Create the future you want! Learn to make money online. Visit our website and start today! www.exclusivebizopps.com
Time Warner Telecom Announces Solid First Quarter 2005 Results Fueled by 29% Data and Internet Growt
Time Warner Telecom Announces Solid First Quarter 2005 Results Fueled by 29% Data and Internet Growth and 16% Enterprise Revenue Growth Year Over Year
LITTLETON, Colo., May 2 /PRNewswire-FirstCall/ -- Time Warner Telecom Inc. (NASDAQ:TWTC) , a leading provider of managed voice and data networking solutions for business customers, today announced its first quarter 2005 financial results, including $171.6 million in revenue, $60.0 million in Modified EBITDA(1) ("M-EBITDA") and a net loss of $35.2 million."Our business progressed with another solid quarter," said Larissa Herda, Time Warner Telecom's Chairman, CEO and President. "We have continued to deliver overall revenue and customer growth with healthy margins, fueled by 29% growth in data and Internet revenue, 16% growth in enterprise revenue and 1% growth in carrier revenue, year over year. By listening to our customers, making the right investments and enabling companies to operate more efficiently through our industry leading Ethernet solutions, we are the forerunner of what businesses need."
Highlights for the Quarter
For the quarter ending March 31, 2005, the Company --
* Sequentially grew enterprise revenue $2.5 million and carrier
revenue $1.1 million over the fourth quarter
* Grew enterprise revenue $12.5 million, or 16%, year over year
* Grew data and Internet revenue $8.3 million, or 29% year over year
* Produced M-EBITDA of $60.0 million. Achieved M-EBITDA margin
of 35%.
* Grew buildings served directly by the Company's fiber network to
nearly 5,300, a 21% increase year over year
* Grew customers to more than 10,700 driven by strong enterprise
growth, a 17% increase year over year
* Launched a business-class VoIP offering in 21 markets
* Issued $200 million of additional financing with a 2014 maturity,
and redeemed $200 million of 2008 debt maturities
Sequential Results - First Quarter 2005 compared to Fourth Quarter 2004
Revenue
Revenue for the quarter was $171.6 million, as compared to $168.0 million for the fourth quarter of 2004, an increase of $3.6 million sequentially. The primary components of the change included:
* $2.5 million increase in revenue from enterprise customers, primarily
from the sale of data and Internet services
* $1.1 million increase from carriers due to stronger sales
By product line, the percentage change in revenue for the first quarter over the fourth quarter was as follows:
* 6% increase for data and Internet services due to success with
Ethernet and IP-based product sales
* 2% increase for dedicated transport services, primarily due to
increased carrier sales
* 1% decrease in switched services
Disconnects for the first quarter resulted in a loss of $2.3 million of monthly revenue for the current quarter, as compared to $2.1 million in the fourth quarter of 2004 and $2.4 million for the first quarter of 2004.
M-EBITDA and Gross Margins
M-EBITDA for the quarter was $60.0 million versus $54.6 million for the fourth quarter of 2004. A portion of the increase related to $4 million of favorable tax resolutions in the first quarter, contributing to the increase in the M-EBITDA margin over the prior quarter. M-EBITDA margin was 35% compared to 33%, and gross margin was 61% compared to 60% for the first quarter of 2005 and the fourth quarter of 2004, respectively. The Company utilizes a fully burdened gross margin, including network costs, and personnel costs for customer care, provisioning, network maintenance, technical field and network operations.
Net Loss
The Company's net loss narrowed to $35.2 million, or $.30 loss per share for the quarter, compared to a net loss of $36.1 million, or $.31 loss per share for the fourth quarter of 2004. The decrease in the net loss reflected an increase in M-EBITDA, lower depreciation expense due to retirement of assets in the fourth quarter that did not recur, and an increase in interest expense related to financing activities in the current quarter. Costs associated with financing activities represented $.09 loss per share in the current quarter.
Year over Year Results -- First Quarter 2005 compared to First Quarter
2004
Revenue
Quarterly revenue was $171.6 million for the current quarter as compared to $161.6 million for the first quarter of 2004, an increase of $10.0 million. The primary components of the change included:
* $12.5 million increase in revenue from enterprise customers,
primarily from the sale of data and Internet services
* $3.2 million increase from carriers, primarily due to increased
transport sales
* $2.3 million decrease related to a favorable MCI bankruptcy
settlement in the first quarter of 2004 that did not recur in the
current quarter
* $1.3 million decrease from related parties, primarily due to a
decrease in transport services being purchased by their Internet-
related businesses
* $2.1 million decrease in intercarrier compensation due to reduced
minutes of use and rate reductions
By product line, the percentage change in revenue year over year was as follows:
* 29% increase for data and Internet services due to success with
Ethernet and IP-based product sales
* 2% increase for dedicated transport services, primarily due to
increased carrier sales
* 6% increase for switched services, primarily due to growth in bundled
voice products
M-EBITDA and Margins
M-EBITDA for the quarter was $60.0 million versus $52.0 million in the same period last year. A portion of the increase related to $4 million of favorable tax resolutions in the current quarter, offset by a favorable $2.7 million MCI bankruptcy settlement recognized in the first quarter of 2004, which did not recur.
M-EBITDA margin was 35% for the quarter. This compared to 32% for the same period last year. Gross margin was 61% for the current quarter. This compared to 60% for the same period last year.
Net Loss
The Company's net loss narrowed to $35.2 million, or $.30 loss per share, for the current quarter. This compares to a net loss of $38.8 million, or $.34 loss per share, for the same period last year. The decrease in net loss is primarily related to an increase in M-EBITDA, offset by an increase in interest expense, reflecting higher interest rates and financing costs year over year. Financing costs represented a loss per share of $.09 and $.08 for the first quarter of 2005 and 2004, respectively.
Other Operating Highlights
Financing
In February, the Company completed an offering of $200 million of additional 9 1/4% Senior Notes due February 15, 2014. Subsequent to the financing, the Company called for the redemption of $200 million of the 9 3/4% Senior Notes due July 15, 2008. Approximately $210 million of cash on hand was used for the redemption. The primary benefit of the financing activities was to defer $200 million of debt maturities from 2008 to 2014.
Capital Expenditures
Capital expenditures were $39.3 million for the quarter. This compares to $49.4 million and $31.5 million for the fourth and first quarters of 2004, respectively. For 2005, the Company expects capital expenditures to be approximately $175 million, which includes the cost of continued expansion of its network, products and systems.
Other Revenue Items
"Our continued strong enterprise growth was complemented by our second consecutive quarter of increased carrier revenue and we are pleased with the continued strengthening in our business," said Mark Peters, Time Warner Telecom's Senior Vice President and Chief Financial Officer. "While the nature of our business includes quarterly fluctuations related to sales cycles, installation timing, disconnects, disputes and contract settlements, the trends in our business continue to be positive."
Summary
"We believe to grow in this industry and to succeed long term, we must create a differentiated and defendable market position," said Herda. "We have done this by building a unique asset that combines the strength of our powerful IP backbone and our local fiber infrastructure, with our leading product portfolio and our network management capabilities. We expect this dynamic set of capabilities combined with our ongoing focus on customer satisfaction and innovation will continue to help us grow the business," concluded Herda.
Time Warner Telecom Inc. plans to conduct a webcast conference call to discuss its earnings results on May 3 at 9:00 a.m. MDT (11:00 a.m. EDT). To access the webcast and the financial and statistical information to be discussed in the webcast, visit www.twtelecom.com under "Investor Relations."
(1) The Company uses a modified definition of EBITDA to eliminate
certain non-cash and non-operating income or charges to earnings to
enhance the comparability of its financial performance from period
to period. Modified EBITDA (or "M-EBITDA) is defined as net income
or loss before depreciation, amortization, accretion, asset
impairment charge, interest expense, interest income, investment
gains and losses, income tax expense and cumulative effect of change
in accounting principle. (See a discussion below of Modified EBITDA
under "Financial Measures".)
Financial Measures
The Company provides financial measures using generally accepted accounting principles ("GAAP") as well as adjustments to GAAP measures to describe its business trends, including Modified EBITDA. Management believes that its definition of Modified EBITDA (see above) is a standard measure of operating performance and liquidity that is commonly reported and widely used by analysts, investors, and other interested parties in the telecommunications industry because it eliminates many differences in financial, capitalization, and tax structures, as well as non-cash and non-operating income or charges to earnings. Modified EBITDA is not intended to replace operating income (loss), net income (loss), cash flow, and other measures of financial performance and liquidity reported in accordance with GAAP. Management uses Modified EBITDA internally to assess on-going operations and it is the basis for various financial covenants contained in the Company's debt agreements. Modified EBITDA is reconciled to Net Loss, the most comparable GAAP measure to Modified EBITDA, within the Consolidated Operating Highlights.
Due to the significant positive impact of the Company's settlement with WorldCom, Inc. (now MCI Inc.), the Company has presented its selected operating statistics both as reported and net of the settlements as well as a reconciliation between the two, in order to assist in understanding the impact of the settlement and the Company's performance during the quarter net of the impact of that event.
Forward Looking Statements
The statements in this press release concerning the outlook for 2005 and beyond, including expansion plans, revenue trends, growth prospects, service disconnects and expected capital expenditures are forward-looking statements that reflect management's views with respect to future events and financial performance. These statements are based on management's current expectations and are subject to risks and uncertainties. Important factors that could cause actual results to differ materially from those in the forward looking statements include the risks summarized in the Company's filings with the SEC, especially the section entitled "Risk Factors" in its 2004 Annual Report on Form 10-K and the risks set forth in the material posted at www.twtelecom.com under "Investor Relations" for the Company's May 3, 2005 webcast. Time Warner Telecom undertakes no obligations to publicly update or revise any forward- looking statements, whether as a result of new information, future events or otherwise.
About Time Warner Telecom Inc.
Time Warner Telecom Inc., headquartered in Littleton, Colo., is a leading provider of managed network solutions to a wide array of businesses and organizations throughout the U.S. that require telecommunications intensive services. One of the country's premier competitive telecom carriers, Time Warner Telecom integrates data, dedicated Internet access, and local and long distance voice services for long distance carriers, wireless communications companies, incumbent local exchange carriers, and such enterprise organizations doing business in healthcare, finance, higher education, manufacturing and hospitality industries as well as for federal, state and local government entities. Please visit www.twtelecom.com for more information.
Time Warner Telecom Inc. Consolidated Operations Highlights (Dollars in thousands) Unaudited (1) Three Months Ended 3/31/05 12/31/04 Growth % Revenue Dedicated transport services $85,648 $83,690 2% Switched services 40,450 41,053 -1% Data and Internet services 36,696 34,765 6% 162,794 159,508 2% Intercarrier compensation (2) 8,780 8,516 3% Total Revenue 171,574 168,024 2% Expenses Operating costs 66,807 67,197 -1% Gross Margin 104,767 100,827 4% Selling, general and administrative 44,779 46,192 -3% Modified EBITDA 59,988 54,635 10% Depreciation, amortization and accretion 58,006 64,531 Operating Income (Loss) 1,982 (9,896) Interest expense (39,797) (28,728) Interest income 2,721 2,590 Net loss before income taxes (35,094) (36,034) Income tax expense 75 111 Net Loss ($35,169) ($36,145) Capital Expenditures $39,330 $49,382 -20% Gross Margin 61% 60% Modified EBITDA Margin 35% 33% (1) For complete financials and related footnotes, please refer to the Company's SEC filings. (2) Intercarrier Compensation includes switched access and reciprocal compensation. Time Warner Telecom Inc. Consolidated Operations Highlights (Dollars in thousands) Unaudited (1) Three Months Ended March 31 2005 2004 Growth % Revenue Dedicated transport services $85,648 $84,160 2% Switched services 40,450 38,113 6% Data and Internet services 36,696 28,424 29% 162,794 150,697 8% Intercarrier compensation (2) 8,780 10,952 -20% 171,574 161,649 6% Expenses Operating costs 66,807 64,317 4% Gross Margin 104,767 97,332 8% Selling, general and administrative 44,779 45,312 -1% Modified EBITDA 59,988 52,020 15% Depreciation, amortization and accretion 58,006 56,813 Operating Income (Loss) 1,982 (4,793) Interest expense (39,797) (35,822) Interest income 2,721 1,319 Investment gains -- 690 Net loss before income taxes (35,094) (38,606) Income tax expense 75 225 Net Loss ($35,169) ($38,831) Capital Expenditures $39,330 $31,548 25% Gross Margin 61% 60% Modified EBITDA Margin 35% 32% (1) For complete financials and related footnotes, please refer to the Company's SEC filings. (2) Intercarrier Compensation includes switched access and reciprocal compensation. Time Warner Telecom Inc. Highlights of Results Per Share Unaudited (1) Three Months Ended 3/31/05 12/31/04 3/31/04 Weighted Average Shares Outstanding (thousands) Basic and Diluted 115,871 115,797 115,515 Basic and Diluted Loss per Common Share As Reported ($0.30) ($0.31) ($0.34) As of 3/31/05 12/31/04 3/31/04 Common shares (thousands) Actual Shares Outstanding 116,079 115,806 115,670 Options (thousands) Options Outstanding 19,468 19,224 19,417 Options Exercisable 12,912 12,871 11,046 Options Exercisable and In-the-Money 2,160 2,120 1,507 (1) For complete financials and related footnotes, please refer to the Company's SEC filings. Time Warner Telecom Inc. Condensed Consolidated Balance Sheet Highlights (Dollars in thousands) Unaudited (1) March 31, December 31, 2005 2004 ASSETS Cash and equivalents, and short-term investments $373,176 $432,506 Receivables 51,853 56,972 Less: allowance (10,885) (11,415) Net receivables 40,968 45,557 Other current assets 25,826 25,598 Long-term Investments -- -- Property, plant and equipment 2,374,956 2,336,338 Less: accumulated depreciation (1,090,548) (1,033,246) Net property, plant and equipment 1,284,408 1,303,092 Other Assets 100,824 98,835 Total $1,825,202 $1,905,588 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $34,673 $42,504 Deferred revenue 19,967 20,229 Accrued taxes, franchise and other fees 64,653 69,001 Accrued interest 18,246 44,265 Accrued payroll and benefits 21,197 23,209 Current portion of debt and lease obligations 2,369 1,387 Other current liabilities 73,510 81,145 Total current liabilities 234,615 281,740 Long-Term Debt and Capital Lease Obligations Floating rate Senior secured notes, due 2/15/2011 240,000 240,000 9.25% Senior unsecured notes, due 2/15/2014 400,493 200,000 9.75% Senior unsecured notes, due 7/15/2008 200,000 400,000 10.125% Senior unsecured notes, due 2/1/2011 400,000 400,000 Capital lease obligations 11,843 10,584 Less: current portion (2,369) (1,387) Total long-term debt and capital lease obligations 1,249,967 1,249,197 Other Long-Term Liabilities 7,671 7,493 Stockholders' Equity 332,949 367,158 Total $1,825,202 $1,905,588 (1) For complete financials and related footnotes, please refer to the Company's SEC filings. Time Warner Telecom Inc. Selected Operating Statistics Unaudited (1) Quarter Ended 2004 2005 Mar. 31 Jun. 30 Sept. 30 Dec. 31 Mar. 31 Operating Metrics: Route Miles Metro 11,998 12,247 12,453 12,375 12,835 Regional 6,694 6,694 6,694 6,794 7,015 Total 18,692 18,941 19,147 19,169 19,850 Fiber Miles Metro 626,873 637,081 646,849 642,298 653,506 Regional 273,963 273,963 273,963 275,163 275,186 Total 900,836 911,044 920,812 917,461 928,692 Buildings (2) On-net 4,350 4,576 4,839 5,074 5,281 Type II 12,502 13,114 13,895 14,139 14,576 Total 16,852 17,690 18,734 19,213 19,857 Networks Class 5 Switches 41 41 40 39 39 Soft Switches 12 12 12 13 20 Headcount Total Headcount 1,982 1,971 1,990 1,986 2,019 Sales Associates (3) 305 310 323 314 317 Customers 9,209 9,632 9,982 10,396 10,740 (1) For complete financials and related footnotes, please refer to the Company's SEC filings. (2) Buildings "On-net" represents customer locations to which the Company's fiber network is directly connected. Type II buildings are carried on the Company's fiber network, including the Company's switch for switched services, with a leased service from the Company's distribution ring to the customer location. (3) Includes Sales Account Executives and Customer Care Specialists. Time Warner Telecom Inc. Selected Operating Statistics Unaudited (1) 2004 Mar. 31 (Note 2) Financial Metrics: (1), (2) As MCI Net of Reported Settlement Settlement Revenue ($000) Dedicated transport services $84,160 $1,661 $82,499 Switched services 38,113 (25) 38,138 Data and Internet services 28,424 675 27,749 Subtotal 150,697 2,311 148,386 Intercarrier Compensation 10,952 -- 10,952 Total Revenue $161,649 $2,311 $159,338 Operating Costs 64,317 -- 64,317 Selling, general and administrative 45,312 (400) 45,712 Modified EBITDA (2) $52,020 $2,711 $49,309 Capital Expenditures ($000) $31,548 -- $31,548 Gross Margin (3) 60% n/a 60% Modified EBITDA Margin 32% n/a 31% 2004 2005 Jun. 30 Sept. 30 Dec. 31 Mar. 31 Financial Metrics: (1), (2) As As As As Reported Reported Reported Reported Revenue ($000) Dedicated transport services $83,552 $81,175 $83,690 $85,648 Switched services 39,321 39,418 41,053 40,450 Data and Internet services 29,908 31,708 34,765 36,696 Subtotal 152,781 152,301 159,508 162,794 Intercarrier Compensation 10,045 8,287 8,516 8,780 Total Revenue $162,826 $160,588 $168,024 $171,574 Operating Costs 64,221 65,550 67,197 66,807 Selling, general and administrative 43,381 43,432 46,192 44,779 Modified EBITDA (2) $55,224 $51,606 $54,635 $59,988 Capital Expenditures ($000) $44,023 $46,880 $49,382 $39,330 Gross Margin (3) 61% 59% 60% 61% Modified EBITDA Margin 34% 32% 33% 35% (1) For complete financials and related footnotes, please refer to the Company's SEC filings. (2) The Company separately presents Modified EBITDA, gross margin and Modified EBITDA margin without MCI settlements to help enhance comparability of these measures between periods. (3) The Company utilizes a fully burdened gross margin, including network costs, and personnel costs for customer care, provisioning, network maintenance, technical field and network operations.
Source: Time Warner Telecom Inc.
Web site: http://www.twtelecom.com/
Share this:
More about:
- Investors Business Daily and Market Research News
- Online Newspaper Readership Continues to Rise
- HP Streamlines Flow of Digital Entertainment from Content Creators to Consumers
- ValueClick Completes Sale of Its Share of ValueClick Japan
- Trend Micro Reports Record Fourth Quarter Results
- Time Warner Telecom Delivers Largest U.S. VPLS Deployment with Juniper Networks
- Vignette Announces 15% Year-Over-Year Revenue Growth
- VeriSign Completes Acquisition of LightSurf
