Third Quarter of 2007 Revenues Increase 20.5% and EBITDA Increases 40.4% Over Comparable Period in 2006
NEW YORK, Nov. 8 /PRNewswire-FirstCall/ -- FiberNet Telecom Group, Inc. (NASDAQ:FTGX), a leading provider of complex interconnection services, today announced its results for the third quarter ended September 30, 2007.
Revenues for the third quarter of 2007 increased to $12.5 million, up 20.5% from $10.4 million for the third quarter of 2006 and up 3.7% from $12.1 million for the second quarter of 2007.
EBITDA (as defined) for the third quarter of 2007 was $2.1 million, up 40.4% from $1.5 million reported in the third quarter of 2006 and up 12.4% from $1.9 million for the second quarter of 2007. The amounts exclude certain non-recurring items discussed below.
FiberNet continued to achieve consistent revenue growth in its core product offerings of transport and colocation services. For the third quarter of 2007, revenues from transport and colocation services (excluding revenues from access management services) grew by 21.0% over the third quarter of 2006 and by 3.9% over the second quarter of 2007.
Transport services remained the most significant component of FiberNet's revenues, accounting for 78.5% of the total revenues generated in the third quarter of 2007. On-net transport revenues were 49.3%, and off-net transport revenues were 29.2% of the total revenues. Off-net transport revenues continued to be the fastest growing area for the Company, increasing by 40.6% from the third quarter of 2006 and by 6.0% from the second quarter of 2007.
Colocation services and access management services represented 20.4% and 1.1% of total revenues generated in the third quarter of 2007, respectively. FiberNet's customer count also increased to 247 as of September 30, 2007, up from 242 at the end of the third quarter of 2006.
Jon A. DeLuca, President and Chief Executive Officer, stated, "With another strong quarter under our belt, we are optimistic for solid finish to 2007. Our new colocation facilities and the deployment of network capacity between our metropolitan networks in New York/New Jersey and Los Angeles will also present us with great opportunities for growth in 2008." Cost of services for the third quarter of 2007 was $6.5 million, compared to $5.3 million for the third quarter of 2006 and $6.3 million for the second quarter of 2007.
Selling, general and administrative expenses for the third quarter of 2007 were $4.2 million, compared to $3.8 million in the third quarter of 2006 and $4.1 million in the second quarter of 2007.
The net loss applicable to common stockholders for the third quarter of 2007 was $(0.9) million, or $(0.12) per share, compared to $(1.5) million, or $(0.23) per share, for the third quarter of 2006. The net loss applicable to common stockholders for the second quarter of 2007 was $(1.0) million, or $(0.14) per share.
Capital expenditures for the third quarter of 2007 were $1.2 million, compared to $0.5 million in the third quarter of 2006 and $1.2 million in the second quarter of 2007. In the third quarter of 2007, $1.0 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 $0.2 million were invested in colocation expansion projects. In the full year of 2007, FiberNet expects to invest approximately $3.0 million in general capital expenditures and approximately $4.0 million related to specific colocation projects.
As of September 30, 2007, FiberNet had total assets of $68.2 million and total stockholders' equity of $40.2 million. As of November 8, 2007, the Company had approximately 7.6 million shares of common stock outstanding, or 8.5 million shares of common stock outstanding on a fully-diluted basis, assuming the exercise of all outstanding options and warrants. Of the approximately 0.9 million outstanding options and warrants, 0.2 million are out-of-the-money as of November 8, 2007.
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 September 30, 2007, FiberNet was in full compliance with all of the financial covenants in its credit agreement.
FiberNet Teleconference: FiberNet will hold a teleconference today, Thursday, November 8, 2007, at 11:00 a.m. EST. To participate in the teleconference please call: 800-510- 0219 and enter pass code 78619989, and from outside the U.S. call 617-614-3451 and enter the pass code.
A replay of the teleconference will be available beginning Thursday, November 8, 2007 at 1:00 p.m. EST through Thursday, November 22, 2007. To listen to the replay by phone, call 888-286-8010 and enter pass code 87918259, 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 of New York/New Jersey and Los 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 http://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, 2006, as filed with the Securities and Exchange Commission on April 2, 2007.
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 on April 2, 2007.
Reconciliation of Non-GAAP Financial Metric: Consolidated Financial Data
(in thousands)
(unaudited)
Three Months Ended
September 30, September 30, June 30,
2007 2006 2007
Calculation of EBITDA (as defined):
Net loss $ (919) $ (1,540) $ (1,040)
Plus:
Operating expenses:
Stock related expense for selling,
general, and administrative matters 307 212 227
Depreciation and amortization 2,369 2,267 2,342
Interest expense, net 352 563 348
Extraordinary loss on early
extinguishment of debt.. -- -- -- EBITDA (as defined) $ 2,109 $ 1,502 $ 1,877
FIBERNET TELECOM GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except for per share amounts) Nine months ended September 30,
2007 2006 Revenues $36,196 $28,893
Operating expenses:
Cost of services
(exclusive of items shown separately below) 18,654 14,455
Selling, general and administrative expense 12,515 11,525
Depreciation and amortization 7,007 6,742 Total operating expenses 38,176 32,722 Loss from operations (1,980) (3,829)
Loss on early extinguishment of debt (1,146) -
Interest income 177 100
Interest expense (1,407) (1,912) Net loss $(4,356) $(5,641) Net loss per share-basic and diluted $(0.59) $(0.92)
Weighted average common shares outstanding-
basic and diluted 7,365 6,116 FIBERNET TELECOM GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except for per share amounts) Three months ended
September 30,
2007 2006 Revenues $12,501 $10,377
Operating expenses:
Cost of services
(exclusive of items shown separately below) 6,490 5,266
Selling, general and administrative expense 4,210 3,821
Depreciation and amortization 2,369 2,267 Total operating expenses 13,069 11,354 Loss from operations (568) (977)
Interest income 63 47
Interest expense (414) (610) Net loss $(919) $(1,540)
Net loss per share-basic and diluted $(0.12) $(0.23)
Weighted average common shares outstanding-
basic and diluted 7,411 6,650 FIBERNET TELECOM GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) September 30, 2007 December 31, 2006
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $7,104 $6,802
Accounts receivable,
net of allowance of $311 and $452 3,389 3,208
Prepaid expenses 665 656 Total current assets 11,158 10,666
Property, plant and equipment, net 55,558 59,534 Other Assets:
Deferred charges, net of accumulated
amortization of $113 and $2,722 792 755
Other assets 661 777 Total other assets 1,453 1,532 TOTAL ASSETS $68,169 $71,732 LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $2,669 $3,482
Accrued expenses 4,541 4,719
Notes payable, current portion 350 -
Deferred revenues, current portion 1,367 1,746 Total current liabilities 8,927 9,947 Long Term Liabilities:
Notes payable, less original issue
discount of $0 and $432 13,650 13,729
Deferred revenue, long term 3,402 3,728
Other long term liabilities 2,008 1,308 Total Long Term Liabilities 19,060 18,765 Total Liabilities 27,987 28,712 Stockholders' Equity:
Common stock, $0.001 par value,
2,000,000,000 shares authorized and
7,640,597 and 7,144,464 shares issued
and outstanding 8 7
Additional paid-in-capital 445,714 444,327
Deferred rent (warrants) (1,429) (1,559)
Accumulated deficit (404,111) (399,755) Total stockholders' equity 40,182 43,020 TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $68,169 $71,732 FIBERNET TELECOM GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands) Nine months ended September 30,
2007 2006
Cash flows from operating activities:
Net loss $(4,356) $(5,641)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 7,007 6,742
Stock related expense 761 571
Deferred rent expense 130 130
Loss on early extinguishment of debt 1,146 -
Other non-cash items 364 830
Change in assets and liabilities:
Increase in accounts receivables (231) (511)
Increase in prepaid expenses (9) (132)
Decrease in other assets 52 755
Decrease in accounts payable (1,017) (170)
Increase in accrued expenses and other
long-term liabilities 535 60
(Decrease) increase in deferred revenues (705) 407 Cash provided by operating activities 3,677 3,041 Cash flows from investing activities:
Capital expenditures (2,774) (1,850) Cash used in investing activities (2,774) (1,850) Cash flows from financing activities:
Proceeds from debt financings 14,000 -
Proceeds from warrant exercises 626 -
Repayment of debt financings (14,160) -
Payment of financing costs of debt financings (1,067) (7)
Payment of financing costs of equity financings - (152)
Proceeds from issuance of equity securities - 2,205 Cash (used in) provided by financing activities (601) 2,046 Net increase in cash and cash equivalents 302 3,237
Cash and cash equivalents at beginning of period 6,802 1,899 Cash and cash equivalents at end of period $7,104 $5,136 Supplemental disclosures of cash flow information:
Interest paid $1,386 $1,421
DATASOURCE: FiberNet Telecom Group, Inc.
CONTACT: Norma I. Salcido, Director, Marketing and Communications of FiberNet Telecom Group, Inc., +1-212-405-6200 or Web site: http://www.ftgx.com/
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