(Logo: http://photos.prnewswire.com/prnh/20110715/CG34837LOGO)
Financial and Operational Highlights
- Total revenue increased 37 percent to
$79.4 million for the quarter endedJune 30, 2013 versus the comparable prior year period, driven by a 54 percent increase in service revenue to$62.0 million - Segment profit for
Commercial Aviation –North America (CA-NA ) andBusiness Aviation (BA), on a combined basis, increased 82 percent to$13.2 million for the quarter endedJune 30, 2013 versus the comparable prior year period, driven by a 54 percent increase inCA-NA service revenue and a 55 percent increase in BA service revenue - Adjusted EBITDA decreased $0.4 million to $3.8 million for the quarter ended
June 30, 2013 versus the comparable prior year period, driven by continued investment in international expansion atCommercial Aviation – Rest of World (CA-ROW) - Aircraft online as of
June 30, 2013 included:- 1,982
CA-NA aircraft, up 27 percent versusJune 30, 2012 - 5,105 BA satellite aircraft, up 4 percent versus
June 30, 2012 - 1,684 BA air-to-ground (ATG) aircraft, up 44 percent versus
June 30, 2012
- 1,982
- Our next generation air-to-ground technology (ATG-4) has been installed on 312
CA-NA aircraft as ofJune 30, 2013
"We had a very strong second quarter with total revenue up 37 percent to
Second Quarter Operating Results
Total revenue increased to
Operating expenses increased to
Adjusted EBITDA decreased $0.4 million to $3.8 million for the quarter ended
Net loss attributable to common stock increased to
Net loss attributable to common stock per share was
Capital expenditures increased to
Segment Information
BA revenue increased 18 percent to
CA-ROW segment loss increased to
Business Outlook
The Company is providing full year 2013 guidance. For the full year ending
- Total revenue of
$305 million to $315 million CA-NA revenue of$188 million to $193 million - BA revenue of
$115 million to $120 million - CA-ROW revenue of approximately
$2 million
- Adjusted EBITDA of zero to negative
$6.0 million - Cash
CAPEX of$115 million to $135 million
Our full year 2013 Adjusted EBITDA guidance of zero to negative
Conference Call
The second quarter conference call will be held on
Non-GAAP Financial Measures
We publicly disclose certain non-GAAP financial measurements, including Adjusted EBITDA, Adjusted Net Loss, Adjusted Net Loss Per Share and Cash CAPEX as defined below under the heading "Definition of Non-GAAP Measures. Management uses Adjusted EBITDA and Cash CAPEX for business planning purposes, including managing our business against internally projected results of operations and measuring our performance and liquidity. Management prepares Adjusted Net Loss and Adjusted Net Loss Per Share for investors, securities analysts and other users of our financial statements to assist them in evaluating our performance under our current capital structure. These supplemental performance measures also provide another basis for comparing period to period results by excluding potential differences caused by non-operational and unusual or non-recurring items. These supplemental performance measurements may vary from and may not be comparable to similarly titled measures by other companies. Adjusted EBITDA, Adjusted Net Loss, Adjusted Net Loss Per Share and Cash CAPEX are not recognized measurements under accounting principles generally accepted in
Cautionary Note Regarding Forward-Looking Statements
Certain disclosures in this press release and related comments by our management include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements regarding our business outlook, industry, business strategy, plans, goals and expectations concerning our market position, international expansion, future operations, margins, profitability, future efficiencies, capital expenditures, liquidity and capital resources and other financial and operating information. When used in this discussion, the words "anticipate," "assume," "believe," "budget," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "future" and the negative of these or similar terms and phrases are intended to identify forward-looking statements in this press release.
Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following: the loss of, or failure to realize benefits from, agreements with our airline partners; any inability to timely and efficiently roll out our technology roadmap for any reason, including regulatory delays, or the failure by our airline partners to roll out equipment upgrades or new services or adopt new technologies in order to support increased network capacity demands; the loss of relationships with original equipment manufacturers or dealers; our ability to develop network capacity sufficient to accommodate growth in passenger demand; unfavorable economic conditions in the airline industry and economy as a whole; our ability to expand our domestic or international operations, including our ability to grow our business with current and potential future airline partners; an inability to compete effectively; our reliance on third-party satellite service providers and equipment and other suppliers, including single source providers and suppliers; our ability to successfully develop and monetize new products and services, including those that are currently being offered on a limited or trial basis or are in various stages of development; our ability to deliver new products and service on schedules consistent with our contractual commitments to customers; the effects, if any, on our business of recent events relating to
Additional information concerning these and other factors can be found under the caption "Risk Factors" in our final prospectus filed with the Securities and Exchange Commission on
Any one of these factors or a combination of these factors could materially affect our financial condition or future results of operations and could influence whether any forward-looking statements contained in this press release ultimately prove to be accurate. Our forward-looking statements are not guarantees of future performance, and you should not place undue reliance on them. All forward-looking statements speak only as of the date made and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
About
Back on the ground,
Gogo Inc. and Subsidiaries |
||||||||||||||
Unaudited Condensed Consolidated Statements of Operations |
||||||||||||||
(in thousands, except per share amounts) |
||||||||||||||
For the Three Months |
For the Six Months |
|||||||||||||
Ended June 30, |
Ended June 30, |
|||||||||||||
2013 |
2012 |
2013 |
2012 |
|||||||||||
Revenue: |
||||||||||||||
Service revenue |
$ |
62,000 |
$ |
40,249 |
$ |
116,935 |
$ |
76,664 |
||||||
Equipment revenue |
17,437 |
17,630 |
33,256 |
35,488 |
||||||||||
Total revenue |
79,437 |
57,879 |
150,191 |
112,152 |
||||||||||
Operating expenses: |
||||||||||||||
Cost of service revenue (exclusive of items shown below) |
31,135 |
19,237 |
57,105 |
37,065 |
||||||||||
Cost of equipment revenue (exclusive of items shown below) |
8,048 |
7,284 |
15,777 |
14,758 |
||||||||||
Engineering, design and development |
12,333 |
7,738 |
24,618 |
15,312 |
||||||||||
Sales and marketing |
7,060 |
6,950 |
13,690 |
12,740 |
||||||||||
General and administrative |
16,214 |
12,383 |
30,809 |
24,033 |
||||||||||
Depreciation and amortization |
13,709 |
9,162 |
27,554 |
17,427 |
||||||||||
Total operating expenses |
88,499 |
62,754 |
169,553 |
121,335 |
||||||||||
Operating loss |
(9,062) |
(4,875) |
(19,362) |
(9,183) |
||||||||||
Other (income) expense: |
||||||||||||||
Interest income |
(14) |
(15) |
(33) |
(25) |
||||||||||
Interest expense |
10,370 |
530 |
14,290 |
599 |
||||||||||
Fair value derivative adjustment |
36,305 |
(8,513) |
36,305 |
(9,640) |
||||||||||
Other income |
(1) |
- |
- |
- |
||||||||||
Total other (income) expense |
46,660 |
(7,998) |
50,562 |
(9,066) |
||||||||||
Income (loss) before incomes taxes |
(55,722) |
3,123 |
(69,924) |
(117) |
||||||||||
Income tax provision |
267 |
223 |
542 |
449 |
||||||||||
Net income (loss) |
(55,989) |
2,900 |
(70,466) |
(566) |
||||||||||
Class A and Class B senior convertible preferred stock return |
(13,994) |
(13,377) |
(29,277) |
(24,905) |
||||||||||
Accretion of preferred stock |
(2,595) |
(2,612) |
(5,285) |
(5,198) |
||||||||||
Net loss attributable to common stock |
$ |
(72,578) |
$ |
(13,089) |
$ |
(105,028) |
$ |
(30,669) |
||||||
Net loss attributable to common stock per share—basic and diluted |
$ |
(4.98) |
$ |
(1.93) |
$ |
(9.82) |
$ |
(4.51) |
||||||
Weighted average number of shares—basic and diluted |
14,585 |
6,798 |
10,694 |
6,798 |
||||||||||
Gogo Inc. and Subsidiaries |
||||||||||
Condensed Consolidated Balance Sheets |
||||||||||
(in thousands, except share and per share data) |
||||||||||
June 30, |
December 31, |
|||||||||
2013 |
2012 |
|||||||||
Assets |
(unaudited) |
|||||||||
Current assets: |
||||||||||
Cash and cash equivalents |
$ |
312,154 |
$ |
112,576 |
||||||
Restricted cash |
193 |
214 |
||||||||
Accounts receivable, net of allowances of $281 and $1,139, respectively |
25,466 |
24,253 |
||||||||
Inventories |
16,443 |
12,149 |
||||||||
Prepaid expenses and other current assets |
6,516 |
6,153 |
||||||||
Total current assets |
360,772 |
155,345 |
||||||||
Non-current assets: |
||||||||||
Property and equipment, net |
238,053 |
197,674 |
||||||||
Intangible assets, net |
67,080 |
58,147 |
||||||||
Goodwill |
3,669 |
620 |
||||||||
Long-term restricted cash |
1,390 |
640 |
||||||||
Debt issuance costs |
14,630 |
8,826 |
||||||||
Other non-current assets |
17,822 |
10,863 |
||||||||
Total non-current assets |
342,644 |
276,770 |
||||||||
Total assets |
$ |
703,416 |
$ |
432,115 |
||||||
Liabilities and Stockholders' equity (deficit) |
||||||||||
Current liabilities: |
||||||||||
Accounts payable |
$ |
17,609 |
$ |
16,691 |
||||||
Accrued liabilities |
53,231 |
45,952 |
||||||||
Deferred revenue |
8,577 |
6,663 |
||||||||
Deferred airborne lease incentives |
7,741 |
5,917 |
||||||||
Current portion of long-term debt and capital leases |
6,926 |
4,091 |
||||||||
Total current liabilities |
94,084 |
79,314 |
||||||||
Non-current liabilities: |
||||||||||
Deferred airborne lease incentives |
48,504 |
40,043 |
||||||||
Deferred rent |
3,933 |
4,020 |
||||||||
Deferred tax liabilities |
5,351 |
4,949 |
||||||||
Long-term debt |
238,979 |
131,450 |
||||||||
Asset retirement obligations |
4,631 |
2,637 |
||||||||
Other non-current liabilities |
1,103 |
1,101 |
||||||||
Total non-current liabilities |
302,501 |
184,200 |
||||||||
Total liabilities |
396,585 |
263,514 |
||||||||
Commitments and contingencies |
||||||||||
Redeemable preferred stock |
||||||||||
Class A senior convertible preferred stock |
- |
174,199 |
||||||||
Class B senior convertible preferred stock |
- |
285,035 |
||||||||
Junior convertible preferred stock |
- |
155,144 |
||||||||
Total preferred stock |
- |
614,378 |
||||||||
Stockholders' equity (deficit) |
||||||||||
Common stock |
8 |
- |
||||||||
Additional paid-in-capital |
866,960 |
9,110 |
||||||||
Accumulated other comprehensive loss |
(242) |
(20) |
||||||||
Accumulated deficit |
(559,895) |
(454,867) |
||||||||
Total stockholders' equity (deficit) |
306,831 |
(445,777) |
||||||||
Total liabilities and stockholders' equity (deficit) |
$ |
703,416 |
$ |
432,115 |
||||||
Gogo Inc. and Subsidiaries |
||||||||||||
Unaudited Condensed Consolidated Statements of Cash Flows |
||||||||||||
(in thousands) |
||||||||||||
For the Six Months |
||||||||||||
Ended June 30, |
||||||||||||
2013 |
2012 |
|||||||||||
Operating activities: |
||||||||||||
Net loss |
$ |
(70,466) |
$ |
(566) |
||||||||
Adjustments to reconcile net loss to cash provided by (used in) operating activities: |
||||||||||||
Depreciation and amortization |
27,554 |
17,427 |
||||||||||
Fair value derivative adjustment |
36,305 |
(9,640) |
||||||||||
Loss on asset disposals/abandonments |
49 |
505 |
||||||||||
Deferred income taxes |
402 |
402 |
||||||||||
Stock compensation expense |
1,783 |
1,695 |
||||||||||
Amortization of deferred financing costs |
1,171 |
40 |
||||||||||
Changes in operating assets and liabilities: |
||||||||||||
Accounts receivable |
(791) |
568 |
||||||||||
Inventories |
(4,294) |
2,023 |
||||||||||
Prepaid expenses and other current assets |
(216) |
189 |
||||||||||
Deposits on satellite services |
(4,774) |
- |
||||||||||
Other non-current assets |
341 |
(906) |
||||||||||
Accounts payable |
(801) |
(1,924) |
||||||||||
Accrued liabilities |
2,234 |
2,916 |
||||||||||
Deferred airborne lease incentives |
6,795 |
4,340 |
||||||||||
Deferred revenue |
1,914 |
1,972 |
||||||||||
Deferred rent |
(81) |
568 |
||||||||||
Other non-current liabilities |
196 |
344 |
||||||||||
Net cash provided by (used in) operating activities |
(2,679) |
19,953 |
||||||||||
Investing activities: |
||||||||||||
Proceeds from the sale of property and equipment |
220 |
20 |
||||||||||
Purchases of property and equipment |
(58,712) |
(24,625) |
||||||||||
Acquisition of intangible assets—capitalized software |
(7,397) |
(6,597) |
||||||||||
Acquisition of Airfone, includes $1.0 million in restricted cash at June 30, 2013 |
(9,344) |
- |
||||||||||
(Increase) decrease in investing restricted cash |
273 |
(250) |
||||||||||
Net cash used in investing activities |
(74,960) |
(31,452) |
||||||||||
Financing activities: |
||||||||||||
Proceeds from initial public offering, net of offering costs |
173,387 |
(2,691) |
||||||||||
Proceeds from credit facility |
113,000 |
135,000 |
||||||||||
Payment of debt, including capital leases |
(2,750) |
(313) |
||||||||||
Payment of debt issuance costs |
(6,975) |
(9,609) |
||||||||||
Other |
580 |
22 |
||||||||||
Net cash provided by financing activities |
277,242 |
122,409 |
||||||||||
Effect of exchange rate changes on cash |
(25) |
- |
||||||||||
Increase in cash and cash equivalents |
199,578 |
110,910 |
||||||||||
Cash and cash equivalents at beginning of period |
112,576 |
42,591 |
||||||||||
Cash and cash equivalents at end of period |
$ |
312,154 |
$ |
153,501 |
||||||||
Gogo Inc. and Subsidiaries |
||||||||||||||
Supplemental Information – Key Operating Metrics |
||||||||||||||
Commercial Aviation – North America |
||||||||||||||
For the Three Months |
For the Six Months |
|||||||||||||
Ended June 30, |
Ended June 30, |
|||||||||||||
2013 |
2012 |
2013 |
2012 |
|||||||||||
Aircraft online |
1,982 |
1,565 |
1,982 |
1,565 |
||||||||||
Average quarterly service revenue per aircraft online (ARPA) |
$ |
25,568 |
$ |
20,997 |
$ |
24,388 |
$ |
20,782 |
||||||
Gross passenger opportunity (GPO) (in thousands) |
77,186 |
65,460 |
142,210 |
120,167 |
||||||||||
Total average revenue per passenger opportunity (ARPP) |
$ |
0.64 |
$ |
0.49 |
$ |
0.65 |
$ |
0.51 |
||||||
Total average revenue per session (ARPS) |
$ |
10.38 |
$ |
9.03 |
$ |
10.34 |
$ |
9.18 |
||||||
Connectivity take rate |
5.9% |
5.3% |
6.0% |
5.4% |
||||||||||
• |
Aircraft online. We define aircraft online as the total number of commercial aircraft on which our ATG network equipment is installed and Gogo service has been made commercially available as of the last day of each period presented. |
• |
Average quarterly service revenue per aircraft online ("ARPA"). We define ARPA as the aggregate total service revenue for the quarter, divided by the number of aircraft online during such quarter (expressed as an average of the beginning and ending aircraft online for such quarter) with the year-to-date ARPA representing the simple average of the quarters in the year-to-date period. |
• |
Gross passenger opportunity ("GPO"). We define GPO as the estimated aggregate number of passengers who board commercial aircraft on which Gogo service has been made available for the period presented. We calculate passenger estimates by taking the maximum capacity of flights with Gogo service, which is calculated by multiplying the number of flights flown by Gogo-equipped aircraft, as published by Air Radio Inc. (ARINC), by the number of seats on those aircraft, and adjusting the product by a passenger load factor for each airline, which represents the percentage of seats on aircraft that are occupied by passengers. Load factors are provided to us by our airline partners and are based on historical data. |
• |
Total average revenue per passenger opportunity ("ARPP"). We define ARPP as revenue from Gogo Connectivity, Gogo Vision, Gogo Signature Services and other service revenue for the period, divided by GPO for the period. |
• |
Total average revenue per session ("ARPS"). We define ARPS as revenue from Gogo Connectivity divided by the total number of sessions during the period. A session, or a "use" of Gogo Connectivity, is defined as the use by a unique passenger of Gogo Connectivity on a flight segment. Multiple logins or purchases under the same user name during one flight segment count as only one session. |
• |
Connectivity take rate. We define connectivity take rate as the number of sessions during the period expressed as a percentage of GPO. Included in our connectivity take-rate calculation are sessions for which we did not receive revenue, including those provided pursuant to free promotional campaigns and, to a lesser extent, as a result of complimentary passes distributed by our customer service representatives or unforeseen technical issues. For the periods listed above, the number of sessions for which we did not receive revenue was less than 3 percent of the total number of sessions. |
Gogo Inc. and Subsidiaries |
||||||||||||||
Supplemental Information – Key Operating Metrics |
||||||||||||||
Business Aviation |
||||||||||||||
For the Three Months |
For the Six Months |
|||||||||||||
Ended June 30, |
Ended June 30, |
|||||||||||||
2013 |
2012 |
2013 |
2012 |
|||||||||||
Aircraft online (1) |
||||||||||||||
Satellite |
5,105 |
4,920 |
5,105 |
4,920 |
||||||||||
ATG |
1,684 |
1,166 |
1,684 |
1,166 |
||||||||||
Average monthly service revenue per aircraft online (1) |
||||||||||||||
Satellite |
$ |
154 |
$ |
132 |
$ |
153 |
$ |
135 |
||||||
ATG |
1,912 |
1,846 |
1,903 |
1,820 |
||||||||||
Units Shipped |
||||||||||||||
Satellite |
173 |
174 |
320 |
379 |
||||||||||
ATG |
201 |
182 |
372 |
363 |
||||||||||
Average equipment revenue per unit shipped (in thousands) |
||||||||||||||
Satellite |
$ |
36 |
$ |
41 |
$ |
38 |
$ |
41 |
||||||
ATG |
52 |
53 |
53 |
51 |
||||||||||
(1) |
Aircraft online and average monthly service revenue per aircraft online exclude the aircraft acquired from Airfone and the related revenue for the three and six month periods ended June 30, 2013, as we intend to wind down the Airfone business by the end of 2013. |
||
• |
Satellite aircraft online. We define satellite aircraft online as the total number of business aircraft on which we have satellite equipment in operation as of the last day of each period presented. |
||
• |
ATG aircraft online. We define ATG aircraft online as the total number of business aircraft on which we have ATG network equipment in operation as of the last day of each period presented. |
||
• |
Average monthly service revenue per satellite aircraft online. We define average monthly service revenue per satellite aircraft online as the aggregate satellite service revenue for the period, divided by the number of satellite aircraft online during the period (expressed as an average of the month end figures for each month in such period). |
||
• |
Average monthly service revenue per ATG aircraft online. We define average monthly service revenue per ATG aircraft online as the aggregate ATG service revenue for the period, divided by the number of ATG aircraft online during the period (expressed as an average of the month end figures for each month in such period). |
||
• |
Units shipped. We define units shipped as the number of satellite or ATG network equipment units, respectively, shipped during the period. |
||
• |
Average equipment revenue per satellite unit shipped. We define average equipment revenue per satellite unit shipped as the aggregate equipment revenue earned from all satellite shipments during the period, divided by the number of satellite units shipped. |
||
• |
Average equipment revenue per ATG unit shipped. We define average equipment revenue per ATG unit shipped as the aggregate equipment revenue from all ATG shipments during the period, divided by the number of ATG units shipped. |
Gogo Inc. and Subsidiaries |
|||||||||||||||
Supplemental Information – Segment Revenue and Segment Profit |
|||||||||||||||
(in thousands, Unaudited) |
|||||||||||||||
For the Three Months Ended |
|||||||||||||||
June 30, 2013 |
|||||||||||||||
CA-NA |
CA-ROW |
BA |
Total |
||||||||||||
Service revenue |
$ |
49,346 |
$ |
71 |
$ |
12,583 |
$ |
62,000 |
|||||||
Equipment revenue |
426 |
148 |
16,863 |
17,437 |
|||||||||||
Total revenue |
$ |
49,772 |
$ |
219 |
$ |
29,446 |
$ |
79,437 |
|||||||
Segment profit (loss) |
$ |
2,669 |
$ |
(9,372) |
$ |
10,491 |
$ |
3,788 |
|||||||
For the Three Months Ended |
|||||||||||||||
June 30, 2012 |
|||||||||||||||
CA-NA |
CA-ROW |
BA |
Total |
||||||||||||
Service revenue |
$ |
32,115 |
$ |
- |
$ |
8,134 |
$ |
40,249 |
|||||||
Equipment revenue |
412 |
480 |
16,738 |
17,630 |
|||||||||||
Total revenue |
$ |
32,527 |
$ |
480 |
$ |
24,872 |
$ |
57,879 |
|||||||
Segment profit (loss) |
$ |
(2,522) |
$ |
(3,038) |
$ |
9,740 |
$ |
4,180 |
|||||||
For the Six Months Ended |
|||||||||||||||
June 30, 2013 |
|||||||||||||||
CA-NA |
CA-ROW |
BA |
Total |
||||||||||||
Service revenue |
$ |
92,152 |
$ |
1,269 |
$ |
23,514 |
$ |
116,935 |
|||||||
Equipment revenue |
985 |
168 |
32,103 |
33,256 |
|||||||||||
Total revenue |
$ |
93,137 |
$ |
1,437 |
$ |
55,617 |
$ |
150,191 |
|||||||
Segment profit (loss) |
$ |
2,284 |
$ |
(15,592) |
$ |
19,947 |
$ |
6,639 |
|||||||
For the Six Months Ended |
|||||||||||||||
June 30, 2012 |
|||||||||||||||
CA-NA |
CA-ROW |
BA |
Total |
||||||||||||
Service revenue |
$ |
61,309 |
$ |
- |
$ |
15,355 |
$ |
76,664 |
|||||||
Equipment revenue |
839 |
480 |
34,169 |
35,488 |
|||||||||||
Total revenue |
$ |
62,148 |
$ |
480 |
$ |
49,524 |
$ |
112,152 |
|||||||
Segment profit (loss) |
$ |
(4,913) |
$ |
(5,598) |
$ |
18,744 |
$ |
8,233 |
|||||||
Gogo Inc. and Subsidiaries |
||||||||||||
For the Three Months |
For the Six Months |
|||||||||||
Ended June 30, |
Ended June 30, |
|||||||||||
2013 |
2012 |
2013 |
2012 |
|||||||||
Adjusted EBITDA: |
||||||||||||
Net loss attributable to common stock (GAAP) |
$ |
(72,578) |
$ |
(13,089) |
$ |
(105,028) |
$ |
(30,669) |
||||
Interest expense |
10,370 |
530 |
14,290 |
599 |
||||||||
Interest income |
(14) |
(15) |
(33) |
(25) |
||||||||
Income tax provision |
267 |
223 |
542 |
449 |
||||||||
Depreciation and amortization |
13,709 |
9,162 |
27,554 |
17,427 |
||||||||
EBITDA |
(48,246) |
(3,189) |
(62,675) |
(12,219) |
||||||||
Fair value derivative adjustments |
36,305 |
(8,513) |
36,305 |
(9,640) |
||||||||
Class A and Class B senior convertible preferred stock return |
13,994 |
13,377 |
29,277 |
24,905 |
||||||||
Accretion of preferred stock |
2,595 |
2,612 |
5,285 |
5,198 |
||||||||
Stock-based compensation expense |
905 |
846 |
1,783 |
1,695 |
||||||||
Amortization of deferred airborne lease incentives |
(1,764) |
(953) |
(3,336) |
(1,706) |
||||||||
Adjusted EBITDA |
$ |
3,789 |
$ |
4,180 |
$ |
6,639 |
$ |
8,233 |
||||
For the Three Months |
For the Six Months |
|||||||||||
Ended June 30, |
Ended June 30, |
|||||||||||
2013 |
2012 |
2013 |
2012 |
|||||||||
Adjusted Net Loss and Adjusted Net Loss Per Share: |
||||||||||||
Net loss attributable to common stock (GAAP) |
$ |
(72,578) |
$ |
(13,089) |
$ |
(105,028) |
$ |
(30,669) |
||||
Fair value derivate adjustments |
36,305 |
(8,513) |
36,305 |
(9,640) |
||||||||
Class A and Class B senior convertible preferred stock return |
13,994 |
13,377 |
29,277 |
24,905 |
||||||||
Accretion of preferred stock |
2,595 |
2,612 |
5,285 |
5,198 |
||||||||
Adjusted Net Loss |
$ |
(19,684) |
$ |
(5,613) |
$ |
(34,161) |
$ |
(10,206) |
||||
Basic and diluted weighted average shares outstanding (GAAP) |
14,585 |
6,798 |
10,694 |
6,798 |
||||||||
Adjustment of shares to our current capital structure |
69,512 |
77,299 |
73,403 |
77,299 |
||||||||
Adjusted shares outstanding |
84,097 |
84,097 |
84,097 |
84,097 |
||||||||
Adjusted Net Loss Per Share – basic and diluted |
$ |
(0.23) |
$ |
(0.07) |
$ |
(0.41) |
$ |
(0.12) |
||||
Cash CAPEX: |
||||||||||||
Consolidated capital expenditures (GAAP) |
$ |
(32,611) |
$ |
(17,483) |
$ |
(66,109) |
$ |
(31,222) |
||||
Change in deferred airborne lease incentives |
2,009 |
(187) |
6,795 |
4,340 |
||||||||
Amortization of deferred airborne lease incentives |
1,764 |
953 |
3,336 |
1,706 |
||||||||
Cash CAPEX |
$ |
(28,838) |
$ |
(16,717) |
$ |
(55,978) |
$ |
(25,176) |
Definition of Non-GAAP Measures
EBITDA represents net income (loss) attributable to common stock before income taxes, interest income, interest expense, depreciation expense and amortization of other intangible assets.
Adjusted EBITDA represents EBITDA adjusted for (i) fair value derivative adjustments, (ii) preferred stock dividends, (iii) accretion of preferred stock, (iv) stock-based compensation expense, (v) amortization of deferred airborne lease incentives and (vi) write off of deferred equity financing costs. Our management believes that the use of Adjusted EBITDA eliminates items that, management believes, have less bearing on our operating performance, thereby highlighting trends in our core business which may not otherwise be apparent. It also provides an assessment of controllable expenses, which are indicators management uses to determine whether current spending decisions need to be adjusted in order to meet financial goals and achieve optimal financial performance.
More specifically, we believe the exclusion of fair value derivative adjustments, Class A and Class B senior convertible preferred stock return and accretion of preferred stock from Adjusted EBITDA is appropriate because we do not believe such items are indicative of ongoing operating performance due to their non-recurring nature as a result of the conversion of all shares of preferred stock into shares of common stock upon consummation of our IPO in
Additionally, we believe the exclusion of stock-based compensation expense from Adjusted EBITDA is appropriate given the significant variation in expense that can result from using the Black-Scholes model to determine the fair value of such compensation. The fair value of our stock options as determined using the Black-Scholes model varies based on fluctuations in the assumptions used in this model, including inputs that are not necessarily directly related to the performance of our business, such as the expected volatility, the risk-free interest rate, the expected life of the options and future dividends to be paid by the Company. Therefore, we believe the exclusion of this cost provides a clearer view of the operating performance of our business. Further, non-cash equity grants made at a certain price and point in time do not necessarily reflect how our business is performing at any particular time. While we believe that investors should have information about any dilutive effect of outstanding options and the cost of that compensation, we also believe that stockholders should have the ability to consider our performance using a non-GAAP financial measure that excludes these costs and that management uses to evaluate our business.
We believe the exclusion of the amortization of deferred airborne lease incentives from Adjusted EBITDA is useful as it allows an investor to view operating performance across time periods in a manner consistent with how management measures segment profit and loss. Management evaluates segment profit and loss in this manner (for a description of segment profit (loss), see Note 16 "Business Segments and Major Customers"), excluding the amortization of deferred airborne lease incentives, because such presentation reflects operating decisions and activities from the current period, without regard to the prior period decision or form of connectivity agreements. See "—Key Components of Consolidated Statements of Operations—Cost of Service Revenue—Commercial Aviation North America" for a discussion of the accounting treatment of deferred airborne lease incentives.
We believe it is useful to an understanding of our operating performance to exclude write off of deferred equity financing costs from Adjusted EBITDA because of the non-recurring nature of this charge.
We also present Adjusted EBITDA as a supplemental performance measure because we believe that this measure provides investors, securities analysts and other users of our financial statements with important supplemental information with which to evaluate our performance and to enable them to assess our performance on the same basis as management.
Adjusted Net Loss represents net loss attributable to common stock before fair value derivative adjustments, Class A and Class B senior convertible preferred stock return and accretion of preferred stock. We present Adjusted Net Loss to eliminate the impact of such items because we do not consider those indicative of ongoing operating performance due to their non-recurring nature as a result of the conversion of all shares of preferred stock into shares of common stock in connection with our IPO in
Adjusted Net Loss Per Share represents net loss attributable to common stock per share—basic and diluted, adjusted to reflect the number of shares of common stock outstanding as of
Cash
Investor Relations Contact: |
Media Relations Contact: |
Varvara Alva |
Steve Nolan |
630-647-7460 |
630-647-1074 |
SOURCE