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| 8-K - MULTIBAND CORP | v217303_8k.htm |
Multiband Announces 2010 Fourth Quarter and Year End Record Results
Full year EBITDA was record $21.8 million, up 474% from $3.8 million in 2009
Income from operations increased to $13.7 million from a loss of $(7.2) million in year-ago period
EPS (Earnings Per Share-Basic) at $1.32
EPS (Diluted) at $0.92
Income Before Taxes Totals $9.6 Million or $0.96 Per Share
March 31, 2011 MINNEAPOLIS --(Business Wire)-- Multiband Corporation, (NASDAQ:MBND), a leading Home Service Provider (HSP) for DIRECTV and the nation's largest DIRECTV Master System Operator (MSO) for Multiple Dwelling Units (MDU’s), today announced financial results for the fourth quarter and year ended December 31, 2010.
Financial Highlights
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Fourth quarter revenues were up 4% to $70.6 million compared to $68.0 million for the quarter ended December 31, 2009.
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Full year 2010 gross margin increased by to 30% compared to 23% for the year-ago period.
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Operating income for the year increased to $13.7 million compared to operating loss of $(7.2) million in the year-ago period.
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EPS (Earnings Per Share-Basic) was $1.32 based upon 10.0175 million shares outstanding.
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EPS (Diluted) was $0.92 based upon 15.681 million shares outstanding.
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EBITDA, a non-GAAP measure, was $21.8 million for the full year 2010, up $18.0 million from $3.8 million in 2009. Fourth quarter 2010 EBITDA was $5.4 million, up 32% compared to $4.1 million in the fourth quarter of 2009.
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Net Income Before Taxes was $9.6 million, up from a loss of $11.0 million a year ago, an improvement of $20.6 million.
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2010 net income for the quarter was $12.1 million, or $1.18 net income per share, which included an $8.9 million income tax benefit, compared to net income of $513,000, or $0.05 per share in the year-ago period. Full year net income increased to $14.7 million, or $1.47 per share which included a $5.1 million income tax benefit, compared to net loss of $(10.0) million or $(1.17) per share in the same period of 2009.
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Fourth Quarter 2010 Financials
Revenues for the three month period ended December 31, 2010 increased 1.0% sequentially to $70.6 million from $69.9 million in third quarter 2010 and increased 3.8% compared to $68.0 million for the quarter ended December 31, 2009.
Fourth quarter 2010 gross margins improved to 30.4% compared to 28.4% for the year-ago period and increased from 29.3% in third quarter 2010 driven by efficiencies at the Company’s HSP segment including improved installation procedures, inventory controls, fleet management, and other operating metrics.
Selling, general and administrative expenses for the fourth quarter increased 4.7% to $15.5 million (22.0% of revenues) from $14.8 million (21.8% of revenues) in the same period last year.
Operating income was $4.2 million for the quarter ended December 31, 2010 doubling the operating income of $2.1 million in the same period last year.
EBITDA, a non-GAAP measure, was $5.4 million for the fourth quarter of 2010, a 32% improvement from $4.1 million in the fourth quarter of 2009.
In the fourth quarter of 2010, the Company generated net income attributable to common stockholders of $11.7 million, or $1.14 per basic share and $0.73 per diluted share, which included an $8.9 million income tax benefit, compared to net income of $357,000, or $0.04 per basic and $0.03 per diluted share in the year-ago period.
YTD 2010 Financial Results
Revenues for the year ended December 31, 2010 decreased 1.3% to $265.6 million from $269.0 million for the year ended December 31, 2009. Gross margins for the year improved to 29.9% compared to 22.8last year.
Operating income was $13.7 million for the year ended December 31, 2010 compared to an operating loss of $(7.2) million in the same period last year. The Company generated net income attributable to common stockholders of $13.2 million, or $1.32 per basic and $0.91 per diluted share, which included a $5.1 million income tax benefit, compared to a net loss of $(10.0) million or $(1.04) per basic and diluted share in the same period of 2009. EBITDA, a non-GAAP measure, was a record $21.8 million for the full year of 2010, a 474% improvement from $3.8 million in the same period in 2009.
The Company generated approximately $11.8 million in operating cash flow for the year ended December 31, 2010 compared to cash used in operating activities of $(3.9) million in the same period last year, which resulted in a 57.0% improvement in the working capital deficit to $12.3 million as of the end of 2010 from $28.6 million as of the end of 2009. We had $1.2 million in cash and cash equivalents as of December 31, 2010 compared to $2.2 million at December 31, 2009. The reduction in cash was a direct result of tax planning strategies employed to reduce current year taxable income. Specifically, the Company accelerated the payment of amounts related to litigation settled in late 2009 and several other expenses totaling approximately $4 million, resulting in favorable tax treatment.
James L. Mandel, CEO of Multiband, commented, “We delivered another exceptionally strong quarter and full year of profitability as well as sequential revenue growth and profitability which has accelerated the momentum from the platform we have created in the last two years. The operating efficiencies in our expanded platform continued to contribute to the significant year over year EBITDA, which grew to $5.4 million for the three months ended December 31, 2010 and $21.8 million for the full year. In addition, gross margins, operating and net income expanded significantly.”
Mr. Mandel continued, “For the fourth quarter, MDU revenues were up 15.6% sequentially from the third quarter of 2010 and was the highest quarterly revenue amount since the second quarter of 2009. This reflects heightened activity in our MDU fulfillment operations associated with DIRECTV owned and operated projects. In addition, the improvement in net income reflects increased HSP incentive revenue, improved inventory control and reduced technician training expense.
Mr. Mandel concluded, “We significantly strengthened our balance sheet over the year. Shareholders’ equity increased approximately 296%, to $20.2 million as of the end of December 31, 2010, from $5.1 million as of December 31, 2009. We now enter 2011 with a stable platform capable of handling significantly higher amounts of activity, integration, and expansion.”
Conference Call Information
A conference call and live webcast will take place Thursday, March 31, 2011, at 11:00 a.m. Eastern Daylight Time.
Anyone interested in participating should call 1-877-941-1428 if calling within the United States or 1-480-629-9665 if calling internationally. There will be a playback available until April 7, 2011. To listen to the playback, please call 1-877-870-5176 if calling within the United States or 1-858-384-5517 if calling internationally. Please use pin number 4426569 for the replay.
The call will also be accompanied live by webcast over the Internet and accessible at http://viavid.net/dce.aspx?sid=00008344.
About Multiband Corporation
Multiband Corporation (Nasdaq: MBND) is the largest nationwide DIRECTV master system operator in the Multiple Dwelling Unit (MDU) market and one of the largest full-service home service providers (HSPs), handling around 20% of all DIRECTV's installations, maintenance and upgrades for residents of single-family homes. Multiband is a full-service operator for a number of other providers within the footprint as well, offering solutions for watch, talk, surf and security, and is equipped with a retail store and an online store to strive to be a customer's "one source solution" for all electronic needs. Additionally, Multiband is a leading provider of software and integrated billing services to MDUs on a single bill, including video, voice, data and other value-added local services, both directly and through strategic arrangements. Multiband is headquartered in Minneapolis, Minn., and has offices strategically placed around the continental United States.
Statements about our future expectations are "forward-looking statements" within the meaning of applicable Federal Securities Laws, and are not guarantees of future performance. When used herein, the words "may," "will," "should," "anticipate," "believe," "appear," "intend," "plan," "expect," "estimate," "approximate," and similar expressions are intended to identify such forward-looking statements. These statements involve risks and uncertainties inherent in our business, including those set forth in our most recent Annual Report on Form 10-K for the year ended December 31, 2009, and other filings with the SEC, and are subject to change at any time. Our actual results could differ materially from these forward-looking statements. We undertake no obligation to update publicly any forward-looking statement.
Company Contact
Contact: James Mandel, CEO for Multiband Corporation at (763)504-3000
Investor Contact
Cameron Donahue, Hayden IR, (651) 653-1854 or cameron@haydenir.com
- tables follow -
MULTIBAND CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
(in thousands, except share and per share amounts)
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2010
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2009
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2008
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REVENUES
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$ | 265,594 | $ | 268,994 | $ | 42,986 | ||||||
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COSTS AND EXPENSES
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Cost of products and services (exclusive of depreciation and amortization shown separately below)
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186,294 | 207,533 | 28,426 | |||||||||
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Selling, general and administrative
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57,173 | 57,778 | 10,500 | |||||||||
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Depreciation and amortization
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8,298 | 10,906 | 3,025 | |||||||||
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Impairment of assets
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160 | - | 132 | |||||||||
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Total costs and expenses
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251,925 | 276,217 | 42,083 | |||||||||
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INCOME (LOSS) FROM OPERATIONS
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13,669 | (7,223 | ) | 903 | ||||||||
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OTHER INCOME (EXPENSE)
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Interest expense
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(4,202 | ) | (4,104 | ) | (657 | ) | ||||||
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Interest income
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8 | 19 | 58 | |||||||||
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Management consulting income
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- | - | 2,366 | |||||||||
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Other income
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103 | 337 | 59 | |||||||||
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Total other income (expense)
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(4,091 | ) | (3,748 | ) | 1,826 | |||||||
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NET INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTEREST IN SUBSIDIARIES
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9,578 | (10,971 | ) | 2,729 | ||||||||
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PROVISION(BENEFIT) FOR INCOME TAXES
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(5,116 | ) | 406 | 1,132 | ||||||||
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NET INCOME (LOSS)
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14,694 | (11,377 | ) | 1,597 | ||||||||
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LESS: NET INCOME (LOSS) ATTRIBUTABLE TO THE NONCONTROLLING INTEREST IN SUBSIDIARIES
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- | (1,727 | ) | 652 | ||||||||
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NET INCOME (LOSS) ATTRIBUTABLE TO MULTIBAND CORPORATION AND SUBSIDIARIES
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14,694 | (9,650 | ) | 945 | ||||||||
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Preferred stock dividends
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1,488 | 370 | 4,088 | |||||||||
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INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
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$ | 13,206 | $ | (10,020 | ) | $ | (3,143 | ) | ||||
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INCOME (LOSS) PER COMMON SHARE – BASIC
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$ | 1.32 | $ | (1.04 | ) | $ | (0.34 | ) | ||||
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INCOME (LOSS) PER COMMON SHARE – DILUTED
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$ | 0.91 | $ | (1.04 | ) | $ | (0.34 | ) | ||||
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Weighted average common shares outstanding – basic
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10,016,717 | 9,665,316 | 9,302,570 | |||||||||
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Weighted average common shares outstanding – diluted
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15,680,918 | 9,665,316 | 9,302,570 | |||||||||
MULTIBAND CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
(in thousands)
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2010
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2009
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2008
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NET INCOME (LOSS)
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$ | 14,694 | $ | (11,377 | ) | $ | 1,597 | |||||
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OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
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Unrealized gains (losses) on securities:
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Unrealized holding gains (losses) arising during period
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(5 | ) | (39 | ) | 46 | |||||||
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COMPREHENSIVE INCOME (LOSS) BEFORE NONCONTROLLING INTEREST IN SUBSIDIARIES
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14,689 | (11,416 | ) | 1,643 | ||||||||
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COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE NONCONTROLLING INTEREST IN SUBSIDIARIES
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- | (1,727 | ) | 652 | ||||||||
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COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO MULTIBAND CORPORATION AND SUBSIDIARIES
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$ | 14,689 | $ | (9,689 | ) | $ | 991 | |||||
MULTIBAND CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2010 AND 2009
ASSETS
(in thousands)
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2010
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2009
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CURRENT ASSETS
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Cash and cash equivalents
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$
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1,204
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$
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2,240
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Securities available for sale
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2
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7
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Accounts receivable, net
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17,223
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14,336
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Other receivable – related party
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518
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518
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Inventories
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11,066
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8,561
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Prepaid expenses and other
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1,939
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549
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Current portion of notes receivable
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6
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6
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Income tax receivable
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3,133
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-
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Deferred tax asset – current
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5,598
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-
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Total Current Assets
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40,689
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26,217
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PROPERTY AND EQUIPMENT, NET
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7,177
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8,546
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OTHER ASSETS
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Goodwill
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38,042
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38,067
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Intangible assets, net
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17,435
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22,677
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Other receivable – related party – long term
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352
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1,011
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Notes receivable – long-term, net of current portion
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27
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25
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Deferred tax asset – long term
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1,897
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-
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Other assets
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6,049
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2,988
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Total Other Assets
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63,802
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64,768
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TOTAL ASSETS
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$
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111,668
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$
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99,531
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MULTIBAND CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2010 AND 2009
LIABILITIES AND STOCKHOLDERS' EQUITY
(in thousands, except share and liquidation preference amounts)
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2010
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2009
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CURRENT LIABILITIES
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Line of credit
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$ | 49 | $ | 49 | ||||
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Short term debt
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44 | 66 | ||||||
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Related parties debt – short term
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665 | 1,345 | ||||||
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Current portion of long-term debt
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- | 228 | ||||||
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Current portion of capital lease obligations
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444 | 489 | ||||||
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Accounts payable
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26,997 | 28,008 | ||||||
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Accrued liabilities
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22,971 | 22,026 | ||||||
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Deferred service obligations and revenue
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1,822 | 2,602 | ||||||
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Total Current Liabilities
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52,992 | 54,813 | ||||||
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LONG-TERM LIABILITIES
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Accrued liabilities – long term
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3,697 | 4,415 | ||||||
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Long-term debt, net of current portion and original issue discount
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4,931 | 4,853 | ||||||
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Related parties debt - long-term, net of current portion and original issue discount
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29,449 | 29,856 | ||||||
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Capital lease obligations, net of current portion
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356 | 491 | ||||||
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Total Liabilities
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91,425 | 94,428 | ||||||
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COMMITMENTS AND CONTINGENCIES
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STOCKHOLDERS' EQUITY
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Cumulative convertible preferred stock, no par value:
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8% Class A (14,171 shares issued and outstanding, $148,796 liquidation preference)
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213 | 213 | ||||||
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10% Class B (0 and 1,370 shares issued and outstanding, $0 and $14,385 liquidation preference)
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- | 14 | ||||||
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10% Class C (112,000 and 112,880 shares issued and outstanding, $1,120,000 and $1,128,800 liquidation preference)
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1,453 | 1,465 | ||||||
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10% Class F (150,000 shares issued and outstanding, $1,500,000 liquidation preference)
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1,500 | 1,500 | ||||||
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8% Class G (11,595 shares issued and outstanding, $115,950 liquidation preference)
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48 | 48 | ||||||
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6% Class H (1.23 and 1.25 shares issued and outstanding, $123,000 and $125,000 liquidation preference)
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- | - | ||||||
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8% Class J (100 shares issued and outstanding, $10,000,000 liquidation preference)
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10,000 | 10,000 | ||||||
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15% Class E cumulative preferred stock, no par value, (195,000 and 220,000 shares issued and outstanding, $1,950,000 and $2,200,000 liquidation preference)
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1,950 | 2,200 | ||||||
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Common stock, no par value (10,305,845 and 9,722,924 shares issued and outstanding)
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39,311 | 38,054 | ||||||
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Stock subscriptions receivable
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- | (26 | ) | |||||
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Stock-based compensation and warrants
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47,504 | 46,572 | ||||||
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Accumulated other comprehensive income – unrealized gain on securities available for sale
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2 | 7 | ||||||
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Accumulated deficit
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(81,738 | ) | (94,944 | ) | ||||
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Total Stockholders' Equity
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20,243 | 5,103 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 111,668 | $ | 99,531 | ||||
EBITDA Computation (2010, 1Q10 – 4Q10) (in thousands)
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2010
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4Q10 | 3Q10 | 2Q10 | 1Q10 | |||||||||||||||||
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(i)
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Net Income (Quarter)
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$ | 14,694 | $ | 12,095 | $ | 1,168 | $ | 2,395 | $ | (964 | ) | |||||||||
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(ii)
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Non Operating
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Gains/Losses
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(400 | ) | (612 | ) | 240 | (322 | ) | 294 | |||||||||||||
| (iii) |
Adjusted Net Income
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$ | 14,294 | $ | 11,483 | $ | 1,408 | $ | 2,073 | $ | (670 | ) | |||||||||
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(Sum of (i)minus (ii)
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| (iv) |
Interest Expense
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4,202 | 987 | 1,026 | 1,066 | 1,123 | |||||||||||||||
| (v) |
Depreciation & Amortization
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8,457 | 1,849 | 2,027 | 2,145 | 2,436 | |||||||||||||||
| (vi) |
Taxes
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$ | (5,116 | ) | $ | (8,872 | ) | $ | 1,573 | $ | 1,983 | $ | 200 | ||||||||
| (vii) |
EBITDA
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$ | 21,837 | $ | 5,447 | $ | 6,034 | $ | 7,267 | $ | 3,089 | ||||||||||
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iii + iv + v + vi
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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.multibandusa.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.
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