EX-99.1 2 d859732dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

 

West Corporation AT THE COMPANY:
11808 Miracle Hills Drive David Pleiss
Omaha, NE 68154 Investor Relations
(402) 963-1500
dmpleiss@west.com

West Corporation Reports Fourth Quarter and Full Year 2014 Results

and Provides 2015 Guidance

Company Declares Quarterly Dividend

OMAHA, NE, January 28, 2015 – West Corporation (Nasdaq:WSTC), a leading provider of technology-enabled communication services, today announced its fourth quarter and full year 2014 results.

On January 7, 2015, the Company announced it had entered into a definitive agreement to sell several of its agent services businesses to Alorica Inc. for approximately $275 million in cash. The businesses being sold are reflected as discontinued operations in the Company’s consolidated financial statements. The sale is expected to close in the first quarter of 2015, subject to regulatory approvals and other customary closing conditions. The Company has presented below its historical operating results, which includes discontinued operations, as well as its results from continuing operations, which excludes discontinued operations. The assets and liabilities of the businesses being sold have been reflected as held for sale for the periods presented.


Key Quarterly Highlights:

 

Unaudited, in millions except per share amounts

   HISTORICAL (1)  
   Three Months Ended Dec. 31,     Twelve Months Ended Dec. 31,  
   2014     2013     % Change     2014     2013     % Change  

Consolidated Revenue

   $ 716.2      $ 687.6        4.2   $ 2,796.7      $ 2,685.9        4.1

Platform-based Revenue2

     497.0        495.8        0.2     2,001.4        1,955.2        2.4

Adjusted EBITDA4

     187.0        178.4        4.8     715.4        704.4        1.5

EBITDA4

     179.2        175.8        2.0     694.2        664.7        4.4

Adjusted Operating Income4

     151.3        144.9        4.4     573.9        575.3        -0.2

Operating Income

     119.4        128.8        -7.3     484.1        480.2        0.8

Adjusted Net Income4

     99.3        63.6        56.0     285.2        229.3        24.3

Net Income

     48.3        50.3        -4.1     158.4        143.2        10.6

Adjusted Earnings per Share - Diluted4

     1.15        0.75        53.3     3.33        2.86        16.4

Earnings per Share - Diluted

     0.56        0.59        -5.1     1.85        1.78        3.9

Free Cash Flow4,5

     95.4        66.9        42.6     312.0        255.7        22.0

Cash Flows from Operations

     132.5        107.4        23.4     462.7        384.1        20.5

Cash Flows used in Investing

     (43.8     (46.3     NM        (544.9     (135.5     NM   

Cash Flows used in Financing

     (135.9     (42.7     NM        (25.0     (196.8     NM   
     CONTINUING OPERATIONS  
Unaudited, in millions except per share amounts    Three Months Ended Dec. 31,     Twelve Months Ended Dec. 31,  
   2014     2013     % Change     2014     2013     % Change  

Consolidated Revenue

   $ 562.9      $ 537.0        4.8   $ 2,218.6      $ 2,121.0        4.6

Adjusted EBITDA4

     173.4        163.7        5.9     668.3        655.6        1.9

EBITDA4

     167.0        161.1        3.7     649.2        616.1        5.4

Adjusted Operating Income4

     141.2        134.5        4.9     541.5        544.1        -0.5

Operating Income

     116.7        119.0        -1.9     461.4        451.3        2.2

Adjusted Net Income4

     68.1        55.4        22.9     247.2        207.7        19.0

Net Income

     34.9        42.5        -18.0     134.6        123.1        9.4

Adjusted Earnings per Share - Diluted4

     0.79        0.65        21.5     2.89        2.59        11.6

Earnings per Share - Diluted

     0.41        0.50        -18.0     1.57        1.53        2.6

Free Cash Flow4,5

           279.2        204.5        36.5

Cash Flows from Operations

           409.5        318.8        28.5

Cash Flows used in Investing

           (524.4     (121.9     NM   

Cash Flows used in Financing

           (25.0     (196.8     NM   

“In 2014, we delivered on our operational goals by achieving our revenue guidance, positioning the company for a reacceleration of growth and effectively deploying our capital,” said Tom Barker, chairman and chief executive officer of West Corporation. “We began 2015 by announcing the divestiture of several of our agent services businesses which should result in a faster growing, more profitable and ultimately more valuable company.”

Dividend

The Company today also announced a $0.225 per common share dividend. The dividend is payable February 19, 2015, to shareholders of record as of the close of business on February 9, 2015.

 

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Consolidated Operating Results (Historical1)

For the fourth quarter of 2014, revenue was $716.2 million compared to $687.6 million for the same quarter of the previous year, an increase of 4.2 percent. Revenue from acquired entities3 was $35.6 million during the fourth quarter of 2014.

For the year ended December 31, 2014, revenue was $2,796.7 million compared to $2,685.9 million for 2013, an increase of 4.1 percent. Revenue from acquired entities3 was $74.7 million during 2014.

The Unified Communications segment had revenue of $395.4 million in the fourth quarter of 2014, a decrease of 1.9 percent compared to the same quarter of the previous year. The Communication Services segment had revenue of $336.3 million in the fourth quarter of 2014, an increase of 12.5 percent compared to the same quarter of the previous year. For 2014, the Unified Communications segment had revenue of $1,616.8 million, an increase of 0.8 percent compared to 2013. The Communication Services segment had revenue of $1,239.4 million in 2014, an increase of 10.7 percent compared to 2013.

Adjusted EBITDA4 for the fourth quarter of 2014 was $187.0 million compared to $178.4 million for the fourth quarter of 2013, an increase of 4.8 percent. EBITDA4 was $179.2 million in the fourth quarter of 2014 compared to $175.8 million in the fourth quarter of 2013. Adjusted EBITDA for 2014 was $715.4 million, or 25.6 percent of revenue, compared to $704.4 million, or 26.2 percent of revenue, in 2013. EBITDA was $694.2 million in 2014 compared to $664.7 million in 2013, an increase of 4.4 percent.

Adjusted operating income4 for the fourth quarter of 2014 was $151.3 million, or 21.1 percent of revenue, compared to $144.9 million, or 21.1 percent of revenue in the same quarter of 2013, an increase of 4.4 percent. Operating income was $119.4 million for the fourth quarter of 2014 compared to $128.8 million in the fourth quarter of 2013, a decrease of 7.3 percent. The decrease in 2014 operating income was due primarily to higher amortization and share-based compensation expense. For the full year 2014, adjusted operating income was $573.9 million compared to $575.3 million in 2013. Operating income for 2014 was $484.1 million compared to 2013 operating income of $480.2 million.

Adjusted net income4 was $99.3 million in the fourth quarter of 2014, an increase of 56.0 percent from the same quarter of 2013. Net income decreased 4.1 percent to $48.3 million in the fourth quarter of 2014, compared to $50.3 million in the same quarter of 2013. This decrease was mainly due to $21.6 million of debt call premium and accelerated amortization of deferred financing costs associated with

 

1  Historical includes the results of both continuing operations and discontinued operations.
2  Platform-based businesses include the Unified Communications segment and public safety and telecom services within our Communication Services segment. Platform-based and agent services revenue are presented prior to intercompany eliminations.
3  Revenue from acquired entities includes SchoolMessenger after April 21, 2014, Health Advocate after June 13, 2014, 911 Enable after September 2, 2014 and SchoolReach after November 3, 2014.
4  See Reconciliation of Non-GAAP Financial Measures below.
5  Free cash flow is calculated as cash flows from operations less cash capital expenditures.
6 

Based on loan covenants except that the leverage ratio presented includes adjusted EBITDA from discontinued operations. Covenant leverage ratio is net of cash and excludes accounts receivable securitization debt.

 

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the Company’s November 15, 2014 redemption of its 7.875 percent Senior Notes due 2019 (the “2019 Notes”). In 2014, adjusted net income was $285.2 million, an increase of 24.3 percent compared to 2013. Net income in 2014 was $158.4 million compared to net income of $143.2 million in 2013, an increase of 10.6 percent. The improvement in profitability was driven by higher operating income and lower effective income tax rates.

Consolidated Operating Results (Continuing Operations)

For the fourth quarter of 2014, revenue was $562.9 million compared to $537.0 million for the same quarter of the previous year, an increase of 4.8 percent. Revenue from acquired entities3 was $35.6 million during the fourth quarter of 2014.

For the year ended December 31, 2014, revenue was $2,218.6 million compared to $2,121.0 million for 2013, an increase of 4.6 percent. Revenue from acquired entities3 was $74.7 million during 2014.

The Unified Communications segment had revenue of $395.4 million in the fourth quarter of 2014, a decrease of 1.9 percent compared to the same quarter of the previous year. The Communication Services segment had revenue of $180.8 million in the fourth quarter of 2014, an increase of 24.0 percent compared to the same quarter of the previous year. For 2014, the Unified Communications segment had revenue of $1,616.8 million, an increase of 0.8 percent compared to 2013. The Communication Services segment had revenue of $653.6 million in 2014, an increase of 19.7 percent compared to 2013. The growth in revenue for the Communication Services segment in the fourth quarter and full year 2014 was primarily due to the acquisition of Health Advocate in June 2014.

Adjusted EBITDA4 for the fourth quarter of 2014 was $173.4 million compared to $163.7 million for the fourth quarter of 2013, an increase of 5.9 percent. EBITDA4 was $167.0 million in the fourth quarter of 2014 compared to $161.1 million in the fourth quarter of 2013. Adjusted EBITDA for 2014 was $668.3 million, or 30.1 percent of revenue, compared to $655.6 million, or 30.9 percent of revenue, in 2013. EBITDA was $649.2 million in 2014 compared to $616.1 million in 2013.

Adjusted operating income4 for the fourth quarter of 2014 was $141.2 million, or 25.1 percent of revenue, compared to $134.5 million, or 25.1 percent of revenue in the same quarter of 2013, an increase of 4.9 percent. Operating income was $116.7 million in the fourth quarter of 2014 compared to $119.0 million in the fourth quarter of 2013. For the full year 2014, adjusted operating income was $541.5 million compared to $544.1 million in 2013. Operating income for 2014 was $461.4 million compared to 2013 operating income of $451.3 million.

Adjusted net income4 was $68.1 million in the fourth quarter of 2014, an increase of 22.9 percent from the same quarter of 2013. Net income decreased 18.0 percent to $34.9 million in the fourth quarter of 2014, compared to $42.5 million in the same quarter of 2013. This decrease was mainly due to $21.6 million of debt call premium and accelerated amortization of deferred financing costs associated with the Company’s November 15, 2014 redemption of its 2019 Notes. In 2014, adjusted net income was $247.2 million, an increase of 19.0 percent compared to 2013. Net income in 2014 was $134.6 million compared to net income of $123.1 million in 2013, an increase of 9.4 percent. The improvement in profitability was driven by higher operating income and lower effective income tax rates.

 

4


Balance Sheet, Cash Flow and Liquidity

At December 31, 2014, West Corporation had cash and cash equivalents totaling $115.1 million and working capital of $369.8 million. Interest expense was $42.9 million during the three months ended December 31, 2014 compared to $51.4 million during the comparable period the prior year. Interest expense was $188.1 million in 2014 compared to $232.9 million in 2013. The reduction in interest expense was due to refinancing of debt completed by the Company during 2014.

The Company’s net debt to pro forma adjusted EBITDA ratio, as calculated pursuant to the Company’s senior secured term debt facilities6 and using historical1 adjusted EBITDA, was 4.59x at December 31, 2014. This ratio would be 4.56x using the Company’s adjusted EBITDA from continuing operations and proceeds from the sale of the Company’s agent services businesses.

On November 15, 2014, the Company redeemed the remaining $450 million of its outstanding 2019 Notes. The redemption price for the 2019 Notes was $467.7 million, including the call premium.

Cash flows from operations on a historical1 basis were $462.7 million for the twelve months ended December 31, 2014 compared to $384.1 million in 2013. Free cash flow4,5 on a historical1 basis increased 22.0 percent to $312.0 million in 2014 compared to $255.7 million in 2013.

“West had significant growth in cash flow in 2014,” said Paul Mendlik, chief financial officer of West Corporation. “Our accounts receivable days sales outstanding at year end were 57 days, compared to 60 days at the end of 2013. This contributed $28 million to the improvement in cash flows from operations for the year.”

Cash flows from operations on a continuing operations basis were $409.5 million for the twelve months ended December 31, 2014 compared to $318.8 million in 2013. Free cash flow4,5 on a continuing operations basis increased 36.5 percent to $279.2 million in 2014 compared to $204.5 million in 2013.

During the fourth quarter of 2014, on a historical1 basis, the Company invested $55.2 million, or 7.7 percent of revenue, in capital expenditures primarily for software and computer equipment. For the full year 2014, the Company invested $155.8 million, or 5.6 percent of revenue, in capital expenditures. On a continuing operations basis, the Company invested $136.3 million, or 6.1 percent of revenue, in capital expenditures during 2014.

Acquisitions

On November 3, 2014, the Company completed the previously announced acquisition of the assets of GroupCast, L.L.C., a provider of alert and notification services for corporations, government entities and K-12 school districts that operates under two brands, GroupCast and SchoolReach (“SchoolReach”). SchoolReach is an award-winning provider of notification systems for thousands of smaller public school districts and private schools throughout the U.S. The purchase price was approximately $12.6 million, net of working capital, and was funded with cash on hand. SchoolReach will be combined with the Company’s SchoolMessenger business in the Unified Communication operating segment.

 

5


2015 Guidance

For 2015, the Company expects the results presented below. This guidance assumes no acquisitions or changes in the current operating environment, capital structure or exchange rates. The two most significant exchange rates used for 2015 guidance are the British Pound Sterling at 1.55 and the Euro at 1.19. The Company expects foreign exchange rates to negatively impact 2015 revenue by approximately $32 million and 2015 adjusted EBITDA by approximately $9 million.

The 2015 guidance does not include the gain the Company expects to report on the sale of its agent services businesses.

The 2015 guidance does not include any interest reduction associated with the proceeds from the sale of the agent services businesses or proceeds from the previously disclosed planned sale of real estate associated with the Company’s agent services businesses. The Company estimates the total cash it will realize from the sale of the businesses and real estate, net of fees and taxes, will be approximately $285 million.

The 2015 leverage ratio guidance range includes the net cash the Company expects to receive for the sale of its agent services businesses.

The 2015 operating income guidance includes approximately $15 million in stranded and rebranding costs and an increase in share-based compensation of approximately $9 million. Adjusted operating income includes approximately $12 million of stranded and rebranding costs.

The 2015 capital expenditure guidance includes several one-time items. The Company expects to invest approximately $27 million on data center consolidation activities, including approximately $8 million which was carried over from what was expected to be spent on these activities in 2014. Additionally, the Company expects to invest approximately $8 million to replace systems being sold along with its agent services businesses. The Company also expects approximately $4 to $5 million of capital expenditures for discontinued operations which is not included in the guidance range below.

The Company’s 2015 guidance for adjusted EBITDA includes approximately $6 to $7 million that the Company expects to receive from discontinued operations during the first quarter of 2015.

 

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In millions except per share and leverage ratio    CONTINUING OPERATIONS
   2014 Actual      2015 Guidance      Growth

Consolidated Revenue

   $ 2,218.6         $2,295 - $2,340       3.4% - 5.5%

Adjusted Operating Income4

   $ 541.5         $536 - $560       -1.0% - 3.4%

Operating Income

   $ 461.4         $445 - $470       -3.6% - 1.9%

Adjusted Net Income4

   $ 247.2         $257 - $267       4.0% - 8.0%

Net Income

   $ 134.6         $190 - $200       41.1% - 48.6%

Adjusted Earnings per Share - Diluted4

   $ 2.89         $2.96 - $3.08       2.4% - 6.6%

Earnings per Share - Diluted

   $ 1.57         $2.20 - $2.31       40.1% - 47.1%

Cash Flows from Operations

   $ 409.5         $420 - $460       2.6% - 12.3%

Capital Expenditures

   $ 136.3         $150 - $170       10.1% - 24.7%

Free Cash Flow4,5

   $ 279.2         $270 - $300       -3.3% - 7.5%

Net Debt to pro forma Adjusted EBITDA ratio6

     4.59x         4.30x - 4.50x      

Full year average diluted share count

     85.5         86.6 - 86.8      
Company will report actual EBITDA and Adjusted EBITDA for 2015
     2014 Actual      2015 Guidance      Growth

Adjusted EBITDA4

   $ 668.3       $ 680 - $703       1.8% - 5.2%

EBITDA4

   $ 649.2       $ 653 - $678       0.6% - 4.4%

“This year we intend to further invest in our highest growth businesses and will be carefully evaluating our options for reinvesting the divestiture proceeds upon closing,” said Tom Barker. “We expect very strong growth in net income this year due to the debt restructuring we completed in 2014.”

Conference Call

The Company will hold a conference call to discuss these topics on Thursday, January 29, 2015 at 11:00 AM Eastern Time (10:00 AM Central Time). Investors may access the call by visiting the Financials section of the West Corporation website at www.west.com and clicking on the Webcast link. A replay of the call will be available on the Company’s website at www.west.com.

About West Corporation

West Corporation (Nasdaq:WSTC) is a global provider of communication and network infrastructure solutions. West helps manage or support essential enterprise communications with services that include unified communication services, public safety services, interactive services such as automated notifications, carrier services and agent services.

For over 25 years, West has provided reliable, high-quality, voice and data services. West serves clients in a variety of industries including telecommunications, retail, financial services, public safety, technology and healthcare. West has a global organization with sales and operations in the United States, Canada, Europe, the Middle East, Asia Pacific and Latin America. For more information on West Corporation, please call 1-800-841-9000 or visit www.west.com.

Forward-Looking Statements

This press release contains forward-looking statements. Forward-looking statements can be identified by the use of words such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “continue” or similar terminology. The statements contained in the 2015 guidance and other statements concerning the Company’s prospects are forward-looking statements. These statements reflect only

 

7


West’s current expectations and are not guarantees of future performance or results. These statements are subject to various risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties include, but are not limited to, West’s ability to complete the announced divestiture of several of its agent services businesses, competition in West’s highly competitive industries; increases in the cost of voice and data services or significant interruptions in these services; West’s ability to keep pace with its clients’ needs for rapid technological change and systems availability; the continued deployment and adoption of emerging technologies; the loss, financial difficulties or bankruptcy of any key clients; security and privacy breaches of the systems West uses to protect personal data; the effects of global economic trends on the businesses of West’s clients; the non-exclusive nature of West’s client contracts and the absence of revenue commitments; the cost of pending and future litigation; the cost of defending against intellectual property infringement claims; the effects of extensive regulation affecting many of West’s businesses; West’s ability to protect its proprietary information or technology; service interruptions to West’s data and operation centers; West’s ability to retain key personnel and attract a sufficient number of qualified employees; increases in labor costs and turnover rates; the political, economic and other conditions in the countries where West operates; changes in foreign exchange rates; West’s ability to complete future acquisitions, integrate or achieve the objectives of its recent and future acquisitions; and future impairments of our substantial goodwill, intangible assets, or other long-lived assets. In addition, West is subject to risks related to its level of indebtedness. Such risks include West’s ability to generate sufficient cash to service its indebtedness and fund its other liquidity needs; West’s ability to comply with covenants contained in its debt instruments; the ability to obtain additional financing; the incurrence of significant additional indebtedness by West and its subsidiaries; and the ability of West’s lenders to fulfill their lending commitments. West is also subject to other risk factors described in documents filed by the Company with the United States Securities and Exchange Commission.

These forward-looking statements speak only as of the date on which the statements were made. West undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable law.

 

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WEST CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands except per share data)

 

    HISTORICAL (1)
Three Months Ended December 31,
    CONTINUING OPERATIONS
Three Months Ended December 31,
 
    2014
Actual
    2013
Actual
    % Change     2014
Adjusted (4)
    2014
Actual
    2013
Actual
    % Change     2014
Adjusted (4)
 

Revenue

  $ 716,243      $ 687,570        4.2   $ 716,243      $ 562,938      $ 536,954        4.8   $ 562,938   

Cost of services

    333,888        329,040        1.5     333,888        234,419        230,699        1.6     234,419   

Selling, general and administrative expenses

    262,984        229,770        14.5     231,027        211,809        187,302        13.1     187,341   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    119,371        128,760        -7.3     151,328        116,710        118,953        -1.9     141,178   

Interest expense, net

    42,911        51,296        -16.3     37,836        42,911        51,296        -16.3     37,836   

Debt call premium and accelerated amortization of deferred financing costs

    21,574        —          NM        —          21,574        —          NM        —     

Other expense (income), net

    (569     (703     NM        (569     (1,493     (683     NM        (1,493
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before tax

    55,455        78,167        -29.1     114,061        53,718        68,340        -21.4     104,835   

Income tax expense

    7,197        27,836        -74.1     14,804        18,834        25,798        -27.0     36,755   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $ 48,258      $ 50,331        -4.1   $ 99,257      $ 34,884      $ 42,542        -18.0   $ 68,080   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

               

Basic

    84,178        83,627          84,178        84,178        83,627          84,178   

Diluted

    86,033        85,088          86,033        86,033        85,088          86,033   

Earnings per share:

               

Basic

  $ 0.57      $ 0.60        -5.0   $ 1.18      $ 0.41      $ 0.51        -19.6   $ 0.81   

Diluted

  $ 0.56      $ 0.59        -5.1   $ 1.15      $ 0.41      $ 0.50        -18.0   $ 0.79   

SELECTED SEGMENT DATA:

               

Revenue:

               

Unified Communications

  $ 395,449      $ 403,150        -1.9     $ 395,449      $ 403,150        -1.9  

Communication Services

    336,301        298,841        12.5       180,782        145,777        24.0  

Intersegment eliminations

    (15,507     (14,421     NM          (13,293     (11,973     NM     
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Total

  $ 716,243      $ 687,570        4.2     $ 562,938      $ 536,954        4.8  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Depreciation:

               

Unified Communications

  $ 19,901      $ 18,841        5.6     $ 19,901      $ 18,841        5.6  

Communication Services

    12,595        10,686        17.9       8,285        6,341        30.7  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Total

  $ 32,496      $ 29,527        10.1     $ 28,186      $ 25,182        11.9  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Amortization:

               

Unified Communications - SG&A

  $ 7,424      $ 6,337        17.2     $ 7,424      $ 6,337        17.2  

Communication Services - COS

    3,221        2,676        20.4       3,221        2,676        20.4  

Communication Services - SG&A

    16,807        7,166        134.5       10,616        6,660        59.4  

Corporate - deferred financing costs

    5,075        4,536        11.9       5,075        4,536        11.9  

Corporate - accelerated amortization of deferred financing costs

    3,853        —          NM          3,853        —          NM     
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Total

  $ 36,380      $ 20,715        75.6     $ 30,189      $ 20,209        49.4  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Share-based Compensation

               

Unified Communications

  $ 3,069      $ 1,310        134.3     $ 3,069      $ 1,310        134.3  

Communication Services

    2,480        1,091        127.3       2,450        1,044        134.7  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Total

  $ 5,549      $ 2,401        131.1     $ 5,519      $ 2,354        134.5  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Cost of services:

               

Unified Communications

  $ 164,946      $ 170,143        -3.1     $ 164,946      $ 170,143        -3.1  

Communication Services

    182,279        171,839        6.1       80,836        71,321        13.3  

Intersegment eliminations

    (13,337     (12,942     NM          (11,363     (10,765     NM     
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Total

  $ 333,888      $ 329,040        1.5     $ 234,419      $ 230,699        1.6  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Selling, general and administrative expenses:

               

Unified Communications

  $ 137,650      $ 132,555        3.8     $ 138,968      $ 133,256        4.3  

Communication Services

    127,504        98,694        29.2       74,771        55,254        35.3  

Intersegment eliminations

    (2,170     (1,479     NM          (1,930     (1,208     NM     
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Total

  $ 262,984      $ 229,770        14.5     $ 211,809      $ 187,302        13.1  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Operating income:

               

Unified Communications

  $ 92,853      $ 100,452        -7.6   $ 104,062      $ 91,535      $ 99,751        -8.2   $ 102,744   

Communication Services

    26,518        28,308        -6.3     47,266        25,175        19,202        31.1     38,434   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 119,371      $ 128,760        -7.3   $ 151,328      $ 116,710      $ 118,953        -1.9   $ 141,178   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating margin:

               

Unified Communications

    23.5     24.9       26.3     23.1     24.7       26.0

Communication Services

    7.9     9.5       14.1     13.9     13.2       21.3
 

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

 

Total

    16.7     18.7       21.1     20.7     22.2       25.1
 

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

 

SELECTED OPERATING DATA2:

               

Revenue from platform-based services

  $ 496,988      $ 495,807        0.2     $ 496,988      $ 495,807        0.2  

Revenue from agent services

  $ 223,665      $ 195,623        14.3     $ 68,146      $ 42,559        60.1  

NM: Not Meaningful

 

9


WEST CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands except per share data)

 

    HISTORICAL (1)
Twelve Months Ended December 31,
    CONTINUING OPERATIONS
Twelve Months Ended December 31,
 
    2014
Actual
    2013
Actual
    % Change     2014
Adjusted (4)
    2014
Actual
    2013
Actual
    % Change     2014
Adjusted (4)
 

Revenue

  $ 2,796,659      $ 2,685,855        4.1   $ 2,796,659      $ 2,218,594      $ 2,120,972        4.6   $ 2,218,594   

Cost of services

    1,319,716        1,260,579        4.7     1,319,716        943,331        894,628        5.4     943,331   

Selling, general and administrative expenses

    992,851        945,062        5.1     903,022        813,856        775,050        5.0     733,797   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    484,092        480,214        0.8     573,921        461,407        451,294        2.2     541,466   

Interest expense, net

    187,834        232,606        -19.2     167,799        187,834        232,606        -19.2     167,799   

Debt call premium and accelerated amortization of deferred financing costs

    73,309        23,105        217.3     —          73,309        23,105        217.3     —     

Other expense (income), net

    (5,966     (2,258     NM        (5,966     (7,026     (2,159     NM        (7,026
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before tax

    228,915        226,761        0.9     412,088        207,290        197,742        4.8     380,693   

Income tax expense

    70,510        83,559        -15.6     126,927        72,679        74,651        -2.6     133,471   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $ 158,405      $ 143,202        10.6   $ 285,161      $ 134,611      $ 123,091        9.4   $ 247,222   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

               

Basic

    84,007        78,875          84,007        84,007        78,875          84,007   

Diluted

    85,507        80,318          85,507        85,507        80,318          85,507   

Earnings per share:

               

Basic

  $ 1.89      $ 1.82        3.8   $ 3.39      $ 1.60      $ 1.56        2.6   $ 2.94   

Diluted

  $ 1.85      $ 1.78        3.9   $ 3.33      $ 1.57      $ 1.53        2.6   $ 2.89   

SELECTED SEGMENT DATA:

               

Revenue:

               

Unified Communications

  $ 1,616,777      $ 1,603,311        0.8     $ 1,616,777      $ 1,603,311        0.8  

Communication Services

    1,239,437        1,119,809        10.7       653,571        545,850        19.7  

Intersegment eliminations

    (59,555     (37,265     NM          (51,754     (28,189     NM     
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Total

  $ 2,796,659      $ 2,685,855        4.1     $ 2,218,594      $ 2,120,972        4.6  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Depreciation:

               

Unified Communications

  $ 77,838      $ 72,388        7.5     $ 77,838      $ 72,388        7.5  

Communication Services

    45,150        42,311        6.7       29,465        24,720        19.2  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Total

  $ 122,988      $ 114,699        7.2     $ 107,303      $ 97,108        10.5  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Amortization:

               

Unified Communications - SG&A

  $ 28,873      $ 26,488        9.0     $ 28,873      $ 26,488        9.0  

Communication Services - COS

    12,216        10,247        19.2       12,216        10,247        19.2  

Communication Services - SG&A

    39,845        28,850        38.1       32,145        26,826        19.8  

Corporate - deferred financing costs

    20,035        18,246        9.8       20,035        18,246        9.8  

Corporate - accelerated amortization of deferred financing costs

    11,601        6,603        75.7       11,601        6,603        75.7  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Total

  $ 112,570      $ 90,434        24.5     $ 104,870      $ 88,410        18.6  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Share-based Compensation

               

Unified Communications

  $ 8,739      $ 5,877        48.7     $ 8,739      $ 5,877        48.7  

Communication Services

    6,989        4,678        49.4       6,835        4,506        51.7  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Total

  $ 15,728      $ 10,555        49.0     $ 15,574      $ 10,383        50.0  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Cost of services:

               

Unified Communications

  $ 680,916      $ 663,835        2.6     $ 680,916      $ 663,835        2.6  

Communication Services

    691,251        628,872        9.9       307,765        255,004        20.7  

Intersegment eliminations

    (52,451     (32,128     NM          (45,350     (24,211     NM     
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Total

  $ 1,319,716      $ 1,260,579        4.7     $ 943,331      $ 894,628        5.4  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Selling, general and administrative expenses:

               

Unified Communications

  $ 550,822      $ 539,655        2.1     $ 555,129      $ 545,791        1.7  

Communication Services

    449,133        410,544        9.4       265,131        233,237        13.7  

Intersegment eliminations

    (7,104     (5,137     NM          (6,404     (3,978     NM     
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Total

  $ 992,851      $ 945,062        5.1     $ 813,856      $ 775,050        5.0  
 

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Operating income:

               

Unified Communications

  $ 385,039      $ 399,821        -3.7   $ 425,131      $ 380,732      $ 393,685        -3.3   $ 420,823   

Communication Services

    99,053        80,393        23.2     148,790        80,675        57,609        40.0     120,643   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 484,092      $ 480,214        0.8   $ 573,921      $ 461,407      $ 451,294        2.2   $ 541,466   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating margin:

               

Unified Communications

    23.8     24.9       26.3     23.5     24.6       26.0

Communication Services

    8.0     7.2       12.0     12.3     10.6       18.5
 

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

 

Total

    17.3     17.9       20.5     20.8     21.3       24.4
 

 

 

   

 

 

     

 

 

   

 

 

   

 

 

     

 

 

 

SELECTED OPERATING DATA2:

               

Revenue from platform-based services

  $ 2,001,363      $ 1,955,203        2.4     $ 2,001,363      $ 1,955,203        2.4  

Revenue from agent services

  $ 810,487      $ 744,304        8.9     $ 224,621      $ 170,345        31.9  

 

10


WEST CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 

     December 31,
2014
    December 31,
2013
    %
Change
 

Current assets:

      

Cash and cash equivalents

   $ 115,061      $ 230,041        -50.0

Trust and restricted cash

     18,573        19,400        -4.3

Accounts receivable, net

     355,625        357,588        -0.5

Prepaid assets

     45,242        31,235        44.8

Other current assets

     95,892        90,462        6.0

Assets held for sale

     304,605        300,049        1.5
  

 

 

   

 

 

   

 

 

 

Total current assets

  934,998      1,028,775      -9.1

Net property and equipment

  350,030      331,904      5.5

Goodwill

  1,884,920      1,671,205      12.8

Other assets

  648,127      464,760      39.5
  

 

 

   

 

 

   

 

 

 

Total assets

$ 3,818,075    $ 3,496,644      9.2
  

 

 

   

 

 

   

 

 

 

Current liabilities

$ 480,436    $ 421,359      14.0

Liabilities held for sale

  84,788      75,628      12.1

Long-term obligations

  3,642,540      3,513,470      3.7

Other liabilities

  269,952      226,359      19.3
  

 

 

   

 

 

   

 

 

 

Total liabilities

  4,477,716      4,236,816      5.7

Stockholders’ deficit

  (659,641   (740,172   10.9
  

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ deficit

$ 3,818,075    $ 3,496,644      9.2
  

 

 

   

 

 

   

 

 

 

 

11


Supplemental Financial Information

The following is a summary of the unaudited quarterly results from continuing operations for the two years ended December 31, 2014 and 2013, in thousands.

 

     Three Months Ended      Year Ended  
     March 31,
2014
    June 30,
2014
     Sept. 30,
2014
     Dec. 31,
2014
     Dec. 31,
2014
 

Revenue

   $ 535,140      $ 552,319       $ 568,197       $ 562,938       $ 2,218,594   

Cost of services

     225,511        239,695         243,706         234,419         943,331   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

  309,629      312,624      324,491      328,519      1,275,263   

Selling, general and administrative expenses

  195,439      197,063      209,545      211,809      813,856   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

  114,190      115,561      114,946      116,710      461,407   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net income from continuing operations

$ 42,097    $ 44,527    $ 13,103    $ 34,884    $ 134,611   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per share from continuing operations:

Basic

$ 0.50    $ 0.53    $ 0.16    $ 0.41    $ 1.60   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

$ 0.49    $ 0.52    $ 0.15    $ 0.41    $ 1.57   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 
     Three Months Ended      Year Ended  
     March 31,
2013
    June 30,
2013
     Sept. 30,
2013
     Dec. 31,
2013
     Dec. 31,
2013
 

Revenue

   $ 521,601      $ 536,716       $ 525,701       $ 536,954       $ 2,120,972   

Cost of services

     219,287        225,308         219,334         230,699         894,628   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

  302,314      311,408      306,367      306,255      1,226,344   

Selling, general and administrative expenses

  215,914      183,310      188,524      187,302      775,050   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

  86,400      128,098      117,843      118,953      451,294   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net income (loss) from continuing operations

$ (1,438 $ 39,410    $ 42,577    $ 42,542    $ 123,091   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Earnings (loss) per share from continuing operations:

Basic

$ (0.02 $ 0.47    $ 0.51    $ 0.51    $ 1.56   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

$ (0.02 $ 0.46    $ 0.50    $ 0.50    $ 1.53   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

12


Reconciliation of Non-GAAP Financial Measures

Adjusted Operating Income Reconciliation

Adjusted operating income is not a measure of financial performance under generally accepted accounting principles (“GAAP”). The Company believes adjusted operating income provides a relevant measure of operating profitability and a useful basis for evaluating the ongoing operations of the Company. Adjusted operating income is used by the Company to assess operating income before the impact of IPO-related expenses, expenses terminated in connection with the IPO, M&A and acquisition-related costs and certain non-cash items. Adjusted operating income should not be considered in isolation or as a substitute for operating income or other profitability data prepared in accordance with GAAP. Adjusted operating income, as presented, may not be comparable to similarly titled measures of other companies. Set forth below is a reconciliation of adjusted operating income to operating income.

Reconciliation of Adjusted Operating Income from Operating Income

 

Unaudited, in thousands                                         
     HISTORICAL (1)     CONTINUING OPERATIONS  
     Three Months Ended Dec. 31,     Three Months Ended Dec. 31,  
     2014      2013      % Change     2014      2013      % Change  

Operating income

   $ 119,371       $ 128,760         -7.3   $ 116,710       $ 118,953         -1.9

Amortization of acquired intangible assets

     24,231         13,503           18,040         12,997      

Share-based compensation

     5,549         2,401           5,519         2,354      

M&A and acquisition related costs

     2,177         234           909         233      
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Adjusted operating income

$ 151,328    $ 144,898      4.4 $ 141,178    $ 134,537      4.9
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 
     Twelve Months Ended Dec. 31,     Twelve Months Ended Dec. 31,  
     2014      2013      % Change     2014      2013      % Change  

Operating income

   $ 484,092       $ 480,214         0.8   $ 461,407       $ 451,294         2.2

Amortization of acquired intangible assets

     68,718         55,338           61,018         53,314      

Share-based compensation

     15,728         10,555           15,574         10,383      

Sponsor management/termination fee

     —           25,000           —           25,000      

IPO bonus

     —           2,975           —           2,975      

M&A and acquisition related costs

     5,383         1,172           3,467         1,172      
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Adjusted operating income

$ 573,921    $ 575,254      -0.2 $ 541,466    $ 544,138      -0.5
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

13


Adjusted Net Income and Adjusted Earnings per Share Reconciliation

Adjusted net income and adjusted earnings per share (EPS) are non-GAAP measures. The Company believes these measures provide a useful indication of profitability and basis for assessing the operations of the Company without the impact of IPO-related expenses, expenses terminated in connection with the IPO, bond redemption premiums, M&A and acquisition related costs and certain non-cash items. Adjusted net income should not be considered in isolation or as a substitute for net income or other profitability metrics prepared in accordance with GAAP. Adjusted net income, as presented, may not be comparable to similarly titled measures of other companies. Set forth below is a reconciliation of adjusted net income to net income.

Reconciliation of Adjusted Net Income from Net Income

 

Unaudited, in thousands except per share                                         
     HISTORICAL (1)     CONTINUING OPERATIONS  
     Three Months Ended Dec. 31,     Three Months Ended Dec. 31,  
     2014      2013      % Change     2014      2013      % Change  

Net income

   $ 48,258       $ 50,331         -4.1   $ 34,884       $ 42,542         -18.0

Amortization of acquired intangible assets

     24,231         13,503           18,040         12,997      

Amortization of deferred financing costs

     5,075         4,536           5,075         4,536      

Accelerated amortization of deferred financing costs

     3,853         —             3,853         —        

Share-based compensation

     5,549         2,401           5,519         2,354      

Debt call premiums

     17,721         —             17,721         —        

M&A and acquisition related costs

     2,177         234           909         233      
  

 

 

    

 

 

      

 

 

    

 

 

    

Pre-tax total

  58,606      20,674      51,117      20,120   

Income tax expense on adjustments

  7,607      7,362      17,921      7,247   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Adjusted net income

$ 99,257    $ 63,643      56.0 $ 68,080    $ 55,415      22.9
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Diluted shares outstanding

  86,033      85,088      86,033      85,088   

Adjusted EPS - diluted

$ 1.15    $ 0.75      53.3 $ 0.79    $ 0.65      21.5
     Twelve Months Ended Dec. 31,     Twelve Months Ended Dec. 31,  
     2014      2013      % Change     2014      2013      % Change  

Net income

   $ 158,405       $ 143,202         10.6   $ 134,611       $ 123,091         9.4

Amortization of acquired intangible assets

     68,718         55,338           61,018         53,314      

Amortization of deferred financing costs

     20,035         18,246           20,035         18,246      

Accelerated amortization of deferred financing costs

     11,601         6,603           11,601         6,603      

Share-based compensation

     15,728         10,555           15,574         10,383      

Sponsor management/termination fee

     —           25,000           —           25,000      

IPO bonus

     —           2,975           —           2,975      

Debt call premiums

     61,708         16,502           61,708         16,502      

M&A and acquisition related costs

     5,383         1,172           3,467         1,172      
  

 

 

    

 

 

      

 

 

    

 

 

    

Pre-tax total

  183,173      136,391      173,403      134,195   

Income tax expense on adjustments

  56,417      50,260      60,792      49,586   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Adjusted net income

$ 285,161    $ 229,333      24.3 $ 247,222    $ 207,700      19.0
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Diluted shares outstanding

  85,507      80,318      85,507      80,318   

Adjusted EPS - diluted

$ 3.33    $ 2.86      16.4 $ 2.89    $ 2.59      11.6

 

14


Free Cash Flow Reconciliation

The Company believes free cash flow provides a relevant measure of liquidity and a useful basis for assessing the Company’s ability to fund its activities, including the financing of acquisitions, debt service, stock repurchases and distribution of earnings to shareholders. Free cash flow is calculated as cash flows from operations less cash capital expenditures. Free cash flow is not a measure of financial performance under GAAP. Free cash flow should not be considered in isolation or as a substitute for cash flows from operations or other liquidity measures prepared in accordance with GAAP. Free cash flow, as presented, may not be comparable to similarly titled measures of other companies. Set forth below is a reconciliation of free cash flow to cash flows from operations.

Reconciliation of Free Cash Flow from Operating Cash Flow

 

Unaudited, in thousands                     
     HISTORICAL (1)  
     Three Months Ended Dec. 31,  
     2014      2013      % Change  

Cash flows from operations

   $ 132,473       $ 107,358         23.4

Cash capital expenditures

     37,034         40,418         -8.4
  

 

 

    

 

 

    

 

 

 

Free cash flow

   $ 95,439       $ 66,940         42.6
  

 

 

    

 

 

    

 

 

 

 

                         CONTINUING OPERATIONS  
     Twelve Months Ended Dec. 31,     Twelve Months Ended Dec. 31,  
     2014      2013      % Change     2014      2013      % Change  

Cash flows from operations

   $ 462,723       $ 384,087         20.5   $ 409,491       $ 318,769         28.5

Cash capital expenditures

     150,716         128,398         17.4     130,318         114,260         14.1
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Free cash flow

   $ 312,007       $ 255,689         22.0   $ 279,173       $ 204,509         36.5
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

EBITDA and Adjusted EBITDA Reconciliation

The common definition of EBITDA is “earnings before interest expense, taxes, depreciation and amortization.” In evaluating liquidity and performance, the Company uses earnings before interest expense, share based compensation, taxes, depreciation and amortization, M&A and acquisition-related costs and one-time IPO-related expenses, or “adjusted EBITDA.” EBITDA and adjusted EBITDA are not measures of financial performance or liquidity under GAAP. EBITDA and adjusted EBITDA should not be considered in isolation or as a substitute for net income, cash flows from operations or other income or cash flows data prepared in accordance with GAAP. EBITDA and adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies. EBITDA and adjusted EBITDA are used by certain investors as measures to assess the Company’s ability to service debt. Adjusted EBITDA is also used in the Company’s debt covenants, although the precise adjustments used to calculate adjusted EBITDA included in the Company’s credit facility and indentures vary in certain respects among such agreements and from those presented below. Certain adjustments to adjusted EBITDA were excluded from the calculations below consistent with the adjustments made for adjusted operating income and adjusted net income. Set forth below is a reconciliation of EBITDA and adjusted EBITDA to cash flows from operations and net income.

 

15


Reconciliation of EBITDA and Adjusted EBITDA from Operating Cash Flow

 

Unaudited, in thousands                         
     HISTORICAL (1)  
     Three Months Ended Dec. 31,     Year Ended Dec. 31,  
     2014     2013     2014     2013  

Cash flows from operating activities

   $ 132,473      $ 107,358      $ 462,723      $ 384,087   

Income tax expense

     7,197        27,836        70,510        83,559   

Deferred income tax benefit

     4,519        6,193        29,146        2,525   

Interest expense and other financing charges

     63,825        51,904        261,404        257,696   

Provision for share-based compensation

     (5,549     (2,401     (15,728     (10,555

Amortization of deferred financing costs

     (5,075     (4,536     (20,035     (18,246

Accelerated amortization of deferred financing costs

     (3,853     —          (11,601     (6,603

Other

     321        (6     312        (99

Changes in operating assets and liabilities, net of business acquisitions

     (14,630     (10,571     (82,490     (27,623
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

  179,228      175,777      694,241      664,741   

Provision for share-based compensation

  5,549      2,401      15,728      10,555   

Sponsor management/termination fee

  —        —        —        25,000   

IPO bonus

  —        —        —        2,975   

M&A and acquisition related costs

  2,177      234      5,383      1,172   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

$ 186,954    $ 178,412    $ 715,352    $ 704,443   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from operating activities

$ 132,473    $ 107,358    $ 462,723    $ 384,087   

Cash flows used in investing activities

$ (43,774 $ (46,349 $ (544,906 $ (135,508

Cash flows used in financing activities

$ (135,882 $ (42,666 $ (25,027 $ (196,828

Reconciliation of EBITDA and Adjusted EBITDA from Net Income

 

Unaudited, in thousands                            
     HISTORICAL (1)  
     Three Months Ended Dec. 31,      Year Ended Dec. 31,  
     2014      2013      2014      2013  

Net income

   $ 48,258       $ 50,331       $ 158,405       $ 143,202   

Interest expense and other financing charges

     63,825         51,904         261,404         257,696   

Depreciation and amortization

     59,948         45,706         203,922         180,284   

Income tax expense

     7,197         27,836         70,510         83,559   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

  179,228      175,777      694,241      664,741   

Provision for share-based compensation

  5,549      2,401      15,728      10,555   

Sponsor management/termination fee

  —        —        —        25,000   

IPO bonus

  —        —        —        2,975   

M&A and acquisition related costs

  2,177      234      5,383      1,172   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

$ 186,954    $ 178,412    $ 715,352    $ 704,443   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

16


Reconciliation of EBITDA and Adjusted EBITDA from Operating Cash Flow

 

Unaudited, in thousands             
     CONTINUING OPERATIONS  
     Year Ended Dec. 31,  
     2014     2013  

Cash flows from operating activities

   $ 409,491      $ 318,769   

Income tax expense

     72,679        74,651   

Deferred income tax benefit

     26,632        6,827   

Interest expense and other financing charges

     261,404        257,696   

Provision for share-based compensation

     (15,574     (10,383

Amortization of deferred financing costs

     (20,035     (18,246

Accelerated amortization of deferred financing costs

     (11,601     (6,603

Other

     316        (13

Changes in operating assets and liabilities, net of business acquisitions

     (74,081     (6,592
  

 

 

   

 

 

 

EBITDA

  649,231      616,106   

Provision for share-based compensation

  15,574      10,383   

Sponsor management/termination fee

  —        25,000   

IPO bonus

  —        2,975   

M&A and acquisition related costs

  3,467      1,172   
  

 

 

   

 

 

 

Adjusted EBITDA

$ 668,272    $ 655,636   
  

 

 

   

 

 

 

Cash flows from operating activities

$ 409,491    $ 318,769   

Cash flows used in investing activities

$ (524,376 $ (121,882

Cash flows used in financing activities

$ (25,027 $ (196,828

Reconciliation of EBITDA and Adjusted EBITDA from Net Income

 

Unaudited, in thousands                            
     CONTINUING OPERATIONS  
     Three Months Ended Dec. 31,      Year Ended Dec. 31,  
     2014      2013      2014      2013  

Net income

   $ 34,884       $ 42,542       $ 134,611       $ 123,091   

Interest expense and other financing charges

     63,825         51,904         261,404         257,696   

Depreciation and amortization

     49,447         40,855         180,537         160,668   

Income tax expense

     18,834         25,798         72,679         74,651   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

  166,990      161,099      649,231      616,106   

Provision for share-based compensation

  5,519      2,354      15,574      10,383   

Sponsor management/termination fee

  —        —        —        25,000   

IPO bonus

  —        —        —        2,975   

M&A and acquisition related costs

  909      233      3,467      1,172   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

$ 173,418    $ 163,686    $ 668,272    $ 655,636   
  

 

 

    

 

 

    

 

 

    

 

 

 

###

 

17