Published:
FiberNet Reports First Quarter 2008 Results
NEW YORK, May 9 /PRNewswire-FirstCall/ -- FiberNet Telecom Group, Inc.
(Nasdaq: FTGX), a leading provider of complex interconnection services, today
announced its results for the first quarter ended March 31, 2008.
Revenues for the first quarter of 2008 increased to $13.6 million, up
16.5% from $11.6 million for the first quarter of 2007 and consistent with
$13.6 million revenues for the fourth quarter of 2007. Included in revenues
for the fourth quarter of 2007 were $0.3 million in non-recurring revenues
from an early termination fee collected from a customer. Excluding this fee,
revenues for the first quarter of 2008 were up 2.3% from the fourth quarter of
2007.
EBITDA (as defined) for the first quarter of 2008 was $2.5 million, up
41.0% from $1.8 million for the first quarter of 2007 and consistent with $2.5
million for the fourth quarter of 2007. Included in EBITDA (as defined) for
the fourth quarter of 2007 was the early termination fee and $0.1 million of
bad debt expense. During the fourth quarter of 2007, FiberNet did not record
any write-off of its allowance for doubtful accounts, however. Excluding
these items, EBITDA (as defined) for the first quarter of 2008 was up 12.5%
from the fourth quarter of 2007.
FiberNet continued to achieve consistent revenue growth in its core
product offerings of transport and colocation services. For the first quarter
of 2008, revenues from transport and colocation services (excluding revenues
from access management services) grew by 16.7% over the first quarter of 2007.
Excluding the early termination fee, revenues from transport and colocation
services (excluding revenues from access management services) grew by 2.4%
over the fourth quarter of 2007.
Transport services remained the most significant component of FiberNet's
revenues, accounting for 76.3% of the total revenues generated in the first
quarter of 2008. On-net transport revenues were 46.4%, and off-net transport
revenues were 29.9% of the total revenues.
Colocation services and access management services represented 22.5% and
1.2% of total revenue generated in the first quarter, respectively. Colocation
revenues were the fastest growing area for the Company in the first quarter of
2008, increasing by 29.2% from the first quarter of 2007 and by 5.5% from the
fourth quarter of 2007. FiberNet's customer count also increased to 265 as of
March 31, 2008, up from 244 at the end of the first quarter of 2007 and 254 at
the end of the fourth quarter of 2007.
Jon A. DeLuca, President and Chief Executive Officer, stated, "We are off
to a good start in 2008. In particular, we are pleased with the growth we are
seeing in colocation services. This year, our expansion plans have turned to
our network services. We are expanding the core capacity of our metro
networks and extending our reach to three new markets. All of these
initiatives should serve to build value over the long term."
Cost of services for the first quarter of 2008 was $6.9 million, compared
to $5.9 million for the first quarter of 2007 and $6.9 million for the fourth
quarter of 2007. These increases were due, in part, to increased off-net
connectivity costs and increased occupancy costs from our colocation expansion
projects.
Selling, general and administrative expenses for the first quarter of 2008
were $4.5 million, compared to $4.2 million in the first quarter of 2007 and
$4.5 million in the fourth quarter of 2007. Included in selling, general and
administrative expenses for the fourth quarter of 2007 is $0.1 million of bad
debt expense.
The net loss applicable to common stockholders for the first quarter of
2008 was $(0.6) million, or $(0.08) per share, compared to $(2.4) million, or
$(0.33) per share, for the first quarter of 2007. The net loss applicable to
common stockholders for the fourth quarter of 2007 was $(0.6) million, or
$(0.08) per share.
Capital expenditures for the first quarter of 2008 were $1.1 million,
compared to $1.0 million in the fourth quarter of 2007 and $0.4 million in the
first quarter of 2007. In the first quarter of 2008, $0.7 million of capital
expenditures were made primarily for the implementation of customer specific
orders and the implementation of network infrastructure to support new
initiatives, and $0.4 million were invested in colocation expansion projects.
In 2008, the Company expects to invest approximately $3.5 million in
capital expenditures for customer order activity, expansion of certain
facilities, new product initiatives and an upgrade to certain information
technology systems and key operating systems. The Company also expects to
invest approximately $3.0 million to complete the two colocation expansion
projects that it began last year. These include its new facility at 60 Hudson
Street inNew York City and its power upgrade at its facility at 165 Halsey
Street inNewark, New Jersey. In 2007, the Company invested $0.9 million in
these colocation projects. In addition, the Company intends to invest
approximately $2.0 million for the national network expansion projects that it
recently announced. These projects include capacity expansions to its metro
networks inNew York /New Jersey andLos Angeles, a capacity expansion to its
metro Ethernet network and extending its network reach to the new markets of
Chicago,San Francisco andMiami.
As of March 31, 2008, FiberNet had total assets of $69.6 million and total
stockholders' equity of $39.2 million. As of May 08, 2008, the Company had
approximately 7.5 million shares of common stock outstanding, or 8.2 million
shares of common stock outstanding on a fully-diluted basis, assuming the
exercise of all outstanding options and warrants. Of the approximately 0.7
million outstanding options and warrants, 0.1 million are out-of-the-money as
of May 08, 2008.
The Company presents the financial metric EBITDA (as defined) because it
is utilized in the determination of the majority of the financial covenants in
its credit agreement, and the metric is calculated in accordance with its
credit agreement. As of March 31, 2008, FiberNet was in full compliance with
all of the financial covenants in its credit agreement.
FiberNet Teleconference:
FiberNet will hold a teleconference today, Friday, May 9, 2008, at 11:00
a.m. EDT. To participate in the teleconference please call: 800-591-6944 and
enter pass code 30684076, and from outside the U.S. call 617-614-4910 and
enter the pass code.
A replay of the teleconference will be available beginning Friday, May 9,
2008 at 1:00 p.m. EDT through Friday, May 23, 2008. To listen to the replay by
phone, call 888-286-8010 and enter pass code 55477761, and from outside the
U.S. call 617-801-6888 and enter the pass code.
About FiberNet Telecom Group, Inc.
FiberNet Telecom Group, Inc. owns and operates integrated interconnection
facilities and diverse transport routes in the two gateway markets ofNew
York/New Jersey andLos Angeles, designed to provide comprehensive broadband
interconnectivity enabling the exchange of traffic over multiple networks.
FiberNet's customized connectivity infrastructure provides an advanced, high
bandwidth, fiber-optic solution to support the demand for network capacity and
to facilitate the interconnection of multiple carriers' and customers'
networks. For additional information about FiberNet, visit the company's
website at www.ftgx.com.
Financial Information and Forward Looking Statements:
This partial discussion of the statements of financial condition and
operations of the Company should be read in conjunction with the consolidated
financial statements and related notes contained in the Company's annual
report on Form 10-K for the year ended December 31, 2007 as filed with the
Securities and Exchange Commission on March 28, 2008.
Investors are cautioned that EBITDA (as defined) is not a financial
measure under generally accepted accounting principles. EBITDA (as defined)
is defined as net loss before income taxes, net interest expense, depreciation
and amortization, stock related expense and other non-cash or non-recurring
charges. The Company does not, nor does it suggest investors should, consider
such a non-GAAP financial measure in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP. EBITDA (as defined)
should not be construed as an alternative to operating income or cash flows
from operating activities, both of which are determined in accordance with
GAAP, or as a measure of liquidity. Because it is not calculated under GAAP,
FiberNet's EBITDA (as defined) may not be comparable to similarly titled
measures used by other companies. EBITDA (as defined) is commonly used in the
communications industry and by financial analysts, and others who follow the
industry, as a measure of operating performance. The Company believes that it
is appropriate to present this financial measure because certain of the
financial covenants in the Company's credit agreement are based upon it.
Various remarks about the Company's future expectations, plans and
prospects constitute forward-looking statements for purposes of the safe
harbor provisions under The Private Securities Litigation Reform Act of 1995.
Such remarks are valid only as of today, and the Company disclaims any
obligation to update this information. Actual results may differ materially
from those indicated by these forward-looking statements as a result of
various important factors, including those discussed in the Company's most
recent Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
Reconciliation of Non-GAAP Financial Metric:
Consolidated Financial Data
(in thousands)
(unaudited)
Three Months Ended
--------------------------------------
March 31, March 31, December 31,
2008 2007 2007
---------- ---------- ------------
Calculation of EBITDA (as defined):
Net loss $ (614) $ (2,397) $ (581)
Plus:
Operating expenses:
Stock related expense for selling,
general, and administrative
matters 347 227 347
Depreciation and amortization 2,439 2,296 2,411
Interest expense, net 370 531 367
Extraordinary loss on early
extinguishment of debt -- 1,146 --
-------- -------- --------
EBITDA (as defined) $ 2,542 $ 1,803 $ 2,544
FIBERNET TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except for per share amounts)
Three months ended
March 31,
2008 2007
Revenues $13,556 $11,634
Operating expenses:
Cost of services (exclusive of items shown
separately below) 6,889 5,898
Selling, general and administrative expense 4,472 4,160
Depreciation and amortization 2,439 2,296
Total operating expenses 13,800 12,354
Loss from operations (244) (720)
Loss on early extinguishment of debt - (1,146)
Interest income 47 63
Interest expense (417) (594)
Net loss $ (614) $(2,397)
Net loss per share-basic and diluted $ (0.08) $ (0.33)
Weighted average common shares
outstanding-basic and diluted 7,578 7,271
FIBERNET TELECOM GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
2008 2007
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $6,729 $8,220
Accounts receivable, net of allowance of $361 4,049 3,818
Prepaid expenses 553 612
Total current assets 11,331 12,650
Property, plant and equipment, net 54,931 54,921
Other Assets:
Deferred charges, net of accumulated
amortization of $210 and $160 817 845
Goodwill 1,613 1,613
Other assets 867 883
Total other assets 3,297 3,341
TOTAL ASSETS $69,559 $70,912
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $5,172 $3,553
Accrued expenses 4,479 7,227
Notes payable, current portion 1,050 700
Deferred revenues, current portion 1,165 1,282
Total current liabilities 11,866 12,762
Long Term Liabilities:
Notes payable 12,950 13,300
Deferred revenue, long term 3,248 3,351
Other long term liabilities 2,338 2,201
Total Long Term Liabilities 18,536 18,852
Total Liabilities 30,402 31,614
Stockholders' Equity:
Common stock, $0.001 par value, 2,000,000,000
shares authorized and 7,569,178 and 7,554,309
shares issued and outstanding 8 8
Additional paid-in-capital 445,798 445,368
Deferred rent (warrants) (1,343) (1,386)
Accumulated deficit (405,306) (404,692)
Total stockholders' equity 39,157 39,298
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $69,559 $70,912
FIBERNET TELECOM GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three months ended
March 31,
2008 2007
Cash flows from operating activities:
Net loss $ (614) $ (2,397)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 2,439 2,296
Stock related expense 347 227
Deferred rent expense 43 43
Loss on early extinguishment of debt - 1,146
Other non-cash items 49 229
Change in assets and liabilities:
Increase in accounts receivables (232) (212)
Decrease in prepaid expenses 59 71
Decrease in other assets 1 22
Increase (decrease) in accounts payable 51 (965)
Decrease in accrued expenses and other
long-term liabilities (733) (770)
Decrease in deferred revenues (220) (352)
Cash provided by (used in) operating activities 1,190 (662)
Cash flows from investing activities:
Common stock repurchase (1,529) -
Capital expenditures (1,130) (435)
Cash used in investing activities (2,659) (435)
Cash flows from financing activities:
Proceeds from debt financings - 14,000
Proceeds from warrant exercises - 522
Repayment of debt financings - (14,160)
Payment of financing costs of debt financings (22) (1,054)
Cash used in financing activities (22) (692)
Net decrease in cash and cash equivalents (1,491) (1,789)
Cash and cash equivalents at beginning of period 8,220 6,802
Cash and cash equivalents at end of period 6,729 $5,013
Supplemental disclosures of cash flow information:
Interest paid $662 $699
SOURCE FiberNet Telecom Group, Inc.
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