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Global Signal Inc. Announces Second Quarter 2004 Earnings
Highlights * Completed IPO in June, raising net proceeds of approximately $132
million
SARASOTA, Fla., July 30 /PRNewswire-FirstCall/ -- Global Signal Inc.
(NYSE:GSL) today reported financial results for the quarter ended June 30,
2004.
Net income for the quarter ended June 30, 2004, was $5.1 million, or $0.11 per
diluted common share, compared with $5.5 million, or $0.13 per diluted common
share, for the second quarter of 2003.
For the three months ended June 30, 2004, Adjusted EBITDA (earnings before
interest, income tax expense (benefit), depreciation, amortization, accretion
and non-cash stock-based compensation expense) was $24.5 million or $0.52 per
diluted common share compared to $21.4 million or $0.50 per diluted common
share for the second quarter 2003.
Adjusted FFO in the second quarter of 2004 was $17.1 million, or $0.36 per
diluted common share. For the quarter ended June 30, 2004, we declared
dividends totaling $0.3125 per share of common stock.
For a reconciliation and discussion of GAAP net income to Adjusted EBITDA and
Adjusted FFO, refer to the tables following the presentation of GAAP results.
Mr. Wesley Edens, Global Signal's Chairman and CEO, stated, "We are pleased
with the results of our first quarter since the completion of our IPO in early
June. Wireless demand drivers continue to fuel the growth in our business. We
expect that our ability to generate stable dividends and realize growth will
differentiate us from our competitors."
Investment Activity
From December 2003 through the end of July 2004, we purchased or entered into
definitive agreements to purchase 471 towers for an aggregate purchase price of
approximately $227 million. The 471 towers are generally located in areas of
high population density and high traffic volume and are primarily in the
eastern and southeastern United States. These towers generate a significant
amount of their revenue from telephony and investment grade tenants.
David Grain, Global Signal's President, stated, "During the second quarter, we
saw strong leasing activity in our existing portfolio from the wireless
telephony carriers. On the investment side, we have made significant progress
in acquiring high quality assets and shifting our revenue mix towards higher
growth telephony tenants. We expect these trends to continue enabling us to
achieve our goals of increasing earnings and dividends."
The Company's business strategy is to focus on increasing its earnings and
dividends to stockholders by growing Adjusted EBITDA through:
* lease-up of existing sites with high quality tenants;
* acquisition of towers primarily designed for telephony tenants and;
* financing newly acquired assets, on a long-term basis, using equity and low
cost fixed rate debt obtained through the issuance of asset-backed securities.
Capital Markets Activity
In June 2004, we issued 8.05 million shares of common stock at $18.00 per share
for net cash proceeds of approximately $132.2 million through an underwritten
initial public offering. We utilized a portion of these proceeds to pay down
our credit facility by $33.4 million and to finance the above mentioned tower
acquisitions.
Conference Call
Management will conduct a conference call on July 30, 2004 to review the
financial results for the three months ended June 30, 2004. The conference
call is scheduled for 1:30 p.m. eastern time. A copy of this earnings release
and quarterly financial supplement is posted to the Investors section of the
Global Signal website provided below. All interested parties are welcome to
participate on the live call. The conference call can be accessed by dialing
(877) 616-4483 ten minutes prior to the scheduled start and referencing the
Global Signal Second Quarter 2004 Earnings Call.
For those who are not available to listen to the live call, a replay will be
available until 11:59 p.m. eastern time on Friday, August 6, 2004 by dialing
(800) 642-1687; please reference access code "8850290."
About Global Signal
Global Signal owns or manages over 3,300 wireless communications towers and
other communications sites. Global Signal is organized and conducts its
operations to qualify as a real estate investment trust (REIT) for federal
income tax purposes. For more information on Global Signal and to be added to
our e-mail distribution list, please visit http://www.gsignal.com/ .
Safe Harbor
Certain items in this press release and associated earnings conference call may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 including, but not necessarily limited
to, statements relating to our ability to deploy capital, close acquisitions,
pay dividends, generate growth, secure financing and increase revenues and
earnings. Words such as "anticipate(s)," "expect(s)," "intend(s)," "plan(s),"
"target(s)," "project(s)," "believe(s)," "seek(s)," "estimate(s)" and similar
expressions are intended to identify such forward- looking statements. These
statements are based on management's current expectations and beliefs and are
subject to a number of factors that could lead to actual results materially
different from those described in the forward-looking statements; Global Signal
can give no assurance that its expectations will be attained. Factors that
could cause actual results to differ materially from Global Signal's
expectations include, but are not limited to, our continued ability to acquire
new towers at attractive prices which will generate returns consistent with
expectations; the possibility that the towers that we have acquired and will
acquire may not generate sufficient additional income to justify their
acquisition; possibilities that conditions to closing of transactions will not
be satisfied and other risks detailed from time to time in Global Signal's SEC
reports including its Form S-11 filed June 2, 2004. Such forward-looking
statements speak only as of the date of this press release. Global Signal
expressly disclaims any obligation to release publicly any updates or revisions
to any forward-looking statements contained herein to reflect any change in the
Company's expectations with regard thereto or change in events, conditions or
circumstances on which any statement is based.
GLOBAL SIGNAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2004 2003 2004
Revenues $41,909 $44,139 $83,143 $87,583
Direct site operating expenses
(excluding depreciation,
amortization and accretion) 13,652 13,318 26,949 26,717
Gross margin 28,257 30,821 56,194 60,866
Other expenses:
Selling, general and administrative
(excluding
non-cash stock-based compensation) 6,694 5,855 13,211 12,414
State franchise, excise and minimum
taxes 208 165 417 337
Depreciation, amortization and
accretion 11,176 11,954 22,352 23,792
Non-cash stock-based compensation
expense for services - 608 - 3,212
18,078 18,582 35,980 39,755
Operating income 10,179 12,239 20,214 21,111
Interest expense, net 5,092 6,803 10,809 12,893
Loss on early extinguishment of debt - - - 8,449
Minority interest in net (income) loss
of subsidiary (3) (9) 3 -
Income (loss) from continuing
operations before
income tax 5,090 5,445 9,402 (231)
Income tax benefit (expense) 343 (102) 419 (112)
Income (loss) from continuing
operations 5,433 5,343 9,821 (343)
Income (loss) from discontinued
operations 95 (270) 195 (261)
Income (loss) before gain (loss) on
sale of properties 5,528 5,073 10,016 (604)
(Loss) gain on sale of properties (27) (6) (85) 134
Net income (loss) $5,501 $5,067 $9,931 $(470)
Basic income (loss) per common share:
Income (loss) from continuing
operations $0.13 $0.12 $0.24 $(0.01)
Income (loss) from discontinued
operations $0.00 $(0.01) $0.00 $0.00
Net income (loss) $0.13 $0.11 $0.24 $(0.01)
Diluted income (loss) per common
share:
Income (loss)from continuing
operations $0.13 $0.11 $0.23 $(0.01)
Income (loss) from discontinued
operations $0.00 $0.00 $0.00 $0.00
Net income (loss) $0.13 $0.11 $0.23 $(0.01)
Weighted average number of common
shares outstanding
Basic 41,000 44,461 41,000 42,760
Diluted 42,900 47,183 42,897 42,760
GLOBAL SIGNAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share data)
December 31, 2003 June 30, 2004
Assets (unaudited)
Current assets:
Cash and cash equivalents $9,661 $42,050
Accounts receivable, net 987 1,024
Prepaid expenses and other current
assets 6,919 7,850
Interest rate swap asset, at fair
value - 7,555
17,567 58,479
Restricted cash - 22,451
Fixed assets, net 362,231 422,894
Intangible assets:
Leasehold interests, net 12,916 9,968
Lease absorption value, net 114,049 114,325
Deferred debt issuance costs, net 11,227 14,884
Other 2,485 2,677
Other assets 4,565 6,094
$525,040 $651,772
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued
expenses $16,255 $19,415
Dividends payable - 5,201
Deferred revenue 10,857 12,089
Interest rate swap liabilities, at
fair value 1,970 -
Current portion of long-term debt 6,535 7,959
35,617 44,664
Long-term debt 257,716 408,797
Other long-term liabilities 5,437 6,361
Total liabilities 298,770 459,822
Minority interest in subsidiary 817 -
Stockholders' equity:
Preferred stock, $0.01 par value,
20,000,000 shares authorized,
no shares issued or outstanding at
December 31, 2003
and June 30, 2004 - -
Common stock, $0.01 par value,
150,000,000 shares authorized,
41,000,000 shares issued and
outstanding at December 31, 2003,
and 50,497,527 shares issued and
outstanding at June 30, 2004 410 505
Additional paid-in capital 206,089 188,707
Accumulated other comprehensive
income (loss) (1,133) 2,738
Retained earnings 20,087 -
225,453 191,950
$525,040 $651,772
GLOBAL SIGNAL INC.
RECONCILIATION OF GAPP INCOME TO ADJUSTED EBITDA
(in thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2004 2003 2004
Net Income (loss) $ 5,501 $ 5,067 $ 9,931 $ (470)
Depreciation, amortization,
and accretion 11,176 11,954 22,352 23,792
Interest 5,092 6,803 10,809 12,893
Income tax expense (343) 102 (419) 112
Loss on early extinguishment
of debt - - - 8,449
Non-cash stock based
compensation - 608 - 3,212
Adjusted EBITDA $21,426 $24,534 $42,673 $47,988
We define Adjusted EBITDA as earnings before interest, income tax expense
(benefit), depreciation, amortization, accretion and non-cash stock-based
compensation expense. Adjusted EBITDA is not a measure of performance
calculated in accordance with accounting principles generally accepted in the
United States, or "GAAP."
We use Adjusted EBITDA as a measure of operating performance. Adjusted EBITDA
should not be considered in isolation or as a substitute for operating income,
net income or loss, cash flows provided by operating, investing and financing
activities or other income statement or cash flow statement data prepared in
accordance with GAAP.
We believe Adjusted EBITDA is useful to an investor in evaluating our operating
performance because:
* it is one of the primary measures used by our management to evaluate
the economic productivity of our operations, including the efficiency
of our employees and the profitability associated with their
performance, the realization of contract revenues under our tenant
leases, our ability to obtain and maintain our customers and our
ability to operate our leasing business effectively;
* it is widely used in the wireless tower industry to measure operating
performance without regard to items such as depreciation and
amortization, which can vary depending upon accounting methods and the
book value of assets; and
* we believe it helps investors meaningfully evaluate and compare the
results of our operations from period to period by removing the impact
of our capital structure (primarily interest charges from our
outstanding debt) and asset base (primarily depreciation and
amortization) from our operating results.
Our management uses Adjusted EBITDA:
* in presentations to our board of directors to enable it to have the
same measurement of operating performance used by management;
* for planning purposes, including the preparation of our annual
operating budget;
* for compensation purposes, including as the basis for annual incentive
bonuses for certain employees;
* as a valuation measure in strategic analyses in connection with the
purchase and sale of assets;
* with respect to compliance with our credit facility, which requires us
to maintain certain financial ratios based on Consolidated EBITDA which
is equivalent to Adjusted EBITDA except that Consolidated EBITDA (i)
annualizes the Adjusted EBITDA contributed from newly acquired towers
until such towers have been owned for twelve months and (ii) excludes
asset impairment charges, gains or losses on the disposition of fixed
assets, extraordinary gains or losses, gains or losses on foreign
currency exchange and certain other non-cash charges; and
* as a measurement of operating performance because it assists us in
comparing our operating performance on a consistent basis as it
removes the impact of our capital structure (primarily interest charges
from our outstanding debt) and asset base (primarily depreciation and
amortization) from our operating results.
There are material limitations to using a measure such as Adjusted EBITDA,
including the difficulty associated with comparing results among more than one
company and the inability to analyze certain significant items, including
depreciation and interest expense, that directly affect our net income or loss.
We compensate for these limitations by considering the economic effect of the
excluded expense items independently as well as in connection with our analysis
of net income. Adjusted EBITDA should be considered in addition to, but not as
a substitute for, other measures of financial performance reported in
accordance with generally accepted accounting principles.
GLOBAL SIGNAL INC.
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED FFO
(in thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2004 2003 2004
Net income $ 5,501 $ 5,067 $ 9,931 $ (470)
Real estate
depreciation
& amortization 10,485 11,310 20,970 22,554
(Gain) loss
on disposal
of assets 27 6 85 (134)
Loss on
extingusihment of debt - - - 8,449
Non-cash stock base
compensation expense
for services - 608 - 3,212
Accretion 97 144 194 334
Adjusted FFO $ 16,110 $ 17,135 $ 31,180 $ 33,945
We believe Adjusted Funds From Operations, or Adjusted FFO, is an appropriate
measure of the performance of REITs because it provides investors with an
understanding of our ability to incur and service debt and make capital
expenditures. Adjusted FFO, for our purposes, represents net income available
for common stockholders (computed in accordance with GAAP), excluding gains (or
losses) on the disposition of real estate assets and real estate depreciation,
amortization, accretion and non-cash stock-based compensation expense.
Adjusted FFO does not represent cash generated from operating activities in
accordance with GAAP and therefore should not be considered an alternative to
net income as an indicator of our operating performance or as an alternative to
cash flow provided by operations as a measure of liquidity and is not
necessarily indicative of funds available to fund our cash needs including our
ability to pay dividends. In addition, Adjusted FFO may not be comparable to
similarly titled measurements employed by other companies.
Our management uses Adjusted FFO:
* in monthly management reports given to our board of directors;
* to provide a measure of our REIT operating performance that can be
compared to other companies using an accepted REIT industry-wide
measurement; and
* as an important supplemental measure of operating performance.
Supplemental Unaudited Financial Information
For the months of June 2003 and 2004 our revenue mix for the primary technology
categories was as follows:
GLOBAL SIGNAL INC.
REVENUE PRECENTAGE BY TENANT TECHNOLOGY TYPE
(Unaudited)
Precent of Revenues for the
Month of Month of
Tenant Technology Type June 2003 June 2004
Telephony (PCS, cellular, ESMR) 38.9% 43.2%
Mobile Radio 27.0 23.1
Paging 22.0 21.3
Broadcast 7.0 7.7
Wireless data and other 5.1 4.7
Total 100.0% 100.0%
Capital expenditures for the three and six months ended June 30, 2003 and 2004
were as follows:
GLOBAL SIGNAL INC.
CAPITAL EXPENDITURES
(in thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2004 2003 2004
Maintenance $ 711 $ 854 $ 1,475 $ 1,419
EBITDA enhancing* 647 1,070 1,847 2,042
Corporate 258 679 348 2,628
Total capital expenditures $ 1,616 $ 2,603 $ 3,670 $ 6,089
*EBITDA enhancing capital expenditure generally represent tower improvements to
accommodate additional tenants or equipment.
Tower portfolio activity from December 31, 2003 through June 30, 2004 was as
follows:
GLOBAL SIGNAL INC.
TOWER PORTFOLIO ACTIVITY*
(Unaudited)
Owned Managed Total
As of December 21, 2003 2,457 819 3,276
Acquisitions 147 - 147
Dispositions (9) (54) (63)
As of June 30, 2004 2,595 765 3,360
* Excludes 69 and 32 sites held for disposal by sale at December 31, 2003 and
June 30, 2004, respectively.
Contact:
Gail Scalfaro
Director of Investor Relations
941-308-5227
DATASOURCE: Global Signal Inc.
CONTACT: Gail Scalfaro, Director of Investor Relations, Global Signal
Inc., +1-941-308-5227
Web site: http://www.gsignal.com/