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Symbol changed to MBNDD Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 20, 2009 04:01PM
Symbol changed to MBNDD (MBND) filed Quarterly Report for the period ended 2009-03-31. Symbol changed to MBNDD has a market cap of $31.6 million; its shares were traded at around $2.88 with and P/S ratio of 2.4.
Highlight of Business Operations:
Selling, general and administrative expenses increased 640.7% to $13,740 in the quarter ended March 31, 2009, compared to $1,855 in the prior year s quarter due primarily to the acquisition of DirecTECH in 2009. Selling, general and administrative expenses were, as a percentage of revenues, 22.1% for the quarter ended March 31, 2009 and 32.5% for the similar period a year ago. This percentage decrease is primarily due to a significant increase in revenues with only modest increases in payroll and administrative expenses offset by $300 of reimbursed payroll expenses for management consulting to DTHC recorded to the Multiband Corp segment in the first quarter of 2008 per its management consulting agreement. This agreement ended in 2009 as a result of the acquisition of the majority ownership of former operating subsidiaries of DTHC (see Note 3). The Company anticipates that for the remainder of 2009, selling, general and administrative expenses will remain consistent with first quarter levels.
The Company, in the first quarter of 2009, incurred a loss from operations of $2,183 versus $757 during the prior year s comparable period. The MDU segment showed a loss from operations of $257 for the three months ended March 31, 2009 compared to profits of $11 for the three months ended March 31, 2008. The MBCorp segment, which has no revenues, showed a loss from operations of $977 for the three months ended March 31, 2009 compared to losses of $828 for the same period last year. For the first quarter of 2009, the HSP segment showed a loss from operations of $949, compared to profits of $60 in the same period last year, which included NC (MMT) only. The MBCorp segment loss is expected to continue in future periods as corporate overhead is expected to remain consistent with current levels. The Company plans to mitigate its loss in the MDU segment in future periods as increased payments to dealers have negatively impacted profits for this segment. The Company believes these payments will stabilize in future periods as a percentage of revenues. At the same time, the Company believes it can enhance profitability in its MDU division by growing its subscriber base at existing properties since the on-going selling, general and administrative expenses to service those subscribers is more variable than fixed. The HSP segment is expected to improve is profitability throughout the balance of 2009 as competitive providers are driven out of some of its existing core markets. The key to removing competitive providers involves the Company s commitment to DirecTV (which it fulfilled in the first quarter) to significantly expand its technical workforce. The expanded workforce creates expense upfront without offsetting revenue due to a training period. However, once the technicians are trained they move into a revenue generating role.
Effective January 1, 2009, the Company implemented FAS 160, noncontrolling interests in subsidiaries (see Note 4). This resulted in the transferring of minority interest of $3,471 at December 31, 2008 related to the 51% ownership of NC from the mezzanine section of the balance sheet to the noncontrolling interest in the equity section of the balance sheet. As of January 2, 2009, Multiband purchased an additional 29% of the outstanding stock of NC, $2,054 of noncontrolling interest was transferred to Multiband s controlling interest related to this acquisition, leaving $1,417 as the remaining value of the noncontrolling interest. In addition, Multiband purchased 80% of the outstanding stock of EC, NE, SC, DC, Security and MBMDU (Note 3). The Company recorded $6,568 of noncontrolling interest related to this acquisition.
During the three months ended March 31, 2009 and 2008, the Company incurred net losses of $2,881 and $846, respectively. Net cash from operations during the three months ended March 31, 2009 was $846 as compared to the net cash used by operations during the three months ended March 31, 2008 of $312. Principal payments on current long-term debt over the next 12 months are expected to total $1,618. As of March 31, 2009, the Company met the compliance covenants of its lender, Convergent Capital. The Company has classified the debt as current as of March 31, 2009 since the note was due May 1, 2009. As of this writing, the Company is working on a refinancing of its note with Convergent Capital.
Cash and cash equivalents totaled $3,640 at March 31, 2009 versus $4,346 at December 31, 2008. Working capital deficit at March 31, 2009 was $30,307 as compared to positive working capital of $2,465 at December 31, 2008, primarily due to the acquisition of the former DTHC operating entities. Total debt and capital lease obligations increased by $34,534 in the three months ended March 31, 2009 due mainly to the addition of notes payable in order to purchase DirecTECH. The Company had a material increase in accounts receivable, accounts payable and accrued liabilities for the period ended March 31, 2009 versus the period ended December 31, 2008 due to the acquisition of 80% of outstanding stock of the former DTHC operating entities. Net cash used by investing activities totaled $1,263 for the period ended March 31, 2009, compared to net cash of $6,716 provided by investing activities for the period ended March 31, 2008, related to cash acquired in the acquisition of NC (formerly MMT).
The Company had a net loss of $2,881 for the quarter ended March 31, 2009, net income of $945 for the year ended December 31, 2008 and net loss of $6,088 for the year ended December 31, 2007. The Company may never be consistently profitable.
Stocks Discussed: MBND,