RCN Reports First Quarter 2010 Results
Market Wire, May, 2010
RCN
Corporation (NASDAQ: RCNI) today announced first quarter 2010 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.
“RCN’s reported first quarter results demonstrated continued consistency in
revenue, EBITDA, and free cash flow generation, including $1.3 million of
deal costs absorbed to date,” stated Peter D. Aquino, President and Chief
Executive Officer. “During Q1, we continued to drive our key initiatives,
including the testing, and now launch, of our industry leading TiVo
Premiere from RCN HD DVR. We began rolling this platform out in DC and NY,
and will move to the rest of our markets by the summer. In addition, RCN
Metro has launched its Xtreme Network in the New York/New Jersey market,
providing financial institutions and other enterprises with an ultra low
latency network to meet their requirements for speed and execution.
Operationally, we are focused on continued execution as we work through the
process to close our merger with an affiliate of ABRY Partners.”
First Quarter Review
Following are highlights of first quarter 2010 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
-- Revenue. Total revenue of $190 million increased slightly from
$189 million in the first quarter of 2009 and was flat compared to the
fourth quarter of 2009.
-- EBITDA. EBITDA of $53 million increased 1% from $52 million in the
first quarter of 2009 and decreased 3% from $55 million in the fourth
quarter of 2009. Included in first quarter 2010 EBITDA are costs of
$1.3 million related to the pending acquisition of the company.
Excluding these costs, EBITDA increased 4% from first quarter 2009 and
decreased slightly from fourth quarter 2009, and EBITDA margin of 29%
expanded by nearly 100 basis points from first quarter 2009 and was
flat compared to fourth quarter 2009. EBITDA is a non-GAAP financial
measure -- see "Non-GAAP Measures" below.
-- Capital Expenditures. Capital expenditures were $22 million, down from
$26 million in the first quarter of 2009 and $41 million in the fourth
quarter of 2009, primarily as a result of the completion of Project
Analog Crush(SM) during 2009.
-- Free Cash Flow. Free cash flow was $7 million, compared to $8 million
in the first quarter of 2009 and $7 million in the fourth quarter of
2009. Free cash flow also included costs related to the pending
acquisition of the company, as noted above. Free cash flow is a
non-GAAP financial measure -- see "Non-GAAP Measures" below.
Residential/Small-Medium Business Segment
-- Revenue. Residential/Small-Medium Business revenue of $141 million
decreased 2% from $144 million in the first quarter of 2009 and was
flat compared to the fourth quarter of 2009. Year-over-year revenue
comparisons reflect 3,000 fewer customers and a decrease in average
revenue per customer ("ARPC") to $109.
-- EBITDA. Residential/Small-Medium Business EBITDA of $36 million
decreased 4% from $38 million in both the first and fourth quarters of
2009. Resi/SMB EBITDA includes $1 million of costs related to the
pending acquisition of the company. Excluding these costs, EBITDA of
$37 million decreased 1% from both the first and fourth quarters of
2009, and EBITDA margin of 26% was flat compared to the first and
fourth quarters of 2009.
-- Capital Expenditures. Residential/Small-Medium Business capital
expenditures were $12 million, down from $19 million in the first
quarter of 2009 and from $33 million in the fourth quarter of 2009, due
primarily to the completion of Project Analog Crush(SM).
-- Customers and RGUs. Residential/Small-Medium Business customers of
approximately 426,000 decreased 3,000 compared to both the first and
fourth quarters of 2009, due in part to higher churn related to the
completion of Project Analog Crush(SM), as well as the tightening of
credit standards for new customers in certain markets. Total revenue
generating units of approximately 896,000 decreased by 18,000 compared
to the first quarter of 2009 and decreased by 3,000 compared to the
fourth quarter of 2009, as continued growth in data RGUs was offset by
a reduction in voice RGUs, consistent with trends for highly-penetrated
landline voice providers, and a slight decrease in video RGUs, due to
the customer trends noted above.
RCN Metro Optical Networks Segment
-- Revenue. RCN Metro revenue of $49 million increased 8% from $46 million
in the first quarter of 2009, and increased slightly from the fourth
quarter of 2009, driven primarily by continued strength in transport
services as well as growth in IP services.
-- EBITDA. RCN Metro EBITDA of $17 million increased 15% from $14 million
in the first quarter of 2009 and decreased slightly compared to the
fourth quarter of 2009. RCN Metro segment EBITDA includes $0.3 million
of costs related to the pending acquisition of the company; excluding
these costs, EBITDA increased 17% from the first quarter of 2009 and
increased slightly from the fourth quarter of 2009 and EBITDA margin of
35% grew by nearly 275 basis points from first quarter 2009 and was
flat compared to fourth quarter 2009.
-- Capital Expenditures
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