INAP Completes Initial Round of Cost Cuts and Provides Initial 2017 Forecast
4:15 PM ET 12/20/16 | PR Newswire
Internap Corporation (NASDAQ: INAP), ("INAP" or the "Company") is a provider of high-performance Internet infrastructure services by providing customers with Colocation, Network and Managed Services, and Cloud Services. Today, the Company announced the completion of the initial round of cost cuts and provided an initial forecast of 2017 initiatives and performance.
The new management team launched a series of turnaround initiatives in the 4th quarter, all designed to improve profitable growth of INAP's robust Internet infrastructure platform across North America and several locations around the world. As communicated during the Company's 3rd quarter conference call, management is implementing a 2017 strategy that includes cost cuts, reorganization and investment in the sales teams, the creation of two pure play business units - Colocation and Cloud - and a recapitalization of our balance sheet. The combination of right-sizing the operations of INAP, investing in high ROI projects to serve customer demand, and completing a recapitalization to give management the necessary flexibility to compete in the long term, is a high priority for the Company.
The recapitalization could include a public offering or private placement of debt or equity securities, including a registered rights offering, which may or may not include a backstop investment commitment, and the refinancing or amendment of the Company's indebtedness. The Company can provide no assurance as to the form or terms of a recapitalization or the timing or ability to complete a recapitalization.
Following the operations reorganization of INAP under new management, the Company reaffirms guidance for 2016, consisting of revenue of $297 million to $300 million, adjusted EBITDA of $81 million to $83 million and capital expenditures of $47 million to $50 million. The Company is evaluating the sale of non-core assets and expects to discontinue programs that are not profitable. As a result, 2017 revenue is expected to decrease to $275 million to $285 million, while 2017 adjusted EBITDA is projected to increase to $84 million to $87 million. The Company's focus on higher return success-based projects is expected to result in decreased 2017 capital expenditures of approximately $42 million. The combination of higher adjusted EBITDA and lower capital expenditures is expected to result in significantly higher free cash flow in 2017 over 2016.
"The new INAP management team is off to a fast start in addressing the areas that require the most attention to take advantage of the Tier III datacenters and network capacity available to fuel customer growth and meet customer demand in Internet infrastructure," said Peter D. Aquino, President and Chief Executive Officer. "Our team is excited about the opportunity to improve operations significantly, and provide the value that shareholders expect. The combination of cost cutting, focus on profitable revenue growth, and success based capex to drive returns is a discipline we believe will drive momentum in our turnaround."
About INAP
Internap is the high-performance Internet infrastructure provider that powers the applications shaping the way we live, work and play. Our hybrid infrastructure delivers performance without compromise - blending virtual and bare-metal cloud, hosting and colocation services across a global network of data centers, optimized from the application to the end user and backed by rock-solid customer support and a 100% uptime guarantee. Since 1996, the most innovative companies have relied on Internap to make their applications faster and more scalable. For more information, visit www.internap.com.
Forward-Looking Statements |
