Glowpoint Announces 2013 Results
DENVER, March 6, 2014 /PRNewswire/ — Glowpoint, Inc. (NYSE MKT: GLOW), a leading provider of video collaboration services and network solutions, today announced financial results for the year ended December 31, 2013.
- Revenue increased 15 percent to $33.5 million for 2013 from $29.1 million for 2012. This increase is attributable to revenue contribution for the full year 2013 from the acquisition of Affinity VideoNet in October 2012.
- Adjusted EBITDA (a non-GAAP financial measure defined below and reconciled to GAAP in the attached schedule) increased 43 percent to $4.4 million for 2013 from $3.1 million for 2012.
- Net cash provided by operating activities increased to $2.3 million for 2013 as compared to $0.8 million for 2012.
- During the second half of 2013, the Company simplified its capital structure by exchanging all outstanding shares of Series B-1 preferred stock into common stock, which eliminated a total of $10.2 million of liquidation preference on the exchanged preferred stock and eliminated future annual dividends of $600,000 that would have commenced accruing in 2014.
- During the fourth quarter of 2013, the Company refinanced its debt facilities to improve near-term liquidity and provide additional borrowing capacity for strategic growth plans.
- The Company secured a new credit facility from Main Street Capital Corporation (“Main Street”) consisting of a 5-year term loan commitment of $11.0 million and a 2-year revolving line of credit of up to $2.0 million. As of December 31, 2013, the Company had outstanding borrowings of $9.0 million on the term loan and $0.3 million on the revolver. During 2013, and in connection with entry into the Main Street credit facility, the Company repaid borrowings of $8.5 million on former term loans and $0.8 million on the former revolver that existed as of December 31, 2012.
- The Company reduced the principal amount on the seller promissory note issued in connection with the Affinity acquisition by $0.2 million to $1.9 million and extended the maturity date from December 31, 2014, to January 4, 2016.
- The Company’s former debt obligations would have required minimum near-term principal payments of $3.6 million in 2014 and $3.0 million in 2015. Principal payments in 2014 and 2015 under the Main Street credit facility and the amended seller note are based on a percentage of excess cash flow generated by the Company and the achievement of certain EBITDA levels. The Company expects to make principal payments of $950,000 on its debt obligations in 2014. See the Company’s 2013 Form 10-K for a full discussion of our debt obligations as of December 31, 2013.
- During 2013, GPI Investment Holdings LLC (“GPI”) acquired a significant portion of the Company’s outstanding common stock from other stockholders. GPI owned approximately 43 percent of the Company’s common stock as of December 31, 2013. GPI is an investment vehicle affiliated with Main Street and the Pessin family who provide more than 40 years of experience investing in, and successfully assisting, micro- and small-cap companies.
“We made significant progress in 2013 on several fronts, including capital restructuring, integration of the Affinity acquisition, growth in Adjusted EBITDA, re-shaping our management team, and shifting our service offerings to meet customers’ transforming video collaboration needs,” said Peter Holst, CEO and president of Glowpoint. “Videoconferencing is a very dynamic market as customers move from hardware-based solutions to virtualized delivery of the technology. Moving forward, our goal is to transform Glowpoint into a service platform to deliver a rapidly growing ecosystem of video, voice, and data collaboration applications to our partners and customers. We believe very strongly in the long-term market opportunity and have taken the requisite steps in 2013 to enable significant platform enhancements in 2014. The core elements of our 2014 plan are as follows:
- More than $2 million of investments in core infrastructure, information systems, and our next generation IT service management platform to not only enhance the current customer experience but broaden the scope of features around it. We expect to fund these investments from the positive cash flow from operations the Company projects to generate in 2014.
- Continued investments in personnel and training. The majority of the management team has only recently joined Glowpoint during the past three-to-six months. With time and an aggressive effort to add experienced personnel in critical areas such as product development, operations, and sales, we believe our focus talent acquisition will yield results.
- Cost-of-service delivery. We believe our development efforts and commitment toward automating key elements of the supply chain will yield higher degrees of operating leverage as the year progresses, resulting in improved gross margins and Adjusted EBITDA performance.
- Mergers and Acquisitions. With a vastly improved capital structure, enhanced product pipeline, and a fully funded capital expenditure plan, our intent is to seek out acquisitions that either add to, or expand, our current service portfolio. We have established strong relationships with our capital sources and look to leverage their substantial financial capacity to create shareholder value.”
Mr. Holst continued, “On a pro forma basis, assuming the Affinity acquisition occurred on January 1, 2012, our revenue declined 9.8 percent from 2012 to 2013, primarily driven by pricing pressure on certain managed services and technology shifts. While we continue to believe those risk factors remain ever-present in the industry as a whole, we are projecting 2014 revenue to be essentially level with 2013 while improving Adjusted EBITDA performance by approximately 10 percent.”
The results of our operations and financial condition for the years ended December 31, 2013 and 2012 are more fully discussed in our Annual Report on Form 10-K for 2013, filed with the Securities and Exchange Commission on March 6, 2014. Investors are encouraged to carefully review the 2013 Form 10-K for a complete analysis of our results from operations and financial condition.
Glowpoint, Inc. (NYSE MKT: GLOW) provides video collaboration, network, and support services to large enterprises and mid-sized companies to support their unified communications (UC) strategies and business goals. More than 1,000 organizations in 96 countries rely on our unmatched experience, business-class support, and cloud-based services to collaborate with colleagues, business partners, and customers more effectively. To learn more, please visit www.glowpoint.com.
Non-GAAP Financial Information
Adjusted EBITDA is defined as net income (loss) before depreciation, amortization, interest expense, interest income, taxes, stock-based compensation, asset impairment charges, acquisition costs, and severance. Adjusted EBITDA is a non-GAAP financial measure and is not intended to replace operating income, net income, cash flow or other measures of financial performance reported in accordance with generally accepted accounting principles. Rather, Adjusted EBITDA is an important measure used by management to assess the operating performance of the Company. Adjusted EBITDA, as defined here, may not be comparable to similarly titled measures reported by other companies due to differences in accounting policies. Additionally, Adjusted EBITDA, as defined here, does not have the same meaning as EBITDA as defined in certain of our prior Securities and Exchange Commission filings that contain separate reconciliations of EBITDA to net income (loss). A reconciliation of Adjusted EBITDA to net income (loss) is shown in the attached schedules.
Forward looking and cautionary statements
Forward-looking statements in this press release regarding our anticipated liquidity and borrowing capacity, financial flexibility, expected 2014 principal payments relating to our debt obligations, expectations regarding revenue, and growth in gross margin and Adjusted EBITDA, plans to make investments in personnel and capital expenditures to improve our core infrastructure and service offerings, plans to seek acquisition opportunities, increasing value for our shareholders and all other statements that are not historical facts, are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve factors, risks, and uncertainties that may cause actual results in future periods to differ materially from such statements. These factors, risks, and uncertainties include market acceptance and availability of new video communications services; the non-exclusive and terminable-at-will nature of sales agreements; rapid technological change affecting demand for our services; competition from other video communication service providers; and the availability of sufficient financial resources to enable us to expand our operations, as well as other risks detailed from time to time in our filings with the Securities and Exchange Commission. We make no representation or warranty that the information contained herein is complete and accurate and we have no duty to correct or update any information contained herein.