World Access Projects Revenue to Reach $2.6
Billion in 2001
PR Newswire - September 19, 2000 16:45
New Consolidated Business Plan Provides Financial Guidance
Company Expects Retail Revenue to Account for 57% of Total Revenue by
Q4 2001
World Access' Plan to Lead the Consolidation in Europe is Fully Funded
ATLANTA, Sept. 19 /PRNewswire/ -- World Access, Inc. (Nasdaq:
WAXS) announced today that, based on a recently developed business model,
it expects its revenue to reach $2.6 billion in 2001, pro forma for all outstanding
acquisitions and assumed future acquisitions. The Company expects retail
revenues to account for 48% of 2001 revenues, with approximately 57% of
fourth quarter 2001 revenues expected to come from retail customers. Revenue
is expected to grow to nearly $6.5 billion in 2004, with more than 75% of
revenue anticipated to be generated from retail sales. The Company expects
EBITDA to grow to 7.4% of revenue by the fourth quarter of 2001, and to
increase to over 17% of revenue in 2004.
The new business model includes the results of WorldxChange
Communications, which has been largely integrated and will be consolidated for
two months of the third quarter and all of the fourth quarter. The model also
includes two other pending acquisitions, STAR Telecommunications, Inc. and
TelDaFax AG, beginning in the first quarter of 2001. These transactions are
expected to close sometime in the fourth quarter of 2000, but because the
review process has been unpredictable and the exact timing of closure is
unknown, they have not been included in the fourth quarter forecast.
The Company is forecasting revenue for the third quarter of 2000 of
approximately $320 million, with approximately $68 million, or 21%, from
retail activities. Third quarter revenue from carrier customers will be down
approximately 25% from the second quarter, pro forma for the addition of
WorldxChange. This reduction is a result of the Company's strengthened credit
policy that was implemented in July, in response to tighter capital market
conditions affecting undercapitalized carrier customers. EBITDA is forecasted
to be approximately ($10.0) million in the third quarter, due to the inclusion of
WorldxChange, which has significant negative EBITDA. The Company expects
to take up to two quarters to realize the full synergies from the acquisition of
WorldxChange.
Revenue for the fourth quarter of 2000 is expected to be approximately $340
million, with nearly $100 million, or 30%, expected to come from retail
customers. The Company is expecting EBITDA in the fourth quarter to be
approximately $2 million, reflecting some of the synergies generated from the
WorldxChange acquisition. As the STAR and TelDaFax acquisitions are
assumed to occur on January 1, 2001 for purposes of the business model, first
quarter 2001 revenues are forecast to increase to approximately $480 million,
with EBITDA turning negative as a result of the inclusion of STAR and
TelDaFax, both of which are generating negative EBITDA. Once the
integrations are complete and synergies fully realized, the Company expects to
be significantly EBITDA positive in the second half of 2001, with EBITDA
reaching an estimated 7.4% of revenues in the fourth quarter.
The Company expects to record a restructuring charge in the third quarter of
2000 of between $30 million and $50 million, related to the integration of
WorldxChange. This charge reflects one-time costs associated with the
consolidation of facilities, severance, integration of network operations, and
elimination of duplicate activities. SG&A in the quarter is also expected to
include a one-time charge of nearly $35 million in order to accrue for costs
associated with migration of billing systems and re-branding of all retail activities
using the NETnet brand, and to increase reserves for doubtful accounts. These
expenses are not expected to recur.
John D. Phillips, Chairman and Chief Executive Officer, commented, "The
dramatic changes in capital market conditions in recent months have led to an
acceleration of our shift to a higher mix of retail traffic, and in that regard we are
well ahead of our internal objectives. Our Business Plan model demonstrates
our confidence in our ability to execute our consolidation strategy, and to
aggregate a critical mass of European SME customers and revenues. In
addition, we have progressed a great deal in integrating WorldxChange and in
rolling out the global systems infrastructure that will allow us to effectively
manage all back office functions as we grow retail revenues. It is in building this
SME customer base and sales organization, utilizing our sophisticated back
office systems, that we will continue to create value.
"While this capital market weakness has restricted access to capital for most
telecom companies, and has served to accelerate our strategic development, it
has also forced us to significantly tighten our credit policies with other carriers.
Since July, we have disconnected service to more than 50 carriers, and
significantly restricted volumes to 25 other carriers. We will only service those
carriers that we feel are sufficiently capitalized to meet their working capital
obligations, and we will not find ourselves in the position of being a de facto
lender to weaker carriers."
The Company's business model was compiled on a country-by-country basis,
taking into consideration the level of competitive development in each country
and the likely progression that environment will take over the next several
years. In addition, the Business Plan incorporates future acquisitions as a
consequence of the consolidation strategy. It is assumed that one or more of
the many acquisitions the Company is exploring will be closed during 2001,
contributing significantly in the second half of the year. However, it is not
possible to know for sure what the short-term impact of these acquired
operations will be and how quickly networks and operations can be integrated.
The Company has not attempted, therefore, to predict the integration impact of
future transactions, since it is so specific to each individual acquisition. It is
likely that large transactions could negatively impact performance for one to
two quarters as operations are integrated, as is the case with WorldxChange
and will likely be true of STAR and TelDaFax.
As additional acquisitions are consummated and retail operations integrated
with the European network, organization and systems of World Access, the
Business Plan model projects revenues growing to $4.5 billion in 2002 and
$6.5 billion by 2004, with EBITDA expected to grow to 10% of revenue in
2002 and more than 17% of revenue by 2004. Diluted shares outstanding are
currently 111 million. Pro forma for the WorldxChange transaction, diluted
shares are expected to be 136 million. Diluted shares will likely be roughly 210
million pro forma for the STAR and TelDaFax transactions.
John D. Phillip further remarked, "We continue to view our strong financial
position as a key competitive advantage. We believe that the under- capitalized
nature of so many of our competitors is limiting their ability to participate in
consolidation of the market, while our strong financial position enables us to
take full advantage of the current situation. We continue to show one of the
strongest balance sheets in the sector, with current leverage of 27%
debt-to-total-capital. Our business model indicates that our strategy is
fully-funded, and we are estimating total cash of approximately $250 million
and leverage of 10% debt-to-total-capital at year- end 2001."
About World Access
World Access is focused on being a leading provider of bundled voice, data
and Internet services to small- to medium-sized business customers located
throughout Europe. In order to accelerate its progress toward a leadership
position in Europe, World Access is acting as a consolidator for the highly
fragmented retail telecom services market, with the objective of amassing a
substantial and fully integrated business customer base. To date, the Company
has acquired several strategic assets, including FaciliCom International, which
operates a Pan-European long distance network and carries traffic for
approximately 200 carrier customers, and NETnet, with retail sales operations
in 9 European countries. NETnet's services include long distance, internet
access and mobile services. Located strategically throughout the United States
and 13 European countries, World Access provides end-to-end international
communication services over an advanced asynchronous transfer mode internal
network that includes gateway and tandem switches, an extensive fiber network
encompassing tens of millions of circuit miles and satellite facilities. For
additional information regarding World Access, please refer to the Company's
website at www.waxs.com .
This press release may contain financial projections or other forward- looking
statements made pursuant to the safe harbor provisions of the Securities
Reform Act of 1995. Such statements involve risks and uncertainties which
may cause actual results to differ materially. These risks include: potential
inability to identify, complete and integrate acquisitions; difficulties in expanding
into new business activities; delays in new service offerings; the potential
termination of certain service agreements or the inability to enter into additional
service agreements; and other risks described in the Company's SEC filings,
including the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, as amended, the Company's Quarterly Report on Form
10Q for the quarter ended June 30, 2000, as amended, and the Company's
Registration Statements on Forms S-3 (No. 333-79097) and S-4 (No.
333-37750), all of which are incorporated by reference into this press release.
CONTACT: Investor Relations, World Access, 404-231-2025
SOURCE World Access, Inc.
/CONTACT: Michele Wolf, V.P. of Investor Relations of World Access, Inc.,
404-231-2025/
/Web site: waxs.com /
(WAXS) |
