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NORCROSS, Ga., Mar 18, 2008 (BUSINESS WIRE) -- EasyLink Services International Corporation ("EasyLink" or "Company") (NasdaqCM: ESIC, www.easylink.com), a global provider of comprehensive messaging services and e-commerce solutions, reports its financial results for the second quarter fiscal 2008 ended January 31, 2008. Based on the Company's year-to-date results, it is increasing its guidance for fiscal year 2008, and expects adjusted EBITDA to range between $22 million and $24 million, an increase from its previous expectations of $17 million to $19 million.
"We are very pleased with this quarter's results, which exceeded our expectations," says Thomas J. Stallings, CEO of EasyLink. "While the timing of the acquisition of EasyLink Services Corporation in relation to our reporting periods makes it difficult to analyze quarter-over-quarter comparisons and the size of the acquisition overwhelms year-over-year comparisons, this has been the Company's strongest financial and operational quarter ever reported. Our effectiveness in reducing operating costs and our investments in sales and marketing have enabled us to stabilize recurring revenue and position the Company for organic growth. These results illustrate the Company's success integrating the acquired business, while continuing to deliver superior service and solutions to our customers."
The Company acquired EasyLink Services Corporation on August 20, 2007, and the Company's second quarter results reflect the first full reporting quarter post-merger. The Company does not believe that these results are indicative of future quarter results as this quarter includes certain expenses related to merger accounting and the continuing amortization of $22.5 million in non-cash interest expense over the life of the underlying convertible notes.
Highlights for the second quarter and six-months ended January 31, 2008 are as follows:
--Total revenue for the second quarter was $23.65 million with a gross
profit margin of 70.1%. Total revenue for the six-month period was
$44.64 million with a gross profit margin of 70.7%.
--Revenue for the second quarter from On Demand Messaging, which
includes faxing, production messaging, document capturing, and
management and e-mail services, was $11.24 million, representing
47.5% of total consolidated revenue and a 66.5% gross margin.
Revenue for the six-month period from the On Demand Messaging
segment was $20.71 million, representing 46.4% of total
consolidated revenue and a 67.2% gross margin.
--Revenue for the second quarter from Supply Chain Messaging, which
includes electronic data interchange (EDI) products and services
and telex, was $12.41 million, representing 52.5% of total
consolidated revenue and a 73.7% gross margin.
Revenue for the six-month period from the Supply Chain Messaging
segment was approximately $23.93 million, representing 53.6% of
total consolidated revenue and a 73.9% gross margin.
--Net income for the second quarter was $3.27 million or $0.13 per
basic share and $0.10 per diluted share. Net income for the six-
month period was $1.26 million or $0.05 per basic share and $0.04
per diluted share.
--Adjusted EBITDA for the second quarter was $7.76 million and $12.58
million for the six-month period. EasyLink intends to focus on
Adjusted EBITDA (EBITDA that includes non-cash compensation
expense) as a measure of the Company's performance, which it
believes serves as a better measure of the Company's performance
than net income, because it excludes ongoing non-cash charges.
EasyLink provides adjusted EBITDA in this press release as additional information regarding its operating results. This measure is not in accordance with, or an alternative for, generally accepted accounting principles (GAAP), and may be different from non-GAAP EBITDA measures used by other companies. EasyLink believes that this presentation of adjusted EBITDA facilitates investors' understanding of its historical operating trends, because it provides an important supplemental measurement in evaluating the operating results of our business. This release should be read in conjunction with the Company's Form 8-K earnings release filed with the Securities and Exchange Commission for the quarter ended January 31, 2008.
Investor Conference Call - Tuesday, March 18, 2008
The Company plans to hold a conference call on Tuesday, March 18, 2008 at 10:00 a.m. EDT to discuss its second quarter fiscal year 2008 results in detail.
The Company invites all those interested in hearing management's discussion to join the call by dialing 877-548-7913 (U.S. and Canada) or 719-325-4858 (International).
A live replay of the call will also be available on the Company's website, www.easylink.com, for 45 days.
Forward-Looking and Cautionary Statements
Except for the historical information and discussion contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those indicated by such forward-looking statements. These and other risk factors are set forth under the caption "Risk Factors" in the Company's Annual Report on Form 10-K, the Company's quarterly reports on Form 10-Q and the Company's other filings with the U.S. Securities and Exchange Commission. These filings are available on a website maintained by the Securities and Exchange Commission at www.sec.gov. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein as a result of new information, future events or otherwise.
About EasyLink Services International Corporation
EasyLink Services International Corporation (EasyLink) (NasdaqCM: ESIC), headquartered in Norcross, GA, is uniquely positioned to deliver a variety of messaging services that range from simple web-based fax delivery for small businesses to sophisticated fax hosting, tailored corporate e-mail messaging, EDI business-to-business exchanges and specialized telex protocol transmissions for marine and finance industries. With over two decades of servicing customers around the globe, EasyLink has established a proven track record for providing effective, reliable and secure communications. For more information on EasyLink, visit www.easylink.com.
EASYLINK SERVICES INTERNATIONAL CORPORATION
Condensed Consolidated Statements of Income (unaudited)
(in thousands, except for share and per share amounts)
Three Months Ended Six Months Ended
January 31, January 31,
------------------------ -------------------------
2008 2007 2008 2007
------------ ----------- ------------ ------------
Service revenue $23,650,804 $5,302,468 $44,636,671 $11,110,196
------------ ----------- ------------ ------------
Cost of services 7,039,413 1,209,558 13,044,315 2,569,625
------------ ----------- ------------ ------------
Gross Profit 16,611,391 4,092,910 31,592,356 8,540,571
Operating expenses:
Product
development and
enhancement 1,839,541 585,697 3,872,222 1,302,341
Selling and
marketing 2,927,111 369,359 5,309,729 889,316
General and
administrative 7,350,389 2,480,435 14,551,496 5,088,476
------------ ----------- ------------ ------------
Operating income 4,494,350 657,419 7,858,909 1,260,438
Other income
(expense):
Interest and
investment
income 278,581 81,293 432,676 163,686
Interest expense (3,154,738) (19,687) (8,158,306) (40,274)
Equity in Losses
in Investment -- -- (930,269) --
Foreign exchange
gain 586,112 -- 785,922 --
Other income
(expense) 46,680 1,044 78,150 (21,576)
------------ ----------- ------------ ------------
Income before
income taxes 2,250,985 720,069 67,082 1,362,274
Provision (benefit)
for income taxes,
current (1,021,999) 16,663 (1,194,139) 84,270
------------ ----------- ------------ ------------
Net income 3,272,984 703,406 1,261,221 1,278,004
Dividends on
preferred stock (50,365) (83,836) (100,776) (184,658)
Extinguishment of
dividends on
retired preferred
stock -- 200,000 -- 200,000
------------ ----------- ------------ ------------
Income attributable
to common
stockholders $ 3,222,619 $ 819,570 $ 1,160,445 $ 1,293,346
============ =========== ============ ============
Basic income per
common share $ 0.13 $ 0.04 $ 0.05 $ 0.06
============ =========== ============ ============
Diluted income per
common share $ 0.10 $ 0.03 $ 0.04 $ 0.05
============ =========== ============ ============
Anti-dilutive stock
options, warrants,
and series C
preferred stock
outstanding 6,332,187 1,710,399 29,293,563 1,710,399
============ =========== ============ ============
Weighted average
number of common
shares outstanding
- basic 24,337,515 22,740,594 24,178,723 22,728,530
============ =========== ============ ============
Weighted average
number of common
shares outstanding
- diluted 49,009,606 24,963,417 25,892,557 25,066,145
============ =========== ============ ============
EASYLINK SERVICES INTERNATIONAL CORPORATION
Condensed Consolidated Balance Sheets
(in thousands; unaudited for January 31, 2008)
January July 31,
31,
2008 2007
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 21,063 $ 5,444
Accounts receivable, net of allowance for doubtful
accounts and allowance for sales returns and
allowances 14,175 3,479
Prepaid expenses and other current assets 4,550 603
--------- ---------
Total current assets 39,788 9,526
Property and equipment, net 8,484 944
Goodwill 46,175 6,293
Other intangible assets, net 30,499 3,737
Investments 1,890 13,223
Restricted cash 417 434
Deferred acquisition costs - 1,039
Other assets 2,212 222
--------- ---------
Total assets $129,465 $ 35,418
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,132 $ 615
Current portion of long term debt - 10,000
Accrued expenses 10,437 1,153
Deferred revenue 800 227
Other current liabilities 1,077 574
--------- ---------
Total current liabilities 17,446 12,569
Long term debt 52,349 -
Deferred tax liability 16,914 -
Other liabilities 1,248 709
--------- ---------
Total liabilities 87,957 13,278
--------- ---------
Stockholders' Equity:
Preferred stock (a) (a)
Common Stock 244 233
Additional paid-in capital 121,173 101,861
Accumulated other comprehensive loss (1,131) -
Accumulated deficit (78,778) (79,954)
--------- ---------
Total stockholders' equity $ 41,508 $ 22,140
========= =========
Total liabilities and stockholders' equity $129,465 $ 35,418
========= =========
(a) less than 1,000
EASYLINK SERVICES INTERNATIONAL CORPORATION
Calculation of Adjusted Earnings before Interest, Taxes, Depreciation
and Amortization (unaudited, includes non-cash compensation)
(in thousands)
Three Months Six Months
Ended Ended
January 31, January 31,
--------------- ---------------
2008 2007 2008 2007
-------- ------ -------- ------
Net Income $ 3,273 $ 703 $ 1,261 $1,278
Interest 3,155 20 8,158 40
Taxes (1,022) 17 (1,194) 84
Depreciation and amortization 2,236 500 4,126 993
Non-cash compensation 118 214 231 494
-------- ------ -------- ------
Adjusted EBITDA $ 7,760 $1,454 $12,582 $2,889
======== ====== ======== ======
SOURCE: EasyLink Services International Corporation
The Investor Relations Group 212-825-3210 Investor Relations: Michael Crawford: mcrawford@investorrelationsgroup.com Emily Hanan: ehanan@investorrelationsgroup.com Brett Foley: bfoley@investorrelationsgroup.com or Media Relations: Susan Morgenbesser: smorgenbesser@investorrelationsgroup.com
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