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UniTek Global Services Reports Fourth Quarter and Full-Year 2013 Results

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Full-Year 2013 Revenues Increased 7.8% to $471.9 Million

Full-Year 2013 Adjusted EBITDA1 Improved 12.7% to $44.7 Million

Full-Year 2013 Net (Loss) of $(52.1) Million versus Full-Year 2012 Net (Loss) of $(77.7) Million; Full-Year 2013 Impairment Charges of $24.4 Million versus $14.9 Million in 2012

BLUE BELL, Pa., March 31, 2014 (GLOBE NEWSWIRE) -- UniTek Global Services, Inc. ("UniTek" or the "Company") (Nasdaq:UNTK), a premier provider of permanently outsourced infrastructure services to the telecommunications, broadband cable, wireless, transportation, public safety and satellite television industries, today announced financial results for the fourth quarter and full year ended December 31, 2013.

"We believe we have made significant strides in 2013 to strengthen our organization and enhance our customer value proposition," said Rocky Romanella, Chief Executive Officer. "UniTek navigated a challenging period last year, but our entire team came together under one vision and addressed the issues with true determination. As a result, we have strengthened our underlying processes, making us a more nimble and efficient company. I look forward to the opportunities that lie ahead for our employees and our Company as we tackle the next phase of our development.

"We have made a concerted effort to deepen our operational expertise and establish a specialized sales force that is strategically aligned with our vision and plan. We continue to emphasize our cultural values of integrity, honesty, service and safety excellence," continued Mr. Romanella.

Fourth Quarter 2013 Financial Results

Total consolidated revenues for the fourth quarter of 2013 were $106.9 million, compared with $120.9 million in revenues for the fourth quarter of 2012, a decrease of 11.6%.

Revenues for the Fulfillment segment in the fourth quarter of 2013 were $76.0 million, a decrease of 5.8%, compared with $80.7 million for the same period in 2012. The decrease in Fulfillment segment revenues was primarily attributable to the closure of certain low or negative margin cable markets during 2013.

For the Engineering and Construction segment, revenues for the fourth quarter 2013 were $30.9 million, a decrease of 23.3%, compared with $40.2 million for the fourth quarter of 2012. The decrease in Engineering and Construction revenues was primarily attributable to a reduction in our wireless turf work year over year as well as lower systems integration revenues.

Adjusted EBITDA1 for the fourth quarter of 2013 was $11.7 million, an increase of 18.2%, compared with adjusted EBITDA of $9.9 million for the same period last year. The increase was driven by a decrease in selling, general and administrative expenses associated with compensation expense, insurance costs and other cost savings of $5.5 million, excluding the effect of stock-based compensation and transaction costs, offset by a decrease of $3.7 million in gross profit on lower revenues.

(Loss) from continuing operations for the fourth quarter of 2013 was $(24.5) million, or $(1.28) per basic and diluted share, compared with (loss) from continuing operations of $(19.1) million, or $(1.01) per basic and diluted share, for the fourth quarter of 2012. The increase of $5.4 million in loss from continuing operations was a result of lower gross profit and higher interest expense as well as an increase of $8.4 million of noncash impairment charges related to goodwill. During the fourth quarter of 2013, we recognized an impairment loss of $23.3 million, related to the goodwill of the Wireless reporting unit and our Cable reporting unit. These charges were partially offset by lower selling, general and administrative expenses and depreciation and amortization charges in the quarter ended December 31, 2013 as compared to the prior year quarter. Restatement and investigation expenses in the quarter ended December 31, 2013 offset the decline in restructuring charges.

Net (loss) for the fourth quarter of 2013 was $(25.4) million, or $(1.33) per basic and diluted share, compared with net (loss) of $(22.6) million, or $(1.20) per basic and diluted share, for the fourth quarter of 2012. The increase in net loss in the quarter resulted from the increase in the loss from operations being only partially offset by a decline in the loss from discontinued operations. Net loss excluding certain items2 was $0.0 million in the fourth quarter of 2013 as compared to $(2.5) million in the same period in 2012.

Full-Year 2013 Financial Results

Total revenues for the full year ended December 31, 2013 were $471.9 million, an increase of 7.8%, compared with $437.6 million in revenues for the full year ended December 31, 2012.

For the Fulfillment segment, full-year 2013 revenues were $316.9 million, an increase of 3.8%, compared with $305.3 million for the full year 2012. The increase in Fulfillment segment revenues was primarily attributable to our entry into new markets as a result of the acquisition of satellite fulfillment markets in September 2012 and organic growth within those markets, as well as organic growth from other satellite customers. These revenue gains were partially offset by lower volume from our cable fulfillment customers as we closed or exited markets in the U.S.

For the Engineering and Construction segment, full-year 2013 revenues were $155.1 million, an increase of 17.2%, compared with $132.3 million for the full year 2012. The increase in Engineering and Construction revenues was primarily attributable to revenue growth from our wireless turf agreement in the Northeast, which will conclude by August 2014.

Adjusted EBITDA1, for the full year 2013 was $44.7 million, an increase of 12.7% compared with adjusted EBITDA of $39.6 million for the full year 2012. The improvement was driven by an increase of $3.8 million in gross profit combined with a decline in selling, general and administrative expenses of $1.3 million excluding the effect of stock-based compensation and transaction costs.

(Loss) from continuing operations for the full year 2013 was $(50.5) million, or $(2.65) per basic and diluted share, compared with (loss) from continuing operations of $(39.5) million, or $(2.17) per basic and diluted share, for the full year 2012. In 2013,we recognized noncash impairment losses of $24.4 million related to goodwill and intangibles of the Wireless reporting unit and our Cable reporting unit.

Net (loss) for the full year 2013 was $(52.1) million, or $(2.73) per basic and diluted share, compared with net (loss) of $(77.7) million, or $(4.28) per basic and diluted share, for the full year 2012. The Company recognized $10.5 million of contingent consideration expenses during the year ended December 31, 2012. The decrease in net loss for the year resulted from the increase in the loss from operations offset by a decline in 2013 in the loss from discontinued operations. Net loss excluding certain items2 was $(7.1) million in 2013 as compared to $(6.5) million in 2012.

Andrew Herning, Chief Financial Officer, added, "We believe the changes we have made to our organizational structure are gaining traction, and anticipate future financial benefit from these measures. We remain steadfast in our efforts to drive down expenses and generate positive cash flow to reduce debt."

Outlook

Commenting on the outlook for 2014, Mr. Romanella remarked: "DIRECTV continues to be our valued partner and we thank them for their support and look forward to consistently meeting their high quality service expectations and representing their trusted brand to the best of our ability. Our AT&T Northeast Turf Agreement is winding down, and we plan to continue to execute to the expectations of this customer. We will continue to seek to cultivate our relationship with the major carriers in the wireless space and believe we are poised to offer new services and gain additional new business as well as expand our sales efforts into other areas that complement the end-to-end telecom solutions we offer. For example, we recently launched a managed services division and have contracts with several key customers. We believe we can grow our business overall this year, and that we will diversify our customer base as we assess new opportunities," concluded Mr. Romanella.

Conference Call

Management will host a conference call to review the Company's financial results at 5:00 p.m. Eastern time, on Monday, March 31, 2014. Interested parties may access the call by calling (877) 868-1833 from within the United States, or (970) 315-0472 if calling internationally, and requesting conference call ID 21473847. Please dial-in approximately five minutes prior to the start of the call. A replay will be available through April 7, 2014 and can be accessed by dialing (855) 859-2056 in the U.S., or (404) 537-3406 internationally, and entering conference ID 21473847. The call will be also be available as a live, listen-only webcast under the "Events and Presentations" page on the "Investor Relations" section of the Company's website. Following the live event, an online archive will be available for 90 days.

About UniTek Global Services

UniTek Global Services is a provider of engineering, construction management and installation fulfillment services to companies specializing in the telecommunications, broadband cable, wireless, two-way radio, transportation, public safety and satellite industries. UniTek has created a scalable operating platform, enabling each UniTek subsidiary to deliver quality services to its Fortune 200 customers. UniTek's website is: www.unitekglobalservices.com.

Forward-Looking Statements

The statements in this press release that are not historical fact are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts, and include without limitation statements regarding the projected growth of and developments in the Company's business, enhancements to the Company's brand and attractiveness to employees, the building of shareholder value, expected impacts on revenues from AT&T, and the achievement of revenue and growth objectives. These statements are subject to uncertainties and risks including, but not limited to, the Company's ability to address issues arising from previously disclosed accounting-related matters, operating performance, general financial, economic, and political conditions affecting the Company's business and its target industries, the ability of the Company to perform its obligations under its contracts and agreements with customers, and other risks contained in reports filed by the Company with the Securities and Exchange Commission, including in our Form 10-K for the year ended December 31, 2013. The words "may," "could," "should," "would," "believe," "are confident," "anticipate," "estimate," "expect," "intend," "plan," "aspire," and similar expressions are intended to identify forward-looking statements. All such statements are made in good faith by the Company pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. The Company does not undertake to update any forward looking statement, whether written or oral, which may be made from time to time by or on behalf of the Company, except as may be required by applicable law or regulations.

Non-GAAP Measures

(1) Adjusted EBITDA is a key indicator used by our management to evaluate operating performance of our continuing operations and to make decisions regarding compensation and other operational matters as well as by our investors and lenders in evaluating our performance. While Adjusted EBITDA is not intended to replace any presentation included in our consolidated financial statements under generally accepted accounting principles, or GAAP, and should not be considered an alternative to operating performance, we believe this measure is useful to investors in assessing our performance with other companies in our industry. This calculation may differ in method of calculation from similarly titled measures used by other companies or from required calculations pursuant to our loan agreements. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as supplemental information. Adjusted EBITDA is our EBITDA adjusted for discontinued operations, stock-based compensation and other unusual or non-recurring costs, including the costs associated with the restatements of our financial statements during 2013, the investigation conducted by our Audit Committee during the year and related costs.

(2) Our management is using net (loss) excluding certain items as an indicator to evaluate the operating performance of the Company excluding the impact of various recent events. While net (loss) excluding certain items is not intended to replace any presentation included in the consolidated financial statements under generally accepted accounting principles, or GAAP, and should not be considered an alternative to operating performance, we believe this measure is useful to investors in assessing our performance by not giving effect to various recent events that have impacted our business. Specifically, these items are (i) (income) loss from discontinued operations, (ii) restructuring charges, (iii) asset impairment, (iv) investigation and related costs, (v) loss on extinguishment of debt and (vi), (income) expense related to contingent consideration.

UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, December 31,
(in thousands, except per share amounts) 2013 2012
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,842 $ 3,836
Accounts receivable, net of allowances 73,358 102,490
Inventories 15,187 15,266
Other current assets 10,707 7,560
Total current assets 101,094 129,152
Restricted cash 16,767
Property and equipment, net of accumulated depreciation of $49,189 and $41,953 14,912 26,393
Amortizable intangible assets, net (includes amortizable customer relationships, net, of $32,263 and $38,090) 33,963 42,013
Goodwill 98,579 121,920
Other assets, net 5,233 6,925
Total assets $ 270,548 $ 326,403
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 7,502 $ 3,450
Current portion of capital lease obligations 4,849 7,688
Accounts payable 23,906 48,845
Accrued insurance 17,719 16,248
Accrued compensation and benefits 7,965 9,766
Other current liabilities 17,296 27,361
Total current liabilities 79,237 113,358
Long-term debt, net of current portion 174,044 153,014
Long-term capital lease obligations, net of current portion 3,509 8,040
Other liabilities 2,299 3,688
Total liabilities 259,089 278,100
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred Stock, $0.00002 par value (20,000 shares authorized, no shares issued or outstanding)
Common Stock, $0.00002 par value (200,000 shares authorized, 19,039 and 18,736 issued and outstanding)
Additional paid-in capital $ 275,274 $ 260,077
Accumulated other comprehensive income 89 57
Accumulated deficit (263,904) (211,831)
Total stockholders' equity 11,459 48,303
Total liabilities and stockholders' equity $ 270,548 $ 326,403
UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income or Loss
Three Months Ended Year Ended
December 31, December 31, December 31, December 31,
(in thousands, except per share amounts) 2013 2012 2013 2012
Revenues $ 106,871 $ 120,929 $ 471,933 $ 437,596
Cost of revenues 88,782 99,137 387,376 356,794
Gross profit 18,089 21,792 84,557 80,802
Selling, general and administrative expenses 7,024 12,867 42,223 46,357
(Income) expense related to contingent consideration 19 (114) 10,096
Restructuring charges (78) 1,613 1,071 8,013
Restatement, investigation and related costs 1,230 8,820
Impairment charges 23,284 14,900 24,374 14,900
Depreciation and amortization 4,191 6,679 20,258 26,469
Operating (loss) (17,562) (14,286) (12,075) (25,033)
Interest expense 8,862 4,833 30,454 15,329
Loss on extinguishment of debt 9,247
Other expense (income), net (965) (98) (733) (1,244)
(Loss) income from continuing operations before income taxes (25,459) (19,021) (51,043) (39,118)
Income tax (benefit) expense (1,001) 38 (552) 353
(Loss) from continuing operations (24,458) (19,059) (50,491) (39,471)
Income (loss) from discontinued operations (930) (3,587) (1,582) (38,259)
Net loss $ (25,388) $ (22,646) $ (52,073) $ (77,730)
Other comprehensive income or loss:
Foreign currency translation 3 3 32 39
Comprehensive loss $ (25,385) $ (22,643) $ (52,041) $ (77,691)
Net loss per share – basic and diluted:
Continuing operations $ (1.28) $ (1.01) $ (2.65) $ (2.17)
Discontinued operations (0.05) (0.19) (0.08) (2.11)
Total $ (1.33) $ (1.20) $ (2.73) $ (4.28)
Weighted average shares of common stock outstanding – basic and diluted 19,140 18,809 19,046 18,182
UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Year Ended
December 31, December 31,
(in thousands) 2013 2012
Cash flows from operating activities:
Net loss $ (52,073) $ (77,730)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for doubtful accounts 2,792 4,819
Depreciation and amortization 20,353 29,016
Impairment charges 24,374 50,080
Loss on extinguishment of debt 9,247
Interest and fees added to debt principal 8,204
Non-cash interest expense 2,943 2,180
Loss on sale of Wireline Group 978
(Income) expense related to contingent consideration (114) 10,096
Stock-based compensation 2,176 4,905
Loss (gain) on sale of property and equipment (940) (1,365)
Deferred income taxes, net 84 (5,602)
Contingent consideration (1,560)
Changes in working capital:
Accounts receivable 26,340 (28,029)
Inventories 79 (2,571)
Prepaid expenses and other assets (2,587) (4,268)
Accounts payable and other liabilities (30,825) 28,001
Net cash used in operating activities 10,053 8,950
Cash flows from investing activities:
Acquisition of property and equipment (2,360) (5,642)
Proceeds from sale of property and equipment 2,056 2,133
Cash paid for acquisition of businesses, net of cash acquired (16,858)
Proceeds from sale of Wireline Group 5,435
Net cash used in investing activities (304) (14,932)
Cash flows from financing activities:
Proceeds from new revolving credit facility, net 21,161 11,229
Proceeds from term loan facilities 33,750
Repayment of term loan facilities (1,298) (1,277)
Repayment of capital leases (8,174) (11,585)
Deposit of cash to collateralize letters of credit (24,716)
Release of cash restriction on collateralized letters of credit 7,949
Payment of contingent consideration (21,480)
Payment of financing fees (6,811) (1,021)
Other financing activities (79) (362)
Net cash (used in) provided by financing activities (11,968) 9,254
Effect of exchange rate on cash and cash equivalents 225 31
Net (decrease) increase in cash and cash equivalents (1,994) 3,303
Cash and cash equivalents at beginning of period 3,836 533
Cash and cash equivalents at end of period $ 1,842 $ 3,836
Supplemental cash flow information:
Interest paid $ 20,331 $ 13,600
Income taxes paid 382 879
Significant non-cash investing and financing activities:
Value of warrants issued to lenders under term loan facilities $ 13,066 $ —
Fair value of equity paid for acquisition 5,789
Acquisition of property and equipment financed by capital leases 804 4,313
UNITEK GLOBAL SERVICES, INC. AND SUBSIDIARIES
Reconciliation of Net Income or Loss to Non-GAAP Measurements
Three Months Ended Year Ended
December 31, December 31, December 31, December 31,
(in thousands) 2013 2012 2013 2012
Net loss $ (25,388) $ (22,646) $ (52,073) $ (77,730)
Loss from discontinued operations 930 3,587 1,582 38,259
Impairment charges 23,284 14,900 24,374 14,900
Restructuring charges (78) 1,613 1,071 8,013
Restatement, investigation and related costs 1,230 8,820
Loss on extinguishment of debt 9,247
(Income) expense related to contingent consideration 19 (114) 10,096
Net income (loss) excluding certain items (22) (2,527) (7,093) (6,462)
Income tax (benefit) expense (1,001) 38 (552) 353
Depreciation and amortization 4,191 6,679 20,258 26,469
Interest expense 8,862 4,833 30,454 15,329
Stock-based compensation 502 855 2,176 4,905
Transaction costs 100 90 180 291
Other expense (income), net (965) (98) (733) (1,244)
Adjusted EBITDA $ 11,667 $ 9,870 $ 44,690 $ 39,641

CONTACT: The Piacente Group | Investor Relations Kathy Price (212) 481-2050 unitek@tpg-ir.com

Source:UniTek Global Services