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Mpower Holding Announces First Quarter 2004 Results
ROCHESTER, N.Y., May 6 /PRNewswire-FirstCall/ -- Mpower Holding Corporation
(BULLETIN BOARD: MPOW) , the parent company of Mpower Communications Corp., a
leading provider of broadband Internet access and telephone services to
business customers, today announced results of its operations for the first
quarter ended March 31, 2004.
"Today we are reporting yet another quarter of strong results. We are extremely
pleased with the trends we continue to see in our business and believe Mpower
to be in a great position of strength both operationally and financially," said
Mpower Holding Chairman and Chief Executive Officer Rolla P. Huff. "We have
improved our profitability even as we have been investing in our organic
revenue growth initiatives. We are seeing early signs that these initiatives
are taking hold, including substantial T1-based product growth over the past
few months. We now have more quota-carrying sales people that are in the
process of coming up the productivity curve, and as they do, we expect our
revenue growth to continue to accelerate."
Mpower's revenue from continuing operations increased to $37.2 million for the
first quarter of 2004, a slight improvement over the first quarter of 2003 and
the fourth quarter of 2003. Core customer revenue, which includes revenue from
the sale of data and voice services, was $32.8 million in the first quarter of
2004, up 2% over the first quarter of 2003 and relatively flat compared to the
fourth quarter of 2003.
Adjusted gross margin from continuing operations was a record $20.8 million or
56% of revenue in the first quarter of 2004, growing 42% over the adjusted
gross margin of $14.6 million in the first quarter of 2003, and 2% higher than
the $20.3 million in adjusted gross margin reported in the fourth quarter of
2003. Adjusted gross margin is calculated as gross margin excluding
depreciation and amortization expense. Gross margin including depreciation and
amortization was $18.8 million in the first quarter of 2004, $12.7 million in
the first quarter of 2003 and $18.2 million in the fourth quarter of 2003.
Selling, general and administrative (SG&A) expenses from continuing operations,
excluding depreciation and amortization, were $17.5 million for the first
quarter of 2004, improving 17% from the $21.1 million in SG&A expenses reported
in the first quarter of 2003, and 6% from the $18.6 million in SG&A expenses
for the fourth quarter of 2003.
Mpower grew Adjusted EBITDA in the first quarter of 2004 to a positive $3.2
million, showing a $9.7 million improvement over the first quarter of 2003 and
a 100% improvement over the $1.6 million of Adjusted EBITDA in the fourth
quarter of 2003.
Mpower's loss from continuing operations was $0.5 million in the first quarter
of 2004, a 95% improvement over the $11.0 million loss in the first quarter of
2003 and a 76% improvement over the $2.1 million loss in the fourth quarter of
2003. Mpower's net loss was $0.3 million in the first quarter of 2004 compared
to a $15.2 million net loss in the first quarter of 2003 and a $0.1 million net
loss in the fourth quarter of 2003.
The company's loss per share before discontinued operations was $0.01 in the
first quarter of 2004 and net loss per share for the first quarter of 2004 was
close to breakeven.
Capital expenditures were $1.3 million in the first quarter of 2004. Mpower
ended the quarter with $29.3 million in unrestricted cash and saw a working
capital increase of 17% from the fourth quarter of 2003. In addition, Mpower
has a $7.5 million revolving receivables-based line of credit available,
although no borrowings under this line of credit are currently outstanding.
Today Mpower reiterated and updated its revenue and Adjusted EBITDA guidance
for the remainder of 2004 and the full-year 2005. "Given our Adjusted EBITDA
performance in the first quarter and our current core Adjusted EBITDA run rate,
we are raising our full-year Adjusted EBITDA guidance by $4 million. This
guidance does not reflect any potential cost increases to our company that
might result from proposals presented this week to the California PUC to adjust
wholesale rates in California," noted Huff.
Mpower is forecasting fourth quarter 2004 revenue of $40.2 million to $40.9
million. The company's revenue guidance for the full-year 2004 is $152.6
million to $155.6 million, and for full-year 2005 is $174.0 million to $180.5
million. In terms of Adjusted EBITDA, Mpower's second quarter 2004 guidance is
$1.5 million to $2.0 million, with full-year 2004 Adjusted EBITDA forecasted in
the range of $8.0 million to $10.0 million and full-year 2005 Adjusted EBITDA
between $16.0 million and $18.0 million.
Company Presentation
A PowerPoint presentation and business model detailing Mpower's quarterly
results and financial projections can be found on the company's Web site at
http://www.mpowercom.com/.
Conference Call to Discuss First Quarter 2004 Results
Mpower will host a conference call to discuss its first quarter 2004 financial
and operating results.
Date: Thursday, May 6, 2004
Time: 10:00 a.m. (Eastern time)
Dial-in Number: 1-877-780-2271
Replay Number: 1-877-519-4471, PIN #4718186
From May 6 at 1:00 p.m. through May 13 at 5:00 p.m.
Eastern
Use of Non-GAAP Financial Information
The SEC has adopted rules (Regulation G) regulating the use of non-GAAP
financial measures. Because of Mpower's use of non-GAAP financial measures,
Adjusted Gross Margin and Adjusted EBITDA, to supplement the Company's
consolidated financial statements presented on a GAAP basis, Regulation G
requires the Company to include in this press release a presentation of the
most directly comparable GAAP measures, which are Gross Margin, including
depreciation and amortization expense, and Net (Loss) Income, and a
reconciliation of the measures to GAAP. The Company has presented a
reconciliation of these measures for each of the periods presented above. The
non-GAAP measure Adjusted EBITDA provides an enhancement to an overall
understanding of the Company's past financial performance and prospects for the
future as well as useful information to investors because of (i) the historical
use by Mpower of Adjusted EBITDA as a performance measurement; (ii) the value
of Adjusted EBITDA as a measure of performance before gains, losses or other
charges considered to be outside the company's core business operating results;
and (iii) the use of the Adjusted EBITDA, or a similar term, by almost all
companies in the CLEC sector as a measurement of performance. The Company has
excluded from its presentation of Adjusted EBITDA network optimization costs
(which are costs resulting principally from the closure of certain of our
markets), stock-based compensation expenses (which are costs related to stock
options issued with an exercise price below fair market value), gains on sales
of assets, gains or losses on investments, reorganization expenses, gain on
discharge of debt, and other income because the Company does not believe that
including such items in Adjusted EBITDA provides investors with an appropriate
measure of determining Mpower's performance in its core business. The non-GAAP
measure Adjusted Gross Margin provides an enhancement to an overall
understanding of the Company's past financial performance and prospects for the
future as well as useful information to investors because of (i) the historical
use by Mpower of this measure as a performance measurement and (ii) the use of
a similar calculation by almost all companies in the CLEC sector as a
measurement of performance. Adjusted Gross Margin is calculated as gross margin
excluding depreciation and amortization expense because the Company does not
believe that including such items in the calculation of Adjusted Gross Margin
provides investors with an appropriate measure of analyzing Mpower's historical
financial performance or in comparing other similar companies in the CLEC
sector. Mpower's utilization of non-GAAP measurements is not meant to be
considered in isolation or as a substitute for net loss, loss from continuing
operations, cash flow, gross margin and other measures of financial performance
prepared in accordance with GAAP. Adjusted Gross Margin and Adjusted EBITDA are
not GAAP measurements and Mpower's use of them may not be comparable to
similarly titled measures employed by other companies in the telecommunications
industry.
About Mpower Holding Corporation
Mpower Holding Corporation (OTC:MPOW) (BULLETIN BOARD: MPOW) is the parent
company of Mpower Communications, a facilities-based broadband communications
provider offering a full range of data, telephony, Internet access and Web
hosting services for small and medium-size business customers. A copy of this
press release and further information about the company can be found at
http://www.mpowercom.com/.
Forward-Looking Statements
Under the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995, Mpower Holding Corporation cautions investors that certain
statements contained in this press release that state 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 are not historical facts and are only estimates or predictions.
Actual results may differ materially from those projected as a result of risks
and uncertainties including, but not limited to, future sales growth, changes
in federal or state telecommunications regulations, market acceptance of our
product offerings, our ability to secure adequate financing or equity capital
to fund our operations and network expansion, our ability to manage growth and
maintain a high level of customer service, the performance of our network and
equipment, our ability to enter into strategic alliances or transactions, the
cooperation of incumbent local exchange carriers in provisioning lines and
interconnecting our equipment, regulatory approval processes, changes in
technology, price competition and other market conditions and risks detailed
from time to time in our Securities and Exchange Commission filings. The
company undertakes no obligation to update publicly any forward-looking
statements, whether as a result of future events, new information, or
otherwise.
FINANCIAL STATEMENTS
Mpower Holding Mpower Holding
BALANCE SHEET (amounts in $ thousands) March 31, 2004 December 31, 2003
Current Assets
Cash & Cash Equivalents $29,294 $29,307
Restricted Investments 24 92
Accounts Receivable, net 12,196 14,076
Other Receivables 4,031 5,039
Prepaid Expenses and Other Current
Assets 2,959 4,487
Total Current Assets 48,504 53,001
Property and Equipment, net 32,268 33,762
Long-Term Restricted Investments 9,475 9,537
Intangibles, net 7,803 8,948
Other Assets 4,063 3,781
Total Assets $102,113 $109,029
Current Liabilities
Current Maturities of Capital Lease
Obligations $155 $256
Accounts Payable 11,520 15,754
Accrued Sales Tax Payable 3,578 3,647
Accrued Property Taxes Payable 2,952 2,818
Accrued Bonus 460 2,388
Deferred Revenue 4,814 4,696
Accrued Other Expenses 10,527 11,018
Total Current Liabilities 34,006 40,577
Long-Term Deferred Revenue 2,063 2,211
Total Liabilities 36,069 42,788
Common Stock 78 78
Additional Paid-in Capital 103,801 103,735
Accumulated Deficit (37,835) (37,572)
Total Stockholders' Equity 66,044 66,241
Total Liabilities and Stockholders'
Equity $102,113 $109,029
Mpower Mpower Mpower
Holding Holding Holding
STATEMENT OF OPERATIONS Three Months Three Months Three Months
(amounts in $ thousands, Ended Ended Ended
except share and per share March 31, March 31, December 31,
amounts) 2004 2003 2003
Operating Revenues:
Core Customer $32,770 $32,060 $32,655
Switched Access 4,383 4,678 4,224
Total Operating Revenues 37,153 36,738 36,879
Operating Expenses:
Cost of Operating Revenues
(exclusive of depreciation and
amortization shown separately
below. See Note 1.) 16,388 22,128 16,627
Selling, General and Administrative
(exclusive of depreciation
and amortization shown separately
below. See Note 1.) 17,549 21,128 18,635
Stock-Based Compensation Expense 39 62 41
(Gain) Loss on Sale of Assets, net (198) 95 (267)
Depreciation and Amortization 3,901 4,303 3,961
Total Operating Expenses 37,679 47,716 38,997
Loss from Continuing Operations (526) (10,978) (2,118)
Loss on Discharge of Debt -- (102) --
Other Income -- -- 1,427
Interest Income 88 50 63
Interest Expense (66) (139) (101)
Loss before Discontinued Operations (504) (11,169) (729)
Income (Loss) from Discontinued
Operations 241 (3,981) 678
Net Loss ($263) ($15,150) ($51)
Basic and Diluted Weighted Average
Shares Outstanding 78,321,851 64,999,025 78,213,486
Basic and Diluted (Loss) Income per
Share:
Loss before Discontinued Operations ($0.01) ($0.17) ($0.01)
Income (Loss) from Discontinued
Operations $0.01 ($0.06) $0.01
Net Loss $0.00 ($0.23) $0.00
Adjusted Gross Margin $20,765 $14,610 $20,252
Adjusted Gross Margin (% of Revenue) 55.9% 39.8% 54.9%
Adjusted EBITDA $3,216 ($6,518) $1,617
Adjusted EBITDA (% of Revenue) 8.7% -17.7% 4.4%
RECONCILIATION TO GAAP March 31, March 31, December 31,
(amounts in $ thousands) 2004 2003 2003
Adjusted Gross Margin $20,765 $14,610 $20,252
Depreciation and Amortization
(allocated to Cost of Operating
Revenues) (1,939) (1,946) (2,051)
Gross Margin (GAAP) $18,826 $12,664 $18,201
RECONCILIATION TO GAAP March 31, March 31, December 31,
(amounts in $ thousands) 2004 2003 2003
Adjusted EBITDA $3,216 ($6,518) $1,617
Depreciation and Amortization (3,901) (4,303) (3,961)
Gain (Loss) on Sale of Assets, net 198 (95) 267
Stock-Based Compensation Expense (39) (62) (41)
Loss from Continuing Operations (526) (10,978) (2,118)
Loss on Discharge of Debt -- (102) --
Other Income -- -- 1,427
Interest Income 88 50 63
Interest Expense (66) (139) (101)
Loss before Discontinued Operations (504) (11,169) (729)
Income (Loss) from Discontinued
Operations 241 (3,981) 678
Net Loss (GAAP) ($263) ($15,150) ($51)
Note 1: Cost of Operating Revenues is exclusive of depreciation and
amortization of $1,939, $1,946 and $2,051 for the three months
ended March 31, 2004, 2003 and December 31, 2003. Selling,
General and Administrative is exclusive of depreciation and
amortization of $1,962, $2,357 and $1,910 for the three months
ended March 31, 2004, 2003 and December 31, 2003.
DATASOURCE: Mpower Holding Corporation
CONTACT: Investor: Gregg Clevenger, Chief Financial Officer,
+1-585-218-6547, or , or Media: Michele Sadwick, Vice
President, +1-585-218-6542, or , both of Mpower
Communications; or Investor Relations: Lester Rosenkrantz of Cameron
Associates, +1-212-554-5486, or
Web site: http://www.mpowercom.com/