TORONTO, Feb. 10, 2022 (GLOBE NEWSWIRE) — Tucows Inc. (NASDAQ:TCX, TSX:TC), a global internet services leader, today reported its financial results for the fourth quarter ended December 31, 2021. All figures are in U.S. dollars.
Note on the Financial Impact of Tucows’ Sale of Ting Mobile Customer Relationships and Transition to Mobile Services Enabler Platform:
As previously announced, effective August 1, 2020 most of Tucows’ mobile customers relationships were sold to DISH Networks (“DISH”) as part of Tucows’ transition of its mobile business to a Mobile Services Enabler (MSE) model from a Mobile Virtual Network Operator (MVNO) model, under which DISH became Tucows’ first
MSE customer. Accordingly, the results of the Mobile Services segment for the full year 2021 reflect operations under the new MSE model for the entire year compared to the year ended 2020 being composed of approximately five months of operations under the new MSE model and approximately seven months of operations under Tucows’ previous MVNO model.
Under the terms of the earn out arrangement for the Ting customer base acquired by DISH, the income generated by the customer base acquired by DISH is recognized (net of expenses) as “Other Income” under the heading “Gain on Sale of Ting Customer Assets”. As a result, revenue and gross margin for the Mobile Services segment for the 2021 year were impacted by the significantly larger MVNO contribution 2020. Tucows will recognize platform fees for customers owned by DISH under the Ting brand as well as customers under other DISH brands that are added to Tucows’ MSE platform, as Mobile Platform Services revenue under the terms of the MSE Agreement signed with DISH. For more information, see Tucows’ Financial Statements and Management Discussion and Analysis for the third quarter of 2021.
Summary Financial Results
(In Thousands of US Dollars, Except Per Share Data)
| 3 Months ended December 31 | 12 Months ended December 31 | ||||||||
| 2021 (Unaudited) |
2020 (Unaudited) |
% Change | 2021 (Unaudited) |
2020 (Unaudited) |
% Change | ||||
| Net revenues | 82,476 | 70,784 | 16.5 | % | 304,337 | 311,202 | (2.2 | %) | |
| Gross Profit | 24,577 | 17,428 | 41.0 | % | 78,293 | 85,485 | (8.4 | %) | |
| Gain on Sale of Ting Customer Assets, net1 | 4,263 | 6,522 | (34.6 | %) | 20,030 | 7,612 | 163.1 | % | |
| Net income | (1,967 | ) | 2,068 | (195.1 | %) | 3,364 | 5,775 | (41.7 | %) |
| Basic earnings per common share | (0.18 | ) | 0.19 | (194.1 | %) | 0.32 | 0.55 | (42.1 | %) |
| Adjusted EBITDA1 | 12,736 | 12,847 | (0.9 | %) | 48,821 | 50,972 | (4.2 | %) | |
| Net cash provided by operating activities | 10,542 | 1,637 | 544.0 | % | 29,637 | 36,081 | (17.9 | %) | |
- This Non-GAAP financial measure is described below and reconciled to GAAP net income in the accompanying table.
Summary of Revenues, Gross Profit and Adjusted EBITDA
(In Thousands of US Dollars)
| Revenue | Gross Profit | Adj. EBITDA1 | ||||||||
| 3 Months ended December 31 |
3 Months ended December 31 |
3 Months ended December 31 |
||||||||
| 2021 (Unaudited) |
2020 (Unaudited) |
2021 (Unaudited) |
2020 (Unaudited) |
2021 (Unaudited) |
2020 (Unaudited) |
|||||
| Fiber Internet Services: | ||||||||||
| Fiber Internet Services | 8,577 | 5,049 | 5,771 | 3,130 | (3,564 | ) | (835 | ) | ||
| Mobile Services: | ||||||||||
| Retail Mobile Services | 2,523 | 1,806 | 753 | 821 | ||||||
| Mobile Platform Services | 5,542 | 188 | 5,393 | 132 | ||||||
| Other Professional Services | 4,473 | 1,959 | 2,692 | 256 | ||||||
| Total Mobile Services | 12,538 | 3,953 | 8,838 | 1,209 | 8,597 | 4,733 | ||||
| Domain Services: | ||||||||||
| Wholesale | ||||||||||
| Domain Services | 47,137 | 47,463 | 10,516 | 10,312 | ||||||
| Value Added Services | 5,518 | 5,097 | 4,843 | 4,257 | ||||||
| Total Wholesale | 52,655 | 52,560 | 15,359 | 14,569 | ||||||
| Retail | 8,706 | 9,222 | 4,329 | 4,783 | ||||||
| Total Domain Services | 61,361 | 61,782 | 19,688 | 19,352 | 11,640 | 12,132 | ||||
| Network Expenses: | ||||||||||
| Network, other costs | n/a | n/a | (4,474 | ) | (2,681 | ) | n/a | n/a | ||
| Network, depreciation and amortization costs | n/a | n/a | (5,347 | ) | (3,582 | ) | n/a | n/a | ||
| Network, impairment | n/a | n/a | 101 | n/a | n/a | n/a | ||||
| Total Network expenses | n/a | n/a | (9,720 | ) | (6,263 | ) | n/a | n/a | ||
| Total | 82,476 | 70,784 | 24,577 | 17,428 | n/a | n/a | ||||
“Tucows delivered another quarter of solid financial performance, highlighted by year-over-year increases in net revenue and gross profit of 17% and 41%, respectively, driven by growth in the Ting Fiber Internet customer base and the significantly higher contribution of our Mobile Services Enabler platform a year after its launch,” said Elliot Noss, President and Chief Executive Officer, Tucows Inc.“ Adjusted EBITDA decreased slightly by 0.9% year-over-year as we continued to invest in the Ting Fiber Internet opportunity, with the fourth quarter seeing another record for capital expenditure on our Fiber network.”
“The fourth quarter concluded a year of both solid financial results and strategic achievements across the Company. Tucows Domain Services posted a record year for both gross margin and adjusted EBITDA as that business reached a new, higher steady state level following the pandemic related growth of 2020. The first full year of our Mobile Services Enabler business, recently rebranded as our Communication Service Provider software platform, Wavelo, was very much in line with our expectations, as we focused on supporting the success of our first customer, DISH. 2021 also saw significant progress on the accelerated build of the Ting Fiber Internet network, with a 61% increase in capital expenditure, 48% increase in the number of serviceable addresses, and a more than 66% expansion of our subscriber base. All of this positions Tucows to continue to ramp investment of the consistent, strong cash flows generated by Tucows Domain Services and the Wavelo CSP Platform in the outsized Ting Fiber Internet opportunity.”
Financial Results
Net revenue for the fourth quarter of 2021 increased 17% to $82.5 million from $70.8 million for the fourth quarter of 2020. The increase was the result of growth in revenue from the Fiber Internet Services business and both the Mobile Platform Services and Other Professional Services components of the Mobile Services Enabler business.
Gross profit for the fourth quarter of 2021 increased 41% to $24.6 million from $17.4 million for the fourth quarter of 2020. The increase was driven by the same factors as net revenue.
Net loss for the fourth quarter of 2021 was $2.0 million, or a loss of $0.18 per share, compared with net income of $2.1 million, or $0.19 per share, for the fourth quarter of 2020 with the loss driven by a higher effective tax rate.
Adjusted EBITDA1 for the fourth quarter of 2021 decreased 0.9% to $12.7 million from $12.8 million for the fourth quarter of 2020. The modest decline in adjusted EBITDA1 reflects the continued investment in Fiber Internet Services.
Cash and cash equivalents at the end of the fourth quarter of 2021 were $9.1 million compared with $5.5 million at the end of the third quarter of 2021 and $8.3 million at the end of the fourth quarter of 2020.
Notes:
1. Adjusted EBITDA
Tucows reports all financial information required in accordance with United States generally accepted accounting principles (GAAP). Along with this information, to assist financial statement users in an assessment of our historical performance, the Company typically discloses and discusses a non-GAAP financial measure, adjusted EBITDA, in press releases and on investor conference calls and related events that exclude certain non-cash and other charges as the Company believes that the non-GAAP information enhances investors’ overall understanding of our financial performance.
The Company believes that the provision of this supplemental non-GAAP measure allows investors to evaluate the operational and financial performance of the Company’s core business using similar evaluation measures to those used by management. The Company uses adjusted EBITDA to measure its performance and prepare its budgets. Since adjusted EBITDA is a non-GAAP financial performance measure, the Company’s calculation of adjusted EBITDA may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. Because adjusted EBITDA is calculated before certain recurring cash charges, including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a liquidity measure. Non-GAAP financial measures do not reflect a comprehensive system of accounting and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies and/or analysts and may differ from period to period. The Company endeavors to compensate for these limitations by providing the relevant disclosure of the items excluded in the calculation of adjusted EBITDA to net income based on U.S. GAAP, which should be considered when evaluating the Company’s results. Tucows strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure.
The Company’s adjusted EBITDA definition excludes depreciation, impairment and loss on disposition of property and equipment, amortization of intangible assets, income tax provision, interest expense (net), accretion of contingent consideration, stock-based compensation, asset impairment, gains and losses from unrealized foreign currency transactions and costs that are one-time in nature and not indicative of on-going performance (profitability), including acquisition and transition costs. Gains and losses from unrealized foreign currency transactions removes the unrealized effect of the change in the mark-to-market values on outstanding unhedged foreign currency contracts, as well as the unrealized effect from the translation of monetary accounts denominated in non-U.S. dollars to U.S. dollars.
The following table reconciles adjusted EBITDA to income before provision for income taxes (dollars in thousands):
| 3 months ended December 31 | 12 months ended December 31 | ||||||
| 2021 (Unaudited) |
2020 (Unaudited) |
2021 (Unaudited) |
2020 (Unaudited) |
||||
| Adjusted EBITDA | 12,736 | 12,847 | 48,821 | 50,972 | |||
| Depreciation of property and equipment | 5,254 | 3,377 | 17,986 | 12,632 | |||
| Impairment and loss on disposition of property and equipment | (100 | ) | (17 | ) | 435 | 1,621 | |
| Amortization of intangible assets | 2,756 | 2,644 | 10,007 | 11,420 | |||
| Impairment of definite life intangible assets | – | – | – | 1,431 | |||
| Disposal of Ting Mobile customer assets | – | – | – | 3,513 | |||
| Interest expense, net | 1,509 | 855 | 4,617 | 3,611 | |||
| Accretion of contingent consideration | 98 | 86 | 383 | 344 | |||
| Stock-based compensation | 1,235 | 1,054 | 4,592 | 3,718 | |||
| Unrealized loss (gain) on change in fair value of forward contracts | – | (237 | ) | 606 | (500 | ) | |
| Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities | 39 | (19 | ) | 219 | 461 | ||
| Acquisition and transition costs* | 671 | 441 | 2,706 | 1,961 | |||
| Income before provision for income taxes | 1,274 | 4,663 | 7,270 | 10,760 | |||
| *Acquisition and other costs represent transaction-related expenses, transitional expenses, such as redundant post-acquisition expenses, primarily related to our acquisitions Cedar in January 2020 and Simply Bits in November 2021 and disposition of certain Ting Mobile assets in August 2020. Expenses include severance or transitional costs associated with department, operational or overall company restructuring efforts, including geographic alignments. | |||||||
Management Commentary
At 6:00 p.m. ET today, Thursday February 10, management’s pre-recorded audio commentary (and transcript) discussing the quarter and outlook for the Company will be posted to the Tucows website at http://www.tucows.com/investors/financials. Prior to reading/listening to management’s commentary on the quarter, interested parties are invited to watch a business background reporting update video by Tucows’ President and Chief Executive Officer, Elliot Noss, which was posted at 5:05 p.m. ET today, Thursday, February 10, on the Investors, videos, decks and reports page of the Investors section of the Company’s web site: https://www.tucows.com/investors/investor-videos/
In lieu of a live question and answer period, for the subsequent eight days, until Friday, February 18, shareholders, analysts and prospective investors can submit questions to Tucows’ management at ir@tucows.com. Management will post responses to questions of general interest (audio recording and transcript) to the Company’s website at http://www.tucows.com/investors/financials/ on Thursday, March 3, at approximately 4 pm ET. All questions will receive a response, however, questions of a more specific nature may be responded to directly.
About Tucows
Tucows helps connect more people to the benefit of internet access through communications service technology, domain services, and fiber-optic internet infrastructure. Ting (https://ting.com/internet) delivers fixed fiber Internet access with outstanding customer support. Wavelo (https://wavelo.com) is a telecommunications software suite for service providers that simplifies the management of mobile and internet network access, provisioning, billing and subscription, developer tools, and more. OpenSRS (https://opensrs.com), Enom (https://www.enom.com) and Ascio (https://ascio.com) combined manage approximately 25 million domain names and millions of value-added services through a global reseller network of over 35,000 web hosts and ISPs. Hover (https://hover.com) makes it easy for individuals and small businesses to manage their domain names and email addresses. More information can be found on Tucows’ corporate website (https://tucows.com).
| Tucows Inc. | |||||
| Consolidated Balance Sheets | |||||
| (Dollar amounts in thousands of U.S. dollars) | |||||
| December 31, |
December 31, | ||||
| 2021 | 2020 | ||||
| (unaudited) | (unaudited) | ||||
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | $ | 9 105 | $ | 8 311 | |
| Accounts receivable | 14 579 | 15 540 | |||
| Contract asset, current portion | 778 | – | |||
| Inventory | 3 277 | 1 875 | |||
| Prepaid expenses and deposits | 20 986 | 16 845 | |||
| Derivative instrument asset, current portion | 299 | 3 860 | |||
| Deferred costs of fulfillment, current portion | 94 506 | 93 467 | |||
| Income taxes recoverable | 3 474 | 1 302 | |||
| Total current assets | 147 004 | 141 200 | |||
| Deferred costs of fulfillment, long-term portion | 18 205 | 17 599 | |||
| Derivative instrument asset, long-term portion | 278 | – | |||
| Property and equipment | 172 662 | 117 530 | |||
| Right of use operating lease asset | 17 515 | 11 238 | |||
| Contract costs | 1 079 | 362 | |||
| Deferred tax asset | 22 | 226 | |||
| Intangible assets | 50 409 | 47 444 | |||
| Goodwill | 130 410 | 116 304 | |||
| Investment | 2 012 | – | |||
| Total assets | $ | 539 596 | $ | 451 903 | |
| Liabilities and Stockholders’ Equity | |||||
| Current liabilities: | |||||
| Accounts payable | $ | 10 016 | $ | 6 329 | |
| Accrued liabilities | 15 240 | 10 235 | |||
| Customer deposits | 16 974 | 15 402 | |||
| Derivative instrument liability, current portion | 125 | 99 | |||
| Operating lease liability, current portion | 3 150 | 1 761 | |||
| Deferred revenue, current portion | 124 116 | 127 336 | |||
| Accreditation fees payable, current portion | 882 | 940 | |||
| Income taxes payable | 102 | 863 | |||
| Other liabilities, current portion | 3 078 | – | |||
| Total current liabilities | 173 683 | 162 965 | |||
| Derivative instrument liability, long-term portion | – | 114 | |||
| Deferred revenue, long-term portion | 23 677 | 24 909 | |||
| Accreditation fees payable, long-term portion | 170 | 195 | |||
| Operating lease liability, long-term portion | 11 853 | 9 179 | |||
| Loan payable, long-term portion | 190 748 | 121 733 | |||
| Other long-term liability | 1 804 | 3 416 | |||
| Deferred tax liability | 22 569 | 24 694 | |||
| Stockholders’ equity: | |||||
| Preferred stock – no par value, 1,250,000 shares authorized; none issued and outstanding | – | – | |||
| Common stock – no par value, 250,000,000 shares authorized; 10,747,417 shares issued and outstanding as of December 31, 2021 and 10,612,414 shares issued and outstanding as of December 31, 2020 | 28 515 | 20 798 | |||
| Additional paid-in capital | 2 764 | 1 458 | |||
| Retained earnings | 83 470 | 80 106 | |||
| Accumulated other comprehensive income (loss) | 343 | 2 336 | |||
| Total stockholders’ equity | 115 092 | 104 698 | |||
| Total liabilities and stockholders’ equity | $ | 539 596 | $ | 451 903 | |
| Tucows Inc. |
||||||||||||
| Consolidated Statements of Operations and Comprehensive Income |
||||||||||||
| (Dollar amounts in thousands of U.S. dollars) |
||||||||||||
| Three months ended December 31, | Twelve months ended December 31, |
|||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| (unaudited) | (unaudited) | |||||||||||
| Net revenues | $ | 82 476 | $ | 70 784 | $ | 304 337 | $ | 311 202 | ||||
| Cost of revenues: | ||||||||||||
| Direct cost of revenues | 48 179 | 47 093 | 193 039 | 200 401 | ||||||||
| Network expenses (*) | 4 474 | 2 681 | 14 769 | 10 194 | ||||||||
| Depreciation of property and equipment | 5 108 | 3 252 | 17 452 | 12 144 | ||||||||
| Amortization of intangible assets | 239 | 330 | 583 | 1 340 | ||||||||
| Impairment of property and equipment | (101 | ) | – | 201 | 1 638 | |||||||
| Total cost of revenues | 57 899 | 53 356 | 226 044 | 225 717 | ||||||||
| Gross profit | 24 577 | 17 428 | 78 293 | 85 485 | ||||||||
| Expenses: | ||||||||||||
| Sales and marketing (*) | $ | 11 892 | $ | 7 753 | $ | 39 471 | $ | 34 274 | ||||
| Technical operations and development (*) | 4 266 | 3 447 | 14 310 | 12 427 | ||||||||
| General and administrative (*) | 7 138 | 5 194 | 22 370 | 20 268 | ||||||||
| Depreciation of property and equipment | 150 | 125 | 534 | 488 | ||||||||
| Loss on disposition of property and equipment | – | (17 | ) | 234 | (17 | ) | ||||||
| Amortization of intangible assets | 2 515 | 2 314 | 9 424 | 10 080 | ||||||||
| Impairment of definite life intangible assets | – | – | – | 1 431 | ||||||||
| Loss (gain) on currency forward contracts | – | (284 | ) | (277 | ) | (383 | ) | |||||
| Total expenses | 25 961 | 18 532 | 86 066 | 78 568 | ||||||||
| Income from operations | (1 384 | ) | (1 104 | ) | (7 773 | ) | 6 917 | |||||
| Other income (expenses): | ||||||||||||
| Interest expense, net | (1 509 | ) | (855 | ) | (4 617 | ) | (3 611 | ) | ||||
| Gain on sale of Ting Customer Assets, net | 4 263 | 6 522 | 20 030 | 7 612 | ||||||||
| Other expense, net | (96 | ) | 100 | (370 | ) | (158 | ) | |||||
| Total other income (expenses) | 2 658 | 5 767 | 15 043 | 3 843 | ||||||||
| Income before provision for income taxes | 1 274 | 4 663 | 7 270 | 10 760 | ||||||||
| Provision for income taxes | 3 241 | 2 595 | 3 906 | 4 985 | ||||||||
| Net income before redeemable non-controlling interest | (1 967 | ) | 2 068 | 3 364 | 5 775 | |||||||
| Redeemable non-controlling interest | – | – | – | – | ||||||||
| Net income attributable to redeemable non-controlling interest | – | – | – | – | ||||||||
| Net income for the period | (1 967 | ) | 2 068 | 3 364 | 5 775 | |||||||
| Other comprehensive income, net of tax | ||||||||||||
| Unrealized income (loss) on hedging activities | 458 | 1 044 | 572 | 1 653 | ||||||||
| Net amount reclassified to earnings | 174 | (79 | ) | (2 565 | ) | 210 | ||||||
| Other comprehensive income net of tax expense (recovery) of $(235) and $398 for the three months ended June 30, 2021 and June 30, 2020, $(375) and $32 for the six months ended June 30, 2021 and June 30, 2020 | 632 | 965 | (1 993 | ) | 1 863 | |||||||
| Comprehensive income, net of tax for the period | $ | (1 335 | ) | $ | 3 033 | $ | 1 371 | $ | 7 638 | |||
| Basic earnings per common share | $ | (0,18 | ) | $ | 0,19 | $ | 0,32 | $ | 0,55 | |||
| Shares used in computing basic earnings per common share | 10 717 349 | 10 605 451 | 10 662 337 | 10 590 684 | ||||||||
| Diluted earnings per common share | $ | (0,18 | ) | $ | 0,19 | $ | 0,31 | $ | 0,54 | |||
| Shares used in computing diluted earnings per common share | 10 883 860 | 10 745 710 | 10 817 468 | 10 692 281 | ||||||||
| (*) Stock-based compensation has been included in expenses as follows: | ||||||||||||
| Network expenses | $ | 131 | $ | 139 | $ | 531 | $ | 472 | ||||
| Sales and marketing | $ | 444 | $ | 475 | $ | 1 941 | $ | 1 678 | ||||
| Technical operations and development | $ | 214 | $ | 198 | $ | 824 | $ | 756 | ||||
| General and administrative | $ | 446 | $ | 242 | $ | 1 296 | $ | 812 | ||||
| Tucows Inc. | ||||||||||||
| Consolidated Statements of Cash Flows |
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| (Dollar amounts in thousands of U.S. dollars) |
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| Three months ended December 31, | Twelve months ended December 31, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Cash provided by: | (unaudited) |
(unaudited) |
||||||||||
| Operating activities: | ||||||||||||
| Net income for the period | $ | (1 967 | ) | $ | 2 068 | $ | 3 364 | $ | 5 775 | |||
| Items not involving cash: | ||||||||||||
| Depreciation of property and equipment | 5 258 | 3 377 | 17 986 | 12 632 | ||||||||
| Impairment of property and equipment | (101 | ) | – | 201 | 1 638 | |||||||
| Amortization of debt discount and issuance costs | 98 | 67 | 300 | 269 | ||||||||
| Amortization of intangible assets | 2 754 | 2 644 | 10 007 | 11 420 | ||||||||
| Net amortization contract costs | (273 | ) | (3 | ) | (717 | ) | 106 | |||||
| Impairment of definite life intangible assets | – | – | – | 1 431 | ||||||||
| Other | – | – | – | 223 | ||||||||
| Accretion of contingent consideration | 96 | 86 | 383 | 344 | ||||||||
| Deferred income taxes (recovery) | 40 | (3 012 | ) | (1 328 | ) | (3 939 | ) | |||||
| Excess tax benefits on share-based compensation expense | (686 | ) | (353 | ) | (1 554 | ) | (861 | ) | ||||
| Net Right of use operating assets/Operating lease liability | (55 | ) | (44 | ) | (2 204 | ) | 205 | |||||
| Loss on disposal of domain names | – | 2 | 1 | 17 | ||||||||
| Loss (gain) on change in the fair value of forward contracts | – | (237 | ) | 606 | (500 | ) | ||||||
| Disposal of Ting Mobile customer assets | – | – | – | 3 513 | ||||||||
| Stock-based compensation | 1 235 | 1 054 | 4 592 | 3 718 | ||||||||
| Change in non-cash operating working capital: | ||||||||||||
| Accounts receivable | 868 | (2 951 | ) | 1 586 | (281 | ) | ||||||
| Contract asset | 2 005 | – | (778 | ) | – | |||||||
| Inventory | 449 | (736 | ) | (787 | ) | 945 | ||||||
| Prepaid expenses and deposits | (2 100 | ) | (3 142 | ) | (3 974 | ) | (3 459 | ) | ||||
| Deferred costs of fulfillment | 485 | 2 174 | (1 645 | ) | (1 899 | ) | ||||||
| Income taxes recoverable | 1 108 | 2 589 | (1 394 | ) | 908 | |||||||
| Accounts payable | 1 779 | (1 664 | ) | 4 068 | (902 | ) | ||||||
| Accrued liabilities | 2 918 | 710 | 4 859 | 376 | ||||||||
| Customer deposits | 908 | 1 030 | 645 | 1 493 | ||||||||
| Deferred revenue | (4 237 | ) | (1 985 | ) | (4 495 | ) | 2 942 | |||||
| Accreditation fees payable | (38 | ) | (40 | ) | (83 | ) | (33 | ) | ||||
| Net cash provided by operating activities | 10 542 | 1 634 | 29 637 | 36 081 | ||||||||
| Financing activities: | ||||||||||||
| Proceeds received on exercise of stock options | 1 974 | 307 | 4 818 | 985 | ||||||||
| Payment of tax obligations resulting from net exercise of stock options | – | (77 | ) | (387 | ) | (556 | ) | |||||
| Repurchase of common stock | – | – | – | (3 281 | ) | |||||||
| Proceeds received on loan payable | 41 000 | 8 000 | 69 000 | 8 000 | ||||||||
| Payment of loan payable costs | (296 | ) | – | (296 | ) | (32 | ) | |||||
| Net cash (used in) provided by financing activities | 42 678 | 8 230 | 73 136 | 5 116 | ||||||||
| Investing activities: | ||||||||||||
| Proceeds on disposal of property and equipment | 510 | – | 510 | – | ||||||||
| Additions to property and equipment | (23 082 | ) | (11 708 | ) | (73 175 | ) | (44 437 | ) | ||||
| Acquisition of Cedar Holdings Group, net of cash of $66 | – | – | – | (8 770 | ) | |||||||
| Acquisition of Simply Bits, net of cash of $801 | (24 028 | ) | – | (24 028 | ) | – | ||||||
| Acquisition of Uniregistry | (2 499 | ) | – | (2 499 | ) | – | ||||||
| Acquisition of intangible assets | (551 | ) | – | (774 | ) | (72 | ) | |||||
| Investment in securities | – | – | (2 012 | ) | – | |||||||
| Net cash used in investing activities | (49 651 | ) | (11 708 | ) | (101 979 | ) | (53 279 | ) | ||||
| (Decrease) increase in cash and cash equivalents | 3 570 | (1 844 | ) | 794 | (12 082 | ) | ||||||
| Cash and cash equivalents, beginning of period | 5 535 | 10 155 | 8 311 | 20 393 | ||||||||
| Cash and cash equivalents, end of period | $ | 9 105 | $ | 8 311 | $ | 9 105 | $ | 8 311 | ||||
| Supplemental cash flow information: | ||||||||||||
| Interest paid | $ | 1 429 | $ | 813 | $ | 4 485 | $ | 3 573 | ||||
| Income taxes paid, net | $ | 2 771 | $ | 3 477 | $ | 8 828 | $ | 8 926 | ||||
| Supplementary disclosure of non-cash investing and financing activities: | ||||||||||||
| Property and equipment acquired during the period not yet paid for | $ | 99 | $ | 1 129 | $ | 99 | $ | 1 129 | ||||
| Fair value of shares issues for acquisition of Cedar Holdings Group | – | $ | – | $ | – | $ | 2 000 | |||||
| Fair value of contingent consideration for acquisition of Cedar Holdings Group | – | $ | – | $ | – | $ | 3 072 | |||||
| Reconciliation of Adjusted EBITDA to Income before Provision for Income Taxes | ||||||||||||
| (In Thousands of U.S. Dollars) | Three months ended December 31, | Twelve months ended December 31, | ||||||||||
| (unaudited) | 2021 (unaudited) | 2020 (unaudited) | 2021 (unaudited) | 2020 (unaudited) | ||||||||
| Adjusted EBITDA | $ | 12 736 | $ | 12 847 | $ | 48 821 | $ | 50 972 | ||||
| Depreciation of property and equipment | 5 254 | 3 377 | 17 986 | 12 632 | ||||||||
| Impairment and loss on disposition of property and equipment | (100 | ) | (17 | ) | 435 | 1 621 | ||||||
| Amortization of intangible assets | 2 756 | 2 644 | 10 007 | 11 420 | ||||||||
| Impairment of indefinite life intangible assets | – | – | – | 1 431 | ||||||||
| Write-down on disposal of Ting Mobile assets | – | – | – | 3 513 | ||||||||
| Interest expense, net | 1 509 | 855 | 4 617 | 3 611 | ||||||||
| Accretion of contingent consideration | 98 | 86 | 383 | 344 | ||||||||
| Stock-based compensation | 1 235 | 1 054 | 4 592 | 3 718 | ||||||||
| Unrealized loss (gain) on change in fair value of forward contracts | – | (237 | ) | 606 | (500 | ) | ||||||
| Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities |
39 | (19 | ) | 219 | 461 | |||||||
| Acquisition and other costs1 | 671 | 441 | 2 706 | 1 961 | ||||||||
| Income before provision for income taxes | $ | 1 274 | $ | 4 663 | $ | 7 270 | $ | 10 760 | ||||
| 1Acquisition and other costs represent transaction-related expenses, transitional expenses, such as redundant post-acquisition expenses, primarily related to our acquisitions Cedar in January 2020 and Simply Bits in November 2021 and disposition of certain Ting Mobile assets in August 2020. Expenses include severance or transitional costs associated with department, operational or overall company restructuring efforts, including geographic alignments. | ||||||||||||
This release includes forward-looking statements as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding our expectations regarding our future financial results and, including, without limitation, our expectations regarding our ability to realize synergies from the Enom acquisition and our expectation for growth of Ting Internet. These statements are based on management’s current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Information about other potential factors that could affect Tucows’ business, results of operations and financial condition is included in the Risk Factors sections of Tucows’ filings with the Securities and Exchange Commission. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All forward-looking statements are based on information available to Tucows as of the date they are made. Tucows assumes no obligation to update any forward-looking statements, except as may be required by law.
Tucows, Ting, Wavelo, OpenSRS, Enom, Ascio and Hover are registered trademarks of Tucows Inc. or its subsidiaries.
Contact:
Lawrence Chamberlain
(416) 519-4196
lawrence.chamberlain@loderockadvisors.com
