Tucows Reports Financial Results for Third Quarter 2019
November 06 2019 - 5:05PM
Tucows Inc. (NASDAQ:TCX, TSX:TC), a provider of network access,
domain names and other Internet services, today reported its
financial results for the third quarter ended September 30, 2019.
All figures are in U.S. dollars.
Summary Financial
Results(In Thousands of US Dollars, Except Per
Share Data)
|
3 Months Ended September 30 |
9 Months Ended September 30 |
2019(Unaudited) |
2018(Unaudited) |
%Change |
2019(Unaudited) |
2018(Unaudited) |
%Change |
Net revenue |
88,129 |
83,519 |
6% |
251,199 |
260,401 |
-4% |
Net income |
4,205 |
5,346 |
-21% |
9,620 |
12,699 |
-24% |
Basic Net earnings per common share |
0.40 |
0.50 |
-20% |
0.90 |
1.20 |
-25% |
Adjusted EBITDA1,2 |
14,832 |
11,858 |
25% |
35,749 |
33,425 |
7% |
Net cash provided by operating activities |
11,215 |
11,214 |
0% |
27,185 |
26,541 |
2% |
- This Non-GAAP financial measure is described below and
reconciled to GAAP net income in the accompanying table.
- Adjusted EBITDA for the three and first nine months of 2019
reflect the impact of the purchase price accounting adjustment
related to the fair value write down of deferred revenue from the
Ascio acquisition on March 18, 2019, which lowered Adjusted EBITDA
by $0.9 million and $1.9 million, respectively.
Summary of Revenues and Gross
profit(In Thousands of US Dollars)
|
Revenue |
Gross Profit |
|
3 Months ended September 30 |
3 Months ended September 30 |
|
2019(Unaudited) |
2018(Unaudited) |
2019(Unaudited) |
2018(Unaudited) |
Network Access Services: |
Mobile Services |
21,722 |
22,546 |
10,551 |
11,147 |
Other Services |
2,890 |
2,033 |
1,954 |
1,161 |
Total Network Access Services |
24,612 |
24,579 |
12,505 |
12,308 |
Domain Services: |
Wholesale |
|
|
|
|
Domain Services |
47,259 |
45,071 |
8,922 |
7,657 |
Value Added Services |
5,154 |
4,540 |
4,381 |
3,733 |
Total Wholesale |
52,413 |
49,611 |
13,303 |
11,390 |
|
|
|
|
|
Retail |
8,713 |
8,731 |
4,354 |
4,266 |
Portfolio |
2,391 |
598 |
2,211 |
450 |
Total Domain Services |
63,517 |
58,940 |
19,868 |
16,106 |
Network Expenses: |
Network, other costs |
- |
- |
(2,254) |
(2,315) |
Network, depreciation and amortization costs |
- |
- |
(2,545) |
(1,838) |
Total Network expenses |
- |
- |
(4,799) |
(4,153) |
|
|
|
|
|
Total |
88,129 |
83,519 |
27,574 |
24,261 |
“The third quarter was highlighted by solid
financial performance, with year-over-year growth in revenue, gross
margin and adjusted EBITDA, as we continued to execute on our
strategic priorities in each component of the business,” said
Elliot Noss, President and Chief Executive Officer, Tucows Inc.
“Our Domains and Ting Mobile businesses continue to generate strong
cash flows to support our outsized Ting Internet growth
opportunity, where we saw another quarter of steady progress --
further expanding both our projected potential serviceable
addresses and serviceable addresses completed, while continuing to
add new customers.”
Financial Results
Net revenue for the third quarter of 2019 increased 6% to $88.1
million from $83.5 million for the third quarter of 2018.
Net income for the third quarter of 2019 decreased 21% to $4.2
million, or $0.40 per share from $5.3 million, or $0.50 per share,
for the third quarter of 2018.
Adjusted EBITDA1 for the third quarter of 2019 increased 25% to
$14.8 million from $11.8 million for the third quarter of 2018.
Adjusted EBITDA for the third quarter of 2019 reflects the impact
of the purchase price accounting adjustment related to the fair
value write down of deferred revenue from the Ascio acquisition,
which lowered Adjusted EBITDA by $0.9 million.
Cash and cash equivalents at the end of the third quarter of
2019 were $12.0 million compared with $12.0 million at the end of
the second quarter of 2019 and $10.8 million at the end of the
third quarter of 2018.
Notes:
1. Adjusted EBITDA
Tucows reports all financial information required in accordance
with United States generally accepted accounting principles (GAAP).
Along with this information, to assist financial statement users in
an assessment of our historical performance, the Company typically
discloses and discusses a non-GAAP financial measure, adjusted
EBITDA, in press releases and on investor conference calls and
related events that exclude certain non-cash and other charges as
the Company believes that the non-GAAP information enhances
investors' overall understanding of our financial performance.
The Company believes that the provision of this supplemental
non-GAAP measure allows investors to evaluate the operational and
financial performance of the Company’s core business using similar
evaluation measures to those used by management. The Company uses
adjusted EBITDA to measure its performance and prepare its budgets.
Since adjusted EBITDA is a non-GAAP financial performance measure,
the Company’s calculation of adjusted EBITDA may not be comparable
to other similarly titled measures of other companies; and should
not be considered in isolation, as a substitute for, or superior to
measures of financial performance prepared in accordance with GAAP.
Because adjusted EBITDA is calculated before recurring cash
charges, including interest expense and taxes, and is not adjusted
for capital expenditures or other recurring cash requirements of
the business, it should not be considered as a liquidity measure.
Non-GAAP financial measures do not reflect a comprehensive system
of accounting and may differ from non-GAAP financial measures with
the same or similar captions that are used by other companies
and/or analysts and may differ from period to period. The Company
endeavors to compensate for these limitations by providing the
relevant disclosure of the items excluded in the calculation of
adjusted EBITDA to net income based on U.S. GAAP, which should be
considered when evaluating the Company's results. Tucows strongly
encourages investors to review its financial information in its
entirety and not to rely on a single financial measure.
The Company’s adjusted EBITDA definition excludes depreciation,
amortization of intangible assets, income tax provision, interest
expense, interest income, stock-based compensation, asset
impairment, gains and losses from unrealized foreign currency
transactions and infrequently occurring items, including
acquisition and transition costs. Gains and losses from unrealized
foreign currency transactions removes the unrealized effect of the
change in the mark-to-market values on outstanding unhedged foreign
currency contracts, as well as the unrealized effect from the
translation of monetary accounts denominated in non-U.S. dollars to
U.S. dollars.
The following table reconciles net income to adjusted EBITDA
(dollars in thousands):
|
3 months endedSeptember 30 |
9 months endedSeptember 30 |
|
2019(unaudited) |
2018(unaudited) |
2019(unaudited) |
2018(unaudited) |
Net income for the period |
4,205 |
5,346 |
9,620 |
12,699 |
Depreciation of property and equipment |
2,348 |
1,445 |
6,445 |
4,006 |
Loss on disposition of property and equipment |
73 |
- |
73 |
- |
Amortization of intangible assets |
2,858 |
2,296 |
7,463 |
6,953 |
Interest expense, net |
1,263 |
914 |
3,549 |
2,761 |
Provision for income taxes |
3,133 |
1,370 |
6,209 |
3,781 |
Stock-based compensation |
830 |
711 |
2,040 |
1,904 |
Unrealized loss (gain) on change in fair value of forward
contracts |
(16) |
(35) |
(204) |
7 |
Unrealized loss (gain) on foreign exchange revaluation of foreign
denominated monetary assets and liabilities |
88 |
(269) |
(402) |
191 |
Acquisition and transition costs* |
50 |
80 |
956 |
1,123 |
|
|
|
|
|
Adjusted EBITDA |
14,832 |
11,858 |
35,749 |
33,425 |
*Acquisition and other costs represents transaction-related
expenses, transitional expenses, such as duplicative
post-acquisition expenses, primarily related to the Company’s
acquisition of Enom in January 2017 and Ascio in March 2019.
Expenses include severance or transitional costs associated with
department, operational or overall company restructuring efforts,
including geographic alignments. |
Conference CallConcurrent with the
dissemination of this news release, management’s pre-recorded
commentary discussing the quarter and outlook for the Company have
been posted to the Tucows web site at
http://www.tucows.com/investors/financials. In lieu of a live
question and answer period, for the next six days (until Tuesday,
November 12), shareholders, analysts and prospective investors can
submit questions to Tucows’ management at ir@tucows.com. Management
will post responses to questions of general interest to the
Company’s web site at http://www.tucows.com/investors/financials/
on Thursday, November 21 at approximately 4:00 p.m. ET. All
questions will receive a response, however, questions of a more
specific nature may be responded to directly.
About TucowsTucows is a provider of network
access, domain names and other Internet services. Ting
(https://ting.com/) delivers mobile phone service and fixed
Internet access with outstanding customer support. OpenSRS
(http://opensrs.com), Enom (http://www.enom.com) and Ascio
(http://ascio.com) combined manage approximately 24 million domain
names and millions of value-added services through a global
reseller network of over 37,000 web hosts and ISPs. Hover
(http://hover.com) makes it easy for individuals and small
businesses to manage their domain names and email addresses. More
information can be found on Tucows’ corporate website
(http://tucows.com).
|
|
Tucows
Inc. |
|
Consolidated
Balance Sheets |
|
(Dollar
amounts in thousands of U.S. dollars) |
|
|
|
|
|
|
|
|
|
September
30, |
December
31, |
|
|
|
2019 |
|
2018 * |
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
11,989 |
|
|
$ |
12,637 |
|
|
Accounts receivable |
|
|
13,351 |
|
|
|
10,837 |
|
|
Inventory |
|
|
3,903 |
|
|
|
3,775 |
|
|
Prepaid expenses and deposits |
|
|
19,717 |
|
|
|
15,472 |
|
|
Derivative instrument asset, current portion |
|
|
- |
|
|
|
- |
|
|
Prepaid domain name registry and ancillary services fees, current
portion |
|
|
95,614 |
|
|
|
87,782 |
|
|
Other assets |
|
|
- |
|
|
|
- |
|
|
Income taxes recoverable |
|
|
2,532 |
|
|
|
1,423 |
|
|
Total current assets |
|
|
147,106 |
|
|
|
131,926 |
|
|
|
|
|
|
|
|
Prepaid
domain name registry and ancillary services fees, long-term
portion |
|
|
17,477 |
|
|
|
18,745 |
|
|
Property and
equipment |
|
|
72,167 |
|
|
|
48,065 |
|
|
Right of use
operating lease asset |
|
|
11,028 |
|
|
|
- |
|
|
Contract
costs |
|
|
1,398 |
|
|
|
1,390 |
|
|
Intangible
assets |
|
|
60,066 |
|
|
|
49,395 |
|
|
Goodwill |
|
|
110,100 |
|
|
|
90,054 |
|
|
Total assets |
|
$ |
419,342 |
|
|
$ |
339,575 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts payable |
|
$ |
5,440 |
|
|
$ |
8,445 |
|
|
Accrued liabilities |
|
|
14,445 |
|
|
|
5,899 |
|
|
Customer deposits |
|
|
14,920 |
|
|
|
11,919 |
|
|
Derivative instrument liability |
|
|
41 |
|
|
|
1,276 |
|
|
Deferred rent, current portion |
|
|
- |
|
|
|
21 |
|
|
Operating lease liability, current portion |
|
|
1,450 |
|
|
|
- |
|
|
Loan payable, current portion |
|
|
- |
|
|
|
18,400 |
|
|
Deferred revenue, current portion |
|
|
128,138 |
|
|
|
116,734 |
|
|
Accreditation fees payable, current portion |
|
|
977 |
|
|
|
985 |
|
|
Income taxes payable |
|
|
689 |
|
|
|
1,668 |
|
|
Total current liabilities |
|
|
166,100 |
|
|
|
165,347 |
|
|
|
|
|
|
|
|
Deferred
revenue, long-term portion |
|
|
26,003 |
|
|
|
26,960 |
|
|
Accreditation fees payable, long-term portion |
|
|
224 |
|
|
|
250 |
|
|
Deferred
rent, long-term portion |
|
|
- |
|
|
|
116 |
|
|
Operating
lease liability, long-term portion |
|
|
9,107 |
|
|
|
- |
|
|
Loan
payable, long-term portion |
|
|
104,968 |
|
|
|
46,201 |
|
|
Deferred
Gain |
|
|
- |
|
|
|
- |
|
|
Deferred tax
liability |
|
|
25,941 |
|
|
|
20,925 |
|
|
|
|
|
|
|
|
Redeemable
non-controlling interest |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
Preferred stock - no par value, 1,250,000 shares authorized; none
issued and outstanding |
|
|
- |
|
|
|
- |
|
|
Common stock - no par value, 250,000,000 shares authorized;
10,572,069 shares issued and outstanding as of September 30, 2019
and 10,627,988 shares issued and outstanding as of December 31,
2018 |
|
|
16,492 |
|
|
|
15,823 |
|
|
Additional paid-in capital |
|
|
106 |
|
|
|
3,953 |
|
|
Retained earnings |
|
|
70,430 |
|
|
|
60,810 |
|
|
Accumulated other comprehensive income (loss) |
|
|
(29 |
) |
|
|
(810 |
) |
|
Total stockholders' equity |
|
|
86,999 |
|
|
|
79,776 |
|
|
Total
liabilities and stockholders' equity |
|
$ |
419,342 |
|
|
$ |
339,575 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*The Company has initially applied ASC 2016-02 (Topic 842) using
the modified retrospective method. Under this method, the
comparative information is not restated. |
|
|
Tucows
Inc. |
Consolidated
Statements of Operations and Comprehensive Income |
(Dollar
amounts in thousands of U.S. dollars) |
|
|
|
Three months
ended September 30, |
|
Nine months
ended September 30, |
|
|
2019 |
|
2018 * |
|
2019 |
|
2018 * |
|
|
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
Net revenues |
$ |
88,129 |
|
$ |
83,519 |
|
$ |
251,199 |
|
$ |
260,401 |
|
|
|
|
|
|
|
|
|
|
Cost of
revenues: |
|
|
|
|
|
|
|
|
Cost of revenues |
|
55,756 |
|
|
55,105 |
|
|
162,561 |
|
|
178,578 |
|
Network expenses (*) |
|
2,254 |
|
|
2,315 |
|
|
7,034 |
|
|
7,590 |
|
Depreciation of property and equipment |
|
2,231 |
|
|
1,339 |
|
|
6,070 |
|
|
3,697 |
|
Amortization of intangible assets |
|
314 |
|
|
499 |
|
|
802 |
|
|
1,497 |
|
Total cost of revenues |
|
60,555 |
|
|
59,258 |
|
|
176,467 |
|
|
191,362 |
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
27,574 |
|
|
24,261 |
|
|
74,732 |
|
|
69,039 |
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
Sales and marketing (*) |
|
8,769 |
|
|
8,412 |
|
|
26,366 |
|
|
24,629 |
|
Technical operations and development (*) |
|
2,876 |
|
|
2,207 |
|
|
8,151 |
|
|
6,657 |
|
General and administrative (*) |
|
4,574 |
|
|
4,120 |
|
|
13,818 |
|
|
12,906 |
|
Depreciation of property and equipment |
|
117 |
|
|
106 |
|
|
375 |
|
|
309 |
|
Loss on disposition of property and equipment |
|
73 |
|
|
- |
|
|
73 |
|
|
- |
|
Amortization of intangible assets |
|
2,544 |
|
|
1,797 |
|
|
6,661 |
|
|
5,456 |
|
Loss (gain) on currency forward contracts |
|
20 |
|
|
(27 |
) |
|
(90 |
) |
|
22 |
|
Total expenses |
|
18,973 |
|
|
16,615 |
|
|
55,354 |
|
|
49,979 |
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
8,601 |
|
|
7,646 |
|
|
19,378 |
|
|
19,060 |
|
|
|
|
|
|
|
|
|
|
Other income
(expenses): |
|
|
|
|
|
|
|
|
Interest expense, net |
|
(1,263 |
) |
|
(914 |
) |
|
(3,549 |
) |
|
(2,761 |
) |
Other income, net |
|
- |
|
|
(16 |
) |
|
- |
|
|
181 |
|
Total other income (expenses) |
|
(1,263 |
) |
|
(930 |
) |
|
(3,549 |
) |
|
(2,580 |
) |
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes |
|
7,338 |
|
|
6,716 |
|
|
15,829 |
|
|
16,480 |
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
3,133 |
|
|
1,370 |
|
|
6,209 |
|
|
3,781 |
|
Net income
before redeemable non-controlling interest |
|
4,205 |
|
|
5,346 |
|
|
9,620 |
|
|
12,699 |
|
|
|
|
|
|
|
|
|
|
Redeemable
non-controlling interest |
|
- |
|
|
- |
|
|
- |
|
|
(26 |
) |
|
|
|
|
|
|
|
|
|
Net income attributable to redeemable non-controlling interest |
- |
|
|
- |
|
|
- |
|
|
26 |
|
Net income
for the period |
|
4,205 |
|
|
5,346 |
|
|
9,620 |
|
|
12,699 |
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income, net of tax |
|
|
|
|
|
|
|
|
Unrealized income (loss) on hedging activities |
|
(175 |
) |
|
144 |
|
|
614 |
|
|
(112 |
) |
Net amount reclassified to earnings |
|
26 |
|
|
63 |
|
|
167 |
|
|
76 |
|
Other comprehensive income (loss) net of tax (expense) recovery of
$47 and ($59) for the three months ended September 30, 2019 and
September 30, 2018, ($250) and $19 for the nine months ended
September 30, 2019 and September 30, 2018 (note 5) |
|
(149 |
) |
|
207 |
|
|
781 |
|
|
(36 |
) |
|
|
|
|
|
|
|
|
|
Comprehensive income, net of tax for the period |
$ |
4,056 |
|
$ |
5,553 |
|
$ |
10,401 |
|
$ |
12,663 |
|
|
|
|
|
|
|
|
|
|
Basic
earnings per common share |
$ |
0.40 |
|
$ |
0.50 |
|
$ |
0.90 |
|
$ |
1.20 |
|
|
|
|
|
|
|
|
|
|
Shares used
in computing basic earnings per common share |
|
10,626,754 |
|
|
10,611,579 |
|
|
10,639,544 |
|
|
10,599,243 |
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per common share |
$ |
0.39 |
|
$ |
0.50 |
|
$ |
0.89 |
|
$ |
1.18 |
|
|
|
|
|
|
|
|
|
|
Shares used
in computing diluted earnings per common share |
|
10,745,834 |
|
|
10,794,297 |
|
|
10,798,099 |
|
|
10,795,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*)
Stock-based compensation has been included in expenses as
follows: |
|
|
|
|
|
|
|
|
Network expenses |
$ |
95 |
|
$ |
70 |
|
$ |
224 |
|
$ |
153 |
|
Sales and marketing |
$ |
363 |
|
$ |
307 |
|
$ |
857 |
|
$ |
739 |
|
Technical operations and development |
$ |
179 |
|
$ |
150 |
|
$ |
428 |
|
$ |
501 |
|
General and administrative |
$ |
193 |
|
$ |
184 |
|
$ |
531 |
|
$ |
511 |
|
|
|
|
|
|
|
|
|
|
*The Company has
initially applied ASC 2016-02 (Topic 842) using the modified
retrospective method. Under this method, the comparative
information is not restated. |
Tucows
Inc. |
Consolidated
Statements of Cash Flows |
(Dollar
amounts in thousands of U.S. dollars) |
|
|
Three
months ended September 30, |
|
Nine
months ended September 30, |
|
|
2019 |
|
2018 * |
|
2019 |
|
2018 * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
provided by: |
|
(unaudited) |
|
(unaudited) |
Operating
activities: |
|
|
|
|
|
|
|
|
Net income for the period |
$ |
4,205 |
|
$ |
5,346 |
|
$ |
9,620 |
|
$ |
12,699 |
|
Items not involving cash: |
|
|
|
|
|
|
|
|
Depreciation of property and equipment |
|
2,348 |
|
|
1,445 |
|
|
6,445 |
|
|
4,006 |
|
Loss on write off of property and equipment |
|
120 |
|
|
- |
|
|
142 |
|
|
- |
|
Amortization of debt discount and issuance costs |
|
64 |
|
|
72 |
|
|
232 |
|
|
211 |
|
Amortization of intangible assets |
|
2,858 |
|
|
2,296 |
|
|
7,463 |
|
|
6,953 |
|
Net amortization contract costs |
|
(61 |
) |
|
(29 |
) |
|
(8 |
) |
|
21 |
|
Deferred income taxes (recovery) |
|
(170 |
) |
|
(369 |
) |
|
1,741 |
|
|
(861 |
) |
Excess tax benefits on share-based compensation expense |
|
(53 |
) |
|
(191 |
) |
|
(790 |
) |
|
(532 |
) |
Amortization of deferred rent |
|
- |
|
|
(5 |
) |
|
- |
|
|
(9 |
) |
Net Right of use operating assets/Operating lease liability |
|
(54 |
) |
|
- |
|
|
(5 |
) |
|
- |
|
Loss on disposal of domain names |
|
66 |
|
|
5 |
|
|
72 |
|
|
70 |
|
Other income |
|
- |
|
|
- |
|
|
- |
|
|
(171 |
) |
Loss (gain) on change in the fair value of forward contracts |
|
(16 |
) |
|
(30 |
) |
|
(204 |
) |
|
13 |
|
Stock-based compensation |
|
830 |
|
|
711 |
|
|
2,040 |
|
|
1,904 |
|
Change in non-cash operating working capital: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
(1,763 |
) |
|
685 |
|
|
(1,920 |
) |
|
847 |
|
Inventory |
|
(644 |
) |
|
108 |
|
|
(128 |
) |
|
(196 |
) |
Prepaid expenses and deposits |
|
(329 |
) |
|
874 |
|
|
(3,243 |
) |
|
(368 |
) |
Prepaid domain name registry and ancillary services fees |
|
3,819 |
|
|
4,229 |
|
|
3,754 |
|
|
15,777 |
|
Income taxes recoverable |
|
1,576 |
|
|
(137 |
) |
|
(1,299 |
) |
|
293 |
|
Accounts payable |
|
(2,394 |
) |
|
778 |
|
|
(2,778 |
) |
|
1,048 |
|
Accrued liabilities |
|
3,687 |
|
|
107 |
|
|
7,274 |
|
|
465 |
|
Customer deposits |
|
1,394 |
|
|
(1,049 |
) |
|
873 |
|
|
(3,370 |
) |
Deferred revenue |
|
(4,200 |
) |
|
(3,559 |
) |
|
(2,062 |
) |
|
(12,090 |
) |
Accreditation fees payable |
|
(68 |
) |
|
(73 |
) |
|
(34 |
) |
|
(169 |
) |
Net cash provided by operating activities |
|
11,215 |
|
|
11,214 |
|
|
27,185 |
|
|
26,541 |
|
|
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
|
|
Proceeds received on exercise of stock options |
|
118 |
|
|
23 |
|
|
312 |
|
|
62 |
|
Payment of tax obligations resulting from net exercise of stock
options |
|
(20 |
) |
|
(116 |
) |
|
(544 |
) |
|
(404 |
) |
Repurchase of common stock |
|
(4,986 |
) |
|
- |
|
|
(4,986 |
) |
|
- |
|
Proceeds received on loan payable |
|
5,000 |
|
|
- |
|
|
45,371 |
|
|
2,500 |
|
Repayment of loan payable |
|
3 |
|
|
(4,387 |
) |
|
(4,600 |
) |
|
(15,212 |
) |
Payment of loan payable costs |
|
2 |
|
|
(4 |
) |
|
(639 |
) |
|
(8 |
) |
Net cash (used in) provided by financing activities |
|
117 |
|
|
(4,484 |
) |
|
34,914 |
|
|
(13,062 |
) |
|
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
|
|
|
Additions to property and equipment |
|
(10,308 |
) |
|
(7,003 |
) |
|
(31,157 |
) |
|
(19,439 |
) |
Acquisition of a portion of the minority interest in Ting Virginia,
LLC |
|
- |
|
|
- |
|
|
- |
|
|
(1,200 |
) |
Acquisition of Ascio Technologies Inc. (net of cash of $1,437) |
|
- |
|
|
- |
|
|
(28,024 |
) |
|
- |
|
Acquisition of intangible assets |
|
(1,038 |
) |
|
(113 |
) |
|
(3,566 |
) |
|
(114 |
) |
Net cash used in investing activities |
|
(11,346 |
) |
|
(7,116 |
) |
|
(62,747 |
) |
|
(20,753 |
) |
|
|
|
|
|
|
|
|
|
(Decrease)
increase in cash and cash equivalents |
|
(14 |
) |
|
(386 |
) |
|
(648 |
) |
|
(7,274 |
) |
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents, beginning of period |
|
12,003 |
|
|
11,161 |
|
|
12,637 |
|
|
18,049 |
|
Cash and
cash equivalents, end of period |
$ |
11,989 |
|
$ |
10,775 |
|
$ |
11,989 |
|
$ |
10,775 |
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information: |
|
|
|
|
|
|
|
|
Interest paid |
$ |
1,267 |
|
$ |
919 |
|
$ |
3,561 |
|
$ |
2,781 |
|
Income taxes paid, net |
$ |
1,959 |
|
$ |
1,793 |
|
$ |
6,123 |
|
$ |
5,370 |
|
|
|
|
|
|
|
|
|
|
Supplementary disclosure of non-cash investing and financing
activities: |
|
|
|
|
|
|
|
|
Property and equipment acquired during the period not yet paid
for |
$ |
991 |
|
$ |
382 |
|
$ |
991 |
|
$ |
382 |
|
Acquisition of intangible assets transferred from other assets |
$ |
2,501 |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
*The Company has
initially applied ASC 2016-02 (Topic 842) using the modified
retrospective method. Under this method, the comparative
information is not restated. |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net income to Adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
(In
Thousands of U.S. Dollars) |
|
Three months
ended September 30, |
|
Nine months
ended September 30, |
|
(unaudited) |
|
2019(unaudited) |
|
2018(unaudited) |
|
2019(unaudited) |
|
2018(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Net income for the period |
$ |
4,205 |
|
$ |
5,346 |
|
$ |
9,620 |
|
$ |
12,699 |
|
Depreciation
of property and equipment |
|
2,348 |
|
|
1,445 |
|
|
6,445 |
|
|
4,006 |
|
Loss on
disposition of property and equipment |
|
73 |
|
|
- |
|
|
73 |
|
|
- |
|
Amortization
of intangible assets |
|
2,858 |
|
|
2,296 |
|
|
7,463 |
|
|
6,953 |
|
Interest
expense, net |
|
1,263 |
|
|
914 |
|
|
3,549 |
|
|
2,761 |
|
Provision
for income taxes |
|
3,133 |
|
|
1,370 |
|
|
6,209 |
|
|
3,781 |
|
Stock-based
compensation |
|
830 |
|
|
711 |
|
|
2,040 |
|
|
1,904 |
|
Unrealized
loss (gain) on change in fair value of forward contracts |
|
(16 |
) |
|
(35 |
) |
|
(204 |
) |
|
7 |
|
Unrealized
loss (gain) on foreign exchange revaluation of foreign denominated
monetary assets and liabilities |
|
88 |
|
|
(269 |
) |
|
(402 |
) |
|
191 |
|
Acquisition
and other costs1 |
|
50 |
|
|
80 |
|
|
956 |
|
|
1,123 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
14,832 |
|
$ |
11,858 |
|
$ |
35,749 |
|
$ |
33,425 |
|
|
|
|
|
|
|
|
|
|
|
1 Acquisition and
other costs represents transaction-related expenses, transitional
expenses, such as duplicative post-acquisition expenses, primarily
related to our acquisition of eNom in January 2017 and Ascio in
March 2019. Expenses include severance or transitional costs
associated with department, operational or overall company
restructuring efforts, including geographic alignments. |
|
|
|
|
|
|
|
|
|
|
This release includes forward-looking statements as that
term is defined in the U.S. Private Securities Litigation Reform
Act of 1995, including statements regarding our expectations
regarding our future financial results and, including, without
limitation, our expectations regarding our ability to realize
synergies from the Enom acquisition and our expectation for growth
of Ting Internet. These statements are based on management’s
current expectations and are subject to a number of uncertainties
and risks that could cause actual results to differ materially from
those described in the forward-looking statements. Information
about other potential factors that could affect Tucows’ business,
results of operations and financial condition is included in the
Risk Factors sections of Tucows’ filings with the Securities and
Exchange Commission. All forward-looking statements should be
evaluated with the understanding of their inherent uncertainty. All
forward-looking statements are based on information available to
Tucows as of the date they are made. Tucows assumes no obligation
to update any forward-looking statements, except as may be required
by law.
Tucows, Ting, OpenSRS, Enom, Ascio and Hover are registered
trademarks of Tucows Inc. or its subsidiaries.
Contact:Lawrence Chamberlain(416) 519-4196 |
lawrence.chamberlain@loderockadvisors.com
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