Attached files
| file | filename |
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| 8-K - 8-K - Spok Holdings, Inc | spok-6302014x8kpressrelease.htm |
Exhibit 99.1 | ||
NEWS RELEASE |  | |
CONTACT:
Bob Lougee | ||||
800-611-8488 | ||||
Bob.Lougee@spok.com | ||||
Spok Reports Second Quarter Operating Results;
Board Declares Regular Quarterly Dividend
Software Bookings Set Record, Backlog Nears Record High;
Wireless Trends Improve; Balance Sheet Remains Strong
SPRINGFIELD, Va. (July 30, 2014) - Spok Holdings, Inc. (NASDAQ: SPOK), formerly USA Mobility, Inc., a global leader in critical communications, today announced operating results for the second quarter ended June 30, 2014. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on September 10, 2014 to stockholders of record on August 19, 2014.
Consolidated revenue for the second quarter was $49.1 million, compared to $52.3 million in the second quarter of 2013. Software revenue was $15.6 million versus $14.5 million in the year-earlier quarter. Wireless revenue was $33.5 million in the second quarter, compared to $37.8 million in the second quarter of 2013.
Second quarter EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $11.7 million, or 23.9 percent of revenue, compared to $15.7 million, or 30.1 percent of revenue, in the year-earlier quarter.
Net income for the second quarter was $4.3 million, or $0.19 per fully diluted share, compared to $6.8 million, or $0.31 per fully diluted share, in the second quarter of 2013.
Key results and highlights for the second quarter included:
• | Bookings for the second quarter increased to $19.0 million from $15.6 million in the year-earlier quarter, achieving a record high. |
• | Backlog totaled $40.2 million at June 30, 2014, compared to $39.6 million a year earlier. |
• | Of the $15.6 million in second quarter Software revenue, $8.1 million was operations revenue and $7.5 million was maintenance revenue, compared to $7.6 million and $6.9 million, respectively, of the $14.5 million in Software revenue for second quarter of 2013. |
• | The renewal rate for software maintenance in the second quarter was 99.5 percent. |
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• | The quarterly rate of Wireless revenue erosion improved to 2.4 percent from 2.6 percent in the second quarter of 2013, while the annual rate of revenue erosion improved to 11.3 percent from 11.7 percent in the year-earlier quarter. |
• | Net paging unit losses were 28,000 in the second quarter versus 35,000 in the second quarter of 2013. The quarterly rate of unit erosion improved to 2.1 percent versus 2.4 percent a year earlier. Units in service at June 30, 2014 totaled 1,299,000, compared to 1,445,000 a year earlier. |
• | Total paging ARPU (average revenue per unit) was $7.98 in the second quarter, compared to $8.22 in the year-earlier quarter. |
• | Operating expenses (excluding depreciation, amortization and accretion) totaled $37.4 million in the second quarter, compared to $36.5 million in the year-earlier quarter. |
• | Capital expenses were $2.4 million, compared to $2.9 million in the second quarter of 2013. |
• | The number of full-time equivalent employees at June 30, 2014 totaled 615, compared to 659 at June 30, 2013. |
• | Dividends paid to stockholders totaled $2.7 million in the second quarter. |
• | The Company’s cash balance at June 30, 2014 was $97.0 million. |
Vincent D. Kelly, president and chief executive officer, said: “The Company continued to make excellent progress during the quarter. We achieved or exceeded our expectations on nearly all performance measures and continued the positive momentum we established in recent quarters. Software revenue increased from the year-earlier quarter, bookings reached an all-time high, and our backlog remained near-record levels at mid-year. In addition, we met our goals for Wireless revenue, gross pager placements, and unit churn. At the same time, we continued to operate profitably, expand our market reach and product offerings, strengthen our balance sheet, and generate sufficient cash flow to again return capital to stockholders in the form of cash dividends.”
Kelly added: “We also announced our new corporate name - Spok, (pronounced “spoke”) - in early July as part of a rebranding initiative that we believe better reflects our evolving identity as a global leader in critical communications. Our new corporate identity under the brand Spok represents a fresh start for our organization after completing the consolidation of our Software and Wireless operations earlier this year. While we realize a brand strategy evolves over time, we are pleased with the positive response we’ve received to the name change from inside and outside the Company.”
Commenting on Software revenue, Kelly said: “Compared to the second quarter of 2013, operations revenue grew 6.5 percent, maintenance revenue increased 8.4 percent, and total Software revenue of $15.6 million was up 7.4 percent. The increase in operations revenue primarily reflected growing deliveries of software, hardware and
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professional services while higher maintenance revenue reflected our continued renewal rates in excess of 99 percent.”
Kelly also noted that record high bookings for the second quarter included sales to both new and existing customers. “Demand was particularly strong for upgrades and installations of call center solutions, with one large health system, for example, adding new applications for its solutions suite to increase patient safety, improve nursing workflows and enhance overall operational efficiencies. Customer demand also remained strong for such software solutions as critical smartphone communications, secure texting, emergency management, and clinical alerting. Beyond healthcare, the public safety sector also showed solid growth with 19 new contracts signed during the quarter.”
Overall, Kelly added, “Software sales continued to be strongest in North America. However, our sales team also recorded an increasing number of contracts with international customers while continuing to build a solid pipeline of new business leads throughout both national and international markets.”
Spok’s Wireless sales efforts during the quarter continued to focus primarily on the core market segments of Healthcare, Government and Large Enterprise. “These core segments represented approximately 93.0 percent of our direct subscriber base and 89.7 percent of our direct paging revenue at the end of the quarter,” Kelly said. “Healthcare comprised 76.2 percent of our direct subscriber base at June 30 and continued to be our best performing market segment with the highest rate of gross placements (4.5 percent) and lowest level of unit disconnects (0.8 percent). Although competition remains strong for all Wireless services, we are pleased the vast majority of our customers continue to recognize the reliability and cost advantages of paging for their critical messaging needs.”
Kelly also noted that Spok’s Software and Wireless sales representatives continued to collaborate on numerous sales initiatives during the second quarter, resulting in 11 new cross-selling accounts.
Shawn E. Endsley, chief financial officer, said second quarter results were largely in line with the Company’s expectations. “Strong revenue from both Wireless and Software, along with continued expense management, enabled us to maintain solid operating cash flow, EBITDA and operating margins,” he noted. “In addition, we again improved our balance sheet, recording a cash balance of $97 million at June 30. While we continue to operate as a debt-free company, we still have approximately $40 million in available borrowing capacity through our existing credit facility for investment opportunities.”
Endsley added that the Company is maintaining its previously announced financial guidance for 2014, which projects total revenue to range from $183 million to $201 million, operating expenses (excluding depreciation,
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amortization and accretion) to range from $147 million to $156 million, and capital expenses to range from $7 million to $9 million.
* * * * * * * * *
Spok plans to host a conference call for investors on its second quarter operating results at 10:00 a.m. Eastern Time on Thursday, July 31, 2014. Dial-in numbers for the call are 719-325-2402 or 888-430-8691. The pass code for the call is 6085888. A replay of the call will be available from 12:30 p.m. ET on July 31 until 12:30 p.m. on Thursday, August 14. Replay numbers are 719-457-0820 or 888-203-1112. The pass code for the replay is 6085888.
* * * * * * * * *
About Spok
Spok Holdings, Inc., headquartered in Springfield, Va., is proud to be a leader in critical communications for healthcare, government, public safety, and other industries. We deliver smart, reliable solutions to help protect the health, well-being, and safety of people around the globe. More than 125,000 organizations worldwide rely on Spok for workflow improvement, secure texting, paging services, contact center optimization, and public safety response. When communications matter, Spok delivers. Visit us at spok.com or find us on Twitter @Spoktweets.
Safe Harbor Statement under the Private Securities Litigation Reform Act: Statements contained herein or in prior press releases which are not historical fact, such as statements regarding Spok’s future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause Spok’s actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, declining demand for paging products and services, continued demand for our software products and services, our ability to develop additional software solutions for our customers and manage our development as a global organization, the ability to manage operating expenses, future capital needs, competitive pricing pressures, competition from both traditional paging services and other wireless communications services, competition from other software providers, government regulation, reliance upon third-party providers for certain equipment and services, as well as other risks described from time to time in our periodic reports and other filings with the Securities and Exchange Commission. Although Spok believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Spok disclaims any intent or obligation to update any forward-looking statements.
Tables to Follow
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SPOK HOLDINGS, INC. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (a) | ||||||||||||||||
(Unaudited and in thousands except share, per share amounts and ARPU) | ||||||||||||||||
For the three months ended | For the six months ended | |||||||||||||||
6/30/2014 | 6/30/2013 | 6/30/2014 | 6/30/2013 | |||||||||||||
Revenue: | ||||||||||||||||
Wireless | $ | 33,518 | $ | 37,771 | $ | 67,869 | $ | 76,550 | ||||||||
Software | 15,576 | 14,497 | 31,344 | 28,848 | ||||||||||||
Total revenue | 49,094 | 52,268 | 99,213 | 105,398 | ||||||||||||
Operating expenses: | ||||||||||||||||
Cost of revenue | 7,180 | 6,961 | 13,985 | 13,628 | ||||||||||||
Service, rental and maintenance | 11,420 | 12,018 | 23,212 | 24,209 | ||||||||||||
Selling and marketing | 7,780 | 6,538 | 15,026 | 12,932 | ||||||||||||
General and administrative | 10,990 | 11,022 | 23,125 | 23,353 | ||||||||||||
Severance and restructuring | 4 | 2 | 24 | 2 | ||||||||||||
Depreciation, amortization and accretion | 4,352 | 3,822 | 8,381 | 7,629 | ||||||||||||
Total operating expenses | 41,726 | 40,363 | 83,753 | 81,753 | ||||||||||||
% of total revenue | 85.0 | % | 77.2 | % | 84.4 | % | 77.6 | % | ||||||||
Operating income | 7,368 | 11,905 | 15,460 | 23,645 | ||||||||||||
% of total revenue | 15.0 | % | 22.8 | % | 15.6 | % | 22.4 | % | ||||||||
Interest expense, net | (64 | ) | (64 | ) | (131 | ) | (128 | ) | ||||||||
Other (expense) income, net | (194 | ) | (75 | ) | (178 | ) | 6 | |||||||||
Income before income tax expense | 7,110 | 11,766 | 15,151 | 23,523 | ||||||||||||
Income tax expense | (2,819 | ) | (4,938 | ) | (5,970 | ) | (9,770 | ) | ||||||||
Net income | $ | 4,291 | $ | 6,828 | $ | 9,181 | $ | 13,753 | ||||||||
Basic net income per common share | $ | 0.20 | $ | 0.32 | $ | 0.42 | $ | 0.63 | ||||||||
Diluted net income per common share | $ | 0.19 | $ | 0.31 | $ | 0.42 | $ | 0.63 | ||||||||
Basic weighted average common shares outstanding | 21,642,163 | 21,644,281 | 21,640,191 | 21,666,096 | ||||||||||||
Diluted weighted average common shares outstanding | 22,099,791 | 21,827,149 | 22,073,254 | 21,921,742 | ||||||||||||
Reconciliation of operating income to EBITDA (b): | ||||||||||||||||
Operating income | $ | 7,368 | $ | 11,905 | $ | 15,460 | $ | 23,645 | ||||||||
Add back: depreciation, amortization and accretion | 4,352 | 3,822 | 8,381 | 7,629 | ||||||||||||
EBITDA | $ | 11,720 | $ | 15,727 | $ | 23,841 | $ | 31,274 | ||||||||
% of total revenue | 23.9 | % | 30.1 | % | 24.0 | % | 29.7 | % | ||||||||
Key statistics: | ||||||||||||||||
Units in service | 1,299 | 1,445 | 1,299 | 1,445 | ||||||||||||
Average revenue per unit (ARPU) | $ | 7.98 | $ | 8.22 | $ | 8.02 | $ | 8.24 | ||||||||
Bookings | $ | 18,959 | $ | 15,626 | $ | 35,880 | $ | 29,879 | ||||||||
Backlog | $ | 40,182 | $ | 39,576 | $ | 40,182 | $ | 39,576 | ||||||||
(a) Slight variations in totals are due to rounding. | ||||||||||||||||
(b) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is | ||||||||||||||||
presented for analytical purposes only. | ||||||||||||||||
SPOK HOLDINGS, INC. | ||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (a) | ||||||||||||||||||||||||
(Unaudited and in thousands except share, per share amounts and ARPU) | ||||||||||||||||||||||||
For the three months ended | ||||||||||||||||||||||||
6/30/2014 | 3/31/2014 | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | |||||||||||||||||||
Revenue: | ||||||||||||||||||||||||
Wireless | $ | 33,518 | $ | 34,351 | $ | 35,831 | $ | 37,067 | $ | 37,771 | $ | 38,779 | ||||||||||||
Software | 15,576 | 15,768 | 18,854 | 12,602 | 14,497 | 14,351 | ||||||||||||||||||
Total revenue | 49,094 | 50,119 | 54,685 | 49,669 | 52,268 | 53,130 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Cost of revenue | 7,180 | 6,805 | 7,500 | 6,787 | 6,961 | 6,667 | ||||||||||||||||||
Service, rental and maintenance | 11,420 | 11,792 | 11,442 | 11,820 | 12,018 | 12,191 | ||||||||||||||||||
Selling and marketing | 7,780 | 7,246 | 7,297 | 6,388 | 6,538 | 6,394 | ||||||||||||||||||
General and administrative | 10,990 | 12,135 | 11,470 | 11,282 | 11,022 | 12,331 | ||||||||||||||||||
Severance and restructuring | 4 | 20 | 981 | — | 2 | — | ||||||||||||||||||
Depreciation, amortization and accretion | 4,352 | 4,029 | 3,680 | 3,858 | 3,822 | 3,807 | ||||||||||||||||||
Total operating expenses | 41,726 | 42,027 | 42,370 | 40,135 | 40,363 | 41,390 | ||||||||||||||||||
% of total revenue | 85.0 | % | 83.9 | % | 77.5 | % | 80.8 | % | 77.2 | % | 77.9 | % | ||||||||||||
Operating income | 7,368 | 8,092 | 12,315 | 9,534 | 11,905 | 11,740 | ||||||||||||||||||
% of total revenue | 15.0 | % | 16.1 | % | 22.5 | % | 19.2 | % | 22.8 | % | 22.1 | % | ||||||||||||
Interest expense, net | (64 | ) | (67 | ) | (64 | ) | (68 | ) | (64 | ) | (64 | ) | ||||||||||||
Other (expense) income, net | (194 | ) | 16 | 15 | 84 | (75 | ) | 81 | ||||||||||||||||
Income before income tax expense | 7,110 | 8,041 | 12,266 | 9,550 | 11,766 | 11,757 | ||||||||||||||||||
Income tax expense | (2,819 | ) | (3,151 | ) | (4,251 | ) | (3,788 | ) | (4,938 | ) | (4,832 | ) | ||||||||||||
Net income | $ | 4,291 | $ | 4,890 | $ | 8,015 | $ | 5,762 | $ | 6,828 | $ | 6,925 | ||||||||||||
Basic net income per common share | $ | 0.2 | $ | 0.23 | $ | 0.37 | $ | 0.27 | $ | 0.32 | $ | 0.32 | ||||||||||||
Diluted net income per common share | $ | 0.19 | $ | 0.22 | $ | 0.36 | $ | 0.26 | $ | 0.31 | $ | 0.32 | ||||||||||||
Basic weighted average common shares outstanding | 21,642,163 | 21,638,198 | 21,633,706 | 21,629,289 | 21,644,281 | 21,688,153 | ||||||||||||||||||
Diluted weighted average common shares outstanding | 22,099,791 | 22,037,796 | 21,969,756 | 21,919,238 | 21,827,149 | 21,904,862 | ||||||||||||||||||
Reconciliation of operating income to EBITDA (b): | ||||||||||||||||||||||||
Operating income | $ | 7,368 | $ | 8,092 | $ | 12,315 | $ | 9,534 | $ | 11,905 | $ | 11,740 | ||||||||||||
Add back: depreciation, amortization and accretion | 4,352 | 4,029 | 3,680 | 3,858 | 3,822 | 3,807 | ||||||||||||||||||
EBITDA | $ | 11,720 | $ | 12,121 | $ | 15,995 | $ | 13,392 | $ | 15,727 | $ | 15,547 | ||||||||||||
% of total revenue | 23.9 | % | 24.2 | % | 29.2 | % | 27.0 | % | 30.1 | % | 29.3 | % | ||||||||||||
Key statistics: | ||||||||||||||||||||||||
Units in service | 1,299 | 1,327 | 1,376 | 1,408 | 1,445 | 1,480 | ||||||||||||||||||
Average revenue per unit (ARPU) | $ | 7.98 | $ | 8.11 | $ | 8.15 | $ | 8.22 | $ | 8.22 | $ | 8.25 | ||||||||||||
Bookings | $ | 18,959 | $ | 16,921 | $ | 16,271 | $ | 17,302 | $ | 15,626 | $ | 14,253 | ||||||||||||
Backlog | $ | 40,182 | $ | 41,396 | $ | 40,211 | $ | 43,831 | $ | 39,576 | $ | 40,183 | ||||||||||||
(a) Slight variations in totals are due to rounding. | ||||||||||||||||||||||||
(b) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for | ||||||||||||||||||||||||
analytical purposes only. | ||||||||||||||||||||||||
SPOK HOLDINGS, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (a) | ||||||||
(In thousands) | ||||||||
6/30/2014 | 12/31/2013 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 97,035 | $ | 89,075 | ||||
Accounts receivable, net | 22,964 | 18,084 | ||||||
Prepaid expenses and other | 6,681 | 7,399 | ||||||
Inventory | 2,070 | 2,221 | ||||||
Deferred income tax assets, net | 3,389 | 3,389 | ||||||
Total current assets | 132,139 | 120,168 | ||||||
Property and equipment, net | 20,936 | 21,122 | ||||||
Goodwill | 133,031 | 133,031 | ||||||
Other intangible assets, net | 22,653 | 25,368 | ||||||
Deferred income tax assets, net | 20,542 | 25,494 | ||||||
Other assets | 1,586 | 1,715 | ||||||
Total assets | $ | 330,887 | $ | 326,898 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 9,796 | $ | 9,885 | ||||
Accrued compensation and benefits | 11,287 | 13,919 | ||||||
Deferred revenue | 24,571 | 23,023 | ||||||
Total current liabilities | 45,654 | 46,827 | ||||||
Deferred revenue | 645 | 862 | ||||||
Other long-term liabilities | 9,231 | 9,259 | ||||||
Total liabilities | 55,530 | 56,948 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Preferred stock | — | — | ||||||
Common stock | 2 | 2 | ||||||
Additional paid-in capital | 128,988 | 127,264 | ||||||
Retained earnings | 146,367 | 142,684 | ||||||
Total stockholders' equity | 275,357 | 269,950 | ||||||
Total liabilities and stockholders' equity | $ | 330,887 | $ | 326,898 | ||||
(a) Slight variations in totals are due to rounding. | ||||||||
SPOK HOLDINGS, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a) | ||||||||
(Unaudited and in thousands) | ||||||||
For the six months ended | ||||||||
6/30/2014 | 6/30/2013 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 9,181 | $ | 13,753 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation, amortization and accretion | 8,381 | 7,629 | ||||||
Amortization of deferred financing costs | 129 | 129 | ||||||
Deferred income tax expense | 4,952 | 8,849 | ||||||
Amortization of stock based compensation | 1,710 | 1,254 | ||||||
Provisions for doubtful accounts, service credits and other | 597 | 833 | ||||||
Adjustments of non-cash transaction taxes | (229 | ) | (251 | ) | ||||
Loss on disposals of property and equipment | 3 | 167 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (5,478 | ) | 2,812 | |||||
Prepaid expenses and other assets | 850 | (367 | ) | |||||
Accounts payable, accrued liabilities and accrued compensation and benefits | (3,076 | ) | (7,578 | ) | ||||
Customer deposits and deferred revenue | 1,331 | (4,088 | ) | |||||
Net cash provided by operating activities | 18,351 | 23,142 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (5,036 | ) | (5,268 | ) | ||||
Proceeds from disposals of property and equipment | 59 | 9 | ||||||
Net cash used in investing activities | (4,977 | ) | (5,259 | ) | ||||
Cash flows from financing activities: | ||||||||
Cash dividends to stockholders | (5,414 | ) | (6,900 | ) | ||||
Net cash used in financing activities | (5,414 | ) | (6,900 | ) | ||||
Net increase in cash and cash equivalents | 7,960 | 10,983 | ||||||
Cash and cash equivalents, beginning of period | 89,075 | 61,046 | ||||||
Cash and cash equivalents, end of period | $ | 97,035 | $ | 72,029 | ||||
Supplemental disclosure: | ||||||||
Interest paid | $ | 3 | $ | 6 | ||||
Income taxes paid | $ | 884 | $ | 831 | ||||
(a) Slight variations in totals are due to rounding. | ||||||||
SPOK HOLDINGS, INC. | ||||||||||||||||||||||||
CONSOLIDATED OPERATING EXPENSES | ||||||||||||||||||||||||
SUPPLEMENTAL INFORMATION (a) | ||||||||||||||||||||||||
(Unaudited and in thousands) | ||||||||||||||||||||||||
For the three months ended | ||||||||||||||||||||||||
6/30/2014 | 3/31/2014 | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | |||||||||||||||||||
Cost of revenue | ||||||||||||||||||||||||
Payroll and related | $ | 3,827 | $ | 3,959 | $ | 3,609 | $ | 3,744 | $ | 3,743 | $ | 3,709 | ||||||||||||
Cost of sales | 2,232 | 1,917 | 2,726 | 1,992 | 2,133 | 1,890 | ||||||||||||||||||
Stock based compensation | 81 | 81 | 74 | 64 | 49 | 49 | ||||||||||||||||||
Other | 1,040 | 848 | 1,091 | 987 | 1,036 | 1,019 | ||||||||||||||||||
Total cost of revenue | 7,180 | 6,805 | 7,500 | 6,787 | 6,961 | 6,667 | ||||||||||||||||||
Service, rental and maintenance | ||||||||||||||||||||||||
Site rent | 3,981 | 4,015 | 3,972 | 4,142 | 4,237 | 4,235 | ||||||||||||||||||
Telecommunications | 1,669 | 1,736 | 1,751 | 1,832 | 1,885 | 1,889 | ||||||||||||||||||
Payroll and related | 4,434 | 4,594 | 4,296 | 4,577 | 4,589 | 4,698 | ||||||||||||||||||
Stock based compensation | (17 | ) | 39 | 32 | 59 | 20 | 20 | |||||||||||||||||
Other | 1,353 | 1,408 | 1,391 | 1,210 | 1,287 | 1,349 | ||||||||||||||||||
Total service, rental and maintenance | 11,420 | 11,792 | 11,442 | 11,820 | 12,018 | 12,191 | ||||||||||||||||||
Selling and marketing | ||||||||||||||||||||||||
Payroll and related | 4,099 | 4,098 | 3,717 | 3,917 | 3,919 | 3,840 | ||||||||||||||||||
Commissions | 2,087 | 1,952 | 2,162 | 1,310 | 1,519 | 1,387 | ||||||||||||||||||
Stock based compensation | 131 | 131 | (24 | ) | 122 | 119 | 119 | |||||||||||||||||
Other | 1,463 | 1,065 | 1,442 | 1,039 | 981 | 1,048 | ||||||||||||||||||
Total selling and marketing | 7,780 | 7,246 | 7,297 | 6,388 | 6,538 | 6,394 | ||||||||||||||||||
General and administrative | ||||||||||||||||||||||||
Payroll and related | 4,440 | 4,796 | 4,802 | 4,696 | 5,074 | 5,414 | ||||||||||||||||||
Stock based compensation | 429 | 835 | 763 | 701 | 440 | 438 | ||||||||||||||||||
Bad debt | 134 | 86 | 262 | 274 | 265 | 275 | ||||||||||||||||||
Facility rent | 899 | 922 | 719 | 883 | 839 | 844 | ||||||||||||||||||
Telecommunications | 399 | 395 | 420 | 388 | 343 | 375 | ||||||||||||||||||
Outside services | 1,719 | 1,762 | 1,811 | 1,927 | 1,606 | 2,560 | ||||||||||||||||||
Taxes, licenses and permits | 1,383 | 1,064 | 1,358 | 1,106 | 1,166 | 1,233 | ||||||||||||||||||
Other | 1,587 | 2,275 | 1,335 | 1,307 | 1,289 | 1,192 | ||||||||||||||||||
Total general and administrative | 10,990 | 12,135 | 11,470 | 11,282 | 11,022 | 12,331 | ||||||||||||||||||
Severance and restructuring | 4 | 20 | 981 | — | 2 | — | ||||||||||||||||||
Depreciation, amortization and accretion | 4,352 | 4,029 | 3,680 | 3,858 | 3,822 | 3,807 | ||||||||||||||||||
Operating expenses | $ | 41,726 | $ | 42,027 | $ | 42,370 | $ | 40,135 | $ | 40,363 | $ | 41,390 | ||||||||||||
Capital expenditures | $ | 2,393 | $ | 2,643 | $ | 2,636 | $ | 2,504 | $ | 2,927 | $ | 2,341 | ||||||||||||
(a) Slight variations in totals are due to rounding. | ||||||||||||||||||||||||
SPOK HOLDINGS, INC. | ||||||||||||||||||
UNITS IN SERVICE ACTIVITY (a) | ||||||||||||||||||
(Unaudited and in thousands) | ||||||||||||||||||
For the three months ended | ||||||||||||||||||
6/30/2014 | 3/31/2014 | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | |||||||||||||
Paging units in service | ||||||||||||||||||
Beginning units in service | ||||||||||||||||||
Direct one-way | 1,200 | 1,246 | 1,275 | 1,307 | 1,324 | 1,346 | ||||||||||||
Direct two-way | 69 | 69 | 70 | 73 | 73 | 75 | ||||||||||||
Total direct | 1,269 | 1,315 | 1,345 | 1,380 | 1,397 | 1,421 | ||||||||||||
Indirect one-way | 30 | 34 | 35 | 36 | 38 | 48 | ||||||||||||
Indirect two-way | 28 | 27 | 28 | 29 | 45 | 46 | ||||||||||||
Total indirect | 58 | 61 | 63 | 65 | 83 | 94 | ||||||||||||
Total beginning units in service | 1,327 | 1,376 | 1,408 | 1,445 | 1,480 | 1,515 | ||||||||||||
Gross placements | ||||||||||||||||||
Direct one-way | 48 | 34 | 32 | 40 | 49 | 39 | ||||||||||||
Direct two-way | 2 | 4 | 3 | 3 | 5 | 3 | ||||||||||||
Total direct | 50 | 38 | 35 | 43 | 54 | 42 | ||||||||||||
Indirect one-way | 1 | — | 1 | 1 | 1 | 1 | ||||||||||||
Indirect two-way | — | 1 | — | — | — | — | ||||||||||||
Total indirect | 1 | 1 | 1 | 1 | 1 | 1 | ||||||||||||
Total gross placements | 51 | 39 | 36 | 44 | 55 | 43 | ||||||||||||
Gross disconnects | ||||||||||||||||||
Direct one-way | (69 | ) | (80 | ) | (61 | ) | (72 | ) | (66 | ) | (61 | ) | ||||||
Direct two-way | (7 | ) | (4 | ) | (4 | ) | (6 | ) | (5 | ) | (5 | ) | ||||||
Total direct | (76 | ) | (84 | ) | (65 | ) | (78 | ) | (71 | ) | (66 | ) | ||||||
Indirect one-way | (2 | ) | (4 | ) | (2 | ) | (2 | ) | (3 | ) | (11 | ) | ||||||
Indirect two-way | (1 | ) | — | (1 | ) | (1 | ) | (16 | ) | (1 | ) | |||||||
Total indirect | (3 | ) | (4 | ) | (3 | ) | (3 | ) | (19 | ) | (12 | ) | ||||||
Total gross disconnects | (79 | ) | (88 | ) | (68 | ) | (81 | ) | (90 | ) | (78 | ) | ||||||
Net loss | ||||||||||||||||||
Direct one-way | (21 | ) | (46 | ) | (29 | ) | (32 | ) | (17 | ) | (22 | ) | ||||||
Direct two-way | (5 | ) | — | (1 | ) | (3 | ) | — | (2 | ) | ||||||||
Total direct | (26 | ) | (46 | ) | (30 | ) | (35 | ) | (17 | ) | (24 | ) | ||||||
Indirect one-way | (1 | ) | (4 | ) | (1 | ) | (1 | ) | (2 | ) | (10 | ) | ||||||
Indirect two-way | (1 | ) | 1 | (1 | ) | (1 | ) | (16 | ) | (1 | ) | |||||||
Total indirect | (2 | ) | (3 | ) | (2 | ) | (2 | ) | (18 | ) | (11 | ) | ||||||
Total net change | (28 | ) | (49 | ) | (32 | ) | (37 | ) | (35 | ) | (35 | ) | ||||||
Ending units in service | ||||||||||||||||||
Direct one-way | 1,179 | 1,200 | 1,246 | 1,275 | 1,307 | 1,324 | ||||||||||||
Direct two-way | 64 | 69 | 69 | 70 | 73 | 73 | ||||||||||||
Total direct | 1,243 | 1,269 | 1,315 | 1,345 | 1,380 | 1,397 | ||||||||||||
Indirect one-way | 29 | 30 | 34 | 35 | 36 | 38 | ||||||||||||
Indirect two-way | 27 | 28 | 27 | 28 | 29 | 45 | ||||||||||||
Total indirect | 56 | 58 | 61 | 63 | 65 | 83 | ||||||||||||
Total ending units in service | 1,299 | 1,327 | 1,376 | 1,408 | 1,445 | 1,480 | ||||||||||||
(a) Slight variations in totals are due to rounding. | ||||||||||||||||||
SPOK HOLDINGS, INC. | ||||||||||||||||||||||||
AVERAGE REVENUE PER UNIT (ARPU) AND CHURN (a) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
For the three months ended | ||||||||||||||||||||||||
6/30/2014 | 3/31/2014 | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | |||||||||||||||||||
Paging ARPU | ||||||||||||||||||||||||
Direct one-way | $ | 7.48 | $ | 7.59 | $ | 7.60 | $ | 7.64 | $ | 7.67 | $ | 7.73 | ||||||||||||
Direct two-way | 18.21 | 18.91 | 19.43 | 19.93 | 19.95 | 20.41 | ||||||||||||||||||
Total direct | 8.06 | 8.19 | 8.23 | 8.29 | 8.33 | 8.40 | ||||||||||||||||||
Indirect one-way | 8.18 | 8.22 | 8.68 | 8.90 | 8.97 | 8.22 | ||||||||||||||||||
Indirect two-way | 4.45 | 4.32 | 3.97 | 3.97 | 3.89 | 3.76 | ||||||||||||||||||
Total indirect | 6.39 | 6.37 | 6.47 | 6.57 | 6.31 | 5.85 | ||||||||||||||||||
Total one-way | 7.50 | 7.60 | 7.63 | 7.68 | 7.71 | 7.74 | ||||||||||||||||||
Total two-way | 14.22 | 14.70 | 14.90 | 15.20 | 14.40 | 13.96 | ||||||||||||||||||
Total paging ARPU | $ | 7.98 | $ | 8.11 | $ | 8.15 | $ | 8.22 | $ | 8.22 | $ | 8.25 | ||||||||||||
Gross disconnect rate (b) | ||||||||||||||||||||||||
Direct one-way | (5.7 | )% | (6.4 | )% | (4.7 | )% | (5.6 | )% | (5.0 | )% | (4.6 | )% | ||||||||||||
Direct two-way | (10.5 | )% | (5.6 | )% | (6.4 | )% | (7.9 | )% | (6.7 | )% | (6.6 | )% | ||||||||||||
Total direct | (6.0 | )% | (6.4 | )% | (4.8 | )% | (5.7 | )% | (5.1 | )% | (4.7 | )% | ||||||||||||
Indirect one-way | (6.8 | )% | (8.2 | )% | (6.1 | )% | (6.3 | )% | (7.4 | )% | (23.6 | )% | ||||||||||||
Indirect two-way | (2.7 | )% | (2.3 | )% | (5.7 | )% | (4.8 | )% | (34.0 | )% | (1.6 | )% | ||||||||||||
Total indirect | (4.8 | )% | (5.5 | )% | (5.9 | )% | (5.6 | )% | (22.3 | )% | (12.5 | )% | ||||||||||||
Total one-way | (5.8 | )% | (6.5 | )% | (4.8 | )% | (5.6 | )% | (5.1 | )% | (5.2 | )% | ||||||||||||
Total two-way | (8.3 | )% | (4.7 | )% | (6.2 | )% | (7.0 | )% | (17.3 | )% | (4.7 | )% | ||||||||||||
Total paging gross disconnect rate | (5.9 | )% | (6.3 | )% | (4.9 | )% | (5.7 | )% | (6.1 | )% | (5.2 | )% | ||||||||||||
Net loss rate (c) | ||||||||||||||||||||||||
Direct one-way | (1.9 | )% | (3.7 | )% | (2.1 | )% | (2.5 | )% | (1.3 | )% | (1.7 | )% | ||||||||||||
Direct two-way | (4.5 | )% | (0.6 | )% | (2.2 | )% | (3.6 | )% | (0.4 | )% | (1.9 | )% | ||||||||||||
Total direct | (2 | )% | (3.5 | )% | (2.1 | )% | (2.5 | )% | (1.3 | )% | (1.7 | )% | ||||||||||||
Indirect one-way | (4.8 | )% | (6.3 | )% | (3.9 | )% | (3.3 | )% | (4.7 | )% | (21.8 | )% | ||||||||||||
Indirect two-way | (2.2 | )% | (1.9 | )% | (4.9 | )% | (4.1 | )% | (33.7 | )% | (1.3 | )% | ||||||||||||
Total indirect | (3.5 | )% | (4.2 | )% | (4.4 | )% | (3.6 | )% | (21.0 | )% | (11.5 | )% | ||||||||||||
Total one-way | (2 | )% | (3.7 | )% | (2.2 | )% | (2.5 | )% | (1.4 | )% | (2.4 | )% | ||||||||||||
Total two-way | (3.8 | )% | (1.0 | )% | (3.0 | )% | (3.8 | )% | (13.3 | )% | (1.6 | )% | ||||||||||||
Total paging net loss rate | (2.1 | )% | (3.5 | )% | (2.2 | )% | (2.6 | )% | (2.4 | )% | (2.3 | )% | ||||||||||||
(a) Slight variations in totals are due to rounding. | ||||||||||||||||||||||||
(b) Gross disconnect rate is current period disconnected units divided by prior period ending units in service. | ||||||||||||||||||||||||
(c) Net loss rate is net current period placements and disconnected units in service divided by prior period ending units in service. | ||||||||||||||||||||||||
SPOK HOLDINGS, INC. | ||||||||||||||||||
SUPPLEMENTAL INFORMATION BY MARKET SEGMENT (a) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
For the three months ended | ||||||||||||||||||
6/30/2014 | 3/31/2014 | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | |||||||||||||
Gross placement rate (b) | ||||||||||||||||||
Healthcare | 4.5 | % | 3.1 | % | 2.9 | % | 3.3 | % | 4.5 | % | 3.4 | % | ||||||
Government | 2.6 | % | 1.9 | % | 1.5 | % | 1.7 | % | 2.3 | % | 1.6 | % | ||||||
Large enterprise | 2.0 | % | 2.9 | % | 3.0 | % | 4.3 | % | 2.4 | % | 2.1 | % | ||||||
Other | 2.2 | % | 2.1 | % | 1.7 | % | 2 | % | 1.5 | % | 1.8 | % | ||||||
Total direct | 4.0 | % | 2.9 | % | 2.7 | % | 3.1 | % | 3.8 | % | 3.0 | % | ||||||
Total indirect | 1.3 | % | 1.2 | % | 1.5 | % | 1.9 | % | 1.4 | % | 1.0 | % | ||||||
Total | 3.9 | % | 2.8 | % | 2.7 | % | 3.1 | % | 3.7 | % | 2.9 | % | ||||||
Gross disconnect rate (b) | ||||||||||||||||||
Healthcare | (5.3 | )% | (6.5 | )% | (4.5 | )% | (5.2 | )% | (4.4 | )% | (3.9 | )% | ||||||
Government | (7.6 | )% | (5.6 | )% | (4.7 | )% | (7.9 | )% | (7.1 | )% | (5.9 | )% | ||||||
Large enterprise | (8.9 | )% | (5.4 | )% | (6.4 | )% | (6.0 | )% | (6.7 | )% | (7.0 | )% | ||||||
Other | (7.7 | )% | (6.5 | )% | (6.5 | )% | (6.5 | )% | (7.4 | )% | (7.3 | )% | ||||||
Total direct | (6.0 | )% | (6.4 | )% | (4.8 | )% | (5.7 | )% | (5.1 | )% | (4.7 | )% | ||||||
Total indirect | (4.8 | )% | (5.5 | )% | (5.9 | )% | (5.6 | )% | (22.3 | )% | (12.5 | )% | ||||||
Total | (5.9 | )% | (6.3 | )% | (4.9 | )% | (5.7 | )% | (6.1 | )% | (5.2 | )% | ||||||
Net loss rate (b) | ||||||||||||||||||
Healthcare | (0.8 | )% | (3.5 | )% | (1.5 | )% | (1.9 | )% | — | % | (0.5 | )% | ||||||
Government | (5.0 | )% | (3.6 | )% | (3.2 | )% | (6.3 | )% | (4.6 | )% | (4.3 | )% | ||||||
Large enterprise | (6.9 | )% | (2.5 | )% | (3.3 | )% | (1.6 | )% | (4.2 | )% | (4.9 | )% | ||||||
Other | (5.5 | )% | (4.4 | )% | (4.8 | )% | (4.5 | )% | (5.9 | )% | (5.5 | )% | ||||||
Total direct | (2.0 | )% | (3.5 | )% | (2.1 | )% | (2.5 | )% | (1.3 | )% | (1.7 | )% | ||||||
Total indirect | (3.5 | )% | (4.2 | )% | (4.4 | )% | (3.6 | )% | (21.0 | )% | (11.5 | )% | ||||||
Total | (2.1 | )% | (3.5 | )% | (2.2 | )% | (2.6 | )% | (2.4 | )% | (2.3 | )% | ||||||
End of period units in service % of total (b) | ||||||||||||||||||
Healthcare | 73.0 | % | 72.0 | % | 71.9 | % | 71.4 | % | 70.9 | % | 68.4 | % | ||||||
Government | 8.3 | % | 8.6 | % | 8.6 | % | 8.8 | % | 9.1 | % | 10.1 | % | ||||||
Large enterprise | 7.8 | % | 8.2 | % | 8.1 | % | 8.2 | % | 8.1 | % | 8.3 | % | ||||||
Other | 6.6 | % | 6.8 | % | 7.0 | % | 7.1 | % | 7.3 | % | 7.6 | % | ||||||
Total direct | 95.7 | % | 95.6 | % | 95.6 | % | 95.5 | % | 95.4 | % | 94.4 | % | ||||||
Total indirect | 4.3 | % | 4.4 | % | 4.4 | % | 4.5 | % | 4.6 | % | 5.6 | % | ||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
(a) Slight variations in totals are due to rounding. | ||||||||||||||||||
(b) Changes in the classification of units in service are reflected in the quarter when such changes are identified. Such changes are | ||||||||||||||||||
then appropriately reflected in calculating the gross placement, gross disconnect and net loss rates. | ||||||||||||||||||
SPOK HOLDINGS, INC. | ||||||||||||||||||||||||
SUPPLEMENTAL INFORMATION - DIRECT PAGING UNITS IN SERVICE AND | ||||||||||||||||||||||||
CELLULAR ACTIVATIONS (a) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
For the three months ended | ||||||||||||||||||||||||
6/30/2014 | 3/31/2014 | 12/31/2013 | 9/30/2013 | 6/30/2013 | 3/31/2013 | |||||||||||||||||||
Account size ending units in service (000's) | ||||||||||||||||||||||||
1 to 3 units | 39 | 41 | 43 | 45 | 47 | 49 | ||||||||||||||||||
4 to 10 units | 23 | 24 | 25 | 26 | 28 | 29 | ||||||||||||||||||
11 to 50 units | 56 | 57 | 61 | 64 | 67 | 71 | ||||||||||||||||||
51 to 100 units | 38 | 41 | 42 | 43 | 45 | 47 | ||||||||||||||||||
101 to 1,000 units | 275 | 282 | 287 | 293 | 305 | 321 | ||||||||||||||||||
>1,000 units | 812 | 824 | 857 | 874 | 888 | 880 | ||||||||||||||||||
Total | 1,243 | 1,269 | 1,315 | 1,345 | 1,380 | 1,397 | ||||||||||||||||||
End of period units in service % of total direct | ||||||||||||||||||||||||
1 to 3 units | 3.1 | % | 3.2 | % | 3.2 | % | 3.3 | % | 3.4 | % | 3.5 | % | ||||||||||||
4 to 10 units | 1.8 | % | 1.9 | % | 1.9 | % | 2.0 | % | 2.0 | % | 2.1 | % | ||||||||||||
11 to 50 units | 4.5 | % | 4.5 | % | 4.6 | % | 4.8 | % | 4.8 | % | 5.1 | % | ||||||||||||
51 to 100 units | 3.1 | % | 3.2 | % | 3.2 | % | 3.2 | % | 3.2 | % | 3.4 | % | ||||||||||||
101 to 1,000 units | 22.1 | % | 22.3 | % | 21.9 | % | 21.8 | % | 22.1 | % | 23.0 | % | ||||||||||||
>1,000 units | 65.4 | % | 64.9 | % | 65.2 | % | 64.9 | % | 64.5 | % | 62.9 | % | ||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
Account size net loss rate | ||||||||||||||||||||||||
1 to 3 units | (4.1 | )% | (4.9 | )% | (4.4 | )% | (4.6 | )% | (5.1 | )% | (4.8 | )% | ||||||||||||
4 to 10 units | (5.4 | )% | (4.1 | )% | (3.8 | )% | (5.3 | )% | (5.3 | )% | (6.0 | )% | ||||||||||||
11 to 50 units | (3.2 | )% | (5.3 | )% | (4.4 | )% | (3.9 | )% | (6.4 | )% | (4.8 | )% | ||||||||||||
51 to 100 units | (8.7 | )% | (1.2 | )% | (3.5 | )% | (2.8 | )% | (5.3 | )% | (4.0 | )% | ||||||||||||
101 to 1,000 units | (2.5 | )% | (1.7 | )% | (1.7 | )% | (4.0 | )% | (5.0 | )% | (3.9 | )% | ||||||||||||
>1,000 units | (1.2 | )% | (4.0 | )% | (1.8 | )% | (1.7 | )% | 1.1 | % | (0.2 | )% | ||||||||||||
Total | (2.0 | )% | (3.5 | )% | (2.1 | )% | (2.5 | )% | (1.3 | )% | (1.7 | )% | ||||||||||||
Account size ARPU | ||||||||||||||||||||||||
1 to 3 units | $ | 14.86 | $ | 14.96 | $ | 14.98 | $ | 15.13 | $ | 15.12 | $ | 15.22 | ||||||||||||
4 to 10 units | 14.12 | 14.22 | 14.29 | 14.38 | 14.29 | 14.33 | ||||||||||||||||||
11 to 50 units | 12 | 12.07 | 11.96 | 12.06 | 11.96 | 12.06 | ||||||||||||||||||
51 to 100 units | 10.18 | 10.27 | 10.34 | 10.66 | 10.42 | 10.47 | ||||||||||||||||||
101 to 1,000 units | 8.58 | 8.76 | 8.89 | 8.85 | 8.84 | 8.84 | ||||||||||||||||||
>1,000 units | 7 | 7.11 | 7.11 | 7.17 | 7.19 | 7.23 | ||||||||||||||||||
Total | $ | 8.06 | $ | 8.19 | $ | 8.23 | $ | 8.29 | $ | 8.33 | $ | 8.40 | ||||||||||||
Cellular: | ||||||||||||||||||||||||
Number of activations | 1,679 | 281 | 690 | 970 | 799 | 925 | ||||||||||||||||||
Revenue from cellular services (000's) | $ | 278 | $ | 108 | $ | 129 | $ | 235 | $ | 163 | $ | 195 | ||||||||||||
(a) Slight variations in totals are due to rounding. | ||||||||||||||||||||||||