FTE Networks, Inc. (FTNW) research, news, and more from GeoInvesting

Company description

Fri, 17 Nov 2017 16:21:55 GMT

FTE Networks, Inc., and its businesses provide end-to-end design, build, and support solutions for state-of-the-art network and commercial properties, creating the most advanced and transformative smart platforms and buildings. Working with some of the world's leading Fortune 500 corporations and communications service providers, FTE's businesses are predicated on smart design and consistent standards that reduce deployment costs and accelerate delivery of innovative projects and services. FTE Networks and its subsidiaries operate 8 Lines of Business, including: Data Center Infrastructure, Fiber Optics, Wireless Integration, Network Engineering, Internet Service Provider, Construction Management, General Contracting, & Pre-Construction Services. With approximately 200+ employees, FTE and its entities have operations in 17 states and Europe.

Research

Tue, 18 Dec 2018 16:07:19 GMT

Fte Networks, Inc. (NYSE:FTNW) ($3.02, $36.7M market cap), a provider of international and regional telecommunications and technology systems, and infrastructure service, announced it has signed a non-binding term sheet with its senior lender, Lateral Investment Management that would adjust the interest rate to Libor +9.5% and extend the maturity date of the credit facility to March 30, 2021.

The current rate on the senior debt is at 12% with maturity on March 31, 2019.

Investors should note that this is a non-binding agreement and contingent on the terms below:

“Consideration in connection with the consummation of this Amendment will include 250,000 common stock warrants with a cash strike price of $10.00 and customary closing fees. The terms of the amended credit facility will be subject to and contingent upon a signed definitive agreement, the satisfaction of certain conditions precedent, including the restructuring of subordinated debt, and all other customary terms and conditions for a transaction of this size and nature. Subject to the foregoing, the Company anticipates that the facility amendment will be completed by the end of January 2019.”

Quotes from management:

“We truly appreciate the relationship we have with Lateral and are excited to soon complete yet another milestone transaction with Lateral,” said Mr. Michael Palleschi, President and CEO of FTE Networks. Mr. Palleschi continued, “Lateral continues to grow with us providing out of the box solutions that are representative of a valued partner.” This amendment will reduce the cost of capital and extend the amortization schedule. Collectively, we believe this transaction will greatly strengthen the balance sheet and overall liquidity of the Company.”

Research

Tue, 02 Oct 2018 16:22:31 GMT

Fte Networks, Inc. (NYSE:FTNW) ($11.08, $83.1M market cap), a provider of international and regional telecommunications and technology systems, and infrastructure services announced it has been awarded $141.4 million in new projects in August and September, bringing the Company’s year to date to approximately $444.8 million.

“I am extremely pleased with our recent infrastructure project award performance. I think it is important to note that while a significant portion of the projects represent reoccurring work with existing customers, we have added new highly recognizable brands to our list of clients as well. This reflects the strong operational reputation we have built in the industry and is a byproduct of our commitment to deliver projects on time and to specifications. Our strategic vision to create and maintain the entire in-building ecosystem, from design through implementation of data systems and intelligent networks, continues to be well-accepted by the market. We have a great deal of momentum right now across all segments, and we expect that to continue into the fourth quarter and beyond.”

Research

Tue, 25 Sep 2018 15:50:33 GMT

Fte Networks, Inc. (NYSE:FTNW) ($11.48, $86.1M market cap), a provider of international and regional telecommunications and technology systems, and infrastructure services issued a CEO letter to shareholders:

"Dear Shareholders:

We would like to take this opportunity to update you on the advances we have made year to date and provide management's outlook for the remainder of this year and into 2019.

The Company has made substantial progress this year in delivering on our growth initiatives and our plan to lead the evolution of next generation, intelligent buildings. With the advances we have made in the last year, we now offer an unparalleled operational platform that combines fundamental stability with unlimited growth potential…"

You can see the full letter here.

One takeaway we could not ignore was that the company once again reiterated its full year guidance, calling for $350 million in revenues and $30 million in adjusted EBITDA. However, as we stated in our September 4th research update, we noticed that the operating income guidance of $15 million, which was given in a prior update by the company, is no longer stated.

We are still confused as to why the Company has omitted its previous operating income guidance, while maintaining its EBITDA guidance.

If the original guidance holds, EPS for the second half of this year would be close to $1.20 per share, or $1.54 for the full year (excluding amortization of deferred financing costs, debt discount and financing costs, which the company mentioned in the earnings release as one-time costs). Shares are trading at a P/E of 7.4 on this full year estimate.

Research

Tue, 04 Sep 2018 14:23:22 GMT

Fte Networks, Inc. (NYSE:FTNW) ($12.96, $97.2M market cap), a provider of international and regional telecommunications and technology systems, and infrastructure services, has seen its shares slump the past month. On August 15, 2018 we highlighted the Company’s Q2 2018 results and last week we mentioned that the CEO and CFO bought shares on the open market.

Although revenue has increased over 200% through the first six months of 2018, non-GAAP EPS was $0.34. When the company issued Q4 2017 and Q1 2018 results in April and May, respectively, it issued the following guidance for 2018:

Net revenue of $350 million
Adjusted EBITDA of $30 million
Operating Income of $15 million

We calculated 2018 EPS based on the company’s operating income guidance of $15 million, which equates to EPS of $1.63 (not taxed) for fiscal 2018. Q1 2018 showed a strong EPS performance, but Q2 came in at a loss, bringing the first half of 2018’s operating income to $466,000, which is nowhere near the implied EPS guidance assumption.

However, in its Q2 earnings release, the company stated it had maintained its guidance for 2018. We noticed that the operating income number was left out of the current guidance which had us concerned, and could be an explanation behind the recent stock’s sharp pullback. After reading through the 2018 conference call, we still believe the company’s original full year 2018 guidance is intact (including operating income), meaning that the Company could be heading for a strong second half of the year for operating income/EPS. We have informed the company’s IR firm of our concerns, urging them to provide clarity on this matter.

Caveats:

Without management issuing updated guidance, inclusive of the operating income figure, we can not be 100% sure of our assumptions.
We still need to gain clarification on whether or not the company has resolved its past due tax liability with the IRS which we have discussed in our original notes. In its 2017 10-K, management stated this issue would be resolved in Q1 2018. Obviously, if they have not resolved this issue, the risk that the Company will have to issue shares to settle this IRS obligation has to be considered.
First half performance of 2018 highlights the lumpiness that can be associated with FTNW’s business (as well other construction companies that rely on big projects).

Research

Thu, 30 Aug 2018 17:07:44 GMT

Fte Networks, Inc. (NYSE:FTNW) ($12.72, $95.4M market cap) - Insiders from this telecommunications, technology systems, and infrastructure services company have filed Form 4’s showing they have added shares at open market prices. The stock has been weak after posting its Q2 2018 results in mid-August. Two Form 4’s filed yesterday show that the CEO and CFO each purchased shares (5,500 and 2,000, respectively) during yesterday's trading session.

Research

Wed, 15 Aug 2018 14:47:10 GMT

Fte Networks, Inc. (NYSE:FTNW) ($16.40, $103.0M market cap), a provider of international and regional telecommunications and technology systems, and infrastructure services, announced Q2 2018 results (pre announced revenues):

Sales of $86.3 million vs $50.6 million in the prior year
Non-GAAP loss of $0.22 vs non-GAAP loss of $0.04

"We are reiterating our revenue, adjusted EBITDA and buildings on net goals for 2018 and remain confident that our backlog and visibility into a growing pipeline of opportunities will facilitate the above results. The entire team is excited about the long-term opportunity and focused on creating shareholder value."

Based on results year to date, the Company is reiterating its previously issued financial guidance for 2018. Expectations remain as follows:

Net revenue of $350 million
Adjusted EBITDA of $30 million

The company had preannounced sales figures on August 6, 2018.

Research

Mon, 06 Aug 2018 15:10:24 GMT

Fte Networks, Inc. (NYSE:FTNW) ($16.96, $108M market cap), a provider of international and regional telecommunications and technology systems, and infrastructure services, released preliminary revenues for the second quarter ending June 30, 2018. “Revenue is expected to increase to approximately $87 million, representing a nearly 75% increase from the $50.7 million posted in Q2 of 2017. The Company expects to meet its annual guidance for 2018 in terms of revenue, adjusted EBITDA and buildings on net and continues to improve on its balance sheet by reducing its debt outstanding while increasing its cash on hand.”

"We are pleased with our execution on several fronts during the second quarter," said Michael Palleschi, Chief Executive Officer of FTE. "In fact, excluding one-time costs and other non-cash expenses, the Company would be profitable on a GAAP-basis. Both our infrastructure and technology segments continue to contribute to our success in a variety of ways. The infrastructure segment provides us with a solid backlog and steady cash flow, enabling us to improve our debt structure and giving us greater operational flexibility. The technology segment, led by our CrossLayer solution, continues to nurture and expand its pipeline which gives us confidence in our building on net goals for the current year. Overall, new business wins remain strong as we build on our excellent reputation and continue to execute for our clients. We look forward to sharing more details on our second quarter earnings call."

This select long’s trading price has been oscillating in a range between between the mid to high teens and low to mid twenties during the course of 2018. On February 22, 2018, we released an RFT on the company titled, "A Comeback Story For This Telecommunications Solutions Provider.” In this piece, we introduced the company’s operating segments, and most notably, compared it to some of its peers against which, as of FTNW’s February 20, 2018 trading price of $21.50, it was clearly undervalued based on a few key metrics (EV/EBITDA, P/S, Forward P/E).

Research

Wed, 01 Aug 2018 15:31:41 GMT

FTW Networks (NYSE AMEX:FTNW) ($15.85, $102.87M market cap), a provider of international/regional telecommunications and technology systems and infrastructure services, announced that its infrastructure segment has been awarded approximately $61.4 million in new projects in July of 2018, bringing the Company’s year-to-date total to approximately $301.9 million.

Michael Palleschi, President and CEO of FTE Networks, stated, “This has been a significant month for us. The award contracts include a large project with a global workspace provider that services prominent companies with advanced needs such as Spotify, Microsoft, and Dell. These awards highlight our business momentum and underscore the continued demand for our infrastructure and technology segments, which, in turn, supports our 2018 revenue and profit optimization objectives.”

Research

Tue, 31 Jul 2018 15:42:26 GMT

Fte Networks, Inc. (AMEX:FTNW) ($16.24 102.0M market cap), isa provider of international/regional telecommunications/technology systems and infrastructure services. We have been covering the Company’s recent strong earning reports as well as numerous contract wins. Yesterday, we noticed for the first time that the company now has analyst EPS estimates of $2.20 and $3.00 for fiscal 2018 and 2019 respectively.

Please see our reasons for tracking note from February 2018 here.

Research

Tue, 10 Jul 2018 15:48:02 GMT

FTW Networks (NYSE AMEX:FTNW) ($17.79, $111.7M market cap), a provider of international/regional telecommunications/technology systems and infrastructure services, announced it was awarded new contracts of $42.7 million in June, bringing the company’s year to date total to approximately $240.5 million.

Quotes from management:

“June was an excellent month in terms of new contract wins, bringing our second quarter to a successful close. We have increased confidence in our goals and are on target for meeting our 2018 stated objectives. We continue to enjoy a healthy backlog and believe that these new awards highlight the strength in our brand,” said Michael Palleschi, President and CEO of FTE Network.”

Research

Wed, 20 Jun 2018 15:19:24 GMT

FTW Networks (NYSE AMEX:FTNW) ($20.53, $128.9 M market cap), a provider of international/regional telecommunications/technology systems and infrastructure services, announced that the Company’s Infrastructure Segment has been awarded a contract expanding its Inside Plant line of business footprint in five markets.

"This contract is significant because it represents an increase in the scope and size of work performed for this customer,” said Mr. Anthony Sirotka, Chief Administrative Officer and Head of FTE's Infrastructure Segment. "We are excited to again be rewarded for our excellent service with some of the largest telecommunications carriers in the industry.”

"We are pleased to announce this new multi-year, multi-million dollar expansion with our globally recognized strategic partner and further strengthen our presence in the markets we serve,” said Mr. Michael Palleschi, Chairman and Chief Executive Officer of FTE. “Our ISP business is high-margin in nature and the relationships we build and maintain with these customers will serve to facilitate the growth of all segments of our business.”

Research

Tue, 12 Jun 2018 16:08:46 GMT

FTW Networks (NYSE AMEX:FTNW) ($21.87, $138.9 M market cap), a provider of international/regional telecommunications/technology systems and infrastructure services, announced it has been awarded new contracts totaling $36 million in new projects in May of 2018, bringing the Company’s year-to-date total to approximately $197.8 million. The new contract awards cover a variety of projects, including a $26 million project for one of the 50 largest law firms in the world.

“These infrastructure wins continue to demonstrate our strength and outstanding reputation in the New York City market and our growing national footprint,” Michael Palleschi, President and CEO of FTE Networks, stated. “Both our technology and infrastructure segments are seeing excellent momentum as we progress through 2018. We continue to execute well against our strategic vision of managing the entire in-building ecosystem, from design through implementation of data systems and intelligent networks.”

We have yet to established whether or not the company has come to terms of agreement to pay past due taxes that we discussed in our initial research, something we are still looking into. To get up to speed on why we began to track FTNW in February 2018, please see our article titled, “A Comeback Story For This Telecommunications Solutions Provider.”

Research

Mon, 21 May 2018 15:09:53 GMT

FTW Networks (NYSE AMEX:FTNW) ($17.00, $106.7M market cap), a provider of international/regional telecommunications/technology systems and infrastructure services, reported its first quarter results this morning:

Sales of $85.1 million vs. $45 million
Adjusted EPS of $0.56 vs. ($0.10)
Announced new infrastructure and technology expansion projects valued at approximately $161 million year-to-date, as of May 1, 2018.

The company also reported a backlog of approximately $460.7 million as of March 31, 2018. The combined backlog as of March 31, 2018 increased approximately $26.7 million from the 2017 year-end backlog. The company also noted that it is consolidating into two segments going forward:

“Announcing that, effective with the first quarter of 2018, the Company will operate primarily in two segments: the infrastructure segment and the technology segment. The infrastructure segment includes general contracting management and network infrastructure solutions. The technology segment, which includes CrossLayer, Inc. (“CrossLayer”), is mainly comprised of managed network services, with an advanced network and cloud platform.

Management’s commentary:

“2018 is a pivotal year for FTE; I am excited at the forward progress the Company is making,” noted Michael Palleschi, President and Chief Executive Officer of FTE. “With the successful integration of Benchmark and launch of CrossLayer, we have positioned ourselves in the market to provide carrier grade in-building technology and innovative infrastructure services. Through our two business segments, technology and infrastructure, we have an incredible opportunity to manage the entire in-building ecosystem from design through implementation of data systems and intelligent buildings.”

“This quarter was excellent on several fronts. We experienced strong revenue growth when compared to pro forma results from first quarter 2017, increased our backlog to approximately $460.7 million, continued to expand our pipeline of CrossLayer opportunities, and strengthened the foundation for growth in 2018 and beyond.”

Research

Tue, 01 May 2018 14:46:59 GMT

Fte Networks, Inc. (AMEX:FTNW) ($16.00; $100.5M market cap), a leading provider of innovative technology-oriented solutions for smart platforms, network infrastructure and buildings, announced new contracts of $28 million.

The new contract awards cover three separate projects with a leading shared office space provider that supplies its tenants with physical and virtual service offerings.

Michael Palleschi, President and CEO of FTE Networks, stated, “These new contracts reinforce the value that FTE’s suite of complementary technology and general contracting solutions can provide its clients, enabling them to meet increasing tenant demands for intelligent work spaces. Similar to our recently announced partnership with Industry City, FTE is well positioned to help build real estate developments as innovative ecosystems that benefit tenants and the wider community alike. We continue to see momentum in our business and expect our growing backlog to drive sustained expansion and sustainable shareholder value.”

Research

Wed, 18 Apr 2018 14:34:39 GMT

Fte Networks, Inc. (AMEX:FTNW) ($19.30; $108.0M market cap), a leading provider of innovative technology-oriented solutions for smart platforms, network infrastructure and buildings, announced Q4 2017 results:

Sales of $110.5 million
Company reported non-GAAP loss of $0.15
We are working our in house non-gaap calculation for the quarter and for fiscal 2018 based on operating income guidance of $15 million. As well as a deeper look at the unpaid tax liability which we mentioned when the company announced its preliminary second half results.
We also need to verify the company’s calculation of the fully diluted share count of 5.5 million
Our preliminary 2018 EPS estimate based on the company’s operating income guidance of $15 million equates to EPS of $1.63 (not taxed) for fiscal 2018.

Quotes from management:

“During 2017, FTE laid the foundation for dynamic growth, by expanding its product and service portfolio and positioning itself as a provider of a complementary suite of technology and general contracting solutions that spans multiple high-growth market segments,” commented Michael Palleschi, FTE’s Chief Executive Officer. “We are highly confident in our ability to maximize the synergies between our Benchmark Builders, CrossLayer and Jus-Com units to drive robust top-and-bottom line growth, and sustainable shareholder value.”

“We have already begun to see the benefits of this operating model, as evidenced by our record fourth quarter revenue, a nearly 40% sequential increase from our third quarter results. While we expect some near-term variability in expenses as we integrate CrossLayer as the foundation of our leading technology and infrastructure service suite to Fortune 100/500 companies and top-ranking REITs, we believe that the robust revenue growth and strong backlog of $434 million, and projected pipeline at year-end are a testament to the underlying strength of this model.”

Guidance for fiscal 2018:

Net revenue of $350 million
Adjusted EBITDA of $30 million
Operating Income of $15 million
Buildings on-net, 30

Research

Wed, 11 Apr 2018 15:30:07 GMT

Fte Networks, Inc. (AMEX:FTNW) ($18.66; $104.4M market cap), a leading provider of innovative technology-oriented solutions for smart platforms, network infrastructure and buildings, announced several new contracts totaling approximately $24.3 million.

Michael Palleschi, President and CEO of FTE Networks, stated, “Year-to-date, FTE has continued to secure new contract awards from an increasingly prestigious client base, including global, tier one clients, Fortune 100/500 companies and top-ranking REITs. Our recently announced preliminary backlog of approximately $434 million at December 31, 2017 underscores the underlying strength of our business and further validates the market’s adoption of FTE’s product and service suite that spans multiple growth market segments. By offering our complementary services that provide state-of-the-art technology and infrastructure solutions that enable the edge, we are well positioned to meet the increasing demands for intelligent work spaces.”

We are looking forward to reading through the 10-K and the subsequent events section to see if the company mentions any progress in its progress with its past due tax liability with the IRS, which they had anticipated to have resolved in the first quarter of 2018. If they are unable to agree on a settlement with the IRS, it could leave the company in a position of having to raise money in the capital markets.

Research

Tue, 03 Apr 2018 14:49:50 GMT

Fte Networks, Inc. (AMEX:FTNW) ($18.45; $103.2M market cap), a leading provider of innovative technology-oriented solutions for smart platforms, network infrastructure and buildings, announced preliminary second half 2017 results:

Total revenue for second half 2017 was $189.6 million (Q4 revenues of $110.6 million)
Adjusted EPS of $1.73 (Q4 EPS of $0.12)

Quotes from management:

“During 2017, FTE acquired and integrated Benchmark Builders, a tier one firm in the coveted New York City market, which both enhanced our top-and-bottom lines and created an ideal sales channel for our first to market compute-to-the-edge technology powered by CrossLayer. These accomplishments were instrumental in the achievement of a key corporate milestone of uplisting to the New York Stock Exchange (American) in December 2017. This distinction allows for the potential of greater liquidity and access to capital, as well as expanded communications to our investor base.”

Outlook for 2018:

“The momentum in our business has continued into 2018, as we announced more than approximately $108.5 million in new contracts during the first quarter. We believe that FTE’s integrated business model represents a new paradigm that spans both the technology and infrastructure sectors. Further, we are confident that the patent-pending CrossLayer technology platform positions FTE to equip our clients with innovative, technology-oriented solutions that offer their commercial tenants a cutting-edge high speed networking experience, powered by edge computing, while providing the Company with enhanced efficiencies and margins, driving sustainable profitability and shareholder value,” concluded Mr. Palleschi.

The press release did not provide any financial tables, so we will await the 10-K to calculate our own non-GAAP metrics.

Something to be potentially concerned about is the big sequential decline in EPS from Q3 to Q4 which illustrates some of the issues that construction companies face when dealing with projects where margins can fluctuate. As we mentioned, this is one of the reasons (along with past due tax issue) we stated that we only took a very small position as the story unfolds. Hopefully, we will gain more clarity upon the release of the 10K.

We highlighted our interest in FTNW on several occasions, noting in our February 2018 newsletter that a successful interview with management was the deciding factor in initiating a small speculative position in the stock near $16/share. While FTNW did go on to log gains to the tune of >60%, the price retreated going into Q4 2017 earnings.

Research

Tue, 27 Feb 2018 18:44:48 GMT

FTE Networks, Inc. (NYSE:FTNW) ($23.85; $133.6M market cap), a leading provider of innovative technology-oriented solutions for smart platforms, network infrastructure and buildings, announced it was selected by New York’s Industry City to provide, build and manage an ultra-fast, fiber optic network that delivers the most advanced and carrier-neutral secure internet connectivity across its 35-acre campus on the Brooklyn, New York, waterfront. The terms for this contract were not disclosed.

Reasons For Tracking

Thu, 22 Feb 2018 15:42:51 GMT

FTE Networks, Inc. (NYSE:FTNW) ($21.75; $141.3M market cap), a leading provider of innovative technology-oriented solutions for smart platforms, network infrastructure and buildings.

On November 17, 2017, we mentioned that we began looking at Fte Networks Inc (AMEX:FTNW) due to strong Q3 2018 financials and the company’s backlog. On January 24, 2018, I had the pleasure of interviewing management to learn more about the business.

In some ways, this story reminds me of multi-bagger ex-GeoBargain Gtt Communications (NYSE:GTT), in that the company went public through a reverse merger and it addresses special customer network connectivity needs. At the time of the podcast, when the stock was trading around $18.00, shares were selling at run-rate P/E of 5, despite reporting huge 2017 Q3 numbers in November, offering some meaningful upside to the stock if the quarter proves to be a new level of performance for the company.

Please see the full RFT here.

Research

Wed, 21 Feb 2018 20:18:53 GMT

FTE Networks, Inc. (NYSE:FTNW) ($20.50; $117.5M market cap, a leading provider of innovative technology-oriented solutions for smart platforms, network infrastructure and buildings, announced that it has been awarded two new projects totaling $27.5 million.

“I am extremely pleased with our steady flow of contract awards and the strengthening of our customer portfolio from both our existing customer base and new customer contracts. The continued expansion of FTE’s project portfolio with esteemed companies signals the market’s growing enthusiasm for FTE. Our visionary combination of technology and infrastructure supports the increasing demand for intelligent buildings by offering a comprehensive set of innovative solutions. Our dynamic product suite and services ensure tenants, workforces, and buildings are utilizing state-of-the-art facilities that provide faster and better compute to the edge solutions.”

In related news, yesterday via premium tweet we sent an update on FTNW where Maj talks about the valuation gap.

Please listen to the full podcast here.

Research

Thu, 15 Feb 2018 18:39:03 GMT

FTE Networks, Inc. (NYSE:FTNW) ($18.34; $102.6M market cap ,a leading provider of innovative technology-oriented solutions for smart platforms, network infrastructure and buildings, announced it has been awarded a new contract valued at $36 million.

“Our team continues to meet and exceed the expectations of our valued customers. Being awarded the contract by a marquee firm strengthens our ability to secure additional engagements with notable global companies located in one of the foremost markets. This award furthers our mission to transform tenant experiences and address increasing tenant demands for advanced technology solutions and high-speed internet. FTE is well positioned to meet the new design and future-ready requirements for smart building infrastructure. We continue to bolster our backlog, and these new contract awards are a testament to the hard work and dedication of the employees of FTE and its subsidiaries.”

On January 12, 2018 we stated we established a small long position (at $15.80) in FTNW as shares looked extremely cheap on a P/E basis. In the coming days, Maj will have a research (podcast) update from our recent interview with management.

Research

Fri, 12 Jan 2018 19:20:46 GMT

Nibbled at Shares of FTNW

FTE Networks, Inc. (NYSE:FTNW) ($15.81; $88.5m market cap) is a leading provider of innovative technology-oriented solutions for smart platforms, network infrastructure and buildings. In yesterday’s email, we highlighted the recent strength in shares and how, if the current quarter becomes the new run rate, shares are extremely cheap on a P/E basis. We have not had a chance to speak with management about the Company’s capital structure. However, we could not resist and nibbled some shares as we await the interview.

Research

Thu, 11 Jan 2018 17:51:07 GMT

FTE Networks, Inc.(NYSE:FTNW) ($16.50; $92.3m market cap), a leading provider of innovative technology-oriented solutions for smart platforms, network infrastructure and buildings saw shares hit a new 52 week high of $19.49 during yesterday’s trading session on the heels of a bullish letter to shareholders from the CEO. Here is one brief excerpt from the letter:

“We expect 2018 to be another year of tremendous growth for FTE. Thanks to the successful integration of our complementary businesses, we are now able to focus on our dynamic growth strategy.”

The full letter can be read here. In our November 17, 2017 email we highlighted the company’s strong Q3 2017 results and discussed the recent 1 for 25 reverse stock split. Shares were trading at $8.10 when we issued our November email. However, we had and still continue to have some questions regarding the Company’s capital structure. We have been unsuccessful in securing an interview with management but will continue to reach out to try and gain clarity on this issue.

As we discussed in prior research, FTNW reported non-GAAP EPS of $1.61 for Q3 2017. We calculated non-GAAP EPS of $0.82, assuming the company can maintain these run rates, the stock would now be trading with a P/E run rate of 2.5 and 5 respectively.

Shareholder Letters

Wed, 10 Jan 2018 20:32:07 GMT

Dear Fellow Shareholders,

Happy New Year! Today I have the honor of ringing the historic New York Stock Exchange (“NYSE”) opening bell. To mark this occasion, I wanted to take the time to update our valued shareholders on recent activities and plans for the future. Since our last shareholder update in October 2017, we have achieved several important milestones, making 2017 one of the most transformative years in the history of our Company. With FTE’s recent launch of our transformative technology powered by CrossLayer and the successful integration of Benchmark Builders into our previously existing FTE business, we believe our business model provides us a competitive edge in the technology and infrastructure market and will play a key role in driving our growth in 2018 and beyond.

A Unique Business Model

FTE is a technology company that is leveraging its market presence in the network infrastructure and general contracting verticals as sales and operations channels for its innovative edge computing technology. In addition to enabling adaptive and efficient smart network connectivity platforms, infrastructure, and buildings, FTE provides end-to-end design, build, and support solutions for state-of-the-art networks, data centers, and residential and commercial properties.

Our business is now comprised of three complementary businesses whose combined operating benefits provide cutting-edge technology solutions to our client base that includes Fortune 100/500 companies, some of the world's leading Telecommunications and IT Services Providers as well as REITs and Media Providers, and, in turn, contributes to improved margins that ultimately impact our growth and profitability.

With technology guiding all that we do, we are confident in the path we are forging to offer unrivaled breadth and quality of solutions to our customers.

A Transformational 2017

We believe our advancements in 2017 established a strong foundation for our business to begin capitalizing on a multi-prong growth opportunity that lies before us.

We integrated Benchmark Builders, a premier general contractor, with a powerful industry brand and strong presence in the New York City metropolitan market. We also launched CrossLayer, our Edge Computing solution that efficiently uses low-cost commodity servers that are scalable and upgradable through open source software, facilitate new capabilities that enable network, cloud, content and data to converge into a single network platform in an environment that evolves with technology.

We believe that our technology platform is central to fully realizing the cross-company synergies and rapidly penetrating our target markets. By leveraging our client base and our network infrastructure operation we will support this growing building network with integrated network services, cutting edge technology, and facility management services, from conception to completion – a disruptive solution.

As FTE continues to grow, we believe it is important to build a culture of execution and delivering on the Company’s stated corporate objectives. In our last shareholder update, we shared our plans relative to an uplisting to a national exchange. In our final pivotal moment in 2017, we had the distinction of completing our uplisting and to see our common stock begin trading on the NYSE American in December.

Uplisting to the NYSE American gives us a larger platform for us to communicate our progress to a broader audience and will enable us to expand and diversify our shareholder base. Combined with our recently announced engagement of KCSA Strategic Communications for Public and Investor Relations to support these communication goals, we believe we are now better positioned to attract a broader range of institutional investors.

Additionally, we continued to deliver on our operational goals and add to our growing backlog by our announcement of contract MSA awards with new and existing customers. These awards not only served to expand and strengthen our footprint in existing markets, they helped open a few new markets as well.

Looking Ahead to 2018 and Beyond

We expect 2018 to be another year of tremendous growth for FTE. Thanks to the successful integration of our complementary businesses, we are now able to focus on our dynamic growth strategy.

As we hope to have reinforced in this letter, we believe FTE has a clear roadmap to delivering sustainable growth. By leveraging our innovative technology as the foundation for our expansion initiatives, we hope to realize the full benefits of our three complementary businesses.

By performing many of our infrastructure projects internally, we believe we will be in a position to maximize profitability. Additionally, by marketing scalable and upgradable technology to our existing client base, we anticipate re-occurring revenues from clients with whom we expect to maintain long-term relationships, building trust and continuing to provide value through our technology solutions.

FTE plans to continue to invest in its technology solutions and to protect these technologies by building a robust patent estate around its key features. In addition, we believe we are well positioned to support the market penetration and sales efforts of our technology platform by making the required investments to expand the sales channels and feed the growth.

We are confident that FTE will continue to benefit from a strong market presence and customer recognition in New York City, and believe that it is well positioned to satisfy the market need, with access to more than 200 REITS and an impressive reoccurring Fortune 100/500 customer portfolio that have a national footprint.

All told, we are confident in our technology focused business model. We look forward to building shareholder value by expanding our client base, increasing profitability, and reaching a broader and more institutional shareholder base with our listing on the NYSE American.

Thank you for your continued commitment to FTE Networks. We look forward to sharing our continued progress with you in 2018 and beyond.

Sincerely,

Michael Palleschi
President and CEO

Research

Thu, 14 Dec 2017 16:31:04 GMT

FTE Networks, Inc. (FTNW) ($13.00; $72.7m market cap), a leading provider of innovative technology-oriented solutions for smart platforms, network infrastructure and buildings, announced $37.2 million in new contract awards.

“These new contract awards further demonstrate the value and market adoption of the Company’s strategic solutions. The three complementary businesses -- FTE Network Services, CrossLayer, Inc., and Benchmark Builders, Inc. provide superior skill and expertise in creating intelligent, efficient, and sustainable smart network connectivity platforms, infrastructure, and buildings. Our ability to effectively integrate our service offerings and realize these synergies provides significant benefits to our customers."

“I am excited about the Company’s continued positive momentum achieved during 2017. The synergistic operating benefits and the Company’s ability to provide general contracting solutions, self-perform a large portion of the infrastructure build outs and provide high margin technology solutions continue to positively impact our growth and profitability. We believe these contract awards will further strengthen our foundation and enable the Company’s continued growth and our ability to execute against the Company’s strategies in 2018,”

In our November 17, 2017 email we highlighted the company’s strong Q3 2017 results and discussed the recent 1 for 25 reverse stock split. Shares momentarily rallied on earnings, but then pulled back. However, over the last few days shares have been moving on the news of an uplisting to the NYSE. Shares were trading at $8.10 when we issued our November email and closed at $13 in yesterday's session.

We are still looking into the company’s capital structure and prior loan agreements from 2015. There are some terms in the agreements that we may believe could be considered toxic. Our best effort calculation for the Company's fully diluted share came in at 6.2 million. However, we have been unable to find exhibits to the original loan that were supposed to be filed shortly after the deal was consummated. We are continuing to dig into the story, but please note that the stock is extremely illiquid and trades on the OTC. The company has yet to return our calls.

Research

Fri, 17 Nov 2017 16:19:39 GMT

FTE Networks, Inc. (FTNWD) ($8.10; $45.2m market cap) - On November 6, 2017 the company’s board approved a 1 for 25 reversestock split. FTNWD is a leading provider of innovative technology-oriented solutions for smart platforms, network infrastructure and buildings.

Shares were trading at $0.40. It seems the Company’s fully diluted post split share count will be 6.2 million shares. Yesterday the company reported strong Q3 Financials:

Sales of $79.1 million vs $50.7 million in Q2 2017
Company issued non-GAAP EPS of $1.61 vs a loss of $0.37 in the prior year period
Geo calculated non-GAAP EPS of $0.82 to TBD.
Backlog of $419.3 million as of September 30, 2017 up from $347 million as of June 30, 2017

Quotes from management:

“The Company continues to make significant strides in its integration of Benchmark Builders, launch of CrossLayer™ and strengthening of FTE Network Services. Our sales teams are now fully engaged in selling activities and focused on implementing measures that cross-promote our three business operations. We continue to gain positive and accretive traction with each business entity. The Company’s strengthening of its financial position is partly attributable to: CrossLayer™’s recurring revenue model, Benchmark’s roughly 90 percent reoccurring revenue, and FTE Network Services’ long-term contracts. We are excited with the direct result of these initiatives as the Company’s holds an impressive backlog of $419.3MM as of September 30, 2017.

Management continues to focus on operational efficiencies and has implemented significant cost reductions throughout third quarter 2017. These savings combined with the ability to leverage synergies and streamline the business are expected to yield total cost savings of approximately $3MM annually. Further, the Company continues to invest in CrossLayer™ with a total investment of approximately $4MM to date. Management believes CrossLayer™ provides a technology platform that sets FTE apart from its competitors and provides its customers with a one-stop solution that offers technology, general contracting and network infrastructure solutions.

I am extremely excited with the tremendous progress of FTE’s continued forward growth trajectory as illustrated in our record revenues and profitability. The Company believes it is well-positioned to move forward with its growth strategy for 2018.”

We are still looking into the company’s capital structure and prior loan agreements from 2015. There are some terms in the agreements that we may believe could be considered toxic. We did the best we could with the information provided to calculate a fully diluted share count (6.2 million). However, we have been unable to find exhibits to the original loan that were supposed to be filed shortly after the deal was consummated. We are continuing to dig into the story, but please note that the stock is extremely illiquid and trades on the OTC.