Third Quarter Highlights
- Company increases 2013 financial estimates
- Voice Revenues of $50.1 million
- Billed minutes of 30.4 billion
- Adjusted EBITDA (as defined below) of $17.0 million
Inteliquent, Inc. (Nasdaq:IQNT), a leading provider of voice
services, today announced its financial results for the third
quarter.
"We are very pleased with our strong third quarter results,"
said Ed Evans, Chief Executive Officer of Inteliquent. "After the
sale of our global data business earlier this year, our strategy of
focusing on our voice business is showing positive results. We
continue to see good momentum in our sales pipeline and a generally
constructive pricing environment."
Third Quarter Results
Inteliquent generated voice revenues of $50.1 million in the
third quarter of 2013, a decrease of 4.0% compared to $52.2 million
of voice revenues in the third quarter of 2012. The decrease
related primarily to a reduction in minute volumes for termination
and international voice services, which was partially offset by an
increase in minute volumes for origination voice services.
Minutes of use decreased 8.2% to 30.4 billion minutes in the
third quarter of 2013, compared to 33.1 billion minutes in the
third quarter of 2012. Average price per minute for the three
months ended September 30, 2013 was $0.00165, an increase of 4.4%,
compared to $0.00158 for the same time period last year.
As seen in the following chart of selected financial and
operational metrics, sequentially, third quarter 2013 voice
revenues and minutes of use both increased from the previous
quarter while average price per minute decreased slightly.
Selected Financial and Operational Metrics
($ in millions, except per minute
figures) |
|
|
|
|
|
|
Q3 2012 |
Q4 2012 |
Q1 2013 |
Q2 2013 |
Q3 2013 |
Voice Revenue |
$52.2 |
$49.8 |
$50.5 |
$49.8 |
$50.1 |
|
|
|
|
|
|
Average Revenue per Minute |
$0.00158 |
$0.00155 |
$0.00165 |
$0.00169 |
$0.00165 |
|
|
|
|
|
|
Minutes of Use (in billions): |
|
|
|
|
|
Local |
|
|
|
|
|
Local Transit Services |
14.3 |
13.7 |
13.6 |
14.2 |
14.2 |
|
|
|
|
|
|
Switched Access (Long
Distance) |
|
|
|
|
|
Termination Services |
14.1 |
13.0 |
11.9 |
11.0 |
11.4 |
Origination Services |
3.9 |
4.6 |
4.7 |
3.9 |
4.5 |
|
|
|
|
|
|
Other |
|
|
|
|
|
International Services |
0.8 |
0.6 |
0.4 |
0.3 |
0.3 |
|
|
|
|
|
|
Total Minutes of Use |
33.1 |
31.9 |
30.6 |
29.4 |
30.4 |
|
|
|
|
|
|
# of Employees (1) |
291 |
290 |
281 |
143 |
140 |
|
|
|
|
|
|
(1) Number of employees
in periods prior to Q2 2013 include employees related to the global
data business, which was divested on April 30, 2013 |
Revenue from continuing operations of $50.4 million for the
third quarter of 2013 decreased $9.2 million compared to $59.6
million for the same period in 2012. Revenue from continuing
operations for the third quarter of 2012 included $6.6 million
related to the global data business sold on April 30,
2013. Data operations for the Americas reporting unit did not
meet all criteria required to receive discontinued operations
treatment.
Network and facilities expenses for the third quarter of 2013
decreased $3.5 million to $22.0 million from $25.5 million for the
three months ended September 30, 2012. Approximately $2.3
million of this decrease resulted from the sale of the global data
business on April 30, 2013 while $1.2 million of the decrease
resulted from optimizing the cost structure of our voice
network.
Combined operating expenses consisting of Operations, Sales and
Marketing, and General and Administrative expenses were $14.3
million for the third quarter of 2013, a decrease of 11.7%, or $1.9
million, from $16.2 million for the third quarter of
2012. Expenses in the third quarter of 2013 included $2.1
million related to an internal investigation conducted by the Audit
Committee of our Board of Directors that concluded in August
2013. The third quarter of 2012 amount included $0.8 million
of data sales related expenses associated with our Americas
reporting unit that did not qualify for discontinued operations
treatment.
Depreciation and amortization expense was $3.3 million for the
third quarter of 2013, or 6.5% of revenue, compared to $5.5 million
for the third quarter of 2012, or 9.2% of revenue.
Income from continuing operations in the third quarter of 2013
was $6.6 million, compared to income from continuing operations of
$5.7 million in the third quarter of
2012.
On April 30, 2013, the Company completed its divestiture of the
global data business. In the third quarter of 2013, loss from
discontinued operations, net of income tax provision, was $0.1
million compared to $8.5 million for the third quarter of 2012.
Adjusted EBITDA (a non-GAAP financial measure) from continuing
operations in the third quarter of 2013 was $17.0 million, a
decrease of 1.7%, compared to $17.3 million in the third quarter of
2012. See "Use of Non-GAAP Financial Measures" below for a
discussion of the presentation of Adjusted EBITDA and
reconciliation to net income.
2013 Business Outlook
Taking into account actual results for the first nine months of
the year and management's current belief about revenue trends,
expenses and the competitive environment, Inteliquent now estimates
as follows for 2013:
|
|
Revenue |
$222 - $225 million |
Adjusted EBITDA |
$64 - $67 million |
Capital Expenditures |
$11 - $13 million |
The financial estimates include the results for Inteliquent's
global data business prior to its divestiture on April 30,
2013.
Conference Call & Web Cast
The third quarter conference call will be held on Thursday,
October 31, 2013 at 10:00 a.m. (ET). A live web cast of the
conference call as well as a replay will be available online on the
Company's corporate web site at www.inteliquent.com. Participants
can also access the call by dialing 1-877-941-0843 (within the
United States and Canada), or 1-480-629-9770 (international
callers). A replay of the call will be available approximately two
hours after the call has ended and will be available until 11:59
p.m. (ET) on November 30, 2013. To access the replay, dial
1-800-406-7325 (within the United States and Canada), or
1-303-590-3030 (international callers) and enter the conference ID
number: 4645306.
Cautionary Statement Regarding
Forward-Looking Statements
This press release contains "forward-looking statements" that
involve substantial risks and uncertainties. All statements, other
than statements of historical fact, included in this press release
are forward-looking statements. The words "anticipates,"
"believes," "efforts," "expects," "estimates," "projects,"
"proposed," "plans," "intends," "may," "will," "would," and similar
expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain these
identifying words. Actual results or events could differ materially
from the plans, intentions and expectations disclosed in the
forward-looking statements we make. Factors that might cause such
differences include, but are not limited to: the effects of
competition, including direct connects, and downward pricing
pressure resulting from such competition; our ability to maintain
relationships with business providers following the sale of our
global data business; our ability to focus on the growth and
performance of our voice business following the sale of our global
data business; our regular review of strategic alternatives; the
impact of current and future regulation, including intercarrier
compensation reform enacted by the Federal Communications
Commission; the risks associated with our ability to successfully
develop and market new voice services, many of which are beyond our
control and all of which could delay or negatively affect our
ability to offer or market new services; the ability to develop and
provide other new services; technological developments; the ability
to obtain and protect intellectual property rights; the impact of
current or future litigation; the potential impact of any future
acquisitions, mergers or divestitures; natural or man-made
disasters; the ability to attract, develop and retain executives
and other qualified employees; changes in general economic or
market conditions; matters arising out of or related to the
impairment charge and financial forecasting practices that were the
subject of an investigation by the Company's Audit Committee; the
possibility that the Securities and Exchange Commission may
disagree with the Audit Committee's findings and may require a
restatement of financial statements or additional or different
remediation; any other proceedings which may be brought against the
Company by the Securities and Exchange Commission or other
governmental agencies; the outcome of current and potential
shareholder derivative actions filed against certain of the
Company's officers and directors; the possibility of additional
private litigation related to the impairment charge and financial
forecasting practices that were subject to investigation by the
Audit Committee and related matters; and other important factors
included in our reports filed with the Securities and Exchange
Commission, particularly in the "Risk Factors" section of our
Annual Report on Form 10-K for the period ended December 31,
2012, as such Risk Factors may be updated from time to time in
subsequent reports. Furthermore, such forward-looking
statements speak only as of the date of this press release. We
undertake no obligation to update any forward-looking statements to
reflect events or circumstances after the date of such
statements.
About Inteliquent
Inteliquent is a leading provider of wholesale voice services
for carriers and service providers. Inteliquent is used by nearly
all national and regional wireless carriers, cable companies and
CLECs in the markets it serves, and its network carries
approximately ten billion minutes of traffic per month. Please
visit Inteliquent's website at www.inteliquent.com and follow us on
Twitter @Inteliquent.
The condensed consolidated statements of operations, balance
sheets and statements of cash flows are unaudited and subject to
reclassification.
INTELIQUENT, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(Unaudited) |
|
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
(In thousands, except per share
amounts) |
2013 |
2012 |
2013 |
2012 |
Revenue |
$ 50,396 |
$ 59,573 |
$ 163,133 |
$ 178,722 |
Operating expense: |
|
|
|
|
Network and facilities expense (excluding
depreciation and amortization) |
22,027 |
25,546 |
70,716 |
72,481 |
Operations |
7,182 |
10,312 |
22,488 |
27,780 |
Sales and marketing |
1,090 |
2,017 |
4,650 |
6,195 |
General and administrative |
6,071 |
3,850 |
15,105 |
14,801 |
Depreciation and amortization |
3,293 |
5,544 |
11,505 |
16,234 |
Carrier settlement |
-- |
9,000 |
-- |
9,000 |
Impairment of fixed assets |
-- |
1,257 |
-- |
1,257 |
Loss (gain) on disposal of fixed
assets |
3 |
(55) |
226 |
(168) |
Gain on disposal of Americas data
assets |
— |
— |
(23,171) |
— |
|
|
|
|
|
Total operating expense |
39,666 |
57,471 |
101,519 |
147,580 |
|
|
|
|
|
Income from operations |
10,730 |
2,102 |
61,614 |
31,142 |
|
|
|
|
|
Other expense (income): |
|
|
|
|
Interest income |
(1) |
(42) |
(53) |
(132) |
Other expense (income) |
4 |
-- |
5 |
(1) |
|
|
|
|
|
Total other expense (income) |
3 |
(42) |
(48) |
(133) |
|
|
|
|
|
Income from continuing operations before
income taxes |
10,727 |
2,144 |
61,662 |
31,275 |
(Benefit) provision for income taxes |
4,177 |
(3,596) |
8,524 |
3,082 |
|
|
|
|
|
Income from continuing operations |
6,550 |
5,740 |
53,138 |
28,193 |
Loss from discontinued operations, net of
income tax provision |
68 |
8,475 |
7,102 |
20,567 |
Loss (gain) on disposal of discontinued
operations |
11 |
— |
(783) |
— |
|
|
|
|
|
Net income (loss) |
$ 6,471 |
$ (2,735) |
$ 46,819 |
$ 7,626 |
|
|
|
|
|
Earnings per share – continuing
operations: |
|
|
|
|
Basic |
$ 0.20 |
$ 0.18 |
$ 1.64 |
$ 0.89 |
Diluted |
$ 0.20 |
$ 0.18 |
$ 1.63 |
$ 0.88 |
Loss per share – discontinued
operations: |
|
|
|
|
Basic |
$ — |
$ (0.27) |
$ (0.20) |
$ (0.65) |
Diluted |
$ — |
$ (0.27) |
$ (0.19) |
$ (0.64) |
Earnings (loss) per share – net income
(loss): |
|
|
|
|
Basic |
$ 0.20 |
$ (0.09) |
$ 1.45 |
$ 0.24 |
Diluted |
$ 0.20 |
$ (0.09) |
$ 1.44 |
$ 0.24 |
Weighted average number of shares
outstanding: |
|
|
|
|
Basic |
32,262 |
31,993 |
32,344 |
31,817 |
Diluted |
32,557 |
31,993 |
32,548 |
32,166 |
Dividends paid per share: |
$ 0.06 |
$ — |
$ 1.38 |
$ — |
|
|
INTELIQUENT, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(Unaudited) |
|
(In thousands, except per share
amounts) |
September 30, 2013 |
December 31, 2012 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 63,061 |
$ 31,479 |
Receivables — net of allowance of $400
and $423, respectively |
30,047 |
30,759 |
Deferred income taxes – current |
— |
1,210 |
Prepaid expenses |
2,132 |
6,405 |
Other current assets |
2,029 |
— |
Current assets of discontinued
operations |
— |
26,924 |
|
|
|
Total current assets |
97,269 |
96,777 |
Property and equipment — net |
25,782 |
44,116 |
Restricted cash |
125 |
962 |
Deferred income taxes – noncurrent |
5,854 |
2,710 |
Other assets |
2,381 |
1,035 |
|
|
|
Total assets |
$ 131,411 |
$ 145,600 |
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 4,724 |
$ 7,546 |
Accrued liabilities: |
|
|
Taxes payable |
3,146 |
2,160 |
Circuit cost |
6,299 |
8,821 |
Rent |
2,000 |
1,829 |
Payroll and related items |
3,806 |
2,687 |
Other |
2,443 |
1,062 |
Current liabilities of discontinued
operations |
— |
22,402 |
|
|
|
Total current liabilities |
22,418 |
46,507 |
|
|
|
Shareholders' equity: |
|
|
Preferred stock — par value of $.001;
50,000 authorized shares; no shares issued and outstanding at
September 30, 2013 and December 31, 2012 |
— |
— |
Common stock — par value of $.001;
150,000 authorized shares; 32,191 shares and 32,345 shares issued
and outstanding at September 30, 2013 and December 31,
2012, respectively |
32 |
32 |
Less treasury stock, at cost; 3,351
shares and 3,083 shares at September 30, 2013 and
December 31, 2012, respectively |
(51,668) |
(50,103) |
Additional paid-in capital |
203,216 |
199,331 |
Accumulated other comprehensive loss |
— |
(4,904) |
Accumulated deficit |
(42,587) |
(45,263) |
|
|
|
Total shareholders' equity |
108,993 |
99,093 |
|
|
|
Total liabilities and shareholders'
equity |
$ 131,411 |
$ 145,600 |
|
|
INTELIQUENT, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(Unaudited) |
|
|
Nine Months Ended
September 30, |
(In thousands) |
2013 |
2012 |
Operating |
|
|
Net income |
$ 46,819 |
$ 7,626 |
Adjustments to reconcile net income to
net cash provided by operating activities: |
|
|
Depreciation and amortization |
12,747 |
22,798 |
Deferred income taxes |
(1,934) |
(2,435) |
Impairment of fixed assets |
— |
1,257 |
Loss (gain) on disposal of fixed
assets |
493 |
(164) |
Gain on disposal of Americas data
assets |
(23,171) |
— |
Gain on disposal of discontinued
operations |
(783) |
— |
Non-cash share-based compensation |
5,169 |
8,566 |
Gain (loss) on intercompany foreign
exchange transactions |
56 |
(66) |
Excess tax deficiency (benefit)
associated with share-based payments |
982 |
(1,176) |
Changes in assets and liabilities: |
|
|
Receivables |
(3,636) |
(2,868) |
Other current assets |
1,340 |
(5,666) |
Other noncurrent assets |
(147) |
587 |
Accounts payable |
(739) |
(1,462) |
Accrued liabilities |
3,552 |
15,884 |
Noncurrent liabilities |
— |
281 |
|
|
|
Net cash provided by operating
activities |
40,748 |
43,162 |
|
|
|
Investing |
|
|
Purchase of equipment |
(9,906) |
(21,076) |
Proceeds from sale of equipment |
28 |
161 |
Proceeds from disposition of discontinued
operations, net of transaction costs |
9,698 |
|
Proceeds from disposition of Americas
data assets, net of transaction costs |
37,092 |
— |
Decrease in restricted cash |
837 |
— |
|
|
|
Net cash provided by (used for) investing
activities |
37,749 |
(20,915) |
|
|
|
Financing |
|
|
Proceeds from the exercise of stock
options |
279 |
1,315 |
Restricted shares withheld to cover
employee taxes paid |
(508) |
(963) |
Dividends paid |
(44,145) |
— |
Payments made for repurchase of common
stock |
(1,565) |
— |
Excess tax (deficiency) benefit
associated with share-based payments |
(982) |
1,176 |
|
|
|
Net cash provided by (used for) financing
activities |
(46,921) |
1,528 |
|
|
|
Effect of exchange rate changes on cash |
6 |
(223) |
Net Increase In Cash And Cash
Equivalents |
31,582 |
23,552 |
Cash And Cash Equivalents — Beginning |
31,479 |
90,279 |
|
|
|
Cash And Cash Equivalents — End |
$ 63,061 |
$ 113,831 |
Supplemental Disclosure Of Cash Flow
Information: |
|
|
Cash paid for taxes |
$ 6,070 |
$ 12,607 |
Supplemental Disclosure Of Noncash Flow
Items: |
|
|
Investing Activity — Accrued purchases of
equipment |
$ 1,372 |
$ 2,617 |
Use of Non-GAAP Financial
Measures
In this press release we disclose "Adjusted EBITDA", which is a
non-GAAP financial measure. For purposes of SEC rules, a non-GAAP
financial measure is a numerical measure of a company's
performance, financial position, or cash flows that either excludes
or includes amounts that are not normally excluded or included in
the most directly comparable measure, calculated and prepared in
accordance with generally accepted accounting principles in the
United Sates (GAAP).
EBITDA is defined as net income (loss) before (a) interest
expense (income) (b) income tax expense (benefit) and
(c) depreciation and amortization. Adjusted EBITDA is defined
as EBITDA as further adjusted to eliminate: non-cash
share-based compensation; as well as non-recurring amounts incurred
in connection with settlement, the discontinuation of our hosted
service offering, severance payments, value added tax payments
related to the global data business we sold, professional and legal
fees incurred in connection with the internal investigation
conducted by our Audit Committee; a payment received under our
insurance policy related to Hurricane Sandy; and the gain on sale
of the global data business. We believe that the presentation of
Adjusted EBITDA included in this press release provides useful
information to investors regarding our results of operations
because it assists in analyzing and benchmarking the performance
and value of our business. We believe that presenting Adjusted
EBITDA facilitates company-to-company operating performance
comparisons of companies within the same or similar industries by
backing out differences caused by variations in capital structure,
taxation and depreciation of facilities and equipment (affecting
relative depreciation expense), which may vary for different
companies for reasons unrelated to operating performance. These
measures provide an assessment of controllable operating expenses
and afford management the ability to make decisions, which are
expected to facilitate meeting current financial goals as well as
achieve optimal financial performance. They provide an indicator
for management to determine if adjustments to current spending
decisions are needed. Furthermore, we believe that the presentation
of Adjusted EBITDA has economic substance because it provides
important insight into our profitability trends, as a component of
net income, and allows management and investors to analyze
operating results with and without the impact of depreciation and
amortization, interest and income tax, non-cash share-based
compensation, amounts incurred in connection with settlement, the
discontinuation of our hosted service offering, severance payments,
value added tax payments related to the global data business we
sold, professional and legal fees incurred in connection with the
internal investigation conducted by our Audit Committee, a payment
received under our insurance policy related to Hurricane Sandy, and
the gain on sale of the global data business. Accordingly, these
metrics measure our financial performance based on operational
factors that management can impact in the short-term, namely the
operational cost structure and expenses of our business. In
addition, we believe Adjusted EBITDA is used by securities
analysts, investors and other interested parties in evaluating
companies, many of which present an EBITDA measure when reporting
their results. Although we use Adjusted EBITDA as a financial
measure to assess the performance of our business, the use of
Adjusted EBITDA is limited because it does not include certain
material costs, such as depreciation, amortization and interest and
taxes, necessary to operate our business. We disclose the
reconciliation between EBITDA and Adjusted EBITDA and net income
(loss) below to compensate for this limitation. While we use net
income (loss) as a significant measure of profitability, we also
believe that Adjusted EBITDA, when presented along with net income
(loss), provides balanced disclosure which, for the reasons set
forth above, is useful to investors in evaluating our operating
performance and profitability. Adjusted EBITDA included in this
press release should be considered in addition to, and not as a
substitute for, net income (loss) as calculated in accordance with
generally accepted accounting principles as a measure of
performance.
The following is a reconciliation of net income (loss) to EBITDA
and Adjusted EBITDA:
INTELIQUENT, INC. AND
SUBSIDIARIES |
Reconciliation of
Non-GAAP Financial Measures to GAAP Financial
Measures |
(Unaudited) |
(Dollars in
thousands) |
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
|
September
30, |
September
30, |
Full Year |
|
2013 |
2012 |
2013 |
2012 |
2013 * |
|
|
|
|
|
|
Net income (loss) |
$ 6,471 |
$ (2,735) |
$ 46,819 |
$ 7,626 |
$ 52,150 |
Interest expense (income) ** |
(1) |
4 |
(5) |
(11) |
-- |
(Benefit) provision for income taxes ** |
4,177 |
(1,959) |
8,751 |
6,379 |
13,100 |
Depreciation and amortization ** |
3,293 |
7,703 |
12,747 |
22,798 |
16,000 |
EBITDA |
$ 13,940 |
$ 3,013 |
$ 68,312 |
$ 36,792 |
$ 81,250 |
Non-cash share-based compensation |
1,239 |
2,540 |
5,169 |
8,566 |
6,300 |
Carrier settlement |
-- |
9,000 |
-- |
9,000 |
-- |
Hosted services |
(450) |
1,779 |
(450) |
1,779 |
(450) |
Severance |
505 |
227 |
879 |
477 |
900 |
Value added tax |
-- |
745 |
-- |
895 |
-- |
Internal investigation |
2,148 |
-- |
2,424 |
-- |
2,400 |
Insurance recovery |
(423) |
-- |
(423) |
-- |
(400) |
Loss (gain) on sale of global data business
** |
11 |
-- |
(23,954) |
-- |
(24,000) |
Adjusted EBITDA |
$ 16,970 |
$ 17,304 |
$ 51,957 |
$ 57,509 |
$ 66,000 |
|
* The amounts
expressed in this column are based on current estimates as of the
date of this press release. The reconciliation is based on the
midpoint of the full year 2013 estimated range announced in this
press release. The financial estimates include results from
the global data business for the first four months of 2013
only. |
** For comparison
purposes, amounts include results from the global data business for
the respective periods, prior to divestiture on April 30, 2013,
which are reported as discontinued operations in the Company's
condensed consolidated statements of operations. |
CONTACT: Media Contact:
Tabitha Long
(312) 384-8018
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