 |
May 9, 2008 |
|
|
|
 |
PRIMUS TELECOM: Posts US$3 Mil. Net Loss in Qtr. Ended March 31 PRIMUS Telecommunications Group Incorporated disclosed on Monday results for the first quarter ended March 31, 2008. At March 31, 2008, the company's consolidated balance sheet showed US$425.6 million in total assets and US$877.1 million in total liabilities, resulting in a US$451.5 million total stockholders' deficit. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with US$191.8 million in total current assets available to pay US$228.1 million in total current liabilities. The company reported a US$3.0 million net loss for the quarter, compared to a net loss of US$2.6 million in the first quarter of 2007. First quarter 2008 net revenue was US$227 million, in line with net revenue of US$227.0 million in the first quarter of 2007. The net loss in the first quarter of 2008 includes a US$2.0 million gain from early extinguishment of debt and a US$2.0 million gain on foreign currency transactions. The net loss in the first quarter of 2007 includes a US$6.0 million loss on early extinguishment or restructuring of debt and a US$3.0 million gain on foreign currency transactions. "We are encouraged by the results in the first quarter, particularly the sequential growth in both overall and retail revenue - a goal that we have been pursuing," said K. Paul Singh, chairman and chief executive officer of PRIMUS. "While we recognize that a single quarter is far from a trend, we hope the results are an early indication that our targeted investments in sales and marketing and infrastructure will lead to further progress in increasing retail revenues. "Despite the positive revenue performance in the first quarter, we believe it is premature to adjust our prior guidance of a 2% to 5% yea-over-year net revenue decline. Similarly, assuming currency exchange rates remain at current levels, we confirm our prior 2008 Adjusted EBITDA guidance to be in the range of $65.0 million to $80.0 million. That outcome will be influenced by the success we achieve in our expanded sales and marketing efforts. In addition, we now expect capital expenditures for the year to be in the $25.0 million to $30.0 million range, approximately $5.0 million lower than our prior guidance," Mr. Singh said. "During the first quarter, we accomplished the following: opened new, and expanded existing, data centers in Canada and Australia; expanded the global DSLAM footprint by 35 to a total of 288 to expand the availability of our broadband services; augmented network capacity to offer higher speed DSL services in Australia and Canada; and continued growth of the company's direct sales force and telemarketing capabilities across its major markets," Mr. Singh stated. "Also, during the quarter, we purchased and retired $15.0 million principal amount of the company's outstanding debt maturing in 2009. In addition, we completed the sales of a minority equity investment in a Japanese entity and surplus fiber assets for an aggregate $3.0 million in cash proceeds. We continue to pursue other potential sales of select assets to improve our liquidity and narrow our geographical focus to our major franchises in the United States, Canada, Australia and Europe. "However, the uncertainty in the capital markets combined with a weak overall economic outlook may extend our time horizon to meet our goal of generating $50.0 million in cash proceeds from assets sales, particularly if valuation parameters are not at acceptable levels," Mr. Singh concluded. First Quarter 2008 Financial Results "First quarter 2008 net revenue was $227.0 million, up 2% or $4.0 million from the prior quarter and in line with the first quarter 2007. The $4.0 million revenue increase as compared to the prior quarter was comprised of a $3.0 million increase in wholesale services revenue and a $1.0 million increase in retail services revenue," said Thomas R. Kloster, chief financial officer. "The growth in retail services revenue reflects continued increases from high-margin broadband, VOIP, local, wireless, data and hosting revenues, which, for the first time in over nine quarters, exceeded the decline in legacy voice and dial-up Internet services revenue. We believe attaining retail revenue growth lends validity to our strategy of making network investments and shifting resources to sales and marketing." Net revenue less cost of revenue was US$84.0 million or 37.3% of net revenue in the first quarter as compared to US$82.0 million and 36.3% in the year-ago quarter. Selling, general and administrative expense in the first quarter was US$69.0 million, up US$1.0 million from US$68.0 million in the year-ago quarter. Income from operations was US$10.0 million in the first quarter of 2008 (including a US$3.0 million gain from sale of assets), an improvement of US$2.0 million from the first quarter of 2007. First quarter 2008 Adjusted EBITDA was US$15.0 million, an increase of US$1.0 million from US$14.0 million in the year-ago quarter. Interest expense for the first quarter 2008 was US$15.0 million, up from US$13.0 million in the first quarter 2007. The increase over the year-ago quarter is attributable to the interest related to the 14 1/4% Senior Secured Notes, issued in February and March 2007. Income tax expense for the first quarter was US$2.0 million, which includes charges for determination of possible future tax obligations under Financial Accounting Standards Board Interpretation No. 48, "Accounting for Uncertainty in Income Taxes," and withholding tax expense for intercompany interest and royalty fees owed by certain foreign subsidiaries. Liquidity and Capital Resources PRIMUS ended the first quarter 2008 with a cash balance of US$67.0 million (US$56.0 million unrestricted) as compared to US$91.0 million (US$81.0 million unrestricted) as of Dec. 31, 2007. The US$25.0 million decrease in unrestricted cash balance is comprised of US$7.0 million for capital expenditures primarily to fund the previously announced Australian DSLAM network expansion and the Canadian data center expansion, US$16.0 million for interest payments, US$11.0 million to purchase and retire US$15.0 million principal amount of the company's outstanding debt maturing in 2009, US$2.0 million for scheduled debt principal reductions, and US$7.0 million for working capital movements. These declines are offset by US$15.0 million of Adjusted EBITDA, and US$3.0 million from the sale of assets. Free Cash Flow for the first quarter 2008 was negative US$14.0 million (comprised of US$7.0 million used in operating activities and US$7.0 million utilized for capital expenditures) as compared to negative US$13.0 million in the year-ago quarter. The principal amount of PRIMUS's long-term debt obligations as of March 31, 2008, was US$649.0 million, as compared to US$664.0 million at Dec. 31, 2007. About PRIMUS Telecom Headquartered in McLean, Virginia, Primus Telecommunications Group (OTC: PRTL) -- http://www.primustel.com/ -- is an integrated communications services provider offering international and domestic voice, voice-over-Internet protocol (VOIP), Internet, wireless, data and hosting services to business and residential retail customers and other carriers located primarily in the United States, Canada, Australia, the United Kingdom and western Europe. The company has operations in Brazil and Mexico. PRIMUS provides services over its global network of owned and leased transmission facilities, including approximately 500 points-of-presence (POPs) throughout the world, ownership interests in undersea fiber optic cable systems, 18 carrier- grade international gateway and domestic switches, and a variety of operating relationships that allow it to deliver traffic worldwide. * * * As reported in the Troubled Company Reporter on April 17, 2008, Moody's Investors Service downgraded Primus Telecommunications Group Incorporated's corporate family rating to Ca from Caa3. |
|
|
||
|
Today's Top Stories have been selected from the Troubled Company Reporter - Latin America. To receive the Full TCR-LA please CLICK HERE.
