EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO

 

US LEC ACHIEVES RECORD REVENUE OF $93.5 MILLION FOR FIRST QUARTER 2005

 

END CUSTOMER REVENUE INCREASES BY 6.0% OVER FOURTH QUARTER 2004

 

CHARLOTTE, NC (April 26, 2005) – Continuing to build on solid financial and operational results, US LEC Corp. (Nasdaq: CLEC), a leading telecommunications carrier providing integrated voice, data and Internet services to businesses and enterprise organizations throughout the Eastern United States, announced today results for the first quarter ended March 31, 2005. The first quarter was highlighted by:

 

    Achieving total revenue of $93.5 million, an $8.3 million, or 10% increase over the first quarter of 2004

 

    Reaching end-customer revenue of $79.1 million, an increase of over $12.3 million compared to the same period last year

 

    Growing data revenue to $28.4 million, accounting for over 30% of total revenue

 

    Achieving EBITDA of $11.9 million, compared to $11.3 million in the first quarter of 2004 and $11.0 million in the fourth quarter of 2004 (see definition and reconciliation of EBITDA to net cash flow from operations below)

 

    Expanding service area to include Roanoke and Blacksburg, Virginia, and Baton Rouge, Louisiana

 

    Reaching the 23,000 customer milestone

 

    Expanding VoIP-enabled services to the Orlando, Atlanta and Washington D.C. markets

 

    Completing the integration of StarNet

 

Revenue for the quarter ended March 31, 2005, increased 10% to $93.5 million, compared with $85.2 million for the quarter ended March 31, 2004, and revenue of $92.1 million for the fourth quarter ended December 31, 2004. The Company reported a net loss attributable to common stockholders of ($8.9) million, or ($0.29) per share, on 30.3 million average shares outstanding for the quarter ended March 31, 2005, compared with a net loss attributable to common stockholders of ($7.2) million, or ($0.24) per share, on 29.8 million average shares outstanding for the first quarter of last year. EBITDA for the first quarter of 2005 was $11.9 million compared with EBITDA of $11.3 million in the first quarter of 2004.

 

Commenting on the Company’s first quarter 2005 results, Aaron D. Cowell, president and chief executive officer of US LEC, said, “US LEC is off to a strong start in 2005. During the first quarter, we achieved end-customer revenue of $79.1 million, an increase of $4.3 million over the previous quarter. Notably, end-customer revenue accounted for 85% of US LEC’s total revenue in the first quarter. Our consistent growth in end-customer revenue reflects our solid customer acquisition and retention results and highlights our team’s ability to grow our business. On a per employee basis, the US LEC team proved once again that they are among the best in the industry by achieving $73,400 of end-customer revenue per employee - up from $64,800 per employee one year ago. EBITDA for the first quarter of 2005 increased to $11.9 million.”


US LEC Announces First Quarter 2005 Results

Page 2 of 5

April 26, 2005

 

Cowell continued, “We are continuing to increase customer take rates as more and more businesses realize the benefit of our robust product portfolio and unsurpassed customer care value proposition. In particular, revenue from data services grew to $28.4 million, representing over 30% of total revenue in the first quarter of 2005. With over 23,000 customers in over 110 markets, and a consolidated penetration rate of our addressable target market of approximately 9%, we have achieved meaningful market share as we continue to successfully execute our business plan.”

 

“We also introduced VoIP-enabled service to three additional markets during the quarter and will continue to expand our coverage throughout 2005. We are excited about the growth opportunities that additional IP-enabled products present US LEC. These new services will build on an already strong value proposition that we provide our customers. We are pleased with the momentum in our business through the first quarter and will continue to leverage our success as we focus on our goal of achieving profitability,” concluded Cowell.

 

Conference Call Information

 

US LEC will hold a conference call to discuss this press release today, April 26, 2005, at 1:00 p.m. Eastern Time. A live broadcast of the conference call will be available online at www.uslec.com, and www.fulldisclosure.com. To listen to the live call, visit either web site at least fifteen minutes early to 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 April 29, 2005 and replay via webcast will be available through May 26, 2005.

 

About US LEC

 

Based in Charlotte, NC, US LEC is a leading telecommunications carrier providing integrated voice, data and Internet services to medium and large businesses and enterprise organizations throughout 15 Eastern states and the District of Columbia. US LEC services include local and long distance calling services, Voice over Internet Protocol (VoIP) service, advanced data services such as Frame Relay, Multi-Link Frame Relay and ATM, dedicated and dial-up Internet services, managed data solutions, data center services and Web hosting. US LEC also offers selected voice services in 27 additional states and provides enhanced data services, selected Internet services and MegaPOP® (local dial-up Internet access for ISPs) nationwide. 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 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 “Caution Regarding Forward-Looking Statements” and in Exhibit 99.1 “Risk Factors” and elsewhere in the Company’s Annual Report on Form 10-K for the period ended December 31, 2004, and in subsequent reports, which are on file with the Securities and Exchange Commission.

 

US LEC is a registered service mark of US LEC Corp. US LEC and Design (R) is a registered service mark and trademark of US LEC Corp. StarNet(TM), Fastnet (SM) and MegaPOP(R) are service marks of US LEC Corp.

 

-end-


US LEC Announces First Quarter 2005 Results

Page 3 of 5

April 26, 2005

 

US LEC Corp. and Subsidiaries

Condensed Consolidated Statements of Operations

(In Thousands, Except Per Share Data)

(Unaudited)

 

     Three months ended
March 31,


 
     2005

    2004

 

Revenue

   $ 93,516     $ 85,186  

Network Expenses (excluding depreciation and amortization shown below)

     45,784       41,450  

Depreciation and Amortization

     12,931       12,485  

Selling, General and Administrative Expenses

     35,868       32,416  
    


 


Loss from Operations

     (1,067 )     (1,165 )

Net Interest Expense

     3,712       2,152  

Net Loss

     (4,779 )     (3,317 )
    


 


Preferred Stock Dividends

     (3,974 )     (3,744 )

Preferred Stock Accretion of Issuance Costs

     (152 )     (143 )
    


 


Net Loss Attributable to Common Stockholders

   $ (8,905 )   $ (7,204 )
    


 


Net Loss Attributable to Common Stockholders Per Common Share

                

Basic and Diluted

   $ (0.29 )   $ (0.24 )
    


 


Weighted Average Number of Shares Outstanding

                

Basic and Diluted

     30,255       29,751  
    


 


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 operating activities as follows:     
     Three months ended
March 31,


 
     2005

    2004

 

Loss from Operations

   $ (1,067 )   $ (1,165 )

Depreciation and Amortization

     12,931       12,485  
    


 


EBITDA

     11,864       11,320  

Changes in Working Capital

     (2,070 )     (2,169 )

Net Interest Expense

     (3,712 )     (2,152 )

Miscellaneous Other

     (124 )     (125 )
    


 


Net Cash Provided by Operating Activities

   $ 5,958     $ 6,874  
    


 



US LEC Announces First Quarter 2005 Results

Page 4 of 5

April 26, 2005

 

US LEC Corp. and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands, Except Per Share Data)

(Unaudited)

 

     March 31,
2005


    December 31,
2004


 

Assets

                

Cash and cash equivalents

   $ 43,860     $ 48,232  

Restricted cash

     169       169  

Accounts receivable, net

     64,422       60,745  

Property and equipment, net

     151,812       158,617  

Deferred income taxes

     1,527       1,507  

Other assets

     27,313       29,041  
    


 


Total Assets

   $ 289,103     $ 298,311  
    


 


Liabilities and Stockholders’ Deficiency

                

Accounts payable

   $ 15,971     $ 21,466  

Notes Payable

     —         980  

Deferred revenue

     13,522       13,573  

Accrued network costs

     29,725       28,730  

Accrued expenses

     27,934       26,913  

Deferred income taxes

     1,527       1,507  

Long-term debt

     149,325       149,288  
    


 


Total Liabilities

     238,004       242,457  
    


 


Series A Redeemable Convertible Preferred Stock

     265,284       261,158  

STOCKHOLDERS’ DEFICIENCY

                

Common Stock - Class A

     303       303  

Additional paid-in capital

     92,392       92,368  

Accumulated Deficit

     (306,880 )     (297,975 )
    


 


Total Stockholders’ Deficiency

     (214,185 )     (205,304 )
    


 


Total Liabilities, Convertible Preferred Stock and Stockholders’ Deficiency

   $ 289,103     $ 298,311  
    


 



US LEC Announces First Quarter 2005 Results

Page 5 of 5

April 26, 2005

 

US LEC Corp. and Subsidiaries

Quarterly Statistical Highlights

(Unaudited)

 

     March 31,
2005


   December 31,
2004


   September 30,
2004


   June 30,
2004


   March 31,
2004


Revenue (in 000s):

                                  

Total revenue

   $ 93,516    $ 92,100    $ 87,262    $ 91,633    $ 85,186

End-customer revenue (1)

   $ 79,119    $ 74,816    $ 72,953    $ 69,425    $ 66,807

Data revenue

   $ 28,391    $ 26,062    $ 23,449    $ 22,132    $ 20,596

Customers:

                                  

Total Customers

     38,071      38,273      36,672      36,045      35,951

Business Class Customers

     23,420      22,324      20,631      19,397      18,244

Business Class Customers Purchasing Data Services

     14,007      13,294      12,048      11,037      10,283

Shared Hosting/Dial Up Customers

     14,651      15,949      16,041      16,648      17,707

Active Channels (2):

                                  

Voice

     439,032      426,422      404,169      381,905      358,338

Data

     327,153      303,802      284,830      273,009      257,186
    

  

  

  

  

Total active channels

     766,185      730,224      688,999      654,914      615,524
    

  

  

  

  

Statistical Data:

                                  

Central Offices

     27      27      27      27      27

Number of employees

     1,078      1,065      1,034      1,054      1,030

Number of sales and sales support employees

     471      460      451      458      438

(1) Includes local, long distance and data revenue from end-customers.
(2) Shared hosting and Dial-Up Internet Access are not included in Active Channels.