FTE NETWORKS REPORTS RECORD
QUARTERLY REVENUE OF $79.1MM AS COMPANY'S MOMENTUM
CONTINUES
Company achieves Profitability of
$2.5MM and Adjusted Diluted Earnings of $1.61 per share
NAPLES, FL -- November 16, 2017 -- InvestorsHub NewsWire --
FTE
Networks, Inc. (OTCQX:
FTNW) and (OTCQX:
FTNWD) ("FTE" or the "Company"), a leading provider of
innovative technology-oriented solutions for smart platforms,
network infrastructure and buildings, today announced unaudited
financial results for the three months and nine months ended
September 30, 2017. The Company achieved significant revenue,
margin, and profitability increases both on a quarter-over-quarter
and year-over-year basis. The Company reported revenues of $79.1MM,
Gross Margin of 19.6%, Net Income of $2.5MM, Adjusted EBITDA of
$11.6MM and $1.61 adjusted diluted earnings per share for the three
months ended September 30, 2017.
September 30, 2017 Financial Highlights
- 56% increase in sequential revenue, $79.1MM versus $50.7MM for
the quarter ended June 30, 2017
- 320 basis point improvement in Gross margin, 19.6% versus 16.4%
for the period ending June 30, 2017
- 149% increase in Net income, approximately $2.5MM versus a loss
of ($5.1MM) for the period ending June 30, 2017
- Adjusted EBITDA of $11.6MM for three months ending September
30, 2017
- Significant increase in adjusted diluted earnings per share to
$1.61 compared to a loss per share of ($0.37) in the quarter ended
September 30, 2016
Recent Business Highlights
- Won three new projects that include infrastructure and
technology expansion; valued at a combined $61.6MM
- Won eight new projects that include infrastructure and
technology expansion; valued at a combined $61.0MM
- Combined backlog of approximately $419.3MM as of September 30,
2017
- Continued to expand footprint and services to Fortune 100/500
clients
- Filed a provisional patent application for CrossLayer
technology covering the decentralized provision of internet and
cloud services
- Installed CrossLayer in Naples, Florida office with the
capacity to serve the mixed-use retail and commercial facility
- Advanced uplist strategy with recent reverse stock split
Third Quarter 2017 Unaudited Financial Results
For the three months ended September 30, 2017, total revenues
were $79.1MM. The Company continues to expand its three
complementary businesses: FTE Networks Services; CrossLayer, Inc.;
and Benchmark Builders, Inc. FTE also continues to achieve
accretive synergies on the Benchmark Builders integration and
expand its consolidated service offerings to new and existing
national markets.
The consolidated third quarter 2017 gross margin increased by
approximately 320 basis points, compared to the gross margin
registered in the prior quarter of 2017. This reflects improving
operating leverage on the growing revenue base. FTE generated an
operating profit of approximately $4.8MM in third quarter 2017,
compared to the prior quarter operating loss of ($2.3MM), which
included approximately $1.8MM in one-time expenses. Net income was
approximately $2.5MM for the three months ended September 30, 2017,
compared to a loss of ($5.1MM) for the period ending June 30, 2017.
Adjusted EBITDA was approximately $11.6MM for the three months
ended September 30, 2017.
Nine-Month 2017 Unaudited Financial Results
For the nine-months ended September 30, 2017, total revenues
were $134.9MM. The operating results of Benchmark Builders included
revenues of $118.0MM for the period from April 21, 2017 to
September 30, 2017. Benchmark also generated net income of $9.5MM
during this period that has been included in the Company's
consolidated statements of operations for the nine-months ended
September 30, 2017. During the period, the Company incurred
approximately $1.8MM in transaction costs in connection with the
Benchmark transaction, which is included in the consolidated
statement of operations for the nine- months ended September 30,
2017.
Michael Palleschi, the Company's President and CEO, commented
"We are very pleased about our third quarter results as almost
every measure of performance improved over the second quarter. The
Company experienced momentous 56% revenue growth over the previous
quarter and profitability of $2.5MM, both contributing to an
adjusted diluted earnings per share of $1.61."
Mr. Palleschi continued, "The Company continues to make
significant strides in its integration of Benchmark Builders,
launch of CrossLayer and strengthening of FTE Network Services. Our
sales teams are now fully engaged in selling activities and focused
on implementing measures that cross-promote our three business
operations. We continue to gain positive and accretive traction
with each business entity. The Company's strengthening of its
financial position is partly attributable to: CrossLayer's
recurring revenue model, Benchmark's roughly 90 percent reoccurring
revenue, and FTE Network Services' long-term contracts. We are
excited with the direct result of these initiatives as the
Company's holds an impressive backlog of $419.3MM as of September
30, 2017."
Mr. Palleschi continued, "Management continues to focus on
operational efficiencies and has implemented significant cost
reductions throughout third quarter 2017. These savings combined
with the ability to leverage synergies and streamline the business
are expected to yield total cost savings of approximately $3MM
annually. Further, the Company continues to invest in CrossLayer
with a total investment of approximately $4MM to date. Management
believes CrossLayer provides a technology platform that sets FTE
apart from its competitors and provides its customers with a
one-stop solution that offers technology, general contracting and
network infrastructure solutions."
Mr. Palleschi concluded "I am extremely excited with the
tremendous progress of FTE's continued forward growth trajectory as
illustrated in our record revenues and profitability. The Company
believes it is well-positioned to move forward with its growth
strategy for 2018."
Subsequent Events
Subsequent to the close of the third quarter 2017, the Company
effectuated a 25-for-1 reverse stock split which proportionally
increased the price per share of its common stock on November 6,
2017. The total number of shares of common stock held by each
stockholder was converted automatically into the number of shares
of common stock equal to the number of issued and outstanding
shares of common stock held by each such stockholder immediately
prior to the reverse stock split, divided by 25, with such
resulting number of shares rounded up to the nearest whole share.
The reverse stock split had no effect on the par value of the
common stock.
On November 8, 2017, the Company announced that its CrossLayer
wholly owned subsidiary completed its first installation of its
patent-pending Compute-to-the-Edge Network technology in its
Naples, Florida, headquarters. The Naples service center is
installed with the capacity to serve the mixed-use retail and
commercial facility. The installation will serve as a showcase for
CrossLayer's new technology.
Additionally, the Company announced the filing of a provisional
patent application with the United States Patent and Trademark
Office (USPTO) for CrossLayer technology covering the decentralized
provision of internet and cloud services. CrossLayer capability
regarding edge deployment and convergence of cloud and network
access is designed to reduce network latency, increase bandwidth to
content and cloud services, and provide levels of security that
customers cannot obtain with other network architectures. Its
unique architecture enables CrossLayer to deliver managed
high-speed networks to individual buildings and large-scale
commercial projects.
About FTE Networks, Inc.
FTE Networks, Inc. ("FTNW"),
is a leading provider of innovative technology-oriented solutions
for smart platforms, network infrastructure and buildings. FTE's
three complementary businesses are FTE Network Services,
CrossLayer, Inc. and Benchmark Builders, Inc. Together they provide
end-to-end design, build and support solutions for state-of-the-art
networks and commercial properties to create the most
transformative smart platforms and buildings. FTE's businesses are
predicated on smart design and consistent standards that reduce
deployment costs and accelerate delivery of innovative projects and
services. The Company works with Fortune 100/500 companies,
including some of the world's leading communications services
providers. FTE Networks and its subsidiaries support multiple
services, including Data Center Infrastructure, Fiber Optics,
Wireless Integration, Network Engineering, Internet Service
Provider, General Contracting Management and General Contracting.
For more information, please visit www.ftenet.com.
Note on Forward-Looking Statements
This release may contain "forward-looking statements" within the
meaning of the safe harbor provisions of the United States Private
Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by words such as: "expected,"
believes,," "potential," "plan" and similar references to future
periods. Examples of forward-looking statements in this release may
include, without limitation, statements and forecasts we make
regarding our financial performance and anticipated operating
results; our strategies for continued growth and market expansion,
including our efforts to list on a national stock exchange, and
other matters that involve known or unknown risks, uncertainties
and other factors that may cause our results, levels of activity,
performance or achievements to differ materially from results
expressed or implied by this release.
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
our current beliefs, expectations, and assumptions regarding the
future of our business, future plans and strategies, projections,
anticipated events and market trends, the economy and other future
conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of
which are outside of our control. These risk factors and others are
included from time to time in documents we file with the Securities
and Exchange Commission, including but not limited to, our Form
10-K's, Form 10-Q's and Form 8-K's. Our actual results and
financial condition may differ materially from those indicated in
the forward-looking statements. Accordingly, you should not place
undue reliance on these forward-looking statements. Any
forward-looking statement made by us in this update is based only
on information currently available to us and speaks only as of the
date on which it is made. We undertake no obligation to publicly
update any forward-looking statement, whether as a result of new
information, future developments or otherwise.
FTE NETWORKS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share information)
|
|
For the Three Months
Ended September 30,
|
|
|
For the Nine Months
Ended September 30,
|
|
|
For the Three Months Ended
March 31,
2017
|
|
|
For the Three Months Ended
September 30, 2016
|
|
|
For the Nine Months Ended
September 30, 2016
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
(Predecessor)
|
|
|
(Predecessor)
|
|
|
(Predecessor)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues, net of discounts
|
|
$
|
79,083
|
|
|
$
|
3,828
|
|
|
$
|
134,866
|
|
|
$
|
9,084
|
|
|
$
|
42,089
|
|
|
$
|
77,644
|
|
|
$
|
307,984
|
|
Cost of revenues
|
|
|
63,553
|
|
|
|
2,403
|
|
|
|
108,608
|
|
|
|
5,649
|
|
|
|
33,789
|
|
|
|
67,201
|
|
|
|
261,042
|
|
Gross Profit
|
|
|
15,530
|
|
|
|
1,425
|
|
|
|
26,258
|
|
|
|
3,435
|
|
|
|
8,300
|
|
|
|
10,443
|
|
|
|
46,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation expense
|
|
|
5,312
|
|
|
|
605
|
|
|
|
10,668
|
|
|
|
1,706
|
|
|
|
5,671
|
|
|
|
4,478
|
|
|
|
13,645
|
|
Selling, general and administrative expenses
|
|
|
4,064
|
|
|
|
548
|
|
|
|
8,662
|
|
|
|
1,920
|
|
|
|
2,009
|
|
|
|
4,452
|
|
|
|
17,199
|
|
Amortization of intangible assets
|
|
|
768
|
|
|
|
-
|
|
|
|
1,358
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Travel expense
|
|
|
128
|
|
|
|
43
|
|
|
|
419
|
|
|
|
210
|
|
|
|
22
|
|
|
|
98
|
|
|
|
261
|
|
Occupancy costs
|
|
|
222
|
|
|
|
201
|
|
|
|
615
|
|
|
|
559
|
|
|
|
160
|
|
|
|
121
|
|
|
|
323
|
|
Loss on Sale of Asset
|
|
|
-
|
|
|
|
-
|
|
|
|
376
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Transaction expenses
|
|
|
246
|
|
|
|
-
|
|
|
|
1,666
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total Operating Expenses
|
|
|
10,740
|
|
|
|
1,397
|
|
|
|
23,764
|
|
|
|
4,395
|
|
|
|
7,862
|
|
|
|
9,149
|
|
|
|
31,428
|
|
Operating Income (Loss)
|
|
|
4,790
|
|
|
|
28
|
|
|
|
2,494
|
|
|
|
(960
|
)
|
|
|
438
|
|
|
|
1,294
|
|
|
|
15,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (Expense) Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(1,824
|
)
|
|
|
(490
|
)
|
|
|
(4,351
|
)
|
|
|
(1,452
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Amortization of deferred financing costs and debt discount
|
|
|
(1,332
|
)
|
|
|
(109
|
)
|
|
|
(3,663
|
)
|
|
|
(328
|
)
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Change in warrant fair market valuation
|
|
|
2,033
|
|
|
|
-
|
|
|
|
854
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Other Income (Expense)
|
|
|
(7
|
)
|
|
|
(147
|
)
|
|
|
(52
|
)
|
|
|
(101
|
)
|
|
|
56
|
|
|
|
30
|
|
|
|
74
|
|
Incentive expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(35
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Extinguishment loss
|
|
|
-
|
|
|
|
(314
|
)
|
|
|
-
|
|
|
|
(314
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Costs
|
|
|
(139
|
)
|
|
|
-
|
|
|
|
(702
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Total Other (Expense) Income
|
|
|
(1,269
|
)
|
|
|
(1,060
|
)
|
|
|
(7,914
|
)
|
|
|
(2,230
|
)
|
|
|
56
|
|
|
|
30
|
|
|
|
74
|
|
Income (Loss) before provision for local income taxes
|
|
|
3,521
|
|
|
|
(1,032
|
)
|
|
|
(5,420
|
)
|
|
|
(3,190
|
)
|
|
|
494
|
|
|
|
1,324
|
|
|
|
15,588
|
|
Provision for local income taxes
|
|
|
972
|
|
|
|
-
|
|
|
|
1,093
|
|
|
|
-
|
|
|
|
240
|
|
|
|
265
|
|
|
|
1,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
2,549
|
|
|
|
(1,032
|
)
|
|
|
(6,513
|
)
|
|
|
(3,190
|
)
|
|
|
254
|
|
|
|
1,059
|
|
|
|
14,523
|
|
Preferred stock dividends
|
|
|
(20
|
)
|
|
|
(20
|
)
|
|
|
(60
|
)
|
|
|
(60
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net Income (Loss) attributable to common shareholders
|
|
|
2,529
|
|
|
|
(1,052
|
)
|
|
|
(6,573
|
)
|
|
$
|
(3,250
|
)
|
|
|
254
|
|
|
|
1,059
|
|
|
|
14,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.47
|
|
|
$
|
(0.43
|
)
|
|
$
|
(1.39
|
)
|
|
$
|
(1.34
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.46
|
|
|
$
|
(0.43
|
)
|
|
$
|
(1.39
|
)
|
|
$
|
(1.34
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
5,367,208
|
|
|
|
2,418,024
|
|
|
|
4,699,369
|
|
|
|
2,418,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
5,547,743
|
|
|
|
2,418,024
|
|
|
|
4,699,369
|
|
|
|
2,418,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Net Income to Non-GAAP EBITDA and
Adjusted EBITDA
|
(Unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months ended
|
|
For the Nine Months ended
|
September 30,
|
September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net Income (Loss) (GAAP)
|
|
$
|
2,549
|
|
$
|
(1,032)
|
|
$
|
(6,513)
|
|
$
|
(3,190)
|
Adjustments to Net Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
1,824
|
|
|
490
|
|
|
4,351
|
|
|
1,452
|
|
Income tax expense (benefit)
|
|
|
972
|
|
|
-
|
|
|
1,093
|
|
|
-
|
|
Amortization
|
|
|
4,345
|
|
|
109
|
|
|
9,130
|
|
|
328
|
|
Depreciation
|
|
|
167
|
|
|
138
|
|
|
463
|
|
|
375
|
EBITDA
|
|
|
9,857
|
|
|
(295)
|
|
|
8,524
|
|
|
(1,035)
|
Further Adjustments to EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash stock based compensation
|
|
|
1,747
|
|
|
18
|
|
|
1,670
|
|
|
172
|
Adjusted EBITDA (non-GAAP)
|
|
$
|
11,604
|
|
$
|
(277)
|
|
$
|
10,194
|
|
$
|
(863)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Net Income Available to Common
Stockholders to Non-GAAP Adjusted Net Income and GAAP Earnings
per Share to Non-GAAP Adjusted Earnings per Share
|
(Unaudited, in thousands)
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
September 30,
|
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net income (loss) attributable to common stockholders (GAAP)
|
$
|
2,529
|
|
$
|
(1,052)
|
|
$
|
(6,573)
|
|
$
|
(3,250)
|
|
Adjustments to Net Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
4,345
|
|
|
109
|
|
|
9,130
|
|
|
328
|
|
|
Deemed dividends on preferred stock
|
|
20
|
|
|
20
|
|
|
60
|
|
|
60
|
|
|
Non-cash stock based compensation expenses
|
|
1,747
|
|
|
18
|
|
|
1,670
|
|
|
172
|
|
|
Acquisition related costs
|
|
246
|
|
|
0
|
|
|
1,666
|
|
|
0
|
|
|
|
Adjusted net income (non-GAAP)
|
$
|
8,887
|
|
$
|
(905)
|
|
$
|
5,953
|
|
$
|
(2,690)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share (GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
$
|
0.46
|
|
$
|
(0.43)
|
|
$
|
(1.39)
|
|
$
|
(1.34)
|
|
|
Adjustments to diluted loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
0.78
|
|
|
0.05
|
|
|
1.94
|
|
|
0.14
|
|
|
Non-cash stock based compensation expenses
|
|
0.31
|
|
|
0.01
|
|
|
0.36
|
|
|
0.07
|
|
|
Acquisition related costs
|
|
0.04
|
|
|
-
|
|
|
0.35
|
|
|
|
|
|
Deemed dividends on preferred stock
|
|
0.00
|
|
|
0.01
|
|
|
0.01
|
|
|
0.02
|
|
|
Impact of including warrants in Adj. Diluted Shares
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
Adjusted Diluted EPS (non-GAAP)
|
|
1.61
|
|
|
(0.37)
|
|
|
1.28
|
|
|
(1.11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in computation of adjusted
diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Common Shares (GAAP)
|
|
5,547
|
|
|
2,418
|
|
|
4,699
|
|
|
2,418
|
|
|
Warrants not included in GAAP Diluted Shares (using
treasury stock method)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Weighted Avg. Preferred Shares (as converted)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
Adjusted Diluted Shares outstanding (non-GAAP)
|
|
5,547
|
|
|
2,418
|
|
|
4,699
|
|
|
2,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Use of non-GAAP Financial Measures
The Company's financial results and financial guidance are
provided in accordance with accounting principles generally
accepted in the United States of America (GAAP) and using certain
non-GAAP financial measures. Management believes that presentation
of operating results using non-GAAP financial measures provides
useful supplemental information to investors and facilitates the
analysis of the Company's core operating results and comparison of
core operating results across reporting periods. Management also
uses non-GAAP financial measures for financial and operational
decision making, planning and forecasting purposes and to manage
the Company's business. Management believes that these non-GAAP
financial measures enable investors to evaluate our operating
results and future prospects in the same manner as management. The
non-GAAP financial measures do not replace the presentation of GAAP
financial results and should only be used as a supplement to and
not as a substitute for the Company's financial results presented
in accordance with GAAP. There are limitations inherent in non-GAAP
financial measures because they exclude charges and credits that
are required to be included in a GAAP presentation, and do not
therefore present the full measure of the Company's recorded costs
against its net revenue. In addition, the Company's definition of
the non-GAAP financial measures below may differ from non-GAAP
measures used by other companies.
Definitions of Non-GAAP Measures
Non - GAAP Adjusted EBITDA
"Adjusted EBITDA" is defined by FTE Networks as net income from
continuing operations before: (i) interest expense, (ii) tax
expense, (iii) depreciation and amortization expense, (iv)
non-cash, stock-based compensation expense, and if applicable in a
reporting period (v) acquisition related transaction expenses (vi)
non-cash impairments of intangible assets (vii) debt financing
costs (viii) and other significant non-recurring or non-operating
(income) or expenses.
Non - GAAP Adjusted Net Income
"Adjusted Net Income" is defined by FTE Networks as net income
available to common shareholders from continuing operations plus:
(i) non-cash amortization of customer lists and other intangible
assets, (ii) non-cash, stock-based compensation expense, (iii)
non-cash deemed dividends on preferred stock, and if applicable in
a reporting period (v) acquisition related transaction expenses
(vi) non-cash impairments of intangible assets (vii) debt financing
costs (viii) and other significant non-recurring or non-operating
(income) or expenses.
Non-GAAP Adjusted Diluted EPS
"Adjusted Diluted EPS" is defined by FTE Networks as Adjusted
Net Income divided by Adjusted Diluted Shares outstanding. Adjusted
Diluted Shares outstanding is the sum of Diluted shares outstanding
and the weighted average number of common shares that would be
outstanding if the preferred stock were converted into common stock
on the original issue date based on the number of days such common
shares would have been outstanding in the reporting period. In
addition, if GAAP Net Income is negative and Adjusted Net Income is
positive, Adjusted Diluted Shares will also include any warrants
that would be outstanding as dilutive instruments using the
treasury stock method.
Basis for Non-GAAP Adjustments
FTE Networks' basis for excluding certain expenses (income) from
GAAP financial measures, are outlined below:
-
Amortization of intangible assets The intangible assets that
give rise to this amortization expense relate to acquisitions, and
the amounts allocated to such intangible assets and the terms of
amortization vary by acquisition and type of asset. FTE Networks
excludes these items to provide a consistent basis for comparing
operating results across reporting periods, pre and
post-acquisition.
-
Stock-based compensation expenses As incentive for both
employees and certain non-employees, from time to time shares of
the Company's common stock are issued by the Board of Directors.
Without adjusting for these non-cash expenses, the Company believes
it would be difficult to compare financial results from core
operations across reporting periods on a consistent basis.
-
Deemed dividends on preferred stock GAAP accounting for the
structure of the Series A and Series A-1 Preferred Stock requires
the Company to accrue a set dividend rate quarterly. Since such
dividends are not paid in cash, the Company believes these non-cash
expenses are not meaningful in evaluating the operating performance
of the Company and it would be misleading to not adjust for such
expenses across reporting periods.
Media and Investor Relations:
FTE Networks, Inc.
999 Vanderbilt Beach Rd., Suite 601
Naples, FL 34108
(877) 850-4308
ir@ftenet.com
OTCQX: FTNW