 |
Mpower Communications Reports Third Quarter 2000 Results
- Third quarter core revenue topped $39 million; surpassed 248,000 lines in service
- 100% of net lines installed were business lines; 9% on DSL service delivery platform
ROCHESTER, NY - October 31, 2000- Mpower Communications Corp. (NASDAQ: MPWR), a provider of broadband data, Internet and telephony services to business customers, today announced results of its operations for the third quarter ended September 30, 2000.
Mpower reported revenue for the third quarter of $45.9 million, a 206% increase over third quarter 1999 revenue of $15 million, and a 49% increase sequentially over the second quarter of 2000. Normalized core revenue (without one-time adjustments) was $39.7 million, a 164% increase over third quarter 1999 revenue and a 28% increase sequentially over the second quarter of 2000. Sequential core revenue growth excluding the company's acquisition of Primary Network was 16%.
Voice line equivalents sold in the quarter were 62,526, a 15% increase over the second quarter. The company installed 55,194 lines and added 34,262 net lines to reach a total of 248,905 lines in service at the end of the third quarter. This growth represents a 16% increase over the 214,643 lines in service at the beginning of the third quarter 2000.
Mpower posted an EBITDA (earnings before interest, taxes, stock-based compensation, depreciation and amortization and non-recurring network optimization cost) loss of $49.4 million for the quarter and produced a gross margin of $4.5 million, or 10% of revenue. EBITDA on a normalized basis for the quarter (without one-time adjustments) was a loss of $55.6 million with a gross margin of ($1.7) million, or (3%) of revenue. The company ended the third quarter with $616 million in cash.
"We have sustained a strong trend in same market growth by leveraging our ability to bundle services on both traditional telephony and new-to-market data platforms," said Mpower Communications President and Chief Executive Officer Rolla P. Huff. "We continue to be at the forefront of working with the incumbent local exchange companies to provide DSL-capable lines that further enable us to bring the power of the Internet and integrated communications to businesses."
The company took a $12 million one-time charge in the quarter associated with network optimization costs. It also recognized a $6.2 million one-time gain, the majority of which is due to the settlement of disputes and the collection of switched access charges from major carriers. Mpower now has entered into agreements with its three major carriers that represent approximately 70% of its switched access revenue.
Mpower Third Quarter Highlights
New Service Delivery Organization
In August, Mpower named Joseph M. Wetzel as President-Operations. Wetzel joined Mpower from MediaOne Group and is focusing on all aspects of service delivery including network services, technology development, information technology and local provisioning.
Mpower's integrated voice and data network was expanded during the quarter to encompass 708 revenue ready central office collocations and 16 voice switches, up from 537 collocations and nine switches at the end of the second quarter. This network footprint spans 42 major metropolitan areas and represents an addressable market in excess of 28 million lines.
Bundled Sales to Business Customers
Selling into this extensive network footprint is a 500 person sales and service organization, including 305 quota-carrying sales representatives directly serving the small and mid-size business market.
Mpower's focus on business customers was demonstrated by the fact that 100% of the net lines installed in the third quarter were business lines. Nine percent of these lines were provisioned on Mpower's DSL service delivery platform in the third quarter, up from 6% in the second quarter and 4% in the first quarter.
"Our stated strategy for penetrating the small business market was clearly advanced this quarter with some significant milestones," added Huff. "For the first time in our company's history all of our net new lines were provisioned to business customers and nearly 10% of them were on our DSL platform. Even more notable than the line growth is the approximately $22 million in annualized net new recurring revenue that results from the business we added this quarter."
Mpower Communications Third Quarter Earnings Conference Call
Mpower will host a conference call today at 10:00 a.m., Eastern Standard Time, to further discuss its third quarter results and other matters. The call is open to the public. The company's senior management team will also take this opportunity to discuss the operational and financial outlook for the remainder of 2000 and 2001. The dial in and replay information for the call is as follows:
| Date: | October 31, 2000 |
| Time: | 10:00 a.m. (Eastern Standard Time) |
| Participants: |
Rolla P. Huff, President and Chief Executive Officer
Michael R. Daley, Executive Vice President and Chief Financial Officer |
| Dial-in Number: | 1-888-754-3420, please reference Mpower 3rd Quarter Financial Results
| | Replay Number: | 1-888-633-8284, reservation #: 16461652
Available 12:30 pm EST, 10/31/00 through 12:30 pm EST, 11/7/00 |
Conference Appearances
Mpower CEO Rolla Huff will be appearing at several investment community conferences during the remainder of the year. The prepared PowerPoint presentation will be made available to the public beginning on November 1, via the Investor Relations section of Mpower's Website at www.mpowercom.com or by contacting the company directly.
About Mpower Communications Corp.
Mpower Communications Corp. ( AMEX:MPE) is a facilities-based broadband communications provider offering a full range of data, telephony, Internet access and Web hosting services for small and medium-size business customers. Further information about the company can be found at www.mpowercom.com.
Forward-Looking Statements
Certain statements contained in this press release that state Mpower Communications and/or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. Management wishes to caution the reader these forward-looking statements are not historical facts and are only estimates or predictions. Actual results may differ materially as a result of risks and uncertainties including, but not limited to, projections of future sales, returns on invested assets, regulatory approval processes, market conditions and other risks detailed from time to time in Mpower's Securities and Exchange Commission filings.
| (in
thousands, except per share data) |
Three Months Ended
September 30 |
Nine
Months Ended
September 30 |
| Statements of
Operations (1): |
2000 |
1999 |
2000 |
1999 |
| Revenues |
$ 45,905 |
$ 15,036 |
$ 102,281 |
$ 34,922 |
| Cost of
operating revenues |
41,436 |
12,460 |
94,032 |
31,449 |
| Selling, general
& administrative |
53,880 |
10,544 |
111,425 |
27,469 |
| Stock-based
compensation |
933 |
- |
2,412 |
- |
| Depreciation
& amortization |
17,059 |
4,740 |
32,003 |
12,406 |
| Non-recurring
network optimization cost |
12,000 |
- |
12,000 |
- |
| Loss
from operations |
(79,403) |
(12,708) |
(149,591) |
(36,402) |
| Net interest
income/(expense) and other |
(4,133) |
(2,287) |
33 |
(8,342) |
| Net loss before
extraordinary item |
(83,536) |
(14,995) |
(149,558) |
(44,744) |
| Extraordinary
loss from extinguishment of debt |
- |
- |
(19,547) |
- |
| Net loss after
extraordinary item |
(83,536) |
(14,995) |
(169,105) |
(44,744) |
| Accrued
preferred stock dividend |
(4,644) |
(1,197) |
(12,275) |
(1,926) |
| Value of
preferred stock beneficial conversion feature |
- |
- |
- |
(47,500) |
| Preferred stock
accretion to redemption value |
(1,095) |
(1,440) |
(5,637) |
(2,789) |
| Net loss
applicable to common stockholders |
$ (89,275) |
$ (17,632) |
$ (187,017) |
$ (96,959) |
| |
| Basic and
diluted loss per share of common stock |
$ (1.60) |
$ (0.55) |
$ (3.74) |
$ (3.46) |
| Loss per share
attributable to extraordinary item |
$ - |
$ - |
$ (0.39) |
$ - |
| Basic and
diluted weighted average shares outstanding |
55,925 |
31,924 |
$ 50,004 |
28,006 |
| |
| EBITDA (2) |
$ (49,411) |
$ (7,968) |
$ (103,176) |
$ (23,996) |
| |
| (in thousands) |
|
|
|
|
| Selected Balance
Sheet Data (1): |
As of
September 30, 2000 |
As of
December 31, 1999 |
|
|
| Cash, cash
equiv. & investments |
$ 616,051 |
$ 169,070 |
|
|
| Restricted
investments |
5,384 |
20,256 |
|
|
| Property &
equipment, net |
423,899 |
191,612 |
|
|
| Current
liabilities |
126,378 |
52,363 |
|
|
| Long-term debt,
net of current portion |
483,724 |
161,312 |
|
|
| Redeemable
preferred stock |
242,895 |
84,973 |
|
|
| Stockholders'
equity |
387,291 |
103,781 |
|
|
| |
| Selected
Operational Statistics (1): |
As of
September 30, 2000 |
As of
December 31,1999 |
|
|
| |
Switches in service |
16 |
7 |
|
|
| |
Markets
Served |
42 |
13 |
|
|
| |
Collocated
facilities revenue ready |
708 |
245 |
|
|
| |
Number
of employees |
2,043 |
849 |
|
|
| |
Number
of sales employees |
501 |
187 |
|
|
| |
Lines
in service : |
|
|
|
|
| |
Business |
196,524 |
95,511 |
|
|
| |
Residential |
52,381 |
47,153 |
|
|
| |
Total lines in service |
248,905 |
142,664 |
|
|
| |
(1)
On June 23, 2000, Mpower acquired Primary Network
Holdings Inc. The acquisition was effectively recorded as
of June 30, 2000 for accounting purposes, and the balance
sheet of Primary is included herein. The results of
operations of Primary are included in results of
operations of Mpower, effective July 1, 2000.
(2) Earnings
before interest, taxes, stock-based compensation,
depreciation and amortization (EBITDA) is a measure
commonly used in the communications industry to analyze
operating performance, leverage and liquidity.
Non-recurring network optimization costs are excluded
from this measure. |
|
|
