|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
|
(Address of principal executive offices)
|
(Zip Code)
|
(
|
(Registrant’s telephone number, including area code)
|
N/A
|
(Former name, former address and former fiscal year, if changed since last report)
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
|
|
☒
|
Smaller reporting company
|
|
|
Emerging growth company
|
|
PAGE | ||
PART I -
|
1 |
|
ITEM 1.
|
1 | |
ITEM 2.
|
2
|
|
ITEM 3.
|
16
|
|
ITEM 4.
|
16
|
|
PART II.
|
17 | |
ITEM 1.
|
17
|
|
ITEM 1A.
|
17
|
|
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 18 |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 18 |
ITEM 4. | MINE SAFETY DISCLOSURES | 18 |
ITEM 5. | OTHER INFORMATION | 18 |
ITEM 6.
|
18 | |
19 |
F-1
|
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
March 31,
|
December 31,
|
|||||||
2023
|
2022
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Sale proceeds held in escrow
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
|
||||||||
Property and equipment, net
|
|
|
||||||
Other assets |
||||||||
Total assets
|
$
|
|
$
|
|
||||
|
|
|||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
|
|||||||
Accounts payable
|
$
|
|
$
|
|
||||
Other current liabilities and accrued expenses
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Other non-current liabilities |
||||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies
|
||||||||
Shareholders’ equity:
|
|
|
||||||
Common shares,
|
|
|
||||||
Accumulated earnings
|
|
|
||||||
Total shareholders’ equity
|
|
|
||||||
|
|
|||||||
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
Three Months Ended
March 31,
|
||||||||
2023
|
2022
|
|||||||
Revenues
|
||||||||
Wireless service revenues
|
$
|
|
$
|
|
||||
Fixed broadband service revenues
|
|
|
||||||
Equipment sales
|
|
|
||||||
Non-subscriber international long distance and other revenues
|
|
|
||||||
Total revenues
|
|
|
||||||
Operating expenses
|
||||||||
Cost of service, exclusive of depreciation, amortization and accretion shown separately
|
|
|
||||||
Cost of equipment sales
|
|
|
||||||
Sales and marketing
|
|
|
||||||
General and administrative
|
|
|
||||||
Depreciation, amortization and accretion
|
|
|
||||||
Loss on disposal of assets
|
|
|
||||||
Total operating expenses
|
|
|
||||||
Operating (loss) income
|
(
|
)
|
|
|||||
Other income (expenses)
|
||||||||
Interest expense
|
|
(
|
)
|
|||||
Change in fair value of warrant liability
|
|
|
||||||
Other, net
|
|
(
|
)
|
|||||
Total other income (expenses), net
|
|
(
|
)
|
|||||
Loss before income taxes
|
(
|
)
|
(
|
)
|
||||
Income tax expense
|
(
|
)
|
(
|
)
|
||||
Net loss
|
(
|
)
|
(
|
)
|
||||
Less: Net income attributable to noncontrolling interests
|
|
(
|
)
|
|||||
Net loss attributable to Trilogy International Partners Inc.
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Comprehensive (loss) income
|
||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Other comprehensive income:
|
||||||||
Foreign currency translation adjustments
|
|
|
||||||
Other comprehensive income
|
|
|
||||||
Comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Comprehensive income attributable to noncontrolling interests
|
|
(
|
)
|
|||||
Comprehensive loss attributable to Trilogy International Partners Inc.
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Net loss attributable to Trilogy International Partners Inc. per share:
|
||||||||
Basic (see Note 9 - Earnings per Share)
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Diluted (see Note 9 - Earnings per Share)
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Weighted average common shares:
|
||||||||
Basic
|
|
|
||||||
Diluted
|
|
|
Accumulated
|
||||||||||||||||||||||||||||
Common Shares
|
Additional
|
Accumulated
|
Other
|
Total
|
||||||||||||||||||||||||
Paid-In
|
(Deficit)
|
Comprehensive
|
Noncontrolling
|
Shareholders’
|
||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Income
|
Interests
|
(Deficit) Equity
|
||||||||||||||||||||||
Balance, December 31, 2021
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||||||||||
Equity-based compensation
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Net (loss) income
|
-
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||
Other comprehensive income
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||
Forfeiture of shares
|
(
|
)
|
|
|
|
|
|
|
||||||||||||||||||||
Issuance of shares related to restricted share units (“RSUs”) and other
|
|
|
(
|
)
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||||
Balance, March 31, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
|||||||||||||
|
||||||||||||||||||||||||||||
Balance, December 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||||
Balance, March 31, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended
March 31,
|
||||||||
2023
|
2022
|
|||||||
Operating activities:
|
||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
||||||||
Provision for doubtful accounts
|
|
|
||||||
Depreciation, amortization and accretion
|
|
|
||||||
Equity-based compensation
|
|
|
||||||
Loss on disposal of assets
|
|
|
||||||
Non-cash right-of-use (“ROU”) asset lease expense
|
|
|
||||||
Non-cash interest expense
|
|
|
||||||
Settlement of cash flow hedges
|
|
(
|
)
|
|||||
Change in fair value of warrant liability
|
|
(
|
)
|
|||||
Non-cash gain from change in fair value on cash flow hedges
|
|
(
|
)
|
|||||
(Gain) loss on forward exchange contracts and unrealized foreign exchange transactions
|
(
|
)
|
|
|||||
Deferred income taxes
|
|
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
|
|
||||||
Equipment Installment Plan (“EIP”) receivables
|
|
|
||||||
Inventory
|
|
(
|
)
|
|||||
Prepaid expenses and other current assets
|
(
|
)
|
(
|
)
|
||||
Other assets
|
|
(
|
)
|
|||||
Accounts payable
|
(
|
)
|
(
|
)
|
||||
Operating lease liabilities
|
|
(
|
)
|
|||||
Other current liabilities and accrued expenses
|
(
|
)
|
|
|||||
Customer deposits and unearned revenue
|
|
(
|
)
|
|||||
Net cash (used in) provided by operating activities
|
(
|
)
|
|
|||||
|
||||||||
Investing activities:
|
||||||||
Purchase of property and equipment
|
|
(
|
)
|
|||||
Other, net
|
|
(
|
)
|
|||||
Net cash used in investing activities
|
|
(
|
)
|
|||||
|
||||||||
Financing activities:
|
||||||||
Proceeds from debt
|
|
|
||||||
Payments of debt, including sale-leaseback and EIP receivables financing obligations
|
|
(
|
)
|
|||||
Proceeds from EIP receivables financing obligation
|
|
|
||||||
Other, net
|
|
(
|
)
|
|||||
Net cash provided by financing activities
|
|
|||||||
|
||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash
|
(
|
)
|
|
|||||
|
||||||||
Cash, cash equivalents and restricted cash, beginning of period
|
|
|
||||||
|
||||||||
Effect of exchange rate changes
|
|
|
||||||
|
||||||||
Cash, cash equivalents and restricted cash, end of period
|
$
|
|
$
|
|
As of May 19, 2022
|
||||
Current assets:
|
||||
Cash, cash equivalents and restricted cash
|
$
|
|
||
Accounts receivable, net
|
|
|||
EIP receivables, net
|
|
|||
Inventory
|
|
|||
Prepaid expenses and other current assets
|
|
|||
Total current assets
|
|
|||
|
||||
Property and equipment, net
|
|
|||
Operating lease right-of-use assets, net
|
|
|||
License costs, goodwill and other intangible assets, net
|
|
|||
Long-term EIP receivables
|
|
|||
Deferred income taxes
|
|
|||
Other assets
|
|
|||
Total assets
|
$
|
|
||
|
||||
Current liabilities:
|
||||
Accounts payable
|
$
|
|
||
Construction accounts payable
|
|
|||
Current portion of debt and financing lease liabilities
|
|
|||
Customer deposits and unearned revenue
|
|
|||
Short-term operating lease liabilities
|
|
|||
Other current liabilities and accrued expenses
|
|
|||
Total current liabilities
|
|
|||
|
||||
Long-term debt and financing lease liabilities
|
|
|||
Non-current operating lease liabilities
|
|
|||
Other non-current liabilities
|
|
|||
Total liabilities
|
$
|
|
||
|
||||
Net assets sold
|
$
|
|
||
|
||||
Net consideration
|
$
|
|
||
Less: Net assets sold
|
(
|
)
|
||
Carrying amount of noncontrolling interests
|
|
|||
Accumulated other comprehensive loss attributable to TIP Inc.
|
(
|
)
|
||
Gain on sale of 2degrees operation
|
$
|
|
As of May 14, 2022
|
||||
Current assets:
|
||||
Cash, cash equivalents and restricted cash
|
$
|
|
||
Accounts receivable and EIP receivables, net
|
|
|||
Inventory
|
|
|||
Prepaid expenses and other current assets
|
|
|||
Total current assets
|
|
|||
|
||||
Property and equipment, net
|
|
|||
Operating lease right-of-use assets, net
|
|
|||
License costs and other intangible assets, net
|
|
|||
Other assets
|
|
|||
Total assets
|
$
|
|
||
|
||||
Current liabilities:
|
||||
Accounts payable
|
$
|
|
||
Construction accounts payable
|
|
|||
Current portion of debt and financing lease liabilities
|
|
|||
Customer deposits and unearned revenue
|
|
|||
Short-term operating lease liabilities
|
|
|||
Other current liabilities and accrued expenses
|
|
|||
Total current liabilities
|
|
|||
|
||||
Long-term debt and financing lease liabilities
|
|
|||
Non-current operating lease liabilities
|
|
|||
Other non-current liabilities
|
|
|||
Total liabilities
|
$
|
|
||
|
||||
Net liabilities sold
|
$
|
(
|
)
|
|
|
||||
Net consideration
|
$
|
|
||
Add: Net liabilities sold
|
|
|||
Carrying amount of noncontrolling interests
|
(
|
)
|
||
Gain on sale of NuevaTel operation
|
$
|
|
Three Months Ended
|
||||
March 31, 2022
|
||||
EIP receivables derecognized
|
$
|
|
||
Cash proceeds
|
(
|
)
|
||
Reversal of unamortized imputed discount
|
(
|
)
|
||
Reversal of allowance for doubtful accounts
|
(
|
)
|
||
Pre-tax gain on sales of EIP receivables
|
$
|
(
|
)
|
As of March 31, 2023
|
As of December 31, 2022
|
|||||||
Payroll, severance and other employee benefits
|
$
|
|
$
|
|
||||
Other
|
|
|
||||||
Other current liabilities and accrued expenses
|
$
|
|
$
|
|
• |
Level 1 – Quoted prices in active markets for identical assets or liabilities;
|
• |
Level 2 – Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable;
|
• |
Level 3 – Unobservable inputs in which little or no market activity exists, requiring an entity to develop its own assumptions that market participants would use to value the
asset or liability.
|
Fair Value Measurement as of March 31, 2023
|
||||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Forward exchange contracts
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Total liabilities
|
$
|
|
$
|
|
$
|
|
$
|
|
Fair Value Measurement as of December 31, 2022
|
||||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Forward exchange contracts
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Total liabilities
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months
Ended March 31,
2022
|
||||
Non-cash gain from change in fair value recorded in Other, net
|
$
|
|
||
Net cash settlement
|
$
|
|
Three Months Ended March 31, 2022
|
||||||||||||||||
New Zealand
|
Bolivia
|
Other
|
Total
|
|||||||||||||
Postpaid wireless service revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Prepaid wireless service revenues
|
|
|
|
|
||||||||||||
Fixed broadband service revenues
|
|
|
|
|
||||||||||||
Equipment sales
|
|
|
|
|
||||||||||||
Other wireless service and other revenues
|
|
|
|
|
||||||||||||
Total revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
Contract Assets
|
||||
2022
|
||||
Balance at January 1
|
$
|
|
||
Increase resulting from new contracts
|
|
|||
Contract assets reclassified to a receivable or collected in cash
|
(
|
)
|
||
Foreign currency translation
|
|
|||
Balance at March 31
|
$
|
|
Deferred Revenue
|
||||
2022
|
||||
Balance at January 1
|
$
|
|
||
Net increase in deferred revenue
|
|
|||
Revenue recognized related to the balance existing at January 1
|
(
|
)
|
||
Foreign currency translation
|
|
|||
Balance at March 31
|
$
|
|
Contract Costs
|
||||
2022
|
||||
Balance at January 1
|
$
|
|
||
Incremental costs of obtaining and contract fulfillment costs
|
|
|||
Amortization included in operating costs
|
(
|
)
|
||
Foreign currency translation
|
|
|||
Balance at March 31
|
$
|
|
Three Months Ended March 31,
|
||||||||
(in thousands, except per share amounts)
|
2023
|
2022
|
||||||
Numerator:
|
||||||||
Net loss attributable to TIP Inc. - basic and diluted
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Denominator:
|
||||||||
Basic and diluted weighted average Common Shares outstanding
|
|
|
||||||
Net loss per share:
|
||||||||
Basic and diluted
|
$
|
(
|
)
|
$
|
(
|
)
|
Three Months Ended March 31,
|
||||||||
2023
|
2022
|
|||||||
Warrants
|
|
|
||||||
Forfeitable founders shares
|
|
|
||||||
Unvested RSUs
|
|
|
||||||
Weighted average Common Shares excluded from calculation of diluted net loss per share
|
|
|
Three Months Ended March 31,
|
||||||||||
Classification | 2023 | 2022 | ||||||||
Operating
lease cost:(1)
|
||||||||||
Cost of service
|
$ |
$ |
||||||||
Sales and marketing
|
||||||||||
General and administrative
|
||||||||||
$ |
$ |
|||||||||
Financing
lease cost:
|
||||||||||
Amortization
of ROU assets
|
Depreciation, amortization and accretion
|
|
|
|||||||
Interest on
lease liabilities
|
Interest expense
|
|
|
|||||||
Total net
lease cost
|
$
|
|
$
|
|
(1)
|
Operating lease costs include variable and short-term lease costs, both of which were immaterial for the periods presented.
|
Three Months Ended
March 31, 2022
|
||||
Cash paid for amounts included in
the measurement of lease liabilities
|
||||
Operating cash flows for operating
leases
|
$
|
|
||
Operating cash flows for finance
leases
|
$
|
|
||
Financing cash flows for finance
leases
|
$
|
|
Three Months Ended March 31,
|
||||||||
2023
|
2022
|
|||||||
Revenues
|
||||||||
New Zealand
|
$
|
|
$
|
|
||||
Bolivia
|
|
|
||||||
Unallocated corporate and eliminations
|
|
|
||||||
Total revenues
|
$
|
|
$
|
|
||||
Segment Adjusted EBITDA
|
||||||||
New Zealand
|
$
|
|
$
|
|
||||
Bolivia
|
|
(
|
)
|
|||||
Equity-based compensation
|
|
(
|
)
|
|||||
Transaction and other nonrecurring costs
|
|
(
|
)
|
|||||
Depreciation, amortization and accretion
|
(
|
)
|
(
|
)
|
||||
Loss on disposal of assets
|
|
(
|
)
|
|||||
Interest expense
|
|
(
|
)
|
|||||
Change in fair value of warrant liability
|
|
|
||||||
Other, net
|
|
(
|
)
|
|||||
Unallocated corporate and eliminations
|
(
|
)
|
(
|
)
|
||||
Loss before income taxes
|
$
|
(
|
)
|
$
|
(
|
)
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
• |
the timing of the liquidation and dissolution of the Company following its adoption of a plan of liquidation on June 10, 2022;
|
• |
the amount and timing of the release to the Company of funds held in escrow to secure payment of certain indemnification obligations under the Purchase Agreement; the escrow period is scheduled to terminate in late May 2023;
|
• |
the timing and amount of any distribution to shareholders;
|
• |
expenses associated with the Company losing its foreign private issuer status under U.S. federal securities laws;
|
• |
the ability of U.S. persons to sell their common shares of TIP Inc. (the “Common Shares”);
|
• |
the Board’s expectation that the financial resources available to the Company following the cash distributions to shareholders will be adequate to fund the Company’s outstanding indemnification obligations (beyond those for which
funds have been placed in escrow) and ongoing costs of operating the Company prior to its liquidation and dissolution; and
|
• |
the possibility of changes in the securities regulations of Canada and the United States that could affect the ability of investors to trade their Common Shares.
|
• |
the amount and timing of the release to the Company of funds held in escrow to secure payment of certain indemnification obligations under the Purchase Agreement; the escrow period is scheduled to terminate in late May 2023; and
|
• |
taxes payable.
|
• |
the amount and timing of the release to the Company of funds held in escrow to secure payment of certain indemnification obligations under the Purchase Agreement; the escrow period is scheduled to terminate in late May 2023;
|
• |
risks related to anti-corruption compliance;
|
• |
reliance on limited management resources;
|
• |
tax related risks;
|
• |
risks related to being a publicly traded company, including, but not limited to, compliance and costs associated with the U.S. Sarbanes-Oxley Act of 2002 (to the extent applicable);
|
• |
an increase in costs and demands on management resources as a result of the Company ceasing to qualify as an “emerging growth company” on December 31, 2022 under the U.S. Jumpstart Our Business Startups Act of 2012;
|
• |
additional expenses in connection with the Company losing its foreign private issuer status under U.S. federal securities laws;
|
• |
the determination to not pay dividends;
|
• |
risks related to the liquidity of the market for the Common Shares;
|
• |
risks related to litigation, including class actions and regulatory matters;
|
• |
risks that the market price and trading volume of the Common Shares may materially decrease or experience increased fluctuation;
|
• |
foreign exchange rate and associated risks;
|
• |
risks related to currency controls and withholding taxes;
|
• |
risks related to the impact of new laws and regulations;
|
• |
risks associated with the Company’s internal controls over financial reporting; and
|
• |
the costs associated with the dissolution of the Company.
|
March 31, 2023
|
December 31, 2022
|
% Change
|
||||||||||
End of period NZD to USD exchange rate(1)
|
0.626
|
0.635
|
(1
|
%)
|
(1)
|
In the fourth quarter of 2022, the Company entered into forward exchange contracts to sell an aggregate of $20 million NZD and buy an aggregate of $12.3 million USD on June 30, 2023. Accordingly, future exposure to fluctuations in the NZD to USD exchange rate for substantially all of the proceeds from the 2degrees Sale held in escrow is mitigated. |
March 31, 2023
|
December 31, 2022
|
% Change
|
||||||||||
End of period CAD to USD exchange rate
|
0.74
|
0.74
|
0
|
%
|
||||||||
|
Three Months Ended March 31,
|
|||||||||||
|
2023
|
2022
|
% Change
|
|||||||||
Average CAD to USD exchange rate
|
0.74
|
0.79
|
(6
|
%)
|
|
Three Months Ended March 31,
|
% Variance
|
||||||||||
|
2023
|
2022
|
3 mo. vs 3 mo.
|
|||||||||
(in millions, unless otherwise noted)
|
||||||||||||
Service revenues
|
$
|
-
|
$
|
131.2
|
(100
|
%)
|
||||||
Total revenues
|
$
|
-
|
$
|
155.4
|
(100
|
%)
|
||||||
Net loss
|
$
|
1.6
|
$
|
28.8
|
(94
|
%)
|
||||||
Net loss margin(1)
|
-
|
%
|
21.9
|
%
|
(21.9
|
) pts | ||||||
Consolidated Adjusted EBITDA(2)
|
$
|
(1.8
|
)
|
$
|
27.8
|
(107
|
%)
|
|||||
Consolidated Adjusted EBITDA Margin(2)
|
-
|
%
|
21.2
|
%
|
(21.2
|
) pts | ||||||
Capital expenditures(3)
|
$
|
-
|
$
|
26.3
|
(100
|
%)
|
(1)
|
Net loss margin is calculated as Net loss divided by service revenues.
|
(2)
|
These are non-U.S. GAAP measures and do not have standardized meanings under U.S. GAAP. Therefore, they are unlikely to be comparable to similar measures presented by other
companies. For definitions and reconciliation to most directly comparable GAAP financial measures, see “Definitions and Reconciliations of Non-GAAP Measures” in this MD&A.
|
(3)
|
Represents purchases of property and equipment excluding purchases of property and equipment acquired through vendor-backed financing and finance lease arrangements. Expenditures
related to the acquisition of spectrum licenses, if any, were not included in capital expenditures amounts.
|
|
Three Months Ended March 31,
|
|||||||
(in millions)
|
2023
|
2022
|
||||||
Revenues:
|
||||||||
Wireless service revenues
|
$
|
-
|
$
|
101.5
|
||||
Fixed broadband service revenues
|
-
|
27.7
|
||||||
Equipment sales
|
-
|
24.1
|
||||||
Non-subscriber international long distance and other revenues
|
-
|
2.1
|
||||||
Total revenues
|
$
|
-
|
$
|
155.4
|
Three Months Ended March 31,
|
% Variance
|
|||||||||||
(in millions)
|
2023
|
2022
|
3 mo. vs 3 mo.
|
|||||||||
Operating expenses:
|
||||||||||||
Cost of service, exclusive of depreciation, amortization and accretion shown separately
|
$
|
-
|
$
|
54.2
|
(100
|
%)
|
||||||
Cost of equipment sales
|
-
|
24.8
|
(100
|
%)
|
||||||||
Sales and marketing
|
-
|
20.5
|
(100
|
%)
|
||||||||
General and administrative
|
1.8
|
31.0
|
(94
|
%)
|
||||||||
Depreciation, amortization and accretion
|
-
|
18.1
|
(100
|
%)
|
||||||||
Loss on disposal of assets
|
-
|
0.5
|
(100
|
%)
|
||||||||
Total operating expenses
|
$
|
1.8
|
$
|
149.1
|
(99 | %) |
|
Three Months Ended March 31,
|
% Variance
|
||||||||||
(in millions)
|
2023
|
2022
|
3 mo. vs 3 mo.
|
|||||||||
Interest expense
|
$
|
-
|
$
|
14.3
|
(100
|
%)
|
||||||
Change in fair value of warrant liability
|
-
|
(0.1
|
)
|
100
|
%
|
|||||||
Other, net
|
(0.2
|
)
|
14.6
|
(102
|
%)
|
|
Three Months Ended March 31,
|
% Variance
|
||||||||||
(in millions)
|
2023
|
2022
|
3 mo. vs 3 mo.
|
|||||||||
Income tax expense
|
$
|
-
|
$
|
6.2
|
(99
|
%)
|
Three Months Ended March 31,
|
% Variance
|
|||||||||||
(in millions, unless otherwise noted)
|
2023
|
2022
|
3 mo. vs 3 mo.
|
|||||||||
Service revenues
|
$
|
-
|
$
|
104.6
|
(100
|
%)
|
||||||
Total revenues
|
$
|
-
|
$
|
128.7
|
(100
|
%)
|
||||||
Segment Adjusted EBITDA
|
$
|
-
|
$
|
32.8
|
(100
|
%)
|
||||||
Segment Adjusted EBITDA Margin(1)
|
-
|
%
|
31.4
|
%
|
(31.4
|
) pts | ||||||
|
||||||||||||
Capital expenditures(2)
|
$
|
-
|
$
|
24.9
|
(100
|
%)
|
||||||
Capital intensity
|
-
|
%
|
23.8
|
%
|
(23.8
|
) pts |
(1)
|
Segment Adjusted EBITDA Margin was calculated as Segment Adjusted EBITDA divided by service revenues.
|
(2)
|
Represents purchases of property and equipment excluding purchases of property and equipment acquired through vendor-backed financing and finance lease arrangements. Expenditures
related to the acquisition of spectrum licenses, if any, were not included in capital expenditures amounts.
|
|
Three Months Ended March 31,
|
% Variance
|
||||||||||
(in millions, unless otherwise noted)
|
2023
|
2022
|
3 mo. vs 3 mo.
|
|||||||||
Service revenues
|
$
|
-
|
$
|
26.6
|
(100
|
%)
|
||||||
Total revenues
|
$
|
-
|
$
|
26.6
|
(100
|
%)
|
||||||
Segment Adjusted EBITDA
|
$
|
-
|
$
|
(0.5
|
)
|
100
|
%
|
|||||
Segment Adjusted EBITDA Margin(1)
|
-
|
%
|
(1.7
|
%)
|
1.7
|
pts | ||||||
Capital expenditures(2)
|
$
|
-
|
$
|
1.5
|
(100
|
%)
|
||||||
Capital intensity
|
-
|
%
|
5.5
|
%
|
(5.5
|
) pts |
(1)
|
Segment Adjusted EBITDA Margin was calculated as Segment Adjusted EBITDA divided by service revenues.
|
(2)
|
Represents purchases of property and equipment excluding purchases of property and equipment acquired through vendor-backed financing and finance lease arrangements. Expenditures
related to the acquisition of spectrum licenses, if any, were not included in capital expenditures amounts.
|
Consolidated Balance Sheet Data
|
|||||||||
As of March 31,
|
As of December 31,
|
||||||||
(in millions, except as noted)
|
2023
|
2022
|
Change includes:
|
||||||
Cash and cash equivalents
|
$
|
21.7
|
$
|
25.1
|
Decline is due to $3.3 million of cash used to fund headquarters operating activities.
|
||||
% Change
|
(13
|
%)
|
|||||||
|
|||||||||
Other current assets
|
14.6
|
14.7
|
|||||||
% Change
|
(1
|
%)
|
|||||||
|
|||||||||
Other non-current assets
|
1.3
|
1.4
|
|||||||
% Change
|
(7
|
%)
|
|||||||
|
|||||||||
Total assets
|
$
|
37.7
|
$
|
41.2
|
|||||
|
|||||||||
Total current liabilities
|
$
|
5.5
|
$
|
7.4
|
Decline is primarily due to payment of accrued employee benefits of $1.2 million and accrued severance of $0.6 million.
|
||||
% Change
|
(25
|
%)
|
|||||||
|
|||||||||
Other non-current liabilities
|
0.3
|
0.3
|
|||||||
% Change
|
(8
|
%)
|
|||||||
|
|||||||||
Total shareholders’ equity
|
31.8
|
33.5
|
Decline is due to the net loss during the three months ended March 31, 2023.
|
||||||
% Change
|
(5
|
%)
|
|||||||
|
|||||||||
Total liabilities and shareholders’ equity
|
$
|
37.7
|
$
|
41.2
|
2023
|
2022
|
2021
|
||||||||||||||||||||||||||||||
(in millions, except per share amounts)
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Service revenues
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
69.2
|
$
|
131.2
|
$
|
133.8
|
$
|
134.4
|
$
|
134.2
|
||||||||||||||||
Equipment sales
|
-
|
-
|
-
|
14.0
|
24.1
|
35.3
|
23.1
|
23.4
|
||||||||||||||||||||||||
Total revenues
|
-
|
-
|
-
|
83.2
|
155.4
|
169.1
|
157.5
|
157.6
|
||||||||||||||||||||||||
Operating expenses
|
(1.8
|
)
|
(1.9
|
)
|
(3.4
|
)
|
380.3
|
(149.1
|
)
|
(170.7
|
)
|
(275.0
|
)
|
(161.6
|
)
|
|||||||||||||||||
Operating (loss) income
|
(1.8
|
)
|
(1.9
|
)
|
(3.4
|
)
|
463.5
|
6.2
|
(1.6
|
)
|
(117.5
|
)
|
(4.1
|
)
|
||||||||||||||||||
Interest expense
|
-
|
-
|
-
|
(8.6
|
)
|
(14.3
|
)
|
(13.8
|
)
|
(13.4
|
)
|
(13.2
|
)
|
|||||||||||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
-
|
0.1
|
(0.1
|
)
|
-
|
0.1
|
|||||||||||||||||||||||
Debt extinguishment, modification and issuance costs
|
-
|
-
|
-
|
(8.5
|
)
|
-
|
-
|
-
|
(7.0
|
)
|
||||||||||||||||||||||
Other, net
|
0.2
|
1.8
|
(2.0
|
)
|
30.2
|
(14.6
|
)
|
(7.7
|
)
|
2.2
|
0.4
|
|||||||||||||||||||||
(Loss) income before income taxes
|
(1.6
|
)
|
(0.1
|
)
|
(5.4
|
)
|
476.6
|
(22.6
|
)
|
(23.2
|
)
|
(128.7
|
)
|
(23.8
|
)
|
|||||||||||||||||
Income tax (expense) benefit
|
-
|
(0.1
|
)
|
-
|
(5.2
|
)
|
(6.2
|
)
|
(5.3
|
)
|
1.0
|
(2.7
|
)
|
|||||||||||||||||||
Net (loss) income
|
(1.6
|
)
|
(0.2
|
)
|
(5.4
|
)
|
471.5
|
(28.8
|
)
|
(28.5
|
)
|
(127.7
|
)
|
(26.5
|
)
|
|||||||||||||||||
Net (income) loss attributable to noncontrolling interests
|
-
|
-
|
-
|
(2.5
|
)
|
(1.1
|
)
|
0.3
|
37.1
|
9.3
|
||||||||||||||||||||||
Net (loss) income attributable to TIP Inc.
|
$
|
(1.6
|
)
|
$
|
(0.2
|
)
|
$
|
(5.4
|
)
|
$
|
468.9
|
$
|
(29.8
|
)
|
$
|
(28.2
|
)
|
$
|
(90.6
|
)
|
$
|
(17.2
|
)
|
|||||||||
|
||||||||||||||||||||||||||||||||
Net (loss) income attributable to TIP Inc. per share:
|
||||||||||||||||||||||||||||||||
Basic
|
$
|
(0.02
|
)
|
$
|
-
|
$
|
(0.06
|
)
|
$
|
5.36
|
$
|
(0.34
|
)
|
$
|
(0.33
|
)
|
$
|
(1.37
|
)
|
$
|
(0.29
|
)
|
||||||||||
Diluted
|
$
|
(0.02
|
)
|
$
|
-
|
$
|
(0.06
|
)
|
$
|
5.31
|
$
|
(0.34
|
)
|
$
|
(0.33
|
)
|
$
|
(1.37
|
)
|
$
|
(0.29
|
)
|
• |
Lower prepaid subscribers due to a shift in focus to postpaid sales;
|
• |
Higher usage of wireless data due to the migration from 3G to 4G Long Term Evolution in Bolivia;
|
• |
Increased competition and changes in the market leading to larger data bundles offered for prices which impacted data ARPU;
|
• |
Stable postpaid churn in New Zealand, which the Company believes was a reflection of the Company’s heightened focus on high-value subscribers, bundled service offerings, and the Company’s enhanced subscriber service efforts;
|
• |
Decreasing voice revenue as rate plans increasingly incorporated more monthly minutes and calling features, such as long distance;
|
• |
Lower roaming revenue due to mobility restrictions associated with the COVID-19 pandemic;
|
• |
Varying handset subsidies as more consumers shifted toward smartphones with the latest technologies;
|
• |
Varying handset costs related to advancement of technologies and reduced supplier rebates or discounts on highly-sought devices;
|
• |
Seasonal promotions which were typically more significant in periods closer to year-end;
|
• |
Subscribers activating and suspending service to take advantage of promotions by the Company or its competitors;
|
• |
Higher voice and data costs related to the increasing number of subscribers, or, alternatively, a decline in costs associated with a decline in voice usage;
|
• |
Higher costs associated with the retention of high-value subscribers; and
|
• |
Decline in gross subscriber additions due to decreased commercial activity resulting from COVID-related societal restrictions and economic contraction.
|
• |
Higher internet subscription fees as subscribers increasingly upgraded to higher-tier speed plans, including those with unlimited usage;
|
• |
Subscribers bundling their service plans at a discount;
|
• |
Fluctuations in retail broadband pricing and operating costs influenced by government-regulated copper wire services pricing and changing consumer and competitive demands;
|
• |
Availability of fiber services in a particular area or general network coverage; and
|
• |
Individuals swapping technologies as fiber became available in their connection area.
|
|
Three Months Ended March 31,
|
% Variance
|
||||||||||
(in millions)
|
2023
|
2022
|
2022 vs 2021
|
|||||||||
|
||||||||||||
Net cash (used in) provided by
|
||||||||||||
Operating activities
|
$
|
(3.3
|
)
|
$
|
19.7
|
(117
|
%)
|
|||||
Investing activities
|
-
|
(27.0
|
)
|
100
|
%
|
|||||||
Financing activities
|
-
|
7.7
|
(100
|
%)
|
||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash
|
$
|
(3.3
|
)
|
$
|
0.4
|
n/
|
m
|
Consolidated Adjusted EBITDA
|
||||||||
Three Months Ended March 31,
|
||||||||
(in millions)
|
2023
|
2022
|
||||||
Net loss
|
$
|
(1.6
|
)
|
$
|
(28.8
|
)
|
||
Interest expense
|
-
|
14.3
|
||||||
Depreciation, amortization and accretion
|
-
|
18.1
|
||||||
Change in fair value of warrant liability
|
-
|
(0.1
|
)
|
|||||
Income tax expense
|
-
|
6.2
|
||||||
Other, net
|
(0.2
|
)
|
14.6
|
|||||
Equity-based compensation
|
-
|
0.5
|
||||||
Loss on disposal of assets
|
-
|
0.5
|
||||||
Transaction and other nonrecurring costs(1)
|
-
|
2.5
|
||||||
Consolidated Adjusted EBITDA
|
$
|
(1.8
|
)
|
$
|
27.8
|
|||
Net loss margin (Net loss divided by service revenues)
|
-
|
%
|
(21.9
|
%)
|
||||
Consolidated Adjusted EBITDA Margin
|
-
|
%
|
21.2
|
%
|
||||
(Consolidated Adjusted EBITDA divided by service revenues)
|
(1)
|
2022 includes $1.8 million of costs in connection with the 2degrees Sale and $0.6 million of costs related to the NuevaTel Transaction. See Note 2 – Sale of Operations to the
Condensed Consolidated Financial Statements for further information related to these transactions.
|
• |
Wireless data revenues (“data revenues”) is a component of wireless service revenues that includes the use of web
navigation, multimedia messaging service and value-added services by subscribers over the wireless network through their devices.
|
• |
Wireless service revenues (“wireless service revenues”) is a component of total revenues that excludes fixed broadband revenues, equipment sales and
non-subscriber international long distance revenues; it captures wireless performance and is the basis for the blended wireless ARPU calculations.
|
• |
Wireless data average revenue per wireless user (“data ARPU”) is calculated by dividing monthly data revenues
during the relevant period by the average number of wireless subscribers during the period.
|
• |
Service revenues (“service revenues”) is a component of total revenues that excludes equipment sales.
|
• |
Churn (“churn”) is the rate at which existing subscribers cancel their services, or are suspended from accessing the network, or have no revenue
generating event within the most recent 90 days, expressed as a percentage. Subscribers that subsequently have their service restored within a certain period of time are presented net of disconnections which may result in a negative
churn percentage in certain periods. Churn is calculated by dividing the number of subscribers disconnected by the average subscriber base. It is a measure of monthly subscriber turnover.
|
• |
Capital intensity (“capital intensity”) represents purchases of property and equipment divided by total service revenues. The Company’s capital
expenditures do not include expenditures on spectrum licenses. Capital intensity allows the Company to compare the level of the Company’s additions to property and equipment to those of other companies within the same industry.
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4. |
Controls and Procedures.
|
Item 1. |
Legal Proceedings.
|
Item 1A. |
Risk Factors.
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Item 3. |
Defaults Upon Senior Securities.
|
Item 4. |
Mine Safety Disclosures.
|
Item 5. |
Other Information.
|
Item 6. |
Exhibits.
|
3.1 | |
3.2
|
|
3.3
|
|
3.4
|
|
31.1 | |
31.2 | |
32.1 | |
32.2 | |
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline
XBRL document)*
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document*
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document*
|
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document*
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document*
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document*
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)*
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
TRILOGY INTERNATIONAL PARTNERS INC.
|
|||
Date:
|
May 11, 2023
|
By:
|
/s/ Erik Mickels
|
Title:
|
Senior Vice President and
|
||
Chief Financial Officer
|