Mpower Holding Announces Fourth Quarter and Year End 2003 Results
ROCHESTER, N.Y., Feb. 12 /PRNewswire-FirstCall/ -- Mpower Holding
Corporation (BULLETIN BOARD: MPOW) , the parent company of Mpower
Communications Corp., a leading provider of broadband Internet
access and telephone services to business customers, today
announced results of its operations for the fourth quarter and year
ended December 31, 2003. "We are very pleased with the continued
progress in our business in the fourth quarter.We reported positive
Adjusted EBITDA for the second consecutive quarter as well as
record gross margins," stated Mpower Holding Chairman and Chief
Executive Officer Rolla P. Huff. "Mpower has never been financially
and operationally stronger than we are today," continued Huff. "I
am also extremely pleased with the significant progress we are
making in re-tooling our sales organization to drive organic
revenue growth. We have increased quota-carrying headcount by 15%
over year-end levels and we expect by the end of next month
quota-carrying headcount will increase 40% relative to the
beginning of the year." Mpower reported revenue from continuing
operations of $36.9 million for the fourth quarter of 2003,
slightly higher than the third quarter of2003 and 3% below the
prior year quarter. For the full-year 2003, Mpower's revenue grew
to $148.2 million, a 1% increase over the prior year. Core customer
revenue was $32.7 million in the fourth quarter of 2003, flat
versus the prior quarter and a 4% improvement over the fourth
quarter of 2002. Core customer revenue increased 11% on an annual
basis from $116.3 million for the full-year 2002 to $129.6 million
for the full-year 2003 and represented 87% of the company's total
revenue, more than offsetting the expected decline in switched
access revenue. Gross margin from continuing operations was $20.3
million or 55% of revenue in the fourth quarter of 2003, growing 6%
sequentially and 14% higher than the fourth quarter of last year.
Full-year 2003 gross margin from continuing operations was $72.7
million or 49% of revenue, an increase of 18% over the prior year.
Selling, general and administrative (SG&A) expenses from
continuing operations were $18.6 million for the fourth quarter of
2003, slightly higher than the $18.1 million in SG&A reported
in the prior quarter and a 20% improvement over the fourth quarter
of 2002. SG&A for the full-year 2003 decreased to $77.4 million
versus the prior year. Adjusted EBITDA in the fourth quarter of
2003 increased to $1.6 million, 66% higher than the previous
quarter and $7.0 million higher than the fourth quarter of 2002.
The company reported a full-year Adjusted EBITDA loss of $4.7
million in 2003, a 90% improvement over the prior year. Loss from
continuing operations was $2.1 million in the current quarter, a
48% improvement over the fourth quarter of 2002. Mpower reduced its
full-year loss from continuing operations by 95% to $19.8 million.
The company's loss per share before discontinued operations was
$0.01 in the current quarter and $0.27 for the full-year 2003. For
the fourth quarter of 2003, the company's net loss was $0.1 million
compared to a $1.2 million net loss in the prior quarter. Mpower
reduced its net loss for the full-year by 79%, reporting a net loss
of $21.1 million. Net loss per share was $0.00 for the fourth
quarter of 2003 and $0.31 for the full-year ended 2003. Capital
expenditures were $2.0 million in the fourth quarter of 2003 and
$7.8 million for the full-year 2003. Mpower ended 2003 with $29.3
million in unrestricted cash, growing its unrestricted cash
position 172% over year-end 2002. Although Mpower has a $7.5
million revolving receivables-based line of credit, it was not
utilized at year-end. Conference Call to Discuss Fourth Quarter and
Year-End Results Mpower will host a conference call to discuss its
fourth quarter and year-end 2003 financial and operating results.
Date: Thursday, February 12, 2004 Time: 10:00 a.m. (Eastern time)
Dial-in Number: 1-866-769-3706 Replay Number: 1-877-519-4471, PIN
#4484777 From February 12 at 1:00 p.m. through February 19 at 5:00
p.m. Eastern Use of Non-GAAP Financial Information The SEC has
adopted rules (Regulation G) regulating the use of non-GAAP
financial measures. Because of Mpower's use of a non-GAAP financial
measure, Adjusted EBITDA, to supplement our consolidated financial
statements presented on a GAAP basis, Regulation G requires us to
include in this press release a presentation of the most directly
comparable GAAP measure, which is Net (Loss) Income, and a
reconciliation of the two measures. We have presented a
reconciliation of the two measures for each of the periods
presented above. The non-GAAP measure we utilize (Adjusted EBITDA)
provides an enhancement to an overall understanding of our past
financial performance and our prospects for the future as well as
useful information to investors because of (i) the historical use
by Mpower of Adjusted EBITDA as a performance measurement; (ii) the
value of Adjusted EBITDA as a measure of performance before gains,
losses or other charges considered to be outside the company's core
business operating results; and (iii) the use of the Adjusted
EBITDA, or a similar term, by almost all companies in the CLEC
sector as a measurement of performance. We have excluded from our
presentation of Adjusted EBITDA network optimization costs (which
are costs resulting principally from the closure of certain of our
markets), stock-based compensation expenses (which are costs
related to stock options issued with an exercise price below fair
market value), gains on sales of assets, gains or losses on
investments, reorganization expenses and gain on discharge of debt,
other income because we do not believe that including such items in
Adjusted EBITDA provides investors with an appropriate measure of
determining Mpower's performance in its core business. Mpower's
utilization of non-GAAP measurementsis not meant to be considered
in isolation or as a substitute for net loss, loss from continuing
operations, cash flow and other measures of financial performance
prepared in accordance with GAAP. Adjusted EBITDA is not a GAAP
measurement and Mpower's use of it may not be comparable to
similarly titled measures employed by other companies in the
telecommunications industry. About Mpower Holding Corporation
Mpower Holding Corporation (OTC:MPOW) (BULLETIN BOARD: MPOW) is the
parent company of MpowerCommunications, 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. A copy of this press release and
further information about the company can be found at
http://www.mpowercom.com/. Forward-Looking Statements Under the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995, Mpower Holding Corporation cautions investors that
certain statements contained in this press release that state
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 from those
projected as a result of risks and uncertainties including, but not
limited to, future sales growth, market acceptance of our product
offerings, our ability to secure adequate financing or equity
capital to fund our operations and network expansion, our ability
to manage growth and maintain a high level of customer service, the
performance of our network and equipment, our ability to enter into
strategic alliances or transactions, the cooperation of incumbent
local exchange carriers in provisioning lines and interconnecting
our equipment, regulatory approval processes, changes in
technology, price competition and other market conditions and risks
detailed from timeto time in our Securities and Exchange Commission
filings. The company undertakes no obligation to update publicly
any forward-looking statements, whether as a result of future
events, new information, or otherwise. FINANCIAL STATEMENTS Mpower
Mpower Mpower Holding Holding Holding December 31, September 30,
December 31, 2003 2003 2002 BALANCE SHEET (amounts in $thousands)
Current Assets Cash & Cash Equivalents $29,307 $36,629 $10,773
Restricted Investments 92 204 84 Accounts Receivable, net 14,076
13,757 13,923 Other Receivables 5,039 8,335 -- Assets Held for Sale
-- -- 20,471 Prepaid Expenses and Other Current Assets 4,487 3,827
5,814 Total Current Assets 53,001 62,752 51,065 Property and
Equipment, net 33,762 35,597 38,497 Long-Term Restricted
Investments 9,537 9,561 13,547 Deferred Financing Costs, net -- 33
16 Intangibles, net 8,948 10,094 13,530 Other Assets 3,781 5,203
10,768 Total Assets $109,029 $123,240 $127,423 Current Liabilities
Current Maturities of Long-Term Debt and Capital Leases $256 $1,460
$4,638 Line of Credit -- 3,725 -- Accounts Payable 15,754 18,467
23,462 Accrued Sales Tax Payable 3,647 5,745 5,753 Accrued Property
Taxes Payable 2,818 3,527 3,030 Deferred Revenue 4,696 4,699 3,183
Accrued Other Expenses 13,406 17,225 14,352 Total Current
Liabilities 40,577 54,848 54,418 Capital Lease Obligations -- 2 371
Long-Term Deferred Revenue 2,211 2,064 1,497 Total Liabilities
42,788 56,914 56,286 Common stock 78 78 65 Additional Paid-in
Capital 103,735 103,769 87,511 Accumulated Deficit (37,572)
(37,521) (16,439) Total Stockholders' Equity 66,241 66,326 71,137
Total Liabilities and Stockholders' Equity $109,029 $123,240
$127,423 Reorganized Reorganized Reorganized Mpower Mpower Mpower
Holding HoldingHolding Three Months Three Months Three Months Ended
Ended Ended December 31, September 30, December 31, 2003 2003 2002
STATEMENT OF OPERATIONS (amounts in $ thousands, except share and
per share amounts) Operating Revenues: Core Customer $32,655
$32,708 $31,311 SwitchedAccess 4,224 4,089 6,642 Total Operating
Revenues 36,879 36,797 37,953 Operating Expenses: Cost of Operating
Revenues 16,627 17,737 20,131 Selling, General andAdministrative
18,635 18,084 23,271 Reorganization Expense -- -- -- Stock-Based
Compensation Expense 41 43 57 Network Optimization Cost -- (954)
(6,390) Gain on Sale of Assets, net (267) (185) (16) Depreciation
and Amortization 3,961 4,121 4,998 Total Operating Expenses 38,997
38,846 42,051 Loss from Continuing Operations (2,118) (2,049)
(4,098) (Loss) Gain on Sale of Investments, net -- -- (489) Gain
(Loss) on Discharge of Debt -- -- 35,030 Other income 1,427 -- --
Interest Income 63 40 371 Interest Expense (101) (102) (1,315)
(Loss) Income before Discontinued Operations (729) (2,111) 29,499
Income (Loss) from Discontinued Operations 678 922 (29,117) Net
(Loss) Income (51) (1,189) 382 Accrued Preferred Stock Dividends --
-- -- Net (Loss) Income Applicable to Common Stockholders ($51)
($1,189) $382 Basic Weighted Average Shares Outstanding 78,213,486
65,762,792 64,999,025 Diluted Weighted Average Shares Outstanding
78,213,486 65,762,792 65,365,420 Basic and Diluted (Loss) Income
per Share Applicable to Common Stockholders: (Loss) Income before
Discontinued Operations ($0.01) ($0.03) $0.45 Income (Loss) from
Discontinued Operations $0.01 $0.01 ($0.44) Net (Loss) Income
($0.00) ($0.02) $0.01 Gross Margin $20,252 $19,060 $17,822 Gross
Margin (% of Revenue) 54.9% 51.8% 47.0% Adjusted EBITDA $1,617 $976
($5,449) Adjusted EBITDA (% of Revenue) 4.4% 2.7% -14.4%
Reorganized Reorganized Predecessor Mpower Mpower Mpower Holding
Holding Holding For the July 31, January 1, Year Ended 2002 to 2002
to December 31, December 31, July 30, 2003 2002 2002 STATEMENT OF
OPERATIONS (amounts in $ thousands, except share and per share
amounts) Operating Revenues: Core Customer $129,563 $51,622 $64,714
Switched Access 18,609 11,193 18,575 Total Operating Revenues
148,172 62,815 83,289 Operating Expenses: Cost of Operating
Revenues 75,445 33,414 51,320 Selling, General and Administrative
77,434 42,779 65,627 Reorganization Expense -- -- 266,383
Stock-Based Compensation Expense 175 276 442 Network Optimization
Cost (954) (6,390) 19,000 Gain on Sale of Assets, net (534) (90)
(91) Depreciation and Amortization 16,369 7,987 28,620 Total
Operating Expenses 167,935 77,976 431,301 Loss from Continuing
Operations (19,763) (15,161) (348,012) (Loss) Gain on Sale of
Investments, net -- (539) 4,326 Gain (Loss) on Discharge of Debt
(102) 35,030 315,310 Other income 1,427 -- -- Interest Income 199
963 3,237 Interest Expense (526) (2,539) (18,065) (Loss) Income
before Discontinued Operations (18,765) 17,754 (43,204) Income
(Loss) from Discontinued Operations (2,368) (34,193) (34,765) Net
(Loss) Income (21,133) (16,439) (77,969) Accrued Preferred Stock
Dividends -- -- (3,974) Net (Loss) Income Applicable to Common
Stockholders ($21,133) ($16,439) ($81,943) Basic Weighted Average
Shares Outstanding 68,515,811 64,999,025 59,461,374 Diluted
Weighted Average Shares Outstanding 68,515,811 65,247,708
59,461,374 Basic and Diluted (Loss) Income per Share Applicable to
Common Stockholders: (Loss) Income before Discontinued Operations
($0.27) $0.27 ($0.79) Income (Loss) from Discontinued Operations
($0.04) ($0.52) ($0.59) Net (Loss) Income ($0.31) ($0.25) ($1.38)
Gross Margin $72,727 $29,401 $31,969 Gross Margin (% of Revenue)
49.1% 46.8% 38.4% Adjusted EBITDA ($4,707) ($13,378) ($33,658)
Adjusted EBITDA (% of Revenue) -3.2% -21.3% -40.4% RECONCILIATION
TO GAAP December 31, September 30, December 31, (amounts in $
thousands) 2003 2003 2002 Adjusted EBITDA $1,617 $976 ($5,449)
Depreciation and Amortization (3,961) (4,121) (4,998)
Reorganization Expense -- -- -- Network Optimization Cost -- 954
6,390 Gain on Sale of Assets, net 267 185 16 Stock-Based
Compensation Expense (41) (43) (57) Loss from Continuing Operations
(2,118) (2,049) (4,098) (Loss) Gain on Sale of Investments, net --
-- (489) Gain (Loss) on Discharge of Debt -- -- 35,030 Other income
1,427 -- -- Interest Income 63 40 371 Interest Expense (101) (102)
(1,315) (Loss) Income before Discontinued Operations (729) (2,111)
29,499 Income (Loss) from Discontinued Operations 678 922 (29,117)
Net (Loss) Income (GAAP) ($51) ($1,189) $382 January 1,
RECONCILIATION TO GAAP July 31, 2002 2002 to (amounts in $
thousands) December 31, to December 31, July 30, 2003 2002 2002
Adjusted EBITDA ($4,707) ($13,378) ($33,658) Depreciation and
Amortization (16,369) (7,987) (28,620) Reorganization Expense -- --
(266,383) Network Optimization Cost 954 6,390 (19,000) Gain on Sale
of Assets, net 534 90 91 Stock-Based Compensation Expense (175)
(276) (442) Loss from Continuing Operations (19,763) (15,161)
(348,012) (Loss) Gain on Sale of Investments, net -- (539) 4,326
Gain (Loss) on Discharge of Debt (102) 35,030 315,310 Other income
1,427 -- -- Interest Income 199 963 3,237 InterestExpense (526)
(2,539) (18,065) (Loss) Income before Discontinued Operations
(18,765) 17,754 (43,204) Income (Loss) from Discontinued Operations
(2,368)(34,193) (34,765) Net (Loss) Income (GAAP) ($21,133)
($16,439) ($77,969) DATASOURCE: Mpower Holding Corporation CONTACT:
Investor: Gregg Clevenger, Chief Financial Officer,
+1-585-218-6547, or , or Media: Michele Sadwick, Vice President,
+1-585-218-6542, or , both of Mpower Holding Corporation; or
Investor Relations: Lester Rosenkrantz of Cameron Associates,
+1-212-554-5486, or , for Mpower Holding Corporation Web site:
http://www.mpowercom.com/
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