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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Syniverse Holdings | NYSE:SVR | NYSE | Ordinary Share |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 30.98 | 0.00 | 01:00:00 |
From Jul 2019 to Jul 2024
Syniverse Holdings, Inc. (NYSE:SVR), a leading provider of technology and business solutions for the global telecommunications industry, today reported results for third quarter 2009, and addressed its recent acquisition of VeriSign’s Mobile Messaging Division.
“Last week’s acquisition of VeriSign’s Mobile Messaging Division is a major step in the evolution of Syniverse, as the newly-expanded messaging business will comprise about 30 percent of our revenues going forward,” said Tony Holcombe, President and CEO. “We have effectively deployed $175 million that will have a tremendous payback and propel our business forward through the addition of outstanding people, products, scale and reach.”
Syniverse cited solid results for the quarter in a period of global economic weakness:
David Hitchcock, Executive Vice President and CFO, said continued cost management helped Syniverse drive margins and earnings during the third quarter.
“We again managed costs very aggressively during the period, posting a strong Adjusted EBITDA margin of 48.7 percent for the quarter,” Hitchcock said. “Despite revenues that were softer than expected, we continued to deliver solid cash net income and strong free cash flow.”
Please refer to the information set forth below under the captions “Non-GAAP Measures” and “Reconciliation of Non-GAAP Measures to GAAP” for an explanation of non-GAAP financial measures as well as a reconciliation of such non-GAAP financial measures to GAAP financial measures.
Third Quarter 2009 Service Line Revenue
Technology Interoperability Services
Technology interoperability services revenues were $66.8 million in the quarter, a 24.5% decrease compared to third quarter 2008. Revenues were down due to the impact of the general global economic slowdown, previously-disclosed customer-specific events and weakness in the sales of ITHL products in Asia Pacific.
Network Services
Network services revenues were $31.9 million in the quarter, a 2.7% increase compared to third quarter 2008, due to increases in SS7 and IP networking.
Number Portability Services
Number portability services revenues were $8.5 million in the quarter, a 5.4% increase compared to third quarter 2008 due to increased porting volumes.
Call Processing Services
Call processing services revenues were $7.5 million in the quarter, a 1.2% decrease compared to third quarter 2008.
Enterprise Solutions
Enterprise solutions revenues were $0.4 million in third quarter 2009.
Off-Network Database Queries (Pass-Through)
Pass-through revenues for third quarter 2009 were $1.6 million.
Third Quarter 2009 Business Highlights
Outlook
Syniverse provides the following outlook for 2009 as set forth below:
Net Revenues $466 - $472 million Net Income $59.5 – $64 million Adjusted EBITDA $202 – $209 million Cash Net Income $98.5 - $103 million Operating Free Cash Flow $80 - $85 millionThe revised full-year outlook includes the impact of the recent messaging acquisition, which closed on October 23.
The successful integration of BSG Wireless continues, and Syniverse expects to realize approximately $12 million of annualized run-rate cost savings upon full integration. Approximately $11 million of the expected cost savings have been realized through September 30, 2009. Expected Adjusted EBITDA and cash net income have been adjusted to exclude the one-time costs related to integrating the businesses and the duplicative costs that are expected to be eliminated by the end of 2009. For periods beginning on Jan. 1, 2009, cash net income assumes a long-term effective tax rate of 37.5%; for periods through Dec. 31, 2008, the long-term effective tax rate assumption was 39%.
Non-GAAP Measures
Syniverse's cash net income is determined by first calculating adjusted net income. Adjusted net income is calculated by: (i) adding the following items to net income: provision for income taxes, restructuring, non-cash stock compensation, BSG Wireless transition expense, messaging acquisition and transition expenses and purchase accounting amortization; (ii) adjusting the resulting pre-tax sum for a provision for income taxes at an assumed long-term tax rate of 37.5% (39% for all periods through Dec. 31, 2008), which excludes the effect of our net operating losses; and (iii) adding to that sum the cash benefit of our tax-deductible goodwill. The cash benefit is a result of the differing treatments of approximately $362 million of goodwill on our balance sheet, which primarily is the result of acquisitions that we made from Verizon in February 2002 and IOS North America in September 2004. Specifically, while this goodwill is not amortized for GAAP purposes, the amortization of goodwill is nonetheless deductible in calculating our taxable income and, hence, reduces actual cash tax liabilities.
Syniverse's Adjusted EBITDA is determined by adding the following items to net income: interest expense, net, provision for income taxes, depreciation and amortization, restructuring, non-cash stock compensation, BSG Wireless transition expenses and messaging acquisition and transition expenses.
Syniverse's operating free cash flow is determined by subtracting capital expenditures, and adding change in working capital due to payment of BSG pre-acquisition contractual obligation from net cash provided by operating activities.
A reconciliation of adjusted net income, cash net income and Adjusted EBITDA to net income, the closest GAAP financial measure, is presented in the financial tables below under the heading “Reconciliation of Non-GAAP Measures to GAAP.” A reconciliation of operating free cash flow to net cash provided by operating activities, the closest GAAP measure, is presented in the financial tables below under the heading “Reconciliation of Non-GAAP Measures to GAAP.”
We present adjusted net income, cash net income and related per-share amounts because we believe they provide useful information regarding our operating results in addition to our GAAP measures. We believe that adjusted net income provides our investors with valuable insight into our profitability exclusive of certain adjustments. In addition, cash net income provides further insight into the cash impact resulting from the different treatments of goodwill for financial reporting and tax purposes. We rely on adjusted net income and cash net income as primary measures of Syniverse’s earnings exclusive of these certain and other non-cash charges.
We present Adjusted EBITDA and operating free cash flow because we believe that Adjusted EBITDA and operating free cash flow provide useful information regarding our continuing operating results. We rely on Adjusted EBITDA and operating free cash flow as primary measures to review and assess the operating performance of our management team in connection with our executive compensation and bonus plans. We also review Adjusted EBITDA and operating free cash flow to compare our current operating results with corresponding periods and with the operating results of other companies in our industry. In addition, we utilize Adjusted EBITDA and operating free cash flow as an assessment of our overall liquidity and our ability to meet our debt service obligations.
We believe that the disclosure of Adjusted EBITDA, operating free cash flow, adjusted net income and cash net income is useful to investors as these non-GAAP measures form the basis of how our management team reviews and considers our operating results. By disclosing these non-GAAP measures, we believe that we create for investors a greater understanding of, and an enhanced level of transparency into, the means by which our management team operates our company. We also believe these measures can assist investors in comparing our performance to that of other companies on a consistent basis without regard to certain items that do not directly affect our ongoing operating performance or cash flows.
Adjusted EBITDA, operating free cash flow, adjusted net income and cash net income have limitations as analytical tools, and you should not rely upon them, or consider them in isolation or as a substitute for GAAP measures, such as net income, cash flows from operating activities and other consolidated income or other cash flows statement data prepared in accordance with GAAP. In addition, these non-GAAP measures may not be comparable to other similarly titled measures of other companies. Because of these limitations, Adjusted EBITDA and operating free cash flow should not be considered as measures of discretionary cash available to us to invest in the growth of our business. Adjusted net income and cash net income also should not be considered as a replacement for, or a measure that should be used or analyzed in lieu of, net income. We attempt to compensate for these limitations by relying primarily upon our GAAP results and using Adjusted EBITDA, operating free cash flow, adjusted net income and cash net income as supplemental information only.
Third Quarter 2009 Earnings Call
Syniverse will host a conference call at 4:30 p.m. ET to discuss the results. To participate on this call, U.S. callers may dial toll free 1-866-383-8008; international callers may dial direct +1 (617) 597-5341. The passcode for this call is 65583949. This event also will be webcast live over the Internet in listen-only mode at www.syniverse.com/investorevents.
A replay of this call will be available beginning at approximately 7:30 p.m. ET on Nov. 2 and will remain available through Nov. 16 at 11:59 p.m. ET. To access the replay, U.S. callers may dial toll free 1-888-286-8010; international callers may dial direct +1 (617) 801-6888. The replay passcode is 65518577.
About Syniverse
Syniverse Technologies (NYSE:SVR) provides mobile technology for the global telecommunications industry, making it possible for disparate data, messaging and voice technologies to interoperate anywhere, any time. Serving more than 800 communications companies in over 160 countries, Syniverse offers market-leading solutions that simplify the complexities of roaming, messaging, network interoperability and business intelligence for mobile operators, MSOs, enterprise verticals and emerging mobile providers. For more information, visit www.syniverse.com.
Cautionary Notice Regarding Forward-Looking Statements
Certain of the statements in this press release may constitute “forward-looking statements” for purposes of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Syniverse to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements include, without limitation: statements regarding Syniverse’s position for long-term success; Syniverse’s ability to continue to manage its costs; growth in messaging and Syniverse’s expectations of its product portfolio and competitive position; Syniverse’s ability to continue to report positive results in future periods and/or to continue to experience growth; Syniverse’s ability to successfully integrate its acquired businesses; Syniverse’s belief of the value of Non-GAAP measures to its investors; Syniverse’s ability to reduce its long-term effective tax rate; and Syniverse’s guidance for 2009, as contained under the caption “Outlook,” including, without limitation, expected net revenues, net income, Adjusted EBITDA, cash net income and operating free cash flow for 2009, as well as the assumptions, estimates, and judgments applied in creating such guidance.
These forward-looking statements are based upon information presently available to the Company’s management and are inherently subjective, uncertain and subject to change, due to any number of risks and uncertainties, including, without limitation, those other risks and factors discussed in Syniverse’s Annual Report on Form 10-K for the year ended Dec. 31, 2008 and Quarterly Reports for the quarters ended March 31, 2009 and June 30, 2009 under the captions “Cautionary Notice Regarding Forward-Looking Statements” and “Risk Factors” and otherwise in Syniverse’s reports and filings that it makes with the Securities and Exchange Commission.
You should not place undue reliance on any forward-looking statements, since those statements speak only as of the date that they are made. Syniverse has no obligation and does not undertake to publicly update, revise or correct any of the forward-looking statements after the date of this Press Release, or after the respective dates on which such statements otherwise are made, whether as a result of new information, future events, or otherwise, except as otherwise may be required by law.
Syniverse Holdings, Inc.
Condensed Consolidated Statements of Income (unaudited)and Other Supplemental Information
(In thousands except per share information) Three Months Ended Nine Months Ended September 30, 2009 September 30, 2008 September 30, 2009 September 30, 2008 Technology Interoperability Services $ 66,844 $ 88,568 $ 196,107 $ 237,577 Network Services 31,944 31,097 92,738 92,382 Number Portability Services 8,514 8,076 23,542 21,462 Call Processing Services 7,459 7,546 21,051 23,248 Enterprise Solutions 349 524 1,129 1,943 Revenues excluding Off-Network Database Queries 115,110135,811 334,567 376,612 Off-Network Database Queries 1,552 1,358 4,497 3,821 Total Revenues 116,662
137,169 339,064 380,433 Cost of operations 41,326 43,133 122,188 122,700 Gross Margin 75,336
94,036 216,876 257,733 Gross Margin % 64.6 % 68.6 % 64.0 % 67.7 % Gross Margin % before Off-Network Database Queries 65.4 % 69.2 % 64.8 % 68.4 % Sales and marketing 8,789 11,071 26,312 34,025 General and administrative 15,986 19,784 49,989 57,794 Depreciation and amortization 14,585 13,809 42,206 41,233 Restructuring - (46 ) - (29 ) Operating income 35,976
49,418 98,369 124,710 Other expense, net Interest expense, net (7,026 ) (8,686 ) (21,636 ) (26,901 ) Other, net (40 ) (164 ) 1,094 (379 ) (7,066 ) (8,850 ) (20,542 ) (27,280 ) Income before provision for income taxes 28,910
40,568 77,827 97,430 Provision for income taxes 11,338 15,101 27,745 36,218 Net income 17,572
25,467 50,082 61,212 Less: Net loss attributable to noncontrolling interest (172 ) - (225 ) - Net income attributable to Syniverse Holdings, Inc. $ 17,744 $ 25,467 $ 50,307 $ 61,212 Net income per share Basic $ 0.26 $ 0.37 $ 0.73 $ 0.90 Diluted $ 0.26 $ 0.37 $ 0.73 $ 0.89 Shares used in calculation Basic 68,088 67,757 67,965 67,629 Diluted 68,303 67,817 68,078 67,706 Other Supplemental Information: Revenue by region (1) (unaudited): Three Months Ended Nine Months Ended September 30, 2009 September 30, 2008 September 30, 2009 September 30, 2008 North America (U.S. and Canada) $ 81,527 $ 98,346 $ 241,467 $ 271,491 Asia Pacific 9,447 10,357 28,317 32,430 Caribbean and Latin America (includes Mexico) 8,391 8,099 24,049 23,413 Europe, Middle East and Africa 15,745 19,009 40,734 49,278 Subtotal non- North American Revenue 33,583 37,465 93,100 105,121 Revenues excluding Off Network Database Queries 115,110 135,811 334,567 376,612 Off Network Database Queries 1,552 1,358 4,497 3,821 Total Revenues 116662.312 137169 339063.922 380433 (1) Based on "bill to" location on invoice. Syniverse Holdings, Inc Reconciliation of Non GAAP Measures to GAAP (unaudited) (In thousands except per share information) Three Months Ended Nine Months Ended September 30, 2009 September 30, 2008 September 30, 2009 September 30, 2008 Reconciliation to adjusted EBITDA Net income $ 17,572 $ 25,467 $ 50,082 $ 61,212 Interest expense, net 7,026 8,686 21,636 26,901 Provision for income taxes 11,338 15,101 27,745 36,218 Depreciation and amortization 14,585 13,809 42,206 41,233 Restructuring - (46 ) - (29 ) Non-cash stock compensation 2,273 1,314 5,288 3,738 BSG Wireless transition expenses 1,511 3,276 6,136 9,677 Messaging acquisition and transition expenses 1,756 - 1,756 - Adjusted EBITDA $ 56,061
$ 67,607 $ 154,849 $ 178,950 Three Months Ended Nine Months Ended September 30, 2009 September 30, 2008 September 30, 2009 September 30, 2008 Reconciliation to adjusted net income and cash net income Net income $ 17,572 $ 25,467 $ 50,082 $ 61,212 Add provision for income taxes 11,338 15,101 27,745 36,218 Income before provision for income taxes 28,910
40,568 77,827 97,430 Restructuring - (46 ) - (29 ) Non-cash stock compensation 2,273 1,314 5,288 3,738 BSG Wireless transition expenses 1,511 3,276 6,136 9,677 Messaging acquisition and transition expenses 1,756 - 1,756 - Purchase accounting amortization 7,020 7,119 20,728 21,357 Adjusted income before provision for income taxes 41,470
52,231 111,735 132,173 Less assumed provision for income taxes at 37.5% for 2009 and 39% for 2008 (15,551 )
(20,370 ) (41,901 ) (51,548 ) Adjusted net income 25,919
31,861 69,834 80,625 Add cash savings of tax deductible goodwill(1) 2,301 2,301 6,903 6,903 Cash net income $ 28,220
$ 34,162 $ 76,737 $ 87,528 Adjusted net income per share $ 0.38 $ 0.47 $ 1.03 $ 1.19 Cash net income per share $ 0.41 $ 0.50 $ 1.13 $ 1.29 Diluted shares outstanding 68,303 67,817 68,078 67,706 1) Represents the cash benefit realized currently as a result of the tax deductibility of goodwill amortization. Three Months Ended Nine Months Ended September 30, 2009 September 30, 2008 September 30, 2009 September 30, 2008 Reconciliation to operating free cash flow Net cash provided by operating activities $ 32,802 $ 45,790 $ 83,076 $ 109,916 Capital expenditures (6,091 ) (9,045 ) (27,027 ) (29,406 ) Change in working capital due to payment of BSG pre-acquisition contractual obligation - - - 5,440 Operating Free Cash Flow $ 26,711 $ 36,745 $ 56,049 $ 85,950 Supplemental cash flow information: Cash interest paid $ 10,034 $ 15,838 $ 23,361 $ 31,018 Cash income taxes paid 1,676 2,692 $ 23,444 9,059 Syniverse Holdings, Inc. Condensed Consolidated Balance Sheets (In thousands except share data) September 30, December 31, 2009 2008
(unaudited)
ASSETS Current assets: Cash $ 216,197 $ 165,605 Accounts receivable, net of allowances of $4,609 and $2,347, respectively 92,417 88,782 Prepaid and other current assets 26,624 20,971 Total current assets 335,238 275,358 Property and equipment, net 53,014 50,251 Capitalized software, net 58,167 60,184 Deferred costs, net 7,821 7,288 Goodwill 607,719 596,662 Identifiable intangibles, net 196,276 208,518 Other assets 1,516 1,573 Total assets $ 1,259,751 $ 1,199,834 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 5,070 $ 7,311 Accrued payroll and related benefits 7,683 20,111 Accrued interest 1,802 5,160 Accrued income taxes 1,669 9,891 Deferred revenues 3,637 4,260 Other accrued liabilities 27,077 28,975 Current portion of Term Note B 3,476 3,431 Total current liabilities 50,414 79,139 Long-term liabilities: Deferred tax liabilities 82,969 65,546 7 3/4% senior subordinated notes due 2013 175,000 175,000 Term Note B, less current maturities 337,143 335,382 Other long-term liabilities 10,276 8,925 Total liabilities 655,802 663,992 Stockholders' equity: Preferred stock, $0.001 par value; 300,000 shares authorized; no shares issued - -Common stock, $0.001 par value; 100,300,000 shares authorized; 69,449,596 shares issued and 69,257,598 shares outstanding and 68,847,632 shares issued and 68,455,634 shares outstanding at September 30, 2009 and December 31, 2008, respectively
69 68 Additional paid-in capital 479,502 471,524 Retained earnings 133,622 83,315 Accumulated other comprehensive loss (10,051 ) (19,035 )Common stock held in treasury, at cost; 191,998 and 391,998 at September 30, 2009 and December 31, 2008, respectively
(15 ) (30 ) Total Syniverse Holdings, Inc. stockholders' equity 603,127 535,842 Noncontrolling interest 822 - Total equity 603,949 535,842 Total liabilities and stockholders' equity $ 1,259,751 $ 1,199,834 Syniverse Holdings, Inc. Condensed Consolidated Statements of Cash Flows (unaudited)(In thousands)
Nine Months Ended September 30, 2009 2008 Cash flows from operating activities Net income $ 50,082 $ 61,212 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization including amortization of deferred debt issuance costs
43,499 42,563 Provision for (recovery of) uncollectible accounts 591 (129 ) Deferred income tax expense 15,826 24,006 Stock-based compensation 5,288 3,738 Other, net 76 478 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (2,539 ) (19,664 ) Other current assets (6,081 ) (3,518 ) Accounts payable, accrued payroll and related benefits (14,478 ) 8,205 Other current liabilities (12,139 ) (6,949 ) Other assets and liabilities 2,951 (26 ) Net cash provided by operating activities 83,076 109,916 Cash flows from investing activities Capital expenditures (27,027 ) (29,406 ) Acquisition of WSI, net of acquired cash (3,099 ) - Acquisition of BSG Wireless, net of acquired cash - (823 ) Net cash used in investing activities (30,126 ) (30,229 ) Cash flows from financing activities Principal payments on senior credit facility (2,580 ) (2,654 ) Issuances of stock under employee stock purchase plan 415 388 Issuance of stock for stock options exercised 2,586 1,951 Minimum tax withholding on restricted stock awards (295 ) (590 ) Purchase of treasury stock - (1 ) Capital contribution from noncontrolling interest in a joint venture 981 - Net cash provided by (used in) financing activities 1,107 (906 ) Effect of exchange rate changes on cash (3,465 ) (1,832 ) Net increase in cash 50,592 76,949 Cash at beginning of period 165,605 49,086 Cash at end of period $ 216,197 $ 126,035 Supplemental cash flow information Interest paid $ 23,361 $ 31,018 Income taxes paid 23,444 9,059 Syniverse Holdings Inc.Reconciliation of Non GAAP Measure Estimates to GAAP (unaudited)
2009E 2009E (in millions) Low High Reconciliation to adjusted EBITDA Net income $ 59.5 $ 64.0 Interest expense, net 28.5 28.5 Provision for income taxes 33.5 36.0 Depreciation and amortization(1) 60.5 60.5 Non-cash stock compensation 8.5 8.5 BSG Wireless transition expenses(2) 7.0 7.0 Messaging acquisition and transition expenses(3) 4.5 4.5 Adjusted EBITDA $ 202.0 $ 209.0 Reconciliation to adjusted net income and cash net income Net income $ 59.5 $ 64.0 Add provision for income taxes 33.5 36.0Income before provision for income taxes
93.0 100.0Adjustments income before provision for income taxes
Purchase accounting amortizations 29.0 29.0 Non-cash stock compensation 8.5 8.5 BSG Wireless transition expenses(2) 7.0 7.0 Messaging acquisition and transition expenses(3) 4.5 4.5Adjusted income before provision for income taxes
142.0 149.0 Less assumed provision for income taxes (53.2 ) (55.7 ) Adjusted net income 88.8 93.3 Add cash savings of tax deductible goodwill(4) 9.7 9.7 Cash net income $ 98.5 $ 103.0 1) Includes purchase accounting amortizations. 2) Represents certain costs that we do not expect to continue in the business upon full integration including:a) Integration specific expenses, including any temporary headcount needed for the migrations, travel for the integration teams, and other one-time costs related to the integration project and:
b) Duplicative data processing and headcount expenses that we do not plan to remain following the full integration.
3) Represents acquisition related expenses which are included in our operating results, such as legal, investment and accounting advisors and integration specific expenses, including any temporary headcount, travel for the integration teams, and other one-time costs related to acquisitions.
4) Represents the cash benefit realized currently as a result of the tax deductibility of goodwill amortization.
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