MGCX reports (.76); estimates were (1.05).
Monday October 25, 7:56 pm Eastern Time
Company Press Release
SOURCE: MGC Communications, Inc.
MGC Announces Third Quarter Results; Huff Named President and Chief
Executive Officer; Revenue Increased 30%; Lines Provisioned Increased
31%
Voice Over DSL (VoDSL) Launched in Las Vegas
LAS VEGAS, Oct. 25 /PRNewswire/ -- MGC Communications, Inc. (``MGC' or the ``Company'), (Nasdaq: MGCX - news), a leading facilities-based integrated
communications services provider, today announced the results of its operations for the third quarter 1999. MGC reported revenues for the third quarter ended September 30, 1999
of $15.0 million, a 30% increase over second quarter 1999 revenues of $11.5 million. Access lines sold as of the end of the third quarter increased by 26% over June 30, 1999 to
138,400. Net installations for the third quarter were 27,675, for a total installed base of lines at September 30, 1999 of 117,210, a 31% increase over June 30, 1999. As a result of
continued network expansion, earnings before interest, taxes, depreciation and amortization (EBITDA) were a loss of $8.0 million for the three months ended September 30,
1999. Gross profit for the third quarter was $2.6 million, a 160% increase over second quarter gross profit of $1.0 million.
Commenting on the Company's third quarter results, Maurice J. Gallagher, Jr., chairman of the board stated, ``The third quarter was obviously a milestone period for MGC,
while executing against our current business plan, we named Rolla Huff as our new president and chief executive officer, secured an additional $35 million equity infusion,
announced our DSL equipment vendors, commenced the deployment of the technology into our existing network, and launched VoDSL service in Las Vegas. With these
cornerstone achievements behind us, we will concentrate on the further deployment of our VoDSL platform and the introduction of our 'Total Solution' package in all of our
markets prior to year-end. All of the key objectives we laid out earlier this year are now in place, on schedule and we are focused on aggressive growth for 2000.'
Rolla P. Huff Named President and Chief Executive Officer
On November 1, 1999, Rolla P. Huff will assume his duties as president and chief executive officer of MGC. Formerly the president and chief operating officer of Frontier
Corporation, Huff brings to MGC an extensive background in strategic planning, operations, sales, marketing and involvement with the financial community.
Commented Gallagher, ``Rolla has a proven record of creating value for shareholders and at this pivotal juncture in our development and with the implementation of our VoDSL
product platform, we believe Rolla is an exceptional choice to lead our management team.'
Line Growth
Of the 27,675 net line additions for the third quarter, 19,834 (more than 70%) were business lines as the Company continues to increase its focus on selling to small and medium
sized business customers within in its existing network footprint. The direct sales staff covering MGC's expanded network footprint increased to 120 from 85 at the end of the
second quarter, a 41% increase.
Network Expansion
By September 30, 1999, the Company had established 288 central office collocations, up from 248 at the end of the second quarter. MGC's expanded footprint gives the
Company an addressable market of approximately 16 million lines. The Company anticipates having in excess of 300 collocation sites established before year-end, of which
approximately 200 will be DSL capable.
Voice Over DSL
During the third quarter of 1999, the Company introduced its 'Total Solution' VoDSL package to small business customers in the Las Vegas market. The 'Total Solution' package
bundles eight voice lines, unlimited custom calling features, MGC long distance, MGCi.com and 'always-on' high-speed Internet access up to 1.5 mbps. By delivering its 'Total
Solution' package over one copper loop via DSL, MGC is able to price its VoDSL offering at what it believes to be a compelling value proposition for small business customers.
Providence and JK&B Commit to $35 Million Investment
Concurrent with the appointment of Huff, the Company announced that an affiliate of Providence Equity Partners Inc. and JK&B Capital have committed to invest an additional
$35 million in MGC. Providence Equity Partners Inc., a private investment firm that specializes in telecommunications investments, and which is already MGC's largest
shareholder, has committed to invest an additional $25 million in the company, which will increase its ownership in MGC to approximately 17%. JK&B Capital has committed to
invest an additional $10 million, which will increase its ownership to approximately 7%. The aggregate $35 million investment will be in the form of convertible preferred stock at
$28 per share.
Noting the additional investment in MGC, Rolla Huff commented, ``We greatly appreciate the increased support of these bellwether investors. Having briefed them on our
broad-based strategic vision for MGC, we believe their additional commitment underscores our strong market position and growth potential.' MGC plans to use the proceeds of
the investment to accelerate the nationwide rollout of its VoDSL product platform.
About MGC
MGC provides local phone service, custom calling features, long distance and Internet services to small and medium size businesses in Southern California including Los Angeles,
San Diego and Orange County, Chicago, Atlanta, southern Florida and Las Vegas. MGC currently plans to open an additional 20 markets in its existing states and five new states
during 2000. MGC was recently ranked 12th in the Bloomberg Tech 100 listing of the fastest growing technology companies in the United States based on sales growth for the
last fiscal year. Further information about the Company can be found at www.MGCi.com.
Third Quarter Conference Call
A conference call will be held on Tuesday, October 26, 1999 at 11:00a.m. (Eastern Standard Time), 8:00a.m. (Pacific Standard Time) at which time the Company's senior
management will discuss the results of its operations for third quarter in more detail. To access the conference call, dial (800) 779-6152 - the pass code is ``MGC Third Quarter.'
A replay of the conference call will be available through Thursday, October 28, 1999 until 9:00p.m. (Eastern Standard Time), 6:00p.m. (Pacific Standard Time) by calling (888)
566-0119.
Forward Looking Statements. Certain statements contained in this Press Release that state the Company's or 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 such as statements regarding the Company's ability to
deploy voice over DSL within a certain period of time and in the Company's markets and the Company's ability to enter new markets and establish additional collocation sites
within a certain period of time, that are not historical facts, are only estimates or predictions. Actual results may differ materially as a result of risks facing the Company or actual
results differing from assumptions underlying such statements. Such risks and assumptions include, but are not limited to, the Company's ability to successfully market its
existing and proposed services to current and new customers in existing and planned markets, successfully develop commercially viable data and Internet offerings, access
markets, install switches and obtain suitable locations for its switches, negotiate suitable interconnection agreements with the ILECs, obtain an acceptable level of cooperation from
the ILECs, all in a timely manner, at reasonable cost and on satisfactory terms and conditions, as well as competitive, regulatory, legislative and judicial developments that could
materially affect the Company's future results. Additional information concerning factors that could cause actual results to differ materially from those expressed or implied in the
forward-looking statements is contained from time to time in the Company's SEC filings, including but not limited to the Company's report on Form 10-K for the year ended
December 31, 1998. Copies of this filing may be obtained by contacting the Company or the SEC.
(in thousands,
except per share data) Three Months Nine Months
Ended September 30 Ended September 30
Statements of
Operations: 1999 1998 1999 1998
Revenues $15,036 $4,908 $34,922 11,772
Cost of operating
revenues 12,460 4,789 31,449 10,575
Gross profit 2,576 119 3,473 1,197
Selling, general
& administrative 10,544 5,364 27,469 11,250
Depreciation &
amortization 4,740 1,158 12,406 3,149
Operating loss (12,708) (6,403) (36,402) (13,202)
Non-operating
income (expense) (2,287) (2,689) (8,342) (9,091)
Net loss before
preferred dividends (14,995) (9,092) (44,744) (22,293)
Preferred dividends (1,197) - (1,926) -
Net loss applicable
to common
stockholders $(16,192) $(9,092) $(46,670) (22,293)
Basic and diluted
loss per share
of common stock $(0.76) $(0.53) $(2.50) (1.69)
Basic and diluted
weighted average
shares outstanding 21,283 17,154 18,671 13,172
EBITDA(1) $(7,968) $(5,245) $(23,996) (10,053)
(in thousands) As of As of
Selected Balance September 30, 1999 December 31, 1998
Sheet Data:
Cash, cash equiv.
& investments $178,961 $84,949
Restricted cash 30,375 39,379
Property & equipment, net 151,159 116,380
Long-term debt 157,677 157,295
Preferred stock
Series B Convertible
Preferred Stock 46,663 -
Stockholders' equity 134,394 63,260
As of As of
Selected Operational September 30, 1999 December 31, 1998
Statistics:
Switches installed 7 7
Markets served 13 7
Collocated facilities built 288 207
Addressable lines(000's) 16,039 11,362
Lines in service:
Business 60,271 20,442
Pay phone 15,711 7,290
Residential 41,228 20,012
Total lines in service 117,210 47,744
Total lines sold
and installed 138,400 61,205
(1) Earnings before interest, taxes, depreciation and amortization (EBITDA)
is a measure commonly used in the communications industry to analyze
operating performance, leverage and liquidity. |
