PGi Reports First Quarter 2014 Results

Revenues Up 11% to $143.2M, Non-GAAP Diluted EPS from Continuing Operations $0.22*

SaaS Products Grow Over 50%

Company Increases 2014 Financial Outlook

Apr 24, 2014, 16:05 ET from PGi

ATLANTA, April 24, 2014 /PRNewswire/ -- Premiere Global Services, Inc. (NYSE: PGI), a leading global provider of collaboration software and services for over 20 years, today announced results for the first quarter ended March 31, 2014.

In the first quarter of 2014, net revenues increased nearly 11% to $143.2 million, compared to $129.5 million in the first quarter of 2013. Diluted EPS from continuing operations was $0.11 in the first quarter of 2014, compared to diluted EPS from continuing operations of $0.15 in the first quarter of 2013. Non-GAAP diluted EPS from continuing operations was $0.22* in the first quarter of 2014, compared to $0.19* in the first quarter of 2013.

"We are pleased to have outperformed our first quarter plan in every major category," said Boland T. Jones, PGi founder, chairman and CEO. "We continue to be delighted by the strong market response to our SaaS-based collaboration solutions and the success we are having in upgrading customers to these highly differentiated products. We plan to continue to invest in driving higher sales of our SaaS products, and we believe that 2014 will be another year of solid growth and higher profitability for PGi."

First Quarter 2014 Accomplishments

  • Grew revenue from PGi SaaS products greater than 50% to $10.7 million;
  • Increased the annual revenue run rate from PGi SaaS products by approximately $4 million during the quarter to approximately $44 million;
  • Released version 3.5 of iMeet®, with increased meeting capacity and groundbreaking new recording, video streaming, meeting minutes and guest screen sharing functionalities;
  • Launched Agenday, a smart calendar app that provides one-touch meeting access and intelligent connections for lower costs, higher productivity and easier collaboration on the go; and
  • Agenday won The Best Mobile App Awards Platinum Award for Best Mobile Calendar.

Financial Outlook

The following statements are based on PGi's current expectations. These statements contain forward-looking statements and company estimates, and actual results may differ materially. PGi assumes no duty to update any forward-looking statements made in this press release.

Based on current business trends and current foreign currency exchange rates, and assuming no additional acquisitions, PGi has raised its financial outlook for 2014 as follows: net revenues from continuing operations are now projected to be in the range of $565-$575 million. PGi continues to project that non-GAAP diluted EPS from continuing operations in 2014 will be in the range of $0.85-$0.88*, as the company plans to continue to reinvest excess earnings this year in product, sales and marketing initiatives designed to accelerate sales of its collaboration software applications and its transition to a SaaS model.

PGi will host a conference call today at 5:00 p.m., Eastern Time to discuss these results. To participate in the call, please dial-in to the appropriate number 5-10 minutes prior to the scheduled start time: (866) 454-4209 (U.S. and Canada) or (913) 312-0671 (International), participant passcode 3176312. The conference call will simultaneously be webcast. Please visit pgi.com for webcast details and conference call replay information, as well as the webcast archive and the text of the earnings release, including the financial and statistical information to be presented during the call.

* Non-GAAP Financial Measures To supplement the company's consolidated financial statements presented in accordance with GAAP, we have included the following non-GAAP measures of financial performance: non-GAAP operating income, non-GAAP net income from continuing operations, non-GAAP diluted net income per share (EPS) from continuing operations and organic growth. The company has also included these non-GAAP measures, as well as net revenues and segment net revenues, on a constant currency basis. Management uses these measures internally as a means of analyzing the company's current and future financial performance and identifying trends in our financial condition and results of operations. We have provided this information to investors to assist in meaningful comparisons of past, present and future operating results and to assist in highlighting the results of ongoing core operations. Please see the table attached for calculation of these non-GAAP financial measures and for reconciliation to the most directly comparable GAAP measures. These non-GAAP financial measures may differ materially from comparable or similarly titled measures provided by other companies and should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP.

About Premiere Global Services, Inc. │ PGi PGi has been a leading global provider of collaboration software and services for over 20 years. PGi's cloud-based software applications let business users connect, collaborate and share ideas and information from their desktop, tablet or smartphone, enabling greater productivity in the office or on the go. PGi has a global presence in 25 countries, and its award-winning solutions provide a collaborative advantage to over 45,000 enterprise customers, including 75% of the Fortune 100™. In the last five years, PGi has hosted more than 1.1 billion people from 137 countries in over 250 million virtual meetings. For more information, visit PGi at pgi.com.

Statements made in this press release, other than those concerning historical information, should be considered forward-looking and subject to various risks and uncertainties, many of which are beyond our control. Such forward-looking statements are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and are made based on management's current expectations or beliefs as well as assumptions made by, and information currently available to, management. A variety of factors could cause actual results to differ materially from those anticipated in PGi's forward-looking statements, including, but not limited to, the following factors: competitive pressures, including pricing pressures; technological changes and the development of alternatives to our services; market acceptance of PGi's SaaS products, including iMeet® and GlobalMeet®; our ability to attract new customers and to retain and further penetrate our existing customers; our ability to establish and maintain strategic reseller and distribution relationships; risks associated with challenging global economic conditions; price increases from our telecommunications service providers; service interruptions and network downtime, including undetected errors or defects in our software; technological obsolescence and our ability to upgrade our equipment or increase our network capacity; concerns regarding the security and privacy of our customers' confidential information; future write-downs of goodwill or other intangible assets; greater than anticipated tax and regulatory liabilities; restructuring and cost reduction initiatives and the market reaction thereto; our level of indebtedness; risks associated with acquisitions and divestitures; indemnification claims from the sale of our PGiSend business; our ability to protect our intellectual property rights, including possible adverse results of litigation or infringement claims; regulatory or legislative changes, including further government regulations applicable to traditional telecommunications service providers and data privacy; risks associated with international operations and market expansion, including fluctuations in foreign currency exchange rates; and other factors described from time to time in our press releases, reports and other filings made with the Securities and Exchange Commission, including but not limited to the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2013. All forward-looking statements attributable to us or a person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We do not undertake any obligation to update or to release publicly any revisions to forward-looking statements contained in this press release to reflect events or circumstances occurring after the date of this press release or the date of the statement, if a different date, or to reflect the occurrence of unanticipated events.

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

Three Months Ended

March 31,

2014

2013

Net revenues

$ 143,239

$ 129,492

Operating expenses:

Cost of revenues (exclusive of depreciation and amortization shown

separately below)

59,542

55,507

Selling and marketing

37,836

34,163

General and administrative (exclusive of expenses

shown separately below)

17,935

15,493

Research and development

4,505

3,723

Depreciation

8,666

8,239

Amortization

2,483

462

Restructuring costs

-

70

Asset impairments

-

144

Net legal settlements and related expenses

-

120

Acquisition-related costs

1,905

-

Total operating expenses

132,872

117,921

Operating income

10,367

11,571

Other (expense) income:

Interest expense

(2,100)

(1,801)

Interest income

9

21

Other, net

291

30

Total other expense

(1,800)

(1,750)

Income from continuing operations before income taxes

8,567

9,821

Income tax expense

3,297

2,640

Net income from continuing operations

5,270

7,181

Loss from discontinued operations, net of taxes

(65)

(103)

Net income

$ 5,205

$ 7,078

BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING

46,385

46,087

Basic net income per share (1)

Continuing operations

$ 0.11

$ 0.16

Discontinued operations

-

-

Net income per share

$ 0.11

$ 0.15

DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING

47,020

46,515

Diluted net income per share

Continuing operations

$ 0.11

$ 0.15

Discontinued operations

-

-

Net income per share

$ 0.11

$ 0.15

(1)

Column totals may not sum due to the effect of rounding on EPS.

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except per share data)

March 31,

December 31,

2014

2013

ASSETS

CURRENT ASSETS

Cash and equivalents

$ 36,721

$ 44,955

Accounts receivable (less allowances of $734 and $760, respectively)

87,923

78,481

Prepaid expenses and other current assets

17,586

22,645

Income taxes receivable

2,649

2,316

Deferred income taxes, net

4,577

4,390

Total current assets

149,456

152,787

PROPERTY AND EQUIPMENT, NET

104,685

105,724

OTHER ASSETS

Goodwill

340,749

341,382

Intangibles, net of amortization

76,340

78,637

Deferred income taxes, net

1,616

1,957

Other assets

17,340

17,621

TOTAL ASSETS

$ 690,186

$ 698,108

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$ 54,667

$ 51,994

Income taxes payable

2,347

2,648

Accrued taxes, other than income taxes

13,810

11,190

Accrued expenses

31,939

34,402

Current maturities of long-term debt and capital lease obligations

1,655

1,719

Accrued restructuring costs

819

2,104

Deferred income taxes, net

168

171

Total current liabilities

105,405

104,228

LONG-TERM LIABILITIES

Long-term debt and capital lease obligations

258,419

272,467

Accrued restructuring costs

18

77

Accrued expenses

29,212

29,570

Deferred income taxes, net

21,500

18,881

Total long-term liabilities

309,149

320,995

SHAREHOLDERS' EQUITY

Common stock, $0.01 par value; 150,000,000 shares authorized,

48,443,924 and 48,338,335 shares issued and outstanding, respectively

486

483

Additional paid-in capital

457,475

457,913

Accumulated other comprehensive gain

9,146

11,169

Accumulated deficit

(191,475)

(196,680)

Total shareholders' equity

275,632

272,885

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 690,186

$ 698,108

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

Three Months Ended

March 31,

2014

2013

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$ 5,205

$ 7,078

Loss from discontinued operations, net of taxes

65

103

Net income from continuing operations

5,270

7,181

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

8,666

8,239

Amortization

2,483

462

Amortization of debt issuance costs

161

148

Net legal settlements and related expenses

-

93

Payments for legal settlements and related expenses

-

(85)

Deferred income taxes

(22)

2,206

Restructuring costs

-

70

Payments for restructuring costs

(1,347)

(660)

Asset impairments

-

144

Equity-based compensation

2,227

1,674

Excess tax benefits from share-based payment arrangements

(250)

(244)

Provision for doubtful accounts

229

(31)

Acquisition-related costs

1,905

-

Cash paid for acquisition-related costs

(1,447)

-

Changes in working capital

(3,746)

(6,786)

Net cash provided by operating activities from continuing operations

14,129

12,411

Net cash used in operating activities from discontinued operations

(42)

(105)

Net cash provided by operating activities

14,087

12,306

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures

(8,101)

(8,796)

Other investing activities, net

2,050

(425)

Net cash used in investing activities from continuing operations

(6,051)

(9,221)

Net cash used in investing activities from discontinued operations

-

-

Net cash used in investing activities

(6,051)

(9,221)

CASH FLOWS FROM FINANCING ACTIVITIES

Principal payments under borrowing arrangements

(34,530)

(12,144)

Proceeds from borrowing arrangements

20,000

11,000

Excess tax benefits of share-based payment arrangements

250

244

Purchases and retirement of treasury stock, at cost

(2,245)

(1,134)

Exercise of stock options

53

-

Net cash used in financing activities from continuing operations

(16,472)

(2,034)

Net cash used in financing activities from discontinued operations

-

-

Net cash used in financing activities

(16,472)

(2,034)

Effect of exchange rate changes on cash and equivalents

202

(571)

NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS

(8,234)

480

CASH AND EQUIVALENTS, beginning of period

44,955

20,976

CASH AND EQUIVALENTS, end of period

$ 36,721

$ 21,456

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited, in thousands, except per share data)

Three Months Ended

March 31,

2014

2013

Non-GAAP Operating Income (1)

Operating income, as reported

$ 10,367

$ 11,571

Restructuring costs

-

70

Asset impairments

-

144

Net legal settlements and related expenses

-

120

Acquisition-related costs

1,905

-

Equity-based compensation

2,227

1,674

Amortization

2,483

462

Non-GAAP operating income

$ 16,982

$ 14,041

Non-GAAP Net Income from Continuing Operations (1)

Net income from continuing operations, as reported

$ 5,270

$ 7,181

Elimination of non-recurring tax adjustments

641

(257)

Restructuring costs

-

49

Asset impairments

-

102

Net legal settlements and related expenses

-

66

Acquisition-related costs

1,314

19

Equity-based compensation

1,537

1,180

Amortization

1,713

326

Non-GAAP net income from continuing operations

$ 10,475

$ 8,666

Non-GAAP Diluted EPS from Continuing Operations (1) (2)

Diluted net income per share from continuing operations, as reported

$ 0.11

$ 0.15

Elimination of non-recurring tax adjustments

0.01

(0.01)

Restructuring costs

-

-

Asset impairments

-

-

Net legal settlements and related expenses

-

-

Acquisition-related costs

0.03

-

Equity-based compensation

0.03

0.03

Amortization

0.04

0.01

Non-GAAP diluted EPS from continuing operations

$ 0.22

$ 0.19

(1)

Management believes that presenting non-GAAP operating income, non-GAAP net income from continuing operations and non-GAAP diluted EPS from

continuing operations provide useful information regarding underlying trends in the company's continuing operations. Management expects

equity-based compensation and amortization expenses to be recurring costs and presents non-GAAP net income from continuing operations and

non-GAAP diluted EPS from continuing operations to exclude these non-cash items, as well as non-recurring items that are unrelated to the company's

ongoing operations, including non-recurring tax adjustments, restructuring costs, asset impairments, net legal settlements and related expenses and

acquisition-related costs. These non-cash and non-recurring items are presented net of taxes for non-GAAP net income from continuing operations and

non-GAAP diluted EPS from continuing operations.

(2)

Column totals may not sum due to the effect of rounding on EPS.

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

CONSTANT CURRENCY ADJUSTMENTS AND ORGANIC GROWTH

Prior Year Quarter Constant Currency Adjustments (3)

Impact of

Q1 - 14 (Constant currency)

fluctuations in foreign currency exchange rates

Q1 - 14 (Actual)

(Unaudited, in thousands, except per share data)

Net Revenues

$ 143,478

$ (239)

$ 143,239

North America Net Revenue

$ 90,485

$ (355)

$ 90,130

Europe Net Revenue

$ 36,068

$ 1,060

$ 37,128

Asia Pacific Net Revenue

$ 16,925

$ (944)

$ 15,981

Non-GAAP Operating Income

$ 16,829

$ 153

$ 16,982

Non-GAAP Net Income from Continuing Operations

$ 10,511

$ (36)

$ 10,475

Non-GAAP Diluted EPS from Continuing Operations

$ 0.22

$ -

$ 0.22

(3)

Management also presents the non-GAAP financial measures described under note 1 above, as well as net revenues and segment net revenue, on a

constant currency basis compared to the same quarter in the previous year to exclude the effects of foreign currency exchange rates, which are not

completely within management's control, in order to facilitate period-to-period comparison of the company's financial results without the distortion of

these fluctuations. These constant currency adjustments convert current quarter results using prior period (Q1 - 13) average exchange rates.

Sequential Quarter Constant Currency Adjustments (4)

Impact of

Q1 - 14 (Constant currency)

fluctuations in foreign currency exchange rates

Q1 - 14 (Actual)

(Unaudited, in thousands)

Net Revenues

$ 143,276

$ (37)

$ 143,239

(4)

Management also presents net revenues on a constant currency basis compared to the prior quarter to exclude the effects of foreign currency

exchange rates, which are not completely within management's control, in order to facilitate period-to-period comparison of the company's financial

results without the distortion of these fluctuations. These constant currency adjustments convert current quarter results using prior period (Q4 - 13)

average exchange rates.

Organic Growth (5)

Impact of

March 31, 2013

fluctuations in foreign currency exchange rates

Acquisitions

Organic net

revenue

growth

March 31, 2014

Organic net

revenue

growth rate

(Unaudited, in thousands, except percentages)

Net Revenues, Three Months Ended

$ 129,492

$ (557)

$ 16,909

$ (2,605)

$ 143,239

-2.0%

(5)

Management defines "organic growth" as revenue changes excluding the impact of foreign currency exchange rate fluctuations and acquisitions made

during the periods presented and presents this non-GAAP financial measure to exclude the effect of these items that are not completely within

management's control, such as foreign currency exchange rate fluctuations, or do not reflect the company's ongoing core operations or underlying

growth, such as acquisitions.

Media and Investor Contact: Sean O'Brien (404) 262-8462 sean.obrien@pgi.com

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SOURCE PGi



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