Global Telecom & Technology Reports Third Quarter 2010 Results
Revenue Increases 25% to $20.0 Million
Adjusted EBITDA Increases 43% to $1.7 Million
MCLEAN, Va.--(BUSINESS WIRE)-- Global Telecom & Technology, Inc. (“GTT”), (OTCBB:GTLT), a leading global network integrator that provides its clients with a broad portfolio of wide-area network, dedicated internet access and managed data services, announced today financial results for the third quarter ended September 30, 2010. Highlights for the quarter include:
- Revenue increased by 25 percent to $20.0 million as compared to $16.0 million for the third quarter 2009.
- Gross margin of 30.3 percent increased compared to 28.5 percent in the third quarter of 2009.
- Adjusted Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”)* increased 43 percent to $1.7 million compared to $1.2 million in the third quarter of 2009.
- Net income of $449,000, or $0.03 earnings per share, increased compared to $392,000, or earnings per share of $0.03 in the third quarter of 2009.
- GTT completed a $10 million term loan agreement and a $5 million line-of-credit facility with Silicon Valley Bank (“SVB”).
* See “Annex A: Non-GAAP Financial Information—Adjusted EBITDA” for more information regarding the computation of Adjusted EBITDA.
“By every financial and operational performance measure, we had a great quarter marked by strong execution in sales and installations,” said Richard D. Calder Jr., president and chief executive officer. “We grew revenue by 25% year-over-year, further improved our gross margin and EBITDA margin, and posted one of the highest sales quarters in our history on the strength of our direct sales teams and expanded agent channel. Following the deliberate pruning of unprofitable accounts during the previous two quarters, we are now very pleased with the current composition of our customer base and our churn rate has returned to a more historically average level. Looking ahead, our value proposition is properly aligned with our customers’ needs for reliable and secure connectivity and our operational platform positions us well to gain leverage as we scale the business.”
“Adjusted EBITDA increased again this quarter to $1.7 million,” said Eric Swank, chief financial officer. “Based on our consistently strong financial results, we completed the new $15 million debt facility with SVB. With this new $10 million term loan and $5 million line-of-credit, we strengthened our balance sheet by retiring our legacy short-term debt, secured significant capital at a very attractive cost and maintained flexibility in our capital structure.”
Conference Call Information
GTT will hold a conference call on Thursday, November 11, 2010 at 10:00 a.m. Eastern Time (7:00 a.m. PT) to discuss its results for the third quarter ended September 30, 2010. To participate in the live conference call, interested parties may dial 1.800.533.7619 or +1.785.830.1923 and enter passcode 4269265. A simultaneous live webcast of the call will be available over the Internet at www.gt-t.net, under the Investor Relations section of the site. A replay of the call will be available for one month. Interested parties can access the call replay by dialing 1.888.203.1112 or +1.719.457.0820 and using the passcode 4269265. In addition, a replay of the webcast will be available on GTT’s website at www.gt-t.net.
About GTT
GTT is a global network integrator providing a broad portfolio of wide-area network services, dedicated internet access, and managed data services. With over 800 supplier relationships worldwide, GTT combines multiple networks and technologies such as private line, Ethernet, and MPLS to deliver cost-effective solutions specifically designed for each client’s unique requirements. GTT enhances customer performance through its proprietary Client Management Database (CMD), which provides a comprehensive client support system for service design and quotation, rapid service implementation, and 24x7 global operations support. Headquartered in McLean, Virginia, GTT has offices in London, Dusseldorf, and Denver and provides services to more than 700 enterprise, government, and carrier clients in over 80 countries worldwide. For more information, visit the GTT website at www.gt-t.net.
Forward-Looking Statements
This release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which reflect the current views of Global Telecom & Technology, Inc., with respect to current events and financial performance. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “could,” “should,” and “continue” or similar words. These forward-looking statements may also use different phrases. From time to time, Global Telecom & Technology, Inc., which we refer to as “we”, “us” or “our” and in some cases, “GTT” or the “Company”, also provides forward-looking statements in other materials GTT releases to the public or files with the United States Securities & Exchange Commission (“SEC”), as well as oral forward-looking statements. You should consult any further disclosures on related subjects in our quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC. Such forward-looking statements are and will be subject to many risks, uncertainties and factors relating to our operations and the business environment that may cause our actual results to be materially different from any future results, express or implied, by such forward-looking statements. Factors that could cause GTT’s actual results to differ materially from these forward-looking statements include, but are not limited to, the following: our ability to obtain capital; our ability to develop and market new products and services that meet customer demands and generate acceptable margins; our reliance on several large customers; our ability to negotiate and enter into acceptable contract terms with our suppliers; our ability to attract and retain qualified management and other personnel; competition in the industry in which we do business; failure of the third-party communications networks on which we depend; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which we are engaged; our ability to maintain our databases, management systems and other intellectual property; our ability to maintain adequate liquidity and produce sufficient cash flow to fund our capital expenditures and debt service; technological developments and changes in the industry; our ability to complete acquisitions or divestitures and to integrate any business or operation acquired; our ability to overcome significant operating losses; and general economic conditions. Additional information concerning these and other important factors can be found under the heading "Risk Factors" in GTT's annual and quarterly reports filed with the Securities and Exchange Commission including, but not limited to, its Annual Report on Form 10-K. Statements in this release should be evaluated in light of these important factors.
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Global Telecom & Technology, Inc. |
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Consolidated Balance Sheets |
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(Amounts in thousands, except for share and per share data) |
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| September 30, 2010 | December 31, 2009 | |||||||
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(Unaudited) |
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| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 7,783 | $ | 5,548 | ||||
| Accounts receivable, net | 8,444 | 9,389 | ||||||
| Deferred contract costs | 763 | 454 | ||||||
| Prepaid expenses and other current assets | 913 | 937 | ||||||
| Total current assets | 17,903 | 16,328 | ||||||
| Property and equipment, net | 1,852 | 2,235 | ||||||
| Intangible assets, net | 6,190 | 7,613 | ||||||
| Other assets | 3,505 | 429 | ||||||
| Goodwill | 29,164 | 29,156 | ||||||
| Total assets | $ | 58,614 | $ | 55,761 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 11,746 | $ | 12,204 | ||||
| Accrued expenses and other current liabilities | 7,478 | 11,372 | ||||||
| Short-term debt | 4,002 | 12,463 | ||||||
| Deferred revenue | 6,156 | 6,112 | ||||||
| Total current liabilities | 29,382 | 42,151 | ||||||
| Long-term debt | 13,571 | 244 | ||||||
| Deferred revenue and other long-term liabilities | 530 | 352 | ||||||
| Total liabilities | 43,483 | 42,747 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Common stock, par value $.0001 per share, 80,000,000 shares authorized, 16,796,986 and 15,472,912 shares issued and outstanding as of September 30, 2010 and December 31, 2009, respectively | 2 | 2 | ||||||
| Additional paid-in capital | 59,992 | 58,710 | ||||||
| Accumulated deficit | (44,582 | ) | (45,499 | ) | ||||
| Accumulated other comprehensive loss | (281 | ) | (199 | ) | ||||
| Total stockholders' equity | 15,131 | 13,014 | ||||||
| Total liabilities and stockholders' equity | $ | 58,614 | $ | 55,761 | ||||
| Global Telecom & Technology, Inc. | ||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||
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(Amounts in thousands, except for share and per share data) |
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| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Revenue | $ | 20,011 | $ | 16,010 | $ | 60,304 | $ | 47,868 | ||||||||
| Operating expenses: | ||||||||||||||||
| Cost of revenue | 13,946 | 11,445 | 42,641 | 34,369 | ||||||||||||
| Selling, general and administrative expense | 4,500 | 3,492 | 13,217 | 10,941 | ||||||||||||
| Depreciation and amortization | 688 | 443 | 2,105 | 1,347 | ||||||||||||
| Total operating expenses | 19,134 | 15,380 | 57,963 | 46,657 | ||||||||||||
| Operating income | 877 | 630 | 2,341 | 1,211 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense, net | (370 | ) | (219 | ) | (1,063 | ) | (651 | ) | ||||||||
| Other income (expense), net | (67 | ) | (18 | ) | (287 | ) | 89 | |||||||||
| Total other income (expense) | (437 | ) | (237 | ) | (1,350 | ) | (562 | ) | ||||||||
| Income before income taxes | 440 | 393 | 991 | 649 | ||||||||||||
| Provision for (benefit from) income taxes | (9 | ) | 1 | 74 | (19 | ) | ||||||||||
| Net income | $ | 449 | $ | 392 | $ | 917 | $ | 668 | ||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 0.03 | $ | 0.03 | $ | 0.05 | $ | 0.04 | ||||||||
| Diluted | $ | 0.03 | $ | 0.03 | $ | 0.05 | $ | 0.04 | ||||||||
| Weighted average shares: | ||||||||||||||||
| Basic | 16,767,451 | 15,346,917 | 16,718,007 | 15,235,459 | ||||||||||||
| Diluted | 16,974,514 | 15,653,177 | 16,951,038 | 15,405,377 | ||||||||||||
ANNEX A: Non-GAAP Financial Information
Adjusted EBITDA
Adjusted EBITDA represents operating income before depreciation and amortization on a non-GAAP (accounting principles generally accepted in the United States of America) combined basis for the periods presented, and adjusted to exclude certain one-time expenses including costs associated with employee terminations and other non-recurring items and non-cash compensation. GTT presents Adjusted EBITDA as a supplemental measure of GTT’s performance. GTT also presents Adjusted EBITDA because GTT believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industry and in measuring the ability of issuers to meet debt service obligations.
In evaluating Adjusted EBITDA, you should be aware that in the future GTT may incur expenses similar to the adjustments in this presentation. GTT’s presentation of Adjusted EBITDA should not be construed as an inference that GTT’s future results will be unaffected by unusual or non-recurring items. Adjusted EBITDA is not a measurement of GTT’s financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP.
The following is a reconciliation of Adjusted EBITDA to operating income (amounts in thousands):
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||
| Operating income | $ | 877 | $ | 630 | $ | 2,341 | $ | 1,211 | ||||
| Depreciation and amortization | 688 | 443 | 2,105 | 1,347 | ||||||||
| Non-cash compensation | 150 | 125 | 504 | 420 | ||||||||
| Adjusted EBITDA | $ | 1,715 | $ | 1,198 | $ | 4,950 | $ | 2,978 | ||||
CONTACT:
For GTT media inquiries, please contact:
Michelle Reilly, 1-703-442-5582
michelle.reilly@gt-t.net
or
For GTT investor relations inquiries, please contact:
Lippert/Heilshorn & Associates
Kim Sutton Golodetz
kgolodetz@lhai.com
or
Jody Burfening, 212-838-3777
jburfening@lhai.com
KEYWORDS: United States North America Virginia
INDUSTRY KEYWORDS: Technology Internet Telecommunications Mobile/Wireless VoIP
MEDIA:
