FiberTower Reports 2010 Fourth Quarter and Full Year Results

SAN FRANCISCO, March 10, 2011 /PRNewswire/ -- FiberTower Corporation (Nasdaq: FTWR), a wireless backhaul services provider, reported results for the fourth quarter and year ended December 31, 2010.

Highlights for the Quarter

• Service revenues net of early termination liability (ETL) grew 20% to $20.1 million in the 2010 fourth quarter from $16.7 million in the 2009 fourth quarter.  
• Average monthly revenue per deployed site net of ETL increased 15% to $2,049 in the 2010 fourth quarter from $1,789 in the 2009 fourth quarter.
• Adjusted EBITDA net of ETL was $945,000 and improved $3.2 million from a loss of $2.2 million in the 2009 fourth quarter.
• Deployed sites grew 5% to 3,276 at the end of the fourth quarter of 2010 from 3,117 at the end of the fourth quarter of 2009.
• Cash and cash equivalents balance was $21.3 million at December 31, 2010.

Kurt Van Wagenen, FiberTower's president and chief executive officer, stated, "We completed a strong year of growth, with fourth quarter service revenues increasing year-over-year and Adjusted EBITDA improving sequentially.  In the quarter, we completed 106 new site deployments, exceeding our target of 100 while maintaining double-digit average revenue per site growth.  We plan to build upon our 2010 accomplishments in execution and growth through a continued focus on service excellence and supporting customer requirements for increased bandwidth."

2010 Fourth Quarter Consolidated Results

Service revenues for the three months ended December 31, 2010 increased by $3.7 million, or 22%, to $20.5 million, compared to $16.7 million for the fourth quarter of 2009.  During the fourth quarter of 2010, FiberTower recorded $329,000 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 $20.1 million and increased by $3.4 million, or 20%, compared to the fourth quarter of 2009. The increase in revenue was primarily driven by selling additional capacity to customers at existing sites.

Operating expenses were $30.1 million in the fourth quarter 2010, compared to $34.4 million in the fourth quarter of 2009.  Included in fourth quarter 2010 operating expenses is a $2.0 million impairment charge related to unrecoverable construction-in-progress.  Excluding this charge, operating expenses decreased through substantially lower general and administrative expense.

Interest expense decreased $6.9 million year-over-year from $10.2 million to $3.3 million.  Net loss for the fourth quarter of 2010 was $12.8 million, compared to net loss of $27.8 million in the fourth quarter of 2009.  

Fourth quarter 2010 Adjusted EBITDA net of ETL was $945,000, improving $3.2 million, compared to a loss of $2.2 million in the fourth quarter of 2009.  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 loss is provided at the end of this release.

Full Year 2010 Consolidated Results

Service revenues for the twelve months ended December 31, 2010 rose 20% to $76.1 million, compared to $63.2 million for 2009.  During 2010, FiberTower recorded $1.3 million of non-recurring revenue associated with ETL of certain circuits, compared to no ETL recorded in 2009.  Revenue net of ETL for 2010 was $74.8 million, improving 18% over the same year ago period.  For the year ended December 31, 2010, Adjusted EBITDA loss net of ETL, improved $12.1 million to a loss of $1.2 million, compared to a loss of $13.3 million for the year ago period. Net loss for 2010 was $49.4 million, compared to net loss of $2.1 million for 2009, which included the recognition of a gain of $98.2 million on the early extinguishment of debt.

Liquidity and Capital Resources

During the fourth quarter of 2010, cash consumption was $9.8 million, compared to $34.3 million in the fourth quarter of 2009. For the year ended December 31, 2010, net cash provided by operations was $1.1 million as compared to $18.5 million used for operations in 2009. Outstanding debt, including accretion, at December 31, 2010 was $164.8 million comprised of $130.1 million in 9.0% Senior Secured Notes due 2016 and $34.7 million in 9.0% Convertible Senior Secured Notes due 2012.

Capital expenditures for the fourth quarter of 2010 totaled $12.2 million, compared to $1.7 million in the 2009 fourth quarter. Capital expenditures for 2010 totaled $32.1 million compared to $8.6 million in 2009 and reflect investing in new sites.  Consolidated cash and cash equivalents at December 31, 2010 were $21.3 million, compared to $31.2 million at September 30, 2010.

Thomas Scott, chief financial officer of FiberTower, stated, "We continued growing revenue in 2010, validating our expansion strategy through a strong, consistent mix of bookings from customers for both new and existing sites.  In 2011, we are focused on maintaining sufficient liquidity through cost reduction and cash management as we fulfill our customer commitments and complete our capital projects."

2011 Priorities

FiberTower recently announced that it received an early termination notice from a customer, which resulted in the February 28, 2011 disconnection of approximately 220 billing locations and reduced monthly billing revenue by approximately $256,000.  The customer is now reviewing approximately 50 additional locations, which generate monthly billing revenue of approximately $88,000, for possible termination on March 31, 2011.  In total, these disconnections would result in early termination fees of approximately $2.2 million.  The aforementioned monthly billing revenue represents approximately 45% of this customer's total billing revenue.  The company may see additional circuit terminations from this customer which would also be subject to additional early termination charges.

Mr. Van Wagenen continued, "We have taken immediate actions to reduce costs, including a 10% headcount reduction, to offset this financial impact without compromising continued consistent execution and excellent customer service.  While we are not issuing 2011 financial guidance because of the uncertainty described above, we expect to remain Adjusted EBITDA positive in 2011 by continuing to add revenue and control costs. We are planning a $10 to $15 million capital program for 2011, focused on meeting existing customer commitments, supporting customer bandwidth growth, increasing density in existing markets and maintaining our network. The combination of our cash on hand, cost reductions and a more modest 2011 capital budget is designed to offer us sufficient liquidity this year."  

Conference Call Details

FiberTower has scheduled a conference call for Friday, March 11th at 11:30 a.m. Eastern Time / 8:30 a.m. Pacific Time to discuss the fourth quarter and year end 2010 financial results.  To participate on the live call, please dial 1-877-941-0843 at least 10 minutes before the start of the conference. International participants may dial 1-480-629-9643.  The conference ID number is 4402891.

Management will review a slide presentation concurrently via webcast summarizing results for the 2010 fourth quarter and year end.  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 March 16th by dialing 1-800-406-7325 or 1-303-590-3030, and entering pass code #4402891.  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 positive 2011  Adjusted EBITDA, our expected range of 2011 capital expenditures and expected 2011 SG&A reductions, 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 loss from operations, net loss, or cash flow provided by (used for) 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, third and fourth quarters of 2010, the company recorded $587,000, $275,000, $143,000 and $329,000 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 loss and the reconciliation of revenue and Adjusted EBITDA excluding the ETL.

SOURCE FiberTower Corporation