012 Smile.Communications (NASDAQ Global market and TASE: SMLC), a growth-oriented provider of communication services in Israel, today reported its financial results for the third quarter and nine months ended September 30, 2007. This is the Company's first earnings release as a publicly traded company, following its NASDAQ IPO on October 31, 2007.
Highlights
- Operational merger completed recently ahead of schedule and under budget
- IPO completed recently on Nasdaq along with dual listing on the TASE (Symbol: SMLC), raising $74 million, net
- Company continues to post top-line and bottom-line growth and improved profitability: revenues for the third quarter reached NIS 280M with 15% non-GAAP operating margin and 22% adjusted EBITDA margin
- Company lists its Series A Debentures on TASE: listing results in a 1.1% decrease in annual interest on NIS 425 million of debt.
Results for the Third Quarter
Revenues for the third quarter of 2007 were NIS 280.3 million (US $69.8 million), an increase of 219% compared with NIS 87.9 million for the third quarter of 2006. On a pro-forma basis, this represented an increase of 3% compared to NIS 271.9 million (US $67.8 million) for the third quarter of 2006. Non-GAAP operating margin for the third quarter was 15% compared to10% in the third quarter of 2006 (on a pro-forma basis).
Note: pro-forma results are provided to assist the reader in comparing the Company's 2007 results, which include the full contribution of its merger with 012 Golden Lines, with 2006 results, which were before the merger. Pro-forma results combine 012 Golden Lines' results for the third quarter of 2006 with Smile.Communications' results for the same period.
Operating margin for the quarter on a non-GAAP basis, which was 15%, reached NIS 41.9 million (US$10.4 million). The difference between GAAP and non-GAAP operating income reflected amortization of NIS 8.0 million (US $2.0 million) recorded in regard of the intangible assets acquired as part of the acquisition of 012 Golden Lines and non-recurring expenses of NIS 3.0 million (US$ 0.75 million), related to charges incurred in connection with the merger of Smile.Communications and 012 Golden Lines.
Net income for the third quarter of 2007 increased by 624% to NIS 12.3 million (US $3.0 million), or NIS 0.67 (US$ 0.17) per share, compared with NIS 1.7 million, or NIS 0.09 per share, for the third quarter of 2006. Impacting net income were NIS 14.3 million finance expenses, which resulted mostly from the period's exceptionally high 2.5% increase in the Israeli CPI (Consumer Price Index) to which some of the Company's debt is linked, as well as to the abovementioned non-recurring operating expenses.
Adjusted EBITDA (1) for the quarter reached NIS 61.4 million (US $15.3 million), a 29% increase compared with the third quarter of 2006 (on a pro-forma basis).
On November, 2007, the Company listed its Series A Debentures on the Tel Aviv Stock Exchange, with a total value of NIS 425.0 million ($105.9 million). As a result of the listing, the annual interest rate on the debentures, which are linked to the CPI, will decline from 5.85% to 4.75%. -- 012 Smile.communications Ltd.
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