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TORONTO, Nov. 04, 2021 (GLOBE NEWSWIRE) — Tucows Inc. (NASDAQ:TCX, TSX:TC), a provider of Fiber Internet Services, Mobile Services, Domain Name Services and other Internet services, today reported its financial results for the third quarter ended September 30, 2021. All figures are in U.S. dollars.
COVID-19: Tucows shareholders and prospective investors are encouraged to read Tucows’ public statement regarding COVID-19, which is available here: https://bit.ly/2LavpOc.
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 third quarter of 2021 reflect operations under the new MSE model with the third quarter of 2020 being composed of approximately one month of operations under Tucows’ previous MVNO model and approximately two months under the new MSE 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 are 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 third quarter of 2021 were impacted by the significantly larger MVNO contribution for the third quarter of 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 September 30 | 9 Months ended September 30 | |||||||
| 2021 (Unaudited) |
2020 (Unaudited) |
% Change | 2021 (Unaudited) |
2020 (Unaudited) |
% Change | |||
| Net revenue | 75,893 | 74,311 | 2.1 | % | 221,861 | 240,418 | (7.7 | %) |
| Gross Profit | 18,024 | 19,941 | (9.6 | %) | 53,716 | 68,057 | (21.1 | %) |
| Gain on Sale of Ting Customer Assets1 | 5,564 | 1,090 | 410.5 | % | 15,767 | 1,090 | 1,346.5 | % |
| Net income | 1,375 | 716 | 92.0 | % | 5,331 | 3,707 | 43.8 | % |
| Basic Net earnings per common share | 0.13 | 0.07 | 85.7 | % | 0.50 | 0.35 | 42.9 | % |
| Adjusted EBITDA1 | 12,205 | 13,270 | (8.0 | %) | 36,083 | 38,124 | (5.4 | %) |
| Net cash provided by operating activities | 1,492 | 11,432 | (86.9 | %) | 19,095 | 34,444 | (44.6 | %) |
- 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 September 30 |
3 Months ended September 30 |
3 Months ended September 30 |
||||||
| 2021 (Unaudited) |
2020 (Unaudited) |
2021 (Unaudited) |
2020 (Unaudited) |
2021 (Unaudited) |
2020 (Unaudited) |
|||
| Fiber Internet Services: | ||||||||
| Fiber Internet Services | 6,672 | 4,657 | 3,019 | 2,975 | (4,358 | ) | (1,052 | ) |
| Mobile Services: | ||||||||
| Retail Mobile Services | 2,309 | 7,019 | 608 | 3,579 | ||||
| Mobile Platform Services | 3,564 | 376 | 3,444 | 376 | ||||
| Other Professional Services | 2,619 | 1,457 | 806 | 190 | ||||
| Total Mobile Services | 8,492 | 8,852 | 4,858 | 4,145 | 7,648 | 5,182 | ||
| Domain Services: | ||||||||
| Wholesale | ||||||||
| Domain Services | 47,081 | 47,261 | 9,972 | 10,449 | ||||
| Value Added Services | 4,862 | 4,380 | 4,174 | 3,691 | ||||
| Total Wholesale | 51,943 | 51,641 | 14,146 | 14,140 | ||||
| Retail | 8,786 | 9,161 | 4,330 | 4,721 | ||||
| Total Domain Services | 60,729 | 60,802 | 18,476 | 18,861 | 12,024 | 12,024 | ||
| Network Expenses: | ||||||||
| Network, other costs | n/a | n/a | 3,445 | 2,612 | n/a | n/a | ||
| Network, depreciation and amortization costs | n/a | n/a | 4,643 | 3,315 | n/a | n/a | ||
| Network, impairment | n/a | n/a | 241 | 113 | n/a | n/a | ||
| Total Network expenses | n/a | n/a | 8,329 | 6,040 | n/a | n/a | ||
| Total | 75,893 | 74,311 | 18,024 | 19,941 | n/a | n/a | ||
“The third quarter once again saw solid financial performance across Tucows businesses,” said Elliot Noss, President and Chief Executive Officer, Tucows Inc. “Our Domains Services continued to deliver consistent performance, benefitting from the higher level of domains under management driven by the pandemic impact last year, as well as our success in maximizing gross margin. In our Mobile Services business, our third quarter results reflect the growing contribution of our new MSE Platform business, which continues to move forward in line with our expectations. And in our Fiber Internet Services business, we continued to make strong, steady progress in the accelerated build out of our network and our customer base, with serviceable addresses and subscribers increasing 48% and 67%, respectively, as we repeated our record level of new subscriber additions achieved in the second quarter.”
Financial Results
Net revenue for the third quarter of 2021 was $75.9 million compared with $74.3 million for the third quarter of 2020. The increase was the result of growth in revenue from the Fiber Internet Services and both Mobile Platform Services and Other Professional Services under the new MSE model, which were partially offset by the absence of Ting Mobile MVNO revenue in the third quarter of 2021, following the Company’s sale of its Ting Mobile customer relationships to DISH on August 1, 2020 and the related earn out being recognized as Other Income. This compares with approximately one month’s contribution in the third quarter of 2020. Excluding the Mobile Services business, net revenue for the combined Domains Services and Fiber Internet businesses for the third quarter of 2021 increased 3% from the third quarter of 2020. Revenue for Mobile Services for the third quarter of 2021 decreased 4% from the third quarter of 2020.
Gross profit for the third quarter of 2021 was $18.0 million compared with $19.9 million for the third quarter of 2020. Excluding the Mobile Services business, gross margin for the combined Domains Services and Fiber Internet Services businesses for the third quarter of 2021 decreased 2% from the third quarter of 2020. Gross profit for Mobile Services for the third quarter of 2021 increased 17% from the third quarter of 2020 due to growth in revenue under the new MSE model.
Net income for the third quarter of 2021 was $1.4 million, or $0.13 per share, compared with $0.7 million, or $0.07 per share, for the third quarter of 2020.
Adjusted EBITDA1 for the third quarter of 2021 was $12.2 million compared with $13.3 million for the third quarter of 2020. Adjusted EBITDA1 reflects the continued investment in Fiber Internet Services.
Cash and cash equivalents at the end of the third quarter of 2021 were $5.5 million compared with $7.3 million at the end of the second quarter of 2021 and $10.2 million at the end of the third 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 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, 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 September 30 | 9 months ended September 30 | |||||
| 2021 (Unaudited) |
2020 (Unaudited) |
2021 (Unaudited) |
2020 (Unaudited) |
|||
| Adjusted EBITDA | 12,205 | 13,270 | 36,083 | 38,124 | ||
| Depreciation of property and equipment | 4,758 | 3,110 | 12,728 | 9,255 | ||
| Impairment and loss on disposition of property and equipment | 470 | 113 | 536 | 1,638 | ||
| Amortization of intangible assets | 2,288 | 2,645 | 7,253 | 8,776 | ||
| Impairment of definite life intangible assets | – | – | – | 1,431 | ||
| Disposal of Ting Mobile customer assets | – | 3,513 | – | 3,513 | ||
| Interest expense, net | 1,169 | 760 | 3,108 | 2,756 | ||
| Accretion of contingent consideration | 96 | 86 | 287 | 258 | ||
| Stock-based compensation | 1,126 | 1,016 | 3,357 | 2,664 | ||
| Unrealized loss (gain) on change in fair value of forward contracts | 249 | (175 | ) | 606 | (263 | ) |
| Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities | 72 | 81 | 178 | 479 | ||
| Acquisition and transition costs* | 901 | 565 | 2,034 | 1,520 | ||
| Income before provision for income taxes | 1,076 | 1,556 | 5,996 | 6,097 | ||
| *Acquisition and other costs represent transaction-related expenses, transitional expenses, such as redundant post-acquisition expenses, primarily related to our acquisition of Ascio in March 2019 and Cedar in January 2020 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. | ||||||
Conference Call
Concurrent with the dissemination of its quarterly financial results news release at 5:05 pm ET on Thursday, November 4, 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. In lieu of a live question and answer period, for the subsequent eight days, until Friday, November 12, 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, November 18, 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 is a provider of Fiber Internet Services, Mobile Services, Domain Name Services and other Internet services. Ting Internet (https://ting.com/internet) delivers fixed fiber Internet access with outstanding customer support. Tucows’ mobile services enabler (MSE) platform provides network access, provisioning and billing services for mobile virtual network operators (MVNOs). 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 36,000 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) | ||||||||
| September 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| (unaudited) | (unaudited) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 5,535 | $ | 8,311 | ||||
| Accounts receivable | 14,822 | 15,540 | ||||||
| Contract asset, current portion | 2,783 | – | ||||||
| Inventory | 3,111 | 1,875 | ||||||
| Prepaid expenses and deposits | 18,719 | 16,845 | ||||||
| Derivative instrument asset, current portion | – | 3,860 | ||||||
| Deferred costs of fulfillment, current portion | 94,970 | 93,467 | ||||||
| Income taxes recoverable | 3,892 | 1,302 | ||||||
| Total current assets | 143,832 | 141,200 | ||||||
| Deferred costs of fulfillment, long-term portion | 18,226 | 17,599 | ||||||
| Derivative instrument asset, long-term portion | 78 | – | ||||||
| Property and equipment | 155,236 | 117,530 | ||||||
| Right of use operating lease asset | 16,138 | 11,238 | ||||||
| Contract costs | 806 | 362 | ||||||
| Deferred tax asset | 153 | 226 | ||||||
| Intangible assets | 40,413 | 47,444 | ||||||
| Goodwill | 116,304 | 116,304 | ||||||
| Investment | 2,012 | – | ||||||
| Total assets | $ | 493,198 | $ | 451,903 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 9,260 | $ | 6,329 | ||||
| Accrued liabilities | 12,176 | 10,235 | ||||||
| Customer deposits | 15,139 | 15,402 | ||||||
| Derivative instrument liability, current portion | 453 | 99 | ||||||
| Operating lease liability, current portion | 2,588 | 1,761 | ||||||
| Deferred revenue, current portion | 127,792 | 127,336 | ||||||
| Accreditation fees payable, current portion | 913 | 940 | ||||||
| Income taxes payable | 62 | 863 | ||||||
| Total current liabilities | 168,383 | 162,965 | ||||||
| Derivative instrument liability, long-term portion | – | 114 | ||||||
| Deferred revenue, long-term portion | 24,195 | 24,909 | ||||||
| Accreditation fees payable, long-term portion | 177 | 195 | ||||||
| Operating lease liability, long-term portion | 11,103 | 9,179 | ||||||
| Loan payable, long-term portion | 149,937 | 121,733 | ||||||
| Other long-term liability | 3,703 | 3,416 | ||||||
| Deferred tax liability | 22,481 | 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; 10,696,779 shares issued and outstanding as of September 30, 2021 and 10,612,414 shares issued and outstanding as of December 31, 2020 | 25,520 | 20,798 | ||||||
| Additional paid-in capital | 2,550 | 1,458 | ||||||
| Retained earnings | 85,437 | 80,106 | ||||||
| Accumulated other comprehensive income (loss) | (288 | ) | 2,336 | |||||
| Total stockholders’ equity | 113,219 | 104,698 | ||||||
| Total liabilities and stockholders’ equity | $ | 493,198 | $ | 451,903 | ||||
| Tucows Inc. | ||||||||||||
| Consolidated Statements of Operations and Comprehensive Income | ||||||||||||
| (Dollar amounts in thousands of U.S. dollars) | ||||||||||||
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| (unaudited) | (unaudited) | |||||||||||
| Net revenues | $ | 75,893 | $ | 74,311 | $ | 221,861 | $ | 240,418 | ||||
| Cost of revenues: | ||||||||||||
| Direct cost of revenues | 49,540 | 48,330 | 144,860 | 153,308 | ||||||||
| Network expenses (*) | 3,445 | 2,612 | 10,295 | 7,513 | ||||||||
| Depreciation of property and equipment | 4,622 | 2,985 | 12,344 | 8,892 | ||||||||
| Amortization of intangible assets | 21 | 330 | 344 | 1,010 | ||||||||
| Impairment of property and equipment | 241 | 113 | 302 | 1,638 | ||||||||
| Total cost of revenues | 57,869 | 54,370 | 168,145 | 172,361 | ||||||||
| Gross profit | 18,024 | 19,941 | 53,716 | 68,057 | ||||||||
| Expenses: | ||||||||||||
| Sales and marketing (*) | $ | 9,892 | $ | 8,318 | $ | 27,579 | $ | 26,521 | ||||
| Technical operations and development (*) | 3,742 | 3,162 | 10,044 | 8,980 | ||||||||
| General and administrative (*) | 5,069 | 4,868 | 15,232 | 15,074 | ||||||||
| Depreciation of property and equipment | 136 | 125 | 384 | 363 | ||||||||
| Loss on disposition of property and equipment | 229 | – | 234 | – | ||||||||
| Amortization of intangible assets | 2,267 | 2,315 | 6,909 | 7,766 | ||||||||
| Impairment of definite life intangible assets | – | – | – | 1,431 | ||||||||
| Loss (gain) on currency forward contracts | (87 | ) | (159 | ) | (277 | ) | (99 | ) | ||||
| Total expenses | 21,248 | 18,629 | 60,105 | 60,036 | ||||||||
| Income from operations | (3,224 | ) | 1,312 | (6,389 | ) | 8,021 | ||||||
| Other income (expenses): | ||||||||||||
| Interest expense, net | (1,169 | ) | (760 | ) | (3,108 | ) | (2,756 | ) | ||||
| Gain on sale of Ting Customer Assets, net | 5,564 | 1,090 | 15,767 | 1,090 | ||||||||
| Other expense, net | (95 | ) | (86 | ) | (274 | ) | (258 | ) | ||||
| Total other income (expenses) | 4,300 | 244 | 12,385 | (1,924 | ) | |||||||
| Income before provision for income taxes | 1,076 | 1,556 | 5,996 | 6,097 | ||||||||
| Provision for income taxes | (299 | ) | 840 | 665 | 2,390 | |||||||
| Net income before redeemable non-controlling interest | 1,375 | 716 | 5,331 | 3,707 | ||||||||
| Redeemable non-controlling interest | – | – | – | – | ||||||||
| Net income attributable to redeemable non-controlling interest | – | – | – | – | ||||||||
| Net income for the period | 1,375 | 716 | 5,331 | 3,707 | ||||||||
| Other comprehensive income, net of tax | ||||||||||||
| Unrealized income (loss) on hedging activities | (501 | ) | 729 | 115 | 609 | |||||||
| Net amount reclassified to earnings | (884 | ) | 46 | (2,739 | ) | 289 | ||||||
| Other comprehensive income net of tax expense (recovery) of $(419) and $230 for the three months ended September 30, 2021 and September 30, 2020, ($794) and $262 for the nine months ended September 30, 2021 and Septmeber 30, 2020 | (1,385 | ) | 775 | (2,624 | ) | 898 | ||||||
| Comprehensive income, net of tax for the period | $ | (10 | ) | $ | 1,491 | $ | 2,707 | $ | 4,605 | |||
| Basic earnings per common share | $ | 0.13 | $ | 0.07 | $ | 0.50 | $ | 0.35 | ||||
| Shares used in computing basic earnings per common share | 10,679,309 | 10,577,731 | 10,643,798 | 10,585,785 | ||||||||
| Diluted earnings per common share | $ | 0.13 | $ | 0.07 | $ | 0.49 | $ | 0.35 | ||||
| Shares used in computing diluted earnings per common share | 10,819,716 | 10,682,808 | 10,800,361 | 10,679,162 | ||||||||
| (*) Stock-based compensation has been included in expenses as follows: | ||||||||||||
| Network expenses | $ | 131 | $ | 138 | $ | 400 | $ | 333 | ||||
| Sales and marketing | $ | 443 | $ | 457 | $ | 1,498 | $ | 1,203 | ||||
| Technical operations and development | $ | 209 | $ | 208 | $ | 610 | $ | 558 | ||||
| General and administrative | $ | 344 | $ | 214 | $ | 849 | $ | 570 | ||||
| Tucows Inc. | ||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||
| (Dollar amounts in thousands of U.S. dollars) | ||||||||||||
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Cash provided by: | (unaudited) | (unaudited) | ||||||||||
| Operating activities: | ||||||||||||
| Net income for the period | $ | 1,375 | $ | 716 | $ | 5,331 | $ | 3,707 | ||||
| Items not involving cash: | ||||||||||||
| Depreciation of property and equipment | 4,758 | 3,110 | 12,728 | 9,255 | ||||||||
| Impairment of property and equipment | 241 | 113 | 302 | 1,638 | ||||||||
| Amortization of debt discount and issuance costs | 68 | 68 | 202 | 202 | ||||||||
| Amortization of intangible assets | 2,288 | 2,645 | 7,253 | 8,776 | ||||||||
| Net amortization contract costs | (189 | ) | (15 | ) | (444 | ) | 109 | |||||
| Impairment of definite life intangible assets | – | – | – | 1,431 | ||||||||
| Other | – | – | – | 223 | ||||||||
| Accretion of contingent consideration | 96 | 86 | 287 | 258 | ||||||||
| Deferred income taxes (recovery) | (488 | ) | 180 | (1,368 | ) | (927 | ) | |||||
| Excess tax benefits on share-based compensation expense | (323 | ) | (164 | ) | (868 | ) | (508 | ) | ||||
| Net Right of use operating assets/Operating lease liability | (2,378 | ) | 137 | (2,149 | ) | 249 | ||||||
| Loss on disposal of domain names | – | – | 1 | 15 | ||||||||
| Loss (gain) on change in the fair value of forward contracts | 249 | (175 | ) | 606 | (263 | ) | ||||||
| Write-down on disposal of Ting Mobile customer assets | – | 3,513 | – | 3,513 | ||||||||
| Stock-based compensation | 1,126 | 1,016 | 3,357 | 2,664 | ||||||||
| Change in non-cash operating working capital: | ||||||||||||
| Accounts receivable | (11 | ) | 118 | 718 | 2,670 | |||||||
| Contract asset | (2,783 | ) | – | (2,783 | ) | – | ||||||
| Inventory | (275 | ) | (123 | ) | (1,236 | ) | 1,681 | |||||
| Prepaid expenses and deposits | 918 | 2,905 | (1,874 | ) | (317 | ) | ||||||
| Deferred costs of fulfillment | 1,442 | 984 | (2,130 | ) | (4,073 | ) | ||||||
| Income taxes recoverable | 532 | (2,475 | ) | (2,502 | ) | (1,681 | ) | |||||
| Accounts payable | 271 | 509 | 2,289 | 759 | ||||||||
| Accrued liabilities | (1,828 | ) | (668 | ) | 1,941 | (334 | ) | |||||
| Customer deposits | (673 | ) | 69 | (263 | ) | 463 | ||||||
| Deferred revenue | (2,873 | ) | (1,070 | ) | (258 | ) | 4,927 | |||||
| Accreditation fees payable | (51 | ) | (47 | ) | (45 | ) | 7 | |||||
| Net cash provided by operating activities | 1,492 | 11,432 | 19,095 | 34,444 | ||||||||
| Financing activities: | ||||||||||||
| Proceeds received on exercise of stock options | 1,368 | 632 | 2,844 | 678 | ||||||||
| Payment of tax obligations resulting from net exercise of stock options | (89 | ) | (132 | ) | (387 | ) | (479 | ) | ||||
| Repurchase of common stock | – | – | – | (3,281 | ) | |||||||
| Proceeds received on loan payable | 10,000 | – | 28,000 | – | ||||||||
| Payment of loan payable costs | – | – | – | (32 | ) | |||||||
| Net cash (used in) provided by financing activities | 11,279 | 500 | 30,457 | (3,114 | ) | |||||||
| Investing activities: | ||||||||||||
| Cost of Domain Names acquired | – | – | – | – | ||||||||
| Additions to property and equipment | (14,488 | ) | (10,636 | ) | (50,093 | ) | (32,729 | ) | ||||
| Gross proceeds from the waiver of rights to .online registry | – | – | – | – | ||||||||
| Acquisition of other assets | – | – | – | – | ||||||||
| Acquisition of Cedar Holdings Group, net of cash of $66 | – | – | – | (8,770 | ) | |||||||
| Acquisition of Ascio Technologies Inc. (net of cash of $1,437) | – | – | – | – | ||||||||
| Acquisition of intangible assets | (6 | ) | – | (223 | ) | (69 | ) | |||||
| Investment in securities | – | – | (2,012 | ) | – | |||||||
| Net cash used in investing activities | (14,494 | ) | (10,636 | ) | (52,328 | ) | (41,568 | ) | ||||
| (Decrease) increase in cash and cash equivalents | (1,723 | ) | 1,296 | (2,776 | ) | (10,238 | ) | |||||
| Cash and cash equivalents, beginning of period | 7,258 | 8,859 | 8,311 | 20,393 | ||||||||
| Cash and cash equivalents, end of period | $ | 5,535 | $ | 10,155 | $ | 5,535 | $ | 10,155 | ||||
| Supplemental cash flow information: | ||||||||||||
| Interest paid | $ | 1,144 | $ | 635 | $ | 3,038 | $ | 2,638 | ||||
| Income taxes paid, net | $ | 212 | $ | 3,249 | $ | 6,008 | $ | 5,449 | ||||
| Supplementary disclosure of non-cash investing and financing activities: | ||||||||||||
| Property and equipment acquired during the period not yet paid for | $ | 1,772 | $ | 1,697 | $ | 1,772 | $ | 1,697 | ||||
| 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 Net income to Adjusted EBITDA | ||||||||||||
| (In Thousands of U.S. Dollars) | Three months ended September 30, | Nine months ended September 30, | ||||||||||
| (unaudited) | 2021 (unaudited) | 2020 (unaudited) | 2021 (unaudited) | 2020 (unaudited) | ||||||||
| Net income for the period | $ | 1,375 | $ | 716 | $ | 5,331 | $ | 3,707 | ||||
| Depreciation of property and equipment | 4,758 | 3,110 | 12,728 | 9,255 | ||||||||
| Impairment of property and equipment | 470 | 113 | 536 | 1,638 | ||||||||
| Amortization of intangible assets | 2,288 | 2,645 | 7,253 | 8,776 | ||||||||
| Impairment of indefinite life intangible assets | – | – | – | 1,431 | ||||||||
| Write-down on disposal of Ting Mobile assets | – | 3,513 | – | 3,513 | ||||||||
| Interest expense, net | 1,169 | 760 | 3,108 | 2,756 | ||||||||
| Accretion of contingent consideration | 96 | 86 | 287 | 258 | ||||||||
| Provision for income taxes | (299 | ) | 840 | 665 | 2,390 | |||||||
| Stock-based compensation | 1,126 | 1,016 | 3,357 | 2,664 | ||||||||
| Unrealized loss (gain) on change in fair value of forward contracts | 249 | (175 | ) | 606 | (263 | ) | ||||||
| Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities | 72 | 81 | 178 | 479 | ||||||||
| Acquisition and other costs1 | 901 | 565 | 2,034 | 1,520 | ||||||||
| Adjusted EBITDA | $ | 12,205 | $ | 13,270 | $ | 36,083 | $ | 38,124 | ||||
| 1Acquisition and other costs represents transaction-related expenses, transitional expenses, such as duplicative post-acquisition expenses. Expenses include severance and 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, OpenSRS, Enom, Ascio and Hover are registered trademarks of Tucows Inc. or its subsidiaries.
Contact:
Lawrence Chamberlain
(416) 519-4196
lawrence.chamberlain@loderockadvisors.com
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