FiberTower Reports Third Quarter 2007 Results
SAN FRANCISCO, Nov. 14 /PRNewswire-FirstCall/ -- FiberTower Corporation (Nasdaq: FTWR), a wireless backhaul services provider, today reported results for the third quarter ended September 30, 2007.
Service revenues for the three months ended September 30, 2007 increased $1.1 million or 17%, to $7.3 million as compared to $6.2 million for the second quarter of 2007. The increase in service revenues during the third quarter of 2007 was driven by ongoing trends including greater penetration in existing markets resulting in new customers on existing sites, increased T-1s per site and continued expansion in sites billing.
Positive developments during the third quarter of 2007 included the following:
New Customer Locations Sales in the third quarter of 2007 were 1,816 representing an increase of 183% from the previous quarter and 21% greater than the total for all of 2006. Penetration in existing markets improved during the 2007 third quarter compared to the prior quarter, highlighting FiberTower's ongoing commitment to site density and cost efficiency. FiberTower's co-location rate improved to 1.63 carriers per site representing the third consecutive quarter of growth. T-1s per Top 100 Sites increased from 14.2 at June 30, 2007 to 18.4 at September 30, 2007 and T-1s per Top 200 Sites increased from 12.2 at June 30, 2007 to 15.5 at September 30, 2007.
"Our third quarter results reflect our continued and improved ability to generate opportunities and convert those opportunities into revenues in a relatively short period of time," said Michael Gallagher, FiberTower's President and Chief Executive Officer. "We continue to benefit from positive trends in wireless, including wireless carriers' desire to improve their 3G and 4G backhaul networks. As the industry progresses towards ubiquitous mobile broadband, our cost efficient, scalable and reliable solution continues to position us as the alternative backhaul partner of choice for wireless carriers."
Operating expenses in the third quarter of 2007 increased by $66.3 million from the second quarter of 2007. Net loss was $90.6 million for the third quarter ended September 30, 2007 compared to a net loss of $26.6 million in the second quarter of 2007. The sequential increase in operating expenses and net loss included two impairment charges totaling $65.9 million ($0.46 per share) recorded in the third quarter of 2007. As a result of the impairment evaluation of the fair value of the carrying amount of goodwill during the third quarter of 2007, we recorded a goodwill impairment charge of $61.4 million. In addition, we recorded an impairment charge of $4.5 million related primarily to capitalized project management fees and construction costs in the Carolina's market. Development activities in the Carolina's market were suspended in the third quarter of 2007 and we had not yet generated billing customers in that market. The net loss per share for the third quarter of 2007 was $0.63 compared to a net loss per share of $0.19 for the second quarter of 2007.
On an EBITDA basis, the loss in the third quarter of 2007 was $12.3 million versus a loss of $13.4 million for the second quarter of 2007. EBITDA is defined as earnings (loss) from operations before interest, taxes, depreciation and amortization, impairment charges and stock-based compensation expenses. The reconciliation of EBITDA, which is a non-GAAP financial measure, is located at the end of this news release.
Liquidity and Capital Resources
Capital expenditures totaled $31.9 million in the third quarter ended September 30, 2007 as compared to $26.7 million in the second quarter. The bulk of capital investments made in the third quarter of 2007 - which do not represent a direct correlation to the company's metric of additional sites deployed during the quarter - were used by FiberTower towards the deployment of Sprint 4G backhaul locations in select markets, the continued build-out of existing markets and additional deployments in Atlanta. However, the Company still benefits from an ability to prioritize its capital spending due to a window of nine to twelve months between actual sale and deployment. FiberTower currently expects to spend approximately $100 million in capital expenditures and $150 million total cash for the 2007 full year.
"One of our primary objectives is to aggressively manage our cost structure," said Thomas Scott, FiberTower's Senior Vice President and Chief Financial Officer. "Over the last nine months, we have controlled our headcount, maintained our liquidity and managed our capital spend efficiently while supporting our continued revenue growth. Additionally, recent Sprint Nextel 4G deployment activity indicates utilizing a greater number of colo sites rather than new sites, which should provide us with greater flexibility in our future capital spend. "
Consolidated cash, cash equivalents, certificates of deposits and other short-term investments at September 30, 2007 were $261.6 million.
Conference Call Details
FiberTower has scheduled a conference call for Thursday, November 15, 2007 at 9:00 a.m. Eastern Time to discuss 2007 third quarter results. Please dial 303-262-2143 and ask for the FiberTower call at least 10 minutes prior to the start time. A telephonic replay of the call will be available through 11:59 p.m. Eastern Time on November 23, 2007 and may be accessed by dialing 303-590- 3000 using the passcode 11100208#. An audio archive will also be available on FiberTower's website at http://www.fibertower.com shortly after the call and will be accessible for approximately ninety days.
About FiberTower
FiberTower is a backhaul and access services provider focused primarily on the wireless carrier market. With its extensive spectrum footprint in 24 GHz and 39 GHz bands, carrier-class microwave and fiber networks in 13 major markets, customer commitments from six of the leading cellular carriers, and partnerships with the largest tower operators in the U.S., FiberTower is considered to be the leading alternative carrier for wireless backhaul. FiberTower also provides backhaul and access service to government and enterprise markets. For more information, please visit our website at www.fibertower.com.
Use of Non-GAAP Financial Measures
This press release uses the Non-GAAP financial measure "EBITDA." EBITDA is used by investors to assist in their evaluation of common stock. The Company uses EBITDA to monitor the financial performance of its operations. EBITDA does not give effect to the cash the Company must use to service its debt or pay its income taxes and thus does not reflect the funds actually available for capital expenditures. In addition, FiberTower's presentation of EBITDA may not be comparable to similarly titled measures reported by other companies. These Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported financial results as determined in accordance with GAAP.
Forward Looking Statements
Statements included in this news release which are not historical in nature are "forward-looking statements" within the meaning of Section 21E of the U.S. Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. Forward looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. These include, without limitation, statements regarding the Company's planned capital expenditures, expected cost per site, anticipated customer growth and expansion plans. There are many risks, uncertainties and other factors that can prevent the achievement of goals or cause results to differ materially from those expressed or implied by these forward-looking statements including, without limitation, difficulties in integrating our companies after our merger in 2006, anticipated negative cash flows and operating losses, additional liquidity requirements, potential loss of significant customers, downturns in the wireless communication industry, regulatory costs and restrictions, potential loss of FCC licenses, equipment supply disruptions and cost increases, and competition from alternative backhaul service providers and technologies, along with those risk factors described in the Company's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
Billing Sites are the number of installed sites from which we currently provide T1(s) to customer(s)
Customer Locations Billing are carrier locations at which we currently provide T1(s). FiberTower sites could have multiple customer locations
Colo rate is the number of customer locations per billing site
Billing T1 Equivalent: A T1 equivalent is either a T1 or another increment of bandwidth of approximately 1.54 megabits per second
Average MRC per T-1 is the average monthly recurring revenue per T-1
Sites Deployed represents the number of sites installed and ready for provision of services. FiberTower sites can be located at cell towers or on rooftop locations.
Customer Location Backlog is the number of sold customer locations not yet billing. (** Note that FiberTower reports backlog on a semi-annual basis)
Reconciliation of Non-GAAP Financial Measures:
This press release includes the use of a financial measure that is not a GAAP measure. The non-GAAP financial measure is presented for additional information and is reconciled to its most comparable GAAP measure below.
SOURCE FiberTower Corporation
