PGi Reports Second Quarter 2013 Results: Organic Revenues Grew Nearly 5% to $132.2M*; Non-GAAP Diluted EPS from Continuing Operations $0.20*; SaaS Revenue Up Nearly 75% Year-Over-Year

Company Revises 2013 Financial Outlook to Reflect Recent Changes in Foreign Currency Exchange Rates and Slower Trends in Europe

18 Jul, 2013, 16:05 ET from PGi

ATLANTA, July 18, 2013 /PRNewswire/ -- Premiere Global Services, Inc. (NYSE: PGI), a global leader in virtual meetings for over 20 years, today announced results for the second quarter ended June 30, 2013.

In the second quarter of 2013, net revenues totaled $132.2 million, compared to $127.0 million in the second quarter of 2012. Diluted EPS from continuing operations was $0.17 in the second quarter of 2013, compared to diluted EPS from continuing operations of $0.14 in the second quarter of 2012. Non-GAAP diluted EPS from continuing operations was $0.20* in the second quarter of 2013, compared to non-GAAP diluted EPS from continuing operations of $0.19* in the second quarter of 2012.

"With revenue from our SaaS products growing nearly 75% in the second quarter – and over half that growth coming from our audio customers adding iMeet® and GlobalMeet® – we remain pleased with our execution of PGi's growth strategy," said Boland T. Jones, PGi founder, chairman and CEO. "The continued growth of our SaaS-based revenue remains a top priority for us, while at the same time we are focused on continuing to drive market share gains through investments in our global distribution and in our acquisition program.

"Over the last few weeks, our year-over-year revenue trends in Europe have slowed, from double-digit to mid-single-digit organic growth rates. We believe this slowdown is related to general economic conditions in the region, and we are confident that PGi continues to have a strong competitive position in the European market. Despite these recent trends, we remain optimistic in both our near- and long-term outlooks for PGi."

Six Month Results

In the first six months of 2013, net revenues totaled $261.7 million, compared to $253.6 million in the first six months of 2012. Diluted EPS from continuing operations was $0.33 in the first six months of 2013, compared to diluted EPS from continuing operations of $0.27 in the first six months of 2012. Non-GAAP diluted EPS from continuing operations was $0.39* in the first six months of 2013, compared to non-GAAP diluted EPS from continuing operations of $0.37* in the first six months of 2012.

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.

Continued foreign currency exchange rate fluctuations and a recent slowing of our business trends in Europe have negatively affected the guidance PGi previously provided on April 18, 2013. As a result, PGi has updated its financial outlook for 2013. Based on current business trends and current foreign currency exchange rates, PGi anticipates that net revenues from continuing operations in 2013 will be in the range of $517-$523 million and non-GAAP diluted EPS from continuing operations will be in the range of $0.78-$0.81*.

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) 737-3662 (U.S. and Canada) or (913) 312-1472 (International). 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 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 global leader in virtual meetings for over 20 years. PGi's cloud-based solutions deliver multi-point, real-time virtual collaboration using video, voice, mobile, web streaming and file sharing technologies. PGi solutions are available via desktops, tablets and mobile devices, helping businesses worldwide be more productive, mobile and environmentally responsible. PGi has a global presence in 25 countries and an established base of over 40,000 enterprise customers, including 75% of the Fortune 100™. In the last five years, PGi has hosted nearly one billion people from 137 countries in over 200 million 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 Premiere Global Services, Inc.'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 customer's 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 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

Six Months Ended

June 30,

June 30,

2013

2012

2013

2012

Net revenues

$ 132,178

$ 127,015

$ 261,670

$ 253,618

Operating expenses:

Cost of revenues (exclusive of depreciation and amortization shown

separately below)

56,856

53,788

112,363

107,238

Selling and marketing

34,382

32,997

68,545

67,031

General and administrative (exclusive of expenses

shown separately below)

16,186

15,934

31,679

31,215

Research and development

3,831

3,526

7,554

6,905

Excise and sales tax expense

77

118

77

118

Depreciation

8,331

8,011

16,570

15,956

Amortization

392

1,212

854

2,432

Restructuring costs (income)

131

(48)

201

113

Asset impairments

54

20

198

45

Net legal settlements and related expenses

220

62

313

82

Acquisition-related costs

212

-

239

-

Total operating expenses

120,672

115,620

238,593

231,135

Operating income

11,506

11,395

23,077

22,483

Other (expense) income:

Interest expense

(1,527)

(1,789)

(3,328)

(3,561)

Interest income

50

5

71

9

Other, net

188

(179)

218

(249)

Total other expense, net

(1,289)

(1,963)

(3,039)

(3,801)

Income from continuing operations before income taxes

10,217

9,432

20,038

18,682

Income tax expense

2,109

2,739

4,749

5,763

Net income from continuing operations

8,108

6,693

15,289

12,919

Loss from discontinued operations, net of taxes

(133)

(226)

(236)

(273)

Net income

$     7,975

$     6,467

$   15,053

$   12,646

BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING

46,204

48,103

46,146

48,279

Basic net income (loss) per share (1)

Continuing operations

$       0.18

$       0.14

$       0.33

$       0.27

Discontinued operations

-

-

(0.01)

(0.01)

Net income per share

$       0.17

$       0.13

$       0.33

$       0.26

DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING

46,720

48,551

46,618

48,740

Diluted net income (loss) per share (1)

Continuing operations

$       0.17

$       0.14

$       0.33

$       0.27

Discontinued operations

-

-

(0.01)

(0.01)

Net income per share

$       0.17

$       0.13

$       0.32

$       0.26

(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)

June 30,

December 31,

2013

2012

ASSETS

CURRENT ASSETS

Cash and equivalents

$   25,291

$    20,976

Accounts receivable (less allowances of $796 and $834, respectively)

85,120

75,149

Prepaid expenses and other current assets

20,584

18,245

Income taxes receivable

3,030

1,272

Deferred income taxes, net

11,224

9,852

Total current assets

145,249

125,494

PROPERTY AND EQUIPMENT, NET

103,907

104,613

OTHER ASSETS

Goodwill

294,426

297,773

Intangibles, net of amortization

6,608

7,384

Deferred income taxes, net

2,473

2,597

Other assets

7,085

7,942

TOTAL ASSETS

$ 559,748

$  545,803

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$   55,090

$   48,166

Income taxes payable

277

1,116

Accrued taxes, other than income taxes

5,272

4,333

Accrued expenses

29,507

32,093

Current maturities of long-term debt and capital lease obligations

1,838

3,137

Accrued restructuring costs

350

1,040

Deferred income taxes, net

1

15

Total current liabilities

92,335

89,900

LONG-TERM LIABILITIES

Long-term debt and capital lease obligations

176,716

179,832

Accrued restructuring costs

68

117

Accrued expenses

14,606

15,541

Deferred income taxes, net

12,739

8,209

Total long-term liabilities

204,129

203,699

SHAREHOLDERS' EQUITY

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

48,181,655 and 47,745,592 shares issued and outstanding, respectively

482

477

Additional paid-in capital

455,673

453,621

Accumulated other comprehensive income

7,072

13,102

Accumulated deficit

(199,943)

(214,996)

Total shareholders' equity

263,284

252,204

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 559,748

$  545,803

 

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

Six Months Ended

June 30,

2013

2012

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$ 15,053

$ 12,646

Loss from discontinued operations, net of taxes

236

273

Net income from continuing operations

15,289

12,919

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

Depreciation

16,570

15,956

Amortization

854

2,432

Amortization of debt issuance costs

296

295

Net legal settlements and related expenses

313

82

Payments for legal settlements and related expenses

(91)

(17)

Deferred income taxes

1,741

3,342

Restructuring costs

201

113

Payments for restructuring costs

(922)

(1,152)

Asset impairments

198

45

Equity-based compensation

3,636

4,184

Excess tax benefits from share-based payment arrangements

(358)

(264)

Provision for doubtful accounts

360

576

Changes in working capital

(8,189)

(9,344)

Net cash provided by operating activities from continuing operations

29,898

29,167

Net cash used in operating activities from discontinued operations

(257)

(630)

Net cash provided by operating activities

29,641

28,537

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures

(17,307)

(15,018)

Other investing activities

569

(249)

Business acquisitions, net of cash acquired

(1,194)

(97)

Net cash used in investing activities from continuing operations

(17,932)

(15,364)

Net cash used in investing activities from discontinued operations

-

(60)

Net cash used in investing activities

(17,932)

(15,424)

CASH FLOWS FROM FINANCING ACTIVITIES

Principal payments under borrowing arrangements

(31,164)

(35,140)

Proceeds from borrowing arrangements

26,000

24,729

Payments of debt issuance costs

-

(23)

Excess tax benefits of share-based payment arrangements

358

264

Purchase and retirement of treasury stock, at cost

(1,758)

(11,437)

Exercise of stock options

-

853

Net cash used in financing activities from continuing operations

(6,564)

(20,754)

Net cash used in financing activities from discontinued operations

-

-

Net cash used in financing activities

(6,564)

(20,754)

Effect of exchange rate changes on cash and equivalents

(830)

(391)

NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS

4,315

(8,032)

CASH AND EQUIVALENTS, beginning of period

20,976

32,033

CASH AND EQUIVALENTS, end of period

$ 25,291

$ 24,001

 

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

(unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2013

2012

2013

2012

Non-GAAP Operating Income (1)

Operating income, as reported

$ 11,506

$ 11,395

$ 23,077

$ 22,483

Restructuring costs

131

(48)

201

113

Excise and sales tax expense

77

118

77

118

Asset impairments

54

20

198

45

Net legal settlements and related expenses

220

62

313

82

Acquisition-related costs

212

-

239

-

Equity-based compensation

1,962

2,102

3,636

4,184

Amortization

392

1,212

854

2,432

Non-GAAP operating income

$ 14,554

$ 14,861

$ 28,595

$ 29,457

Non-GAAP Net Income from Continuing Operations (1)

Net income from continuing operations, as reported

$ 8,108

$  6,693

$ 15,289

$ 12,919

Elimination of non-recurring tax adjustments

(905)

(91)

(1,162)

158

Restructuring costs

92

(34)

142

79

Excise and sales tax expense

54

83

54

83

Asset impairments

38

14

140

32

Net legal settlements and related expenses

155

43

221

57

Acquisition-related costs

149

-

168

-

Equity-based compensation

1,383

1,471

2,563

2,929

Amortization

276

848

602

1,702

Non-GAAP net income from continuing operations

$ 9,350

$   9,027

$ 18,017

$ 17,959

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

Diluted net income per share from continuing operations, as reported

$   0.17

$     0.14

$     0.33

$     0.27

Elimination of non-recurring tax adjustments

(0.02)

-

(0.02)

-

Restructuring costs

-

-

-

-

Excise and sales tax expense

-

-

-

-

Asset impairments

-

-

-

-

Net legal settlements and related expenses

-

-

-

-

Acquisition-related costs

-

-

-

-

Equity-based compensation

0.03

0.03

0.05

0.06

Amortization

0.01

0.02

0.01

0.03

Non-GAAP diluted EPS from continuing operations

$   0.20

$   0.19

$   0.39

$   0.37

(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, 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

(unaudited)

Prior Year Quarter Constant Currency Adjustments (3)

Impact of

fluctuations in foreign currency exchange rates

Q2 - 13 (Constant currency)

Q2 - 13 (Actual)

(in thousands, except per share data)

Net Revenues

$ 133,199

$  (1,021)

$  132,178

North America Net Revenue

$   86,538

$       (46)

$    86,492

Europe Net Revenue

$   28,941

$         23

$    28,964

Asia Pacific Net Revenue

$   17,720

$     (998)

$    16,722

Non-GAAP Operating Income

$   14,902

$     (348)

$    14,554

Non-GAAP Net Income from Continuing Operations

$     9,274

$        76

$      9,350

Non-GAAP Diluted EPS from Continuing Operations

$       0.20

$           -

$       0.20

(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 (Q2 - 12) average exchange rates.

Sequential Quarter Constant Currency Adjustments (4)

Impact of

fluctuations in foreign currency exchange rates

Q2 - 13 (Constant currency)

Q2 - 13 (Actual)

(in thousands)

Net Revenues

$ 132,958

$ (780)

$ 132,178

(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 (Q1 - 13) average exchange rates.

Organic Growth (5)

Impact of

fluctuations in foreign currency exchange rates

June 30, 2012

Organic net revenue growth

June 30, 2013

Organic net revenue growth rate

(in thousands, except percentages)

Net Revenues, Three Months Ended

$ 127,015

$ (1,021)

$ 6,184

$ 132,178

4.9%

Net Revenues, Six Months Ended

$ 253,618

$ (1,753)

$ 9,805

$ 261,670

3.9%

(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. The Company did not close any acquisitions during the period presented.

 

Investor Calls Sean O'Brien Executive Vice President Strategy & Communications (404) 262-8462

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SOURCE PGi



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