Anterix(ATEX) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Consolidated Financial Statements Anterix's consolidated financial statements reflect a decrease in assets, increased net losses, and negative cash flows from operations and investing activities Consolidated Balance Sheets Total assets decreased to $255.9 million from $278.0 million, driven by reduced cash and declining equity Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2022 (Unaudited) | March 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $70,114 | $105,624 | | Intangible assets | $159,469 | $151,169 | | Total assets | $255,935 | $278,044 | | Liabilities & Equity | | | | Total current liabilities | $29,903 | $9,636 | | Total liabilities | $89,846 | $91,746 | | Total stockholders' equity | $166,089 | $186,298 | | Total liabilities and stockholders' equity | $255,935 | $278,044 | Consolidated Statements of Operations Net loss for the three months ended September 30, 2022, increased to $10.6 million due to higher operating expenses Consolidated Statements of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Six Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Spectrum revenues | $398 | $182 | $733 | $364 | | Operating expenses | $13,943 | $12,083 | $27,996 | $24,209 | | Gain from disposal of intangible assets, net | ($2,905) | ($10,230) | ($3,553) | ($10,230) | | Loss from operations | ($10,660) | ($1,707) | ($23,732) | ($13,669) | | Net loss | ($10,643) | ($1,777) | ($23,839) | ($13,787) | | Net loss per share (basic and diluted) | ($0.56) | ($0.10) | ($1.27) | ($0.77) | Consolidated Statements of Stockholders' Equity Stockholders' equity decreased to $166.1 million due to net loss and stock repurchases - For the six months ended September 30, 2022, total stockholders' equity decreased by approximately $20.2 million[20] - Key activities impacting equity included a $23.8 million net loss, $8.8 million in equity-based compensation, and $4.7 million for the retirement of common stock under the repurchase program[20] Consolidated Statements of Cash Flows Net cash used in operating, investing, and financing activities led to a $35.5 million decrease in cash Cash Flow Summary (in thousands) | Activity | Six Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($17,948) | ($12,592) | | Net cash used in investing activities | ($12,373) | ($12,075) | | Net cash (used in) provided by financing activities | ($5,189) | $7,996 | | Net change in cash and cash equivalents | ($35,510) | ($16,671) | | Cash and cash equivalents, beginning of period | $105,624 | $117,538 | | Cash and cash equivalents, end of period | $70,114 | $100,866 | Notes to Unaudited Consolidated Financial Statements The notes detail accounting policies, 900 MHz spectrum commercialization, and key lease agreements - The company is the largest holder of licensed spectrum in the 900 MHz band and is focused on leasing it to utility and critical infrastructure customers for private broadband networks following the FCC's Report and Order[28] - During the six months ended September 30, 2022, the company began recognizing revenue of $0.1 million from its long-term lease agreement with Evergy after delivering cleared spectrum for 45 counties[30] - On October 28, 2022, after the quarter ended, the company entered into a 20-year agreement with Xcel Energy for dedicated use of its 900 MHz spectrum across eight states[91] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses 900 MHz spectrum commercialization, increased revenues, rising expenses, and liquidity Results of Operations Spectrum revenues increased, operating expenses rose, and a reduced gain from asset disposal led to a higher loss Spectrum Revenues (in thousands) | Period | Q3 2022 | Q3 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Spectrum revenues | $398 | $182 | $216 | 119% | Operating Expenses (in thousands) | Period | Q3 2022 | Q3 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Operating expenses | $13,943 | $12,083 | $1,860 | 15% | - The increase in G&A expenses for Q3 2022 was primarily due to $1.6 million higher stock compensation expense and $0.6 million higher headcount and related costs[103] - The gain from disposal of intangible assets decreased to $2.9 million in Q3 2022 from $10.2 million in Q3 2021, as the company exchanged narrowband for broadband licenses in a different number of counties with varying cost bases[108][109][110] Liquidity and Capital Resources The company holds $70.1 million in cash, deemed sufficient for 12 months, and continues its share repurchase - The company holds $70.1 million in cash and cash equivalents as of September 30, 2022[117] - Net cash used in operating activities was $17.9 million for the six months ended September 30, 2022, compared to $12.6 million for the same period in 2021[120] - The company has a share repurchase program with $30.3 million remaining authorization as of September 30, 2022. For the six months ended, the company repurchased $4.7 million worth of stock[125][127] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate sensitivity on cash, deemed immaterial, with no foreign currency risk - The company's main market risk is interest rate changes affecting its cash and cash equivalents, but this risk is considered immaterial due to the short-term nature of the investments[129] - There is no foreign currency risk as all operations and transactions are denominated in U.S. dollars[129] Controls and Procedures Management concluded disclosure controls were effective as of September 30, 2022, with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[131] - No material changes to the company's internal control over financial reporting occurred during the quarter[132] PART II. OTHER INFORMATION Legal Proceedings The company is not involved in any material legal proceedings - The company is not involved in any material legal proceedings[135] Risk Factors No material changes have occurred to the risk factors disclosed in the 2022 Annual Report - No material changes have occurred to the risk factors disclosed in the 2022 Annual Report[136] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 54,450 shares, with $30.3 million remaining under the share repurchase program Issuer Purchases of Equity Securities (for the three months ended September 30, 2022) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Dollar Value Remaining for Purchase (in thousands) | | :--- | :--- | :--- | :--- | | July 2022 | — | — | $32,313 | | August 2022 | — | — | $32,313 | | September 2022 | 54,450 | $36.73 | $30,313 | | Total | 54,450 | $36.73 | $30,313 | - The Board authorized a share repurchase program of up to $50.0 million on September 29, 2021, valid through September 29, 2023[139] Defaults Upon Senior Securities No defaults upon senior securities were reported - None[140] Mine Safety Disclosures Mine safety disclosures are not applicable to the company's operations - Not applicable[140] Other Information No other material information was reported - None[141] Exhibits The report lists various exhibits filed with Form 10-Q, including corporate governance documents and certifications - Exhibits filed include the Amended and Restated Certificate of Incorporation, Bylaws, CEO/CFO certifications (Rule 13a-14, 15d-14, and Section 906), and Inline XBRL data files[142]