GOGO INC. Item 2.02. Results of Operations and Financial Condition.
On
• For the three months endedMarch 31, 2021 : o Service revenue of approximately$59 million , equipment revenue of approximately$14 million and total revenue of approximately$73 million o Net loss in the range of$(12) million to$(4) million o Adjusted EBITDA of approximately$33 million , which reflects a delay in certain budgeted operating expenses now expected to be incurred in future quarters • As ofApril 14, 2021 : o Cash and cash equivalents of$461 million o Long-term indebtedness consisting of the following: ?$975 million aggregate principal amount outstanding of 9.875% Senior Secured Notes ?$103 million aggregate principal amount outstanding of 6.000% Convertible Senior Notes (the "Convertible Notes") o 109,609,905 total shares of common stock outstanding
The Company will release its complete financial results for the first quarter of
2021 before the market opens on
Cautionary Statement Regarding Preliminary Results for the First Quarter of 2021
The expected first quarter 2021 results are preliminary, unaudited and subject
to completion, reflect management's current views and may change as a result of
management's review of results and other factors, including a wide variety of
significant business, economic and competitive risks and uncertainties. These
preliminary results, including without limitation those discussed in Footnote 1
to the reconciliation table shown below, are subject to the finalization of the
Company's accounting close and reporting procedures for the first quarter, which
have yet to be performed, and should not be viewed as a substitute for full
quarterly financial statements prepared in accordance with accounting principles
generally accepted in the
You should read this information together with the financial statements and the
related notes and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" for prior periods included in the Company's
EBITDA and Adjusted EBITDA Description and Reconciliation
Adjusted EBITDA represents EBITDA (which represents net loss attributable to
common stock before interest expense, interest income, income taxes and
depreciation and amortization expense) adjusted for (i) stock-based compensation
expense included in the results of continuing operations, (ii) the results of
discontinued operations, including stock-based compensation expense, (iii) loss
on settlement of Convertible Notes and (iv) separation costs related to the sale
of our
--------------------------------------------------------------------------------
Our management believes that the use of Adjusted EBITDA eliminates items that management believes have less bearing on our operating performance, thereby highlighting trends in our core business which may not otherwise be apparent. It also provides an assessment of controllable expenses, which are indicators management uses to determine whether current spending decisions need to be adjusted in order to meet financial goals and achieve optimal financial performance.
We believe that the exclusion of stock-based compensation expense from Adjusted EBITDA is appropriate given the significant variation in expense that can result from using the Black-Scholes model to determine the fair value of such compensation. The fair value of our stock options is determined using the Black-Scholes model and varies based on fluctuations in the assumptions used in this model, including inputs that are not necessarily directly related to the performance of our business, such as the expected volatility, the risk-free interest rate and the expected term of the options. Therefore, we believe that the exclusion of this cost provides a clearer view of the operating performance of our business. Further, stock option grants made at a certain price and point in time do not necessarily reflect how our business is performing at any particular time. While we believe that investors should have information about any dilutive effect of outstanding options and the cost of that compensation, we also believe that stockholders should have the ability to consider our performance using a non-GAAP financial measure that excludes these costs and that management uses to evaluate our business.
We believe it is useful for an understanding of our operating performance to exclude the results of discontinued operations from Adjusted EBITDA because they are not part of our ongoing operations.
We believe it is useful for an understanding of our operating performance to exclude the loss on settlement of Convertible Notes from Adjusted EBITDA because of the infrequently occurring nature of this activity.
We believe it is useful for an understanding of our operating performance to exclude separation costs related to the sale of CA from Adjusted EBITDA because of the non-recurring nature of this activity.
We also present Adjusted EBITDA as a supplemental performance measure because we believe that this measure provides investors, securities analysts and other users of our financial statements with important supplemental information with which to evaluate our performance and to enable them to assess our performance on the same basis as management.
Adjusted EBITDA is not a measure presented in accordance with GAAP, and our use of the term Adjusted EBITDA may vary from that of others in our industry. Adjusted EBITDA has limitations as an analytical tool and should not be considered as an alternative to net income, operating profit, revenues or any other performance measures derived in accordance with GAAP as measures of operating performance.
--------------------------------------------------------------------------------
Gogo Inc. and Subsidiaries Reconciliation ofGAAP Net Loss Range to Adjusted EBITDA For the Three Months EndedMarch 31, 2021 (preliminary) (in millions) (unaudited) GAAP net loss range (1)$ (12) - (4 ) Interest expense range (1) 28 - 32 Interest income - Income tax provision - Depreciation and amortization 4 EBITDA range 24 - 28 Stock-based compensation expense 2 Loss from discontinued operations 1
Loss on settlement of Convertible Notes range (1) 2 - 6
Separation costs related to CA sale - Adjusted EBITDA$ 33 (1) Interest expense and Loss on settlement of Convertible Notes and the resulting GAAP net loss have been presented as ranges since the Company is still 1) assessing the impact of adopting ASU No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"), which simplifies the accounting for certain convertible instruments by removing the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature, and 2) finalizing the accounting treatment for the Convertible Notes exchanged during the quarter. These expected ranges may differ from actual reported results once the Company has finalized its accounting close and reporting procedures for the first quarter. However, as Interest expense and Loss on settlement of Convertible Notes are excluded from the Company's computation of Adjusted EBITDA, we do not expect Adjusted EBITDA to be impacted by the resolution of the above items.
Cautionary Note Regarding Forward-Looking Statements
Certain disclosures in this report include "forward-looking statements" that are
based on management's beliefs and assumptions and on information currently
available to management. Most forward-looking statements contain words that
identify them as forward-looking, such as "anticipates," "believes,"
"continues," "could," "seeks," "estimates," "expects," "intends," "may,"
"plans," "potential," "predicts," "projects," "should," "will," "would" or
similar expressions and the negatives of those terms that relate to future
events. Forward-looking statements also include projections, forecasts or
estimates of performance, including, in particular, statements regarding our
preliminary first quarter 2021 results. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date of
this report and the Company undertakes no obligation to update or revise
publicly any such forward-looking statements, whether as a result of new
information, future events or otherwise. These forward-looking statements are
based on estimates and assumptions by our management that, although we believe
to be reasonable, are inherently uncertain. Important factors that could cause
actual results, developments and business decisions to differ materially from
these forward-looking statements include the uncertainties described under the
heading "Risk Factors" in the Company's Annual Report on Form 10-K filed with
the
--------------------------------------------------------------------------------
© Edgar Online, source
