POSTS RECORD REVENUE FOR THIRD QUARTER 2006
Revenues Climb 60% and Operating
Income Increases 225%
For Three Months Ended September 30, 2006
November 15, 2006
Conference Call Scheduled Today, November 15 at
9:00 A.M. Eastern Time
JACKSON, MS – November 15, 2006 – XFONE, Inc.
(AMEX and TASE: XFN) (“XFONE” or “the Company”), a provider
of international voice, video and data communications
services, announced yesterday financial results for the
third quarter and nine months ended September 30, 2006.
Financial highlights for the three months ended September 30, 2006 compared to the three months ended September 30, 2005 (translated into US dollars for convenience):
- Total revenues rose to a record of £5,127,985 ($9,654,252), up 60.5% from £3,419,183 ($6,012,634) and grew 15% from £4,525,256 ($8,367,198) in the prior sequential quarter. Approximately 40% of the sequential increase in revenues was from organic growth.
- Gross profit margin on sales increased to 42% from 32%.
- XFONE USA revenues climbed 151% to £2,019,057 ($3,801,198) from £862,631 ($1,516,937).
- XFONE’S operations in the UK contributed £2,372,903 ($4,467,369) to total revenues, a more than 20% increase from revenues of £2,105,968 ($3,703,346).
- Revenues from XFONE 018, the Company’s Israel-based operations, totaled £736,025 ($1,385,685), representing a 75% increase over £450,584 ($792,351).
- Operating profit grew 224.8% to £222,671 ($419,000) from £73,479 ($129,000) and increased 90.4% compared to the second quarter.
- EBITDA for the quarter increased 108% to $593,000 from $285,000 and grew 50% from $395,000 in the previous sequential quarter.
- XFONE 018 reported its first positive EBITDA of $17,000.
- Net income grew to £112,031 ($210,917), or £0.01 ($0.02) earnings per basic share, compared to a loss of £118,803 ($208,915), or a loss of £0.02 ($0.03) per basic share.
Note: Results for the three months and nine months ended September 30, 2005 reflect a one-time loss of £181,055 ($318,000) associated with damages to the Company’s equipment and operations as a result of the effects of Hurricane Katrina.
Financial highlights for the nine months ended September 30, 2006 compared to the nine months ended September 30, 2005 (translated into US dollars for convenience):
- Total revenues increased 52.8% to £14,154,530 ($26,648,167) from £9,912,515 ($17,431,158).
- Gross profit margins also improved, rising to 39% from 33%.
- Revenue contribution from XFONE USA rose 143% to £5,950,394 ($11,202,569) from £2,625,530 ($4,616,995).
- Operating profit grew 215.8% to £426,716 ($803,361) from £144,643 ($254,356).
- Net income increased to £299,884 ($564,580), or £0.03 ($0.06) earnings per basic share, compared to a loss of £15,469 ($27,202), or a loss of £0.00 ($0.00) per basic share.
As of September 30, 2006, XFONE, Inc. had £4,829,735 ($9,092,749) in cash and
accounts receivable; and total shareholders’ equity of
£10,277,766 ($19,349,540).
Operational Highlights:
- During the quarter the Israel Securities Authority
and the Tel Aviv Stock Exchange (“TASE”) approved
the dual listing of the Company on the TASE. Trading
on TASE commenced on July 24, 2006.
- In mid-September 2006, the Company reported a substantial
growth in network traffic at its wholly owned UK subsidiary,
Swiftnet Limited. During August Swiftnet gained 20,000
new customers, primarily through its “Text & Talk”
service. Swiftnet is taking steps to increase its
network capacity in order to accommodate the resulting
volume growth.
- During the quarter the Company also completed the
integration of Equitalk and finalized the deployment
of Equitalk’s billing system.
- XFONE USA initiated collocation processes and switch
upgrading during the quarter, to migrate over one
thousand residential customers to the XFONE switch.
• On August 30, 2006, XFONE 018 was granted a license
to operate in Israel as an
Internet Service Provider (ISP).
Guy Nissenson, President and Chief Executive Officer of
XFONE, Inc., stated, “During the quarter we achieved very
strong performance across all of our operations, with
approximately 40% of our sequential growth during the
quarter being organic. Our strong growth, coupled with
synergies that we are realizing from recent acquisitions,
drove significant margin improvement. In Israel, for example,
we have built the business from zero to EBITDA positive
in less than two years and are very optimistic about the
opportunity for continued growth. In the U.S. and UK we
continue to build our presence as a leading facilities-based
telecom provider with new service offerings and customer
service improvements. In addition, we believe that many
of the synergies related to recent acquisitions, as well
as the full cost benefit from the new infrastructure build
out in the U.S. are not yet reflected in our financial
performance.” XFONE will host a teleconference today,
beginning at 9:00 AM Eastern, to discuss the third quarter
results. The conference call may be accessed in the U.S.
and Canada by dialing toll free 1-877-407-0782. International
callers may access the call by dialing 1-201-689-8567.
A replay of the teleconference will be available for thirty
days and may be accessed domestically by dialing 1-877-660-6853
and international callers may dial 1-201-612-7415. Callers
must enter account number 286 and conference number 220373.
| Xfone, Inc.
and Subsidiaries |
| CONSOLIDATED STATEMENTS OF
INCOME |
| |
3
Months Ended
September 30, |
9
Months Ended
September 30, |
3
Months Ended
September 30, |
9
Months Ended
September 30, |
| |
2006 |
2005 |
2006 |
2005 |
2006 |
2006 |
| |
|
|
|
|
US$ |
US$ |
| |
| Revenues |
£5,127,985 |
£3,419,183 |
£14,154,530 |
£9,912,515 |
$9,654,252 |
$26,648,167 |
| Cost of Revenues |
(2,999,587) |
(2,326,743) |
(8,683,975) |
(6,662,272) |
(5,647,202) |
(16,348,972) |
| |
|
|
|
|
|
|
| Gross Profit |
2,128,398 |
1,092,440 |
5,470,555 |
3,250,243 |
4,007,050 |
10,299,195 |
| |
| Operating expenses: |
|
|
|
|
|
|
| Research and development |
(5,625) |
(5,625) |
(16,875) |
(15,625) |
(10,590) |
(31,770) |
| Marketing and Selling |
(595,048) |
(334,742) |
(1,413,778) |
(991,802) |
(1,120,273) |
(2,661,663) |
| General and administrative |
(1,305,054) |
(678,594) |
(3,613,186) |
(2,098,173) |
(2,456,973) |
(6,802,401) |
| |
| Total operating expenses |
(1,905,727) |
(1,018,961) |
(5,043,839) |
(3,105,600) |
(3,587,836) |
(9,495,834) |
| |
| Operating profit |
222,671 |
73,479 |
426,716 |
144,643 |
419,214 |
803,361 |
| |
| Financing expenses - net |
(73,885) |
(26,928) |
(179,918) |
(68,203) |
(139,100) |
(338,724) |
| Equity in income of affiliated company |
(78,320) |
(3,689) |
(5,942) |
43,843 |
(147,450) |
(11,187) |
| Loss from a change of holding of affiliated company |
-- |
-- |
(29,848) |
-- |
-- |
(56,194) |
| Loss from hurricane Katrina |
-- |
(181,055) |
-- |
(181,055) |
-- |
-- |
| Other income |
11,117 |
4,312 |
34,186 |
17,452 |
20,930 |
64,361 |
| |
| Income before minority interest and taxes |
81,583 |
(133,881) |
245,194 |
-43,320 |
153,594 |
461,617 |
| |
| Minority Interest |
35,671 |
5,593 |
42,348 |
59,585 |
67,156 |
79,727 |
| |
|
|
|
|
|
|
| Income Before taxes |
117,254 |
(128,288) |
287,542 |
16,265 |
220,750 |
541,344 |
| |
| Benefit (taxes on income) |
(5,223) |
9,485 |
12,342 |
(31,734) |
(9,833) |
23,236 |
| |
| Net income |
£112,031 |
£(118,803) |
£299,884 |
£(15,469) |
$210,917 |
$564,580 |
| |
| Weighted average shares outstanding |
|
|
|
|
|
|
| Basic |
10,966,100 |
6,886,959 |
9,615,690 |
6,720,971 |
10,966,100 |
9,615,690 |
| Diluted |
11,425,870 |
6,886,959 |
10,075,460 |
6,720,971 |
11,425,870 |
10,075,460 |
| Earnings Per Share: |
|
|
|
|
|
|
| Basic |
£0.01 |
£(0.02) |
£0.03 |
£0.00 |
$0.02 |
$0.06 |
| Diluted |
£0.01
|
£(0.02) |
£0.03
|
£0.00
|
$0.02 |
$0.06
|
About XFONE, Inc.
A U.S.-domiciled corporation, XFONE, Inc. is an international voice, video and data communications services provider with operations in the United Kingdom, the United States and Israel that offers a wide range of services, which include: local, long distance and international telephony services; prepaid and postpaid calling cards; cellular services; Internet services; messaging services (Email/Fax Broadcast, Email2Fax and Cyber-Number); and reselling opportunities. The Company serves customers across Europe, Asia, North, Central and South America, Australia and Africa.
This press release contains forward-looking statements.
The words or phrases "should," "would
be," "will allow," "intends to,"
"will likely result," "are expected to,"
"will continue," "is anticipated,"
"estimate," "project," or similar
expressions are intended to identify "forward-looking
statements." The Company's financial results reflected
above should not be construed by any means as representative
of the current or future value of its common stock.
All information set forth in this press release, except
historical and factual information, represents forward-looking
statements. This includes all statements about the company's
plans, beliefs, estimates and expectations. These statements
are based on current estimates and projections, which
involve certain risks and uncertainties that could cause
actual results to differ materially from those in the
forward-looking statements. These risks and uncertainties
include issues related to rapidly changing technology
and evolving standards in the industries in which the
Company and its subsidiaries operate; the ability to
obtain sufficient funding to continue operations, maintain
adequate cash flow, profitably exploit new business,
and license and sign new agreements; the unpredictable
nature of consumer preferences; and other factors set
forth in the Company's most recently filed annual report
and registration statement. Readers are cautioned not
to place undue reliance on these forward-looking statements,
which reflect management's analysis only as of the date
hereof. The Company undertakes no obligation to publicly
revise these forward-looking statements to reflect events
or circumstances that arise after the date hereof. Readers
should carefully review the risks and uncertainties
described in other documents that the Company files
from time to time with the Securities and Exchange Commission.
| For More Information, Please Contact: |
 |
| U.S.
IR Contact |
John Nesbett/Jennifer Beloeau
Institutional Marketing Services (IMS)
Phone: 1.203.972.9200.
E-mail: jnesbett@institutionalms.com |
|
| Xfone Contact |
|
Niv Krikov
Chief Financial Officer
Phone: + 972.39254446 (Israel)
E-mail: E-mail: niv@xfone.com |
|
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