GTT Communications, Inc. (NYSE:GTT) Q3 2018 Earnings Conference Call Transcript

Nov 08, 2018 • 10:00 am ET

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GTT Communications, Inc. (NYSE:GTT) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, and welcome to the GTT Communications Third Quarter 2018 Results Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Mr. Chris McKee, General Counsel and EVP of Corporate Development. Please go ahead.

Executive
Chris McKee

Thank you, and good morning. I'm joined today by Rick Calder, GTT's President and CEO; Mike Sicoli, GTT's CFO; and Brian Thompson, GTT's Executive Chairman of the Board. Today's discussion is being made available via webcast through the company's website, www.gtt.net. A telephonic replay of this call will be available for one week. Dial-in information for the replay as well as access to a replay of the webcast is also available on our website.

(Forward-Looking Cautionary Statements)

During the call, we will also discuss non-GAAP financial measures, including certain pro forma information, which were not prepared in accordance with GAAP. A reconciliation of our GAAP and non-GAAP results is provided in today's press release and is posted in the IR section of our website.

I will now turn the call over to Rick Calder. Rick?

Executive
Rick Calder

Thank you, Chris, and good morning, everyone. Third quarter 2018 marked another good quarter of performance by GTT. We delivered revenue and adjusted EBITDA growth of 121% and 93% from last year, respectively, and we made meaningful progress on the integration of our largest strategic acquisition, Interoute. We completed the organization integration in September, and we expect the majority of those employees currently on transition to leave the company by year-end with the remainder leaving throughout the first half of 2019. The systems integration is also well underway as we consolidated all core business support systems to our client management database, CMD, in October. Network integration is also on track for substantial completion in the next few months. We expect to complete the Interoute integration in early 2019 consistent with our prior estimate of 3 to 4 quarters post close and continue to expect to achieve at least $100 million in run rate cost synergies once the integration is complete.

It is important to note that our $100 million target remains unchanged, despite the recent weakness in the euro and the pound as we expect to outperform our initial estimates on a constant currency basis. Given our successful progress on Interoute integration, right after the quarter ended, we announced the acquisition of Access Point, a provider of communication services to enterprise clients throughout the United States. Access Point brings a growing roster of strategic U.S. enterprise clients, deepening GTT's presence in key verticals, such as retail, manufacturing and energy with significant upsell opportunities, complementary managed broadband, Internet and voice capabilities to reinforce GTT's market leadership in cloud networking, new partner relationships in the indirect channel, complementing GTT's expanding presence in the channel marketplace and a track record of serving clients with highly responsive support, aligning with GTT's core values of simplicity, speed and agility.

Similar to our prior small acquisitions, we expect the