Internet Agreements, Business Usage, and Acquisitions Fuel Growth
STOCKTON, Calif., May 1 /PRNewswire/ -- Pac-West Telecomm, Inc.
(Nasdaq: PACW), a rapidly growing provider of integrated telecommunications
services, today announced its results for the first quarter ended
March 31, 2000. Pac-West's total revenues for the first quarter of 2000 were
$30.8 million, an increase of 114 percent from revenues of $14.4 million in
the first quarter of 1999, and an increase of seven percent from revenues of
$28.2 million in the fourth quarter of 1999. After subtracting a one-time
payment from GTE of $6.3 million from the fourth quarter 1999, revenues grew
41 percent sequentially.
Diluted earnings per share for the first quarter of 2000 were $0.06, which
compares to a loss per share of ($0.03) for the first quarter of 1999. As of
March 31, 2000, the company had cash and short-term investments totaling
$139.0 million.
Revenues grew as a result of increased Internet usage and growth in the
number of Pac-West's small and medium business customers. Pac-West has
agreements with more than 90 Internet service providers (ISPs), which
represent approximately 16 percent of the Internet traffic in California. The
company attributes the growth in the number of small and medium business
customers to an expanded sales force, which now totals 129 salespeople, up
from 88 on December 31, 1999. Pac-West is one of the few companies with an
aggressive focus on delivering packaged voice and data to the underserved
small and medium business market in the western U.S.
Wally Griffin, Pac-West's president and chief executive officer, said, "We
continue to execute our business plan, which includes becoming the dominant
provider of telecommunications services in one of the fastest-growing areas of
the country. We are building our network and have added new services and
customers to the two new switches we installed at the end of 1999 in Seattle
and Los Angeles. We are no longer just a California company, but a super
regional Competitive Local Exchange Carrier (CLEC). As we further expand from
our base in California, Nevada and Washington into the other seven western
states, Pac-West intends to target a potential market of over 1.4 million
small and medium businesses and 16.5 million business lines. We expect that
the high demand for our packaged solutions we have experienced in our current
markets will provide excellent added growth opportunities for Pac-West in
these new markets."
The following chart highlights some of our results for the first quarters
of 2000 and 1999, and the fourth quarter of 1999:
Q1 2000 Q4 1999 Q1 1999 Change
(unaudited) (unaudited) (unaudited) Q1 2000 over
Q1 1999
Total Revenue $30.8 mil $28.2 mil $14.4 mil 114 %
EBITDA * $10.6 mil $14.4 mil $6.1 mil 75 %
Net Income $2.3 mil $5.1 mil $0.6 mil 283 %
Earnings (Loss)
Per Share (diluted) $0.06 $0.16 $(0.03) ---
Lines in Service 124,300 105,100 67,700 84 %
Minutes of Use 5.4 billion 4.6 billion 3.1 billion 74 %
* EBITDA equals earnings before interest, net, income taxes, depreciation
and amortization.
First Quarter Highlights
Pac-West completed the acquisition of Napa Valley Telecom and acquired
Installnet, Inc. (INET), a San Diego-based company, during the first quarter.
Griffin added, "these strategic acquisitions continue to expand our geographic
base of small and medium business customers, which improves our network
utilization and margins. Business customers tend to use our access lines most
heavily during the daytime hours, while Internet users are generally heavier
users in the evening and weekend hours. Additionally, we added skilled and
experienced sales and technical personnel from these acquisitions to expand
our already strong sales and delivery forces. We believe that integration is
going well, and we are beginning to migrate Napa Valley and INET customers
onto Pac-West's higher margin network. While these companies previously had
lower direct operating margins (revenues less operating expense/revenues) than
Pac-West, we still achieved a consolidated margin of 67 percent for the
quarter, which is a strong performance. Expenses remained under tight control
in the quarter as we seek to be a dominant low cost provider of bundled
telecommunications services."
During the first quarter, the company signed an agreement with Akamai
Technologies to install their servers in Pac-West's SuperPOP switching
facility in Stockton. The Akamai servers reduce ISP bandwidth costs, improve
network performance, and enable more efficient delivery of high quality
Internet content, applications, and streaming media.
Pac-West also signed a multi-year agreement with NetZero, the nation's
largest provider of free Internet access, to supply its local access ports,
modems, and Internet backbone, through our managed modem service offering.
NetZero intends to utilize our network to provide service to its users
throughout California and parts of Nevada. NetZero joins more than 90 ISPs
who have contracted with Pac-West for access and infrastructure services,
including EarthLink, Splitrock and Concentric Network. Just after the quarter
closed, Pac-West also signed a multi-year agreement with OneMain.com, one of
the largest independent ISPs in the country, to provide local access ports for
its dial-up Internet service.
Looking Forward
"Following recent agreements to enter the Denver telecommunications
market," Griffin continued, "we are in the process of opening a division
office in Denver. We're very excited about the opportunities in this market
and we plan to establish a major presence there.
"We believe that there are more exciting times ahead in expanding
broadband services. For example in the near future we intend to explore ways
to respond to the growing demand for broadband services and IP telephony. In
this second quarter, we intend to launch a trial of wireless broadband for
Internet access and begin a limited DSL trial offering through Pac-West's
collocation cages in selected ILEC exchanges in the central valley of
California. By the end of this year, we expect to offer integrated voice,
video and data services over IP.
"We intend to continue to make selective acquisitions to accelerate our
growth that are consistent with our focused strategy of growing our business
by serving the Internet infrastructure market and the voice and data needs of
the small-medium business customers," Griffin concluded.
About Pac-West
Pac-West Telecomm, Inc., founded in 1980, is a rapidly growing provider of
integrated telecommunications services to Internet service providers (ISPs)
and small and medium businesses. With operations currently in California,
Nevada and Washington, Pac-West intends to expand throughout the western U.S.
and expects to have operations in 10 western states by the end of 2000.
Pac-West supplies Internet infrastructure services to more than 90 ISPs
that can either collocate and maintain their own equipment at Pac-West's
switching facilities, or subscribe to an integrated managed modem service that
includes access lines, modems, routers, authentication services, and technical
support. For its small and medium business customers, Pac-West bundles
state-of-the-art telephone equipment, including design, installation, and
maintenance, with local, long distance, and data services. The company uses a
"smart-build" network strategy, building and owning the intelligent components
of its communications network while leasing unbundled loops and transport
lines from other carriers. More information about the company is available at
http://www.pacwest.com .
Forward-Looking Statements
The foregoing discussion contains forward-looking statements. The
company's future performance is subject to numerous risks and uncertainties
that could cause actual results to deviate substantially from those discussed
in these forward-looking statements. Factors that could impact the
variability of future results include: successful execution of the company's
expansion activities into new geographic markets on a timely and
cost-effective basis; the pace at which new competitors enter the company's
existing and planned markets; competitive responses of the Incumbent Local
Exchange Carriers; execution of interconnection agreements with Incumbent
Local Exchange Carriers on terms satisfactory to the company; maintenance of
the company's supply agreements for transmission facilities; continued
acceptance of the company's services by new and existing customers; the
outcome of legal and regulatory proceedings regarding reciprocal compensation
for Internet-related calls and certain of the company's product offerings; the
ability to attract and retain talented employees; and the company's ability to
successfully access markets, install switching electronics, and obtain the use
of leased fiber transport facilities and any required governmental
authorizations, franchises and permits, all in a timely manner, at reasonable
costs and on satisfactory terms and conditions, as well as regulatory,
legislative and judicial developments that could cause actual results to
differ materially from the future results indicated, expressed or implied, in
such forward-looking statements. These and other factors are discussed in the
company's Prospectus dated November 3, 1999, and in its annual report as of
December 31, 1999, on Form 10-K as filed with the SEC.
For investor information on Pac-West Telecomm via fax at no additional
cost, please dial 1-800-PRO-INFO (732-544-2850 outside the U.S.) and enter
code PACW.
Pac-West Telecomm, Inc.
CONDENSED STATEMENTS OF OPERATIONS: Quarter Ended
Quarter Ended
Unaudited ($ in 000s except March 31, March 31,
per share amounts) 2000 1999
Revenues $30,807 $14,416
Costs and expenses:
Operating 10,024 4,062
Selling, general & administrative 10,194 4,303
Depreciation & amortization 4,129 1,449
Total costs and expenses 24,347 9,814
Income from operations 6,460 4,602
Other income and expenses, net (8) --
Interest expense, net 2,341 3,523
Income before provision for income taxes 4,127 1,079
Provision for income taxes 1,819 432
Net income 2,308 647
Accrued preferred stock dividends -- (1,142)
Net income (loss) applicable
to common stockholders $2,308 $(495)
Basic weighted average number
of shares outstanding 35,575,092 17,587,458
Diluted weighted average number
of shares outstanding 37,543,674 17,587,458
Basic net income (loss) per share: $0.06 $(0.03)
Diluted net income (loss) per share $0.06 $(0.03)
CONDENSED BALANCE SHEET: As of As of
Unaudited ($ in 000s) March 31, 2000 Dec. 31, 1999
Cash & short-term investments $138,969 $162,913
Other current assets 20,154 13,779
Total current assets 159,123 176,692
Equipment, vehicles and
leasehold improvements -- net 114,116 105,189
Acquisition goodwill, net 18,251 210
Deferred financing costs, net 5,448 5,648
Other assets, net 2,759 2,361
Total assets $299,697 $290,100
Accounts payable and accrued liabilities $17,786 $23,411
Other current liabilities 5,658 1,789
Total current liabilities 23,444 25,200
Long-term debt 150,006 150,017
Deferred income taxes 9,409 8,633
Total liabilities 182,859 183,850
Stockholders' equity 116,838 106,250
Total liabilities and stockholders' equity $299,697 $290,100
SOURCE Pac-West Telecomm, Inc.
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Related links:
http://www.pacwest.com
CONTACT:
Richard E. Bryson, Chief Financial Officer of
Pac-West Telecomm, Inc., 209-926-3086, rbryson@pacwest.com;
Virginia Turner, general information, Gary Tiedemann, investors,
or Mary Wallace, media, all of The Financial Relations Board,
415-986-1591
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