ATN International(ATNI) - 2023 Q1 - Quarterly Report

PART I Item 1. Unaudited Condensed Consolidated Financial Statements Unaudited Q1 2023 financials show revenue growth to $185.8 million, but a net loss of $7.1 million due to higher expenses Condensed Consolidated Balance Sheets As of March 31, 2023, total assets slightly decreased to $1.70 billion, while total liabilities increased to $942.3 million and equity declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $1,700,015 | $1,707,869 | | Cash and cash equivalents | $56,016 | $54,660 | | Net fixed assets | $1,056,363 | $1,055,954 | | Total Liabilities | $942,266 | $938,571 | | Long-term debt, including current portion | $464,681 | $421,900 | | Total Equity | $664,526 | $676,829 | Condensed Consolidated Statements of Operations Q1 2023 revenue grew 8.0% to $185.8 million, but net loss widened to $7.1 million due to higher operating and interest expenses Q1 2023 vs. Q1 2022 Statement of Operations (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Total Revenue | $185,774 | $172,019 | | Income from Operations | $636 | $108 | | Interest Expense | $(8,807) | $(3,363) | | Net Loss | $(7,055) | $(1,957) | | Net Loss Attributable to ATN Stockholders | $(5,885) | $(948) | | Diluted Net Loss Per Share | $(0.44) | $(0.13) | | Dividends Per Share | $0.21 | $0.17 | - The company recorded a $2.9 million restructuring expense in Q1 2023, which was not present in the prior-year period[12] Condensed Consolidated Statements of Cash Flows Q1 2023 operating cash flow improved to $16.0 million, while investing activities used $52.8 million and financing provided $38.0 million Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $16,012 | $11,388 | | Net cash used in investing activities | $(52,762) | $(34,468) | | Net cash provided by financing activities | $37,999 | $19,228 | | Net change in cash | $1,249 | $(3,852) | - Capital expenditures increased to $50.6 million in Q1 2023 from $34.2 million in Q1 2022[21] Notes to Unaudited Condensed Consolidated Financial Statements Notes detail business segments, the Sacred Wind acquisition, upcoming debt maturity, government program reliance, and a new Verizon agreement - The company operates through two segments: International Telecom (Bermuda, Cayman Islands, Guyana, US Virgin Islands) and US Telecom (Alaska and the western United States)[30] - On November 7, 2022, the company acquired Sacred Wind Enterprises for $44.6 million, with purchase price allocation finalized in Q1 2023[65] - Subsequent to quarter end, on May 10, 2023, Commnet signed a seven-year Carrier Managed Services Master Agreement with Verizon, estimated at approximately $200 million over the initial term[147][149] - The company's 2019 CoBank Credit Facility, with $122.0 million outstanding, matures on April 10, 2024, with refinancing actively pursued for 2023[32][34] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2023 revenue growth driven by segment performance and acquisitions, increased net loss due to higher expenses, and critical debt refinancing needs Results of Operations Q1 2023 total revenue increased 8.0% to $185.8 million, driven by both International and US Telecom segments, despite minimal operating income Revenue by Segment (in thousands) | Segment | Q1 2023 Revenue | Q1 2022 Revenue | % Change | | :--- | :--- | :--- | :--- | | International Telecom | $90,408 | $86,787 | 4.1% | | US Telecom | $95,367 | $85,232 | 12.0% | | Total Revenue | $185,774 | $172,019 | 8.0% | - Fixed revenue increased by 12.7% to $117.8 million, driven by growth in Alaska and the Sacred Wind acquisition[187][188] - A $2.9 million restructuring charge was recorded in Q1 2023 related to decommissioning cell sites in the US Telecom segment[212] - Interest expense more than doubled to $8.8 million from $3.4 million year-over-year due to increased borrowings and higher interest rates[218] Liquidity and Capital Resources As of March 31, 2023, the company had $61.0 million cash and $464.7 million debt, with a critical CoBank Credit Facility refinancing due April 2024 - The 2019 CoBank Credit Facility, with $122.0 million outstanding, matures in April 2024, creating a significant refinancing need[266] - Management is actively pursuing debt financing options to extend the maturity, expecting completion during 2023[266] - Full-year 2023 capital expenditures are projected to be between $160 million and $170 million, net of reimbursable amounts[234] - The company repurchased $1.4 million of its common stock in Q1 2023, with $18.0 million remaining authorized for future repurchases[238] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are foreign currency fluctuations, mainly from Guyana operations, and interest rate sensitivity on its $372.6 million variable-rate debt - The company's main foreign currency exposure is to the Guyana Dollar[272] - As of March 31, 2023, $372.6 million of variable-rate debt was outstanding; a 100-basis-point change in interest rates would alter annual interest expense by $3.7 million[275] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of March 31, 2023, the company's disclosure controls and procedures were effective[276] - No material changes in internal control over financial reporting were identified during the quarter[277] PART II—OTHER INFORMATION Item 1. Legal Proceedings Legal proceedings, detailed in Note 14, primarily involve GTT in Guyana and Alaska Communications, with $15.3 million accrued for potential liabilities - For details on legal proceedings, the report directs readers to Note 14 of the Unaudited Condensed Consolidated Financial Statements[278] - As of March 31, 2023, the company has accrued $15.3 million for various probable claims, legal actions, and regulatory proceedings[144] Item 1A. Risk Factors A key risk factor is the ability to refinance the 2019 CoBank Credit Facility, maturing April 2024 with $122.0 million outstanding - A significant risk is the maturity of the 2019 CoBank Credit Facility on April 10, 2024, with $122.0 million outstanding as of March 31, 2023[282] - Inability to refinance this debt on favorable terms could adversely impact operations or financial results[282] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2023, the company repurchased 71,563 shares of common stock, with $18.0 million remaining authorized under the 2016 Repurchase Plan Share Repurchases in Q1 2023 | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Plan | | :--- | :--- | :--- | :--- | | Jan 2023 | — | $— | — | | Feb 2023 | — | $— | — | | Mar 2023 | 71,563 | $39.69 | 35,656 | - As of March 31, 2023, $18.0 million remains authorized for share repurchases under the 2016 Repurchase Plan[283] Item 5. Other Information A significant subsequent event is Commnet Wireless's seven-year Carrier Managed Services Master Agreement with Verizon, valued at approximately $200 million - On May 10, 2023, subsidiary Commnet entered into a Carrier Managed Services Master Agreement with Verizon Wireless[286] - The agreement has an initial seven-year term and is expected to generate approximately $200 million in total payments from Verizon[287][288] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - The report includes standard exhibits such as Sarbanes-Oxley certifications (31.1, 31.2, 32.1, 32.2) and XBRL data files[291]