(Source: Business Wire)
Teletouch
Communications, Inc. (OTC: TLLE), a leading provider of AT&T
(NYSE: T) and T-Mobile
USA (NYSE: DT) cellular services, two-way radio, mobile and related
consumer electronics products and services, today announced financial
results for the first quarter 2010 fiscal year ended August 31, 2009.
Quarterly Highlights
Reported Gross billings of $19.2 million
Reported Total operating revenues of $11.46 million
Increased Operating income to $0.57 million (a 109% increase over the
prior year period)
Increased adjusted EBITDA to $1.02 million (a 49% increase over the
prior year period)
Achieved marginally positive (break-even) Net income
"For the first time in several years, the Company achieved positive net
income without the benefit of an extraordinary event occurring during
the period. We continue to improve our operational efficiencies while
maintaining margins, and have recorded meaningful reductions in total
SG&A expenses resulting in significant year-over-year increases in
operating income and adjusted EBITDA," stated T. A. "Kip" Hyde, Jr.,
President, Chief Operating Officer and Director of Teletouch. "Although
the overall market dynamics remain challenging, and we have our specific
legal challenges with AT&T, we expect to sustain ongoing positive
operational results for the foreseeable future."
Hyde continued, "Each month, we serve tens of thousands of customers and
end-users through our cellular billing, two-way radio, wholesale
distribution and consumer electronics retail, direct and eCommerce
businesses. With our exclusivity to AT&T in the Dallas/Fort Worth market
area lifted in August 2009, we have begun final negotiations on
distribution agreements with a variety of new cellular carriers, Wi-Fi,
Wi-Max and related communications providers, and expect to launch a
number of exciting new wireless products and services throughout the
remainder of fiscal year 2010."
As reported on September 30, 2009, the Company's subsidiary, Progressive
Concepts, Inc. dba Hawk Electronics ("PCI"), the largest remaining
master distributor of AT&T cellular products and services in the U.S.,
initiated legal action against AT&T seeking a minimum $100 million in
damages. The process of binding arbitration was commenced to seek relief
for damages incurred when AT&T prevented the company from selling Apple,
Inc.'s (Nasdaq: AAPL) popular iPhone and other "AT&T exclusive"
products and services that PCI contends it is entitled by contract to
provide to its customers. In addition, the action asserts that AT&T has
violated the longstanding non-solicitation agreement between the
companies, by actively inducing customers to leave PCI for AT&T, and
employing predatory business practices. PCI is being represented in this
matter by the Company's long-time counsels at the national law firm of Bracewell
& Giuliani LLP.
For a more detailed description of the Company's legal action Notice and
Initial Statement of Claim, please refer to the related Form
8-K, filed October 1, 2009 (available at the Company's website http://www.teletouch.com/press.asp
or on EDGAR
at SEC.gov).
For the quarter ended August 31, 2009, the Company announced the
following results [the Summary results information and Tables below
present selected financial data, including certain non-GAAP measures;
see filing for complete data]:
Table 1 -- Explanatory notes: The Company refers to the total amount
invoiced to its customers for services or goods as "Gross Billings,"
which is a non-GAAP financial measure. The Company believes Gross
Billings is more comparable to the total operating revenues reported by
its wireless competitors, and is a better measure of the total volume of
cash generating transactions processed by the Company during each
period, which the Company further believes provides a clearer
understanding of the operations, costs and risks associated with the
Company's core cellular business.
The Company bills its customers in excess of its reportable GAAP
revenues, in the form of "Gross cellular subscriber billings," a
non-GAAP financial measure, described as the total recurring monthly
cellular service charges invoiced to the Company's wireless subscribers.
The Company takes 100% ofthe accounts receivable risk for all of its
billings, before deducting a fixed percentage of the dollars invoiced
for cellular usage that are payable to AT&T under the Company's various
master distributor agreements.
Table 1 below denotes how the Company's Gross cellular subscriber
billings and the related revenue sharing deductions are combined to
reach the GAAP results. That is, after deducting AT&T's percentage
revenue sharing, the remaining amounts (including billings for the
Company's own products and services), are retained by the Company as
compensation for the services provided to these subscribers, such net
amounts representing the revenue under GAAP that is reported by the
Company (net revenue reporting). The "net revenue adjustment" amount is
the total payment to AT&T for its component of the subscriber billings,
and can be added back to GAAP "Service, rent and maintenance revenue"
and "Total operating revenue" to better understand the Company's total
annual billings.
TABLE 1
(dollars in thousands) Three Months Ended August 31, 2009 vs 2008
2009 % of Oper Rev 2008 % of Oper Rev $ Change % Change
Service, rent, and maintenance revenue
Cellular operations service, rent and maintenance revenue $ 6,195 54 % $ 6,508 51 % $ (313 ) -5 %
Add: net revenue adjustment (revenue share due AT&T) 7,737 8,866 (1,129 ) -13 %
Gross cellular subscriber billings 13,932 15,374 (1,442 ) -9 %
Other operations service, rent and maintenance revenue 464 4 % 493 4 % (29 ) -6 %
Gross service, rent and maintenance revenue $ 14,396 $ 15,867 $ (1,471 ) -9 %
Product sales revenue 4,800 42 % 5,885 46 % (1,085 ) -18 %
Gross Billings $ 19,196 $ 21,752 $ (2,556 ) -12 %
Less: net revenue adjustment (revenue share due AT&T) (7,737 ) (8,866 ) 1,129 -13 %
Total Operating Revenue (GAAP) $ 11,459 100 % $ 12,886 100 % $ (1,427 ) -11 %
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Summary financial results as follows:
Teletouch Communications, Inc.
Financial Highlights
(in thousands, except shares and per share amounts)
Three Months Ended
August 31,
2009 2008 Change
Summary Operating Results:
Service, rent and maintenance revenue $ 6,659 $ 7,001 $ (342 )
Product sales revenue 4,800 5,885 (1,085 )
Total revenues 11,459 12,886 (1,427 )
Net book value of products sold (4,404 ) (5,303 ) 899
7,055 7,583 (528 )
Operating income 564 270 294
Net income (loss) $ - $ (446 ) $ 446
Basic and diluted income (loss) per share of common stock $ - $ (0.01 ) $ 0.01
Weighted average shares outstanding - basic and diluted: 48,895,491 49,051,980 (156,489 )
Other Data:
Operating income 564 270 294
Net income (loss) - (446 ) 446
Add back:
Depreciation 327 374 (47 )
Interest expense 502 635 (133 )
Income tax expense 62 81 (19 )
EBITDA 891 644 247
Add back: Stock based compensation expense 131 42 89
Adjusted EBITDA (1) 1,022 686 336
Selected Balance Sheet Highlights
(in thousands)
August 31, May 31,
2009 2009 Change
Cash $ 3,756 $ 4,642 $ (886 )
Current portion of long-term debt 1,415 1,313 102
Long-term debt, net of current portion 14,570 15,103 (533 )
Current Assets 14,677 16,899 (2,222 )
Current Liabilities 17,862 19,704 (1,842 )
Working Capital (3,185 ) (2,805 ) (380 )
(1) Teletouch's EBITDA means loss from continuing operations before depreciation and amortization, interest expense and income tax expense. Adjusted EBITDA is EBITDA less expense for stock-based compensation. EBITDA and Adjusted EBITDA are both non-GAAP measures that the Company believes allows for a more complete analysis of our results.
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Disclosure of Non-GAAP Financial
Measures
We report our financial results in accordance with generally accepted
accounting principles ("GAAP"). However, management believes the
presentation of certain non-GAAP financial measures provides useful
information to management and investors regarding financial and business
trends relating to the Company's financial condition and results of
operations, and that when GAAP financial measures are viewed in
conjunction with the non-GAAP financial measures, investors are provided
with a more meaningful understanding of the Company's ongoing operating
performance. In addition, these non-GAAP financial measures are among
the primary indicators management uses as a basis for evaluating
performance. For all non-GAAP financial measures in this release, we
have provided corresponding GAAP financial measures for comparative
purposes in the report.
We refer to the term "EBITDA" or "Adjusted EBITDA" in various places of
our financial discussion. EBITDA is defined by us as net income (loss)
before interest expense, income tax expense, and depreciation and
amortization expense. Adjusted EBITDA will include the foregoing
calculation, as well as certain other exclusions as may be defined
therein when such term is used. Neither EBITDA nor Adjusted EBITDA are a
measure of operating performance under GAAP and therefore should not be
considered in isolation nor construed as an alternative to operating
profit, net income (loss) or cash flows from operating, investing or
financing activities, each as determined in accordance with GAAP. Also,
EBITDA should not be considered as a measure of liquidity. Moreover,
since EBITDA is not a measurement determined in accordance with GAAP,
and thus is susceptible to varying interpretations and calculations,
EBITDA, as presented, may not be comparable to similarly titled measures
presented by other companies.
Investors should be advised that while Teletouch is current with all
prior annual period reporting requirements on Form 10-K, the Company is
not current with certain prior quarterly period reports. The Company
requested and has received relief on certain of its delinquent prior
period Quarterly Reports on Form 10-Q from the Securities and Exchange
Commission ("SEC"). Specifically, the Company was granted relief from
filing the delinquent fiscal 2007 Quarterly Reports. The Company is
required to file its delinquent fiscal 2008 Quarterly Reports. In
granting the Company relief from filing its 2007 Quarterly Reports, the
SEC staff reminded Teletouch that acceptance of the fiscal 2008
Quarterly Reports as sufficient to bring Teletouch "current" with its
filings, would not mean that these filings would be deemed "timely" for
the purposes of certain corporate events, including the availability of
Form S-3 and Form S-8 stock registrations.The SEC also indicated that
it would advise further consultation with its staff regardingwhen
Teletouch would be deemed fully up-to-date in its filings, for the
purposes of the availability of Rule 144 resale of restricted securities.
The Company's filing of its fiscal 2009 Annual Report on Form 10-K (for
the period ending May 31, 2009) began a period of "timely filing" for
determining the Company's future eligibility for these various
registration forms. The Company anticipates filing its remaining three
delinquent fiscal 2008 Quarterly Reports on or before December 31, 2009,
and that all of its upcoming fiscal 2010 Quarterly Reports, including
this current first quarter fiscal year 2010 report, will be filed timely.
About Teletouch Communications
For over 40 years, Teletouch
has offered a comprehensive suite of telecommunications products and
services under the Teletouch,
AT&T®
and T-Mobile®
brands, including cellular, two-way radio, GPS-telemetry, wireless
messaging and public safety/emergency response products and services.
Teletouch operates a chain of retail stores and direct sales force under
the "Teletouch" brand, including service offerings for T-Mobile;
its own two-way
radio network; and, related emergency vehicle products and services
business as Teletouch EVP at www.teletouchevp.com.
Teletouch's wholly-owned subsidiary, Progressive Concepts, Inc. (PCI),
is a leading provider of AT&T Mobility (voice, data and entertainment)
to consumers, businesses and government agencies. For over 35 years, PCI
has also offered consumer electronics products and services through its
own chain of retail stores under the "Hawk
Electronics" brand; as well as through its own network of
Hawk-branded sub-agents, direct sales force and on the Internet at
various sites including: www.hawkelectronics.com
and www.hawkexpress.com.
In addition, PCI operates a national wholesale distribution business,
PCI Wholesale, which serves major carrier agents, smaller retailers and
rural cellular carriers, as well as automotive retailers and auto
dealers throughout the country, with ongoing product and sales support
through www.pciwholesale.com
and www.pcidropship.com,
among other sites.
Teletouch's common stock is traded Over-The-Counter under stock symbol:
TLLE. Additional information about the Teletouch family of companies can
be found at www.teletouch.com.
All statements from Teletouch Communications, Inc. in this news release
that are not based on historical fact are "forward-looking statements"
within the meaning of the PSLRA of 1995 and the provisions of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. While the Company's
management has based any forward-looking statements contained herein on
its current expectations, the information on which such expectations
were based may change. These forward-looking statements rely on a number
of assumptions concerning future events and are subject to a number of
risks, uncertainties, and other factors, many of which are outside of
our control, that could cause actual results to materially differ from
such statements. Such risks, uncertainties, and other factors include,
but are not necessarily limited to, those set forth under the caption
"Risk Factors" in the Company's most recent Form 10-K and 10-Q filings,
and amendments thereto, as well as other public filings with the SEC
since such date. The Company operates in a rapidly changing and
competitive environment, and new risks may arise. Accordingly, investors
should not place any reliance on forward-looking statements as a
prediction of actual results. The Company disclaims any intention to,
and undertakes no obligation to, update or revise any forward-looking
statement.
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