SOURCE: Centennial Communications Corp.
Centennial Communications Announces Fiscal First-Quarter Results
Fiscal First-Quarter Net Income of $0.07 per Diluted Share, Compared to Net Income of $0.06 per Diluted Share in the Prior-Year Quarter
Fiscal First-Quarter Consolidated Adjusted Operating Income of $101.3 Million, Up 7 Percent Year-Over-Year From $94.6 Million
Fiscal First-Quarter Consolidated Revenue of $265.2 Million, Up 7 Percent Year-Over-Year From $248.0 Million
http://www.ir.centennialwireless.com
WALL, NJ--(Marketwire - October 7, 2008) - Centennial Communications Corp. (
"In the U.S., we again benefited from strong retail ARPU growth by selling at every customer touch-point and harnessing a growing data revenue opportunity," said Michael J. Small, Centennial's chief executive officer. "Our local market strategy continues to work because we remain committed to a proven sales and customer care philosophy that emphasizes direct, high-quality interactions with our subscribers."
Small continued, "In Puerto Rico, our new menu of unlimited rate plans remains a key differentiator with premium users of wireless service. We're seizing the initiative with an unparalleled collection of assets to attack the enterprise, residential and wireless markets in a comprehensive way."
Centennial reported fiscal first-quarter consolidated revenue of $265.2 million, which included $147.8 million from U.S. wireless and $117.4 million from Puerto Rico operations. Consolidated revenue grew 7 percent versus the fiscal first quarter of 2008. The Company ended the quarter with 1,090,400 total wireless subscribers, which compares to 1,058,500 for the year-ago quarter and 1,092,600 for the previous quarter ended May 31, 2008. The Company reported 596,700 total access lines and equivalents at the end of the fiscal first quarter, which compares to 536,100 for the year-ago quarter.
CENTENNIAL SEGMENT HIGHLIGHTS
U.S. Wireless Operations
-- Revenue was $147.8 million, a 7 percent increase from last year's
first quarter. Retail revenue (total revenue excluding roaming revenue)
increased 10 percent from the year-ago period primarily driven by strong
data, access and feature revenue. Roaming revenue decreased 12 percent
from the year-ago quarter primarily due to an 18 percent decline in the
rate per minute for roaming traffic.
-- Average revenue per user (ARPU) was $74 during the fiscal first
quarter, a 4 percent year-over-year increase. ARPU included approximately
$6.62 of data revenue per user, which grew 55 percent from the year-ago
period.
-- AOI was $58.6 million, a 10 percent year-over-year increase,
representing an AOI margin of 40 percent. AOI benefited from strong growth
in retail revenue, partially offset by a decline in roaming revenue.
-- U.S. wireless ended the quarter with 659,800 total subscribers, which
compares to 646,300 for the prior-year quarter and to 665,300 for the
previous quarter ended May 31, 2008. Postpaid subscribers decreased 4,100
from the fiscal fourth quarter of 2008 due to higher postpaid churn of 2.6
percent. The Company expects postpaid churn to be lower during the
remainder of the 2009 fiscal year. Total gross additions remained solid
and grew 4 percent from the year-ago period.
-- Capital expenditures were $8.7 million for the fiscal first quarter.
Puerto Rico Wireless Operations
-- Revenue was $84.8 million, an increase of 4 percent from the prior-
year first quarter, primarily driven by a 4 percent increase in total
subscribers.
-- ARPU was $66, which was unchanged when compared to the year-ago
period. ARPU included approximately $8.42 of data revenue per user, which
increased 37 percent from the year-ago period.
-- AOI totaled $23.0 million, an adjusted 1 percent year-over-year
decrease, representing an AOI margin of 27 percent. AOI was unfavorably
impacted by an adjusted 10 percent increase in handset costs primarily
related to customer retention.
-- Puerto Rico wireless ended the quarter with 430,600 total subscribers,
which compares to 412,200 for the prior-year quarter and to 427,300 for the
previous quarter ended May 31, 2008. Postpaid subscribers increased 2,900
from the fiscal fourth quarter of 2008, aided by stable postpaid churn of
2.5 percent.
-- Capital expenditures were $6.7 million for the fiscal first quarter.
Puerto Rico Broadband Operations
-- Revenue was $35.7 million, an 11 percent year-over-year increase.
Revenue increased primarily due to strong access line and data growth from
cable television operators in Puerto Rico.
-- AOI was $19.8 million, a 9 percent increase from the year-ago period,
representing an AOI margin of 55 percent. AOI increased due to robust
access line growth.
-- Switched access lines totaled approximately 98,300 at the end of the
fiscal first quarter, an increase of 17,500 lines, or 22 percent from the
prior-year quarter. Dedicated access line equivalents were 498,400 at the
end of the fiscal first quarter, a 9 percent year-over-year increase.
-- Capital expenditures were $5.2 million for the fiscal first quarter.
DEFINITIONS AND RECONCILIATION
(1) Adjusted operating income is defined as net income before loss from
discontinued operations, minority interest in income of subsidiaries,
income tax expense, interest expense, net, gain (loss) on disposition
of assets, stock-based compensation expense and depreciation and
amortization. Please refer to the schedule below for a reconciliation
of adjusted operating income to consolidated net income and the
Investor Relations website at www.ir.centennialwireless.com for a
discussion and reconciliation of this and other non-GAAP financial
measures.
Reconciliation of adjusted operating income to consolidated net income:
Three Months Ended
August 31,
--------------------
2008 2007
--------- ---------
Adjusted operating income $ 101,293 $ 100,037
Depreciation and amortization (35,544) (33,356)
Stock-based compensation expense (2,870) (3,055)
Gain (loss) on disposition of assets 47 (349)
--------- ---------
Operating income 62,926 63,277
Interest expense, net (44,880) (48,584)
Income tax expense (10,056) (8,261)
Minority interest in income of subsidiaries (167) (152)
--------- ---------
Income from continuing operations 7,823 6,280
Loss from discontinued operations (337) (514)
--------- ---------
Net income $ 7,486 $ 5,766
--------- ---------
(2) Please refer to the Company's Form 10-K for the year ending May 31,
2008 and the fiscal fourth-quarter 2008 earnings press release for
information regarding the discontinuation of the loaned phones
program.
CONFERENCE CALL INFORMATION
As previously announced, the Company will host a conference call to discuss results at 8:30 a.m. ET on Tuesday, October 7, 2008. Callers should dial (800) 406-5356 to access the call. The conference call will also be simultaneously webcast on Centennial's Investor Relations website at www.ir.centennialwireless.com. A replay of the conference call will also be available beginning Tuesday, October 7 through Tuesday, October 21 on Centennial's Investor Relations website. Callers can also dial (888) 203-1112, Access Code 2376848 to access an audio replay of the conference call.
ABOUT CENTENNIAL
Centennial Communications (
SAFE HARBOR PROVISION
Cautionary statement for purposes of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995: Information in this release that involves Centennial's expectations, beliefs, hopes, plans, projections, estimates, intentions or strategies regarding the future are forward-looking statements. Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the Company's actual results to differ materially from those projected in such forward-looking statements. These risks, assumptions and uncertainties include, but are not limited to: the effects of vigorous competition in our markets, which may make it difficult for us to attract and retain customers and to grow our customer base and revenue and which may increase churn, which could reduce our revenue and increase our costs; the fact that many of our competitors are larger than we are, have greater financial resources than we do, are less leveraged than we are, have more extensive coverage areas than we do, and may offer less expensive and more technologically advanced products and services than we do; our ability to gain access to the latest technology handsets in a timeframe and at a cost similar to our competitors; our ability to acquire, and the cost of acquiring, additional spectrum in our markets to support growth and deployment of advanced technologies, including 3G and 4G services; our ability to successfully deploy and deliver wireless data services to our customers, including next generation 3G and 4G technology; the effect of changes in the level of support provided to us by the Universal Service Fund; our ability to grow our subscriber base at a reasonable cost to acquire; our dependence on roaming agreements for a significant portion of our wireless revenue and the expected decline in roaming revenue over the long term; our ability to successfully integrate any acquired markets or businesses; the effects of higher than anticipated handset subsidy costs; our dependence on roaming agreements for our ability to offer our wireless customers competitively priced regional and nationwide rate plans that include areas for which we do not own wireless licenses; the effects of adding new subscribers with lower credit ratings; our substantial debt obligations, including restrictive covenants, which place limitations on how we conduct business; market prices for the products and services we offer may decline in the future; changes and developments in technology, including our ability to upgrade our networks to remain competitive and our ability to anticipate and react to frequent and significant technological changes which may render certain technologies used by us obsolete; the effects of a decline in the market for our CDMA based technology; the effects of consolidation in the telecommunications industry; general economic, business, political and social conditions in the areas in which we operate, including the effects of downturns in the economy, world events, terrorism, hurricanes, tornadoes, wind storms and other natural disasters; our ability to generate cash and the availability and cost of additional capital to fund our operations and our significant planned capital expenditures; our need to refinance or amend existing indebtedness prior to its stated maturity; the effects of governmental regulation of the telecommunications industry; our ability to attract and retain qualified personnel; the effects of network disruptions and system failures; our ability to manage, implement and monitor billing and operational support systems; the results of litigation filed or which may be filed against us or our vendors, including litigation relating to wireless billing, using wireless telephones while operating an automobile and litigation relating to infringement of patents; the effects of scientific reports that may demonstrate possible health effects of radio frequency transmission from use of wireless telephones; and the influence on us by our significant stockholder and anti-takeover provisions and other risks referenced from time to time in the Company's filings with the Securities and Exchange Commission. All forward-looking statements included in this release are based upon information available to Centennial as of the date of the release, and we assume no obligation to update or revise any such forward-looking statements.
CENTENNIAL COMMUNICATIONS CORP.
FINANCIAL DATA AND OPERATING STATISTICS
August 31, 2008
($000's, except per subscriber data)
Three Months Ended
------------------------
Aug-08 Aug-07
----------- -----------
CONSOLIDATED
Total Wireless Subscribers 1,090,400 1,058,500
Net Gain - Total Subscribers (2,200) 8,900
Revenue per Average Wireless Customer (1) $ 71 $ 69
Retail Penetration (4) 8.4% 8.4%
Prepaid & Postpaid Churn - Wireless (5) 2.7% 2.3%
Monthly MOU's per Wireless Customer 1,352 1,306
U.S. WIRELESS
Postpaid Wireless Subscribers 642,300 621,100
Prepaid Wireless Subscribers 17,500 25,200
----------- -----------
Total Wireless Subscribers 659,800 646,300
Total Wireless Gross Adds 49,000 47,100
Net Gain - Wireless Subscribers (5,500) 3,200
GSM as a % of Wireless Subscribers 99.9% 93.8%
Revenue per Average Wireless Customer (1) $ 74 $ 71
Retail Revenue per Average Wireless Customer (2) $ 66 $ 62
Data Revenue per Average Wireless Customer (3) $ 6.62 $ 4.28
Retail Revenue $ 132,018 $ 119,652
Roaming Revenue $ 15,789 $ 17,952
Penetration - Wireless (4) 7.4% 7.5%
Postpaid Churn - Wireless (5) 2.6% 2.0%
Prepaid & Postpaid Churn - Wireless (5) 2.7% 2.3%
Monthly MOU's per Wireless Customer 1,106 1,041
Cost to Acquire (6) $ 311 $ 325
Capital Expenditures $ 8,706 $ 7,051
PUERTO RICO
Postpaid Wireless Subscribers 426,500 409,400
Prepaid Wireless Subscribers 4,100 2,800
----------- -----------
Total Wireless Subscribers 430,600 412,200
Total Wireless Gross Adds 36,400 35,000
Net Gain - Wireless Subscribers 3,300 5,700
Revenue per Average Wireless Customer (1) $ 66 $ 66
Data Revenue per Average Wireless Customer (3) $ 8.42 $ 6.15
Penetration - Wireless (4) 10.8% 10.3%
Postpaid Churn - Wireless (5) 2.5% 2.3%
Prepaid & Postpaid Churn - Wireless (5) 2.6% 2.4%
Monthly MOU's per Wireless Customer 1,733 1,725
Fiber Route Miles 1,360 1,314
Switched Access Lines 98,300 80,800
Dedicated Access Line Equivalents (7) 498,400 455,300
On-Net Buildings 2,299 2,027
Capital Expenditures - Wireless $ 6,730 $ 7,473
Capital Expenditures - Broadband $ 5,228 $ 5,472
----------- -----------
Capital Expenditures - Total Puerto Rico $ 11,958 $ 12,945
=========== ===========
REVENUES
U.S. Wireless $ 147,807 $ 137,604
----------- -----------
Puerto Rico - Wireless $ 84,832 $ 81,338
Puerto Rico - Broadband $ 35,667 $ 32,004
Puerto Rico - Intercompany $ (3,093) $ (2,976)
----------- -----------
Total Puerto Rico $ 117,406 $ 110,366
----------- -----------
Consolidated $ 265,213 $ 247,970
=========== ===========
ADJUSTED OPERATING INCOME (8)
U.S. Wireless $ 58,588 $ 53,139
----------- -----------
Puerto Rico - Wireless $ 22,952 $ 28,693
Puerto Rico - Broadband $ 19,753 $ 18,205
----------- -----------
Total Puerto Rico $ 42,705 $ 46,898
----------- -----------
Consolidated $ 101,293 $ 100,037
=========== ===========
NET DEBT
Total Debt Less Cash and Cash Equivalents $ 1,888,900 $ 1,936,100
(1) Revenue per Average Wireless Customer is determined for each period by
dividing total monthly revenue per wireless subscriber including
roaming revenue by the average customers for such period.
(2) Retail Revenue per Average Wireless Customer is determined for each
period by dividing retail revenue (total revenue excluding roaming
revenue) by the average customers for such period.
(3) Data Revenue per Average Wireless Customer is determined for each
period by dividing data revenue by the average customers for such
period.
(4) The penetration rate equals the percentage of total population in our
service areas who are subscribers to our wireless service as of
period-end. August 2008 for U.S. Wireless includes an additional
400,000 population equivalents for spectrum purchased in Ohio.
(5) Churn is calculated by dividing the aggregate number of subscribers
who cancel service during each month in a period by the total number
of subscribers as of the beginning of the month. Churn is stated as
the average monthly churn rate for the period.
(6) Cost to Acquire a new customer is calculated by dividing the sum of
the cost of phones and marketing expenses less the related
equipment sales by the gross activations for the period. Cost to
acquire excludes costs relating to phones used for customer
retention.
(7) August 2007 includes 96,800 dedicated access line equivalents related
to repeatedly renewed short term contracts that had previously been
excluded due to their term.
(8) Adjusted operating income is defined as net income before loss from
discontinued operations, minority interest in income of subsidiaries,
income tax expense, interest expense, net, gain (loss) on disposition
of assets, stock based compensation expense and depreciation and
amortization.
CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
Three Months Ended
------------------------
August 31, August 31,
2008 2007
----------- -----------
REVENUE:
Service revenue $ 249,003 $ 234,359
Equipment sales 16,210 13,611
----------- -----------
265,213 247,970
----------- -----------
COSTS AND EXPENSES:
Cost of services (exclusive of depreciation
and amortization shown below) 50,676 46,574
Cost of equipment sold 42,149 31,522
Sales and marketing 25,869 25,586
General and administrative 48,096 47,306
Depreciation and amortization 35,544 33,356
(Gain) loss on disposition of assets (47) 349
----------- -----------
202,287 184,693
----------- -----------
OPERATING INCOME 62,926 63,277
----------- -----------
INTEREST EXPENSE, NET (44,880) (48,584)
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAX EXPENSE AND MINORITY INTEREST
IN INCOME OF SUBSIDIARIES 18,046 14,693
INCOME TAX EXPENSE (10,056) (8,261)
----------- -----------
INCOME FROM CONTINUING OPERATIONS
BEFORE MINORITY INTEREST IN INCOME
OF SUBSIDIARIES 7,990 6,432
MINORITY INTEREST IN INCOME OF SUBSIDIARIES (167) (152)
----------- -----------
INCOME FROM CONTINUING OPERATIONS 7,823 6,280
NET LOSS FROM DISCONTINUED OPERATIONS (337) (514)
----------- -----------
NET INCOME $ 7,486 $ 5,766
=========== ===========
EARNINGS PER SHARE:
BASIC
EARNINGS PER SHARE FROM CONTINUING
OPERATIONS $ 0.07 $ 0.06
LOSS PER SHARE FROM DISCONTINUED OPERATIONS $ (0.00) $ (0.00)
----------- -----------
NET INCOME PER SHARE $ 0.07 $ 0.06
=========== ===========
DILUTED
EARNINGS PER SHARE FROM CONTINUING
OPERATIONS $ 0.07 $ 0.06
LOSS PER SHARE FROM DISCONTINUED OPERATIONS $ (0.00) $ (0.00)
----------- -----------
NET INCOME PER SHARE $ 0.07 $ 0.06
=========== ===========
WEIGHTED-AVERAGE SHARES OUTSTANDING DURING THE
PERIOD:
BASIC 108,038 107,062
=========== ===========
DILUTED 110,200 110,011
=========== ===========
Steve E. Kunszabo
Executive Director, Investor Relations
732-556-2220