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| 8-K - MULTIBAND CORP | v179795_8k.htm |
Multiband
Announces Strong 2009 Fourth Quarter Results and a Record 2009 Full-Year
Performance
-
Record Fiscal Year Revenues of $269.0 million, up 526% YoY from $43.0 million in
2008;
-
4th Quarter Revenue Increases to $68.0 million up 382% YoY from $14.1 million in
4Q08;
-
4th
Quarter EBITDA improves to $4.3 million, up 30% sequentially from $3.3 million
in 3Q09 and up 105% YoY from $2.1 million in 4Q08;
-
Company Earns $830K or $0.09 per share, for 4Q09
APRIL 1, 2010 MINNEAPOLIS
--(Business Wire)-- Multiband Corporation, (NASDAQ:MBND), the nation's largest
DIRECTV Master System Operator (MSO) for Multiple Dwelling Units (MDU’s),
announced today strong financial results for the 2009 fourth quarter and fiscal
year ended December 31, 2009. The Company had strong fourth quarter
revenues of $68.0 million, an increase of 382% compared to $14.1 million for the
quarter ended December 31, 2008 but down 5% from the prior quarter primarily due
to seasonality. Revenues increased YoY primarily due to the
acquisition of the former operating entities of DirecTECH Holding Company Inc.
(DTHC) as well as its substantial investments made in the HSP segment in
1H09. The Company achieved 80% ownership in January 2009 and
completed the acquisition in December 2009.
EBITDA, a
non-GAAP measure, was $4.3 million for the 2009 fourth quarter, an improvement
of over $1.0 million sequentially from $3.3 million in 3Q09, and up $2.2 million
from the same period in 2008. Improved margins were driven by
efficiencies at the Company’s HSP segment including improved installation
procedures, inventory controls, fleet management, and reduced
turnover.
In 4Q09,
the Company generated net income of $830K or approximately $0.09 per share,
compared to $842K or $0.09 per share, in the fourth quarter of
2008. GAAP net income per common share was $0.04 basic and $0.03
diluted compared to $0.08 per common sharefor basic and diluted in
the fourth quarter of 2008. The 2009 fourth quarter represented the
Company’s return to positive net income after three quarters of losses which
were primarily due to substantial investments in the HSP business segment during
the 1H09.
2009
Recap
Revenues
for the twelve month period ended December 31, 2009 increased 526% to $268.9
million from $42.9 millon for the same period in 2008. This overall
increase in revenues is primarily due to the purchase of the former operating
entities of DTHC coupled with significant organic growth, as the Company hired
over 1,000 new technicians in its HSP business segment during the first two
quarters of the year. The larger workforce allowed the HSP segment to
deliver significant installation volumes throughout the balance of 2009 and
positioned the Company for continued success with DIRECTV, which remains its
largest customer and partner and whose contract was extended into mid- 2013
during the course of 2009.
Adjusted
EBITDA, a non-GAAP measure, was $3.954 million for the year. However,
this metric still includes the negative impact of the aforementioned ramp up in
staffing expenses. The absorption of those staffing expenses led to
significantly increased revenues and substantially higher run rates of EBITDA
during the second half of fiscal 2009.
Conference Call
Today
The
Company will hold a conference call today to discuss the results. The conference
call will take place at 11:00 AM Eastern Daylight Time. Interested parties
should dial 866-394-1497 and use pass code 64394723. There will be a playback
available as well.
Litigation
Settlement
As of
December 31, 2009, Multiband had recorded $8.7 million of accrued liabilities
for claims and potential settlements associated with existing litigation, the
majority of which relate to claims for back overtime wages alleged to be due
between 2006 and 2008 at DirecTECH Holding Company. Effective
December 31, 2009, the Company settled in principal the majority of these
claims. While the Company and its predecessors denied the allegations underlying
the lawsuits, it agreed to a settlement to avoid significant legal fees, the
uncertainty of a jury trial, and other expenses and management time that would
have to be devoted to protracted litigation. The Company recorded the
settlement of $6.7 million, net of imputed interest of $575K and including
administration fees and estimated payroll taxes. The aforementioned
settlement will be paid in equal installments of $291K over a 24 month period
beginning January 15, 2010.
In
connection with the purchase of the operating subsidiaries of DTHC, the Company
has the right to offset a portion of certain claims against the note to DTHC, in
relation to the settlement noted above, the Company offset $3.9 million during
the year ended December 31, 2009. The Company has recorded a receivable of
$1.0 million as of December 31, 2009 which represents an estimate of the amount
that could potentially be recovered from DTHC including legal fees for the
remaining litigation. Offsets to date have been taken as a purchase
price adjustment to the DTHC transaction, which reduced the debt owed to the
ESOT and former owners to approximately $30.0 million.
Commentary
"This
quarter’s strong results reflect, again in part, the continuing trend of
consumers staying at home due to challenging economic conditions. As
a result, we have seen increases in subscribers. Additionally, our ability to
seamlessly integrate the operations of the former DirecTECH operating entities
and organically grow high margin revenue without a corresponding increase in
operating expenses is now clear”, said James L. Mandel, CEO of Multiband. "Our
significantly improved financial results demonstrate the benefits of the
DirecTECH acquisition and validate the synergies between the companies that have
resulted in this strong growth. Our overall performance is even more
noteworthy considering we grew our business over five-fold in a matter of
months.”
“Looking
ahead, our success will be measured by continued gains in efficiencies in our
HSP division, which now sits atop our peers in terms of mean times to install
and various other performance metrics that are key to
profitability. Moving forward, we intend to launch additional
products into our HSP and MDU channels to improve revenues per truck roll and
aid in employee retention, which should further boost profitability especially
in seasonally slow periods”, Mandel continued.
Guidance
For 2010,
Multiband is projecting revenues in the $250MM range due to the lack of the
mandatory digital conversion which boosted 2009 activity. Though the overall
revenue outlook is relatively flat compared to 2009, the Company has taken a
cautious stance with regard to inputs it is receiving from its HSP channel
partners as it feels that that is the most prudent course of
action. In MDU, Multiband continues to negotiate incremental
financing in order to fund capital expenditures, which could boost its ability
to add subscribers and associated recurring revenues and cash flow from rights
of entry across the country. While revenues could be flat, expanded
margins are anticipated as the constant deployment of new procedures and
technologies to aid workforce and fleet management are initiated. No new
additional M&A activity has been included in the guidance, though
opportunities abound for consolidation of the market which could further boost
scope and scale.
EBITDA Computation (2009, 1Q09 –
4Q09) (in thousands)
|
2009
|
4Q09 | 3Q09 | 2Q09 | 1Q09 | ||||||||||||||||||
|
(i)
|
Net
Income (Quarter)
|
$ | (11,377 | ) | $ | 830 | $ | (725 | ) | $ | (8,601 | ) | $ | (2,881 | ) | |||||||
|
(ii)
|
Non
Operating
|
|||||||||||||||||||||
|
Gains/Losses
|
(85 | ) | (151 | ) | 251 | (31 | ) | (154 | ) | |||||||||||||
|
(iii)
|
Adjusted
Net Income
|
(11,462 | ) | 679 | (474 | ) | (8,632 | ) | (3,035 | ) | ||||||||||||
|
(Sum
of (i)minus (ii)
|
||||||||||||||||||||||
|
(iv)
|
Interest
Expense
|
4,104 | 1,333 | 1,026 | 890 | 855 | ||||||||||||||||
|
(v)
|
Depreciation
& Amortization
|
10,906 | 2,504 | 2,414 | 2,703 | 3,285 | ||||||||||||||||
|
(vi)
|
Taxes
|
406 | (168 | ) | 372 | 102 | 100 | |||||||||||||||
|
(vii)
|
EBITDA
|
$ | 3,954 | $ | 4,348 | $ | 3,338 | $ | (4,937 | ) | $ | 1,205 | ||||||||||
|
iii
+ iv + v + vi
|
||||||||||||||||||||||
NON-GAAP
Financial Measures
To comply
with Regulation G promulgated pursuant to the Sarbanes-Oxley Act, Multiband
Corporation attached to this news release and will post to the company's
investor relations web site (www.multiband.com) any reconciliation of
differences between non-GAAP financial information that may be required in
connection with issuing the company's quarterly financial results.
The
Company, as is common in its industry, uses EBITDA as a measure of performance
to demonstrate earnings exclusive of interest and non-cash events. The Company
manages its business based on its cash flows. The Company, in its daily
management of its business affairs and analysis of its monthly, quarterly and
annual performance, makes its decisions based on cash flows, not on the
amortization of assets obtained through historical activities. The Company, in
managing its current and future affairs, cannot affect the amortization of the
intangible assets to any material degree, and therefore uses EBITDA as its
primary management guide. Since an outside investor may base its evaluation of
the Company's performance based on the Company's net loss not its cash flows,
there is a limitation to the EBITDA measurement. EBITDA is not, and should not
be considered, an alternative to net loss, loss from operations, or any other
measure for determining operating performance of liquidity, as determined under
accounting principals generally accepted in the United States (GAAP). The most
directly comparable GAAP reference in the Company's case is the removal of
interest, depreciation, amortization, taxes and other non-cash
expense.
Contact:
James Mandel, CEO for Multiband Corporation at (763)504-3000.