RCN Announces Third Quarter Results; Year-Over-Year Revenues up 27 percent, EBITDA loss down 49 percent
PRINCETON, N.J., Nov. 7 /PRNewswire/ -- RCN Corporation (Nasdaq: RCNC - news) today announced its results for the quarter ended September 30, 2001.
Quarterly Highlights
-- EBITDA loss reduced to $44.2 million this quarter, down from
$63.9 million last quarter and $85.8 million loss a year ago.
-- Network connections grew 44 percent to 780,564, up from 543,749 a
year ago.
-- SG&A costs declined for third quarter in a row.
-- Gross margin improved to 57.1 percent.
-- Debt reduction activities saved approximately $75 million in annual
interest expense.
``We see positive trends for our company again this quarter,'' said David C. McCourt, Chairman and CEO of RCN Corporation. ``Over the last 9 months, we have brought our EBITDA loss and SG&A spending down by 60 percent and 28 percent, respectively, while revenues grew 20 percent during that same time frame. We have also completed two tender offers that significantly improve our financial position.''
Financial Results for the Third Quarter
For the quarter ended September 30, 2001, pro forma total RCN revenues were $136.7 million, a 27 percent increase from $107.6 million in the same quarter last year, and a 4 percent increase from the second quarter of 2001. RCN's pro forma total consolidated EBITDA (earnings before interest, taxes, depreciation, amortization and non-cash stock-based compensation) for the quarter was a loss of $44.2 million, a 49 percent improvement from the same quarter in 2000, and a 31 percent improvement from last quarter. Excluding an extraordinary gain of $75.5 million on the early retirement of debt, the company posted a net loss of $187.1 million, or $(1.92) per average common share, for the quarter. Including the gain, the company's net loss was $111.6 million, or $(1.15) per average common share, versus $(2.70) in the third quarter of 2000.
``Our focus on reducing costs has resulted in continued substantial quarter-to-quarter reductions in EBITDA losses and SG & A expenses,'' said Timothy Stoklosa, Executive Vice President and Chief Financial Officer. ``We have also been able to permanently reduce future fixed charges through debt reduction.''
Debt reduction: The company has retired approximately $735 million face amount of debt through tender offers commenced during the second and third quarters. Pro forma for the tender offers, long-term debt outstanding at the end of the third quarter is $1.9 billion.
Capital expenditures, including inventory for the quarter, were $115 million, a decrease of 66 percent from a year ago and 26 percent from the previous quarter. During the third quarter of 2001, RCN passed an additional 36,000 homes with its network, and, more importantly, converted 54,000 homes passed into marketable homes. The company now has over 183,600 connections resulting from its ResiLink(SM) bundled service product, with the average customer bundle having 2.7 connections and generating $134 in monthly revenue.
Cash Burn and Liquidity: Total operating cash burn in the third quarter was $136 million, versus $230 million in the second quarter and $496 million in the first quarter. At the end of the third quarter, RCN had liquidity of approximately $1.2 billion, including a $250 million revolver available through its Credit Facility. This liquidity is pro forma for the tender offer completed October 19, 2001, in which $593 million of face value of bonds were retired using $161 million of cash.
``During the third quarter, we made excellent progress in continuing to reduce our cash burn rate while further optimizing margins,'' said Jeff White, President of Customer and Field Operations for RCN. ``RCN is still growing its revenues going forward as we convert our homes passed to marketable homes and target them with direct marketing and by telephone. Additionally, improved productivity and lowered discretionary spending helped us realize significant SG&A savings.'' |
