Financial and operating highlights include:
- Minutes of use for full year 2014 increased 13.0% compared to
full year 2013; 4Q 2014 minutes of use increased 14.8% compared to
4Q 2013.
- Voice revenue for full year 2014 increased 9.9% compared to
full year 2013; 4Q 2014 voice revenue increased 10.4% compared to
4Q 2013.
- Net income of $38.5 million for full year 2014 and $10.1
million for 4Q 2014.
- Adjusted EBITDA (a non-GAAP financial measure) of $79.9 million
for full year 2014 and $20.1 million for 4Q 2014.
- Financial estimates for full year 2015 of $215 million to $230
million of revenue; $75 million to $81 million of Adjusted EBITDA
(a non-GAAP financial measure); and $11 million to $13 million of
capital expenditures.
Inteliquent, Inc. (Nasdaq:IQNT), a leading provider of voice
services, today announced its financial results for the fourth
quarter of 2014.
"We are very pleased with the results for the fourth quarter and
the full year," said Ed Evans, Chief Executive Officer of
Inteliquent. "We had another record quarter for carrying minutes
across our network, while continuing to maintain our margins. It
was another strong quarter and our annual results reflect the
highest annual voice revenue in the history of the Company."
Fourth Quarter Results
Inteliquent generated voice revenue of $55.4 million in the
fourth quarter of 2014, an increase of 10.4%, or $5.2 million, from
$50.2 million of voice revenue in the fourth quarter of 2013. The
increase related primarily to an increase in minute volumes.
Minutes of use increased 14.8% to 34.9 billion minutes in the
fourth quarter of 2014, compared to 30.4 billion minutes in the
fourth quarter of 2013. Average rate per minute for the fourth
quarter of 2014 was $0.00158, a decrease of 4.2%, compared to
$0.00165 for the fourth quarter of 2013.
Revenue from continuing operations for the fourth quarter of
2014 was $55.4 million, an increase of 14.2%, or $6.9 million, from
$48.5 million for the fourth quarter of 2013. Included in revenue
from continuing operations for the fourth quarter of 2013 is a $1.7
million adjustment 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
accounting treatment. Excluding the revenue adjustment from
data operations in the Americas reporting unit for the fourth
quarter of 2013, revenue from continuing operations increased $5.2
million in the fourth quarter of 2014. The increase in revenue
from continuing operations is primarily related to an increase in
minute volumes.
Network and facilities expense for the fourth quarter of 2014
was $24.0 million, a decrease of 0.8%, or $0.2 million, from $24.2
million for the fourth quarter of 2013. Network and facilities
expense for the fourth quarter of 2013 included $1.1 million
related to the global data business sold on April 30,
2013. Excluding costs from data operations in the Americas
reporting unit for the fourth quarter of 2013, network and
facilities expense increased $0.9 million in the fourth quarter of
2014. The increase in network and facilities expense was
primarily due to an increase in minute volumes.
Combined operating expenses consisting of Operations, Sales and
Marketing, and General and Administrative expenses were $12.2
million for the fourth quarter of 2014, an increase of 14.0%, or
$1.5 million, from $10.7 million for the fourth quarter of
2013. The fourth quarter of 2013 amount includes $0.4 million
of data sales related expenses associated with our Americas
reporting unit that did not qualify for discontinued operations
accounting treatment. Excluding expenses from data operations
in the Americas reporting unit for the fourth quarter of 2013,
combined operating expenses increased $1.9 million in the fourth
quarter of 2014. The increase was primarily due to an increase
of $1.2 million in personnel related expenses as a result of
increased headcount and an increase of $0.8 million in professional
services.
Depreciation and amortization expense was $2.7 million for the
fourth quarter of 2014, or 4.9% of revenue, compared to $3.1
million for the fourth quarter of 2013, or 6.4% of
revenue. The decrease of $0.4 million in depreciation and
amortization expense resulted from a lower depreciable base of
assets due to less capital expenditures during the current
year.
Income from continuing operations in the fourth quarter of 2014
was $10.1 million, compared to income from continuing operations of
$11.2 million for the fourth quarter of 2013.
Adjusted EBITDA (a non-GAAP financial measure) from continuing
operations in the fourth quarter of 2014 was $20.1 million, an
increase of 11.7% or $2.1 million, from $18.0 million for the
fourth quarter of 2013. See "Use of Non-GAAP Financial
Measures" below for a discussion of the presentation of Adjusted
EBITDA and reconciliation to Net income.
Free Cash Flow (a non-GAAP financial measure) in the fourth
quarter of 2014 was $16.3 million, an increase of 5.8% or $0.9
million, from $15.4 million for the fourth quarter of
2013. See "Use of Non-GAAP Financial Measures" below for a
discussion of the presentation of Free Cash Flow and a
reconciliation to Net income.
Full Year Results
Inteliquent generated voice revenue of $220.5 million for the
year ended December 31, 2014, an increase of 9.9%, or $19.9
million, from $200.6 million of voice revenue for the year ended
December 31, 2013. The increase related primarily to an
increase in minute volumes. Minutes of use increased 13.0% to
136.6 billion minutes for the year ended December 31, 2014,
compared to 120.9 billion minutes for the year ended December 31,
2013. Average rate per minute for the year ended December 31,
2014 was $0.00161, a decrease of 3.0%, compared to $0.00166 for the
year ended December 31, 2013.
Revenue from continuing operations for the year ended December
31, 2014 was $220.5 million, an increase of 4.2%, or $8.8 million,
from $211.7 million for the year ended December 31,
2013. Included in revenue from continuing operations for 2013
is $10.4 million related to the global data business sold on April
30, 2013, and $0.7 million of associated transition services and
related revenue. Data operations for the Americas reporting
unit did not meet all criteria required to receive discontinued
operations accounting treatment. Excluding the revenue from
data operations in the Americas reporting unit and associated
transition services and related revenue for the year ended December
31, 2013, revenue from continuing operations increased $19.9
million. The increase in revenue from continuing operations is
primarily related to an increase in minute volumes.
Network and facilities expense for the year ended December 31,
2014 was $95.0 million, an increase of 0.1%, or $0.1 million, from
$94.9 million for the year ended December 31, 2013. Network
and facilities expense for 2013 included $4.5 million related to
the global data business sold on April 30, 2013. Excluding
costs from data operations in the Americas reporting unit, network
and facilities expense increased $4.6 million. The increase in
network and facilities expense was primarily due to an increase in
minute volumes.
Combined operating expenses consisting of Operations, Sales and
Marketing, and General and Administrative expenses were $49.4
million for the year ended December 31, 2014, a decrease of 6.6%,
or $3.5 million, from $52.9 million for the year ended December 31,
2013. The 2013 amount includes $1.5 million of data sales
related expenses associated with our Americas reporting unit that
did not qualify for discontinued operations accounting
treatment. Excluding expenses from data operations in the
Americas reporting unit, combined operating expenses decreased $2.0
million. The decrease was primarily due to $2.4 million of
charges recognized in 2013 associated with the previously announced
internal investigation conducted by the Company's Audit
Committee.
Depreciation and amortization expense was $11.8 million for the
year ended December 31, 2014, or 5.4% of revenue, compared to $14.7
million for the year ended December 31, 2013, or 6.9% of
revenue. The decrease of $2.9 million in depreciation and
amortization expense resulted from a lower depreciable base of
assets due to less capital expenditures during the current
year.
On April 30, 2013, the Company completed its divestiture of the
global data business. The agreement governing the sale
contained certain provisions governing post-closing adjustments to
the purchase price. During the year ended December 31, 2014,
the Company recorded a $1.1 million loss on the sale of the global
data business as a result of the settlement with the buyer
regarding the purchase price adjustments. During the
year ended December 31, 2013, the Company recorded a gain of $28.8
million on the sale of the global data business.
Income from continuing operations for the year ended December
31, 2014 was $38.5 million, compared to income from continuing
operations of $64.3 million for the year ended December 31,
2013.
Adjusted EBITDA (a non-GAAP financial measure) from continuing
operations for the year ended December 31, 2014 was $79.9 million,
an increase of 14.3% or $10.0 million, from $69.9 million for the
year ended December 31, 2013. See "Use of Non-GAAP Financial
Measures" below for a discussion of the presentation of Adjusted
EBITDA and reconciliation to Net income.
Free Cash Flow (a non-GAAP financial measure) for the year ended
December 31, 2014 was $69.8 million, an increase of 21.4% or $12.3
million, from $57.5 million for the year ended December 31,
2013. See "Use of Non-GAAP Financial Measures" below for a
discussion of the presentation of Free Cash Flow and a
reconciliation to Net income.
2015 Business Outlook
Inteliquent's financial estimates for full year 2015 are as
follows:
- Revenue is expected to be between $215 million and $230
million.
- Adjusted EBITDA (a non-GAAP financial measure) is expected to
be between $75 million and $81 million.
- Capital expenditures are expected to be between $11 million and
$13 million.
Conference Call & Web Cast
The fourth quarter conference call will be held on Thursday,
February 26, 2015 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 1-888-378-0320 (within the
United States and Canada), or 1-719-457-2661 (international
callers) and entering the conference ID number: 1973713. A replay
of the call will be available approximately two hours after the
call has ended and will be available until 11:59 a.m. (ET) on March
28, 2015. To access the replay, dial 1-888-203-1112 (within the
United States and Canada), or 1-719-457-0820 (international
callers) and enter the conference ID number: 1973713.
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 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 voice
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; the ability to identify and successfully attract a
highly qualified successor to the Chief Executive Officer and his
or her future performance; the length of time required to complete
an executive search; cooperation by key parties during the Chief
Executive Officer transition process; 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; the possibility of litigation or other actions 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, 2013, 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 eleven billion minutes of traffic per month. Please
visit Inteliquent's website at www.inteliquent.com and follow us on
Twitter @Inteliquent.
The consolidated statements of income, balance sheets and
statements of cash flows are unaudited and subject to
reclassification.
INTELIQUENT, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF INCOME |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended |
Twelve Months
Ended |
|
December 31, |
December 31, |
(In thousands, except per share
amounts) |
2014 |
2013 |
2014 |
2013 |
Revenue |
$ 55,365 |
$ 48,528 |
$ 220,508 |
$ 211,661 |
Operating expense: |
|
|
|
|
Network and facilities expense (excluding
depreciation and amortization) |
23,960 |
24,151 |
94,995 |
94,867 |
Operations |
7,355 |
6,107 |
29,296 |
28,595 |
Sales and marketing |
722 |
904 |
3,264 |
5,554 |
General and administrative |
4,141 |
3,667 |
16,840 |
18,772 |
Depreciation and amortization |
2,681 |
3,147 |
11,817 |
14,652 |
(Gain) loss on sale of property and
equipment |
(31) |
(34) |
(60) |
192 |
(Gain) loss on sale of Americas Data
assets |
— |
(5,620) |
1,081 |
(28,791) |
Total operating expense |
38,828 |
32,322 |
157,233 |
133,841 |
Income from operations |
16,537 |
16,206 |
63,275 |
77,820 |
Other expense (income): |
|
|
|
|
Interest expense (income) |
14 |
47 |
51 |
(6) |
Other (income) expense |
— |
(1) |
(2) |
4 |
Total other expense (income) |
14 |
46 |
49 |
(2) |
Income from continuing operations before
provision for income taxes |
16,523 |
16,160 |
63,226 |
77,822 |
Provision for income taxes |
6,417 |
5,000 |
24,703 |
13,524 |
Income from continuing operations |
10,106 |
11,160 |
38,523 |
64,298 |
Income (loss) from discontinued operations,
net of provision for income taxes |
— |
3,294 |
— |
(3,808) |
(Loss) on sale of discontinued operations,
net of provision for income taxes |
— |
(5,620) |
— |
(4,837) |
Net income |
$ 10,106 |
$ 8,834 |
$ 38,523 |
$ 55,653 |
Earnings per share - continuing
operations: |
|
|
|
|
Basic |
$ 0.30 |
$ 0.35 |
$ 1.17 |
$ 1.99 |
Diluted |
$ 0.30 |
$ 0.34 |
$ 1.15 |
$ 1.97 |
Loss per share - discontinued
operations: |
|
|
|
|
Basic |
$ — |
$ (0.07) |
$ — |
$ (0.27) |
Diluted |
$ — |
$ (0.07) |
$ — |
$ (0.27) |
Earnings per share - net income: |
|
|
|
|
Basic |
$ 0.30 |
$ 0.27 |
$ 1.17 |
$ 1.72 |
Diluted |
$ 0.30 |
$ 0.27 |
$ 1.15 |
$ 1.71 |
Weighted average number of shares
outstanding: |
|
|
|
|
Basic |
33,316 |
32,194 |
32,887 |
32,306 |
Diluted |
33,785 |
32,501 |
33,384 |
32,557 |
Dividends paid per share: |
$ 0.15 |
$ 0.06 |
$ 0.45 |
$ 1.44 |
|
|
INTELIQUENT, INC. AND
SUBSIDIARIES |
CONSOLIDATED BALANCE
SHEETS |
(Unaudited) |
|
|
|
|
December 31, |
(In thousands, except per share
amounts) |
2014 |
2013 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 104,737 |
$ 77,004 |
Receivables — net of allowance of $2,336
and $900, respectively |
32,766 |
22,200 |
Deferred income taxes-current |
836 |
720 |
Prepaid expenses |
2,198 |
2,375 |
Other current assets |
1,320 |
1,977 |
Total current assets |
141,857 |
104,276 |
Property and equipment—net |
23,678 |
25,815 |
Restricted cash |
345 |
125 |
Deferred income taxes-noncurrent |
3,284 |
5,495 |
Other assets |
1,007 |
1,534 |
Total assets |
$ 170,171 |
$ 137,245 |
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 1,607 |
$ 2,176 |
Accrued liabilities: |
|
|
Taxes payable |
1,263 |
2,437 |
Circuit cost |
7,266 |
8,987 |
Rent |
2,015 |
2,071 |
Payroll and related items |
3,079 |
3,079 |
Other |
897 |
1,674 |
Total current liabilities |
16,127 |
20,424 |
Commitments and contingencies |
|
|
Shareholders' equity: |
|
|
Preferred stock—par value of $.001;
50,000 authorized shares; no shares issued and outstanding at
December 31, 2014 and December 31, 2013 |
-- |
-- |
Common stock—par value of $.001; 150,000
authorized shares; 33,458 shares and 32,215 shares issued and
outstanding at December 31, 2014 and December 31, 2013,
respectively |
33 |
32 |
Less treasury stock, at cost; 3,351
shares at December 31, 2014 and December 31, 2013 |
(51,668) |
(51,668) |
Additional paid-in capital |
217,628 |
203,989 |
Accumulated deficit |
(11,949) |
(35,532) |
Total shareholders' equity |
154,044 |
116,821 |
Total liabilities and shareholders'
equity |
$ 170,171 |
$ 137,245 |
|
|
INTELIQUENT, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF CASH FLOWS |
(Unaudited) |
|
|
|
|
Years Ended
December 31, |
(In thousands) |
2014 |
2013 |
Operating |
|
|
Net income |
$ 38,523 |
$ 55,653 |
Adjustments to reconcile net income to
net cash flows provided by operating activities: |
|
|
Depreciation and amortization |
11,817 |
15,894 |
Deferred income taxes |
8 |
(2,295) |
(Gain) loss on sale of property and
equipment |
(60) |
458 |
Provision for uncollectible accounts |
1,925 |
900 |
Loss (gain) on sale of Americas Data
assets |
1,081 |
(28,791) |
Loss on sale of discontinued
operations |
— |
4,837 |
Non-cash share-based compensation |
4,269 |
6,163 |
Gain on intercompany foreign exchange
transactions |
— |
56 |
Excess tax benefit associated with
share-based payments |
(1,090) |
(262) |
Changes in assets and liabilities, net of
effect of acquisitions and dispositions: |
|
|
Receivables |
(12,491) |
4,281 |
Other current assets |
(247) |
180 |
Other noncurrent assets |
2,614 |
199 |
Accounts payable |
(175) |
(3,830) |
Accrued liabilities |
(5,716) |
3,922 |
Net cash provided by operating
activities |
40,458 |
57,365 |
Investing |
|
|
Purchase of property and equipment |
(10,090) |
(12,470) |
Proceeds from sale of property and
equipment |
72 |
28 |
Sale of other investments |
— |
534 |
Proceeds from sale of discontinued
operations, net of transaction costs |
— |
42,587 |
Proceeds from sale of Americas Data
assets, net of transaction costs |
— |
4,203 |
(Increase) decrease in restricted
cash |
(220) |
837 |
Net cash (used for) provided by investing
activities |
(10,238) |
35,719 |
Financing |
|
|
Proceeds from the exercise of stock
options |
12,476 |
468 |
Restricted shares withheld to cover
employee taxes paid |
(1,113) |
(808) |
Dividends paid |
(14,940) |
(45,922) |
Payments made for repurchase
of common stock |
— |
(1,565) |
Excess tax benefit associated with
share-based payments |
1,090 |
262 |
Net cash used for financing
activities |
(2,487) |
(47,565) |
Effect of exchange rate changes on cash |
— |
6 |
Net increase in cash and cash
equivalents |
27,733 |
45,525 |
Cash and cash equivalents — Beginning |
77,004 |
31,479 |
Cash and cash equivalents — End |
$ 104,737 |
$ 77,004 |
Supplemental Disclosure of Cash Flow
Information: |
|
|
Cash paid for interest |
$ — |
$ — |
Cash paid for taxes |
$ 25,759 |
$ 12,695 |
Supplemental Disclosure of Noncash Flow
Items: |
|
|
Investing activity — Accrued purchases of
property and equipment |
$ 1,348 |
$ 1,742 |
The following table includes selected financial and operational
metrics, sequentially, for the last five quarters.
Selected Financial and Operational
Metrics
|
Three Months
Ended |
Years
Ended |
(In thousands, except per share amounts) |
Dec. 31 |
Mar. 31 |
Jun. 30 |
Sep. 30 |
Dec. 31 |
Dec. 31 |
Dec. 31 |
|
2013 |
2014 |
2014 |
2014 |
2014 |
2013 |
2014 |
|
|
|
|
|
|
|
|
Total Revenue |
$ 48.5 |
$ 56.2 |
$ 54.9 |
$ 54.0 |
$ 55.4 |
$ 211.7 |
$ 220.5 |
Adjusted EBITDA |
$ 18.0 |
$ 20.2 |
$ 19.5 |
$ 20.0 |
$ 20.1 |
$ 69.9 |
$ 79.9 |
Total Capital Expenditures |
$ 2.6 |
$ 2.6 |
$ 2.7 |
$ 1.0 |
$ 3.8 |
$ 12.5 |
$ 10.1 |
Free Cash Flow |
$ 15.4 |
$ 17.6 |
$ 16.8 |
$ 19.0 |
$ 16.3 |
$ 57.5 |
$ 69.8 |
Voice Revenue |
$ 50.2 |
$ 56.2 |
$ 54.9 |
$ 54.0 |
$ 55.4 |
$ 200.6 |
$ 220.5 |
Average Revenue per Minute |
$ 0.00165 |
$ 0.0017 |
$ 0.00162 |
$ 0.00156 |
$ 0.00158 |
$ 0.00166 |
$ 0.00161 |
|
|
|
|
|
|
|
|
Minutes of Use (in millions): |
|
|
|
|
|
|
|
Local |
|
|
|
|
|
|
|
Local Transit Services |
14,330 |
15,178 |
15,513 |
15,706 |
15,040 |
56,105 |
61,437 |
|
|
|
|
|
|
|
|
Switched Access (Long
Distance) |
|
|
|
|
|
|
|
Termination Services |
11,306 |
12,539 |
13,161 |
13,878 |
15,123 |
46,822 |
54,701 |
Origination Services |
4,790 |
5,418 |
5,222 |
5,038 |
4,768 |
17,999 |
20,446 |
|
|
|
|
|
|
|
|
Total Minutes of Use |
30,426 |
33,135 |
33,896 |
34,622 |
34,931 |
120,926 |
136,584 |
|
|
|
|
|
|
|
|
# of Employees |
143 |
149 |
154 |
155 |
160 |
143 |
160 |
Use of Non-GAAP Financial
Measures
In this press release we disclose "Adjusted EBITDA" and "Free
Cash Flow", which are non-GAAP financial measures. 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 States (GAAP).
EBITDA is defined as net income before (a) interest
expense, net (b) income tax expense 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 the
discontinuation of our hosted service offering, severance payments,
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 expense, non-cash share-based compensation, amounts
incurred in connection with the discontinuation of our hosted
service offering, severance payments, 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 below to compensate for this limitation. While we use
net income as a significant measure of profitability, we also
believe that Adjusted EBITDA, when presented along with net income,
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 as calculated in accordance with
generally accepted accounting principles as a measure of
performance.
Free Cash Flow is defined as Adjusted EBITDA less capital
expenditures as disclosed in the Consolidated Statement of Cash
Flows. Free Cash Flow represents the cash that a company is
able to generate after cash expenses and capital expenditures
necessary to maintain or expand its asset base. Management
believes that Free Cash Flow is a relevant metric to provide
investors, as it is an indicator of the Company's ability to
generate cash that can potentially be used by the Company for
capital investments, acquisitions, payment of dividends or share
repurchases. There are material limitations to using Free Cash
Flow to measure the Company's performance as it excludes certain
material items such as cash used to pay income taxes and
dividends. Free Cash Flow should not be used as a substitute
for net change in cash and cash equivalents on the Consolidated
Statements of Cash Flows.
The following is a reconciliation of net income to EBITDA,
Adjusted EBITDA and Free Cash Flow:
|
Three Months
Ended |
Years
Ended |
(In thousands, except per share amounts) |
Dec. 31 |
Mar. 31 |
Jun. 30 |
Sep. 30 |
Dec. 31 |
Dec. 31 |
Dec. 31 |
|
2013 |
2014 |
2014 |
2014 |
2014 |
2013 |
2014 |
|
|
|
|
|
|
|
|
Net income (loss) * |
$ 8,834 |
$ 9,193 |
$ 9,448 |
$ 9,776 |
$ 10,106 |
$ 55,653 |
$ 38,523 |
Interest expense (income) * |
(1) |
2 |
17 |
18 |
14 |
(6) |
51 |
Provision (benefit) for income taxes * |
5,000 |
6,127 |
6,036 |
6,123 |
6,417 |
13,750 |
24,703 |
Depreciation and amortization |
3,146 |
3,141 |
3,010 |
2,985 |
2,681 |
15,894 |
11,817 |
EBITDA |
$ 16,979 |
$ 18,463 |
$ 18,511 |
$ 18,902 |
$ 19,218 |
$ 85,291 |
$ 75,094 |
Non-cash share-based compensation |
994 |
1,024 |
1,085 |
1,159 |
1,001 |
6,163 |
4,269 |
Hosted services |
(8) |
(358) |
(117) |
(28) |
(75) |
(458) |
(578) |
Severance |
15 |
-- |
-- |
-- |
-- |
894 |
-- |
Internal investigation |
3 |
-- |
-- |
-- |
-- |
2,427 |
-- |
Insurance recovery |
-- |
-- |
-- |
-- |
-- |
(423) |
-- |
Loss (gain) on sale of global data business
* |
(1) |
1,081 |
-- |
-- |
-- |
(23,954) |
1,081 |
Adjusted EBITDA |
$ 17,982 |
$ 20,210 |
$ 19,479 |
$ 20,033 |
$ 20,144 |
$ 69,940 |
$ 79,866 |
|
|
|
|
|
|
|
|
Capital Expenditures |
2,564 |
2,582 |
2,685 |
1,012 |
3,811 |
12,470 |
10,090 |
|
|
|
|
|
|
|
|
Free Cash Flow |
$ 15,418 |
$ 17,628 |
$ 16,794 |
$ 19,021 |
$ 16,333 |
$ 57,470 |
$ 69,776 |
* 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 consolidated statements of
operations.
CONTACT: Analyst Contact:
Kurt Abkemeier
investorrelations@inteliquent.com
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