EX-99.1 3 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

[US LEC LOGO]

 

Press Release

 

FOR IMMEDIATE RELEASE

 

Media Contact:

   

Investor Contact:

     

Jennifer Sharpe

   

James Stawski

     

704-319-1135

   

704-319-1189

     

jsharpe@uslec.com

   

jstawski@uslec.com

     

 

REVENUE INCREASES 36% YEAR OVER YEAR TO $73 MILLION

US LEC GROWS FIRST QUARTER EBITDA TO $8.6 MILLION OR 12% OF REVENUE

 

CHARLOTTE, NC (April 29, 2003) – Continuing to build on solid financial and operational results, US LEC Corp. (Nasdaq: CLEC), a super-regional telecommunications carrier providing integrated voice, data and Internet services to businesses, today announced results for the quarter ended March 31, 2003. The first quarter was highlighted by:

 

  •   Positive cash flow from operations due to improved results from operations, increased end-customer collection results and contracts negotiated with carriers
  •   Positive EBITDA of $8.6 million, or 12% of revenue – up $7.8 million over the first quarter of 2002 (see reconciliation of EBITDA to net cash flow from operations on page 4)
  •   Net revenue growth of 36% to $73.1 million over the first quarter of 2002
  •   End-customer revenue growth of 53% to $47.6 million over the first quarter of 2002 and a 9% sequential increase over the fourth quarter of 2002
  •   Serving 10,988 customers as of March 31, 2003
  •   Acquisition of the Internet Service Provider (ISP) customer contracts of Eagle Communications in Georgia, Florida, North Carolina and Tennessee
  •   Providing data services to more than 4,800 business customers

 

The Company reported a net loss attributable to common stockholders of ($8.5) million, or ($0.31) per share, on 26.9 million average shares outstanding for the quarter ended March 31, 2003, compared with a net loss attributable to common stockholders of ($15.2) million, or ($0.58) per share, on 26.4 million average shares outstanding for the first quarter last year. Net revenues for the quarter ended March 31, 2003, increased 36% to $73.1 million, compared with $53.9 million for the quarter ended March 31, 2002 and net revenues of $73.7 million reported for the fourth quarter of 2002, which included $3.6 million of revenue associated with the resolution of contract negotiations with another carrier. EBITDA for the first quarter of 2003 was $8.6 million compared to EBITDA of $0.7 million in the first quarter of 2002.

 

Commenting on the Company’s first quarter 2003 results, Aaron D. Cowell, president and chief executive officer of US LEC, said, “US LEC has consistently provided stakeholders with solid results that are among the best in the competitive carrier space. We continued that trend in the first quarter of 2003 by adding almost 700 new customers in the quarter – a 7% increase over last quarter. In addition, we also crossed the 400,000 DS0 milestone. Demand continues to grow as our brand name and reputation as a provider of quality services and commitment to customer care gains recognition among medium-to-large sized businesses in each of the 75 markets that we serve. While adding to our

US LEC Announces First Quarter 2003 Results

Page 2 of 6

April 29, 2003

 

customer base, we have maintained virtually unchanged headcount for over a year – utilizing the increased productivity of our team to support improved results. In the first quarter of 2003, we continued growing our data services business. As a result, 44% of US LEC’s customers now utilize at least one of our data products. Data channels grew by 15% over the last quarter and the Company now has over 4,800 data customers. Notably, data services now account for 13% of US LEC’s total revenue. We continue to strive to be the premier communications partner for business by delivering quality voice, data and Internet services and exceeding expectations for customer care.”

 

Michael K. Robinson, executive vice president and chief financial officer of US LEC added, “Since generating positive EBITDA in the first quarter of 2002, US LEC has continued to improve resulting in an EBITDA margin of 12% at March 31, 2003. Our strong growth is the result of a solid business plan and a team that is focused on executing this plan. One of the highlights of the quarter was the increase in cash due to improved results from operations, increased end-customer collection results and contracts negotiated with carriers, which had the effect of reducing our receivables from $58.0 million in the fourth quarter of 2002 to $49.0 million in the first quarter of 2003. We have continued to control costs resulting in SG&A remaining flat at approximately $29.5 million for the third consecutive quarter. At March 31, 2003, end-customer revenue accounted for 65% of total revenue. Additionally, end-customer revenue has increased by approximately $4 million in each of the last four quarters. Moving further into 2003, we will continue to be aggressive in expanding our market share, controlling our costs and growing top and bottom line results. We have made significant progress through the solid execution of our business plan and intend to leverage our strengths to continue this positive trend.”

 

Conference Call Information

 

US LEC Corp. will hold a conference call to discuss this press release on April 29, 2003, at 11:00 a.m. EST. A live broadcast of the conference call will be available online at www.uslec.com, and www.companyboardroom.com. To listen to the live call, visit either web site at least fifteen minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a telephone replay will be available shortly after the call through the close of business on May 2, 2003 and replay via webcast will be available through June 30, 2003.

 

About US LEC

 

Based in Charlotte, NC, US LEC is an integrated telecommunications carrier providing voice, data and Internet services to over 11,000 mid-to-large-sized business customers throughout the southeastern and mid-Atlantic United States. The US LEC network of 26 digital switching centers consists of Lucent 5ESS(R) AnyMedia(TM) digital switches, Lucent CBX500 ATM data switches and Juniper M20(TM) Internet Gateway routers. The US LEC local service area includes Alabama, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia and the District of Columbia. US LEC also offers selected voice services in Arkansas, California, Connecticut, Indiana, Massachusetts, Montana, Nevada, New York, Ohio, Texas and Wisconsin, in addition to data services in these states and others. For more information about US LEC, visit www.uslec.com.

 

Except for the historical information contained herein, this report contains forward-looking statements, subject to uncertainties and risks, including the demand for US LEC’s services, the ability of the Company to introduce additional products, the ability of the Company to successfully attract and retain personnel, competition in existing and potential additional markets, uncertainties regarding its dealings with ILECs and other telecommunications carriers and facilities providers, regulatory uncertainties, the possibility of adverse decisions related to reciprocal compensation and access

US LEC Announces First Quarter 2003 Results

Page 3 of 6

April 29, 2003

 

charges owing to the Company, as well as the Company’s ability to begin operations in additional markets. These and other applicable risks are summarized in the “Forward-Looking Statements and Risk Factors” section and elsewhere in the Company’s Annual Report on Form 10-K for the period ended December 31, 2002, and in subsequent reports, which are on file with the Securities and Exchange Commission.

 

-end-

US LEC Announces First Quarter 2003 Results

Page 4 of 6

April 29, 2003

 

US LEC Corp. and Subsidiaries

Condensed Consolidated Statements of Operations

(In Thousands, Except Per Share Data)

(Unaudited)

 

    

Three months ended

March 31,

  
    

2003

     

2002

  

Revenue, Net

   

$

73,108

 

   

$

53,938

 

Network Expenses

   

 

34,943

 

   

 

27,283

 

Depreciation and Amortization

   

 

11,439

 

   

 

10,553

 

Selling, General and Administrative Expenses

   

 

29,607

 

   

 

25,928

 

    
  

Loss from Operations

   

 

(2,881

)

   

 

(9,826

)

Interest Income (Expense), Net

   

 

(1,917

)

   

 

(1,901

)

    
  

Net Loss

   

 

(4,798

)

   

 

(11,727

)

    
  

Preferred Stock Dividends

   

 

(3,527

)

   

 

(3,324

)

Preferred Stock Accretion of Issuance Costs

   

 

(135

)

   

 

(127

)

    
  

Net Loss Attributable to Common Stockholders

   

$

(8,460

)

   

$

(15,178

)

    
  

Net Loss Attributable to Common Stockholders Per Common Share Basic and Diluted

   

$

(0.31

)

   

$

(0.58

)

    
  

Weighted Average Number of Shares Outstanding Basic and Diluted

   

 

26,895

 

   

 

26,388

 

    
  

 

EBITDA consists of earnings (loss) before interest income and expense, income taxes, depreciation and amortization. EBITDA as used by the Company may be different than similarly used measures by other companies and is not a measure of financial performance under GAAP. Management believes EBITDA is a useful measure of the Company’s liquidity and is used by investors and analysts to evaluate companies in our industry. EBITDA is reconciled to net cash provided by (used in) operating activities as follows:

 

    

Three months ended

March 31,

  
    

2003

     

2002

  

Loss from Operations

   

$

(2,881

)

   

$

(9,826

)

Depreciation and Amortization

   

 

11,439

 

   

 

10,553

 

    
  

EBITDA

   

 

8,558

 

   

 

727

 

Changes in working capital

   

 

6,572

 

   

 

(3,050

)

Net interest expense

   

 

(1,917

)

   

 

(1,901

)

Misc other

   

 

(1,257

)

   

 

433

 

    
  

Net cash provided by (used in) operating activities

   

$

11,956

 

   

$

(3,791

)

    
  

US LEC Announces First Quarter 2003 Results

Page 5 of 6

April 29, 2003

 

US LEC Corp. and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands, Except Per Share Data)

(Unaudited)

 

    

March 31, 2003

     

December 31, 2002

  

Assets

                  

Cash and cash equivalents

   

$

29,142

 

   

$

25,715

 

Restricted cash

   

 

1,580

 

   

 

1,080

 

Accounts receivable, net

   

 

49,073

 

   

 

57,989

 

Property and equipment, net

   

 

170,345

 

   

 

178,810

 

Deferred income taxes

   

 

2,924

 

   

 

2,805

 

Other assets

   

 

21,932

 

   

 

18,915

 

    
  

Total Assets

   

$

274,996

 

   

$

285,314

 

    
  

Liabilities and Stockholders’ Deficiency

                  

Accounts payable

   

$

15,307

 

   

$

18,089

 

Deferred revenue

   

 

8,599

 

   

 

8,048

 

Accrued network costs

   

 

22,703

 

   

 

26,952

 

Accrued expenses

   

 

21,594

 

   

 

22,522

 

Deferred income taxes

   

 

2,924

 

   

 

2,805

 

Long-term debt

   

 

131,565

 

   

 

130,617

 

    
  

Total Liabilities

   

 

202,692

 

   

 

209,033

 

    
  

Series A Redeemable Convertible Preferred Stock

   

 

233,934

 

   

 

230,272

 

STOCKHOLDERS’ DEFICIENCY

                  

Common Stock—Class A

   

 

269

 

   

 

269

 

Additional paid-in capital

   

 

79,346

 

   

 

78,526

 

Accumulated Deficit

   

 

(241,245

)

   

 

(232,786

)

    
  

Total Stockholders’ Deficiency

   

 

(161,630

)

   

 

(153,991

)

    
  

Total Liabilities, Convertible Preferred Stock and Stockholders’ Deficiency

   

$

274,996

 

   

$

285,314

 

    
  

US LEC Announces First Quarter 2003 Results

Page 6 of 6

April 29, 2003

 

US LEC Corp. and Subsidiaries

Quarterly Statistical Highlights

(Unaudited)

 

Statistical Data:

   

March 31,

2003

   

Dec. 31,

2002

     

Sept. 30,

2002

   

June 30, 2002

   

March 31, 2002

Local switches in service

   

 

26

   

 

26

 

   

 

26

   

 

26

   

 

26

Number of states served (including Washington, DC)

   

 

14

   

 

14

 

   

 

14

   

 

14

   

 

14

Number of customers

   

 

10,988

   

 

10,290

 

   

 

9,394

   

 

8,434

   

 

7,505

Number of data customers

   

 

4,810

   

 

4,139

 

   

 

3,572

   

 

2,712

   

 

2,225

Number of employees

   

 

913

   

 

911

 

   

 

928

   

 

908

   

 

913

Number of sales and sales support employees

   

 

371

   

 

367

 

   

 

390

   

 

383

   

 

379

Revenue (in 000s)

                                     

Total Net Revenue

   

$

73,108

   

$

73,733

1

   

$

63,892

   

$

58,801

   

$

53,938

End-customer 2

   

$

47,552

   

$

43,520

 

   

$

39,027

   

$

35,207

   

$

31,175

Data

   

$

9,858

   

$

8,213

 

   

$

6,404

   

$

5,311

   

$

3,969

Active Channels3:

   

March 31,

2003

   

Dec. 31,

2002

     

Sept. 30,

2002

   

June 30, 2002

   

March 31, 2002

Voice

   

 

292,902

   

 

278,986

 

   

 

259,148

   

 

233,314

   

 

208,188

Data

   

 

95,338

   

 

82,559

 

   

 

64,644

   

 

51,012

   

 

40,147

ISP

   

 

20,826

   

 

22,516

 

   

 

23,791

   

 

27,392

   

 

30,131

    
  
  
  
  

Totals:

   

 

409,066

   

 

384,061

 

   

 

347,583

   

 

311,718

   

 

278,466

    
  
  
  
  

 

1Includes the subsequent event of $3.6 million additional revenue recorded for the quarter

2Includes local, long distance and data revenue from end-customers

3For a detailed explanation of these terms, please visit the network description section of the Company’s web site at www.uslec.com