Grande Communications Holdings, Inc. Announces Results for the Quarter Ended March 31, 2005 and Guidance for 2005.SAN MARCOS, Texas San Marcos is a city in Texas, USA. The population was 34,733 at the 2000 census. It is the county seat of Hays County.GR6 Texas State University-San Marcos (formerly Southwest Texas State University) is located in the city. -- Grande Communications AboutGrande Communications is a United States telecommunications firm, based out of San Marcos, Texas, that uses a deep-fiber optic network for broadband services. In 1999, the company was established when the largest single round of venture capital funding in Texas was raised, Holdings, Inc.: Highlights for Q1 2005 --Grande added 7,818 new connections during the quarter ending March 31, 2005. --Revenues from bundled cable television, local and long-distance long-dis·tance adj. 1. Covering a long distance: a long-distance runner; operating under long-distance supervision. 2. telephone, broadband Internet See broadband. and security services Security services are state institutions for the provision of intelligence, primarily of a strategic nature, but also including protective security intelligence. Examples include the Security Service (MI5) and the Secret Intelligence Service (MI6) in the United Kingdom, and the grew by 7% to $32.7 million in Q1 2005 from Q4 2004. --Customer ARPU (Average Revenue Per User) A calculation often used to determine the overall value of an application. It is also used to rate particular customers, especially in the wireless space, by comparing someone's account to the overall average. increased by $1.88 and cable ARPU increased by $2.26 in Q1 2005 from Q4 2004. Grande Communications(R) reported financial results for the quarter ending March 31, 2005, including operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. of $48.5 million, net loss of $12.2 million and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become of $6.9 million. EBIDTA EBIDTA Earnings Before Interest Depreciation Taxes and Amortization is a non-GAAP measure frequently used as a basis for comparing businesses in Grande's industry, although Grande's measure of EBITDA may not be comparable to similarly titled measures of other companies. Below is a discussion of EBITDA and a reconciliation of EBITDA to the company's GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). results. Grande Gran·de 1 , Rio A river, about 1,046 km (650 mi) long, flowing from southeast Brazil generally northwest to the Paranaíba River, with which it forms the Paraná River. grew operating revenue for the company by 5% from Q4 2004 to Q1 2005 and EBITDA from $5.4 million in Q4 2004 to $6.9 million in Q1 2005. An adjustment made for lease accounting in Q4 2004 negatively impacted SG&A in Q4 2004 by $0.6 million. Grande's net loss narrowed in Q1 2005 to $12.2 million from $15.1 million in Q4 2004. "Grande remains focused on execution and growing our customer base," said Grande Vice Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack E. Morrow mor·row n. 1. The following day: resolved to set out on the morrow. 2. The time immediately subsequent to a particular event. 3. Archaic The morning. . "The first quarter was all about blocking and tackling. Our teams have continued to operate in competitive markets while growing the customer base to 41% of all of our marketable Marketable are securities that can be easily converted into cash. Such securities will generally have highly liquid markets allowing the security to be sold at a reasonable price very quickly. homes passed."
Selected Operational Metrics
----------------------------
-------------------------------------------------
March 31, June 30, Sept. 30, Dec. 31, March 31,
2004 2004 2004 2004 2005
-------------------------------------------------
Operating Data:
Marketable homes
passed 280,959 288,258 297,697 308,913 319,717
Customers (1) 110,790 115,275 120,243 126,736 130,753
Number of connections
Cable television 75,255 78,244 81,642 83,098 84,483
Telephone (1) 101,347 104,954 108,418 110,360 114,809
Broadband Internet
and other 43,142 47,440 51,476 56,184 60,768
-------- -------- -------- -------- --------
Total connections 219,744 230,638 241,536 249,642 260,060
Average monthly
revenue per:
Customer $ 87.14 $ 85.75 $ 85.32 $ 82.87 $ 84.75
Cable television 46.03 46.59 46.00 45.63 47.89
Telephone 44.12 43.86 43.84 42.38 43.31
Broadband Internet
and other 35.94 35.49 34.40 34.50 34.59
1) In the first quarter of 2005, Grande reclassified approximately 900
customers and 2,600 telephony connections to its operating data
for its retail services that were previously supported by its
network services team and now supported by its retail team. These
customers were not previously counted in operating data, as the
customers from network services and broadband transport are not
included in the operating data.
Financial Highlights Comparing March 31, 2004 and December 31,
2004 to March 31, 2005
-----------------------
Unaudited
-----------------------------
Three Months Ended Growth
----------------------------- -----------------
($s in thousands) March 31, Dec. 31, March 31, March Dec. '04
'04
to March to March
2004 2004 2005 '05 '05
-------- -------- -------- -------- --------
Bundled Services
-----------------------
Revenue
Video $ 10,112 $ 11,271 $ 12,038 $ 1,926 $ 767
Voice 13,124 13,916 14,629 1,505 713
Data 4,398 5,504 6,068 1,670 564
-------- -------- -------- ------- -------
Total Revenue $ 27,634 $ 30,691 $ 32,735 $ 5,101 $ 2,044
Cost of Service 7,424 8,425 9,075 1,651 650
-------- -------- -------- ------- -------
Gross Margin $ 20,210 $ 22,266 $ 23,660 $ 3,450 $ 1,394
Gross Margin % 73% 73% 72%
Network Services
-----------------------
Revenue $ 11,147 $ 13,616 $ 13,734 $ 2,587 $ 118
Cost of Service 8,302 8,722 8,869 567 147
-------- -------- -------- ------- -------
Gross Margin $ 2,845 $ 4,894 $ 4,865 $ 2,020 $ (29)
Gross Margin % 26% 36% 35%
Broadband Transport
-----------------------
Revenue (1) $ 2,906 $ 2,132 $ 1,991 $ (915) $ (141)
Cost of Service 704 374 263 (441) (111)
-------- -------- -------- ------- -------
Gross Margin $ 2,202 $ 1,758 $ 1,728 $ (474) $ (30)
Gross Margin % 76% 83% 87%
Total Company
-----------------------
Revenue $ 41,687 $ 46,439 $ 48,460 $ 6,773 $ 2,021
Cost of Service 16,430 17,521 18,207 1,777 686
--------- -------- -------- ------- -------
Gross Margin $ 25,257 $ 28,918 $ 30,253 $ 4,996 $ 1,335
Gross Margin % 61% 62% 62%
Reconciliation of
EBITDA/Adjusted EBITDA
--------------------------------
Net loss as reported $(13,430) $(15,063) $(12,155) $ 1,275 $ 2,908
Add back non-EBITDA items
included in net loss:
Interest income (65) (204) (315) (250) (111)
Interest expense 1,277 4,888 4,743 3,466 (145)
Income taxes 197 (366) 75 (122) 441
Depreciation &
Amortization 12,715 16,147 14,527 1,812 (1,620)
-------- -------- -------- ------- -------
EBITDA $ 694 $ 5,402 $ 6,875 $ 6,181 $ 1,473
Loss on Extinguishment
of debt 2,145 - - (2,145) -
-------- -------- -------- ------- -------
EBITDA, As Adjusted $ 2,839 $ 5,402 $ 6,875 $ 4,036 $ 1,473
1) Broadband Transport includes revenue from a construction project in
Q1 2004 of $738 thousand.
Other Q1 2005 Highlights Capital expenditures for the quarter ended March 31, 2005 were $15.6 million, including capitalized interest Capitalized interest Interest that is not immediately expensed, but rather is considered as an asset and is then amortized through the income statement over time. In the context of project financing, interest that is paid by additional borrowing. of $0.8 million. The build-out Build-out is an urban planner’s estimate of the amount and location of potential development for an area. Build-out is one step of the land use planning process. Evaluation of potential development impacts begins with a build-out analysis. of Grande's network passed 10,804 new marketable homes in the first quarter of 2005. Grande completed the first quarter of 2005 with $34.2 million of cash and $15.0 million of short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments. Grande's cash and investments of $49.2 million as of March 31, 2005 decreased from the year-end 2004 balance of $61.2 million primarily due to the company's continued investment in capital expenditures related to the build-out of its network as well as associated customer premise equipment, although the decrease in cash was partially offset by positive cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses of $3.9 million. The indenture An agreement declaring the benefits and obligations of two or more parties, often applicable in the context of Bankruptcy and bond trading. The term indenture primarily describes secured contracts and has several applications in U.S. law. governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. Grande's notes prohibits the company from making capital expenditures when the aggregate amount of the cash and cash equivalents (including short-term investments) held by Grande would be less than $20 million. Guidance for 2005 Grande continues to expect positive trends in the business in 2005. Grande expects 2005 EBITDA to nearly double its 2004 Adjusted EBITDA. Grande also anticipates spending approximately $48 million on capital expenditures, excluding capitalized interest, for 2005. Cash is expected to decrease to approximately $30 million at year-end December 31, 2005. Grande's Use of EBITDA and Adjusted EBITDA EBITDA is frequently used as a basis for comparing businesses in Grande's industry, although Grande's measure of EBITDA may not be comparable to similarly titled measures of other companies. EBITDA does not purport To convey, imply, or profess; to have an appearance or effect. The purport of an instrument generally refers to its facial appearance or import, as distinguished from the tenor of an instrument, which means an exact copy or duplicate. PURPORT, pleading. to represent operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. or cash flow from operating activities, as those terms are defined under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , and should not be considered as an alternative to those measurements as an indicator of its performance. In the first quarter of 2004, Grande wrote off debt issuance costs of approximately $2.1 million associated with the repayment of its senior credit facility following the completion of its senior notes offering. The company believes this expense is analogous analogous /anal·o·gous/ (ah-nal´ah-gus) resembling or similar in some respects, as in function or appearance, but not in origin or development. a·nal·o·gous adj. to amortization and interest expense and, therefore, believes it is more useful to show EBITDA net of this one-time amount because Grande believes it is a better measure of its operating performance and is more comparable to prior periods. However, because of the nature of the charge, Grande is referring to its EBITDA in 2004 net of the charge as "Adjusted EBITDA." The reconciliation from net loss as reported to EBITDA and Adjusted EBITDA is set forth above. Conference Call Details Grande Communications Holdings, Inc. will hold its conference call today, Thursday, May 12, 2005 at 11 a.m. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT (noon EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ) to discuss earnings for the quarter ended March 31, 2005. Grande Vice Chairman and CEO William E. Morrow and Grande Chief Financial Officer Michael L. Wilfley will host the conference call at 877-707-9632. The conference ID# is: "7Grande." A recording of the call will be available at 888-276-5302 until the end of the day Thursday, May 19, 2005. About Grande Communications(R) (www.grandecom.com) Headquartered in San Marcos San Marcos (săn mär`kəs). 1 City (1990 pop. 38,974), San Diego co., S Calif., a northern suburb of San Diego; settled 1880s, inc. 1963. , Grande Communications(R) is building a deep-fiber broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). network to homes and businesses from the ground up. Grande delivers high-speed Internet See broadband. , local and long-distance telephone, digital cable and wireless home security services over its own advanced network to communities in Texas. Grande's bundled service area includes portions of Austin, Corpus Christi Corpus Christi, in Christianity Corpus Christi [Lat.,=body of Christ], feast of the Western Church, observed on the Thursday after Trinity Sunday (or on the following Sunday). , suburban northwest Dallas Northwest Dallas is an area comprised of many communities and neighborhoods in Dallas, Texas, (USA). Geography
Forward Looking Statements This press release may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Grande operations that are based on its current expectations, estimates and projections. Words such as "expects," "intends," "plans," "projects," "believes," "estimates," and similar expressions are used to identify these forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict and could cause actual results and outcomes to be materially different. Such risks and uncertainties include those listed under the caption "Risk Factors" in Grande's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2004 filed with the Securities and Exchange Commission. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak only as of the date they were made and Grande undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Grande Communications' Financial Statements
Grande Communications Holdings, Inc.
Condensed Consolidated Statement of Operations
(In thousands, except per share data)
Unaudited
-----------------------------
Three Months Ended
-----------------------------
March 31, Dec. 31, March 31,
2004 2004 2005
-------- -------- --------
Operating revenues $ 41,687 $ 46,439 $ 48,460
Operating expenses:
Direct costs 16,430 17,521 18,207
Selling, general and administrative 22,631 23,166 23,525
Depreciation and amortization 12,715 16,147 14,527
-------- -------- --------
Total operating expenses 51,776 56,834 56,259
-------- -------- --------
Operating loss (10,089) (10,395) (7,799)
Other income (expense):
Interest income 65 204 315
Interest expense (1,277) (4,888) (4,743)
Gain on disposal of assets 16 16 72
Loss on extinguishment of debt (2,145) - -
-------- -------- --------
Total other income (expense) (3,341) (4,668) (4,356)
-------- -------- --------
Net loss attributable to common
shareholders (13,430) (15,063) (12,155)
======== ======== ========
Basic and diluted net loss per share
attributable to common shareholders (1.12) (1.23) (0.98)
Basic and diluted weighted average number
of common shares outstanding 11,971 12,272 12,422
Grande Communications Holdings, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
--------- ----------
Dec. 31, March 31,
2004 2005
--------- ---------
Assets (audited) (unaudited)
Current assets:
Cash and cash equivalents $ 41,195 $ 34,208
Investments (1) 20,000 15,000
Accounts receivable, net 20,951 20,284
Prepaid expenses and other current assets 2,720 3,254
--------- ---------
Total current assets 84,866 72,746
Property, plant and equipment, net 303,536 305,446
Goodwill 133,145 133,220
Other intangible assets, net 5,355 4,747
Debt issue costs, net 6,953 6,703
Other assets 4,661 5,148
--------- ---------
Total assets $ 538,516 $ 528,010
--------- ---------
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 13,193 $ 14,531
Accrued liabilities 21,644 21,711
Note payable 43 127
Deferred revenue 5,218 5,298
Current portion of capital lease obligations 636 655
--------- ---------
Total current liabilities 40,734 42,322
Deferred rent 753 857
Deferred revenue 4,908 4,767
Capital lease obligations, net of current
portion 13,940 13,838
Long term debt 128,237 128,427
Commitments and contingencies
Stockholders' equity:
Preferred Stock 441 441
Common stock 13 13
Additional paid-in capital 508,313 508,323
Treasury stock, at cost (5) (5)
Accumulated deficit (158,818) (170,973)
--------- ---------
Total stockholders' equity 349,944 337,799
--------- ---------
Total liabilities and stockholders' equity $ 538,516 $ 528,010
--------- ---------
1) Investments consist of short-term holdings in certificates of
deposit with banks and high grade commercial paper.
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