 million for the second quarter of
2018. Adjusted EBITDA for the second quarter 2019 reflects
the impact of the purchase price accounting adjustment related to
the fair value write down of deferred revenue from the Ascio
acquisition, which lowered Adjusted EBITDA by $0.7 million.
Cash and cash equivalents at the end of the second quarter of
2019 were $12.0 million compared with $11.0 million at the end of
the first quarter of 2019 and $11.2 million at the end of the
second quarter of 2018.
Notes:
1. Adjusted EBITDA
Tucows reports all financial information required in accordance
with United States generally accepted accounting principles (GAAP).
Along with this information, to assist financial statement users in
an assessment of our historical performance, the Company typically
discloses and discusses a non-GAAP financial measure, adjusted
EBITDA, in press releases and on investor conference calls and
related events that exclude certain non-cash and other charges as
the Company believes that the non-GAAP information enhances
investors' overall understanding of our financial performance.
The Company believes that the provision of this supplemental
non-GAAP measure allows investors to evaluate the operational and
financial performance of the Company’s core business using similar
evaluation measures to those used by management. The Company uses
adjusted EBITDA to measure its performance and prepare its
budgets. Since adjusted EBITDA is a non-GAAP financial
performance measure, the Company’s calculation of adjusted EBITDA
may not be comparable to other similarly titled measures of other
companies; and should not be considered in isolation, as a
substitute for, or superior to measures of financial performance
prepared in accordance with GAAP. Because adjusted EBITDA is
calculated before recurring cash charges, including interest
expense and taxes, and is not adjusted for capital expenditures or
other recurring cash requirements of the business, it should not be
considered as a liquidity measure. Non-GAAP financial measures do
not reflect a comprehensive system of accounting and may differ
from non-GAAP financial measures with the same or similar captions
that are used by other companies and/or analysts and may differ
from period to period. The Company endeavors to compensate for
these limitations by providing the relevant disclosure of the items
excluded in the calculation of adjusted EBITDA to net income based
on U.S. GAAP, which should be considered when evaluating the
Company's results. Tucows strongly encourages investors to
review its financial information in its entirety and not to rely on
a single financial measure.
The Company’s adjusted EBITDA definition excludes depreciation,
amortization of intangible assets, income tax provision, interest
expense, interest income, stock-based compensation, asset
impairment, gains and losses from unrealized foreign currency
transactions and infrequently occurring items, including
acquisition and transition costs. Gains and losses from unrealized
foreign currency transactions removes the unrealized effect of the
change in the mark-to-market values on outstanding unhedged foreign
currency contracts, as well as the unrealized effect from the
translation of monetary accounts denominated in non-U.S. dollars to
U.S. dollars.
The following table reconciles net income to adjusted EBITDA
(dollars in thousands):
|
|
|
|
3 months ended June 30 |
6 months ended June 30 |
|
2019(unaudited) |
2018(unaudited) |
2019(unaudited) |
2018(unaudited) |
Net income for the period |
2,616 |
|
3,608 |
5,415 |
|
7,352 |
Depreciation of property and equipment |
2,172 |
|
1,330 |
4,097 |
|
2,562 |
Amortization of intangible assets |
2,565 |
|
2,326 |
4,605 |
|
4,657 |
Interest expense, net |
1,314 |
|
951 |
2,286 |
|
1,847 |
Provision for income taxes |
1,819 |
|
1,228 |
3,076 |
|
2,411 |
Stock-based compensation |
685 |
|
615 |
1,210 |
|
1,193 |
Unrealized loss (gain) on change in fair value of forward
contracts |
(70 |
) |
46 |
(188 |
) |
43 |
Unrealized loss (gain) on foreign exchange revaluation of foreign
denominated monetary assets and liabilities |
(162 |
) |
282 |
(490 |
) |
459 |
Acquisition and transition costs* |
547 |
|
802 |
906 |
|
1,043 |
|
|
|
|
|
Adjusted EBITDA |
11,486 |
|
11,188 |
20,917 |
|
21,567 |
*Acquisition and other costs represents transaction-related
expenses, transitional expenses, such as duplicative
post-acquisition expenses, primarily related to the Company’s
acquisition of Enom in January 2017 and Ascio in March 2019.
Expenses include severance or transitional costs associated with
department, operational or overall company restructuring efforts,
including geographic alignments. |
|
Conference CallConcurrent with the
dissemination of this news release, management’s pre-recorded
commentary discussing the quarter and outlook for the Company have
been posted to the Tucows web site at
http://www.tucows.com/investors/financials. In lieu of a live
question and answer period, for the next six days (until Tuesday,
August 13), shareholders, analysts and prospective investors can
submit questions to Tucows’ management at ir@tucows.com. Management
will post responses to questions of general interest to the
Company’s web site at http://www.tucows.com/investors/financials/
on Tuesday, August 20 at approximately 4:00 p.m. ET. All
questions will receive a response, however, questions of a more
specific nature may be responded to directly.
About TucowsTucows is a provider of network
access, domain names and other Internet services. Ting
(https://ting.com) delivers mobile phone service and fixed Internet
access with outstanding customer support. OpenSRS
(http://opensrs.com), Enom (http://www.enom.com) and Ascio
(http://ascio.com) manage a combined 25 million domain names and
millions of value-added services through a global reseller network
of over 37,000 web hosts and ISPs. Hover (http://hover.com) makes
it easy for individuals and small businesses to manage their domain
names and email addresses. More information can be found on Tucows’
corporate website (http://tucows.com).
|
|
Tucows
Inc. |
|
Consolidated Balance Sheets |
|
(Dollar amounts in thousands of U.S. dollars) |
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2019 |
|
2018 * |
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
12,003 |
|
|
$ |
12,637 |
|
|
Accounts receivable |
|
11,588 |
|
|
|
10,837 |
|
|
Inventory |
|
3,259 |
|
|
|
3,775 |
|
|
Prepaid expenses and deposits |
|
19,455 |
|
|
|
15,472 |
|
|
Derivative instrument asset, current portion |
|
140 |
|
|
|
- |
|
|
Prepaid domain name registry and ancillary services fees, current
portion |
|
97,788 |
|
|
|
87,782 |
|
|
Other assets |
|
2,501 |
|
|
|
- |
|
|
Income taxes recoverable |
|
3,208 |
|
|
|
1,423 |
|
|
Total current assets |
|
149,942 |
|
|
|
131,926 |
|
|
|
|
|
|
|
Prepaid domain name registry and ancillary services fees, long-term
portion |
|
18,060 |
|
|
|
18,745 |
|
|
Property and equipment |
|
64,010 |
|
|
|
48,065 |
|
|
Right of use operating lease
asset |
|
11,395 |
|
|
|
- |
|
|
Contract costs |
|
1,337 |
|
|
|
1,390 |
|
|
Intangible assets |
|
59,451 |
|
|
|
49,395 |
|
|
Goodwill |
|
110,093 |
|
|
|
90,054 |
|
|
Total assets |
$ |
414,288 |
|
|
$ |
339,575 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
$ |
7,590 |
|
|
$ |
8,445 |
|
|
Accrued liabilities |
|
10,789 |
|
|
|
5,899 |
|
|
Customer deposits |
|
13,526 |
|
|
|
11,919 |
|
|
Derivative instrument liability |
|
- |
|
|
|
1,276 |
|
|
Deferred rent, current portion |
|
- |
|
|
|
21 |
|
|
Operating lease liability, current portion |
|
1,496 |
|
|
|
- |
|
|
Loan payable, current portion |
|
- |
|
|
|
18,400 |
|
|
Deferred revenue, current portion |
|
130,499 |
|
|
|
116,734 |
|
|
Accreditation fees payable, current portion |
|
1,038 |
|
|
|
985 |
|
|
Income taxes payable |
|
797 |
|
|
|
1,668 |
|
|
Total current liabilities |
|
165,735 |
|
|
|
165,347 |
|
|
|
|
|
|
|
Deferred revenue, long-term
portion |
|
26,720 |
|
|
|
26,960 |
|
|
Accreditation fees payable, long-term portion |
|
231 |
|
|
|
250 |
|
|
Deferred rent, long-term portion |
|
- |
|
|
|
116 |
|
|
Operating lease liability, long-term portion |
|
9,482 |
|
|
|
- |
|
|
Loan payable, long-term portion |
|
99,901 |
|
|
|
46,201 |
|
|
Deferred Gain |
|
- |
|
|
|
- |
|
|
Deferred tax liability |
|
25,218 |
|
|
|
20,925 |
|
|
|
|
|
|
|
Redeemable non-controlling
interest |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
Preferred stock - no par value, 1,250,000 shares authorized; none
issued and outstanding |
|
- |
|
|
|
- |
|
|
Common stock - no par value, 250,000,000 shares authorized;
10,663,462 shares issued and outstanding as of June 30, 2019 and
10,627,988 shares issued and outstanding as of December 31,
2018 |
|
16,461 |
|
|
|
15,823 |
|
|
Additional paid-in capital |
|
4,195 |
|
|
|
3,953 |
|
|
Retained earnings |
|
66,225 |
|
|
|
60,810 |
|
|
Accumulated other comprehensive income (loss) |
|
120 |
|
|
|
(810 |
) |
|
Total stockholders' equity |
|
87,001 |
|
|
|
79,776 |
|
|
Total liabilities and
stockholders' equity |
$ |
414,288 |
|
|
$ |
339,575 |
|
|
|
|
|
|
|
*The Company has initially applied ASC 2016-02 (Topic 842) using
the modified retrospective method. Under this method, the
comparative information is not restated. |
|
|
|
|
|
Tucows
Inc. |
Consolidated Statements of Operations and Comprehensive
Income |
(Dollar amounts in thousands of U.S. dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2019 |
|
2018 * |
|
2019 |
|
2018 * |
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
$ |
84,117 |
|
|
$ |
81,087 |
|
|
$ |
163,070 |
|
|
$ |
176,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
54,873 |
|
|
|
54,501 |
|
|
|
106,805 |
|
|
|
123,473 |
|
Network expenses (*) |
|
2,385 |
|
|
|
2,701 |
|
|
|
4,780 |
|
|
|
5,275 |
|
Depreciation of property and equipment |
|
2,038 |
|
|
|
1,228 |
|
|
|
3,839 |
|
|
|
2,359 |
|
Amortization of intangible assets |
|
314 |
|
|
|
499 |
|
|
|
488 |
|
|
|
998 |
|
Total cost of revenues |
|
59,610 |
|
|
|
58,929 |
|
|
|
115,912 |
|
|
|
132,105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
24,507 |
|
|
|
22,158 |
|
|
|
47,158 |
|
|
|
44,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing (*) |
|
8,856 |
|
|
|
7,852 |
|
|
|
17,597 |
|
|
|
16,217 |
|
Technical operations and development (*) |
|
2,752 |
|
|
|
2,355 |
|
|
|
5,275 |
|
|
|
4,450 |
|
General and administrative (*) |
|
4,796 |
|
|
|
4,256 |
|
|
|
9,244 |
|
|
|
8,786 |
|
Depreciation of property and equipment |
|
134 |
|
|
|
102 |
|
|
|
258 |
|
|
|
203 |
|
Amortization of intangible assets |
|
2,251 |
|
|
|
1,827 |
|
|
|
4,117 |
|
|
|
3,659 |
|
Loss (gain) on currency forward contracts |
|
(31 |
) |
|
|
52 |
|
|
|
(110 |
) |
|
|
49 |
|
Total expenses |
|
18,758 |
|
|
|
16,444 |
|
|
|
36,381 |
|
|
|
33,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
5,749 |
|
|
|
5,714 |
|
|
|
10,777 |
|
|
|
11,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
(1,314 |
) |
|
|
(951 |
) |
|
|
(2,286 |
) |
|
|
(1,847 |
) |
Other income, net |
|
- |
|
|
|
73 |
|
|
|
- |
|
|
|
197 |
|
Total other income (expenses) |
|
(1,314 |
) |
|
|
(878 |
) |
|
|
(2,286 |
) |
|
|
(1,650 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for
income taxes |
|
4,435 |
|
|
|
4,836 |
|
|
|
8,491 |
|
|
|
9,763 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
1,819 |
|
|
|
1,228 |
|
|
|
3,076 |
|
|
|
2,411 |
|
Net income before redeemable
non-controlling interest |
|
2,616 |
|
|
|
3,608 |
|
|
|
5,415 |
|
|
|
7,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable non-controlling
interest |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(26 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
redeemable non-controlling interest |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
26 |
|
Net income for the period |
|
2,616 |
|
|
|
3,608 |
|
|
|
5,415 |
|
|
|
7,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income,
net of tax |
|
|
|
|
|
|
|
|
|
|
|
Unrealized income (loss) on hedging activities |
|
240 |
|
|
|
(273 |
) |
|
|
789 |
|
|
|
(256 |
) |
Net amount reclassified to earnings |
|
80 |
|
|
|
13 |
|
|
|
141 |
|
|
|
13 |
|
Other comprehensive income (loss) net of tax (expense) recovery of
($103) and $84 for the three months ended June 30, 2019 and June
30, 2018, ($298) and $78 for the six months ended June 30, 2019 and
June 30, 2018 |
|
320 |
|
|
|
(260 |
) |
|
|
930 |
|
|
|
(243 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income, net of
tax for the period |
$ |
2,936 |
|
|
$ |
3,348 |
|
|
$ |
6,345 |
|
|
$ |
7,109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common
share |
$ |
0.25 |
|
|
$ |
0.34 |
|
|
$ |
0.51 |
|
|
$ |
0.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing basic earnings per common share |
|
10,657,124 |
|
|
|
10,597,228 |
|
|
|
10,646,045 |
|
|
|
10,592,994 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common
share |
$ |
0.24 |
|
|
$ |
0.33 |
|
|
$ |
0.50 |
|
|
$ |
0.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing
diluted earnings per common share |
|
10,840,005 |
|
|
|
10,803,007 |
|
|
|
10,837,456 |
|
|
|
10,797,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) Stock-based compensation
has been included in expenses as follows: |
|
|
|
|
|
|
|
|
|
|
|
Network expenses |
$ |
72 |
|
|
$ |
28 |
|
|
$ |
129 |
|
|
$ |
84 |
|
Sales and marketing |
$ |
297 |
|
|
$ |
245 |
|
|
$ |
494 |
|
|
$ |
432 |
|
Technical operations and development |
$ |
132 |
|
|
$ |
174 |
|
|
$ |
249 |
|
|
$ |
351 |
|
General and administrative |
$ |
183 |
|
|
$ |
168 |
|
|
$ |
338 |
|
|
$ |
327 |
|
|
|
|
|
|
|
|
|
|
|
|
|
*The Company has initially applied ASC 2016-02 (Topic 842) using
the modified retrospective method. Under this method, the
comparative information is not restated. |
|
|
|
|
|
|
|
Tucows
Inc. |
Consolidated Statements of Cash Flows |
(Dollar amounts in thousands of U.S. dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2019 |
|
2018 * |
|
2019 |
|
2018 * |
|
|
|
|
|
|
|
|
Cash provided by: |
(unaudited) |
|
(unaudited) |
Operating activities: |
|
|
|
|
|
|
|
|
|
|
|
Net income for the period |
$ |
2,616 |
|
|
$ |
3,608 |
|
|
$ |
5,415 |
|
|
$ |
7,352 |
|
Items not involving cash: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation of property and equipment |
|
2,172 |
|
|
|
1,330 |
|
|
|
4,097 |
|
|
|
2,562 |
|
Loss on write off of property and equipment |
|
- |
|
|
|
- |
|
|
|
22 |
|
|
|
- |
|
Amortization of debt discount and issuance costs |
|
90 |
|
|
|
69 |
|
|
|
168 |
|
|
|
139 |
|
Amortization of intangible assets |
|
2,565 |
|
|
|
2,326 |
|
|
|
4,605 |
|
|
|
4,657 |
|
Net amortization contract costs |
|
34 |
|
|
|
25 |
|
|
|
53 |
|
|
|
50 |
|
Deferred income taxes (recovery) |
|
1,449 |
|
|
|
(445 |
) |
|
|
1,911 |
|
|
|
(492 |
) |
Excess tax benefits on share-based compensation expense |
|
(381 |
) |
|
|
(197 |
) |
|
|
(737 |
) |
|
|
(341 |
) |
Amortization of deferred rent |
|
- |
|
|
|
(4 |
) |
|
|
- |
|
|
|
(4 |
) |
Net Right of use operating assets/Operating lease liability |
|
79 |
|
|
|
- |
|
|
|
49 |
|
|
|
- |
|
Loss on disposal of domain names |
|
2 |
|
|
|
28 |
|
|
|
6 |
|
|
|
65 |
|
Other income |
|
- |
|
|
|
(42 |
) |
|
|
- |
|
|
|
(171 |
) |
Loss (gain) on change in the fair value of forward contracts |
|
(70 |
) |
|
|
46 |
|
|
|
(188 |
) |
|
|
43 |
|
Stock-based compensation |
|
685 |
|
|
|
615 |
|
|
|
1,210 |
|
|
|
1,193 |
|
Change in non-cash operating working capital: |
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
1,031 |
|
|
|
471 |
|
|
|
(157 |
) |
|
|
162 |
|
Inventory |
|
108 |
|
|
|
(350 |
) |
|
|
516 |
|
|
|
(304 |
) |
Prepaid expenses and deposits |
|
(2,524 |
) |
|
|
(717 |
) |
|
|
(2,914 |
) |
|
|
(1,242 |
) |
Prepaid domain name registry and ancillary services fees |
|
1,651 |
|
|
|
204 |
|
|
|
(65 |
) |
|
|
11,548 |
|
Income taxes recoverable |
|
(1,639 |
) |
|
|
165 |
|
|
|
(2,875 |
) |
|
|
430 |
|
Accounts payable |
|
(1,170 |
) |
|
|
(1,862 |
) |
|
|
(384 |
) |
|
|
270 |
|
Accrued liabilities |
|
2,266 |
|
|
|
(401 |
) |
|
|
3,587 |
|
|
|
358 |
|
Customer deposits |
|
(808 |
) |
|
|
(46 |
) |
|
|
(521 |
) |
|
|
(2,321 |
) |
Deferred revenue |
|
(1,131 |
) |
|
|
1,067 |
|
|
|
2,138 |
|
|
|
(8,531 |
) |
Accreditation fees payable |
|
(46 |
) |
|
|
(136 |
) |
|
|
34 |
|
|
|
(96 |
) |
Net cash provided by operating activities |
|
6,979 |
|
|
|
5,754 |
|
|
|
15,970 |
|
|
|
15,327 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
|
|
|
Proceeds received on exercise of stock options |
|
122 |
|
|
|
32 |
|
|
|
194 |
|
|
|
39 |
|
Payment of tax obligations resulting from net exercise of stock
options |
|
(185 |
) |
|
|
(141 |
) |
|
|
(524 |
) |
|
|
(288 |
) |
Proceeds received on loan payable |
|
7,431 |
|
|
|
2,500 |
|
|
|
40,371 |
|
|
|
2,500 |
|
Repayment of loan payable |
|
(3 |
) |
|
|
(6,253 |
) |
|
|
(4,603 |
) |
|
|
(10,825 |
) |
Payment of loan payable costs |
|
(434 |
) |
|
|
- |
|
|
|
(641 |
) |
|
|
(4 |
) |
Net cash (used in) provided by financing activities |
|
6,931 |
|
|
|
(3,862 |
) |
|
|
34,797 |
|
|
|
(8,578 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
Additions to property and equipment |
|
(10,414 |
) |
|
|
(7,319 |
) |
|
|
(20,849 |
) |
|
|
(12,436 |
) |
Acquisition of a portion of the minority interest in Ting Virginia,
LLC |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,200 |
) |
Acquisition of other assets |
|
(2,501 |
) |
|
|
- |
|
|
|
(2,501 |
) |
|
|
- |
|
Acquisition of Ascio Technologies Inc. (net of cash of $1,437) |
|
- |
|
|
|
- |
|
|
|
(28,024 |
) |
|
|
- |
|
Acquisition of intangible assets |
|
(27 |
) |
|
|
- |
|
|
|
(27 |
) |
|
|
(1 |
) |
Net cash used in investing activities |
|
(12,942 |
) |
|
|
(7,319 |
) |
|
|
(51,401 |
) |
|
|
(13,637 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in cash
and cash equivalents |
|
968 |
|
|
|
(5,427 |
) |
|
|
(634 |
) |
|
|
(6,888 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents,
beginning of period |
|
11,035 |
|
|
|
16,588 |
|
|
|
12,637 |
|
|
|
18,049 |
|
Cash and cash equivalents, end
of period |
$ |
12,003 |
|
|
$ |
11,161 |
|
|
$ |
12,003 |
|
|
$ |
11,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow
information: |
|
|
|
|
|
|
|
|
|
|
|
Interest paid |
$ |
1,318 |
|
|
$ |
961 |
|
|
$ |
2,294 |
|
|
$ |
1,862 |
|
Income taxes paid, net |
$ |
2,046 |
|
|
$ |
2,240 |
|
|
$ |
4,164 |
|
|
$ |
3,577 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary disclosure of
non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
Property and equipment acquired during the period not yet paid
for |
$ |
674 |
|
|
$ |
258 |
|
|
$ |
674 |
|
|
$ |
258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
*The Company has initially applied ASC 2016-02 (Topic 842) using
the modified retrospective method. Under this method, the
comparative information is not restated. |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net income to Adjusted
EBITDA |
(In Thousands of U.S.
Dollars) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2019(unaudited) |
|
2018(unaudited) |
|
2019(unaudited) |
|
2018(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the period |
$ |
2,616 |
|
|
$ |
3,608 |
|
$ |
5,415 |
|
|
$ |
7,352 |
Depreciation of property and equipment |
|
2,172 |
|
|
|
1,330 |
|
|
4,097 |
|
|
|
2,562 |
Amortization of intangible assets |
|
2,565 |
|
|
|
2,326 |
|
|
4,605 |
|
|
|
4,657 |
Interest expense, net |
|
1,314 |
|
|
|
951 |
|
|
2,286 |
|
|
|
1,847 |
Provision for income taxes |
|
1,819 |
|
|
|
1,228 |
|
|
3,076 |
|
|
|
2,411 |
Stock-based compensation |
|
685 |
|
|
|
615 |
|
|
1,210 |
|
|
|
1,193 |
Unrealized loss (gain) on change in fair value of forward
contracts |
|
(70 |
) |
|
|
46 |
|
|
(188 |
) |
|
|
43 |
Unrealized loss (gain) on foreign exchange revaluation of foreign
denominated monetary assets and liabilities |
|
(162 |
) |
|
|
282 |
|
|
(490 |
) |
|
|
459 |
Acquisition and other costs1 |
|
547 |
|
|
|
802 |
|
|
906 |
|
|
|
1,043 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
11,486 |
|
|
$ |
11,188 |
|
$ |
20,917 |
|
|
$ |
21,567 |
|
|
|
|
|
|
|
|
|
|
|
|
1Acquisition and other costs represents transaction-related
expenses, transitional expenses, such as duplicative
post-acquisition expenses, primarily related to our acquisition of
eNom in January 2017 and Ascio in March 2019. Expenses include
severance or transitional costs associated with department,
operational or overall company restructuring efforts, including
geographic alignments. |
|
|
|
|
|
|
|
|
|
|
|
|
This release includes forward-looking statements as that term is
defined in the U.S. Private Securities Litigation Reform Act of
1995, including statements regarding our expectations regarding our
future financial results and, including, without limitation, our
expectations regarding our ability to realize synergies from the
Enom acquisition and our expectation for growth of Ting Internet.
These statements are based on management’s current expectations and
are subject to a number of uncertainties and risks that could cause
actual results to differ materially from those described in the
forward-looking statements. Information about other potential
factors that could affect Tucows’ business, results of operations
and financial condition is included in the Risk Factors sections of
Tucows’ filings with the Securities and Exchange Commission. All
forward-looking statements should be evaluated with the
understanding of their inherent uncertainty. All forward-looking
statements are based on information available to Tucows as of the
date they are made. Tucows assumes no obligation to update any
forward-looking statements, except as may be required by law.
Tucows, Ting, OpenSRS, Enom, Ascio and Hover are registered
trademarks of Tucows Inc. or its subsidiaries.
Contact:Lawrence ChamberlainLoderock
Advisors(416) 519-4196lawrence.chamberlain@loderockadvisors.com
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