FiberTower Reports 2010 Third Quarter Results

SAN FRANCISCO, Nov. 4, 2010 /PRNewswire-FirstCall/ -- FiberTower Corporation (Nasdaq: FTWR), a wireless backhaul services provider, reported results for the third quarter and nine months ended September 30, 2010.

Highlights for the Quarter

• Service revenues net of early termination liability (ETL) grew 19% to $19.3 million in the 2010 third quarter from $16.2 million in the 2009 third quarter.  
• Average monthly revenue per deployed site net of ETL increased 17% to $2,029 in the 2010 third quarter from $1,733 in the 2009 third quarter.
• Adjusted EBITDA net of ETL was $692,000 and improved $3.6 million from a loss of $2.9 million in the 2009 third quarter.
• Deployed sites grew to 3,170 in the third quarter of 2010 from 3,118 in the third quarter of 2009.
• Cash and cash equivalents balance was $31.2 million at September 30, 2010.

Kurt Van Wagenen, FiberTower's president and chief executive officer, stated, "We achieved a major financial milestone in the third quarter by reporting positive Adjusted EBITDA for the first time in the company's history.  In addition, we delivered strong year-over-year top-line revenue growth, which accelerated for the third consecutive quarter and was substantially accomplished at our existing sites.  Our continuing sales success increases our confidence in the goals we set for this year and for continuing growth in 2011."

2010 Third Quarter Consolidated Results

Service revenues for the three months ended September 30, 2010 increased by $3.2 million, or 20%, to $19.4 million, compared to $16.2 million for the third quarter of 2009.  During the third quarter of 2010, FiberTower recorded $143,000 of non-recurring revenue associated with early termination of certain circuits, compared to no ETL in the year ago quarter.  Revenue net of ETL was $19.3 million, increasing 19% compared to the third quarter of 2009.  The increase in revenue was primarily driven by selling additional capacity and Ethernet services to customers at existing sites.

Operating expenses were $27.6 million in the third quarter, compared to $28.0 million in the third quarter of 2009 and reflect increases in sales and marketing resources to drive growth, which were more than offset by lower general and administrative expense.  

Interest expense decreased $6.7 million year-over-year from $10.1 million to $3.4 million.  Net loss for the third quarter of 2010 was $11.8 million, compared to net loss of $21.8 million in the third quarter of 2009.  

Third quarter 2010 Adjusted EBITDA net of ETL was $692,000, improving $3.6 million, compared to a loss of $2.9 million in the third quarter of 2009 and improving $1.6 million over the second quarter of 2010.  Adjusted EBITDA is defined as net income (loss) from operations before interest, taxes, depreciation and amortization, impairment and restructuring charges, stock-based compensation, gain on early extinguishment of debt, debt exchange expenses and other income (expense).  The reconciliation of Adjusted EBITDA, which is a non-GAAP financial measure, to net income (loss) is provided at the end of this release.

Consolidated Results for the Nine Months Ended September 30, 2010

Service revenues for the nine months ended September 30, 2010 rose 20% to $55.7 million, compared to $46.5 million for the year ago period.  During the first nine months of 2010, FiberTower recorded $1.0 million of non-recurring revenue associated with ETL of certain circuits, compared to no ETL recorded in 2009.  Revenue net of ETL for the first nine months of 2010 was $54.6 million, improving 17% over the same year ago period.  For the nine months ended September 30, 2010, Adjusted EBITDA loss net of ETL, improved $9.0 million to $2.1 million, compared to $11.1 million for the year ago period. Net loss for the first nine months of 2010 was $36.6 million, compared to net income of $25.7 million for the same period of 2009, which included the recognition of a gain of $98.2 million on the early extinguishment of debt.

Liquidity and Capital Resources

During the third quarter of 2010, cash consumption was $11.0 million, compared to $4.7 million in the third quarter of 2009.  For the nine months ended September 30, 2010, net cash used for operations was $1.2 million as compared to $10.3 million for the year ago period.  Outstanding debt, including accretion, at September 30, 2010 was $161.4 million comprised of $128.6 million in 9.0% Senior Secured Notes due 2016 and $32.8 million in 9.0% Convertible Senior Secured Notes due 2012.  

Capital expenditures for the third quarter of 2010 totaled $10.9 million, compared to $2.3 million in the third quarter of 2009.  Consolidated cash and cash equivalents at September 30, 2010 were $31.2 million, compared to $42.2 million at June 30, 2010.  

Thomas Scott, chief financial officer of FiberTower, said "Our 2010 sales success has opened up multiple investment opportunities for the company.  We are investing capital to expand capacity on our current network and to deploy new sites that meet our internal hurdle rates.  We believe these investments will provide a solid platform to grow revenue and improve Adjusted EBITDA performance."

Conference Call Details

FiberTower has scheduled a conference call for Friday, November 5th at 11:30 a.m. Eastern Time / 8:30 a.m. Pacific Time to discuss the third quarter 2010 financial results.  To participate on the live call, please dial 1-877-941-8609 at least 10 minutes before the start of the conference. International participants may dial 1-480-629-9818.  The conference ID number is 4371689.

Management will review a slide presentation concurrently via webcast summarizing results for the 2010 third quarter.  Investors may access the webcast and presentation from the "Investor Relations" section of the company's website at http://www.fibertower.com/corp/investors-presentations-and-events.shtml

A telephone replay will be available until midnight PT on November 10th by dialing 1-800-406-7325 or 1-303-590-3030, and entering pass code #4371689.  A webcast replay will also be available at the web address above for 90 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 fiber and microwave networks in 13 major markets and master service agreements with nine U.S. wireless carriers, FiberTower is considered to be a 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.

Forward-Looking Statements

This news release includes "forward-looking" statements, as that term is defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission, or SEC, in its rules, regulations and releases.  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 statements regarding, among other things, our future financial performance and results of operations including guidance for expected ranges of 2010 revenue, Adjusted EBITDA and capital expenditures, our financial and business prospects, the deployment of our services, capital requirements, financing prospects, planned capital expenditures, expected cost per site, anticipated customer growth, expansion plans, and anticipated cash balances.  

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.  These include, among other things, negative cash flows and operating and net 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, competition from alternative backhaul service providers and technologies, along with those risk factors described in the company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, as filed with the SEC.  

Reconciliation of Non-GAAP Financial Measures:  

This news release includes the use of Adjusted EBITDA, which is a non-GAAP financial measure management uses to monitor the financial performance of the company's operations.  This measurement, together with GAAP measures such as revenue and loss from operations, assists management in its decision-making processes relating to the operation of the company's business.  Adjusted EBITDA is defined as net income (loss) from operations before interest, taxes, depreciation and amortization, impairment and restructuring charges, stock-based compensation, gain on early extinguishment of debt, debt exchange expenses and other income (expense).  Adjusted EBITDA is not a substitute for operating income, net income (loss), or cash flow used in operating activities as determined in accordance with GAAP, as a measure of performance or liquidity.  In addition, the company's presentation of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.  This non-GAAP financial measure should be viewed in addition to, and not as an alternative for, the company's reported financial results as determined in accordance with GAAP.  

During the first, second and third quarters of 2010, the company recorded $587,000, $275,000 and $143,000 respectively, in revenue associated with an early termination liability (ETL) of certain circuits. As this is not recurring revenue, the company has adjusted revenue and Adjusted EBITDA to exclude the ETL. The following table shows the calculation of the company's total Adjusted EBITDA reconciled to net income (loss) and the reconciliation of revenue and Adjusted EBITDA excluding the ETL.

SOURCE FiberTower Corporation