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/
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