PGi SaaS Products Revenue Up Over 50% in Second Quarter 2014; Total Revenues Up Over 9% to $144.3M, Non-GAAP Diluted EPS from Continuing Ops $0.23*

Company Reiterates 2014 Financial Outlook, Including Accelerated SaaS Growth Investments; Projects 2014 Free Cash Flow to Exceed $1.00 Per Share*

Jul 17, 2014, 16:05 ET from PGi

ATLANTA, July 17, 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 second quarter ended June 30, 2014.

In the second quarter of 2014, net revenues increased 9.2% to $144.3 million, compared to $132.2 million in the second quarter of 2013. Diluted EPS from continuing operations was $0.13 in the second quarter of 2014, compared to diluted EPS from continuing operations of $0.17 in the second quarter of 2013. Non-GAAP diluted EPS from continuing operations was $0.23* in the second quarter of 2014, compared to non-GAAP diluted EPS from continuing operations of $0.20* in the second quarter of 2013. 

"We are pleased with the continuing solid trends in our global business and, in particular, the increasing momentum in sales of our SaaS-based collaboration products," said Boland T. Jones, PGi founder, chairman and CEO. "We generated SaaS revenue of approximately $12 million in the second quarter, representing over 50% year-over-year growth and our highest sequential increase ever in this important revenue category. We ended the quarter with strong sales pipelines and an annual revenue run-rate of over $48 million from these high-value, high-margin products. Consistent with our ongoing strategy, we plan to accelerate our investments in driving higher sales of these next-generation collaboration products this year, as we work to further accelerate the positive transition in our business toward a SaaS model."

Six Month Results

In the first six months of 2014, net revenues grew nearly 10% to $287.5 million, compared to $261.7 million in the first six months of 2013. Diluted EPS from continuing operations was $0.24 in the first six months of 2014, compared to diluted EPS from continuing operations of $0.33 in the first six months of 2013. Non-GAAP diluted EPS from continuing operations was $0.45* in the first six months of 2014, compared to non-GAAP diluted EPS from continuing operations of $0.39* in the first six months of 2013. 

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 it provided on April 24, 2014net revenues from continuing operations are projected to be in the range of $565-$575 million and non-GAAP diluted EPS from continuing operations is projected to be in the range of $0.85-$0.88and free cash flow is projected to exceed $1.00 per share*. The Company continues to anticipate that it will 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: (888) 205-6705 (U.S. and Canada) or (913) 312-0726 (International), participant passcode 9783896. 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, free cash flow and organic growth. Management defines "free cash flow" as net cash provided by operating activities from continuing operations, less capital expenditures. 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 empower business users to 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  

 Six Months Ended  

 June 30, 

 June 30, 

2014

2013

2014

2013

Net revenues

$ 144,287

$ 132,178

$ 287,526

$ 261,670

Operating expenses: 

Cost of revenues (exclusive of depreciation and amortization shown

  separately below)

59,001

56,856

118,543

112,363

Selling and marketing

37,593

34,382

75,429

68,545

General and administrative (exclusive of expenses   shown separately below)

19,070

16,186

37,005

31,679

Research and development

4,616

3,831

9,121

7,554

Excise and sales tax expense

-

77

-

77

Depreciation

8,885

8,331

17,551

16,570

Amortization

2,484

392

4,967

854

Restructuring costs

-

131

-

201

Asset impairments

-

54

-

198

Net legal settlements and related expenses

-

220

-

313

Acquisition-related costs

1,786

212

3,691

239

Total operating expenses

133,435

120,672

266,307

238,593

Operating income

10,852

11,506

21,219

23,077

Other (expense) income:

Interest expense

(2,385)

(1,527)

(4,485)

(3,328)

Interest income

11

50

20

71

Other, net

(36)

188

255

218

Total other expense

(2,410)

(1,289)

(4,210)

(3,039)

Income from continuing operations before income taxes

8,442

10,217

17,009

20,038

Income tax expense

2,309

2,109

5,606

4,749

Net income from continuing operations

6,133

8,108

11,403

15,289

Loss from discontinued operations, net of taxes

(118)

(133)

(183)

(236)

Net income

$     6,015

$     7,975

$   11,220

$   15,053

BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING

45,859

46,204

46,121

46,146

Basic net income (loss) per share (1)

Continuing operations

$       0.13

$       0.18

$       0.25

$       0.33

Discontinued operations

-

-

-

(0.01)

Net income per share

$       0.13

$       0.17

$       0.24

$       0.33

DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING

46,550

46,720

46,784

46,618

Diluted net income (loss) per share

Continuing operations

$       0.13

$       0.17

$       0.24

$       0.33

Discontinued operations

-

-

-

(0.01)

Net income per share

$       0.13

$       0.17

$       0.24

$       0.32

(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)

June 30, 

December 31, 

2014

2013

ASSETS

CURRENT ASSETS

Cash and equivalents

$          31,926

$           44,955

Accounts receivable (less allowances of $768 and $760, respectively)

88,465

78,481

Prepaid expenses and other current assets

15,895

22,645

Income taxes receivable

3,712

2,316

Deferred income taxes, net

692

4,390

Total current assets

140,690

152,787

PROPERTY AND EQUIPMENT, NET

105,894

105,724

OTHER ASSETS

Goodwill

341,524

341,382

Intangibles, net of amortization

75,041

78,637

Deferred income taxes, net

2,403

1,957

Other assets

17,382

17,621

TOTAL ASSETS

$        682,934

$          698,108

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$         62,554

$            51,994

Income taxes payable

2,423

2,648

Accrued taxes, other than income taxes

9,271

11,190

Accrued expenses

34,348

34,402

Current maturities of long-term debt and capital lease obligations 

1,821

1,719

Accrued restructuring costs

544

2,104

Deferred income taxes, net

28

171

Total current liabilities

110,989

104,228

LONG-TERM LIABILITIES

Long-term debt and capital lease obligations 

251,937

272,467

Accrued restructuring costs

-

77

Accrued expenses

29,587

29,570

Deferred income taxes, net

19,334

18,881

Total long-term liabilities

300,858

320,995

SHAREHOLDERS' EQUITY

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

47,375,315 and 48,338,335 shares issued and outstanding, respectively

479

483

Additional paid-in capital

444,691

457,913

Accumulated other comprehensive gain

11,377

11,169

Accumulated deficit

(185,460)

(196,680)

Total shareholders' equity

271,087

272,885

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$        682,934

$          698,108

 

 

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited, in thousands)

Six Months Ended

June 30, 

2014

2013

CASH FLOWS FROM OPERATING ACTIVITIES

Net income 

$ 11,220

$ 15,053

Loss from discontinued operations, net of taxes

183

236

 Net income from continuing operations 

11,403

15,289

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

Depreciation

17,551

16,570

Amortization

4,967

854

Amortization of debt issuance costs 

322

296

Net legal settlements and related expenses

-

313

Payments for legal settlements and related expenses

-

(91)

Deferred income taxes

908

1,741

Restructuring costs

-

201

Payments for restructuring costs 

(1,659)

(922)

Asset impairments

-

198

Equity-based compensation

4,884

3,636

Excess tax benefits from share-based payment arrangements

(395)

(358)

Provision for doubtful accounts

362

360

Acquisition-related costs

3,691

-

Cash paid for acquisition-related costs

(3,779)

-

Changes in working capital

812

(8,189)

Net cash provided by operating activities from continuing operations

39,067

29,898

Net cash used in operating activities from discontinued operations

(165)

(257)

Net cash provided by operating activities

38,902

29,641

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures

(15,520)

(17,307)

Other investing activities, net

2,052

(625)

Business acquisitions, net of cash acquired 

66

-

Net cash used in investing activities from continuing operations

(13,402)

(17,932)

Net cash used in investing activities from discontinued operations

-

-

Net cash used in investing activities

(13,402)

(17,932)

CASH FLOWS FROM FINANCING ACTIVITIES

Principal payments under borrowing arrangements

(83,447)

(31,164)

Proceeds from borrowing arrangements

62,000

26,000

Excess tax benefits of share-based payment arrangements

395

358

Purchases and retirement of treasury stock, at cost

(18,988)

(1,758)

Exercise of stock options

963

-

Net cash used in financing activities from continuing operations

(39,077)

(6,564)

Net cash used in financing activities from discontinued operations

-

-

Net cash used in financing activities

(39,077)

(6,564)

Effect of exchange rate changes on cash and equivalents

548

(830)

NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS

(13,029)

4,315

CASH AND EQUIVALENTS, beginning of period

44,955

20,976

CASH AND EQUIVALENTS, end of period

$ 31,926

$ 25,291

 

 

 

PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited, in thousands, except per share data)

Three Months Ended 

Six Months Ended 

June 30,

June 30,

2014

2013

2014

2013

Non-GAAP Operating Income (1)

Operating income, as reported 

$ 10,852

$ 11,506

$ 21,219

$ 23,077

Restructuring costs 

-

131

-

201

Excise and sales tax expense

-

77

-

77

Asset impairments

-

54

-

198

Net legal settlements and related expenses

-

220

-

313

Acquisition-related costs

1,786

212

3,691

239

Equity-based compensation

2,657

1,962

4,884

3,636

Amortization

2,484

392

4,967

854

    Non-GAAP operating income

$ 17,779

$ 14,554

$ 34,761

$ 28,595

Non-GAAP Net Income from Continuing Operations (1)

Net income from continuing operations, as reported

$   6,133

$  8,108

$ 11,403

$ 15,289

Elimination of non-recurring tax adjustments and related interest

(167)

(905)

474

(1,162)

Restructuring costs

-

92

-

142

Excise and sales tax expense

-

54

-

54

Asset impairments

-

38

-

140

Net legal settlements and related expenses

-

155

-

221

Acquisition-related costs

1,232

149

2,547

168

Equity-based compensation

1,833

1,383

3,370

2,563

Amortization

1,714

276

3,427

602

    Non-GAAP net income from continuing operations

$ 10,745

$   9,350

$ 21,221

$ 18,017

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

Diluted net income per share from continuing operations, as reported

$     0.13

$     0.17

$     0.24

$     0.33

Elimination of non-recurring tax adjustments and related interest

-

(0.02)

0.01

(0.02)

Restructuring costs

-

-

-

-

Excise and sales tax expense

-

-

-

-

Asset impairments

-

-

-

-

Net legal settlements and related expenses

-

-

-

-

Acquisition-related costs

0.03

-

0.05

-

Equity-based compensation

0.04

0.03

0.07

0.05

Amortization

0.04

0.01

0.07

0.01

    Non-GAAP diluted EPS from continuing operations

$     0.23

$     0.20

$     0.45

$     0.39

(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 and related interest, 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

Prior Year Quarter Constant Currency Adjustments (3)

Impact of

Q2 - 14 (Constant currency)

fluctuations in foreign currency exchange rates

Q2 - 14 (Actual)

(Unaudited, in thousands, except per share data)

Net Revenues

$  143,185

$               1,102

$  144,287

North America Net Revenue

$    89,645

$                (253)

$    89,392

Europe Net Revenue

$    36,646

$               1,643

$    38,289

Asia Pacific Net Revenue

$    16,894

$                (288)

$    16,606

Non-GAAP Operating Income

$    17,534

$                  245

$    17,779

Non-GAAP Net Income from Continuing Operations

$    10,803

$                  (58)

$    10,745

Non-GAAP Diluted EPS from Continuing Operations

$        0.23

$                      -

$        0.23

(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 - 13) average exchange rates.

Sequential Quarter Constant Currency Adjustments (4)

Impact of 

Q2 - 14 (Constant currency)

fluctuations in foreign currency exchange rates

Q2 - 14 (Actual)

(Unaudited, in thousands)

Net Revenues

$  143,785

$                  502

$ 144,287

(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 - 14) average exchange rates.

Organic Growth (5)

Impact of

June 30, 2013

fluctuations in foreign currency exchange rates

Acquisitions

Organic net revenue growth

June 30, 2014

Organic net revenue growth rate

(Unaudited, in thousands, except percentages)

Net Revenues, Three Months Ended

$  132,178

$                  548

$    16,689

$    (5,128)

$ 144,287

-3.9%

 Net Revenues, Six Months Ended

$  261,670

$                    (9)

$    33,598

$    (7,733)

$ 287,526

-3.0%

(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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