Global Traffic Network
Global Traffic Network, Inc. Reports Fiscal Third Quarter 2011 Operating Results
Friday 13 May 2011
Quarterly Revenue Increases 11% to $26.8 million Year to Date Adjusted Operating Income Up 91% NEW YORK--(BUSINESS WIRE)-- reports to radio and television stations outside the United States, today announced its results for the fiscal third quarter ended March 31, 2011. The Company's revenue for the quarter ended March 31, 2011 was $26.8 million, an increase of 11% from $24.1 million reported in the third quarter of fiscal 2010. Revenue from the Company's Australian, Canadian and United Kingdom operations were up 7%, 11% and 19%, respectively, from the fiscal third quarter of 2010. When measured in local currencies, Canadian and United Kingdom revenues increased 6% and 16%, respectively compared to the prior year quarter while Australian revenues declined 4%. Consolidated revenue for third fiscal quarter 2010 was very strong, up 93% from the previous fiscal year, making for a difficult comp in the current year quarter. Adjusted Operating Income decreased from $2.7 million for the fiscal third quarter ended March 31, 2010 to $1.9 million for the quarter ended March 31, 2011. The Company defines Adjusted Operating Income (Loss) as net operating income (loss) plus depreciation and amortization expense. The decrease mainly pertains to the Company's Australia operations which suffered a decrease in revenues in local currency, which when combined with the Company's primarily fixed cost business model led to a decrease in Adjusting Operating Income despite the consolidated revenue increase. Adjusted Operating Income includes the impact of non-cash compensation from the granting of stock options and restricted stock which was $0.4 million for the current quarter compared to $0.3 million for the previous year quarter. The increase in third quarter fiscal 2010 Adjusted Operating Income had been one of the largest in Company history, increasing from a significant Adjusted Operating Loss for the fiscal quarter ended March 31, 2009. Net loss for the third quarter of fiscal 2011 was $0.2 million compared to net income of $0.5 million for the same quarter a year ago. Included in the United Kingdom results were $0.7 million of amortization expense related to the intangibles of the Company's acquisition of Unique Broadcasting in March 2009. The Company's revenue for the nine months ended March 31, 2011 was $83.9 million, an increase of 20% from $70.1 million reported for the first nine months of fiscal 2010. Revenue from the Company's Australian, Canadian and United Kingdom operations were up 18%, 62% and 11%, respectively, from the nine month period ended March 31, 2010. When measured in local currencies, Australian, Canadian and United Kingdom revenues increased 8%, 55% and 13%, respectively compared to the prior year nine month period. Adjusted Operating Income increased $6.0 million to $12.6 million for the nine month period ended March 31, 2011 compared to $6.6 million for the comparable period ended March 31, 2010. Adjusted Operating Income includes the impact of non-cash compensation from the granting of stock options and restricted stock which was $1.0 million for the current period compared to $0.9 million for the year ago period. Net income for the first nine months of fiscal 2011 was $4.9 million compared to net income of $0.3 million in the year ago period. In addition to the continued (and increased) profitability of the Australian operations, the Company's United Kingdom operations attained profitability while the Company's Canadian operations significantly reduced their net loss compared to the nine months ended March 31, 2010. Included in the United Kingdom current results were $2.0 million of amortization expense related to the intangibles of the Company's acquisition of Unique Broadcasting in March 2009. Commenting on the results, William L. Yde III, Chairman, Chief Executive Officer and President of Global Traffic Network, said, "We believe the decrease in Adjusted Operating Income this quarter is a temporary pause in our continued growth. Over the previous five quarters our trailing twelve month Adjusted Operating Income grew from $2.3 million to $15.9 million. For the nine month period ended March 31, our Adjusted Operating Income has almost doubled to $12.6 million from $6.6 million last year. Looking to the current quarter, we believe that the last year comparable is not as challenging as was third quarter 2010. We are off to a good start as revenue for April was strong, as all of our markets were up both in U.S. dollars and their local currencies. Canada's bookings have already exceeded last quarter and the previous year finish so we expect a nice increase out of this market and anticipate Adjusted Operating Income being positive for the quarter. In addition, foreign currency exchange rates continue to have a positive impact on our consolidated results and based on the exchange rates to date appear poised to be a material benefit in the fourth quarter of fiscal 2011 as well." Mr. Yde continued, "Global Alert Network, our personalized alerting product for mobile phones, has added a significant number of subscribers since our launch in February 2011. We now have in excess of 80 thousand users and had over 700 thousand traffic and weather alert messages received by these subscribers in the month of April alone. We are in the process of attempting to secure charter advertisers for the service and expect to begin to generate revenue shortly." Mr. Yde concluded, "We anticipate solid growth this quarter and a strong finish to the fiscal year. Our Company continues to generate strong free cash flow and maintain a rock solid balance sheet which has no debt and almost $2.00 per share in cash. We continue to be well positioned in the advertising market place, with no significant direct competitors, an extremely effective product and a seasoned, experienced sales staff." Fourth Fiscal Quarter 2011 Outlook To date, for the Company's fiscal fourth quarter ending June 30, 2011, revenue reflected in the Company's internal sales reports is higher compared to the fiscal fourth quarter ended June 30, 2010 at the same date, primarily due to a weakening of the U.S. dollar. The impact of a weaker U.S. dollar, all other things being equal, is to increase the reported revenues and expenses when local currency financial statements are translated into financial statements reported in U.S. dollars compared to a neutral exchange rate. Should foreign exchange rates and revenues from the Company's consolidated operations end fiscal fourth quarter 2011 consistent with the exchange rates to date and current sales pacings, the Company anticipates revenues, Adjusted Operating Income and net income will exceed the fiscal fourth quarter ended June 30, 2010. However, a significant portion of our anticipated revenue has not yet been booked and softness in May and/or June's results could cause our actual performance to be less than anticipated. Conference Call Global Traffic Network, Inc. will host a conference call at 8:30 a.m. EDT on Friday, May 13, 2011, to discuss its fiscal third quarter 2011 results, as well as other relevant matters. To listen to the call, dial (877) 303-9131 (domestic), or (408) 337-0141 (international), and enter the pass code 58181039. The call will also be available live on the Internet at www.globaltrafficnetwork.com access the replay, please call (800) 642-1687 (domestic) or (706) 645-9291 (international) and enter the following code: 58181039. About Global Traffic Network Global Traffic Network, Inc. (Nasdaq: GNET) is a leading provider of custom traffic and news reports to radio and television stations outside the U.S. The Company operates the largest traffic and news network in Australia, operates traffic networks in eight Canadian markets and the largest national radio traffic network across the United Kingdom. In exchange for providing custom traffic and news reports, television and radio stations provide Global Traffic Network with commercial airtime inventory that the Company sells to advertisers. As a result, radio and television stations incur no out-of-pocket costs when contracting to use Global Traffic Network's services. For more information, visit the Company's website at This press release contains statements that constitute forward-looking statements. These statements reflect the Company's current views with respect to future events. These forward-looking statements involve known and unknown risks, uncertainties and other factors, including those discussed under the heading "Risk Factors" and elsewhere in the Company's annual report 10-K, which may cause the actual results, performance or achievements to be materially different from any future results, performances or achievements anticipated or implied by these forward-looking statements. These statements can be recognized by the use of words such as "anticipate," "may," "will," "intend," " should," "could," "can," "would," "expect," "believe," "estimate," " predict," "potential," "plan," "is designed to," "target" or the negative of these terms, and similar expressions. The Company does not undertake to revise or update any forward-looking statements to reflect future events or circumstances. Currency Exchange Rates for Income Statement Information Three Months Ending March 31, 2011 Three Months Ending March 31, 2010 Difference Australia 1.0056 0.9039 +11.3% Canada 1.0141 0.9606 + 5.6% United Kingdom 1.6028 1.5614 + 2.7% SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION Global Traffic Network, Inc. defines Adjusted Operating Income (Loss) as net operating income (loss) adjusted to exclude depreciation and amortization expense. The Company uses Adjusted Operating Income (Loss), among other things, to evaluate its operating performance. The Company believes the presentation of this measure is relevant and useful for investors because it helps improve their ability to understand the Company's operating performance and makes it easier to compare the Company's results with other companies that have different financing and capital structures or tax rates. In addition, the Company believes this measure is among the measures used by investors, analysts and peers in the media industry for purposes of evaluation and comparing its operating performance to other companies. Adjusted Operating Income (Loss) is not a measure of performance calculated in accordance with generally accepted accounting principles ("GAAP") and it should not be considered in isolation of, or as a substitute for, net operating income (loss) as an indicator of operating performance. Because Adjusted Operating Income (Loss) excludes certain financial information compared with net operating income (loss), the most directly comparable GAAP financial measure, users of this financial information should consider the types of events and transactions which are excluded. In addition, Adjusted Operating Income (Loss) may not be comparable to measures of adjusted operating income, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA, operating cash flow or similarly titled measures employed by other companies. Adjusted Operating Income (Loss) is not necessarily a measure of the Company's ability to fund its cash needs. The following presents the reconciliation of net operating income to Adjusted Operating Income for the three and nine month periods ended March 31, 2011 and 2010. Three Months Ended Nine Months Ended March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (In thousands) (In thousands) (In thousands) (In thousands) Net operating income $ 398 $ 1,365 $ 8,182 $ 2,686 Add back: Depreciation and amortization expense 1,509 1,353 4,422 3,910 Adjusted Operating Income $ 1,907 $ 2,718 $ 12,604 $ 6,596 Global Traffic Network, Inc. Income Statement Detail (Unaudited) (In thousands) Three Months Ended March 31, 2011 2011 2011 2011 2011 2011 Australia Canada UK Alert* Corporate Total Revenues $ 15,199 $ 3,010 $ 8,579 $ - $ - $ 26,788 Operating expenses Traffic 6,094 2,681 6,285 274 - 15,334 News 2,759 - 496 - - 3,255 TV 286 - - - - 286 Selling, G&A 2,775 950 998 43 - 4,766 Corporate overhead 460 - 90 - 332 882 Non-cash compensation - - - - 358 358 Depreciation/amortization 266 515 728 - - 1,509 Net operating income (loss) 2,559 (1,136 ) (18 ) (317 ) (690 ) 398 Interest expense - - - - - - Other (income) (364 ) - (4 ) - - (368 ) Other expense - 21 - - 11 32 Net income (loss) before taxes 2,923 (1,157 ) (14 ) (317 ) (701 ) 734 Income tax expense (benefit) 888 - 25 - 9 922 Net income (loss) $ 2,035 $ (1,157 ) $ (39 ) $ (317 ) $ (710 ) $ (188 ) 2010 2010 2010 2010 2010 2010 Australia Canada UK Alert* Corporate Total Revenues $ 14,210 $ 2,678 $ 7,225 $ - $ - $ 24,113 Operating expenses Traffic 5,223 2,437 5,337 99 - 13,096 News 2,262 - 404 - - 2,666 TV 236 - - - - 236 Selling, G&A 2,519 870 766 9 - 4,164 Corporate overhead 411 - - - 506 917 Non-cash compensation - - - - 316 316 Depreciation/amortization 251 370 707 25 - 1,353 Net operating income (loss) 3,308 (999 ) 11 (133 ) (822 ) 1,365 Interest expense - - - - - - Other (income) (200 ) - (47 ) - 1 (246 ) Other expense - 2 - - - 2 Net income (loss) before taxes 3,508 (1,001 ) 58 (133 ) (823 ) 1,609 Income tax expense (benefit) 1,050 - 61 - 15 1,126 Net income (loss) $ 2,458 $ (1,001 ) $ (3 ) $ (133 ) $ (838 ) $ 483 *Global Alert Network, Inc. (formerly Mobile Traffic Network, Inc.) Global Traffic Network, Inc. Income Statement Detail (Unaudited) (In thousands) Nine Months Ended March 31, 2011 2011 2011 2011 2011 2011 Australia Canada UK Alert* Corporate Total Revenues $ 49,717 $ 10,494 $ 23,691 $ - $ - $ 83,902 Operating expenses Traffic 17,444 7,720 17,082 631 - 42,877 News 8,023 - 1,519 - - 9,542 TV 777 - - - - 777 Selling, G&A 8,820 3,003 2,596 80 - 14,499 Corporate overhead 1,313 - 90 - 1,167 2,570 Non-cash compensation - - - - 1,033 1,033 Depreciation/amortization 799 1,474 2,148 1 - 4,422 Net operating income (loss) 12,541 (1,703 ) 256 (712 ) (2,200 ) 8,182 Interest expense - - - - - - Other (income) (902 ) (4 ) (10 ) - - (916 ) Other expense - 27 - - 12 39 Net income (loss) before taxes 13,443 (1,726 ) 266 (712 ) (2,212 ) 9,059 Income tax expense 4,048 - 90 - 25 4,163 Net income (loss) $ 9,395 $ (1,726 ) $ 176 $ (712 ) $ (2,237 ) $ 4,896 2010 2010 2010 2010 2010 2010 Australia Canada UK Alert* Corporate Total Revenues $ 42,227 $ 6,487 $ 21,349 $ 31 $ - $ 70,094 Operating expenses Traffic 14,858 7,114 16,466 401 - 38,839 News 6,777 - 1,369 - - 8,146 TV 700 - - - - 700 Selling, G&A 7,516 2,018 2,613 142 - 12,289 Corporate overhead 1,196 - - - 1,379 2,575 Non-cash compensation - - - - 949 949 Depreciation/amortization 750 903 2,179 78 - 3,910 Net operating income (loss) 10,430 (3,548 ) (1,278 ) (590 ) (2,328 ) 2,686 Interest expense 15 - - - - 15 Other (income) (513 ) (9 ) (131 ) - (101 ) (754 ) Other expense - 6 - 26 - 32 Net income (loss) before taxes 10,928 (3,545 ) (1,147 ) (616 ) (2,227 ) 3,393 Income tax expense (benefit) 3,291 - (184 ) - 15 3,122 Net income (loss) $ 7,637 $ (3,545 ) $ (963 ) $ (616 ) $ (2,242 ) $ 271 *Global Alert Network, Inc. (formerly Mobile Traffic Network, Inc.) GLOBAL TRAFFIC NETWORK, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands except share and per share amounts) Three Months Ended Nine Months Ended March 31 March 31 2011 2010 2011 2010 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues $ 26,788 $ 24,113 $ 83,902 $ 70,094 Operating expenses (exclusive of depreciation and amortization shown separately below) 18,875 15,998 53,196 47,685 Selling, general and administrative expenses 6,006 5,397 18,102 15,813 Depreciation and amortization expense 1,509 1,353 4,422 3,910 Net operating income 398 1,365 8,182 2,686 Interest expense — — — 15 Other (income) (including interest income of $367 and $200 for the three months ended March 31, 2011 and 2010 and interest income of $907 and $513 for the nine months ended March 31, 2011 and 2010) (368 ) (246 ) (916 ) (754 ) Other expense 32 2 39 32 Net income before income taxes 734 1,609 9,059 3,393 Income tax expense 922 1,126 4,163 3,122 Net (loss) income $ (188 ) $ 483 $ 4,896 $ 271 (Loss) income per common share: Basic $ (0.01 ) $ 0.03 $ 0.27 $ 0.01 Diluted $ (0.01 ) $ 0.03 $ 0.26 $ 0.01 Weighted average common shares outstanding: Basic 18,298,051 18,118,170 18,214,696 18,100,262 Diluted 18,298,051 18,139,989 18,607,610 18,109,126 GLOBAL TRAFFIC NETWORK, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) March 31, June 30, 2011 2010 (Unaudited) (Unaudited) ASSETS: Current Assets: Cash and cash equivalents $ 36,972 $ 19,564 Accounts receivable net of allowance for doubtful accounts of $140 and $69 at March 31, 2011 and June 30, 2010 22,579 18,790 Prepaids and other current assets 1,518 1,989 Deferred tax assets 354 239 Total current assets 61,423 40,582 Property and equipment, net 6,441 6,693 Intangibles 11,909 13,013 Goodwill 4,565 4,257 Deferred tax assets 182 129 Other assets 332 414 Total assets $ 84,852 $ 65,088 LIABILITIES AND SHAREHOLDERS' EQUITY: Current Liabilities: Accounts payable and accrued expenses $ 15,555 $ 11,709 Deferred revenue 645 810 Income taxes payable 1,800 1,306 Total current liabilities 18,000 13,825 Deferred tax liabilities 3,039 2,747 Other liabilities 464 349 Total liabilities 21,503 16,921 Preferred stock, $.001 par value; 10,000,000 authorized; 0 issued and outstanding as of March 31, 2011 and June 30, 2010 — — Common stock, $.001 par value; 100,000,000 shares authorized; 19,010,851 shares issued and outstanding as of March 31, 2011 and 18,409,834 shares issued and outstanding as of June 30, 2010 19 18 Additional paid in capital 54,149 51,391 Accumulated other comprehensive income 7,916 389 Retained earnings (accumulated deficit) 1,265 (3,631 ) At KCSA Strategic Communications Phil Carlson/Marybeth Csaby, 212-896-1233/1236 Total shareholders' equity 63,349 48,167 Total liabilities and shareholders' equity $ 84,852 $ 65,088 GLOBAL TRAFFIC NETWORK, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Nine Months Ended March 31, 2011 2010 (Unaudited) (Unaudited) Cash flows from operating activities: Net income $ 4,896 $ 271 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,422 3,910 Allowance for doubtful accounts 71 (54 ) Non-cash compensation expense 1,033 949 Change in deferred taxes 14 (211 ) Foreign currency translation income — (101 ) Loss on disposal or write down of assets 92 26 Changes in assets and liabilities (net of effects from purchase of controlled entity): Accounts receivable (788 ) (1,371 ) Prepaid and other current assets and other assets 790 14 Accounts payable and accrued expenses and other liabilities 1,872 1,031 Deferred revenue (298 ) (474 ) Income taxes payable 183 (782 ) Net cash provided by operating activities 12,287 3,208 Cash flows from investing activities: Purchase of property and equipment (1,723 ) (1,204 ) Acquisition of business — (3,488 ) Net cash used in investing activities (1,723 ) (4,692 ) Cash flows from financing activities: Proceeds from exercise of warrants 1,791 — Repayment of long term debt — (414 ) Net cash provided (used) in financing activities 1,791 (414 ) Effect of exchange rate changes on cash and cash equivalents 5,053 1,853 Net increase (decrease) in cash and cash equivalents 17,408 (45 ) Cash and cash equivalents at beginning of fiscal period 19,564 21,419 Cash and cash equivalents at end of fiscal period $ 36,972 $ 21,374 Supplemental disclosures of cash flow information: Cash paid during the fiscal period for: Interest $ — $ 15 Income taxes $ 3,990 $ 4,142 pcarlson@kcsa.com or At Global Traffic Network, Inc. Scott Cody, 212-896-1255 Chief Financial Officer, Chief Operating Officer & Treasurer scott.cody@globaltrafficnet.com Source: Global Traffic Network, Inc. News Provided by Acquire Media