Exhibit 99.1
For Immediate Release
TERREMARK WORLDWIDE REPORTS
SECOND QUARTER FY 2006 RESULTS
SECOND QUARTER FY 2006 RESULTS
• | Net colocation space utilization increased by 11% to 10.1%; Company approaches EBITDA breakeven point | |
• | New bookings during the quarter represented $12.8 million of new annual contract value | |
• | 49 new customers including Broadstar, Forsythe Technology, and Intermedia were added | |
• | Existing customer expansions also represent services delivered out of Herndon, Virginia facility | |
• | NAP of Americas’ disaster plans performed flawlessly during Hurricane Wilma; customer services uninterrupted |
Miami, FL., November 9, 2005 –Terremark Worldwide, Inc. (AMEX:TWW) a leading operator of integrated Tier-1 Internet exchanges and a global provider of managed IT infrastructure solutions for government and private sectors, today reported its results for the quarter ended September 30, 2005.
Total revenues for the quarter ended September 30, 2005 were $14.0 million, representing an increase of 31% over the previous quarter. The increase reflects the positive impact of our bookings over the past two quarters and the inclusion of managed services revenue from our Dedigate acquisition. The percentage of data center revenue derived from Federal government customers during the quarter ended September 30, 2005 was 23%.
Data center expenses were $8.7 million for the quarter ended September 30, 2005, representing an increase of $1.7 million over the previous quarter. Gross profit margins, excluding depreciation and amortization, improved to 38%
during the September 30, 2005 quarter compared to 34% during the prior quarter.
EBITDA loss, as adjusted, for the quarter ended September 30, 2005 was $280,000, a significant improvement over an EBITDA loss of $2.3 million the previous quarter. EBITDA, as adjusted, is defined as loss from operations less depreciation, amortization and stock based compensation. EBITDA, as adjusted, should be considered in addition to, but not in lieu of, loss from operations reported under GAAP.
As of September 30, 2005, Terremark’s cash and cash equivalents were $29.2 million, a decrease of only $2.8 million compared to the previous quarter.
Total colocation space utilization increased to 10.1% as of September 30, 2005 from 9.1% as of June 30, 2005. Utilization of built-out colocation space increased to 42.7% as of September 30, 2005 from 39.2% as of June 30, 2005. This utilization rate puts Terremark near its EBITDA break-even point. Cross connects billed to customers increased to 3,182 as of September 30, 2005 from 2,836 the previous quarter and 2,039 a year earlier, representing an increase of 12% and 56%, respectively.
During the quarter ended September 30, 2005, Terremark added 49 new customers, for a total of 396 customers at the end of the period. Terremark booked $12.8 million of new annual contract value during the quarter ended September 30, 2005, an increase of 38% over the previous quarter’s bookings. Furthermore, over 74% of the bookings during the September 2005 quarter were generated from existing customers.
For the quarter ended September 30, 2005, annualized data center services revenue per utilized square foot were $1,534, compared to $1,277 at the end of the previous quarter and $1,280 a year earlier. For the quarter ended September 30, 2005, our data center services revenue churn was less than 1%. The Company defines churn as annualized data center services revenue lost as a percentage of annualized data center services revenue for the most recent quarter.
“We are pleased with the results of the quarter and the growth in our customer base, now totaling 396 customers,” said Manuel D. Medina, Chairman and CEO of Terremark Worldwide, Inc. “We remain optimistic about the fundamentals of our business model and the market drivers we are seeing. With the momentum and visibility in our current business and our confidence in closing various deals with the Federal government, we are very excited about the balance of 2006.”
Business Outlook
Medina continued. “While we remain confident in our ability to close the large Federal deals we are pursuing, the exact timing is difficult to predict. Therefore, in providing guidance for the remainder of the year and next quarter, we have decided to exclude any financial impact of these large deals that we expect to close during the remainder of our fiscal year.”
The Company has updated its previously issued guidance for the fiscal year ending March 31, 2006. The Company expects revenues to be in the range of $65 million to $75 million, EBITDA to range from $2 million to $8 million and capital expenditures to range from $7 million to $8 million for its 2006 fiscal year. The Company is also providing guidance for our quarter ending December 31, 2005 and expects quarterly revenue to range from $17 million to $18 million and EBITDA to range from $0.5 million to $1.25 million. The change in
guidance is primarily due to delays in closing of certain large contracts in the Company’s sales pipeline.
8-K Filing Regarding Correction of EPS Calculation
The Company filed an 8-K this afternoon announcing the restatement of its diluted earnings per share disclosure for its fiscal year 2005. It is important to note that this disclosure modification has no impact on reported revenues, net loss, cash flows assets or liabilities. When the Company previously calculated its earnings per share it did not eliminate the impact on net income/net loss of the change in fair value of the derivative embedded in the Company’s 9% senior convertible notes. The restated diluted earnings per share properly eliminate this impact from our net income/loss to calculate diluted earnings per share. This change to the earnings per share disclosure was deemed to be material and thus warranted a restatement of the Company’s previously issued financial statements based on specific accounting literature that provides guidance on determining materiality. As a result, the Company also disclosed an additional material weakness in its internal control over financial reporting, specifically with regard to the earnings per share calculation. The Company is evaluating steps to be taken to remediate this weakness.
The Company will hold a conference today, November 9, 2005 at 5:30 p.m. ET, to discuss all of the above. Additional information regarding the Company’s financial performance as of and for the quarter ended September 30, 2005 and a comparison to the quarter ended September 30, 2004 can be found on the attached balance sheet and statement of operations and in the Company’s Quarterly Report on Form 10-Q.
About Terremark Worldwide, Inc.
Terremark Worldwide, Inc. (AMEX:TWW) is a leading operator of integrated Tier-1 Internet exchanges and a global provider of managed IT infrastructure solutions for government and private sectors. Terremark delivers its portfolio of services from seven locations in the U.S., Europe and Latin America and from four service aggregation and distribution locations, which aggregate network traffic and distribute network-based services in Europe and Asia to meet specific customer needs. Terremark’s flagship facility, the NAP of the Americas, is the model for the carrier-neutral Internet exchanges the company has in Santa Clara, California (NAP of the Americas/West), in Sao Paulo, Brazil (NAP do Brasil) and in Madrid, Spain (NAP de las Americas — Madrid). The carrier-neutral NAP of the Americas is a state-of-the-art facility that provides exchange point, colocation and managed services. Terremark is headquartered at 2601 S. Bayshore Drive, 9th Floor, Miami, Florida USA, (305) 856-3200. More information about Terremark Worldwide can be found at www.terremark.com.
Statements contained in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Terremark’s actual results may differ materially from those set forth in the forward-looking statements due to a number of risks, uncertainties and other factors, as discussed in Terremark’s filings with the SEC. These factors include, without limitation, Terremark’s ability to obtain funding for its business plans, uncertainty in the demand for Terremark’s services or products and Terremark’s ability to manage its growth. Terremark does not assume any obligation to update these forward-looking statements.
Contacts:
Terremark Worldwide, Inc., Miami | Investor Relations | |
Sandra Gonzalez-Levy, 305-860-7829 | Market Street Partners | |
sgonzalez-levy@terremark.com | JoAnn Horne | |
415 445 3233 | ||
joann@marketstreetpartners.com |
Non-GAAP Financial Measures
Terremark continues to provide all information required in accordance with generally accepted accounting principles (GAAP), but it believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, Terremark uses non-GAAP financial measures, such as EBITDA, as adjusted. In presenting these non-GAAP financial measures, Terremark excludes certain non-cash items that it believes are not good indicators of the Company’s current or future operating performance. These non-cash items are depreciation, amortization and stock-based compensation.
Terremark intends to calculate the various non-GAAP financial measures in future periods on a basis consistent with its calculation of those measures for the three and six months ended September 30, 2005 and 2004 and the three months ended June 30, 2005, presented within this press release.
Terremark Worldwide, Inc.
Consolidated Statement of Operations
Consolidated Statement of Operations
For the Three Months Ended | ||||||||||||
September 30, | June 30, | September 30, | ||||||||||
2005 | 2005 | 2004 | ||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
Revenues | ||||||||||||
Data Center | $ | 13,961,080 | $ | 10,671,120 | $ | 7,914,744 | ||||||
Construction contracts and fees | — | — | 303,368 | |||||||||
Operating revenues | 13,961,080 | 10,671,120 | 8,218,112 | |||||||||
Expenses | ||||||||||||
Data center operations, excluding depreciation | 8,718,207 | 7,011,649 | 6,463,989 | |||||||||
Construction contract expenses, excluding depreciation | — | — | 243,467 | |||||||||
General and administrative | 3,503,439 | 4,180,644 | 3,417,332 | |||||||||
Sales and marketing | 2,021,059 | 1,759,074 | 1,062,773 | |||||||||
Depreciation and amortization | 2,047,154 | 1,864,461 | 1,296,305 | |||||||||
Operating expenses | 16,289,859 | 14,815,828 | 12,483,866 | |||||||||
Loss from operations | (2,328,779 | ) | (4,144,708 | ) | (4,265,754 | ) | ||||||
Other income (expenses) | ||||||||||||
Change in fair value of derivatives embedded within convertible debt | 10,441,700 | (464,025 | ) | 10,375,875 | ||||||||
Gain on debt restructuring and extinguishment, net | — | — | — | |||||||||
Interest expense | (6,305,142 | ) | (5,996,853 | ) | (3,449,314 | ) | ||||||
Interest income | 439,261 | 460,173 | 129,924 | |||||||||
Gain on sale of asset | 499,388 | — | — | |||||||||
Other, net | (80,276 | ) | 14,141 | 23,406 | ||||||||
Total other income (expenses) | 4,994,931 | (5,986,564 | ) | 7,079,891 | ||||||||
Loss before income taxes | 2,666,152 | (10,131,272 | ) | 2,814,137 | ||||||||
Income taxes | — | — | — | |||||||||
Net loss | 2,666,152 | (10,131,272 | ) | 2,814,137 | ||||||||
Preferred dividend | (184,700 | ) | (187,789 | ) | (244,511 | ) | ||||||
Earnings allocation to participating security holders | (396,616 | ) | — | (488,423 | ) | |||||||
Net (loss) income attributable to common shareholders | $ | 2,084,836 | $ | (10,319,061 | ) | $ | 2,081,203 | |||||
Reconciliation of Loss from Operations to EBITDA, as adjusted | ||||||||||||
Loss from operations | (2,328,779 | ) | (4,144,708 | ) | (4,265,754 | ) | ||||||
Depreciation and amortization | 2,047,154 | 1,864,461 | 1,296,305 | |||||||||
EBITDA, as adjusted | $ | (281,625 | ) | $ | (2,280,247 | ) | $ | (2,969,449 | ) | |||
Calculation of Gross Profit Margin | ||||||||||||
Operating revenues | 13,961,080 | 10,671,120 | 8,218,112 | |||||||||
Less: | ||||||||||||
Data center operations — services, excluding depreciation | 8,718,207 | 7,011,649 | 6,463,989 | |||||||||
Construction contract expenses | — | — | 243,467 | |||||||||
Gross Profit | $ | 5,242,873 | $ | 3,659,471 | $ | 1,510,656 | ||||||
Gross Profit Margin as a % of operating revenues | 38 | % | 34 | % | 18 | % |
Terremark Worldwide, Inc.
Consolidated Statement of Operations
Consolidated Statement of Operations
For the Six Months Ended | ||||||||
September 30, | ||||||||
2005 | 2004 | |||||||
(Unaudited) | (Unaudited) | |||||||
Revenues | ||||||||
Data center | $ | 24,632,200 | $ | 15,025,915 | ||||
Construction contracts and fees | — | 1,087,708 | ||||||
Operating revenues | 24,632,200 | 16,113,623 | ||||||
Expenses | ||||||||
Data center operations, excluding depreciation | 15,729,856 | 12,200,670 | ||||||
Construction contract expenses, excluding depreciation | — | 948,813 | ||||||
General and administrative | 7,684,085 | 6,979,446 | ||||||
Sales and marketing | 3,780,133 | 2,033,119 | ||||||
Depreciation and amortization | 3,911,615 | 2,573,054 | ||||||
Operating expenses | 31,105,689 | 24,735,102 | ||||||
Loss from operations | (6,473,489 | ) | (8,621,479 | ) | ||||
Other income (expenses) | ||||||||
Change in fair value of derivatives embedded within convertible debt | 9,977,675 | 13,679,250 | ||||||
Gain on debt restructuring and extinguishment, net | — | 3,420,956 | ||||||
Interest expense | (12,301,995 | ) | (6,433,148 | ) | ||||
Interest income | 899,434 | 196,243 | ||||||
Gain on sale of asset | 499,388 | — | ||||||
Other, net | (66,136 | ) | (4,260 | ) | ||||
Total other income (expenses) | (991,634 | ) | 10,859,041 | |||||
Loss before income taxes | (7,465,123 | ) | 2,237,562 | |||||
Income taxes | — | — | ||||||
Net loss | (7,465,123 | ) | 2,237,562 | |||||
Preferred dividend | (372,489 | ) | (486,821 | ) | ||||
Earnings allocation to participating security holders | — | (240,611 | ) | |||||
Net (loss) income attributable to common shareholders | $ | (7,837,612 | ) | $ | 1,510,130 | |||
Reconciliation of Loss from Operations to EBITDA, as adjusted | ||||||||
Loss from operations | (6,473,489 | ) | (8,621,479 | ) | ||||
Depreciation and amortization | 3,911,615 | 2,573,054 | ||||||
EBITDA, as adjusted | $ | (2,561,874 | ) | $ | (6,048,425 | ) | ||
Calculation of Gross Profit Margin | ||||||||
Operating revenues | 24,632,200 | 16,113,623 | ||||||
Less: | ||||||||
Data center operations — services, excluding depreciation | 15,729,856 | 12,200,670 | ||||||
Construction contract expenses | — | 948,813 | ||||||
Gross Profit | $ | 8,902,344 | $ | 2,964,140 | ||||
Gross Profit Margin as a % of operating revenues | 36 | % | 18 | % |
Terremark Worldwide, Inc.
Consolidated Balance Sheets
Consolidated Balance Sheets
September 30, | June 30, | March 31, | ||||||||||
2005 | 2005 | 2005 | ||||||||||
(Unaudited) | (Unaudited) | |||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 29,201,130 | $ | 32,072,143 | $ | 44,001,144 | ||||||
Restricted cash | 2,834,743 | 2,508,465 | 2,185,321 | |||||||||
Accounts receivable, net of allowance for doubtful accounts of $200,000 each year | 8,295,936 | 5,942,434 | 4,388,889 | |||||||||
Current portion of capital lease receivable | 2,495,269 | 2,280,000 | 2,280,000 | |||||||||
Prepaid expenses and other current assets | 2,602,352 | 1,312,610 | 942,575 | |||||||||
Total current assets | 45,429,430 | 44,115,652 | 53,797,929 | |||||||||
Restricted cash | 5,647,501 | 5,647,501 | 5,641,531 | |||||||||
Property and equipment, net of accumulated depreciation | 123,538,626 | 123,143,500 | 123,406,321 | |||||||||
Debt issuance costs, net of accumulated amortization | 7,878,186 | 8,336,768 | 8,797,296 | |||||||||
Other assets | 2,386,957 | 1,680,489 | 1,182,716 | |||||||||
Capital lease receivable, net of current portion | 5,233,464 | 5,510,001 | 6,080,001 | |||||||||
Intangibles, net of accumulated amortization of $130,000 | 4,070,000 | — | — | |||||||||
Goodwill | 16,483,530 | 9,999,870 | 9,999,870 | |||||||||
Total assets | $ | 210,667,694 | $ | 198,433,781 | $ | 208,905,664 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Current liabilities: | ||||||||||||
Current portion of mortgage payable | $ | 718,341 | $ | 705,338 | $ | 692,570 | ||||||
Current portion of notes payable | 4,201,549 | 4,233,236 | 4,489,945 | |||||||||
Construction payables | — | 33,747 | 427,752 | |||||||||
Accounts payable and accrued expenses | 11,617,988 | 8,568,927 | 8,914,578 | |||||||||
Current portion of capital lease obligations | 1,202,843 | 1,026,321 | 1,037,459 | |||||||||
Interest payable | 3,787,525 | 765,204 | 2,680,882 | |||||||||
Current portion of unearned interest | 660,820 | 677,559 | 724,686 | |||||||||
Series H redeemable convertible preferred stock: $.001 par value, 294 shares issued and outstanding, at liquidation value | 631,699 | 624,202 | — | |||||||||
Total current liabilities | 22,820,765 | 16,634,534 | 18,967,872 | |||||||||
Mortgage payable, less current portion | 45,924,733 | 45,980,001 | 46,034,024 | |||||||||
Convertible debt | 56,398,741 | 55,118,677 | 53,972,558 | |||||||||
Derivatives embedded within convertible debt, at estimated fair value | 10,138,943 | 20,580,643 | 20,116,618 | |||||||||
Notes payable, less current portion | 24,469,885 | 24,195,754 | 23,664,142 | |||||||||
Deferred rent | 2,239,678 | 2,129,977 | 2,001,789 | |||||||||
Unearned interest under capital lease receivables | 628,933 | 747,501 | 898,778 | |||||||||
Capital lease obligations, less current portion | 593,980 | 362,544 | 434,441 | |||||||||
Deferred revenue | 4,248,119 | 2,561,713 | 1,994,598 | |||||||||
Series H redeemable convertible preferred stock: $.001 par value, 294 shares issued and outstanding, at liquidation value | — | — | 616,705 | |||||||||
Total liabilities | 167,463,777 | 168,311,344 | 168,701,525 | |||||||||
Minority interest | — | — | 28,090 | |||||||||
Commitments and contingencies | — | — | — | |||||||||
Stockholder’s equity: | ||||||||||||
Series I convertible preferred stock: $.001 par value, 369 and 383 shares issued and outstanding (liquidation value of approximately $10.2 million and $10.3 million) | 1 | 1 | 1 | |||||||||
Common stock: $.001 par value, 100,000,000 shares authorized; 44,384,029 and 42,745,336 shares issued | 44,384 | 42,745 | 42,587 | |||||||||
Common stock warrants | 13,603,860 | 13,624,760 | 13,599,704 | |||||||||
Common stock options | 1,538,260 | 1,538,260 | 1,538,260 | |||||||||
Additional paid-in capital | 289,870,765 | 279,051,205 | 279,063,085 | |||||||||
Accumulated deficit | (254,139,192 | ) | (256,805,341 | ) | (246,674,069 | ) | ||||||
Accumulated other comprehensive loss | (148,994 | ) | (108,556 | ) | (172,882 | ) | ||||||
Treasury stock: 865,202 shares | (7,220,637 | ) | (7,220,637 | ) | (7,220,637 | ) | ||||||
Note receivable — related party | (344,530 | ) | — | — | ||||||||
Total stockholders’ equity | 43,203,917 | 30,122,437 | 40,176,049 | |||||||||
Total liabilities and stockholders’ equity | $ | 210,667,694 | $ | 198,433,781 | $ | 208,905,664 | ||||||