Mpower Holding Announces Adjusted EBITDA Positive Results for ThirdQuarter 2003; Net Loss Improves 75% over Second Quarter 2003
ROCHESTER, N.Y., Nov 6, 2003 /PRNewswire-FirstCall via COMTEX/ -- Mpower Holding Corporation (OTC 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 third quarter ended September 30, 2003.
"Achieving positive Adjusted EBITDA results this quarter is another important step on our path towards sustainable cash flow growth," said Mpower Communications Chairman and Chief Executive Officer Rolla P. Huff. "Our financial and operational progress was recognized during the quarter by a $17.5 million equity investment in our company. We believe this investment reflects the value in Mpower's facilities-based network and strong debt-free balance sheet, and directly supports our clear strategy for profitable growth."
Mpower expects to use the new capital to raise its growth profile primarily by investing in additional sales, installations and product enhancements to increase its market share in Los Angeles, San Diego, Northern California, Las Vegas and Chicago.
Mpower's Adjusted EBITDA for the third quarter of 2003 was a positive $1.0 million, a 225% improvement over the Adjusted EBITDA loss of $0.8 million in the second quarter of 2003 and an $11.7 million improvement over the $10.7 million Adjusted EBITDA loss in the third quarter of 2002. Adjusted EBITDA represents earnings from continued operations before interest, taxes, depreciation, amortization and gains or losses from the sale of assets, and excludes network optimization costs, reorganization expenses, stock-based compensation and gain on discharge of debt.
Mpower's loss from continuing operations was reduced to $2.2 million in the third quarter of 2003, marking a 53% improvement over the second quarter of 2003 and a 99% improvement over the third quarter of 2002. The company's loss per share before discontinued operations was $0.03 in the third quarter of 2003.
The company reported a net loss of $1.2 million in the third quarter of 2003, a 75% improvement over the second quarter of 2003. Without reorganization expenses and the gain on the discharge of debt recorded in the third quarter of last year, Mpower's net loss would have improved by 96% over the third quarter of 2002. Mpower's net loss per share was $0.02 in the third quarter of 2003.
Revenue from continuing operations was $36.8 million for the third quarter of 2003, essentially even with the second quarter of 2003 and the third quarter of 2002. Offsetting the expected decline in switched access revenue, Mpower's core customer revenue, which includes revenue from the sale of data and voice services, increased 2% over the second quarter of 2003 and 7% over the third quarter of 2002 reaching $32.7 million and representing 89% of Mpower's total revenue.
"We continue to grow the profitability and quality of our core customer revenue streams with revenue from our high margin PRI and T1-based data services increasing 20% over the last quarter," added Huff. "With the recent investment, we are in the process of implementing a customer acquisition strategy to accelerate organic growth. At the same time, we have made significant progress in maintaining customer revenue with monthly customer retention rates averaging 98% for the third quarter."
Mpower's gross margin from continuing operations was $19.1 million or 52% of revenue in the third quarter of 2003 as compared to $18.8 million or 50% of revenue in the second quarter of 2003 and marked a 12% increase over the gross margin reported in the third quarter of 2002.
The company continued to reduce its operating expenses with selling, general and administrative (SG&A) costs declining to $18.1 million in the third quarter of 2003, an 8% improvement over second quarter of 2003 and a 35% improvement over the third quarter of 2002.
The company's capital expenditures were $2.4 million for the third quarter of 2003. Mpower ended the third quarter of 2003 with $36.6 million in unrestricted cash, growing its unrestricted cash position 90% over the second quarter of 2003 and 158% over the third quarter of 2002. The September 30, 2003 unrestricted cash balance includes approximately $17.5 million received in connection with the company's equity private placement plus $1.9 million that was returned to certain potential investors in October 2003 due to over-subscription of the private placement. In October 2003, $1.1 million was paid as finder fees for the private placement.
Conference Call to Discuss Third Quarter Results
Mpower will host a conference call to discuss its third quarter financial and operating results.
Date: Thursday, November 6, 2003
Time: 9:00 a.m. (Eastern time)
Dial-in Number: 1-800-683-1585
Audio Webcast: www.mpowercom.com
Replay Number: 1-877-519-4471, PIN #4279528
From November 6 at 11:00 a.m. through November 13 at
5:00 p.m. Eastern
Webcast Replay: Available on Mpower's Web site at: www.mpowercom.com
