TORONTO, ONTARIO -- (Marketwire) -- 10/19/12 -- Phonetime Inc. (TSX:PHD) announced today the financial results for the nine months ended September 30, 2012. Net income was $1.4 million, compared to $2.2 million for the first nine months of 2011. EBITDA(1) was $1.9 million compared to $1.2 million in 2011.
(amounts in thousands of US dollars, except per share information)
Q3-2012 Q3-2011 YTDQ3 - YTDQ3 -
2012 2011
For the three and nine months
ended, September 30 Unaudited Unaudited Unaudited Unaudited
2012 2011 2012 2011
$ $ $ $
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Revenue 22,412 29,561 70,597 89,852
Cost of revenue 20,699 27,374 65,231 84,199
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Gross margin 1,713 2,187 5,366 5,653
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7.6% 7.4% 7.6% 6.3%
Operating expenses 944 1,185 3,024 3,833
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Income before the undernoted 769 1,002 2,342 1,820
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Corporate expenses 130 178 416 650
Depreciation of property and
equipment 30 99 90 415
Amortization of intangible assets 107 256 743 756
Stock-based compensation 10 20 33 87
Interest and debt costs 40 69 144 272
Gain on retirement of debt - - (260) 0
Mark to fair value of common share
warrants - (279) (1) (2,272)
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317 343 1,165 (92)
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Income (loss) before income taxes
and discontinued operations 452 659 1,177 1,912
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Provision for (recovery of) income
taxes
Current 5 - 15 -
Deferred (100) (100) (300) (299)
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(95) (100) (285) (299)
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Income (loss) before discontinued
operations 547 759 1,462 2,211
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Discontinued operations, net of
tax of nil - - - -
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Net income (loss) and
comprehensive income (loss) for
the period 547 759 1,462 2,211
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Revenue for the nine months ended was $71 million compared to $90 million in 2011. 2012 revenue is lower than that of 2011, primarily as a result of continued price decreases in the markets in which the Company operates; this is part of an ongoing trend in international long distance rates that has existed for a number of years. Lower revenue was offset by improved margins, resulting in Income before undernoted in 2012 of $2.3 million compared to $1.8 million in 2011, an improvement of $0.5 million.
In 2012, the Company retired its subordinated debt resulting in a one-time non-cash gain of $0.3 million. This is recorded below the line as Gain on retirement of debt. In 2011, the Company retired common stock warrant derivatives resulting in a one-time non-cash gain of $1.7 million. This was recorded below the line.
At September 30, 2012, the Company had a cash balance of $0.5 million and $2.5 million of available borrowings under its revolving lending facility. Shareholder's equity was $10.3 million compared to $9.1 million at December 31, 2011.
On September 14th, 2012, the Company acquired and cancelled five million or 3.1% of its outstanding shares at an average cost $0.043 per share, reducing the number of shares outstanding to 153,731,492.
Outlook
"We are continuing to execute our business plan. We remain profitable despite a continued global recession. We continue to seek opportunities to consolidate traffic with competitors and partners." said, Gary Clifford, Executive Chairman.
The Company's unaudited interim financial statements have been filed on SEDAR.
About Phonetime Inc.
Established in 1994, Phonetime is a leading provider of international and domestic switched voice services to the worlds telecommunication operators and voice service providers. Phonetime's customers and suppliers include, fixed line operators, mobile operators, retail and VoIP service providers, who buy and sell voice and IP telecommunications services. Phonetime has traders in Europe, Asia and the Americas using its proprietary trading platform with embedded intelligence, which includes profitability benchmarking, call routing, credit management, network quality visibility and loss prevention. As voice technology evolves Phonetime has commoditized its trading philosophy and along with its platform is positioned to emerge as a leading clearing house. Phonetime is a public company listed on the Toronto Stock Exchange (TSX).
Caution Regarding Forward Looking Information:
This press release contains forward-looking statements, which may be identified by words like "expects", "anticipates", "plans", "intends", "indicates" or similar expressions. These statements are not a guarantee of future performance and are inherently subject to risks and uncertainties. Phonetime's actual results could differ materially from those currently anticipated due to a number of factors set forth in reports and other documents filed by the Company with Canadian securities regulatory authorities from time to time. See www.sedar.com which contains all securities files.
(1) EBITDA is non-GAAP financial measure. It is defined as Income from continuing operations excluding depreciation and amortization expense, stock based compensation, interest expense, gain on retirement of debt and mark to fair value of common stock warrants.
