PGi Reports Fourth Quarter and Fiscal Year 2013 Results: SaaS Products Up Nearly 75% in 2013, Comprising 6% of Total Revenues; Free Cash Flow Approaches $1.00 Per Share* Company Reiterates 2014 Financial Outlook PR Newswire ATLANTA, Feb. 20, 2014 ATLANTA, Feb. 20, 2014 /PRNewswire/ --Premiere Global Services, Inc. (NYSE: PGI), a leading global provider of collaboration software and services for over 20 years, today announced final results for the fourth quarter and fiscal year ended December 31, 2013. Fourth Quarter 2013 Financial Results In the fourth quarter of 2013, net revenues increased approximately 7.0% to $134.6 million, compared to $125.8 million in the fourth quarter of 2012. Diluted EPS from continuing operations was $(0.03) in the fourth quarter of 2013, compared to diluted EPS from continuing operations of $0.20 in the fourth quarter of 2012. Non-GAAP diluted EPS from continuing operations was $0.20* in the fourth quarter of 2013, compared to $0.18* in the fourth quarter of 2012. "We are pleased with our 2013 performance, as we accelerated sales of our collaboration software applications and made solid progress in transitioning PGi to a higher-value SaaS model – while also generating significant free cash flow of nearly $1.00 per share*," said Boland T. Jones, PGi founder, chairman and CEO. "We continue to be optimistic in our outlook, and we see 2014 as another year of solid growth and higher profitability for PGi." 2013 Financial Results In 2013, net revenues total $526.9 million, compared to $505.3 million in 2012. Diluted EPS from continuing operations was $0.40 in 2013, compared to diluted EPS from continuing operations of $0.58 in 2012. Non-GAAP diluted EPS from continuing operations totaled $0.78* in 2013, compared to non-GAAP diluted EPS from continuing operations of $0.73* in 2012. 2013 Accomplishments oGrew revenue from PGi SaaS products nearly 75% to approximately $31 million; oExited the year with an annual revenue run-rate of approximately$37 million from SaaS products; oNamed a Top 10 Innovative Technology Company in Georgia by the Technology Association of Georgia (TAG); oAcquired ACT Teleconferencing, Inc., a global provider of integrated conferencing solutions with operations in eight countries in North America, Europe and Asia Pacific; oAcquired Via-Vox Limited, operating under the name Powwownow, one of Europe's fastest growing conferencing providers focused on small and midsize businesses; oIncreased the borrowing capacity, extended the term and improved the pricing and covenants of its credit facility, providing additional flexibility to execute its strategic growth plans, while also lowering its cost of capital; oAnnounced a multi-year strategic alliance with TeliaSonera, a leading provider of network access and telecommunication services in the Nordic and Baltic countries, to bring PGi's virtual meeting solutions to TeliaSonera's business and consumer customers in these regions; oAnnounced iMeet® accessibility via the SAP® Business ByDesign® solution, making it available to even more fast-growing, mid-market businesses and subsidiaries of large enterprises working with SAP around the world; and oAnnounced a managed services agreement with Ingram Micro Inc., the world's largest technology distributor and a global leader in IT supply-chain, adding iMeet to the Ingram Micro Cloud Marketplace. Financial Outlook The following statements are based on PGi's current expectations. These statements contain forward-looking statements and company estimates, and actual results may differ materially. PGi assumes no duty to update any forward-looking statements made in this press release. Based on current business trends and current foreign currency exchange rates, and assuming no additional acquisitions, PGi continues to anticipate that results for 2014 will be within the financial outlook ranges previously provided: net revenues from continuing operations are projected to be in the range of $560-$570 million and non-GAAP diluted EPS from continuing operations are projected to be in the range of $0.85-$0.88*. PGi continues to anticipate that sales of its SaaS-based products will increase over 50% in 2014 compared to 2013 and will comprise in excess of 10% of its consolidated annual revenue run-rate by the end of 2014. PGi will host a conference call today at 5:00 p.m., Eastern Time to discuss these results. To participate in the call, please dial-in to the appropriate number 5-10 minutes prior to the scheduled start time: (888) 271-8604 (U.S. and Canada) or (913) 312-0704 (International), participant code 5278333. The conference call will simultaneously be webcast. Please visit www.pgi.com for webcast details and conference call replay information, as well as the webcast archive and the text of the earnings release, including the financial and statistical information to be presented during the call. * Non-GAAP Financial Measures To supplement the company's consolidated financial statements presented in accordance with GAAP, we have included the following non-GAAP measures of financial performance: non-GAAP operating income, non-GAAP net income from continuing operations, non-GAAP diluted net income per share (EPS) from continuing operations, free cash flow and organic growth. Except for free cash flow, the company has also included these non-GAAP measures, as well as net revenues and segment net revenues, on a constant currency basis. Management uses these measures internally as a means of analyzing the company's current and future financial performance and identifying trends in our financial condition and results of operations. We have provided this information to investors to assist in meaningful comparisons of past, present and future operating results and to assist in highlighting the results of ongoing core operations. Please see the table attached for calculation of these non-GAAP financial measures and for reconciliation to the most directly comparable GAAP measures. These non-GAAP financial measures may differ materially from comparable or similarly titled measures provided by other companies and should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. SAP, ByDesign and all SAP logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries. All other trademarks and registered trademarks are the property of their respective owners. About Premiere Global Services, Inc. │ PGi PGi has been a leading global provider of collaboration software and services for over 20 years. PGi's cloud-based software applications let business users connect, collaborate and share ideas and information from their desktop, tablet or smartphone, enabling greater productivity in the office or on the go. PGi has a global presence in 25 countries, and its award-winningsolutions provide a collaborative advantage to over 45,000 enterprise customers, including 75% of the Fortune 100™.In the last five years, PGi has hosted more than 1.1 billion people from 137 countries in over 250 million virtual meetings. For more information, visit PGi at www.pgi.com. Statements made in this press release, other than those concerning historical information, should be considered forward-looking and subject to various risks and uncertainties. Such forward-looking statements are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and are made based on management's current expectations or beliefs as well as assumptions made by, and information currently available to, management. A variety of factors could cause actual results to differ materially from those anticipated in PGi's forward-looking statements, including, but not limited to, the following factors: competitive pressures, including pricing pressures; technological changes and the development of alternatives to our services; market acceptance of our cloud-based, virtual meeting solutions, including our iMeet^® and GlobalMeet^® solutions; our ability to attract new customers and to retain and further penetrate our existing customers; our ability to establish and maintain strategic reseller relationships; risks associated with challenging global economic conditions; price increases from our telecommunications service providers; service interruptions and network downtime; technological obsolescence and our ability to upgrade our equipment or increase our network capacity; concerns regarding the security and privacy of our customers' confidential information; future write-downs of goodwill or other intangible assets; greater than anticipated tax and regulatory liabilities; restructuring and cost reduction initiatives and the market reaction thereto; our level of indebtedness; risks associated with acquisitions and divestitures; indemnification claims from the sale of our PGiSend business; our ability to protect our intellectual property rights, including possible adverse results of litigation or infringement claims; regulatory or legislative changes, including further government regulations applicable to traditional telecommunications service providers and data privacy; risks associated with international operations and market expansion, including fluctuations in foreign currency exchange rates; and other factors described from time to time in our press releases, reports and other filings with the Securities and Exchange Commission, including but not limited to the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2012. All forward-looking statements attributable to us or a person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We do not undertake any obligation to update or to release publicly any revisions to forward-looking statements contained in this press release to reflect events or circumstances occurring after the date of this press release or the date of the statement, if a different date, or to reflect the occurrence of unanticipated events. PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Ended Year Ended December 31, December 31, 2013 2012 2013 2012 Net revenues $ 134,625 $ 125,771 $ 526,865 $ 505,281 Operating expenses: Cost of revenues (exclusive of depreciation and 57,428 54,110 225,994 215,154 amortization shown separately below) Selling and marketing 32,502 31,875 134,426 130,631 General and administrative (exclusive of expenses shown 17,935 16,342 65,219 63,412 separately below) Research and development 4,875 3,741 16,574 14,349 Excise and sales tax expense 1,891 203 1,969 321 Depreciation 8,729 8,275 33,758 32,482 Amortization 1,787 742 3,496 3,981 Restructuring costs 3,065 (91) 3,506 612 Asset impairments 980 138 1,196 879 Net legal settlements and 7 183 598 2,034 related expenses Acquisition-related costs 2,348 - 5,392 - Total operating 131,547 115,518 492,128 463,855 expenses Operating income 3,078 10,253 34,737 41,426 Other (expense) income: Interest expense (2,225) (1,763) (7,152) (7,167) Interest income 24 30 117 49 Other, net 84 (277) 214 (808) Total other expense, (2,117) (2,010) (6,821) (7,926) net Income from continuing operations 961 8,243 27,916 33,500 before income taxes Income tax expense (benefit) 2,241 (1,173) 9,062 5,445 Net (loss) income from (1,280) 9,416 18,854 28,055 continuing operations Loss from discontinued (120) (131) (538) (465) operations, net of taxes Net (loss) income $ $ $ $ (1,400) 9,285 18,316 27,590 BASIC WEIGHTED-AVERAGE SHARES 46,328 46,546 46,214 47,596 OUTSTANDING Basic net (loss) income per share (1) Continuing operations $ $ $ $ (0.03) 0.20 0.41 0.59 Discontinued operations - - (0.01) (0.01) Net (loss) income per share $ $ $ $ (0.03) 0.20 0.40 0.58 DILUTED WEIGHTED-AVERAGE SHARES 46,328 47,103 46,727 48,092 OUTSTANDING Diluted net (loss) income per share (1) Continuing operations $ $ $ $ (0.03) 0.20 0.40 0.58 Discontinued operations - - (0.01) (0.01) Net (loss) income per share $ $ $ $ (0.03) 0.20 0.39 0.57 (1) Column totals may not sum due to the effect of rounding on EPS. PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) December 31, December 31, 2013 2012 ASSETS CURRENT ASSETS Cash and equivalents $ $ 44,955 20,976 Accounts receivable (less allowances of $760 and 78,481 75,149 $834, respectively) Prepaid expenses and other current assets 22,645 18,245 Income taxes receivable 2,316 1,272 Deferred income taxes, net 4,390 9,852 Total current assets 152,787 125,494 PROPERTY AND EQUIPMENT, NET 105,724 104,613 OTHER ASSETS Goodwill 341,382 297,773 Intangibles, net of amortization 78,637 7,384 Deferred income taxes, net 1,957 2,597 Other assets 17,621 7,942 TOTAL ASSETS $ $ 698,108 545,803 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ $ 51,994 48,166 Income taxes payable 2,648 1,116 Accrued taxes, other than income taxes 11,190 4,333 Accrued expenses 34,402 32,093 Current maturities of long-term debt and capital 1,719 3,137 lease obligations Accrued restructuring costs 2,104 1,040 Deferred income taxes, net 171 15 Total current liabilities 104,228 89,900 LONG-TERM LIABILITIES Long-term debt and capital lease obligations 272,467 179,832 Accrued restructuring costs 77 117 Accrued expenses 29,570 15,541 Deferred income taxes, net 18,881 8,209 Total long-term liabilities 320,995 203,699 SHAREHOLDERS' EQUITY Common stock, $0.01 par value; 150,000,000 shares authorized, 48,338,335 and 47,745,592 483 477 shares issued and outstanding, respectively Additional paid-in capital 457,913 453,621 Accumulated other comprehensive income 11,169 13,102 Accumulated deficit (196,680) (214,996) Total shareholders' equity 272,885 252,204 TOTAL LIABILITIES AND SHAREHOLDERS' $ $ EQUITY 698,108 545,803 PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Year Ended December 31, 2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 18,316 $ 27,590 Loss from discontinued operations, net of 538 465 taxes Net income from continuing operations 18,854 28,055 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 33,758 32,482 Amortization 3,496 3,981 Amortization of debt issuance costs 611 592 Net legal settlements and related expenses 598 2,034 Payments for legal settlements and related (510) (1,512) expenses Deferred income taxes 3,068 (4,322) Restructuring costs 3,506 612 Payments for restructuring costs (2,469) (3,213) Asset impairments 1,196 879 Equity-based compensation 7,872 8,074 Excess tax benefits from share-based payment (525) (367) arrangements Provision for doubtful accounts 514 1,089 Acquisition-related costs 5,392 - Cash paid for acquisition-related costs (3,863) - Changes in assets and liabilities, net of effect of acquisitions and dispositions: Changes in working capital 4,360 2,137 Net cash provided by operating 75,858 70,521 activities from continuing operations Net cash used in operating activities (554) (672) from discontinued operations Net cash provided by operating 75,304 69,849 activities CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (31,774) (32,338) Business acquisitions, net of cash acquired (102,145) - Other investing activities (452) (1,273) Net cash used in investing activities (134,371) (33,611) from continuing operations Net cash used in investing activities - (60) from discontinued operations Net cash used in investing activities (134,371) (33,671) CASH FLOWS FROM FINANCING ACTIVITIES Principal payments under borrowing (78,847) (94,655) arrangements Proceeds from borrowing arrangements 166,750 75,929 Payments of debt issuance costs (1,258) (23) Excess tax benefits of share-based payment 525 367 arrangements Purchase and retirement of treasury stock, (4,066) (29,915) at cost Exercise of stock options - 932 Net cash provided by (used in) financing activities from continuing 83,104 (47,365) operations Net cash used in financing activities - - from discontinued operations Net cash provided by (used in) 83,104 (47,365) financing activities Effect of exchange rate changes on cash and (58) 130 equivalents NET INCREASE (DECREASE) IN CASH AND 23,979 (11,057) EQUIVALENTS CASH AND EQUIVALENTS, beginning of year 20,976 32,033 CASH AND EQUIVALENTS, end of year $ 44,955 $ 20,976 PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in thousands, except per share data) (unaudited) Three Months Ended Year Ended December 31, December 31, 2013 2012 2013 2012 Non-GAAP Operating Income (1) Operating income, as reported $ $ $ $ 3,078 10,253 34,737 41,426 Restructuring costs 3,065 (91) 3,506 612 Excise and sales tax expense 1,891 203 1,969 321 Asset impairments 980 138 1,196 879 Net legal settlements and 7 183 598 2,034 related expenses Acquisition-related costs 2,348 - 5,392 - Equity-based compensation 2,178 1,961 7,872 8,074 Amortization 1,787 742 3,496 3,981 Non-GAAP operating income $ $ $ $ 15,334 13,389 58,766 57,327 Non-GAAP Net Income from Continuing Operations (1) Net (loss) income from $ $ $ $ continuing operations, as (1,280) 9,416 18,854 28,055 reported Elimination of non-recurring 1,939 (3,376) 687 (4,354) tax adjustments Restructuring costs 2,101 (67) 2,454 433 Excise and sales tax expense 1,296 149 1,378 227 Excise and sales tax interest 127 - 130 - Asset impairments 672 101 837 622 Net legal settlements and 5 134 419 1,439 related expenses Acquisition-related costs 1,610 - 3,774 - Equity-based compensation 1,493 1,437 5,510 5,712 Amortization 1,225 544 2,447 2,817 Non-GAAP net income from $ $ $ $ continuing operations 9,188 8,338 36,490 34,951 Non-GAAP Diluted EPS from Continuing Operations (1) (2) Diluted net (loss) income per $ $ $ $ share from continuing (0.03) 0.20 0.40 0.58 operations, as reported Elimination of non-recurring 0.04 (0.07) 0.01 (0.09) tax adjustments Restructuring costs 0.04 - 0.05 0.01 Excise and sales tax expense 0.03 - 0.03 - Excise and sales tax interest - - - - Asset impairments 0.01 - 0.02 0.01 Net legal settlements and - - 0.01 0.03 related expenses Acquisition-related costs 0.03 - 0.08 - Equity-based compensation 0.03 0.03 0.12 0.12 Amortization 0.03 0.01 0.05 0.06 Non-GAAP diluted EPS from $ $ $ $ continuing operations 0.20 0.18 0.78 0.73 Free Cash Flow (3) Net cash provided by operating activities from continuing $ 75,858 $ 70,521 operations, as reported Less: Capital expenditures, as (31,774) (32,338) reported Free cash flow 44,084 38,183 Free cash flow per share $ $ 0.94 0.79 Management believes that presenting non-GAAP operating income, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations provide useful information regarding underlying trends in the company's continuing operations. Management expects equity-based compensation and amortization expenses to be recurring costs and presents non-GAAP net income from continuing operations and non-GAAP (1) diluted EPS from continuing operations to exclude these non-cash items as well as non-recurring items that are unrelated to the company's ongoing operations, including non-recurring tax adjustments, restructuring costs, excise and sales tax expense, excise and sales tax interest, asset impairments, net legal settlements and related expenses and acquisition-related costs. These non-cash and non-recurring items are presented net of taxes for non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations. Column totals may not sum due to the effect of rounding on EPS. For the three months ended December 31, 2013, diluted net loss per share from continuing operations, as reported, is calculated using basic weighted-average shares outstanding of 46,328. The effect of share-based awards is excluded from the shares used in this calculation because such (2) effect is anti-dilutive. However, non-GAAP diluted EPS from continuing operations is calculated using diluted weighted-average shares outstanding of 46,933. The effect of share-based awards is included in the shares used in the calculation of non-GAAP diluted EPS from continuing operations because such effect is dilutive. Management defines "free cash flow" as net cash provided by operating activities from continuing operations, less capital expenditures. Management believes that this non-GAAP measure provides a relevant measure (3) of the company's liquidity in evaluating its financial performance and ability to generate cash without additional external financing in order to repay debt obligations, fund acquisitions and repurchase shares. Management utilizes diluted weighted-average shares outstanding in calculating free cash flow per share. PREMIERE GLOBAL SERVICES, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES CONSTANT CURRENCY ADJUSTMENTS AND ORGANIC GROWTH (unaudited) Prior Year Quarter Constant Currency Adjustments (4) Impact of fluctuations Q4 - 13 in Q4 - 13 (Constant foreign (Actual) currency) currency exchange rates (in thousands, except per share data) Net $ 135,748 $ (1,123) $ 134,625 Revenues North America $ $ (227) $ 87,008 Net 87,235 Revenue Europe Net $ $ 453 $ 31,173 Revenue 30,720 Asia Pacific $ $ (1,349) $ 16,444 Net 17,793 Revenue Non-GAAP $ Operating 15,547 $ (213) $ 15,334 Income Non-GAAP Net Income $ $ from 9,175 13 $ 9,188 Continuing Operations Non-GAAP Diluted $ $ EPS from 0.20 - $ 0.20 Continuing Operations Management also presents the non-GAAP financial measures described under note 1 above, as well as net revenues and segment net revenue, on a constant currency basis compared to the same quarter in the previous year to exclude (4) the effects of foreign currency exchange rates, which are not completely within management's control, in order to facilitate period-to-period comparison of the company's financial results without the distortion of these fluctuations. These constant currency adjustments convert current quarter results using prior period (Q4 - 12) average exchange rates. Sequential Quarter Constant Currency Adjustments (5) Impact of fluctuations Q4 - 13 in Q4 - 13 (Constant foreign (Actual) currency) currency exchange rates (in thousands) Net $ 133,958 $ 667 $ 134,625 Revenues Management also presents net revenues on a constant currency basis compared to the prior quarter to exclude the effects of foreign currency exchange rates, which are not completely within management's control, in order to (5) facilitate period-to-period comparison of the company's financial results without the distortion of these fluctuations. These constant currency adjustments convert current quarter results using prior period (Q3 - 13) average exchange rates. Organic Growth (6) Impact of fluctuations Organic Organic December in net December net 31, foreign Acquisitions revenue 31, revenue 2012 currency growth 2013 growth exchange rate rates (in thousands, except percentages) Net Revenues, $ $ Three $ 125,771 $ (1,123) $ 13,991 (4,014) 134,625 (3.2)% Months Ended Net $ $ Revenues, $ 505,281 $ (4,239) $ 18,593 7,230 526,865 1.4% Year Ended Management defines "organic growth" as revenue changes excluding the impact of foreign currency exchange rate fluctuations and acquisitions made during the periods presented and presents this non-GAAP financial measure to exclude (6) the effect of these items that are not completely within management's control, such as foreign currency exchange rate fluctuations, or do not reflect the company's ongoing core operations or underlying growth, such as acquisitions. Media and Investor Contact: Sean O'Brien (404) 262-8462 firstname.lastname@example.org (Logo: http://photos.prnewswire.com/prnh/20131203/CL27071LOGO ) SOURCE PGi Website: http://www.pgi.com
PGi Reports Fourth Quarter and Fiscal Year 2013 Results: SaaS Products Up Nearly 75% in 2013, Comprising 6% of Total Revenues;
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