2018 Highlighted by Record Revenue,
Adjusted EBITDA2 and Cash Flow from Operations
Tucows Inc. (NASDAQ:TCX, TSX:TC), a provider of network access,
domain names and other Internet services, today reported its
financial results for the fourth quarter ended December 31, 2018.
All figures are in U.S. dollars.
Summary Financial
Results(In Thousands of US Dollars, Except Per
Share Data)
|
3 Months Ended December 31 |
12 Months Ended December 31 |
2018(Unaudited) |
2017(Unaudited) |
% Change |
2018(Unaudited) |
2017(Unaudited) |
% Change |
Net revenue |
85,612 |
90,621 |
-6% |
346,013 |
329,421 |
5% |
Net income1 |
4,436 |
11,199 |
-60% |
17,135 |
22,327 |
-23% |
Basic Net earnings per common share1 |
0.42 |
1.06 |
-60% |
1.62 |
2.12 |
-24% |
Adjusted EBITDA2,3 |
16,633 |
15,276 |
9% |
50,057 |
41,357 |
21% |
Net cash provided by operating activities |
10,668 |
14,081 |
-24% |
37,209 |
31,896 |
17% |
- Net Income and Earnings Per Share for the fourth quarter and
Fiscal 2017 reflected a net positive implementation impact from the
Tax Cuts and Jobs Act of 2017 of $5.8 million and $0.55 per share,
respectively.
- This Non-GAAP financial measure is described below and
reconciled to GAAP net income in the accompanying table.
- Adjusted EBITDA for the fourth quarter and twelve month period
of 2017 reflect the impact of the purchase price accounting
adjustment related to the fair value write down of deferred revenue
from the Enom acquisition which lowered Adjusted EBITDA by $0.8
million and $7.8 million for the fourth quarter and twelve months
of 2017, respectively.
Summary of Revenues and Gross
profit(In Thousands of US Dollars)
|
Revenue |
Gross profit |
|
3 Months ended December
31 |
3 Months endedDecember
31 |
|
2018(Unaudited) |
2017(Unaudited) |
2018(Unaudited) |
2017(Unaudited) |
Network Access Services: |
Mobile Services |
22,511 |
23,795 |
11,093 |
|
11,094 |
|
Other Services |
2,320 |
1,590 |
1,429 |
|
651 |
|
Total Network Access Services |
24,831 |
25,385 |
12,522 |
|
11,745 |
|
|
|
|
|
|
Domain Services: |
Wholesale |
|
|
|
|
Domain Services |
43,396 |
48,320 |
7,752 |
|
6,514 |
|
Value Added Services |
4,180 |
4,305 |
3,438 |
|
3,733 |
|
Total Wholesale |
47,576 |
52,625 |
11,190 |
|
10,247 |
|
|
|
|
|
|
Retail |
8,880 |
8,711 |
4,475 |
|
4,141 |
|
Portfolio |
4,325 |
3,900 |
3,900 |
|
3,376 |
|
Total Domain Services |
60,781 |
65,236 |
19,565 |
|
17,764 |
|
|
|
|
|
|
Network Expenses: |
Network, other costs |
- |
- |
(2,256 |
) |
(2,260 |
) |
Network, depreciation and amortization costs |
- |
- |
(2,100 |
) |
(1,513 |
) |
Total Network expenses |
- |
- |
(4,356 |
) |
(3,773 |
) |
|
|
|
|
|
Total |
85,612 |
90,621 |
27,731 |
|
25,736 |
|
“The fourth quarter once again saw solid, consistent performance
across the business, highlighted by year-over-year gross profit
expansion in both Domains and Network Access and 9% growth in
adjusted EBITDA,” said Elliot Noss, President and Chief Executive
Officer, Tucows Inc. “The quarter capped off another record
year in terms of revenue, gross profit, adjusted EBITDA and cash
flow from operations. As importantly, the cash generation of the
Domains and Ting Mobile businesses fueled our build-out of the Ting
Internet footprint that will drive our next phase of outsized
growth.”
“Ting Internet made strong, steady progress throughout the year,
growing our serviceable addresses, customers and recurring monthly
revenue, adding a sixth town early in the year and readying for the
seventh announced just last week. At Ting Mobile, we again
delivered strong year-over-year growth in revenue, margin and gross
profit. In our Domains business, we made significant progress in
the integration of Enom, with more than half of the $5 million in
expected EBITDA synergies now realized, as well as the development
of the new platform, positioning this business for potential new
growth opportunities.”
“All of these achievements position Tucows for an exciting 2019
in each of our businesses and improving growth that will drive
long-term value for our shareholders.”
Financial Results
Net revenue for the fourth quarter of 2018 was $85.6 million
compared with $90.6 million for the fourth quarter of 2017, with
the decrease due primarily to acceleration of revenue related to
the bulk transfer of 2.8 million very low margin domain names in
the first and third quarters of 2018. Excluding the impact of
these of bulk transfers, net revenue for the fourth quarter of 2018
increased 2% compared to the fourth quarter of 2017.
Net income for the fourth quarter of 2018 was $4.4 million, or
$0.42 per share compared with $11.2 million, or $1.06 per share,
for the fourth quarter of 2017. Net income for the fourth
quarter of 2017 was positively impacted by the tax related
implementation impacts from the Tax Cuts and Jobs Act of 2017 for
$5.8 million or $0.55 per share.
Adjusted EBITDA1 for the fourth quarter of 2018 increased 9% to
$16.6 million from $15.3 million for the fourth quarter of
2017.
Cash and cash equivalents at the end of the fourth quarter of
2018 were $12.6 million compared with $10.8 million at the end of
the third quarter of 2018 and $18.0 million at the end of the
fourth quarter of 2017.
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 transitions 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 ended December 31 |
12 months ended December 31 |
|
2018 (unaudited) |
2017 (unaudited) |
2018 (unaudited) |
2017 (unaudited) |
Net income for the period |
4,436 |
11,199 |
|
17,135 |
22,327 |
|
Depreciation of property and equipment |
1,716 |
1,114 |
|
5,722 |
3,727 |
|
Amortization of intangible assets |
2,290 |
2,330 |
|
9,243 |
8,400 |
|
Impairment of intangible assets |
- |
110 |
|
- |
111 |
|
Interest expense, net |
926 |
865 |
|
3,687 |
3,567 |
|
Provision for income taxes |
5,239 |
(1,032 |
) |
9,020 |
1,748 |
|
Stock-based compensation |
670 |
623 |
|
2,574 |
1,457 |
|
Unrealized loss (gain) on change in fair value of forward
contracts |
201 |
54 |
|
207 |
18 |
|
Unrealized loss (gain) on foreign exchange revaluation of foreign
denominated monetary assets and liabilities |
752 |
(45 |
) |
943 |
(804 |
) |
Acquisition and transition costs* |
403 |
58 |
|
1,526 |
806 |
|
|
|
|
|
|
Adjusted EBITDA |
16,633 |
15,276 |
|
50,057 |
41,357 |
|
*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. 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
remarks 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 five days (until Monday,
February 18), 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 Tuesday, February 26 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) and Enom (http://www.enom.com) manage a
combined 23 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) |
|
|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2018 |
|
|
2017* |
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
12,637 |
|
|
$ |
18,049 |
|
Accounts
receivable |
|
|
10,837 |
|
|
|
12,376 |
|
Inventory |
|
|
3,775 |
|
|
|
2,944 |
|
Prepaid
expenses and deposits |
|
|
15,472 |
|
|
|
14,186 |
|
Prepaid
domain name registry and ancillary services fees, current
portion |
|
|
87,782 |
|
|
|
103,302 |
|
Income
taxes recoverable |
|
|
1,423 |
|
|
|
3,004 |
|
Total
current assets |
|
|
131,926 |
|
|
|
153,861 |
|
|
|
|
|
|
|
Prepaid
domain name registry and ancillary services fees, long-term
portion |
|
|
18,745 |
|
|
|
23,701 |
|
Property and
equipment |
|
|
48,065 |
|
|
|
24,620 |
|
Contract
costs |
|
|
1,390 |
|
|
|
- |
|
Intangible assets |
|
|
49,395 |
|
|
|
58,414 |
|
Goodwill |
|
|
90,054 |
|
|
|
90,054 |
|
Total
assets |
|
$ |
339,575 |
|
|
$ |
350,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
|
$ |
8,445 |
|
|
$ |
7,026 |
|
Accrued
liabilities |
|
|
5,899 |
|
|
|
6,412 |
|
Customer
deposits |
|
|
11,919 |
|
|
|
15,255 |
|
Derivative instrument liability |
|
|
1,276 |
|
|
|
- |
|
Deferred
rent, current portion |
|
|
21 |
|
|
|
21 |
|
Loan
payable, current portion |
|
|
18,400 |
|
|
|
18,290 |
|
Deferred
revenue, current portion |
|
|
116,734 |
|
|
|
129,155 |
|
Accreditation fees payable, current portion |
|
|
985 |
|
|
|
1,175 |
|
Income
taxes payable |
|
|
1,668 |
|
|
|
1,226 |
|
Total
current liabilities |
|
|
165,347 |
|
|
|
178,560 |
|
|
|
|
|
|
|
Deferred revenue,
long-term portion |
|
|
26,960 |
|
|
|
31,427 |
|
Accreditation fees payable, long-term portion |
|
|
250 |
|
|
|
289 |
|
Deferred
rent, long-term portion |
|
|
116 |
|
|
|
130 |
|
Loan
payable, long-term portion |
|
|
46,201 |
|
|
|
58,634 |
|
Deferred
Gain |
|
|
- |
|
|
|
429 |
|
Deferred
tax liability |
|
|
20,925 |
|
|
|
19,834 |
|
|
|
|
|
|
|
Redeemable
non-controlling interest |
|
|
- |
|
|
|
1,136 |
|
|
|
|
|
|
|
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; 10,627,988
shares issued and outstanding as of December 31, 2018 and
10,583,879 shares issued and outstanding as of December 31,
2017 |
|
|
15,823 |
|
|
|
15,368 |
|
Additional paid-in capital |
|
|
3,953 |
|
|
|
2,167 |
|
Retained
earnings |
|
|
60,810 |
|
|
|
42,676 |
|
Accumulated other comprehensive income |
|
|
(810 |
) |
|
|
- |
|
Total
stockholders' equity |
|
|
79,776 |
|
|
|
60,211 |
|
Total liabilities and
stockholders' equity |
|
$ |
339,575 |
|
|
$ |
350,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
*The Company has initially applied ASC 2014-09 (Topic 606)
using the modified retrospective method. Under this method, the
comparative information is not restated. |
|
|
|
|
|
|
|
|
Tucows
Inc. |
|
Consolidated Statements
of Operations |
|
(Dollar
amounts in thousands of U.S.
dollars) |
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31, |
|
Year ended December
31, |
|
|
2018 |
|
|
20171 |
|
|
2018 |
|
|
20171 |
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
Net revenues |
$ |
85,612 |
|
$ |
90,621 |
|
$ |
346,013 |
|
$ |
329,421 |
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
Cost of
revenues |
|
53,525 |
|
|
61,112 |
|
|
232,103 |
|
|
230,600 |
|
Network
expenses (*) |
|
2,256 |
|
|
2,260 |
|
|
9,846 |
|
|
9,324 |
|
Depreciation of property and equipment |
|
1,601 |
|
|
1,014 |
|
|
5,298 |
|
|
3,142 |
|
Amortization of intangible assets |
|
499 |
|
|
499 |
|
|
1,996 |
|
|
1,834 |
|
Total
cost of revenues |
|
57,881 |
|
|
64,885 |
|
|
249,243 |
|
|
244,900 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
27,731 |
|
|
25,736 |
|
|
96,770 |
|
|
84,521 |
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
Sales and
marketing (*) |
|
8,434 |
|
|
7,372 |
|
|
33,063 |
|
|
29,423 |
|
Technical
operations and development (*) |
|
2,091 |
|
|
1,855 |
|
|
8,748 |
|
|
7,258 |
|
General
and administrative (*) |
|
4,804 |
|
|
3,468 |
|
|
17,710 |
|
|
13,594 |
|
Depreciation of property and equipment |
|
115 |
|
|
100 |
|
|
424 |
|
|
585 |
|
Amortization of intangible assets |
|
1,791 |
|
|
1,831 |
|
|
7,247 |
|
|
6,566 |
|
Impairment of indefinite life intangible assets |
|
- |
|
|
110 |
|
|
- |
|
|
111 |
|
Loss
(gain) on currency forward contracts |
|
232 |
|
|
17 |
|
|
254 |
|
|
(98 |
) |
Total
expenses |
|
17,467 |
|
|
14,753 |
|
|
67,446 |
|
|
57,439 |
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
10,264 |
|
|
10,983 |
|
|
29,324 |
|
|
27,082 |
|
|
|
|
|
|
|
|
|
|
Other income
(expenses): |
|
|
|
|
|
|
|
|
Interest
expense, net |
|
(926 |
) |
|
(865 |
) |
|
(3,687 |
) |
|
(3,567 |
) |
Other
income, net |
|
337 |
|
|
49 |
|
|
518 |
|
|
560 |
|
Total
other income (expenses) |
|
(589 |
) |
|
(816 |
) |
|
(3,169 |
) |
|
(3,007 |
) |
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes |
|
9,675 |
|
|
10,167 |
|
|
26,155 |
|
|
24,075 |
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
5,239 |
|
|
(1,032 |
) |
|
9,020 |
|
|
1,748 |
|
Net income before
redeemable non-controlling interest |
|
4,436 |
|
|
11,199 |
|
|
17,135 |
|
|
22,327 |
|
|
|
|
|
|
|
|
|
|
Redeemable
non-controlling interest |
|
- |
|
|
(75 |
) |
|
(26 |
) |
|
(387 |
) |
|
|
|
|
|
|
|
|
|
Net income attributable
to redeemable non-controlling interest |
|
- |
|
|
75 |
|
|
26 |
|
|
387 |
|
Net income for the
period |
|
4,436 |
|
|
11,199 |
|
|
17,135 |
|
|
22,327 |
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income, net of tax |
|
|
|
|
|
|
|
|
Unrealized income (loss) on hedging activities |
|
(910 |
) |
|
(88 |
) |
|
(1,022 |
) |
|
550 |
|
Net
amount reclassified to earnings |
|
136 |
|
|
(234 |
) |
|
212 |
|
|
(650 |
) |
Other
comprehensive income (loss) net of tax of $ 241 and $ 183 for the
three months ended December 31, 2018 and December 31, 2017, $
259 and $ - for the year ended December 31, 2018 and December
31, 2017 |
|
(774 |
) |
|
(322 |
) |
|
(810 |
) |
|
(100 |
) |
|
|
|
|
|
|
|
|
|
Comprehensive income,
net of tax for the period |
$ |
3,662 |
|
$ |
10,877 |
|
$ |
16,325 |
|
$ |
22,227 |
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share |
$ |
0.42 |
|
$ |
1.06 |
|
$ |
1.62 |
|
$ |
2.12 |
|
|
|
|
|
|
|
|
|
|
Shares
used in computing basic earnings per common share |
|
10,621,181 |
|
|
10,580,429 |
|
|
10,604,722 |
|
|
10,537,356 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share |
$ |
0.41 |
|
$ |
1.04 |
|
$ |
1.59 |
|
$ |
2.07 |
|
|
|
|
|
|
|
|
|
|
Shares used in
computing diluted earnings per common share |
|
10,791,940 |
|
|
10,802,817 |
|
|
10,794,170 |
|
|
10,793,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) Stock-based
compensation has been included in expenses as follows: |
|
|
|
|
|
|
|
|
Network
expenses |
$ |
70 |
|
$ |
50 |
|
$ |
223 |
|
$ |
110 |
|
Sales and
marketing |
$ |
286 |
|
$ |
255 |
|
$ |
1,025 |
|
$ |
573 |
|
Technical
operations and development |
$ |
135 |
|
$ |
145 |
|
$ |
636 |
|
$ |
360 |
|
General
and administrative |
$ |
179 |
|
$ |
173 |
|
$ |
690 |
|
$ |
414 |
|
|
|
|
|
|
|
|
|
|
1The Company has initially applied ASC 2014-09 (Topic 606)
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
December 31, |
|
Year ended December
31, |
|
|
2018 |
|
|
2017* |
|
2018 |
|
|
2017* |
Cash provided by: |
(unaudited) |
|
(unaudited) |
Operating activities: |
|
|
|
|
|
|
|
|
Net income for the
period |
$ |
4,436 |
|
$ |
11,199 |
|
$ |
17,135 |
|
$ |
22,327 |
|
Items not
involving cash: |
|
|
|
|
|
|
|
|
Depreciation of property and equipment |
|
1,716 |
|
|
1,114 |
|
|
5,722 |
|
|
3,727 |
|
Loss on
write off of property and equipment |
|
- |
|
|
- |
|
|
- |
|
|
17 |
|
Amortization of debt discount and issuance costs |
|
70 |
|
|
69 |
|
|
281 |
|
|
273 |
|
Amortization of intangible assets |
|
2,290 |
|
|
2,330 |
|
|
9,243 |
|
|
8,400 |
|
Net
amortization contract costs |
|
(7 |
) |
|
- |
|
|
14 |
|
|
- |
|
Impairment of indefinite life intangible asset |
|
- |
|
|
110 |
|
|
- |
|
|
111 |
|
Deferred
income taxes (recovery) |
|
1,899 |
|
|
(326 |
) |
|
1,038 |
|
|
(3,337 |
) |
Excess
tax benefits on share-based compensation expense |
|
(165 |
) |
|
(181 |
) |
|
(697 |
) |
|
(2,796 |
) |
Amortization of deferred rent |
|
(5 |
) |
|
- |
|
|
(14 |
) |
|
6 |
|
Loss on
disposal of domain names |
|
271 |
|
|
266 |
|
|
341 |
|
|
291 |
|
Other
income |
|
(258 |
) |
|
(129 |
) |
|
(429 |
) |
|
(515 |
) |
Loss
(gain) on change in the fair value of forward contracts |
|
194 |
|
|
54 |
|
|
207 |
|
|
17 |
|
Stock-based compensation |
|
670 |
|
|
623 |
|
|
2,574 |
|
|
1,457 |
|
Change in
non-cash operating working capital: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
692 |
|
|
1,340 |
|
|
1,539 |
|
|
1,010 |
|
Inventory |
|
(635 |
) |
|
5 |
|
|
(831 |
) |
|
(1,733 |
) |
Prepaid
expenses and deposits |
|
(918 |
) |
|
527 |
|
|
(1,286 |
) |
|
(1,642 |
) |
Prepaid
domain name registry and ancillary services fees |
|
4,699 |
|
|
3,460 |
|
|
20,476 |
|
|
4,030 |
|
Income
taxes recoverable |
|
2,398 |
|
|
(2,241 |
) |
|
2,691 |
|
|
(426 |
) |
Accounts
payable |
|
(877 |
) |
|
856 |
|
|
171 |
|
|
(3,826 |
) |
Accrued
liabilities |
|
(978 |
) |
|
(2,269 |
) |
|
(513 |
) |
|
(1,275 |
) |
Customer
deposits |
|
34 |
|
|
(78 |
) |
|
(3,336 |
) |
|
1,085 |
|
Deferred
revenue |
|
(4,798 |
) |
|
(2,610 |
) |
|
(16,888 |
) |
|
4,933 |
|
Accreditation fees payable |
|
(60 |
) |
|
(38 |
) |
|
(229 |
) |
|
(238 |
) |
Net cash
provided by operating activities |
|
10,668 |
|
|
14,081 |
|
|
37,209 |
|
|
31,896 |
|
|
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
|
|
Proceeds
received on exercise of stock options |
|
50 |
|
|
48 |
|
|
112 |
|
|
222 |
|
Payment
of tax obligations resulting from net exercise of stock
options |
|
(41 |
) |
|
(23 |
) |
|
(445 |
) |
|
(1,462 |
) |
Proceeds
received on loan payable |
|
4,500 |
|
|
- |
|
|
7,000 |
|
|
86,998 |
|
Repayment
of loan payable |
|
(4,384 |
) |
|
(4,572 |
) |
|
(19,596 |
) |
|
(19,976 |
) |
Payment
of loan payable costs |
|
- |
|
|
- |
|
|
(8 |
) |
|
(620 |
) |
Net cash
(used in) provided by financing activities |
|
125 |
|
|
(4,547 |
) |
|
(12,937 |
) |
|
65,162 |
|
|
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
|
|
|
Additions
to property and equipment |
|
(8,480 |
) |
|
(3,474 |
) |
|
(27,919 |
) |
|
(12,935 |
) |
Acquisition of a portion of the minority interest in Ting Virginia,
LLC |
|
- |
|
|
- |
|
|
(1,200 |
) |
|
(2,000 |
) |
Acquisition of Enom Incorporated, net of cash |
|
- |
|
|
- |
|
|
- |
|
|
(76,237 |
) |
Acquisition of intangible assets |
|
(451 |
) |
|
(558 |
) |
|
(565 |
) |
|
(2,942 |
) |
Net cash
used in investing activities |
|
(8,931 |
) |
|
(4,032 |
) |
|
(29,684 |
) |
|
(94,114 |
) |
|
|
|
|
|
|
|
|
|
(Decrease) increase in
cash and cash equivalents |
|
1,862 |
|
|
5,502 |
|
|
(5,412 |
) |
|
2,944 |
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period |
|
10,775 |
|
|
12,547 |
|
|
18,049 |
|
|
15,105 |
|
Cash and cash
equivalents, end of period |
$ |
12,637 |
|
$ |
18,049 |
|
$ |
12,637 |
|
$ |
18,049 |
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow
information: |
|
|
|
|
|
|
|
|
Interest
paid |
$ |
931 |
|
$ |
871 |
|
$ |
3,712 |
|
$ |
3,587 |
|
Income
taxes paid, net |
$ |
1,742 |
|
$ |
1,502 |
|
$ |
7,112 |
|
$ |
7,815 |
|
|
|
|
|
|
|
|
|
|
Supplementary
disclosure of non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Property
and equipment acquired during the period not yet paid for |
$ |
1,462 |
|
$ |
214 |
|
$ |
1,462 |
|
$ |
214 |
|
|
|
|
|
|
|
|
|
|
*The Company has initially applied ASC 2014-09 (Topic 606)
using the modified retrospective method. Under this method, the
comparative information is not restated. |
|
|
|
|
|
|
|
|
|
Reconciliation of Net income to Adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
(In Thousands of US
Dollars) |
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
Year ended December 31, |
|
|
|
2018 (unaudited) |
|
2017 (unaudited) |
|
2018 (unaudited) |
|
2017 (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Net income for the
period |
$ |
4,436 |
$ |
11,199 |
|
$ |
17,135 |
$ |
22,327 |
|
|
Depreciation of property and equipment |
|
1,716 |
|
1,114 |
|
|
5,722 |
|
3,727 |
|
|
Amortization of intangible assets |
|
2,290 |
|
2,330 |
|
|
9,243 |
|
8,400 |
|
|
Impairment of intangible assets |
|
- |
|
110 |
|
|
- |
|
111 |
|
|
Interest
expense, net |
|
926 |
|
865 |
|
|
3,687 |
|
3,567 |
|
|
Provision for income taxes |
|
5,239 |
|
(1,032 |
) |
|
9,020 |
|
1,748 |
|
|
Stock-based compensation |
|
670 |
|
623 |
|
|
2,574 |
|
1,457 |
|
|
Unrealized loss (gain) on change in fair value of forward
contracts |
|
201 |
|
54 |
|
|
207 |
|
18 |
|
|
Unrealized loss (gain) on foreign exchange revaluation of foreign
denominated monetary assets and liabilities |
|
752 |
|
(45 |
) |
|
943 |
|
(804 |
) |
|
Acquisition and other costs1 |
|
403 |
|
58 |
|
|
1,526 |
|
806 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
16,633 |
$ |
15,276 |
|
$ |
50,057 |
$ |
41,357 |
|
|
|
|
|
|
|
|
|
|
|
|
1Acquisition 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. 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
expectation 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 and Hover are registered trademarks
of Tucows Inc. or its subsidiaries.
Contact:Lawrence ChamberlainLoderock
Advisors(416) 519-4196lawrence.chamberlain@loderockadvisors.com
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