EXHIBIT 99.1
MPOWER HOLDING ANNOUNCES FOURTH QUARTER AND YEAR END 2003 RESULTS
ROCHESTER, NY - FEBRUARY 12, 2004 - Mpower Holding Corporation (OTCBB: 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 fourth quarter and year ended
December 31, 2003.
"We are very pleased with the continued progress in our business in the fourth
quarter. We reported positive Adjusted EBITDA for the second consecutive quarter
as well as record gross margins," stated Mpower Holding Chairman and Chief
Executive Officer Rolla P. Huff.
"Mpower has never been financially and operationally stronger than we are
today," continued Huff. "I am also extremely pleased with the significant
progress we are making in re-tooling our sales organization to drive organic
revenue growth. We have increased quota-carrying headcount by 15% over year-end
levels and we expect by the end of next month quota-carrying headcount will
increase 40% relative to the beginning of the year."
Mpower reported revenue from continuing operations of $36.9 million for the
fourth quarter of 2003, slightly higher than the third quarter of 2003 and 3%
below the prior year quarter. For the full-year 2003, Mpower's revenue grew to
$148.2 million, a 1% increase over the prior year. Core customer revenue was
$32.7 million in the fourth quarter of 2003, flat versus the prior quarter and a
4% improvement over the fourth quarter of 2002. Core customer revenue increased
11% on an annual basis from $116.3 million for the full-year 2002 to $129.6
million for the full-year 2003 and represented 87% of the company's total
revenue, more than offsetting the expected decline in switched access revenue.
Gross margin from continuing operations was $20.3 million or 55% of revenue in
the fourth quarter of 2003, growing 6% sequentially and 14% higher than the
fourth quarter of last year. Full-year 2003 gross margin from continuing
operations was $72.7 million or 49% of revenue, an increase of 18% over the
prior year.
Selling, general and administrative (SG&A) expenses from continuing operations
were $18.6 million for the fourth quarter of 2003, slightly higher than the
$18.1 million in SG&A reported in the prior quarter and a 20% improvement over
the fourth quarter of 2002. SG&A for the full-year 2003 decreased to $77.4
million versus the prior year.
Adjusted EBITDA in the fourth quarter of 2003 increased to $1.6 million, 66%
higher than the previous quarter and $7.0 million higher than the fourth quarter
of 2002. The company reported a full-year Adjusted EBITDA loss of $4.7 million
in 2003, a 90% improvement over the prior year.
Loss from continuing operations was $2.1 million in the current quarter, a 48%
improvement over the fourth quarter of 2002. Mpower reduced its full-year loss
from continuing operations by 95% to $19.8 million. The company's loss per share
before discontinued operations was $0.01 in the current quarter and $0.27 for
the full-year 2003.
For the fourth quarter of 2003, the company's net loss was $0.1 million compared
to a $1.2 million net loss in the prior quarter. Mpower reduced its net loss for
the full-year by 79%, reporting a net loss of $21.1 million. Net loss per share
was $0.00 for the fourth quarter of 2003 and $0.31 for the full-year ended 2003.
Capital expenditures were $2.0 million in the fourth quarter of 2003 and $7.8
million for the full-year 2003. Mpower ended 2003 with $29.3 million in
unrestricted cash, growing its unrestricted cash position 172% over year-end
2002. Although Mpower has a $7.5 million revolving receivables-based line of
credit, it was not utilized at year-end.
CONFERENCE CALL TO DISCUSS FOURTH QUARTER AND YEAR-END RESULTS
Mpower will host a conference call to discuss its fourth quarter and year-end
2003 financial and operating results.
DATE: Thursday, February 12, 2004
TIME: 10:00 a.m. (Eastern time)
DIAL-IN NUMBER: 1-866-769-3706
REPLAY NUMBER: 1-877-519-4471, PIN #4484777
From February 12 at 1:00 p.m. through February 19 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 a non-GAAP financial measure,
Adjusted EBITDA, to supplement our consolidated financial statements presented
on a GAAP basis, Regulation G requires us to include in this press release a
presentation of the most directly comparable GAAP measure, which is Net (Loss)
Income, and a reconciliation of the two measures. We have presented a
reconciliation of the two measures for each of the periods presented above. The
non-GAAP measure we utilize (Adjusted EBITDA) provides an enhancement to an
overall understanding of our past financial performance and our 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. We have
excluded from our 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 and gain on
discharge of debt, other income because we do not believe that including such
items in Adjusted EBITDA provides investors with an appropriate measure of
determining Mpower's performance in its core business. 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 and other
measures of financial performance prepared in accordance with GAAP. Adjusted
EBITDA is not a GAAP measurement and Mpower's use of it may not be comparable to
similarly titled measures employed by other companies in the telecommunications
industry.
ABOUT MPOWER HOLDING CORPORATION
Mpower Holding Corporation (OTCBB: 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 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, 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.
CONTACTS:
Mpower Communications Investor Contact: Investor Relations Contact:
Gregg Clevenger, Chief Financial Officer Lester Rosenkrantz, Cameron Associates
Telephone: 585-218-6547 Telephone: 212-554-5486
Email: invest@mpowercom.com Email: Lester@cameronassoc.com
Mpower Communications Media Contact:
Michele Sadwick, Vice President
Telephone: 585-218-6542
Email: msadwick@mpowercom.com
FINANCIAL STATEMENTS
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MPOWER HOLDING MPOWER HOLDING MPOWER HOLDING
BALANCE SHEET (AMOUNTS IN $ THOUSANDS) DECEMBER 31, 2003 SEPTEMBER 30, 2003 DECEMBER 31, 2002
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Current Assets
Cash & Cash Equivalents $29,307 $36,629 $10,773
Restricted Investments 92 204 84
Accounts Receivable, net 14,076 13,757 13,923
Other Receivables 5,039 8,335 -
Assets Held for Sale - - 20,471
Prepaid Expenses and Other Current Assets 4,487 3,827 5,814
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Total Current Assets 53,001 62,752 51,065
Property and Equipment, net 33,762 35,597 38,497
Long-Term Restricted Investments 9,537 9,561 13,547
Deferred Financing Costs, net - 33 16
Intangibles, net 8,948 10,094 13,530
Other Assets 3,781 5,203 10,768
TOTAL ASSETS $109,029 $123,240 $127,423
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Current Liabilities
Current Maturities of Long-Term Debt and Capital Leases $256 $1,460 $4,638
Line of Credit - 3,725 -
Accounts Payable 15,754 18,467 23,462
Accrued Sales Tax Payable 3,647 5,745 5,753
Accrued Property Taxes Payable 2,818 3,527 3,030
Deferred Revenue 4,696 4,699 3,183
Accrued Other Expenses 13,406 17,225 14,352
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Total Current Liabilities 40,577 54,848 54,418
Capital Lease Obligations - 2 371
Long-Term Deferred Revenue 2,211 2,064 1,497
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Total Liabilities 42,788 56,914 56,286
Common stock 78 78 65
Additional Paid-in Capital 103,735 103,769 87,511
Accumulated Deficit (37,572) (37,521) (16,439)
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Total Stockholders' Equity 66,241 66,326 71,137
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $109,029 $123,240 $127,423
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REORGANIZED REORGANIZED REORGANIZED
MPOWER HOLDING MPOWER HOLDING MPOWER HOLDING
STATEMENT OF OPERATIONS (amounts in $ thousands, THREE MONTHS ENDED THREE MONTHS ENDED THREE MONTHS ENDED
except share and per share amounts) DECEMBER 31, 2003 SEPTEMBER 30, 2003 DECEMBER 31, 2002
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Operating Revenues:
Core Customer $32,655 $32,708 $31,311
Switched Access 4,224 4,089 6,642
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Total Operating Revenues 36,879 36,797 37,953
Operating Expenses:
Cost of Operating Revenues 16,627 17,737 20,131
Selling, General and Administrative 18,635 18,084 23,271
Reorganization Expense - - -
Stock-Based Compensation Expense 41 43 57
Network Optimization Cost - (954) (6,390)
Gain on Sale of Assets, net (267) (185) (16)
Depreciation and Amortization 3,961 4,121 4,998
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Total Operating Expenses 38,997 38,846 42,051
Loss from Continuing Operations (2,118) (2,049) (4,098)
(Loss) Gain on Sale of Investments, net - - (489)
Gain (Loss) on Discharge of Debt - - 35,030
Other income 1,427 - -
Interest Income 63 40 371
Interest Expense (101) (102) (1,315)
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(Loss) Income before Discontinued Operations (729) (2,111) 29,499
Income (Loss) from Discontinued Operations 678 922 (29,117)
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Net (Loss) Income (51) (1,189) 382
Accrued Preferred Stock Dividends - - -
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Net (Loss) Income Applicable to Common Stockholders ($51) ($1,189) $382
Basic Weighted Average Shares Outstanding 78,213,486 65,762,792 64,999,025
Diluted Weighted Average Shares Outstanding 78,213,486 65,762,792 65,365,420
Basic and Diluted (Loss) Income per Share Applicable to
Common Stockholders:
(Loss) Income before Discontinued Operations ($0.01) ($0.03) $0.45
Income (Loss) from Discontinued Operations $0.01 $0.01 ($0.44)
Net (Loss) Income ($0.00) ($0.02) $0.01
Gross Margin $20,252 $19,060 $17,822
Gross Margin (% of Revenue) 54.9% 51.8% 47.0%
Adjusted EBITDA $1,617 $976 ($5,449)
Adjusted EBITDA (% of Revenue) 4.4% 2.7% -14.4%
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REORGANIZED REORGANIZED PREDECESSOR
MPOWER HOLDING MPOWER HOLDING MPOWER HOLDING
STATEMENT OF OPERATIONS (amounts in $ thousands, FOR THE YEAR ENDED JULY 31, 2002 TO JANUARY 1, 2002 TO
except share and per share amounts) DECEMBER 31, 2003 DECEMBER 31, 2002 JULY 30, 2002
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Operating Revenues:
Core Customer $129,563 $51,622 $64,714
Switched Access 18,609 11,193 18,575
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Total Operating Revenues 148,172 62,815 83,289
Operating Expenses:
Cost of Operating Revenues 75,445 33,414 51,320
Selling, General and Administrative 77,434 42,779 65,627
Reorganization Expense - - 266,383
Stock-Based Compensation Expense 175 276 442
Network Optimization Cost (954) (6,390) 19,000
Gain on Sale of Assets, net (534) (90) (91)
Depreciation and Amortization 16,369 7,987 28,620
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Total Operating Expenses 167,935 77,976 431,301
Loss from Continuing Operations (19,763) (15,161) (348,012)
(Loss) Gain on Sale of Investments, net - (539) 4,326
Gain (Loss) on Discharge of Debt (102) 35,030 315,310
Other income 1,427 - -
Interest Income 199 963 3,237
Interest Expense (526) (2,539) (18,065)
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(Loss) Income before Discontinued Operations (18,765) 17,754 (43,204)
Income (Loss) from Discontinued Operations (2,368) (34,193) (34,765)
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Net (Loss) Income (21,133) (16,439) (77,969)
Accrued Preferred Stock Dividends - - (3,974)
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Net (Loss) Income Applicable to Common Stockholders ($21,133) ($16,439) ($81,943)
Basic Weighted Average Shares Outstanding 68,515,811 64,999,025 59,461,374
Diluted Weighted Average Shares Outstanding 68,515,811 65,247,708 59,461,374
Basic and Diluted (Loss) Income per Share Applicable to
Common Stockholders:
(Loss) Income before Discontinued Operations ($0.27) $0.27 ($0.79)
Income (Loss) from Discontinued Operations ($0.04) ($0.52) ($0.59)
Net (Loss) Income ($0.31) ($0.25) ($1.38)
Gross Margin $72,727 $29,401 $31,969
Gross Margin (% of Revenue) 49.1% 46.8% 38.4%
Adjusted EBITDA ($4,707) ($13,378) ($33,658)
Adjusted EBITDA (% of Revenue) -3.2% -21.3% -40.4%
RECONCILIATION TO GAAP (amounts in $ thousands) December 31, 2003 September 30, 2003 December 31, 2002
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Adjusted EBITDA $1,617 $976 ($5,449)
Depreciation and Amortization (3,961) (4,121) (4,998)
Reorganization Expense - - -
Network Optimization Cost - 954 6,390
Gain on Sale of Assets, net 267 185 16
Stock-Based Compensation Expense (41) (43) (57)
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Loss from Continuing Operations (2,118) (2,049) (4,098)
(Loss) Gain on Sale of Investments, net - - (489)
Gain (Loss) on Discharge of Debt - - 35,030
Other income 1,427 - -
Interest Income 63 40 371
Interest Expense (101) (102) (1,315)
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(Loss) Income before Discontinued Operations (729) (2,111) 29,499
Income (Loss) from Discontinued Operations 678 922 (29,117)
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Net (Loss) Income (GAAP) ($51) ($1,189) $382
JULY 31, 2002 TO JANUARY 1, 2002 TO
RECONCILIATION TO GAAP (amounts in $ thousands) DECEMBER 31, 2003 DECEMBER 31, 2002 JULY 30, 2002
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Adjusted EBITDA ($4,707) ($13,378) ($33,658)
Depreciation and Amortization (16,369) (7,987) (28,620)
Reorganization Expense - - (266,383)
Network Optimization Cost 954 6,390 (19,000)
Gain on Sale of Assets, net 534 90 91
Stock-Based Compensation Expense (175) (276) (442)
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Loss from Continuing Operations (19,763) (15,161) (348,012)
(Loss) Gain on Sale of Investments, net - (539) 4,326
Gain (Loss) on Discharge of Debt (102) 35,030 315,310
Other income 1,427 - -
Interest Income 199 963 3,237
Interest Expense (526) (2,539) (18,065)
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(Loss) Income before Discontinued Operations (18,765) 17,754 (43,204)
Income (Loss) from Discontinued Operations (2,368) (34,193) (34,765)
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Net (Loss) Income (GAAP) ($21,133) ($16,439) ($77,969)