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545 Long Wharf Drive, 5th floor, New Haven, CT 06511 Tel:
1-877-DSL-NET1 Fax: 203-624-3612 Email:
info@dsl.net Web: www.dsl.net |
DSL.net Reports Third Quarter 2003 Results: Revenue Increases 62%, Gross Margin Increases 62% and Adjusted EBITDA Improves 11% from Year Earlier
-- 3Q 2003 Revenue and Gross Margin Both Hit Record
Levels --
NEW HAVEN, Conn., Nov. 12, 2003 – DSL.net, Inc. (NASDAQ: DSLN), a leading nationwide provider of broadband communications services to businesses, today reported third quarter 2003 financial results.
Revenue for the third quarter of 2003 was a record $18.2 million, representing a 62% increase from third quarter of 2002 revenue of $11.3 million. Revenue for the nine months ended Sept. 30, 2003, was a record $53.1 million, a 55% increase over revenue of $34.2 million for the comparable period in 2002.
The Company generated record gross margin, or revenue less network expense, of $5.2 million for the third quarter of 2003, representing a 62% improvement over gross margin of $3.2 million for the third quarter of 2002. For the nine months ended Sept. 30, 2003, the Company generated gross margin of $14.7 million, a 62% improvement over gross margin of $9.1 million for the first nine months of 2002.
Earnings before interest, taxes, depreciation, amortization, other income (expense) and non-cash stock compensation (“Adjusted EBITDA”) for the third quarter of 2003 was negative $2.6 million, an 11% improvement compared to negative $3.0 million for the third quarter of 2002. Adjusted EBITDA for the nine months ended Sept. 30, 2003, was negative $9.4 million, a 12% improvement over negative $10.7 million Adjusted EBITDA for the comparable period in 2002.
“Our third quarter results demonstrate that we continue to execute on our business plan through strong growth in revenue, improvements in cash flow and the completion of several milestones in the integration of acquired network assets and related subscriber lines during the first nine months of 2003,” said David F. Struwas, chairman and chief executive officer of DSL.net. “During the third quarter, we also closed a $30 million financing with Deutsche Bank and VantagePoint Venture Partners. As a result, based on our current plans, we believe we are fully funded to implement our growth initiatives and begin generating positive Adjusted EBITDA by the end of the third quarter of 2004.”
Free cash flow (defined as Adjusted EBITDA minus capital expenditures) for the third quarter of 2003 was negative $3.2 million, a 5% improvement over free cash flow of negative $3.4 million for the third quarter of 2002. For the first nine months of 2003, free cash flow was negative $11.2 million, a 7% improvement over free cash flow of negative $12.0 million for the comparable 2002 period.
Net loss for the quarter ended Sept. 30, 2003, was $9.1 million, representing an 8% larger net loss than the $8.5 million net loss for the third quarter of 2002. For the nine months ended Sept. 30, 2003, net loss was $27.1 million, a 1% improvement over net loss of $27.3 million for the comparable 2002 period. On a per share basis, the Company reported a net loss applicable to common stockholders of $0.17 per share for the third quarter of 2003, compared to $0.19 per share for the comparable 2002 period. For the nine months ended Sept. 30, 2003, net loss applicable to common stockholders was $0.57 per share, compared to $0.57 per share for the comparable 2002 period.
Net loss and net loss per share for the 2003 periods included two special items. The first was a $5.9 million non-cash write-off of deferred financing costs associated with a bank credit facility that was retired during the third quarter. This was partially offset by the second special item, a $3.5 million non-cash gain related to the negotiated retirement of other debt at a substantial discount during the third quarter. These special items resulted in net other expense of $2.4 million. Excluding these special items, all net loss and net loss per share results for the periods ended Sept. 30, 2003, improved over the comparable periods in 2002.
At Sept. 30, 2003, the Company had total assets of $69.9 million, including $21.1 million in cash.
“Our financial position has greatly improved as a result of the $30 million in new financing that we received during the third quarter and the retirement of substantially all of our previously existing debt at a significant discount,” said Robert J. DeSantis, chief financial officer of DSL.net. “We remain sharply focused on driving revenue growth, improving cash-flow and making strategic acquisitions. Our recent acquisition of the assets and subscribers of TalkingNets, which provides us with an integrated voice and data platform, underscores our success in making acquisitions that enhance our strategic position.”
DSL.net will host a
conference call to discuss results for the third quarter, as well as future
plans and expectations, today at 11 a.m. Eastern Time. Interested parties may
listen to the live audio webcast of the call by visiting the investor relations
section of DSL.net's Web site, www.dsl.net.
The call also may be accessed live via telephone by dialing 800-274-0251,
confirmation code 501100. For those unable to access the live conference call,
an audio replay will be available until 11 p.m., Eastern Time, on Nov. 26,
2003, by dialing 888-203-1112 and entering code 501100. Investors may also
access the call replay by visiting the investor relations section of the
Company's Web site.
About DSL.net
DSL.net, Inc. is a
leading nationwide provider of broadband communications services to businesses.
The Company combines its own facilities, nationwide network infrastructure and
Internet Service Provider (ISP) capabilities to provide high-speed Internet
access, private network solutions and value-added services directly to small-
and medium-sized businesses or larger enterprises looking to connect multiple
locations. DSL.net product offerings include T-1 and business-class DSL
services, virtual private networks (VPNs), frame relay, Web hosting, DNS
management, enhanced e-mail, online data backup and recovery services,
firewalls and nationwide dial-up services, as well as integrated voice and data
offerings in select markets. For more information, visit www.dsl.net, e-mail info@dsl.net,
or call 1-877-DSL-NET1 (1-877-375-6381).
This
press release contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking statements
are subject to a variety of risks and uncertainties, many of which are beyond
DSL.net's control, which could cause actual results to differ materially from
those contemplated in these forward-looking statements. In particular, the
risks and uncertainties include, among other things, (i) fluctuations in
DSL.net's quarterly operating results, which could adversely affect the price
of its common stock; (ii) DSL.net's unproven business model, which may not be
successful; (iii) DSL.net's ability to execute its business plan in a timely
manner to generate the forecasted financial and operating results and
liquidity; (iv) failure to generate sufficient revenue, contain certain
discretionary spending or achieve certain other business plan objectives could
have a material adverse effect on DSL.net’s results of operations or financial
position or impact the Company’s ability to begin generating positive Adjusted
EBITDA by the end of the third quarter of 2004; (v) risks associated with the
possible removal of DSL.net’s common stock from the Nasdaq SmallCap Market,
which removal could adversely impact the pricing and trading of DSL.net’s
common stock; (vi) regulatory, legislative and judicial developments, which
could adversely affect the way DSL.net operates its business; (vii) risks
associated with acquisitions, including difficulties in identifying and
completing acquisitions, integrating acquired businesses or assets and
realizing the revenue, earnings or synergies anticipated from any acquisitions;
(viii) competition; (ix) the risk that the conditions required for the issuance
of the remaining warrants to purchase shares of DSL.net’s common stock in the
Deutsche Bank-led financing are not satisfied or waived by January 14, 2004, in
which case DSL.net may be obligated to then repay the $30 million raised in
such financing; and (x) DSL.net's dependence on wholesale providers to provide
it with local DSL and T-1 facilities in areas where it has not deployed its own
equipment. Existing and prospective investors are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. DSL.net undertakes no obligation, and disclaims any obligation, to
update or revise the information contained in this press release, whether as a
result of new information, future events or circumstances or otherwise. For
additional information regarding these and other risks faced by DSL.net, see
the disclosure contained under “Risk Factors'' in DSL.net’s Annual Report on
Form 10-K for the year ended December 31, 2002, which has been filed with the
Securities and Exchange Commission.
DSL.net
is a trademark of DSL.net, Inc. Other company names may be trademarks of their
respective owners.
Contacts: Media: Investors:
Joe Tomkowicz Bob
DeSantis
203-782-3885 203-782-3267
jtomkowicz@dsl.net investors@dsl.net
(Financial Tables
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