Global Telecom & Technology Reports Fourth Quarter and Year End 2006 Results.Newly Integrated Company's Global Multi-Network Operator Model Accelerates Revenue Growth MCLEAN, Va. -- Global Telecom & Technology, Inc. ("GTT GTT, n See test, glucose tolerance. GTT Glucose tolerance test, see there "), (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :GTLT), a global Multi-Network Operator (MNO), today reported results for the fourth quarter and twelve months ended December 31, 2006. * Revenue growth accelerates in fourth quarter -- revenue increases 12.5 percent over year ago period * Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become improvements in fourth quarter performance demonstrates operational leverage in merged entity * Promissory notes promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. extended to April 2008 * Company completes restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plan * Sales force to be increased to take advantage of growing MNO opportunities On October 15, 2006, Mercator Partners Acquisition Corp. acquired U.S. based Global Internetworking ("GII GII Global Information Infrastructure GII Getty Information Institute GII Gasherbrum II (26,360 ft. mountain near Pakistan-China) GII Government Information Infrastructure GII Ghana Integrity Initiative ") and U.K. based European Telecom & Technology ("ETT ETT Empresa de Trabajo Temporal (Spain) ETT European Transactions on Telecommunications ETT Exercise Treadmill Test ETT Embedded Training Team ETT Exercise Tolerance Test (cardiology) ") and renamed the combined entity GTT. GTT is a Multi-Network Operator -- a facilities-free, technology-neutral telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. provider with operations in the Americas and in Europe, the Middle East and Asia. GTT serves over 200 customers with services delivered to more than 50 countries. In this press release, in order to provide investors with useful information regarding GTT's results of operations, in addition to presenting GTT's results of operations prepared according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. U.S. Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "), GTT is also presenting the arithmetic combination of the results of operations of GTT, GII and ETT for the periods presented, which GTT refers to as "non-GAAP combined" financial information. See "Annex an·nex tr.v. an·nexed, an·nex·ing, an·nex·es 1. To append or attach, especially to a larger or more significant thing. 2. A: Non-GAAP Financial Information--Non-GAAP Combined Financial Information." Commenting on the company's newly integrated business, H. Brian Thompson Brian Thompson may refer to:
Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. services from enterprise, service providers and network carriers. Our asset-light, multi-network approach enables GTT to seamlessly provide competitive, best in class services not limited to any single network footprint, technology or vendor. In addition to designing unique connectivity solutions for our customers, we provide a complete communications solution by integrating, managing and supporting all aspects of these various networks on our customers' behalf. As network demands and complexities grow, GTT is uniquely positioned for solid growth. Our future is bright and we believe customers, investors and employees alike will benefit as we grow the company." Financial Highlights Financial highlights from the quarter and the full year ended December 31, 2006 include: (dollars in millions except per share information) Note: Prior to the acquisitions in October 2006 the company had no material business or operations. [TABLE OMITTED] [TABLE OMITTED] Operations Update "In the five months since we launched GTT, we have focused on two initiatives: integration of our Americas and EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. operations, and an aggressive effort to upsell our existing customers GTT's full set of services while also targeting new enterprise and carriers accounts that have transcontinental and emergent emergent /emer·gent/ (e-mer´jent) 1. coming out from a cavity or other part. 2. pertaining to an emergency. emergent 1. coming out from a cavity or other part. 2. coming on suddenly. data communication needs - opportunities ideally suited for our MNO model," said Mr. Thompson. "We have made good progress toward these goals," added Thompson. "We have organized the company so that there is a global sales function focused on identifying transcontinental opportunities. To facilitate new enterprise sales, we have implemented our EMEA team's successful enterprise model into our North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. sales processes A sales process is a systematic approach for performing product or service sales. The reasons for having a sales process include seller and buyer risk management, achieving standardized customer interaction in sales and scalable revenue generation. . We are coordinating our carrier-relations efforts on a global basis which we believe will enhance our ability to analyze supplier information and identify lower-cost supplier options. And, our operations and provisioning team has been structured to ensure that we provide world-class service for our multi-national services. Our two Network Operating Centers (NOCs) have been integrated and we are now able to offer 24x7x365 support including multi-lingual assistance. Finally, CMD CMD cerebromacular degeneration. (TM), our proprietary software tool that represents a very critical part of our ability to source, quote and manage our services has been installed into our London facility and we are in the process of enhancing it to include network Point-of-Presence and other carrier data for Europe and Asia. We have done well during the transition period but still have much to achieve. I am optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that with continued operational execution, the additions to our sales staff and prudent financial management, our business will thrive in 2007." Fourth Quarter 2006 compared to Fourth Quarter 2005 For the 2006 fourth quarter, reported GAAP revenue of $10.5 million resulted from the operations of GII and ETT commencing on October 16, 2006, the date of the acquisitions. As an acquisition vehicle, GTT had no substantial operations in the quarter ended December 31, 2005, and the 2006 fourth quarter results reflect the completion of the Acquisitions during the period. On a non-GAAP combined basis, 2006 fourth quarter combined adjusted revenue was $13.5 million, representing a 12.5% increase over 2005 fourth quarter non-GAAP combined revenue of $12.0 million. The company's revenue results were driven by increased global sales to both new and existing customers in the enterprise and carrier markets through the company's direct sales force. Reported gross margin for the 2006 fourth quarter was 25.7 percent, with no applicable gross margin in the 2005 fourth quarter because GTT had no material operations or business during that period. For the 2006 fourth quarter, non-GAAP combined gross margin of 29.1 percent was a slight decrease from the 2005 fourth quarter gross margin of 29.7 percent. Non-GAAP combined gross margin includes the effect of $0.1 million of cost of revenues arising from the deferred revenues added to non-GAAP combined revenue. See "Annex A: Non-GAAP Financial Information--Non-GAAP Combined Gross Margin." Gross margins were positively affected by improved supplier pricing in the US but were offset by the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of higher margin enterprise customer contracts in Europe. On a GAAP basis, selling, general and administrative ("SG&A") expenses for the 2006 fourth quarter of $3.4 million reflected the operations of the acquired business and corporate costs beginning October 16, 2006, compared to $0.1 million for the 2005 fourth quarter, when GTT had no material operations or business. For the fourth quarter 2006, non-GAAP combined SG&A of $4.2 million was essentially flat compared to the $4.2 million of expense in the 2005 fourth quarter. Fourth quarter 2006 SG&A expenses exclude approximately $0.5 million of option exercise expenses resulting from the Acquisitions. On a combined basis, headcount for the company increased slightly from 90 in 2005 to 92 in 2006. In addition, the company began recognizing costs in the fourth quarter of 2006 due to its status as a publicly-traded entity with material business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . Adjusted EBITDA for the 2006 fourth quarter of $(0.3) million reflected an improvement over the $(0.6) million in Adjusted EBITDA for the 2005 fourth quarter. See "Annex A: Non-GAAP Financial Information--Adjusted EBITDA." On a non-GAAP combined basis the accelerated revenue growth from operations during the 2006 fourth quarter reduced SG&A as a percentage of revenue to 31.0 percent from 34.6 percent in the 2005 fourth quarter, contributing to improved Adjusted EBITDA performance. The company believes that the improved Adjusted EBITDA performance reflects its ability to leverage its existing platform to drive revenue and margin expansion. In the 2006 fourth quarter, the company's net loss was $(5.7) million, or $(0.45) per share, compared to 2005 fourth quarter net income of $1.6 million or $0.14 per share. The net loss in the 2006 fourth quarter was driven mainly by operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. following the Acquisitions and the non-cash impact of the change in derivative value of outstanding warrants during the 2006 fourth quarter. "The fourth quarter represented a transition period for GTT," said Mr. Thompson. "We were pleased to generate double-digit top-line growth in the initial quarter during which we consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. the acquisitions of GII and ETT, and we expect that given what we perceive to be the robust demand for our services, we will move closer to our target 20 to 30 percent revenue growth objectives in the coming quarters. I am confident that 2007 will provide shareholders and customers evidence that GTT is emerging as a leading alternative telecom service provider." The company also announced it had completed a restructuring aimed at creating a more efficient organization by reducing overhead and increasing its investment in meeting demand for new customers. The company plans to increase its existing sales force by ten people between Europe and the US during the first half of 2007 while consolidating certain corporate functions. The company expects to take a charge related to restructuring in 2007, with the majority of it occurring in the first quarter. Additionally, the company announced it had extended the maturity of $5.9 million in promissory notes previously due on June 2007 to April 2008. Full Year 2006 compared to Full Year 2005 On a GAAP basis, GTT reported revenue of $10.5 million for the full-year ended December 31, 2006. As previously mentioned, GTT had no substantial operations in the year ended December 31, 2005, and the 2006 results reflect the completion of the Acquisitions in October 2006. On a non-GAAP combined basis, full year 2006 combined adjusted revenue of GII and ETT was $52.0 million, which was a 4 percent increase over non-GAAP combined 2005 full year revenue. The growth in new sales in 2006 was offset somewhat by customer contract expirations in Europe following the restructuring of a large multinational corporate customer's European operations. Reported gross margin for the full year ended December 31, 2006 was 25.7 percent of revenue with no comparable reported gross margin for the reported full year 2005. On a non-GAAP combined basis, 2006 full year gross margin was 29.4 percent compared with 30.0 percent in the prior year. The slight decline in 2006 gross margin was caused by the same factors described above with respect to the 2006 and 2005 fourth quarters. On a GAAP basis, SG&A expenses for 2006 of $4.0 million reflected the operations of the acquired companies and corporate costs beginning October 16, 2006, compared to $0.4 million for 2005, when GTT had no material operations or business. On a non-GAAP combined basis, SG&A for the full year of $16.4 million increased from $16.1 million in SG&A for the full year ended December 31, 2005. Full year 2006 SG&A results exclude approximately $0.5 million of option exercise expenses resulting from the acquisitions of GII and ETT. Full year 2006 SG&A expenses increased compared to 2005 SG&A expenses due to the same factors described above with respect to the 2006 and 2005 fourth quarters. Net loss for full year 2006 was ($1.8) million, compared to a profit of $1.4 million for the corresponding period in 2005. Net loss per share for the year ended December 31, 2006 was $(0.15) compared to a net income per share of $0.16 in the year ago period. The 2005 profit was derived from a positive derivative valuation impact and interest income on the trust fund originally established by Mercator Partners Acquisition Corp. to hold funds that could be used in merger or acquisition activity. The net loss for the full year 2006 was driven mainly by operating loss following the Acquisitions and the non-cash impact of the change in derivative value of outstanding warrants for the year. Full Year 2007 Forecast For the full year of 2007, total revenues from the company's operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. are expected to be in the range of $62 million to $68 million. Gross margins are expected to be in the 28% to 30% range with selling, general and administrative expenses in the range of $17 million to $18 million excluding restructuring and severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs and non-cash equity compensation. Conference Call Information The company will discuss its results and guidance on its quarterly conference call Thursday, March 29, 2007, at 8:30 a.m. Eastern Time (5:30 a.m. PT). To hear the conference call live, dial 800.310.6649 or +1.719.457.2693, enter passcode 6408576 and asking for the GTT call. A simultaneous live Webcast of the call will be available over the Internet at www.gt-t.net, under the Investor Relation section of the site. A replay of the call will be available beginning on Thursday, March 29, 2007, at approximately 11:00 a.m. ET until Monday, April 2, 2007. Interested parties can access the call replay by dialing 888.203.1112 or +1.719.457.0820 and using the passcode 6408576. In addition, the Webcast will be available on the company's Web site at www.gt-t.net beginning on Tuesday April 3, 2006. About GTT Formed in October 2006, following the acquisition by Mercator Partners Acquisition Corp. of Global Internetworking Inc and European Telecommunications & Technology Limited, Global Telecom & Technology, Inc. ("GTT") (OTCBB:GTLT) is a new type of service provider: a Multi-Network Operator ("MNO"). As a Multi-Network Operator, GTT does not own the infrastructure upon which its services are provided. Instead, GTT designs solutions based on its customer's requirements, using a combination of telecommunications networks A telecommunications network is a of telecommunications links and nodes arranged so that messages may be passed from one part of the network to another over multiple links and through various nodes. and technologies. Unlike traditional network centric carriers, GTT provides best-of-breed solutions by procuring Procuring, in general, is the act of acquiring goods or services, usually by contract. It may refer to:
Headquartered in McLean, Virginia McLean is an unincorporated community located in Fairfax County in Northern Virginia. A small geographic area along Chain Bridge Road in Arlington County has a 22101 zip code and is also part of McLean. and with offices in London, Paris, Dusseldorf, New Delhi New Delhi (dĕl`ē), city (1991 pop. 294,149), capital of India and of Delhi state, N central India, on the right bank of the Yamuna River. , and New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , GTT provides a global service footprint covering more than 50 countries, and it has more than 200 customers and in excess of 100 carrier partnerships around the world. For more information visit the GTT web site: http://www.gt-t.net Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Some of the statements made by GTT in this press release, including without limitation statements regarding GTT's anticipated future growth, financial performance and potential mergers and acquisitions activity, are forward-looking in nature. GTT intends that any forward-looking statements, as defined in Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), shall be covered by the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions for such statements contained in Section 21E of the Exchange Act. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "may," "will," "should," "expects," "anticipates," "intends," "plans," "believes," "estimates," "predicts," "potential," "continues" and similar expressions are forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause the company's actual future results to differ materially from those projected or contemplated in the forward-looking statements. GTT believes that these risks include, but are not limited to: GTT's ability to develop and market new products and services that meet customer demands and generate acceptable margins; GTT's reliance on several large customers; the complexities of carrying on business carrying on business n. pursuing a particular occupation on a continuous and substantial basis. There need not be a physical or visible business "entity" as such. on an international basis; GTT's ability to negotiate and enter into acceptable contract terms with its suppliers; GTT's ability to attract and retain qualified management and other personnel; continued development of GTT's information technology platforms; failure of the third-party communications networks The transmission channels interconnecting all client and server stations as well as all supporting hardware and software. on which GTT depends; GTT's ability to successfully complete the integration of its operating companies operating company A business that engages in transactions with outsiders. following the acquisitions; and competition and other risks associated with the communications sector in general and the multi-network operator sector in particular. Additional information concerning these and other important factors can be found under the heading "Risk Factors" in GTT's Quarterly Report on Form 10-Q Form 10-Q See 10-Q. filed with the Securities and Exchange Commission in November 2006, and in GTT's other annual and quarterly reports filed from time to time with the Securities and Exchange Commission. Statements in this release should be evaluated in light of these important factors. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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