Multiband Announces Strong 2009 Fourth Quarter Results and a Record
2009 Full-Year Performance
MINNEAPOLIS, MN -- (MARKETWIRE) -- 04/01/10 --
Multiband Corporation, (NASDAQ: MBND), the nation's largest DIRECTV Master
System Operator (MSO) for Multiple Dwelling Units (MDU's), announced today
strong financial results for the 2009 fourth quarter and fiscal year ended
December 31, 2009. The Company had strong fourth quarter revenues of $68.0
million, an increase of 382% compared to $14.1 million for the quarter ended
December 31, 2008 but down 5% from the prior quarter primarily due to
seasonality. Revenues increased YoY primarily due to the acquisition of the
former operating entities of DirecTECH Holding Company Inc. (DTHC) as well
as its substantial investments made in the HSP segment in 1H09. The Company
achieved 80% ownership in January 2009 and completed the acquisition in
December 2009.
EBITDA, a non-GAAP measure, was $4.3 million for the 2009 fourth quarter, an
improvement of over $1.0 million sequentially from $3.3 million in 3Q09, and
up $2.2 million from the same period in 2008. Improved margins were driven
by efficiencies at the Company's HSP segment including improved installation
procedures, inventory controls, fleet management, and reduced turnover.
In 4Q09, the Company generated net income of $830K or approximately $0.09
per share, compared to $842K or $0.09 per share, in the fourth quarter of
2008. GAAP net income per common share was $0.04 basic and $0.03 diluted
compared to $0.08 per common share for basic and diluted in the fourth
quarter of 2008. The 2009 fourth quarter represented the Company's return to
positive net income after three quarters of losses which were primarily due
to substantial investments in the HSP business segment during the 1H09.
2009 Recap
Revenues for the twelve month period ended December 31, 2009 increased 526%
to $268.9 million from $42.9 million for the same period in 2008. This
overall increase in revenues is primarily due to the purchase of the former
operating entities of DTHC coupled with significant organic growth, as the
Company hired over 1,000 new technicians in its HSP business segment during
the first two quarters of the year. The larger workforce allowed the HSP
segment to deliver significant installation volumes throughout the balance
of 2009 and positioned the Company for continued success with DIRECTV, which
remains its largest customer and partner and whose contract was extended
into mid-2013 during the course of 2009.
Adjusted EBITDA, a non-GAAP measure, was $3.954 million for the year.
However, this metric still includes the negative impact of the
aforementioned ramp up in staffing expenses. The absorption of those
staffing expenses led to significantly increased revenues and substantially
higher run rates of EBITDA during the second half of fiscal 2009.
Conference Call Today
The Company will hold a conference call today to discuss the results. The
conference call will take place at 11:00 AM Eastern Daylight Time.
Interested parties should dial 866-394-1497 and use pass code 64394723.
There will be a playback available as well.
Litigation Settlement
As of December 31, 2009, Multiband had recorded $8.7 million of accrued
liabilities for claims and potential settlements associated with existing
litigation, the majority of which relate to claims for back overtime wages
alleged to be due between 2006 and 2008 at DirecTECH Holding Company.
Effective December 31, 2009, the Company settled in principal the majority
of these claims. While the Company and its predecessors denied the
allegations underlying the lawsuits, it agreed to a settlement to avoid
significant legal fees, the uncertainty of a jury trial, and other expenses
and management time that would have to be devoted to protracted litigation.
The Company recorded the settlement of $6.7 million, net of imputed interest
of $575K and including administration fees and estimated payroll taxes. The
aforementioned settlement will be paid in equal installments of $291K over a
24 month period beginning January 15, 2010.
In connection with the purchase of the operating subsidiaries of DTHC, the
Company has the right to offset a portion of certain claims against the note
to DTHC, in relation to the settlement noted above, the Company offset $3.9
million during the year ended December 31, 2009. The Company has recorded a
receivable of $1.0 million as of December 31, 2009 which represents an
estimate of the amount that could potentially be recovered from DTHC
including legal fees for the remaining litigation. Offsets to date have been
taken as a purchase price adjustment to the DTHC transaction, which reduced
the debt owed to the ESOT and former owners to approximately $30.0 million.
Commentary
"This quarter's strong results reflect, again in part, the continuing trend
of consumers staying at home due to challenging economic conditions. As a
result, we have seen increases in subscribers. Additionally, our ability to
seamlessly integrate the operations of the former DirecTECH operating
entities and organically grow high margin revenue without a corresponding
increase in operating expenses is now clear", said James L. Mandel, CEO of
Multiband. "Our significantly improved financial results demonstrate the
benefits of the DirecTECH acquisition and validate the synergies between the
companies that have resulted in this strong growth. Our overall performance
is even more noteworthy considering we grew our business over five-fold in a
matter of months."
"Looking ahead, our success will be measured by continued gains in
efficiencies in our HSP division, which now sits atop our peers in terms of
mean times to install and various other performance metrics that are key to
profitability. Moving forward, we intend to launch additional products into
our HSP and MDU channels to improve revenues per truck roll and aid in
employee retention, which should further boost profitability especially in
seasonally slow periods", Mandel continued.
Guidance
For 2010, Multiband is projecting revenues in the $250MM range due to the
lack of the mandatory digital conversion which boosted 2009 activity. Though
the overall revenue outlook is relatively flat compared to 2009, the Company
has taken a cautious stance with regard to inputs it is receiving from its
HSP channel partners as it feels that that is the most prudent course of
action. In MDU, Multiband continues to negotiate incremental financing in
order to fund capital expenditures, which could boost its ability to add
subscribers and associated recurring revenues and cash flow from rights of
entry across the country. While revenues could be flat, expanded margins are
anticipated as the constant deployment of new procedures and technologies to
aid workforce and fleet management are initiated. No new additional M&A
activity has been included in the guidance, though opportunities abound for
consolidation of the market which could further boost scope and scale.
EBITDA Computation (2009, 1Q09 - 4Q09) (in thousands)
2009 4Q09 3Q09 2Q09 1Q09
--------- --------- --------- --------- ---------
(i) Net Income
(Quarter) ($ 11,377) $ 830 ($ 725) ($ 8,601) ($ 2,881)
(ii) Non Operating
Gains/Losses (85) (151) 251 (31) (154)
--------- --------- --------- --------- ---------
(iii) Adjusted Net
Income (11,462) 679 (474) (8,632) (3,035)
(Sum of
(i)minus (ii)
(iv) Interest
Expense 4,104 1,333 1,026 890 855
(v) Depreciation &
Amortization 10,906 2,504 2,414 2,703 3,285
(vi) Taxes 406 (168) 372 102 100
--------- --------- --------- --------- ---------
(vii) EBITDA $ 3,954 $ 4,348 $ 3,338 ($ 4,937) $ 1,205
========= ========= ========= ========= =========
iii + iv + v +vi NON-GAAP Financial Measures
To comply with Regulation G promulgated pursuant to the Sarbanes-Oxley Act,
Multiband Corporation attached to this news release and will post to the
company's investor relations web site (www.multiband.com) any reconciliation
of differences between non-GAAP financial information that may be required
in connection with issuing the company's quarterly financial results.
The Company, as is common in its industry, uses EBITDA as a measure of
performance to demonstrate earnings exclusive of interest and non-cash
events. The Company manages its business based on its cash flows. The
Company, in its daily management of its business affairs and analysis of its
monthly, quarterly and annual performance, makes its decisions based on cash
flows, not on the amortization of assets obtained through historical
activities. The Company, in managing its current and future affairs, cannot
affect the amortization of the intangible assets to any material degree, and
therefore uses EBITDA as its primary management guide. Since an outside
investor may base its evaluation of the Company's performance based on the
Company's net loss not its cash flows, there is a limitation to the EBITDA
measurement. EBITDA is not, and should not be considered, an alternative to
net loss, loss from operations, or any other measure for determining
operating performance of liquidity, as determined under accounting
principles generally accepted in the United States (GAAP). The most directly
comparable GAAP reference in the Company's case is the removal of interest,
depreciation, amortization, taxes and other non-cash expense.
Contact: James Mandel, CEO for Multiband Corporation at (763)504-300
(END) Dow Jones Newswires
April 01, 2010 10:14 ET (14:14 GMT)
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