PGi Reports Fourth Quarter and Fiscal Year 2013 Results: SaaS Products Up Nearly 75% in 2013, Comprising 6% of Total Revenues; Free Cash Flow Approaches $1.00 Per Share*

Company Reiterates 2014 Financial Outlook

20 Feb, 2014, 16:05 ET from PGi

ATLANTA, Feb. 20, 2014 /PRNewswire/ -- Premiere Global Services, Inc. (NYSE: PGI), a leading global provider of collaboration software and services for over 20 years, today announced final results for the fourth quarter and fiscal year ended December 31, 2013.

Fourth Quarter 2013 Financial Results

In the fourth quarter of 2013, net revenues increased approximately 7.0% to $134.6 million, compared to $125.8 million in the fourth quarter of 2012.  Diluted EPS from continuing operations was $(0.03) in the fourth quarter of 2013, compared to diluted EPS from continuing operations of $0.20 in the fourth quarter of 2012.  Non-GAAP diluted EPS from continuing operations was $0.20* in the fourth quarter of 2013, compared to $0.18* in the fourth quarter of 2012. 

"We are pleased with our 2013 performance, as we accelerated sales of our collaboration software applications and made solid progress in transitioning PGi to a higher-value SaaS model – while also generating significant free cash flow of nearly $1.00 per share*," said Boland T. Jones, PGi founder, chairman and CEO. "We continue to be optimistic in our outlook, and we see 2014 as another year of solid growth and higher profitability for PGi."

2013 Financial Results

In 2013, net revenues total $526.9 million, compared to $505.3 million in 2012.  Diluted EPS from continuing operations was $0.40 in 2013, compared to diluted EPS from continuing operations of $0.58 in 2012. Non-GAAP diluted EPS from continuing operations totaled $0.78* in 2013, compared to non-GAAP diluted EPS from continuing operations of $0.73* in 2012. 

2013 Accomplishments

  • Grew revenue from PGi SaaS products nearly 75% to approximately $31 million;
  • Exited the year with an annual revenue run-rate of approximately $37 million from SaaS products;
  • Named a Top 10 Innovative Technology Company in Georgia by the Technology Association of Georgia (TAG);
  • Acquired ACT Teleconferencing, Inc., a global provider of integrated conferencing solutions with operations in eight countries in North America, Europe and Asia Pacific;
  • Acquired Via-Vox Limited, operating under the name Powwownow, one of Europe's fastest growing conferencing providers focused on small and midsize businesses;
  • Increased the borrowing capacity, extended the term and improved the pricing and covenants of its credit facility, providing additional flexibility to execute its strategic growth plans, while also lowering its cost of capital;
  • Announced a multi-year strategic alliance with TeliaSonera, a leading provider of network access and telecommunication services in the Nordic and Baltic countries, to bring PGi's virtual meeting solutions to TeliaSonera's business and consumer customers in these regions;
  • Announced iMeet® accessibility via the SAP® Business ByDesign® solution, making it available to even more fast-growing, mid-market businesses and subsidiaries of large enterprises working with SAP around the world; and
  • Announced a managed services agreement with Ingram Micro Inc., the world's largest technology distributor and a global leader in IT supply-chain, adding iMeet to the Ingram Micro Cloud Marketplace.

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 continues to anticipate that results for 2014 will be within the financial outlook ranges previously provided: net revenues from continuing operations are projected to be in the range of $560-$570 million and non-GAAP diluted EPS from continuing operations are projected to be in the range of $0.85-$0.88*.  PGi continues to anticipate that sales of its SaaS-based products will increase over 50% in 2014 compared to 2013 and will comprise in excess of 10% of its consolidated annual revenue run-rate by the end of 2014. 

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:  (888) 271-8604 (U.S. and Canada) or (913) 312-0704 (International), participant code 5278333.  The conference call will simultaneously be webcast.  Please visit www.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, free cash flow and organic growth. Except for free cash flow, 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. 

SAP, ByDesign and all SAP logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries.  All other trademarks and registered trademarks are the property of their respective owners.

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 www.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. 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 our cloud-based, virtual meeting solutions, including our iMeet® and GlobalMeet® solutions; our ability to attract new customers and to retain and further penetrate our existing customers; our ability to establish and maintain strategic reseller relationships; risks associated with challenging global economic conditions; price increases from our telecommunications service providers; service interruptions and network downtime; 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 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, 2012. 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

(in thousands, except per share data)

(unaudited)

 Three Months Ended  

 Year Ended  

 December 31, 

 December 31, 

2013

2012

2013

2012

Net revenues

$  134,625

$  125,771

$  526,865

$  505,281

Operating expenses: 

Cost of revenues (exclusive of depreciation and amortization shown separately below)

57,428

54,110

225,994

215,154

Selling and marketing

32,502

31,875

134,426

130,631

General and administrative (exclusive of expenses shown separately below)

17,935

16,342

65,219

63,412

Research and development

4,875

3,741

16,574

14,349

Excise and sales tax expense

1,891

203

1,969

321

Depreciation

8,729

8,275

33,758

32,482

Amortization

1,787

742

3,496

3,981

Restructuring costs

3,065

(91)

3,506

612

Asset impairments

980

138

1,196

879

Net legal settlements and related expenses

7

183

598

2,034

Acquisition-related costs

2,348

-

5,392

-

Total operating expenses

131,547

115,518

492,128

463,855

Operating income

3,078

10,253

34,737

41,426

Other (expense) income:

Interest expense

(2,225)

(1,763)

(7,152)

(7,167)

Interest income

24

30

117

49

Other, net

84

(277)

214

(808)

Total other expense, net

(2,117)

(2,010)

(6,821)

(7,926)

Income from continuing operations before income taxes

961

8,243

27,916

33,500

Income tax expense (benefit)

2,241

(1,173)

9,062

5,445

Net (loss) income from continuing operations

(1,280)

9,416

18,854

28,055

Loss from discontinued operations, net of taxes

(120)

(131)

(538)

(465)

Net (loss) income

$    (1,400)

$      9,285

$    18,316

$    27,590

BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING

46,328

46,546

46,214

47,596

Basic net (loss) income per share (1)

Continuing operations

$      (0.03)

$        0.20

$        0.41

$        0.59

Discontinued operations

-

-

(0.01)

(0.01)

Net (loss) income per share

$      (0.03)

$        0.20

$        0.40

$        0.58

DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING

46,328

47,103

46,727

48,092

Diluted net (loss) income per share (1)

Continuing operations

$      (0.03)

$        0.20

$        0.40

$        0.58

Discontinued operations

-

-

(0.01)

(0.01)

Net (loss) income per share

$      (0.03)

$        0.20

$        0.39

$        0.57

(1)

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

 

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

December 31, 

December 31, 

2013

2012

ASSETS

CURRENT ASSETS

Cash and equivalents

$           44,955

$           20,976

Accounts receivable (less allowances of $760 and $834, respectively)

78,481

75,149

Prepaid expenses and other current assets

22,645

18,245

Income taxes receivable

2,316

1,272

Deferred income taxes, net

4,390

9,852

Total current assets

152,787

125,494

PROPERTY AND EQUIPMENT, NET

105,724

104,613

OTHER ASSETS

Goodwill

341,382

297,773

Intangibles, net of amortization

78,637

7,384

Deferred income taxes, net

1,957

2,597

Other assets

17,621

7,942

TOTAL ASSETS

$         698,108

$         545,803

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$           51,994

$           48,166

Income taxes payable

2,648

1,116

Accrued taxes, other than income taxes

11,190

4,333

Accrued expenses

34,402

32,093

Current maturities of long-term debt and capital lease obligations 

1,719

3,137

Accrued restructuring costs

2,104

1,040

Deferred income taxes, net

171

15

Total current liabilities

104,228

89,900

LONG-TERM LIABILITIES

Long-term debt and capital lease obligations 

272,467

179,832

Accrued restructuring costs

77

117

Accrued expenses

29,570

15,541

Deferred income taxes, net

18,881

8,209

Total long-term liabilities

320,995

203,699

SHAREHOLDERS' EQUITY

Common stock, $0.01 par value; 150,000,000 shares authorized, 48,338,335 and 47,745,592 shares issued and outstanding, respectively

483

477

Additional paid-in capital

457,913

453,621

Accumulated other comprehensive income

11,169

13,102

Accumulated deficit

(196,680)

(214,996)

Total shareholders' equity

272,885

252,204

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$         698,108

$         545,803

 

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (in thousands)

 (unaudited)

Year Ended

December 31, 

2013

2012

CASH FLOWS FROM OPERATING ACTIVITIES

Net income 

$       18,316

$       27,590

Loss from discontinued operations, net of taxes

538

465

 Net income from continuing operations 

18,854

28,055

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

Depreciation

33,758

32,482

Amortization

3,496

3,981

Amortization of debt issuance costs 

611

592

Net legal settlements and related expenses

598

2,034

Payments for legal settlements and related expenses

(510)

(1,512)

Deferred income taxes

3,068

(4,322)

Restructuring costs

3,506

612

Payments for restructuring costs 

(2,469)

(3,213)

Asset impairments

1,196

879

Equity-based compensation

7,872

8,074

Excess tax benefits from share-based payment arrangements

(525)

(367)

Provision for doubtful accounts

514

1,089

Acquisition-related costs

5,392

-

Cash paid for acquisition-related costs

(3,863)

-

Changes in assets and liabilities, net of effect of acquisitions and dispositions:

Changes in working capital

4,360

2,137

Net cash provided by operating activities from continuing operations

75,858

70,521

Net cash used in operating activities from discontinued operations

(554)

(672)

 Net cash provided by operating activities

75,304

69,849

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures

(31,774)

(32,338)

Business acquisitions, net of cash acquired

(102,145)

-

Other investing activities

(452)

(1,273)

Net cash used in investing activities from continuing operations

(134,371)

(33,611)

Net cash used in investing activities from discontinued operations

-

(60)

 Net cash used in investing activities

(134,371)

(33,671)

CASH FLOWS FROM FINANCING ACTIVITIES

Principal payments under borrowing arrangements

(78,847)

(94,655)

Proceeds from borrowing arrangements

166,750

75,929

Payments of debt issuance costs

(1,258)

(23)

Excess tax benefits of share-based payment arrangements

525

367

Purchase and retirement of treasury stock, at cost

(4,066)

(29,915)

Exercise of stock options

-

932

Net cash provided by (used in) financing activities from continuing operations

83,104

(47,365)

Net cash used in financing activities from discontinued operations

-

-

 Net cash provided by (used in) financing activities

83,104

(47,365)

Effect of exchange rate changes on cash and equivalents

(58)

130

NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS

23,979

(11,057)

CASH AND EQUIVALENTS, beginning of year

20,976

32,033

CASH AND EQUIVALENTS, end of year

$       44,955

$       20,976

 

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

(unaudited)

 Three Months Ended  

 Year Ended  

 December 31, 

 December 31, 

2013

2012

2013

2012

Non-GAAP Operating Income (1)

Operating income, as reported 

$        3,078

$      10,253

$      34,737

$      41,426

Restructuring costs 

3,065

(91)

3,506

612

Excise and sales tax expense

1,891

203

1,969

321

Asset impairments

980

138

1,196

879

Net legal settlements and related expenses

7

183

598

2,034

Acquisition-related costs

2,348

-

5,392

-

Equity-based compensation

2,178

1,961

7,872

8,074

Amortization

1,787

742

3,496

3,981

Non-GAAP operating income

$      15,334

$      13,389

$      58,766

$      57,327

Non-GAAP Net Income from Continuing Operations (1)

Net (loss) income from continuing operations, as reported

$       (1,280)

$        9,416

$      18,854

$      28,055

Elimination of non-recurring tax adjustments

1,939

(3,376)

687

(4,354)

Restructuring costs

2,101

(67)

2,454

433

Excise and sales tax expense

1,296

149

1,378

227

Excise and sales tax interest

127

-

130

-

Asset impairments

672

101

837

622

Net legal settlements and related expenses

5

134

419

1,439

Acquisition-related costs

1,610

-

3,774

-

Equity-based compensation

1,493

1,437

5,510

5,712

Amortization

1,225

544

2,447

2,817

Non-GAAP net income from continuing operations

$        9,188

$        8,338

$      36,490

$      34,951

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

Diluted net (loss) income per share from continuing operations, as reported

$        (0.03)

$          0.20

$          0.40

$          0.58

Elimination of non-recurring tax adjustments

0.04

(0.07)

0.01

(0.09)

Restructuring costs

0.04

-

0.05

0.01

Excise and sales tax expense

0.03

-

0.03

-

Excise and sales tax interest

-

-

-

-

Asset impairments

0.01

-

0.02

0.01

Net legal settlements and related expenses

-

-

0.01

0.03

Acquisition-related costs

0.03

-

0.08

-

Equity-based compensation

0.03

0.03

0.12

0.12

Amortization

0.03

0.01

0.05

0.06

Non-GAAP diluted EPS from continuing operations

$          0.20

$          0.18

$          0.78

$          0.73

Free Cash Flow (3)

Net cash provided by operating activities from continuing operations, as reported

$ 75,858

$ 70,521

Less: Capital expenditures, as reported

(31,774)

(32,338)

Free cash flow

44,084

38,183

Free cash flow per share

$          0.94

$          0.79

(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, excise and sales tax expense, excise and sales tax interest, 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. For the three months ended December 31, 2013, diluted net loss per share from continuing operations, as reported, is calculated using basic weighted-average shares outstanding of 46,328. The effect of share-based awards is excluded from the shares used in this calculation because such effect is anti-dilutive. However, non-GAAP diluted EPS from continuing operations is calculated using diluted weighted-average shares outstanding of 46,933. The effect of share-based awards is included in the shares used in the calculation of non-GAAP diluted EPS

from continuing operations because such effect is dilutive.

(3)

Management defines "free cash flow" as net cash provided by operating activities from continuing operations, less capital expenditures. Management believes that this non-GAAP measure provides a relevant measure of the company's liquidity in evaluating its financial performance and ability to generate cash without additional external financing in order to repay debt obligations, fund acquisitions and repurchase shares. Management utilizes diluted weighted-average shares outstanding in calculating free cash flow per share.

 

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

CONSTANT CURRENCY ADJUSTMENTS AND ORGANIC GROWTH

(unaudited)

Prior Year Quarter Constant Currency Adjustments (4)

Q4 - 13 (Constant currency)

Impact of fluctuations in foreign currency exchange rates

Q4 - 13 (Actual)

(in thousands, except per share data)

Net Revenues

$ 135,748

$   (1,123)

$ 134,625

North America Net Revenue

$   87,235

$      (227)

$   87,008

Europe Net Revenue

$   30,720

$        453

$   31,173

Asia Pacific Net Revenue

$   17,793

$   (1,349)

$   16,444

Non-GAAP Operating Income

$   15,547

$      (213)

$   15,334

Non-GAAP Net Income from Continuing Operations

$     9,175

$          13

$     9,188

Non-GAAP Diluted EPS from Continuing Operations

$       0.20

$             -

$       0.20

(4)

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 (Q4 - 12) average exchange rates.

Sequential Quarter Constant Currency Adjustments (5)

Q4 - 13 (Constant currency)

Impact of fluctuations in foreign currency exchange rates

Q4 - 13 (Actual)

(in thousands)

Net Revenues

$ 133,958

$       667

$ 134,625

(5)

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 (Q3 - 13) average exchange rates.

Organic Growth (6)

December 31, 2012

Impact of fluctuations in foreign currency exchange rates

Acquisitions

Organic net revenue growth

December 31, 2013

Organic net revenue growth rate

(in thousands, except percentages)

Net Revenues, Three Months Ended

$ 125,771

$   (1,123)

$   13,991

$  (4,014)

$ 134,625

(3.2)%

Net Revenues, Year Ended

$ 505,281

$   (4,239)

$   18,593

$    7,230

$ 526,865

1.4%

(6)

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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