ATN International, Inc. — FY 2021 Form 10-K
Reporting period: Year ended December 31, 2021. This is an annual filing, not a standalone fourth-quarter report; quarterly results are not clearly provided in the supplied filing text.
Business context
ATN provides mobile, fixed broadband and voice, carrier, and managed IT services in underserved markets in the United States, Bermuda, and the Caribbean. Its strategy emphasizes fiber investment and long-term infrastructure cash flows. The company reports International Telecom, US Telecom, and Renewable Energy segments.
In July 2021, ATN acquired control of Alaska Communications, owning approximately 52% of its common equity. It also sold 67% of its India solar business in January 2021 and retained a 33% interest.
Financial performance
| Metric | FY 2021 | FY 2020 | Change |
|---|---|---|---|
| Total revenue | $602.7 million | $455.4 million | Up 32.3% |
| Operating income (loss) | $(15.0) million | $9.2 million | Down $24.2 million |
| Net loss attributable to ATN shareholders | $(22.1) million | $(14.1) million | Loss widened $8.0 million |
| Diluted loss per share | $(1.52) | $(0.89) | — |
| Cash from operating activities | $80.5 million | $86.3 million | Down $5.8 million |
| Capital expenditures | $106.1 million | $75.3 million | Up $30.8 million |
| Cash, restricted cash, and short-term investments | $81.0 million | $105.0 million | Down $24.0 million |
| Total debt, net of unamortized financing costs | $366.5 million | $72.8 million | Up substantially, mainly following Alaska acquisition |
Operating margin was approximately negative 2.5% in 2021 versus positive 2.0% in 2020. Cash from operations less reported capital expenditures was approximately negative $25.6 million; this simple calculation is not a company-defined free-cash-flow measure. The filing text does not provide a clear consolidated EBITDA figure.
At year-end, current assets were $232.6 million and current liabilities were $220.9 million. The company reported $122.5 million available under its CoBank facility, $37.7 million under the FirstNet receivables facility, and $33.0 million under Alaska’s revolving facility. It stated that cash, operating cash flow, and credit availability should cover working capital and capital expenditure needs for at least 12 months.
Material changes versus prior year
- Revenue rose primarily because Alaska Communications contributed $110.5 million after its July acquisition, FirstNet construction revenue increased by $25.0 million, and mobility and fixed-service revenues grew.
- Communication services revenue increased 26.8%; construction revenue increased to $35.9 million from $10.9 million. FirstNet construction revenue is expected to have minimal operating-income impact because related costs are similar to revenue.
- Operating results were pressured by a $20.6 million goodwill impairment in the US Virgin Islands, higher acquisition-related costs and depreciation, and increased operating expenses.
- International Telecom revenue increased 4.4% to $342.9 million, but segment operating income fell to $33.9 million from $58.9 million. US Telecom revenue more than doubled to $259.4 million, while the segment moved from $8.0 million operating income to a $14.0 million loss.
- Interest expense increased to $9.6 million from $5.3 million following additional borrowing. Investing cash outflow rose to $426.6 million, largely reflecting the Alaska acquisition.
Outlook, risks, and unusual items
- Management expects 2022 capital expenditures of approximately $150 million to $165 million, with significant investment in fiber. It expects a full year of Alaska results and further broadband expansion, but also anticipates higher depreciation, interest, and operating costs.
- ATN expected to recognize another $33 million to $38 million of FirstNet construction revenue in 2022, with approximately matching construction costs. At year-end, 60% of sites were complete; management expected most remaining sites in 2022 and the balance in early 2023. COVID-related, permitting, supply, and construction delays remain risks.
- US Virgin Islands high-cost support fell from approximately $16.4 million annually to $10.9 million beginning July 2021, was scheduled to decline to $5.5 million in July 2022, and is expected to end thereafter. The filing links reduced funding and changed market conditions to the Viya goodwill impairment.
- ATN disclosed that Viya was out of compliance with its debt leverage covenant at December 31, 2021; the lender granted a waiver on March 16, 2022. The company reported compliance with the CoBank and Alaska facility covenants at year-end.
- Key risks include Guyana’s new competitive and regulatory regime, subsidy reductions and compliance requirements, the Alaska integration and competitive environment, declining wholesale roaming, customer concentration in carrier services, supply-chain and inflation pressures, cybersecurity and network outages, and severe weather exposure.
- Potential contingencies include Guyana tax disputes totaling $44.1 million, for which $5.0 million was accrued; an unresolved USAC Rural Health Care audit and FCC inquiry concerning Alaska Communications; and other claims. ATN accrued $14.5 million for these and other potential liabilities, while some reasonably possible exposures could not be estimated.
- The company recorded a $20.6 million goodwill impairment and a $2.8 million loss on dispositions of long-lived assets in 2021. It also reported a $22.1 million loss on the India solar-business sale in 2020 and further related assessment losses in 2021.
- The audit opinion was unqualified and management reported effective disclosure controls and internal control over financial reporting. Alaska Communications, representing approximately 32% of consolidated assets and 18% of revenue, was excluded from management’s and the auditor’s ICFR assessment because it was acquired during 2021.
Most important facts for investors to verify
- Whether Alaska Communications integration, growth, and cash generation meet expectations, and how its debt and redeemable minority interests affect returns to ATN shareholders.
- The timing, remaining costs, and ongoing margin contribution of the FirstNet build and services contract.
- The financial impact of declining US Virgin Islands subsidies, Guyana liberalization, and the pending USAC audit and FCC inquiry.
- Whether forecast capital spending and debt service can be funded while maintaining liquidity, dividends, and covenant compliance.
- How much of reported revenue growth reflects acquired operations and construction activity versus recurring organic service growth.