Gross Margins Improve 12 Percentage Points and
EBITDA Performance Improves 56 Percent over Fourth Quarter 1999
QUARTERLY HIGHLIGHTS TABLE
Three Months Ended Percent Change
Mar. 31, 2000 Dec. 31, 1999
Revenues
Communication Services $10,243 $8,004 Up 28.0%
Web Solutions $2,145 $1,334 Up 60.8%
Total Revenues $12,388 $9,338 Up 32.7%
Gross Margin $4,556 $2,365 Up 92.6%
Selling, General
& Admin. Expenses $8,128 $10,503 Down 22.6%
EBITDA Loss $(3,572) $(8,138) Down 56.1%
EBITDA Loss Per Share $(0.17) $(0.42) Down 59.5%
Loss Per Share $(0.35) $(0.63) Down 44.4%
DENVER, May 3 /PRNewswire/ -- RMI.NET, Inc. (Nasdaq: RMII), a national
e-commerce and connectivity company, today reported record quarterly revenues
of $12.4 million for the three months ended March 31, 2000, an increase of
135 percent from the same period a year ago and up 33 percent from the fourth
quarter of 1999.
(Photo: http://www.newscom.com/cgi-bin/prnh/19990628/RMILOGO )
RMI.NET reported an EBITDA(1) loss per share of $0.17 for the first
quarter of 2000, a 15 percent improvement versus the same period in 1999 and a
60 percent improvement over the fourth quarter of 1999.
On an earnings per share basis, the company reported a loss of $0.35 per
share for the three months ended March 31, 2000.
"We are very pleased in every respect with our performance for the first
quarter of this year," said Douglas H. Hanson, RMI.NET's Chairman and Chief
Executive Officer. "The improvements in revenues, gross margin and
bottom-line results are consistent with our objective of achieving breakeven
cash flow by December of this year. We are confident that our financial
performance will continue to improve in subsequent quarters through successful
renegotiations of vendor contracts as well as other previously identified
efficiencies."
Acquisitions and Productivity Fuel Revenue Increase
Three acquisitions late last year -- Phoenix-based Future One, LaJunta,
Colo.-based Western Regional Networks and Schaumburg, Ill.-based AIS Network
-- were the major drivers behind the sequential quarterly revenue growth.
Additional revenue improvements over the previous quarter came from increased
customers for the company's high bandwidth digital subscriber line (DSL)
service as well as custom web production and web hosting/co-location services.
Communications services revenues in the first quarter of 2000 were up
28 percent over the fourth quarter of 1999; web solutions revenues for the
first quarter of 2000 were up 61 percent over the fourth quarter of 1999.
Year-over-year revenue growth was attributable primarily to acquisitions.
Fourteen of the company's 16 acquisitions last year were completed in the
second, third and fourth quarters. Both communications services and web
solutions revenues for the three months ended March 31, 2000 more than doubled
the amounts reported for the same period a year ago.
Gross Margins Improve Sequentially
Gross margin for the three months ended March 31, 2000 was 37 percent, a
10 percentage point decline from the same period a year ago but a
12 percentage point improvement from the three months ended December 31, 1999.
The margin decline from the year ago quarter was reflective of the product mix
resulting from acquisitions. Margin improvement over the previous quarter was
driven by revenue improvements both in communication services and web
solutions.
Selling, General and Administrative Expenses Decline as a Percent of
Revenues
Selling, general and administrative expenses (SG&A) also showed
improvements -- both over the same period a year ago and the fourth quarter of
1999. SG&A as a percent of revenue in the first quarter of 2000 of 66 percent
improved from 112 percent reported for the three months ended December 31,
1999 and from 85 percent reported from the same period a year ago. The
improvement in SG&A in the first quarter 2000 versus the fourth quarter of
1999 was due to reduced costs due to the national marketing campaign completed
in December. The year-over-year quarterly improvement in SG&A was
attributable primarily to productivity derived from sales force expansion and
the increased availability of DSL service.
Future Outlook
"Investors are taking a closer look at fundamentals, and we are doing the
same thing to enhance shareholder value," added Hanson. "Our near-term focus
is directed on reducing and eliminating our cash burn as soon as possible
while maintaining the tenets of our strategic vision. We will continue to
expand both organically and through additional acquisitions that are
consistent with our positive cash flow objective. We have identified
initiatives that will enhance the financial performance of our business plan
and efforts are being carried out to effect all efficiency action items as
soon as possible."
First Quarter Milestones and Recent Developments
-- Key Acquisitions:
-- Announced a definitive agreement to acquire Denver-based Internet
Communications Corp. (Nasdaq: INCC), an integrated communications
solution provider and network services company, for $28 million in
stock and warrants. Upon successful completion of this
transaction, RMI.NET's annualized revenue run rate will exceed
$70 million, with business-related revenues representing 65 percent
of the total.
-- Acquired a 19.9 percent stake in Platformix (formerly
enginenumber9.com), a vertical market applications service provider
(ASP) and developer of "private label" virtual desktops for
businesses and associations. As part of the agreement, Platformix
agreed to work exclusively with RMI.NET for the development and
maintenance of its wholly owned web company, tribeside.com, a
vertical web portal geared toward high school and college students.
-- DSL Growth: Added 1,000 new digital subscriber line (DSL) customers,
bringing the total to 4,300 installed and pending customers. With the
announcement of its partnership with New Edge Networks on April 12,
2000, the company expanded its reach and opportunities for continued
DSL customer additions.
-- Partnerships
-- Utilizing the industry-leading Persona(TM) software technology
developed by PrivaSeek, Inc., RMI.NET became the first Internet
company in the nation to allow business and residential customers
to control the content they receive from Internet advertisers,
marketers, content providers and companies utilizing e-Commerce
capabilities.
-- Became the first commerce services provider (CSP) to employ
PromulGate(TM) "latent time" technology, developed by The DelFin
Project(TM), Inc., to provide dial-up customers with information as
they authenticate their access to the World Wide Web. This
technology is an advertising-delivery system that offers customers
interaction with personalized content rather than a blank screen.
Initiatives for the Remainder of 2000
-- Aggressively increase the sales force from 100 currently to 200 by
September 30, 2000 with greater emphasis on higher priced and higher
margin products and services.
-- Continue negotiations with vendors to obtain more favorable pricing
and thus lower cost of sales. Cost reductions have been identified
and actions are being taken to secure these savings, with further
opportunities to be acted upon through September 30, 2000.
-- Complete the integration of the financial back office accounting and
billing system to enhance both internal management and external
customer reporting.
-- Build upon the upgrades to our backbone routers, improved peering and
added OC-3 transit in Seattle achieved in the last six months.
Looking ahead six months, complete the network integration of
acquisitions and eliminate unneeded duplication while increasing
critical component and circuit redundancy.
-- Continue the development and enhancement of established reusable
object-oriented software code to allow better delivery of software
solutions with less programming effort. This will benefit our
customers because the time to market and cost for their solutions is
lessened while at the same time making RMI.NET more price competitive
with improved margins.
-- Achieve additional economies of scale through acquisitions that
enhance geographic density in the markets where we have an existing
presence.
About RMI.NET
Denver-based RMI.NET, Inc., formerly Rocky Mountain Internet, is a
national e-commerce and connectivity company focusing on solutions for small
and medium-sized businesses. The company specializes in e-business
applications; web solutions, including design, hosting and marketing; and
high-speed Internet access, including digital subscriber line (DSL). RMI.NET
has an annualized revenue run rate of more than $50 million and more than
100,000 nationwide customers. The company wholly owns a proprietary portal
site and search engine, Infohiway, at wwwinfohiway.com. For more information,
call (800) 864-4327, or visit RMI.NET's web site at http://www.rmi.net.
This press release may contain forward-looking statements within the scope
of the Securities Act of 1933 and the Securities Exchange Act of 1934.
Although the company believes these statements are based on reasonable
assumptions, it can give no assurance that its goals will be achieved.
Differences between assumed facts and actual results can be material depending
on the circumstances and investors should be aware of the important factors
that could have a material impact on future results. Please refer to the
company's cautionary statements section of RMI.NET's 10-K dated December 31,
1999 and other Securities and Exchange Commission (SEC) filings subsequent to
this date.
NOTE -- RMI.NET intends to file its Form 10-Q for the quarter ended
March 31, 2000 on or before May 10, 2000. The company believes the financial
results contained in this release are accurate as of today and has no reason
to expect these results to change prior to the filing of the Form 10-Q.
However, RMI.NET can give no assurance or guarantee that changes will not
occur with its SEC filing.
(1) EBITDA represents operating loss before depreciation and amortization.
EBITDA is not a measurement of financial performance under generally accepted
accounting principles and should not be considered as an alternative to the
net income measure of performance.
OPERATING RESULTS
Three Months Ended (000s except for per share amounts)
March 31, 2000 December 31, 1999 March 31, 1999
Amount % of Rev. Amount % of Rev. Amount % of Rev.
Revenues
Comm. Services $10,243 82.7% $8,004 85.7% $4,339 82.4%
Web Solutions $2,145 17.3% $1,334 14.3% $924 17.6%
Total Revenues $12,388 $9,338 $5,263
Cost of Revenues
Comm. Services $7,311 $6,548 $2,548
Web Solutions $521 $425 $222
Total Cost
of Revenues $7,832 63.2% $6,973 74.7% $2,770 52.6%
Gross Margin $4,556 36.8% $2,365 25.3% $2,493 47.4%
Operating Expenses
Selling $1,579 12.7% $2,279 24.4% $856 16.3%
General & Admin. $6,549 52.9% $8,224 88.1% $3,618 68.7%
Depreciation
& Amort. $3,853 31.1% $3,972 42.5% $1,143 21.7%
Total Operating
Expenses $11,981 96.7% $14,475 155.0% $5,617 106.7%
Operating Loss $(7,425) -59.9% $(12,110) -129.7% $(3,124) -59.4%
EBITDA $(3,572) -28.8% $(8,138) -87.1% $(1,981) -37.6%
Other Income
(Expense), Net $21 $(133) $(63)
Preferred
Dividends $-- $-- $99
Net Loss $(7,404) -59.8% $(12,243) -131.1% $(3,286) -62.4%
Loss Per Share $(0.35) $(0.63) $(0.34)
EBITDA Per Share $(0.17) $(0.42) $(0.20)
Weighted Average
Shares 21,019 19,360 9,767
SOURCE RMI.NET, Inc.
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Related links:
http://www.rmi.net
Photo Notes:
NewsCom:
http://www.newscom.com/cgi-bin/prnh/19990628/RMILOGO
PRN Photo Desk, 888-776-6555 or 201-369-3467
CONTACT:
Steven P. Eschbach, CFA, Vice President -
Investor Relations of RMI.NET, Inc., 303-308-2272,
steve.eschbach@corp.rmi.net
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