Global Telecom & Technology Reports First Quarter 2008 Results
Revenue Grows 19.9 Percent to $16.3 Million
Third Consecutive Quarter of Positive Adjusted EBITDA
MCLEAN, VA., May 13, 2008 - Global Telecom & Technology, Inc. (“GTT”), (OTCBB: GTLT), a leading global Multi-Network Operator, today announced results for the first quarter ended March 31, 2008.
- Revenue grew to $16.3 million, a 19.9 percent increase compared to $13.6 million in the first quarter of 2007.
- Gross margin percentage of 29.0 percent was unchanged compared to the fourth quarter 2007 and down slightly from 29.8 percent in the first quarter of 2007.
- Selling, general and administrative (SG&A) expenses, excluding non-cash compensation, decreased to $4.6 million, or 28.1 percent of revenue, compared to $4.7 million, or 34.3 percent of revenue in the first quarter of 2007.
- Adjusted Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) increased to $150 thousand compared to a $(602) thousand loss in the first quarter of 2007.
“We had a great start to the year,” said Richard D. Calder, Jr., president and chief executive officer, GTT. “The strong growth and continued positive results underscore our value proposition as a Multi-Network Operator.
“As our recent announcements confirm, we remain focused on growing our business through new customer acquisition, strategic supplier agreements, and through new product development. For example, the GTT Hub ServiceSM private line network offering which we launched in the first quarter is already gaining traction in the market.
“Moving forward, we expect to achieve strong revenue growth, maintain gross margin, reduce SG&A expenses as a percentage of overall revenue and increase positive Adjusted EBITDA throughout the year.”
Financial Highlights
Financial highlights and historical comparisons for the quarter ended March 31, 2008 include (in millions except per share amounts):
|
Q1 2008 |
Q4 2007 |
Q3 2007 |
Q2 2007 |
Q1 2007 |
|
|
|
|
|
|
Revenue |
$16.3 |
$15.5 |
$14.7 |
$13.8 |
$13.6 |
Adjusted EBITDA(a) |
$0.15 |
$0.23 |
$0.16 |
$(0.05) |
$(0.60) |
Operating loss |
$(0.7) |
$(0.6) |
$(0.6) |
$(2.3) |
$(3.1) |
Net (loss) income |
$(0.6) |
$1.5 |
$(0.5) |
$(2.3) |
$(3.0) |
Net (loss) income per share |
$(0.04) |
$0.11 |
$(0.04) |
$(0.19) |
$(0.25) |
(a) See “Annex A: Non-GAAP Financial Information—Adjusted EBITDA” for more information regarding the computation of Adjusted EBITDA.
Revenue for the three months ended March 31, 2008 was $16.3 million, representing a 19.9 percent increase over the first quarter of 2007. Revenue growth was driven by strong installs during the quarter with an increase in average circuit size due to customer demand for greater capacity. In addition, nearly one third of new sales in the first quarter were to new customers as the company continued to successfully expand its customer base. Revenue for the first quarter of 2008 also benefited nominally from an increased average exchange rate for the British Pound Sterling and Euro to the U.S. Dollar as compared to the first quarter of 2007.
SG&A expenses, excluding non-cash compensation decreased to $4.6 million, or 28.1 percent of revenue, compared to $4.7 million, or 34.3 percent of revenue in the first quarter of 2007.
For the third consecutive quarter, GTT produced positive Adjusted EBITDA. First quarter Adjusted EBITDA increased to $150 thousand compared to a $(602) thousand loss in the first quarter of 2007.
“We are pleased with our quarterly results including our continued strong revenue and Adjusted EBITDA performance,” stated Kevin J. Welch, chief financial officer, GTT. “We achieved our Adjusted EBITDA results even with the impact of the annual audit and compliance costs recognized in the first quarter.”
In March 2008, the company signed a new $2.0 million senior secured credit facility agreement with Silicon Valley Bank. The facility’s borrowing capacity is based upon company accounts receivables and cash collections, has a 364 day term and contains no restrictive financial covenants. GTT does not currently have any outstanding borrowings under the facility.
Conference Call Information
GTT will discuss its results on its quarterly conference call scheduled for Wednesday, May 14, 2008, at 8:30 a.m. Eastern Time (5:30 a.m. PT). To hear the conference call live, interested parties may dial 1.800.896.8445 or +1.785.830.1916 and enter passcode 7253492. A simultaneous live webcast of the call will be available over the Internet at www.gt-t.net, under the Investor Relations section of the site. A replay of the call will be available through April 20, 2008. Interested parties can access the call replay by dialing 1.888.203.1112 or +1.719.457.0820 and using the passcode 7253492. In addition, a replay of the webcast will be available on GTT’s website at www.gt-t.net.
About GTT
As a Multi-Network Operator, GTT combines multiple networks and technologies to design unique network solutions for its customers. By integrating components of multiple carrier networks, GTT can create the “best network” in a way that no single carrier can. GTT has taken the Multi-Network Operator strategy to a new level, through a combination of powerful network design tools, a global service footprint, a deep and broad set of strategic supplier relationships, and above all, an expert team committed to delivering outstanding end-to-end customer service.
Headquartered just outside Washington, D.C. in McLean, Virginia and with offices in London, Paris, and Dusseldorf, GTT has over 150 carrier partnerships and access to over 100,000 network Points of Presence around the world. GTT provides a global service footprint that supports more than 300 businesses in more than 70 countries, worldwide. For more information visit the GTT website: www.gt-t.net
Forward-Looking Statements
Some of the statements made by GTT in this press release, including without limitation statements regarding GTT's anticipated future growth, financial performance and transactional activity, are forward-looking in nature. GTT intends that any forward-looking statements, as defined in Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), shall be covered by the safe harbor provisions for such statements contained in Section 21E of the Exchange Act. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "may," "will," "should," "expects," "anticipates," "intends," "plans," "believes," "estimates," "predicts," "potential," "continues" and similar expressions are forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause GTT’s actual future results to differ materially from those projected or contemplated in the forward-looking statements. GTT believes that these risks include, but are not limited to: GTT's ability to develop and market new products and services that meet customer demands and generate acceptable margins; GTT's ability to execute with respect to growth plans and/or acquisition strategies; GTT's reliance on several large customers; the complexities of carrying on business on an international basis; GTT's ability to negotiate and enter into acceptable contract terms with its suppliers; GTT's ability to attract and retain qualified management and other personnel; continued development of GTT's information technology platforms; failure of the third-party communications networks on which GTT depends; and competition and other risks associated with the communications sector in general and the multi-network operator sector in particular. Additional information concerning these and other important factors can be found under the heading "Risk Factors" in GTT's annual and quarterly reports filed with the Securities and Exchange Commission including, but not limited to, its Annual Report on Form 10-K filed in March 2008. Statements in this release should be evaluated in light of these important factors.
GTT Media Contact: GTT Investor Contact:
JD Darby Mike Bauer
+1.703.442.5530 +1.703.442.5503
jd.darby@gt-t.net mike.bauer@gt-t.net
Global Telecom & Technology, Inc.
Condensed Consolidated Balance Sheets
In thousands, except share and per share amounts
Global Telecom & Technology, Inc.
Condensed Consolidated Statements of Operations
In thousands, except share and per share amounts
(Unaudited)
ANNEX A: Non-GAAP Financial Information
Adjusted EBITDA
Adjusted EBITDA represents operating income before depreciation and amortization on a non-GAAP combined basis for the periods presented, and adjusted to exclude certain one-time expenses including costs associated with employee terminations and other non-recurring items and non-cash compensation. GTT presents Adjusted EBITDA as a supplemental measure of GTT’s performance. GTT also presents Adjusted EBITDA because GTT believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industry and in measuring the ability of issuers to meet debt service obligations.
In evaluating Adjusted EBITDA, you should be aware that in the future GTT may incur expenses similar to the adjustments in this presentation. GTT’s presentation of Adjusted EBITDA should not be construed as an inference that GTT’s future results will be unaffected by unusual or non-recurring items. Adjusted EBITDA is not a measurement of GTT’s financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP.
The following is a reconciliation of Adjusted EBITDA to operating loss (in thousands):
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