Tucows Inc. (NASDAQ:TCX, TSX:TC), a provider of Fiber Internet
Services, Mobile Services, Domain Name Services and other Internet
services, today reported its financial results for the second
quarter ended June 30, 2021. All figures are in U.S. dollars.
COVID-19: Tucows shareholders and
prospective investors are encouraged to read Tucows’ public
statement regarding COVID-19, which is available here:
https://bit.ly/2LavpOc.
Note on the Financial Impact of Tucows’ Sale of Ting
Mobile Customer Relationships and Transition to Mobile Services
Enabler Platform:
As previously announced, effective August 1, 2020 most of
Tucows’ mobile customers relationships were sold to DISH Networks
(“DISH”) as part of Tucows’ transition of its mobile business to a
Mobile Services Enabler (MSE) model from a Mobile Virtual Network
Operator (MVNO) model, under which DISH became Tucows’ first MSE
customer. Accordingly, the results of the Mobile Services segment
for the second quarter of 2021 reflects operations under the new
MSE model with prior periods being composed entirely of operations
under Tucows’ previous MVNO model.
Under the terms of the earn out arrangement for the Ting
customer base acquired by DISH, the income generated by the
customer base acquired by Dish are recognized (net of expenses) as
“Other Income” under the heading “Gain on Sale of Ting Customer
Assets”. As a result, revenue and gross margin for the Mobile
Services segment for the second quarter of 2021 are lower than
those for the second quarter of 2020. Tucows will recognize fees
per subscriber for customers owned by DISH under the Ting brand as
well as customers under DISH’s Boost brand that are added to
Tucows’ MSE platform, as Mobile Platform Services revenue under the
terms of the MSE Agreement signed with DISH. For more information,
see Tucows’ Financial Statements and Management Discussion and
Analysis for the second quarter of 2021.
Summary Financial
Results(In Thousands of US Dollars, Except Per
Share Data)
|
3 Months ended June 30 |
6 Months ended June 30 |
2021(Unaudited) |
2020(Unaudited) |
% Change |
2021(Unaudited) |
2020(Unaudited) |
% Change |
Net revenue |
75,093 |
82,122 |
(8.6%) |
145,968 |
166,107 |
(12.1%) |
Gross Profit |
18,239 |
22,966 |
(20.6%) |
35,692 |
48,116 |
(25.8%) |
Gain on Sale of Ting Customer
Assets1 |
4,808 |
- |
n/a |
10,203 |
- |
n/a |
Net income |
1,807 |
157 |
1,051% |
3,956 |
2,991 |
32.3% |
Basic Net earnings per common share |
0.17 |
0.01 |
1,600% |
0.37 |
0.28 |
31.8% |
Adjusted EBITDA1 |
11,158 |
12,175 |
(8.4%) |
23,881 |
24,856 |
(3.9%) |
Net cash provided by operating activities |
3,518 |
8,939 |
(60.6%) |
17,604 |
23,012 |
(23.5%) |
- This Non-GAAP financial measure is described below and
reconciled to GAAP net income in the accompanying table.
Summary of Revenues, Gross Profit and
Adjusted EBITDA(In Thousands of US
Dollars)
|
Revenue |
Gross Profit |
Adj. EBITDA1 |
|
3 Months ended June 30 |
3 Months endedJune 30 |
3 Months ended June 30 |
|
2021(Unaudited) |
2020(Unaudited) |
2021(Unaudited) |
2020(Unaudited) |
2021(Unaudited) |
2020(Unaudited) |
Fiber Internet Services: |
|
|
Fiber Internet Services |
5,825 |
4,414 |
2,799 |
2,749 |
(3,320) |
(1,071) |
|
|
|
|
|
|
|
Mobile Services: |
Retail Mobile Services |
2,548 |
17,567 |
1,061 |
8,907 |
|
|
Mobile Platform Services |
2,457 |
- |
2,364 |
- |
|
|
Other Professional Services |
2,001 |
- |
261 |
- |
|
|
Total Mobile Services |
7,006 |
17,567 |
3,686 |
8,907 |
5,284 |
3,868 |
|
|
|
|
|
|
|
Domain Services: |
|
|
Wholesale |
|
|
|
|
|
|
Domain Services |
47,883 |
46,206 |
10,176 |
9,852 |
|
|
Value Added Services |
5,482 |
4,741 |
4,899 |
4,008 |
|
|
Total Wholesale |
53,365 |
50,947 |
15,075 |
13,860 |
|
|
|
|
|
|
|
|
|
Retail |
8,897 |
9,194 |
4,400 |
4,816 |
|
|
Total Domain Services |
62,262 |
60,141 |
19,475 |
18,676 |
12,750 |
12,351 |
Network Expenses: |
|
|
Network, other costs |
n/a |
n/a |
3,612 |
2,485 |
n/a |
n/a |
Network, depreciation and amortization costs |
n/a |
n/a |
4,108 |
3,356 |
n/a |
n/a |
Network, impairment |
n/a |
n/a |
1 |
1,525 |
n/a |
n/a |
Total Network expenses |
n/a |
n/a |
7,721 |
7,366 |
n/a |
n/a |
|
|
|
|
|
|
|
Total |
75,093 |
82,122 |
18,239 |
22,966 |
n/a |
n/a |
“The second quarter marked another solid financial performance
for Tucows with revenue and gross margin from our Domains Services
and Fiber Internet Services businesses increasing 5% and 4%,
respectively, year-over-year,” said Elliot Noss, President and
Chief Executive Officer, Tucows Inc. “On top of its continued
consistency, our Domain Services business is benefitting from the
growth in domains under management generated by the pandemic impact
last year, as well as our focus on maximizing gross margin. Our
Mobile Services business continues to move forward in line with our
expectations. And Ting Internet once again saw record performance
across key build metrics, including by far our largest capital
expenditure and passed address additions in a quarter, as growth in
the subscriber base gained further momentum, with net additions up
47% from Q1 and more than triple that of Q2 of last year.”
Financial Results Net revenue for
the second quarter of 2021 was $75.1 million compared with $82.1
million for the second quarter of 2020. The majority of the
decrease was the result of the absence of Ting Mobile MVNO revenue
in the second quarter of 2021 following the Company’s sale of its
Ting Mobile customer relationships to DISH during the third quarter
of 2020 and the related earn out being recognized as Other Income.
Excluding the Mobile Services business, net revenue for the
combined Domains Services and Ting Internet businesses for the
second quarter of 2021 increased 5% from the second quarter of
2020.
Gross profit for the second quarter of 2021 was $18.2 million
compared with $23.0 million for the second quarter of 2020. The
decrease in gross profit is attributable to the same factors as the
decrease in revenue. Excluding the Mobile Services business, gross
margin for the combined Domains Services and Ting Internet
businesses for the second quarter of 2021 increased 4% from the
second quarter of 2020.
Net income for the second quarter of 2021 was $1.8 million, or
$0.17 per share, compared with $0.2 million, or $0.01 per share,
for the second quarter of 2020.
Adjusted EBITDA1 for the second quarter of 2021 was $11.2
million compared with $12.2 million for the second quarter of 2020.
Adjusted EBITDA1 is impacted by the continued investment in Ting
Fiber.
Cash and cash equivalents at the end of the second quarter of
2021 were $7.3 million compared with $8.3 million at the end of the
first quarter of 2021 and $8.9 million at the end of the second
quarter of 2020.
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 (net), accretion of contingent consideration, stock-based
compensation, asset impairment, gains and losses from unrealized
foreign currency transactions and costs that are one-time in nature
and not indicative of on-going performance (profitability),
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 adjusted EBITDA to income before
provision for income taxes (dollars in thousands):
|
3 months ended June 30 |
6 months ended June 30 |
|
2021 (Unaudited) |
2020 (Unaudited) |
2021 (Unaudited) |
2020 (Unaudited) |
Adjusted EBITDA |
11,158 |
12,175 |
23,881 |
24,856 |
Depreciation of property and equipment |
4,211 |
3,155 |
7,970 |
6,145 |
Impairment and loss on disposition of property and equipment |
6 |
1,525 |
66 |
1,525 |
Amortization of intangible assets |
2,346 |
2,830 |
4,965 |
6,131 |
Impairment of definite life intangible assets |
- |
1,431 |
- |
1,431 |
Interest expense, net |
1,003 |
846 |
1,939 |
1,996 |
Accretion of contingent consideration |
95 |
85 |
191 |
172 |
Stock-based compensation |
1,209 |
847 |
2,231 |
1,648 |
Unrealized loss (gain) on change in fair value of forward
contracts |
191 |
(436) |
357 |
(88) |
Unrealized loss (gain) on foreign exchange revaluation of foreign
denominated monetary assets and liabilities |
42 |
441 |
106 |
399 |
Acquisition and transition costs* |
367 |
845 |
1,136 |
956 |
|
|
|
|
|
Income before provision for income taxes |
1,688 |
606 |
4,920 |
4,541 |
*Acquisition and other costs represent transaction-related
expenses, transitional expenses, such as redundant post-acquisition
expenses, primarily related to our acquisition of Ascio in March
2019 and Cedar in January 2020 and disposition of certain Ting
Mobile assets in August 2020. Expenses include severance or
transitional costs associated with department, operational or
overall company restructuring efforts, including geographic
alignments. |
Conference Call
Concurrent with the dissemination of its quarterly financial
results news release at 5:05 pm ET on Thursday, August 5,
management’s pre-recorded audio commentary (and transcript)
discussing the quarter and outlook for the Company, will be posted
to the Tucows website at
http://www.tucows.com/investors/financials. In lieu of a live
question and answer period, for the subsequent six days, until
Wednesday, August 11, shareholders, analysts and prospective
investors can submit questions to Tucows’ management at
ir@tucows.com. Management will post responses to questions of
general interest (audio recording and transcript) to the Company’s
website at http://www.tucows.com/investors/financials/ on
Tuesday, August 17, at approximately 4 pm ET. All questions will
receive a response, however, questions of a more specific nature
may be responded to directly.
About Tucows
Tucows is a provider of Fiber Internet Services, Mobile
Services, Domain Name Services and other Internet services. Ting
Internet (https://ting.com/internet) delivers fixed fiber Internet
access with outstanding customer support. Tucows’ mobile services
enabler (MSE) platform provides network access, provisioning and
billing services for mobile virtual network operators (MVNOs).
OpenSRS (https://opensrs.com), Enom (https://www.enom.com) and
Ascio (https://ascio.com) combined manage approximately 26 million
domain names and millions of value-added services through a global
reseller network of over 36,000 web hosts and ISPs. Hover
(https://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
(https://tucows.com).
|
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Tucows
Inc. |
|
Consolidated
Balance Sheets |
|
(Dollar
amounts in thousands of U.S. dollars) |
|
|
|
|
|
|
|
|
|
June
30, |
|
December
31, |
|
|
|
|
2021 |
|
|
2020 |
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
7,258 |
|
$ |
8,311 |
|
Accounts receivable |
|
|
14,811 |
|
|
15,540 |
|
Inventory |
|
|
2,836 |
|
|
1,875 |
|
Prepaid expenses and deposits |
|
|
19,637 |
|
|
16,845 |
|
Derivative instrument asset, current portion |
|
|
1,704 |
|
|
3,860 |
|
Deferred costs of fulfillment, current portion |
|
|
96,148 |
|
|
93,467 |
|
Income taxes recoverable |
|
|
4,041 |
|
|
1,302 |
|
Total current assets |
|
|
146,435 |
|
|
141,200 |
|
|
|
|
|
|
|
Deferred
costs of fulfillment, long-term portion |
|
|
18,490 |
|
|
17,599 |
|
Derivative
instrument asset, long-term portion |
|
|
83 |
|
|
- |
|
Investments |
|
|
2,012 |
|
|
- |
|
Deferred tax
asset |
|
|
168 |
|
|
226 |
|
Property and
equipment |
|
|
144,187 |
|
|
117,530 |
|
Right of use
operating lease asset |
|
|
12,541 |
|
|
11,238 |
|
Contract
costs |
|
|
617 |
|
|
362 |
|
Intangible
assets |
|
|
42,695 |
|
|
47,444 |
|
Goodwill |
|
|
116,304 |
|
|
116,304 |
|
Total assets |
|
$ |
483,532 |
|
$ |
451,903 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts payable |
|
$ |
7,430 |
|
$ |
6,329 |
|
Accrued liabilities |
|
|
14,003 |
|
|
10,235 |
|
Customer deposits |
|
|
15,812 |
|
|
15,402 |
|
Derivative instrument liability, current portion |
|
|
110 |
|
|
99 |
|
Operating lease liability, current portion |
|
|
2,270 |
|
|
1,761 |
|
Deferred revenue, current portion |
|
|
130,094 |
|
|
127,336 |
|
Accreditation fees payable, current portion |
|
|
958 |
|
|
940 |
|
Income taxes payable |
|
|
20 |
|
|
863 |
|
Total current liabilities |
|
|
170,697 |
|
|
162,965 |
|
|
|
|
|
|
|
Derivative
instrument liability, long-term portion |
|
|
- |
|
|
114 |
|
Deferred
revenue, long-term portion |
|
|
24,766 |
|
|
24,909 |
|
Accreditation fees payable, long-term portion |
|
|
183 |
|
|
195 |
|
Operating
lease liability, long-term portion |
|
|
10,202 |
|
|
9,179 |
|
Loan
payable, long-term portion |
|
|
139,867 |
|
|
121,733 |
|
Other
long-term liability |
|
|
3,607 |
|
|
3,416 |
|
Deferred tax
liability |
|
|
23,386 |
|
|
24,694 |
|
|
|
|
|
|
|
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;
10,665,514 shares issued and outstanding as of June 30, 2021 and
10,612,414 shares issued and outstanding as of December 31,
2020 |
|
|
23,457 |
|
|
20,798 |
|
Additional paid-in capital |
|
|
2,208 |
|
|
1,458 |
|
Retained earnings |
|
|
84,062 |
|
|
80,106 |
|
Accumulated other comprehensive income (loss) |
|
|
1,097 |
|
|
2,336 |
|
Total stockholders' equity |
|
|
110,824 |
|
|
104,698 |
|
Total
liabilities and stockholders' equity |
|
$ |
483,532 |
|
$ |
451,903 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tucows
Inc. |
|
|
Consolidated
Statements of Operations and Comprehensive Income |
|
|
(Dollar
amounts in thousands of U.S. dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended June 30, |
|
Six months
ended June 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
Net
revenues |
$ |
75,093 |
|
$ |
82,122 |
|
$ |
145,968 |
|
$ |
166,107 |
|
|
|
|
|
|
|
|
|
|
Cost of
revenues: |
|
|
|
|
|
|
|
|
Direct cost of revenues |
|
49,133 |
|
|
51,790 |
|
|
95,320 |
|
|
104,978 |
|
Network expenses (*) |
|
3,612 |
|
|
2,485 |
|
|
6,850 |
|
|
4,901 |
|
Depreciation of property and equipment |
|
4,084 |
|
|
3,030 |
|
|
7,722 |
|
|
5,907 |
|
Amortization of intangible assets |
|
24 |
|
|
326 |
|
|
323 |
|
|
680 |
|
Impairment of property and equipment |
|
1 |
|
|
1,525 |
|
|
61 |
|
|
1,525 |
|
Total cost of revenues |
|
56,854 |
|
|
59,156 |
|
|
110,276 |
|
|
117,991 |
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
18,239 |
|
|
22,966 |
|
|
35,692 |
|
|
48,116 |
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
Sales and marketing (*) |
$ |
9,376 |
|
$ |
9,218 |
|
$ |
17,687 |
|
$ |
18,203 |
|
Technical operations and development (*) |
|
3,170 |
|
|
3,067 |
|
|
6,302 |
|
|
5,818 |
|
General and administrative (*) |
|
5,210 |
|
|
5,465 |
|
|
10,163 |
|
|
10,206 |
|
Depreciation of property and equipment |
|
127 |
|
|
125 |
|
|
248 |
|
|
238 |
|
Loss on disposition of property and equipment |
|
5 |
|
|
- |
|
|
5 |
|
|
- |
|
Amortization of intangible assets |
|
2,322 |
|
|
2,504 |
|
|
4,642 |
|
|
5,451 |
|
Impairment of definite life intangible assets |
|
- |
|
|
1,431 |
|
|
- |
|
|
1,431 |
|
Loss (gain) on currency forward contracts |
|
63 |
|
|
(381 |
) |
|
(190 |
) |
|
60 |
|
Total expenses |
|
20,273 |
|
|
21,429 |
|
|
38,857 |
|
|
41,407 |
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
(2,034 |
) |
|
1,537 |
|
|
(3,165 |
) |
|
6,709 |
|
|
|
|
|
|
|
|
|
|
Other income
(expenses): |
|
|
|
|
|
|
|
|
Interest expense, net |
|
(1,003 |
) |
|
(846 |
) |
|
(1,939 |
) |
|
(1,996 |
) |
Gain on sale of Ting customer assets, net |
|
4,808 |
|
|
- |
|
|
10,203 |
|
|
- |
|
Other expense, net |
|
(83 |
) |
|
(85 |
) |
|
(179 |
) |
|
(172 |
) |
Total other income (expenses) |
|
3,722 |
|
|
(931 |
) |
|
8,085 |
|
|
(2,168 |
) |
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes |
|
1,688 |
|
|
606 |
|
|
4,920 |
|
|
4,541 |
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
(119 |
) |
|
449 |
|
|
964 |
|
|
1,550 |
|
Net income
for the period |
|
1,807 |
|
|
157 |
|
|
3,956 |
|
|
2,991 |
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income, net of tax |
|
|
|
|
|
|
|
|
Unrealized income (loss) on hedging activities |
|
248 |
|
|
1,114 |
|
|
616 |
|
|
(120 |
) |
Net amount reclassified to earnings |
|
(1,021 |
) |
|
200 |
|
|
(1,855 |
) |
|
243 |
|
Other comprehensive income net of tax expense (recovery) of $(235)
and $398 for the three months ended June 30, 2021 and June 30,
2020, $(375) and $32 for the six months ended June 30, 2021 and
June 30, 2020 |
|
(773 |
) |
|
1,314 |
|
|
(1,239 |
) |
|
123 |
|
|
|
|
|
|
|
|
|
|
Comprehensive income, net of tax for the period |
$ |
1,034 |
|
$ |
1,471 |
|
$ |
2,717 |
|
$ |
3,114 |
|
|
|
|
|
|
|
|
|
|
Basic
earnings per common share |
$ |
0.17 |
|
$ |
0.01 |
|
$ |
0.37 |
|
$ |
0.28 |
|
|
|
|
|
|
|
|
|
|
Shares used
in computing basic earnings per common share |
|
10,633,601 |
|
|
10,567,382 |
|
|
10,625,748 |
|
|
10,589,806 |
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per common share |
$ |
0.17 |
|
$ |
0.01 |
|
$ |
0.37 |
|
$ |
0.28 |
|
|
|
|
|
|
|
|
|
|
Shares used
in computing diluted earnings per common share |
|
10,797,921 |
|
|
10,653,527 |
|
|
10,794,523 |
|
|
10,684,304 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*)
Stock-based compensation has been included in expenses as
follows: |
|
|
|
|
|
|
|
|
Network expenses |
$ |
144 |
|
$ |
109 |
|
$ |
269 |
|
$ |
196 |
|
Sales and marketing |
$ |
550 |
|
$ |
374 |
|
$ |
1,056 |
|
$ |
745 |
|
Technical operations and development |
$ |
234 |
|
$ |
183 |
|
$ |
401 |
|
$ |
350 |
|
General and administrative |
$ |
281 |
|
$ |
179 |
|
$ |
505 |
|
$ |
356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tucows
Inc. |
|
Consolidated
Statements of Cash Flows |
|
(Dollar
amounts in thousands of U.S. dollars) |
|
|
|
|
|
|
|
|
|
|
|
Three months
ended June 30, |
|
Six months
ended June 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Cash
provided by: |
|
(unaudited) |
|
(unaudited) |
Operating
activities: |
|
|
|
|
|
|
|
|
Net income for the period |
$ |
1,807 |
|
$ |
157 |
|
$ |
3,956 |
|
$ |
2,991 |
|
Items not involving cash: |
|
|
|
|
|
|
|
|
Depreciation of property and equipment |
|
4,211 |
|
|
3,155 |
|
|
7,970 |
|
|
6,145 |
|
Impairment of property and equipment |
|
1 |
|
|
1,525 |
|
|
61 |
|
|
1,525 |
|
Amortization of debt discount and issuance costs |
|
67 |
|
|
67 |
|
|
134 |
|
|
134 |
|
Amortization of intangible assets |
|
2,346 |
|
|
2,830 |
|
|
4,965 |
|
|
6,131 |
|
Net amortization contract costs |
|
(248 |
) |
|
95 |
|
|
(255 |
) |
|
124 |
|
Impairment of definite life intangible assets |
|
- |
|
|
1,431 |
|
|
- |
|
|
1,431 |
|
Other |
|
- |
|
|
223 |
|
|
- |
|
|
223 |
|
Accretion of contingent consideration |
|
95 |
|
|
85 |
|
|
191 |
|
|
172 |
|
Deferred income taxes (recovery) |
|
(660 |
) |
|
(917 |
) |
|
(880 |
) |
|
(1,107 |
) |
Excess tax benefits on share-based compensation expense |
|
(372 |
) |
|
(164 |
) |
|
(544 |
) |
|
(344 |
) |
Net Right of use operating assets/Operating lease liability |
|
174 |
|
|
291 |
|
|
229 |
|
|
112 |
|
Loss on disposal of domain names |
|
- |
|
|
2 |
|
|
1 |
|
|
15 |
|
Loss (gain) on change in the fair value of forward contracts |
|
191 |
|
|
(436 |
) |
|
357 |
|
|
(88 |
) |
Stock-based compensation |
|
1,209 |
|
|
847 |
|
|
2,231 |
|
|
1,648 |
|
Change in non-cash operating working capital: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
1,057 |
|
|
401 |
|
|
729 |
|
|
2,552 |
|
Inventory |
|
(519 |
) |
|
900 |
|
|
(961 |
) |
|
1,804 |
|
Prepaid expenses and deposits |
|
(5,058 |
) |
|
(3,247 |
) |
|
(2,792 |
) |
|
(3,222 |
) |
Deferred costs of fulfillment |
|
539 |
|
|
(2,204 |
) |
|
(3,572 |
) |
|
(5,057 |
) |
Income taxes recoverable |
|
(2,345 |
) |
|
294 |
|
|
(3,034 |
) |
|
794 |
|
Accounts payable |
|
568 |
|
|
(1,521 |
) |
|
2,019 |
|
|
250 |
|
Accrued liabilities |
|
2,975 |
|
|
2,165 |
|
|
3,768 |
|
|
334 |
|
Customer deposits |
|
285 |
|
|
336 |
|
|
410 |
|
|
394 |
|
Deferred revenue |
|
(2,734 |
) |
|
2,655 |
|
|
2,615 |
|
|
5,997 |
|
Accreditation fees payable |
|
(71 |
) |
|
(31 |
) |
|
6 |
|
|
54 |
|
Net cash provided by operating activities |
|
3,518 |
|
|
8,939 |
|
|
17,604 |
|
|
23,012 |
|
|
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
|
|
Proceeds received on exercise of stock options |
|
1,247 |
|
|
29 |
|
|
1,476 |
|
|
46 |
|
Payment of tax obligations resulting from net exercise of stock
options |
|
(80 |
) |
|
(165 |
) |
|
(298 |
) |
|
(347 |
) |
Repurchase of common stock |
|
- |
|
|
(164 |
) |
|
- |
|
|
(3,281 |
) |
Proceeds received on loan payable |
|
18,000 |
|
|
- |
|
|
18,000 |
|
|
- |
|
Payment of loan payable costs |
|
(1 |
) |
|
(7 |
) |
|
(1 |
) |
|
(32 |
) |
Net cash (used in) provided by financing activities |
|
19,166 |
|
|
(307 |
) |
|
19,177 |
|
|
(3,614 |
) |
|
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
|
|
|
Additions to property and equipment |
|
(21,661 |
) |
|
(12,150 |
) |
|
(35,605 |
) |
|
(22,093 |
) |
Acquisition of Cedar Holdings Group, net of cash of $66 |
|
- |
|
|
- |
|
|
- |
|
|
(8,770 |
) |
Acquisition of intangible assets |
|
(63 |
) |
|
(69 |
) |
|
(217 |
) |
|
(69 |
) |
Investment in securities |
|
(2,012 |
) |
|
- |
|
|
(2,012 |
) |
|
- |
|
Net cash used in investing activities |
|
(23,736 |
) |
|
(12,219 |
) |
|
(37,834 |
) |
|
(30,932 |
) |
|
|
|
|
|
|
|
|
|
(Decrease)
increase in cash and cash equivalents |
|
(1,052 |
) |
|
(3,587 |
) |
|
(1,053 |
) |
|
(11,534 |
) |
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents, beginning of period |
|
8,310 |
|
|
12,446 |
|
|
8,311 |
|
|
20,393 |
|
Cash and
cash equivalents, end of period |
$ |
7,258 |
|
$ |
8,859 |
|
$ |
7,258 |
|
$ |
8,859 |
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information: |
|
|
|
|
|
|
|
|
Interest paid |
$ |
995 |
|
$ |
686 |
|
$ |
1,940 |
|
$ |
1,840 |
|
Income taxes paid, net |
$ |
3,415 |
|
$ |
1,243 |
|
$ |
5,796 |
|
$ |
2,200 |
|
|
|
|
|
|
|
|
|
|
Supplementary disclosure of non-cash investing and financing
activities: |
|
|
|
|
|
|
|
|
Property and equipment acquired during the period not yet paid
for |
$ |
212 |
|
$ |
635 |
|
$ |
212 |
|
$ |
635 |
|
Fair value of shares issues for acquisition of Cedar Holdings
Group |
|
- |
|
$ |
- |
|
$ |
- |
|
$ |
2,000 |
|
Fair value of contingent consideration for acquisition of Cedar
Holdings Group |
|
- |
|
$ |
7 |
|
$ |
- |
|
$ |
3,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA to Income
before |
|
|
|
|
|
|
|
|
Provision for Income Taxes |
|
|
|
|
|
|
|
|
(In
Thousands of U.S. Dollars) |
|
Three months
ended June 30, |
|
Six months
ended June 30, |
(unaudited) |
|
2021 (unaudited) |
|
2020 (unaudited) |
|
2021 (unaudited) |
|
2020 (unaudited) |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
11,158 |
$ |
12,175 |
|
$ |
23,881 |
$ |
24,856 |
|
Depreciation
of property and equipment |
|
4,211 |
|
3,155 |
|
|
7,970 |
|
6,145 |
|
Impairment
and loss on disposition of property and equipment |
|
6 |
|
1,525 |
|
|
66 |
|
1,525 |
|
Amortization
of intangible assets |
|
2,346 |
|
2,830 |
|
|
4,965 |
|
6,131 |
|
Impairment
of definite life intangible assets |
|
- |
|
1,431 |
|
|
- |
|
1,431 |
|
Interest
expense, net |
|
1,003 |
|
846 |
|
|
1,939 |
|
1,996 |
|
Accretion of
contingent consideration |
|
95 |
|
85 |
|
|
191 |
|
172 |
|
Stock-based
compensation |
|
1,209 |
|
847 |
|
|
2,231 |
|
1,648 |
|
Unrealized
loss (gain) on change in fair value of forward contracts |
|
191 |
|
(436 |
) |
|
357 |
|
(88 |
) |
Unrealized
loss (gain) on foreign exchange revaluation of foreign denominated
monetary assets and liabilities |
|
42 |
|
441 |
|
|
106 |
|
399 |
|
Acquisition
and other costs1 |
|
367 |
|
845 |
|
|
1,136 |
|
956 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes |
$ |
1,688 |
$ |
606 |
|
$ |
4,920 |
$ |
4,541 |
|
|
|
|
|
|
|
|
|
|
1Acquisition and other costs represents transaction-related
expenses, transitional expenses, such as duplicative
post-acquisition expenses. Expenses include severance and
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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