Teletouch Reports Third Quarter 2010 Fiscal Year Results
Profitable Quarter Increases YTD Earnings Per Share to $0.02
FORT WORTH, Texas--(BUSINESS WIRE)-- Teletouch Communications, Inc. (PINK SHEETS: TLLE), a leading U.S. wireless services and consumer electronics provider, today announced financial results for the third fiscal quarter ended February 28, 2010.
Quarterly Highlights - Financial
- Increased Total operating revenues to $16.56 million (a 50% increase over the prior year period)
- Increased Operating income to $1.42 million (a 2,427% increase over the prior year period)
- Increased EBITDA to $1.73 million (a 329% increase over the prior year period)
- Increased Net income to $0.75 million (a $1.33 million increase from a $0.58 million Net loss in the prior year period)
Other Highlights
- Signed National Agency Agreement with Sprint
- Signed National Distribution Agreement with Clearwire
- Regained currency in SEC reporting status for all required prior periods
“Following profitable first and second quarters, Teletouch delivered an even stronger performance in its third fiscal quarter,” stated T. A. “Kip” Hyde, Jr., President, Chief Operating Officer and Director of Teletouch. “While our core cellular service business has remained relatively predictable, a significant increase in our wholesale distribution business unit once again helped bolster this quarter’s results.”
Hyde added, “With regard to our litigation against AT&T (NYSE: T), the legal proceedings are fully underway, with an Agreed Scheduling Order received in February setting the arbitration hearing dates for November 8-12, 2010 (see 'Note' below). Meanwhile, we are focused on continuing to grow controllable segments of our business organically, with the addition of our new carrier partners and other products and services helping to ensure sustained positive operating results through the remainder of fiscal year 2010 (period ending May 31, 2010).”
Note: As reported on September 30, 2009, the Company’s subsidiary, Progressive Concepts, Inc. d/b/a Hawk Electronics ("PCI"), the largest remaining master distributor of AT&T cellular products and services in the U.S., initiated legal action against AT&T seeking a minimum $100 million in damages. The process of binding arbitration was commenced to seek relief for damages incurred as a result of AT&T preventing the company from selling Apple, Inc.’s (Nasdaq: AAPL) popular iPhone and other "AT&T exclusive" products and services that PCI contends it is entitled by contract to provide to its customers. The action further asserts that AT&T has violated the longstanding non-solicitation agreement between the companies, by actively inducing customers to leave PCI for AT&T and employing predatory business practices. PCI is being represented in this matter by the Company’s long-time counsels at the national law firm of Bracewell & Giuliani LLP.
For a more detailed description of the Company’s legal action Notice and Initial Statement of Claim, please refer to the related Form 8-K, filed October 1, 2009 (available at the Company’s website: www.teletouch.com or on EDGAR at www.sec.gov).
For the quarter ended February 28, 2010, the Company announced the following results [the Summary results information below present selected financial data, including certain non-GAAP measures; see filing for complete data]:
| Teletouch Communications, Inc. Financial Highlights (in thousands, except shares and per share amounts) |
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Three Months Ended |
February 28, | |||||||||||
| 2010 | 2009 | Change | ||||||||||
| Summary Operating Results: | ||||||||||||
| Service, rent and maintenance revenue | $ | 6,308 | $ | 6,778 | $ | (470 | ) | |||||
| Product sales revenue | 10,251 | 4,270 | 5,981 | |||||||||
| Total operating revenues | 16,559 | 11,048 | 5,511 | |||||||||
| Cost of service, rent and maintenance | (1,693 | ) | (2,226 | ) | 533 | |||||||
| Cost of products sold | (8,719 | ) | (4,186 | ) | (4,533 | ) | ||||||
| Margin on revenues | 6,147 | 4,636 | 1,511 | |||||||||
| Operating income | 1,415 | 56 | 1,359 | |||||||||
| Net income (loss) | 753 | (583 | ) | 1,336 | ||||||||
| Basic income (loss) per share of common stock | $ | 0.02 | $ | (0.01 | ) | $ | 0.03 | |||||
| Diluted income (loss) per share of common stock | $ | 0.02 | $ | (0.01 | ) | $ | 0.03 | |||||
| Weighted average shares outstanding - basic and diluted | ||||||||||||
| Basic | 48,739,002 | 49,051,980 | (312,978 | ) | ||||||||
| Diluted | 48,830,618 | 49,051,980 | (221,362 | ) | ||||||||
| Other Data: | ||||||||||||
| Operating income | 1,415 | 56 | 1,359 | |||||||||
| Net income (loss) | 753 | (583 | ) | 1,336 | ||||||||
| Add back: | ||||||||||||
| Depreciation | 311 | 346 | (35 | ) | ||||||||
| Interest expense | 602 | 558 | 44 | |||||||||
|
Income tax expense |
60 | 81 | (21 | ) | ||||||||
| EBITDA (1) | 1,726 | 402 | 1,324 | |||||||||
|
Nine Months Ended |
February 28, | |||||||||||
| 2010 | 2009 | Change | ||||||||||
| Summary Operating Results: | ||||||||||||
| Service, rent and maintenance revenue | $ | 19,522 | $ | 20,524 | $ | (1,002 | ) | |||||
| Product sales revenue | 22,375 | 14,603 | 7,772 | |||||||||
| Total operating revenues | 41,897 | 35,127 | 6,770 | |||||||||
| Cost of service, rent and maintenance | (5,569 | ) | (6,934 | ) | 1,365 | |||||||
| Cost of products sold | (19,791 | ) | (13,577 | ) | (6,214 | ) | ||||||
| Margin on revenues | 16,537 | 14,616 | 1,921 | |||||||||
| Operating income | 2,986 | 632 | 2,354 | |||||||||
| Net income (loss) | 1,129 | (1,423 | ) | 2,552 | ||||||||
| Basic income (loss) per share of common stock | $ | 0.02 | $ | (0.03 | ) | $ | 0.05 | |||||
| Diluted income (loss) per share of common stock | $ | 0.02 | $ | (0.03 | ) | $ | 0.05 | |||||
| Weighted average shares outstanding - basic and diluted | ||||||||||||
| Basic | 48,791,738 | 49,051,980 | (260,242 | ) | ||||||||
| Diluted | 48,791,738 | 49,051,980 | (260,242 | ) | ||||||||
| Other Data: | ||||||||||||
| Operating income | 2,986 | 632 | 2,354 | |||||||||
| Net income (loss) | 1,129 | (1,423 | ) | 2,552 | ||||||||
| Add back: | ||||||||||||
| Depreciation | 956 | 1,075 | (119 | ) | ||||||||
| Interest expense | 1,674 | 1,811 | (137 | ) | ||||||||
|
Income tax expense |
183 | 244 | (61 | ) | ||||||||
| EBITDA (1) | 3,942 | 1,707 | 2,235 | |||||||||
| Selected Balance Sheet Highlights (in thousands) |
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| February 28, | May 31, | |||||||||||
| 2010 | 2009 | Change | ||||||||||
| Cash | $ | 3,855 | $ | 4,642 | $ | (787 | ) | |||||
| Current portion of long-term debt | 1,366 | 1,313 | 53 | |||||||||
| Long-term debt, net of current portion | 14,783 | 15,103 | (320 | ) | ||||||||
| Current Assets | 14,209 | 16,899 | (2,690 | ) | ||||||||
| Current Liabilities | 15,362 | 19,704 | (4,342 | ) | ||||||||
| Working Capital | (1,153 | ) | (2,805 | ) | 1,652 | |||||||
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(1) Teletouch's EBITDA means Net income (loss) before depreciation and amortization, interest expense and income tax expense. EBITDA is non-GAAP measures that the Company believes allows for a more complete analysis of our results. |
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Disclosure of Non-GAAP Financial Measures
We report our financial results in accordance with accounting principles generally accepted in the United States of America (“GAAP”). However, management believes the presentation of certain non-GAAP financial measures provides useful information to management and investors regarding financial and business trends relating to the Company’s financial condition and results of operations, and that when GAAP financial measures are viewed in conjunction with the non-GAAP financial measures, investors are provided with a more meaningful understanding of the Company’s ongoing operating performance. In addition, these non-GAAP financial measures are among the primary indicators management uses as a basis for evaluating performance. For all non-GAAP financial measures in this release, we have provided corresponding GAAP financial measures for comparative purposes in the report.
We refer to the term “EBITDA” in various places of our financial discussion. EBITDA is defined by us as net income (loss) before interest expense, income tax expense, and depreciation and amortization expense. EBITDA is not a measure of operating performance under GAAP and therefore should not be considered in isolation nor construed as an alternative to operating profit, net income (loss) or cash flows from operating, investing or financing activities, each as determined in accordance with GAAP. Also, EBITDA should not be considered as a measure of liquidity. Moreover, since EBITDA is not a measurement determined in accordance with GAAP, and thus is susceptible to varying interpretations and calculations, EBITDA, as presented, may not be comparable to similarly titled measures presented by other companies.
SEC FINANCIAL REPORTING STATUS NOTICE – TELETOUCH HAS REGAINED REPORTING CURRENCY: During the third quarter, Teletouch became current with all prior annual and quarterly period reporting requirements in accordance with the guidelines provided to the Company by the Securities and Exchange Commission (“SEC”), including certain Company-requested and SEC-granted relief from filing the Company’s delinquent fiscal 2007 Quarterly Reports. In December 2009, the Company filed its previously delinquent quarterly financial reports for the first, second and third quarters of its 2008 fiscal year, ended May 31, 2008, establishing currency in all required reporting. Investors should note however, that the filing of these previously delinquent reports does not mean that such filings are deemed "timely" under SEC requirements for certain corporate events, including specifically the availability of Form S-3 and Form S-8 stock registrations. The SEC also indicated to the Company that it would advise further consultation with SEC staff regarding when Teletouch would be deemed “fully up-to-date” in its filings, specifically for the purposes of the availability of Rule 144 resale of restricted securities, should such a need arise.
The Company’s filing of its fiscal 2009 Annual Report on Form 10-K (for the period ending May 31, 2009) began a period of “timely filing” for determining the Company's future eligibility for the various registration forms discussed above. The Company is timely in filing its first, second and this third quarter financial reports on Form 10-Q, and anticipates that its annual report on Form 10-K for the current fiscal year ending May 31, 2010 will also be filed timely, on or before August 30, 2010.
About Teletouch Communications
For over 46 years, Teletouch has offered a comprehensive suite of wireless telecommunications solutions, including cellular, two-way radio, GPS-telemetry and wireless messaging. Teletouch is a leading direct Authorized Services Provider and billing agent of AT&T (NYSE: T) products and services (voice, data and entertainment) to consumers, businesses and government agencies, as well as an operator of its own two-way radio network and LTR systems in Texas. Recently, Teletouch entered into national agency and distribution agreements with Sprint (NYSE: S) and Clearwire (NASDAQ: CLWR), providers of advanced 4G cellular network services. Teletouch operates a chain of 26 retail and authorized agent stores under the “Teletouch™” and “Hawk Electronics™” brands, in conjunction with its direct sales force, call center operations, and various retail eCommerce websites including: www.hawkelectronics.com and www.hawkexpress.com. Through its wholly owned subsidiary, Progressive Concepts, Inc., Teletouch operates a national distribution business, PCI Wholesale, primarily serving large cellular carrier agents and rural carriers, as well as auto dealers and smaller consumer electronics retailers, with product sales and support available through www.pciwholesale.com and www.pcidropship.com, among other B2B oriented websites.
Teletouch's common stock is traded Over-The-Counter under stock symbol: TLLE. Additional information about the Teletouch family of companies can be found at www.teletouch.com.
All statements from Teletouch Communications, Inc. in this news release that are not based on historical fact are "forward-looking statements" within the meaning of the PSLRA of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. While the Company’s management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of our control, that could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth under the caption “Risk Factors” in the Company’s most recent Form 10-K and 10-Q filings, and amendments thereto, as well as other public filings with the SEC since such date. The Company operates in a rapidly changing and competitive environment, and new risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. The Company disclaims any intention to, and undertakes no obligation to, update or revise any forward-looking statement.
The registered trademarks of AT&T, Sprint, Clearwire and each, any and all brands, products or service names discussed in relation to contractual relationships with Teletouch Communications, Inc., Progressive Concepts, Inc., Hawk Electronics and affiliates, are the property of their respective owners.
CONTACT:
Vollmer Public Relations, LLP
Analysts and Reporters:
Allen Caudle, 972-488-4790
or
Tony Martin, 972-488-4790
or
Denisha Stevens, 972-488-4790
Denisha@Vollmerpr.com
or
Investor Relations:
Teletouch Communications, Inc.
Amy Gossett, 800-232-3888
investors@teletouch.com
KEYWORDS: United States North America Texas
INDUSTRY KEYWORDS: Technology Consumer Electronics Telecommunications Mobile/Wireless
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