RCN Reports Fourth Quarter 2009 ResultsQ4 Revenue +1% Y-o-Y to $190 Million; 2009 Revenue +3% Y-o-Y to $764 Million; Q4 EBITDA +3% Y-o-Y to $55 Million; 2009 EBITDA +13% to $219 Million; $7 Million Free Cash Flow in Q4; $36 Million Free Cash Flow in 2009HERNDON, VA, Mar 09, 2010 (MARKETWIRE via COMTEX News Network) — RCN Corporation (NASDAQ: RCNI) today announced fourth quarter 2009 results. RCN Corporation is a leading provider of all-digital and high-definition video, high-speed internet, and premium voice services to residential and small-medium business customers, in Philadelphia, Lehigh Valley, PA, New York, Boston, Chicago and Washington, D.C., as well as high-capacity transport services to carrier and large enterprise customers. "We had a solid year in 2009 despite a challenging economic and competitive environment, which is a tribute to RCN's quality network and highly skilled employees," stated Peter D. Aquino, President and Chief Executive Officer. "For the year, we grew revenue, EBITDA, and EBITDA margin in both segments, delivered $36 million in consolidated Free Cash Flow, and completed several major initiatives, including Project Analog Crush(SM) in all markets. We have many exciting projects underway for 2010, including the RCN/TiVo HD DVR launch, continued DOCSIS 3.0 deployment, and IP telephony rollout in the Resi/SMB segment, as well as the Open Cape project and 'Xtreme' low latency financial services network deployment in the RCN Metro segment." Fourth Quarter Review Following are highlights of fourth quarter 2009 results for consolidated RCN and for the company's two reporting segments: Residential/Small-Medium Business, comprised of the RCN and RCN Business Services business units; and RCN Metro Optical Networks. Consolidated Results
Full Year 2009 Review Total revenue for the full year 2009 grew 3% to $764 million from $739 million in 2008. Residential/Small Business segment revenue grew 1% and RCN Metro segment revenue grew 11%. 2009 EBITDA of $219 million grew 13% from $194 million in 2008; 2009 EBITDA margin increased by over 200 basis points to 29%. Residential/Small Business segment EBITDA grew 7%, with EBITDA margin expanding nearly 150 basis points to 27%. RCN Metro segment EBITDA grew 30%, with EBITDA margin expanding nearly 500 basis points to 33%. Capital expenditures for 2009 were $127 million compared to $126 million in 2008. Residential/Small Business segment 2009 capital expenditures were $93 million compared to $99 million in 2008. RCN Metro segment 2009 capital expenditures were $34 million compared to $27 million in 2008. Reported Results Revenue was $190 million in the fourth quarter of 2009, compared to $188 million in the fourth quarter of 2008 and $192 million in the third quarter of 2009. Net loss was $4 million in the fourth quarter of 2009, compared to $13 million in the fourth quarter of 2008 and $6 million in the third quarter of 2009. Michael T. Sicoli, Chief Financial Officer of RCN, stated, "For years, we have been positioning RCN to deliver strong free cash flow, and we are very proud to have generated approximately $1 per share in free cash flow during 2009. We will continue our efforts to grow free cash flow by focusing on revenue growth and margin expansion, while maintaining a stable level of capital expenditures." Non-GAAP Measures In addition to the results presented in accordance with Generally Accepted Accounting Principles ("GAAP") throughout this press release, RCN has presented non-GAAP financial measures, such as EBITDA, EBITDA Margin, Free Cash Flow and ARPC. RCN believes that these non-GAAP measures, viewed in addition to and not in lieu of its reported GAAP results, provide useful information to investors because they are an integral part of RCN's internal evaluation of operating performance. In addition, they are measures that RCN uses to evaluate management's effectiveness. Reconciliations to comparable GAAP measures as well as definitions begin on page 8. RCN's non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies. About RCN Corporation RCN Corporation (NASDAQ: RCNI), www.rcn.com, is a competitive broadband services provider delivering all-digital and high-definition video, high-speed internet and premium voice services to residential and small-medium business customers under the brand names of RCN and RCN Business Services, respectively. In addition, through its RCN Metro Optical Networks business unit, RCN delivers fiber-based high-capacity data transport services to large commercial customers, primarily large enterprises and carriers, targeting the metropolitan central business districts in the company's geographic markets. RCN's primary service areas include Washington, D.C., Philadelphia, Lehigh Valley (PA), New York City, Boston and Chicago. (RCNI-Q) RCN Forward-Looking Statements This press release contains forward-looking statements regarding future events and future performance of RCN that involve risks and uncertainties that could materially affect actual results. This information is qualified in its entirety by cautionary statements and risk factors disclosure contained in certain of RCN's Securities and Exchange Commission filings. For a description of certain factors that could cause actual results to vary from current expectations and forward-looking statements contained in this press release, refer to documents that RCN files from time to time with the Securities and Exchange Commission.
RCN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions)
(unaudited)
Three months ended Year ended
December 31, December 31,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Revenues $ 190.3 $ 188.0 $ 763.8 $ 739.2
Costs and expenses:
Direct expenses 69.0 65.7 275.2 264.2
Selling, general and
administrative
(including stock-based
compensation) 70.3 70.9 279.9 294.1
Exit costs and restructuring
charges, net of recoveries -- 0.9 0.6 2.3
Depreciation and amortization 44.6 50.2 193.3 198.9
-------- -------- -------- --------
Operating income (loss) 6.4 0.3 14.8 (20.3)
Investment income -- 0.4 0.4 2.9
Interest expense (10.0) (13.8) (42.3) (53.3)
Other expense, net -- -- (0.4) --
-------- -------- -------- --------
Loss from operations before income
taxes (3.6) (13.1) (27.5) (70.7)
Income tax expense (0.3) -- (1.1) --
-------- -------- -------- --------
Net loss $ (3.9) $ (13.1) $ (28.6) $ (70.7)
======== ======== ======== ========
RCN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
(unaudited)
------------ ------------
December 31, December 31,
ASSETS 2009 2008
------------ ------------
Current assets:
Cash and cash equivalents $ 71.8 $ 10.8
Short-term investments 15.1 52.9
Accounts receivable, net of allowance for
doubtful accounts 65.7 63.6
Prepayments and other current assets 14.7 11.4
------------ ------------
Total current assets 167.4 138.7
Property, plant and equipment, net of
accumulated depreciation 654.7 718.0
Goodwill 15.5 15.5
Intangible assets, net of accumulated
amortization 106.2 112.3
Long-term restricted investments 11.7 15.4
Deferred charges and other assets 15.1 16.8
------------ ------------
Total assets $ 970.5 $ 1,016.8
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 25.7 $ 37.8
Advanced billings and customer deposits 33.9 34.2
Accrued expenses and other 56.5 53.8
Accrued employee compensation and related
expenses 18.3 18.4
Accrued exit costs 2.1 2.7
Current portion of long-term debt and capital
lease obligations 25.9 7.4
------------ ------------
Total current liabilities 162.4 154.2
Long-term debt and capital lease obligations,
net of current maturities 709.3 735.3
Other long-term liabilities 90.6 110.9
------------ ------------
Total liabilities 962.3 1,000.4
------------ ------------
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.01 per
share 0.4 0.4
Additional paid-in-capital 454.2 451.2
Treasury stock (6.4) (5.7)
Accumulated deficit (403.0) (374.4)
Accumulated other comprehensive loss (37.0) (55.0)
------------ ------------
Total stockholders' equity 8.1 16.4
------------ ------------
Total liabilities and stockholders' equity $ 970.5 $ 1,016.8
============ ============
RCN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
(unaudited)
----------------------
Year ended
December 31,
----------------------
2009 2008
---------- ----------
Cash flows from operating activities:
Net loss $ (28.6) $ (70.7)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 193.3 198.9
Other (11.8) 11.8
---------- ----------
Net cash provided by operating activities 152.9 140.0
Cash flows from investing activities:
Additions to property, plant and equipment (118.3) (143.3)
Net proceeds from sale of discontinued
operations and other assets -- 2.5
Decrease (increase) in short-term investments 37.8 (7.1)
Proceeds from sales of property, plant and
equipment 1.0 1.9
Decrease in restricted investments 3.7 7.4
---------- ----------
Net cash used in investing activities (75.7) (138.7)
Cash flows from financing activities:
Repayments of long-term debt, including debt
premium and capital lease obligations (7.4) (7.3)
Payment of debt issuance costs -- (0.1)
Proceeds from bank debt -- 5.0
Dividend payments (0.8) (1.6)
Proceeds from the exercise of stock options -- 0.4
Cost of common shares repurchased (7.3) (7.7)
Purchase of treasury stock (0.7) (1.0)
---------- ----------
Net cash used in financing activities (16.2) (12.3)
Net increase (decrease) in cash and cash
equivalents 61.0 (11.0)
Cash and cash equivalents at beginning of
period 10.8 21.8
---------- ----------
Cash and cash equivalents at end of period $ 71.8 $ 10.8
========== ==========
OPERATING RESULTS
RESIDENTIAL / SMALL BUSINESS SEGMENT
(unaudited)
------------------------------- --------------------
Three months Year ended
ended December 31,
------------------------------- --------------------
(dollars in December September December
millions) 31, 2009 30, 2009 31, 2008 2009 2008
--------- --------- --------- --------- ---------
Video $ 78.1 $ 78.6 $ 76.0 $ 311.9 $ 294.7
Data 34.3 34.7 36.0 140.8 142.7
Voice 25.8 27.3 27.8 107.8 114.4
Recip Comp/Other 3.1 3.4 3.2 13.6 16.2
--------- --------- --------- --------- ---------
Total Revenue 141.3 143.9 143.1 574.1 567.9
Direct expenses 51.2 49.5 49.2 206.3 199.4
Selling, general and
administrative (1) 52.4 54.5 54.1 212.4 223.1
--------- --------- --------- --------- ---------
EBITDA $ 37.7 $ 39.9 $ 39.8 $ 155.4 $ 145.4
EBITDA Margin 26.7% 27.8% 27.8% 27.1% 25.6%
Capital Expenditures $ 32.6 $ 25.4 $ 25.3 $ 92.5 $ 99.2
Key Metrics
(customers & RGUs
in thousands)
Video RGUs 364 367 366
Data RGUs 312 309 302
Voice RGUs 223 227 244
--------- --------- ---------
Total RGUs 899 903 911
Customers 429 430 428
Average Revenue Per
Customer $ 108 $ 111 $ 110
Digital Penetration 100% 94% 87%
OPERATING RESULTS
RCN METRO OPTICAL NETWORKS SEGMENT
(unaudited)
------------------------------- --------------------
Three months Year ended
ended December 31,
------------------------------- --------------------
(dollars in December September December
millions) 31, 2009 30, 2009 31, 2008 2009 2008
--------- --------- --------- --------- ---------
Transport Services $ 37.4 $ 36.9 $ 34.6 $ 145.2 $ 131.4
Data and Internet
Services 1.7 1.5 0.8 5.2 2.6
Colocation 3.1 2.9 3.0 11.8 12.1
Leased Services 5.1 5.1 5.1 20.4 19.7
Installation & Other 1.8 1.6 1.4 7.1 5.5
--------- --------- --------- --------- ---------
Total Revenue 49.0 48.0 44.9 189.7 171.3
Direct expenses 17.8 17.2 16.5 68.9 64.9
Selling, general and
administrative (1) 14.2 14.3 15.1 57.3 57.6
--------- --------- --------- --------- ---------
EBITDA $ 16.9 $ 16.5 $ 13.4 $ 63.5 $ 48.8
EBITDA Margin 34.6% 34.3% 29.8% 33.5% 28.5%
Capital Expenditures $ 8.8 $ 8.8 $ 7.4 $ 34.3 $ 26.6
(1) Excludes stock-based compensation expense
RCN Corporation
Non-GAAP Reconciliation
(1) EBITDA is defined as net income (loss) plus income tax benefit
(expense), other (expense) income net, (loss) gain on sale of assets,
interest expense, investment income, depreciation and amortization,
non-cash stock-based compensation expense and other special items
including impairments, exit costs and other charges. EBITDA margin
represents EBITDA divided by total revenues. We believe that EBITDA
provides useful information to investors because it is an indicator of
the strength and performance of our ongoing business operations,
including our ability to fund discretionary spending such as capital
expenditures and other investments and our ability to incur and service
debt. While depreciation and amortization are considered operating
costs under generally accepted accounting principles, these expenses
represent non-cash current period allocation of costs associated with
long-lived assets acquired or constructed in prior periods. EBITDA is
a calculation commonly used as a basis for investors, analysts and
credit rating agencies to evaluate and compare the periodic and future
operating performance and value of companies within the cable
industry. EBITDA, as defined above, may not be similar to EBITDA
measures of other companies, is not a measurement under accounting
principles generally accepted in the United States and should be
considered in addition to, but not as a substitute for, the
information contained in our statements of operations.
-------------------------------------------
For the three months ended
-------------------------------------------
December 31, September 30, December 31,
(dollars in millions) 2009 2009 2008
------------- ------------- -------------
Net loss $ (3.9) $ (5.7) $ (13.1)
Income tax expense 0.3 - -
Interest expense 10.0 10.4 13.8
Investment income -- -- (0.4)
Depreciation and amortization 44.6 49.4 50.2
Non-cash stock-based
compensation expense 3.6 2.1 1.8
Exit costs & restructuring
charges, net of recoveries -- 0.3 0.9
------------- ------------- -------------
EBITDA $ 54.6 $ 56.4 $ 53.2
EBITDA Margin 28.7% 29.4% 28.3%
----------------------------
For the year ended
----------------------------
December 31, December 31,
(dollars in millions) 2009 2008
------------- -------------
Net loss $ (28.6) $ (70.7)
Income tax expense 1.1 --
Other expense, net 0.4 --
Interest expense 42.3 53.3
Investment income (0.4) (2.9)
Depreciation and amortization 193.3 198.9
Non-cash stock-based compensation expense 10.2 13.3
Exit costs & restructuring charges, net of
recoveries 0.6 2.3
------------- -------------
EBITDA $ 218.8 $ 194.3
EBITDA Margin 28.7% 26.3%
(2) Segment EBITDA is defined as operating income before depreciation and
amortization, non-cash stock-based compensation expense, exit costs and
restructuring charges. This measure eliminates the significant level of
non-cash depreciation and amortization expense that results from the
capital-intensive nature of our businesses and from intangible assets
recognized in business combinations, as well as non-cash stock-based
compensation and other special items such as exit costs and other
restructuring charges. We use this measure to evaluate our
consolidated operating performance and the performance of our operating
segments, and to allocate resources and capital. It is also a
significant performance measure in our annual incentive compensation
programs. We believe that this measure is useful to investors because
it is one of the bases for comparing our operating performance with
that of other companies in our industries, although our measure may not
be directly comparable to similar measures used by other companies.
Because we use this metric to measure our segment profit or loss, we
reconcile it to operating income, the most directly comparable
financial measure calculated and presented in accordance with GAAP.
Segment EBITDA should not be considered as a substitute for operating
income (loss), net income (loss), net cash provided by operating
activities, or other measures of performance or liquidity we have
reported in accordance with GAAP.
RESIDENTIAL / SMALL BUSINESS SEGMENT
------------------------------- --------------------
For the three months ended For the year ended
------------------------------- --------------------
(dollars in December September December December December
millions) 31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
--------- --------- --------- --------- ---------
Operating loss $ (0.7) $ (2.4) $ (4.2) $ (11.0) $ (34.1)
Exit costs and
restructuring
charges, net -- 0.3 0.8 0.7 1.6
Depreciation and
amortization 35.6 40.5 41.9 158.0 167.5
Non-cash
stock-based
compensation
expense 2.7 1.6 1.4 7.7 10.4
--------- --------- --------- --------- ---------
EBITDA $ 37.7 $ 39.9 $ 39.8 $ 155.4 $ 145.4
EBITDA Margin 26.7% 27.8% 27.8% 27.1% 25.6%
RCN METRO OPTICAL NETWORKS SEGMENT
-----------------------------------------------------
For the three months ended For the year ended
------------------------------ --------------------
(dollars in December September December December December
millions) 31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
--------- --------- --------- --------- ---------
Operating income $ 7.0 $ 7.1 $ 4.5 $ 25.8 $ 13.8
Exit costs and
restructuring
charges, net -- -- 0.1 (0.1) 0.7
Depreciation and
amortization 9.0 8.9 8.3 35.2 31.4
Non-cash
stock-based
compensation
expense 0.9 0.5 0.4 2.6 3.0
--------- --------- --------- --------- ---------
EBITDA $ 16.9 $ 16.5 $ 13.4 $ 63.5 $ 48.8
EBITDA Margin 34.6% 34.3% 29.8% 33.5% 28.5%
(3) Average monthly revenue per customer, or ARPC, is an industry metric
that measures revenues, excluding commercial and other residential
revenue (consisting of dial-up and reciprocal compensation) per period
divided by the average number of customers during that period. We
believe that ARPC provides useful information concerning the appeal of
our service offerings and our rate plans. ARPC as defined above may not
be similar to ARPC measures of other companies, is not a measurement
under accounting principles generally accepted in the United States and
should be considered in addition to, but not as a substitute for, the
information contained in our statements of operations.
-------------------------------------------
For the three months ended
-------------------------------------------
December 31, September 30, December 31,
(dollars in millions) 2009 2009 2008
------------- ------------- -------------
Total Revenues $ 190.3 $ 191.9 $ 188.0
Less: Commercial Revenue (49.0) (48.0) (44.9)
Less: Other Residential
Revenue (1.7) (1.8) (1.7)
------------- ------------- -------------
Customer Revenues 139.6 142.1 141.4
------------- ------------- -------------
ARPC $ 108 $ 111 $ 110
(4) Free cash flow is defined as net cash from operating activities, plus
net cash from investing activities, activity in short-term investments
and restricted investments, minus proceeds from discontinued
operations. We believe that free cash flow provides useful information
to investors, analysts and our management about the cash generated by
our core operations after interest and our ability to fund scheduled
debt maturities and other financing activities. Free cash flow, as
defined above, may not be comparable to free cash flow measures of
other companies, is not a measurement under accounting principles
generally accepted in the United States and should be considered in
addition to, but not as a substitute for, the information contained in
our statements of cash flows.
----------------------------------- ----------
For the
For the three months ended year ended
----------------------------------- ----------
December September December December
(dollars in millions) 31, 2009 30, 2009 31, 2008 31, 2009
----------- ---------- ----------- ----------
Net cash provided by
operating activities $ 37.6 $ 49.0 $ 38.1 $ 152.9
Net cash provided by (used
in) investing activities 0.3 (30.7) (45.8) (75.7)
(Decrease) increase in
short-term investments (30.7) (7.2) 14.8 (37.8)
Decrease in restricted
investments -- -- -- (3.7)
----------- ---------- ----------- ----------
Free Cash Flow $ 7.1 $ 11.0 $ 7.2 $ 35.7
Contact: RCN Richard Ramlall SVP Strategic External Affairs and Programming (703) 434-8430 Lippert/Heilshorn & Associates Carolyn Capaccio (212) 838-3777 Email Contact SOURCE: RCN http://www2.marketwire.com/mw/emailprcntct?id=E201CB8DC308E37A © 2010 Marketwire, Inc., All rights reserved. News Provided by COMTEX |
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