Here ya go!
e.spire's First Quarter Revenue Up 110% to $58 Million;
Strong Growth Accelerates EBITDA Turn-Around
PR Newswire - May 06, 1999 11:53
ANNAPOLIS JUNCTION, Md., May 6 /PRNewswire/ -- e.spire Communications, Inc. (Nasdaq:
ESPI) today announced significantly improved financial results for the quarter ended March 31,
1999. Revenue surged to an all-time high of $58.1 million, a 111% increase over the year-ago
quarter and a sequential increase of 21%. Earnings before interest, taxes, depreciation and
amortization (EBITDA) for the quarter, was a loss of $15.4 million, also a dramatic 21%
improvement from the prior quarter.
"We are very pleased that our first quarter results have put us back on track for renewed delivery of
steadily improving operational and financial performance," said Anthony J. Pompliano, e.spire's
Chairman and Chief Executive Officer. "Our reorganization of e.spire into separate operating
segments, combined with our continuing emphasis on cost controls, has been extremely successful.
Going forward, we remain focused on improving margins within our core telecom base, while
continuing to accelerate revenue growth as we move steadily closer to EBITDA break-even."
e.spire installed approximately 21,000 access lines during the quarter, substantially all of which were
on-net. Driven by the Company's previously announced objective of enhancing overall margins
through elimination of local resale lines, the quarter produced approximately 16,000 local resale
disconnects. Cumulative lines in-service as of March 31, 1999 totaled 135,134, of which 60% were
on-net versus just 27% on-net for the year ago quarter.
Commenting on e.spire's success in exiting the low-margin local resale market, Pompliano added,
"Our execution in this effort has been aggressive, yet well balanced -- overall lines in service continue
to grow, our on-net ratio is rising rapidly and our gross margins are increasing." In a related event, on
April 21, 1999, e.spire announced the sale of approximately 15,000 additional local resale lines to
Access One Communications. On a pro-forma basis, this transaction increases e.spire's on-net
access lines to 67% of total lines installed.
SEGMENT OVERVIEW:
Telecommunications Services
e.spire data and Internet services continued to deliver strong results by contributing nearly 20% of
total revenue for the quarter, with year-over-year revenues growing by 42%, and sequential revenue
growing by 15%. This growth is attributed to the Company's coast-to-coast networking infrastructure
by which it delivers both ATM and frame relay products via its 66 data points-of- presence (POPs)
and accessibility to more than 300 POPs on a national level through various internetworking
relationships.
Cybergate, e.spire's wholly-owned Internet service provider, grew its customer base to nearly
86,000 during the quarter, a 100% increase over the year-ago period. Dial-up accounted for 58% of
these customers with Web hosting representing 42%. During the quarter, e.spire announced the
expansion of its dial-up Internet services to 25 of its major cities. e.spire continues to benefit from its
capabilities as a Tier 1 Internet provider through its 50 public and private peering arrangements that
ensure robust connectivity to all Internet destinations.
In addition, the Company signed two significant agreements during the first quarter that further
enhance its data and Internet opportunities. The first agreement, with Covad Communications,
enables e.spire to offer digital subscriber line (DSL) service in major metropolitan markets later this
year. Under the second agreement, e.spire will provide nationwide frame relay, Internet access and
backbone network services to Eastman Kodak Company subsidiary PictureVision's leading digital
photofinishing service, PhotoNet(TM).
Voice services revenue, including dedicated access, switched local, long distance and reciprocal
compensation, comprised approximately 50% of total revenue, an increase of 57% over the year-ago
quarter. Voice services revenue also increased on a sequential basis, in spite of the Company's
aggressive initiatives to purge local resale, e.spire's lowest gross margin offering in its product
portfolio.
To date, e.spire operates 35 local fiber networks, with three under construction in the Tier 1 markets
of New York, Philadelphia and Washington, DC/Northern Virginia. The Company has also
constructed more than 157,000 fiber miles, nearly 1,800 route miles, established more than 90
co-locations, connected greater than 3,200 buildings and has deployed 25 Lucent 5ESS voice
switches, as of March 31, 1999.
Network Technologies
Network Technologies, e.spire's network management, design and construction subsidiary, continued
to drive strong results by providing approximately 30% of first quarter revenues, representing a
sequential increase of 80%. Customers to date include Qwest, IXC, Frontier, and Hyperion, among
others.
Throughout the quarter, Network Technologies continued to pursue its aggressive network
development strategies, including forming various arrangements to provide and acquire dark fiber in
key markets, and providing its project-based consulting and turnkey solution expertise to other
carriers, corporations and municipalities. The quarter was also highlighted by the fact that Network
Technologies has begun an extensive network build in Houston, their first build for inventory purposes
with the intention of selling it on a wholesale or dark fiber basis to third parties.
OUTLOOK:
"In recent months the direction of our initiatives has been clear, and our current results underscore
their effectiveness. We reduced expenses, we increased revenues and we enhanced overall margins.
Our future prospects within each of our complementary business segments are encouraging. We are
positioned to exploit not only traditional CLEC opportunities, but also the burgeoning data and
Internet markets, as well as the increasing demand for the construction of local broadband networks,"
Pompliano concluded.
e.spire is a leading provider of integrated communications solutions, including dedicated access, local
dial tone, long distance, advanced data, Internet and networking solutions, in markets throughout the
United States. For more information on e.spire, contact www.espire.net.
Certain statements regarding the development of the Company's businesses, the markets for the
Company's services and products, the Company's anticipated capital expenditures, anticipated
EBITDA and other statements are forward- looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995) which can be identified as any statement that does not
relate strictly to historical or current facts. Forward-looking statements use such words as plans,
expects, will, will likely result, are expected to, will continue, is anticipated, estimate, project,
believes, anticipates, intends and expects, may, should, continue, seek, could and other similar
expressions. Although the Company believes that its expectations are based on reasonable
assumptions, it can give no assurance that its expectations will be achieved. The important factors that
could cause actual results to differ materially from those in the forward-looking statements herein (the
"Cautionary Statements") include, without limitation, the Company's degree of financial leverage, risks
associated with debt service requirements and interest rate fluctuations, risks associated with
acquisitions and the integration thereof, the impact of restriction under the Company's financial
instruments, dependence on availability of transmission facilities, regulation risks including the impact
of the Telecommunications Act of 1996, contingent liabilities, the impact of competitive services and
pricing, the ability of the Company to successfully implement its strategies, as well as the other risks
referenced from time to time in the Company's filings with the SEC, including the Company's Form
10-K for the year ended December 31, 1998. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are expressly qualified in their
entirety by the Cautionary Statements. The Company does not undertake any obligation to release
publicly any revisions to such forward- looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
e.spire Communications, Inc.
Financial Highlights (unaudited)
(in thousands, except share data and statistical data)
Three Months Ended
Statement of Operations 3/31/99 3/31/98
Revenues:
Telecommunications services $40,033 $26,144
Network technologies services 18,040 1,325
Total revenues 58,073 27,469
Cost of goods sold:
Telecommunications services 28,134 19,118
Network technologies services 9,103 135
Total cost of goods sold 37,237 19,253
Gross margin:
Telecommunications services 11,899 7,026
Network technologies services 8,937 1,190
Total gross margin 20,836 8,216
Operating expenses:
Selling, general and administrative 36,222 19,806
Noncash compensation expense 3,049 1,633
Depreciation and amortization 20,175 8,251
Total operating expenses 59,446 29,690
Loss from operations (38,610) (21,474)
Interest income/(expense), net (18,578) (10,621)
Net loss (57,188) (32,095)
Preferred stock dividends and accretion 9,697 8,493
Net loss applicable to common stockholders $(66,885) $(40,588)
Basic and diluted net loss per common share $(1.37) $(1.08)
Weighted average number of
common shares outstanding 48,687,218 37,709,282
EBITDA $(15,386) $(11,590)
e.spire Communications, Inc.
Financial Highlights (unaudited)
(in thousands)
March 31, March 31,
Condensed Balance Sheets 1999 1998
Current assets $329,604 $268,963
Net property, plant and equipment 531,524 298,398
Other 56,584 74,119
Total assets $917,712 $641,480
Current liabilities $66,447 $37,059
Long-term liabilities 767,114 493,285
Total liabilities 833,561 530,344
Redeemable preferred stock and options 250,724 214,522
Stockholders' deficit (166,573) (103,386)
Total liabilities, redeemable preferred
stock and options, and stockholders'
deficit $917,712 $641,480
Selected Statistical Data
Fiber Networks 35 32
Fiber Networks Under Construction 3 3
Access Lines Installed 135,134 57,653
Total Buildings Connected 3,231 1,912
Route Miles 1,781 1,314
Fiber Miles 157,215 112,086
VGE's 1,350,978 1,059,601
Voice Switches Installed 25 17
Data Switches Installed 66 47
Full-Time Employees 1,324 834
SOURCE e.spire Communications, Inc. |
