Anterix Inc. — Form 10-Q Summary
Business context and reporting period. Anterix commercializes licensed 900 MHz spectrum and related broadband solutions for utilities and critical-infrastructure customers deploying private LTE networks. This report covers the quarter ended June 30, 2023, the first quarter of fiscal 2024, compared with the quarter ended June 30, 2022. Anterix is pursuing FCC broadband licenses and spectrum-clearing work needed to fulfill customer agreements.
Financial results and position
| Metric | Three months ended June 30, 2023 | Prior-year quarter |
|---|---|---|
| Spectrum revenue | $0.608 million | $0.335 million |
| Operating expenses | $14.263 million | $14.053 million |
| Gain on disposal of intangible assets | $10.785 million | $0.648 million |
| Operating loss | $2.839 million | $13.072 million |
| Net loss | $2.118 million | $13.196 million |
| Net loss per share, basic and diluted | $0.11 | $0.71 |
| Net cash used in operating activities | $8.209 million | $9.832 million |
- Revenue rose 81%, primarily because of recognition of Evergy spectrum revenue. Revenue recognized in both periods was included in deferred revenue at the beginning of the respective periods.
- The $10.8 million gain was noncash and resulted from exchanging narrowband licenses for broadband licenses in nine counties. It materially reduced the reported operating and net losses; it is not recurring customer revenue.
- Operating expenses increased 1%. General and administrative expense rose 3%, mainly from higher headcount-related and stock-compensation costs; depreciation and amortization declined 32%.
- Interest income increased to $0.386 million from $0.017 million, mainly due to higher interest rates. The company recorded a $0.240 million income tax benefit, versus $0.200 million expense in the prior-year quarter.
Balance sheet and liquidity at June 30, 2023: Cash and cash equivalents were $29.033 million, down from $43.182 million at March 31, 2023. Total assets were $279.328 million and total liabilities were $98.133 million. Intangible assets were $215.795 million. The filing presents no borrowings; liabilities include $4.259 million of operating lease liabilities and a $20.249 million current contingent liability. Deferred revenue totaled $60.151 million. Anterix reported that cash on hand and contracted customer proceeds should meet financial obligations for at least 12 months from the filing date, while noting that additional capital may be needed to implement its plans.
Operating cash use was $8.209 million, investing cash use was $5.195 million, and financing cash use was $0.745 million. Investing cash use primarily funded spectrum acquisitions, swaps, and retuning. Cash declined by $14.149 million during the quarter. No share repurchases occurred in the quarter; $26.8 million remained under the program, which was authorized through September 29, 2023.
Material developments and outlook
- In April 2023, Anterix agreed to provide LCRA with spectrum covering 68 counties for total payments of $30 million through fiscal 2026, as spectrum and licenses are delivered, plus a contribution of select LCRA narrowband spectrum. Revenue or gain on the sale is recognized as delivery is completed by county. Non-delivery could trigger refunds or termination rights.
- After quarter-end, in July 2023, Anterix delivered spectrum and licenses for 14 counties in Xcel Energy’s service territory and received a $21.2 million milestone payment. The Xcel agreement covers eight states and delivery is expected to continue through 2029. The company’s maximum potential liability for future undiscounted payments under the agreement was reported as approximately $8 million at June 30.
- Anterix had FCC approvals for the San Diego County broadband license transfer to SDG&E, pending a final arrangement. It anticipated a delivery-delay adjustment of $0.8 million to $1.3 million. Separately, $20.2 million of SDG&E payments remained recorded as a contingent liability, refundable in specified termination or non-delivery circumstances.
- No quantitative earnings or revenue guidance was provided. Management cited spectrum-delivery timing, retuning and acquisition costs, customer contracting, potential refunds or penalties, regulation, inflation, and supply-chain or equipment delays as factors that could affect liquidity and commercialization. Management said the SDG&E adjustment was an isolated event and did not expect other material adjustments to existing customer contracted proceeds.
The company reported no material legal proceedings and no material changes to the risk factors in its most recent annual report. Management concluded disclosure controls were effective at quarter-end.
Investor facts to verify
- Progress and timing of FCC license approvals, spectrum clearing, and delivery obligations under the LCRA, Xcel, SDG&E, and other customer agreements.
- Whether the anticipated SDG&E delivery-delay adjustment is finalized and whether any customer refunds, penalties, or other delivery-related costs arise.
- Cash burn, contracted receipts, spectrum-clearing and acquisition spending, and the basis for management’s stated liquidity runway.
- Revenue conversion from deferred balances and the extent to which reported results depend on noncash license-exchange gains versus recurring or newly contracted revenue.
- Status of the share repurchase authorization, which was scheduled to expire September 29, 2023.