MIAMI -- Terremark Worldwide, Inc. (AMEX:TWW):
--237 new customers for the year and 54 new customers for the quarter including Club Med, The School Board of Collier County, and Mercy Hospital;
--Launched Secure Information Services Group providing data security related offerings
--Turned EBITDA positive and operating cash flow positive for the 4th quarter;
--Increased gross profit margins to 39% for the March 2006 quarter
Terremark Worldwide, Inc. (AMEX:TWW) a leading operator of integrated Tier-1 Internet exchanges and a global provider of managed IT infrastructure solutions for government and private sectors, today reported its results for the quarter and year ended March 31, 2006.
Total revenues for the quarter ended March 31, 2006 were $ 19.0 million and $62.5 million for the year ended March 31, 2006, representing an increase of 1% over the previous quarter and an increase of 30% over the previous year. Total revenues during the 2005 fiscal year included $11.8 million of non-recurring technology infrastructure build outs and total revenues for the 2006 fiscal year included approximately $8.7 million of non-recurring project type revenue. Without these one time revenues, the year over year increase in revenues was 54%.
EBITDA, as adjusted for FY 2006 was a positive $554 thousand compared to a loss of $8.2 million for FY 2005. EBITDA, as adjusted, is defined as loss from operations less depreciation, amortization and stock based compensation. EBITDA, as adjusted, should be considered in addition to, but not in lieu of, loss from operations reported under GAAP.
Revenue and EBITDA results for the quarter ended March 31, 2006 came in below guidance primarily due to a shift in project revenues related to a federal government contract. The contract is now expected to be deployed in the second and third quarter of FY2007.
"This past year marked a very important period for us as we achieved significant customer growth and continued to build on our managed services offerings," said Manuel D. Medina, Chairman and CEO. "Our goal is to leverage the success of 2006 into 2007. We are particularly excited about our opportunity as the market itself is showing growth and momentum. New technologies are driving customers to locate in facilities that have power and cooling resources to meet the increased demand. Our experience and success positions us to capitalize on these market opportunities."
Data center expenses were $11.6 million for the quarter and $ 38.8 million for the year ended March 31, 2006, consistent with the previous quarter and an increase of 5% for the year. Gross profit margins, excluding depreciation and amortization, were consistent at 39% during the March 31, 2006 quarter versus the prior quarter. Similarly, full year gross profit margins, excluding depreciation and amortization, improved to 38% for the 2006 fiscal year from 23% during fiscal year 2005.
Total colocation space utilization increased to 12.1% as of March 31, 2006 from 11.8 % as of December 31, 2005. Utilization of built-out colocation space increased to 43.3% as of March 31, 2006 from 42.3% as of December 31, 2005. Cross connects billed to customers increased to 4,007 as of March 31, 2006 from 3,724 the previous quarter and 2,505 a year earlier, representing an increase of 8% and 60%, respectively.
During the quarter ended March 31, 2006, Terremark added 54 new customers, for a total of 488 customers at the end of the year. Terremark booked $16.8 million of new contract value during the quarter ended March 31, 2006.
For the quarter ended March 31, 2006, annualized data center services revenue per utilized square foot were $1,701 compared to $1,835 at the end of the previous quarter and $1,440 a year earlier. The drop in total revenue per square foot was due to a decrease in non-recurring project revenue. For the quarter ended March 31, 2006, data center services revenue churn was less than 1%. The Company defines churn as annualized data center services revenue lost as a percentage of annualized data center services revenue for the most recent quarter.
Highlights of this year include:
--New customer contracts include BroadStar, Shutterfly, IDG Netherlands and others.
--Over 14 banking and financial institutions became customers i.e. Bank United, First Bank of Miami, U.S. Century, Transatlantic Bank and others.
--Leading Law Firms also became customers i.e. Greenberg Traurig, Hunton & Williams and others.
--Expansion of existing customer i.e. Facebook, Navega, and others
--Hosted first Analysts Day at the NAP of the Americas.
--Acquired European Managed Dedicated Hosting provider - Dedigate
--Launched Secured Virtual Banking Suite, Secure Information Services Group and On-Net Marketplace search tool for customers
--Join forces with CareTech Solutions to deliver management services to hospitals and healthcare institutions.
--Hosted Post Hurricane and Hurricane Preparedness Seminars
--Hosted Annual Global Peering Forum
--Obtained SAS 70 certification
--Successfully completed remediation of internal controls related to Sarbanes Oxley compliance
Business Outlook
For the first quarter ending June 30, 2006, the Company expects revenue to range from $21 million to $22 million and EBITDA to range from $1.5 million to $2.5 million. For the full 2007 fiscal year, the Company expects revenues to be in the range of $100 million to $105 million, EBITDA to range from $18 million to $22 million and capital expenditures to range from $10 million to $11 million.
Conference Call
The Company will hold a conference today, June 13, 2006 at 5:00 p.m. ET, to discuss all of the above. To participate on the conference call, please dial 866-831-6162 (domestic) or 617-213-8852 (international) five to ten minutes before the call and reference the passcode TWW Call. A simultaneous live Webcast of the call will be available over the Internet at http://www.terremark.com, under the Investor Relations heading.
A replay of the call will be available beginning on Tuesday, June 13, 2006 at 7:00 p.m. (ET) by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and providing the following replay code: 30769880. In addition, the Webcast will be available on the Company's web site at http://www.terremark.com.
Additional information regarding the Company's financial performance as of and for the year ended March 31, 2006 can be found on the attached balance sheet and statements of operations and in the Company's Annual Report on Form 10-K.
About Terremark Worldwide, Inc.
Terremark Worldwide, Inc. (AMEX:TWW) is a leading operator of integrated Tier-1 Internet exchanges and a global provider of managed IT infrastructure solutions for government and private sectors. Terremark delivers its portfolio of services from seven locations in the U.S., Europe and Latin America and from four service aggregation and distribution locations, which aggregate network traffic and distribute network-based services in Europe and Asia to meet specific customer needs. Terremark's flagship facility, the NAP of the Americas, is the model for the carrier-neutral Internet exchanges the company has in Santa Clara, California (NAP of the Americas/West), in Sao Paulo, Brazil (NAP do Brasil) and in Madrid, Spain (NAP de las Americas - Madrid). The carrier-neutral NAP of the Americas is a state-of-the-art facility that provides exchange point, colocation and managed services. Terremark is headquartered at 2601 S. Bayshore Drive, 9th Floor, Miami, Florida USA, 305-856-3200. More information about Terremark Worldwide can be found at http://www.terremark.com.
Statements contained in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Terremark's actual results may differ materially from those set forth in the forward-looking statements due to a number of risks, uncertainties and other factors, as discussed in Terremark's filings with the SEC. These factors include, without limitation, Terremark's ability to obtain funding for its business plans, uncertainty in the demand for Terremark's services or products and Terremark's ability to manage its growth. Terremark does not assume any obligation to update these forward-looking statements.
Non-GAAP Financial Measures
Terremark continues to provide all information required in accordance with generally accepted accounting principles (GAAP), but it believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, Terremark uses non-GAAP financial measures, such as EBITDA, as adjusted. In presenting these non-GAAP financial measures, Terremark excludes certain non-cash items that it believes are not good indicators of the Company's current or future operating performance. These non-cash items are depreciation, amortization and stock-based compensation.
Terremark intends to calculate the various non-GAAP financial measures in future periods on a basis consistent with its calculation of those measures for the twelve months ended March 31, 2006 and 2005, presented within this press release.
Terremark Worldwide, Inc. Consolidated Balance Sheets March 31, March 31, 2006 2005 ------------- ------------- Assets Current assets Cash and cash equivalents $20,401,934 $44,001,144 Restricted cash 474,073 2,185,321 Accounts receivable, net of allowance for doubtful accounts 10,951,827 4,388,889 Current portion of capital lease receivable 2,507,029 2,280,000 Prepaid and other current assets 1,840,075 942,575 ------------- ------------- Total current assets 36,174,938 53,797,929 Restricted cash 3,814,842 5,641,531 Property and equipment, net 129,893,318 123,406,321 Debt issuance costs 6,963,232 8,797,296 Other assets 3,414,483 1,182,716 Capital lease receivable, net of current portion 4,004,449 6,080,001 Intangibles 3,680,000 - Goodwill 16,771,189 9,999,870 ------------- ------------- Total assets $204,716,451 $208,905,664 ============= ============= Liabilities and Stockholder's Equity Current Liabilities Current portion of debt and capital lease obligations $1,890,108 $6,219,974 Accounts payable and accrued expenses 19,122,700 10,067,016 Interest payable 3,833,288 2,680,882 Series H redeemable convertible preferred stock 646,693 - ------------- ------------- Total current liabilities 25,492,789 18,967,872 Mortgage payable, less current portion 45,795,552 46,034,024 Convertible debt 59,102,452 53,972,558 Derivative embedded within convertible debt, at estimated fair value 24,960,750 20,199,750 Notes payable, less current portion 25,614,140 23,664,142 Deferred rent and other liabilities 3,267,481 2,817,435 Capital leases obligations, less current portion 852,311 434,441 Deferred revenue 5,794,659 1,994,598 Series H redeemable convertible preferred stock - 616,705 ------------- ------------- Total liabilities 190,880,134 168,701,525 ------------- ------------- Minority interest - 28,090 ------------- ------------- Commitments and contingencies - - ------------- ------------- Stockholders' equity (deficit) Series I convertible preferred stock 1 1 Common stock 44,490 42,587 Common stock warrants 13,251,660 13,599,704 Common stock options 582,004 1,538,260 Additional paid-in capital 291,607,528 279,063,085 Accumulated deficit (283,823,243) (246,674,069) Accumulated other comprehensive loss (317,756) (172,882) Treasury stock (7,220,637) (7,220,637) Note receivable (287,730) - ------------- ------------- Total stockholders' equity 13,836,317 40,176,049 ------------- ------------- Total liabilities and stockholders' equity $204,716,451 $208,905,664 ============= ============= Terremark Worldwide, Inc. Consolidated Statement of Operations For the Three Months Ended --------------------------- March 31, December 31, 2006 2005 ------------- ------------- Revenue Data center - services $19,015,338 $18,881,744 Data center - technology infrastructure - - ------------- ------------- Total operating revenues 19,015,338 18,881,744 ------------- ------------- Expenses Data center operations - services excluding depreciation 11,571,763 11,522,260 General and administrative 4,652,400 3,288,032 Sales and marketing 2,492,072 2,275,843 Depreciation and amortization 2,481,771 2,284,781 ------------- ------------- Total operating expenses 21,198,006 19,370,916 ------------- ------------- Net loss from operations (2,182,668) (489,173) ------------- ------------- Other income (expense) Change in fair value of derivatives embedded within convertible debt (13,316,138) (1,422,538) Interest expense (6,455,498) (6,313,518) Interest income 381,982 461,192 Other income (expense), net (269,245) (78,447) ------------- ------------- Total other expense (19,658,899) (7,353,310) ------------- ------------- Loss from continuing operations before income taxes (21,841,567) (7,842,483) Income taxes - - ------------- ------------- Net loss (21,841,567) (7,842,483) Preferred dividend (169,700) (184,700) ------------- ------------- Net loss to common shareholders $(22,011,267) $(8,027,183) ============= ============= Net (loss) income per common share: Basic $(0.50) $(0.18) ============= ============= Diluted $(0.50) $(0.18) ============= ============= Weighted average common shares outstanding - basic 42,973,114 43,539,750 Weighted average common shares outstanding - diluted 42,973,114 43,539,750 Reconciliation of Loss from Operations to EBITDA, as adjusted Loss from operations (2,182,668) (489,173) Depreciation and amortization 2,481,771 2,284,781 Stock based compensation 975,644 ------------- ------------- EBITDA, as adjusted $1,274,747 $1,795,609 ============= ============= Calculation of Gross Profit Margin Operating revenues 19,015,338 18,881,744 Less: Data center operations - services, excluding depreciation 11,571,763 11,522,260 ------------- ------------- Gross Profit $7,443,575 $7,359,483 ============= ============= Gross Profit Margin as a % of operating revenues 39% 39% Terremark Worldwide, Inc. Consolidated Statement of Operations For the Twelve Months Ended ----------------------------------------- March 31, March 31, March 31, 2006 2005 2004 ------------- ------------- ------------- Revenue Data center - services $62,529,282 $34,985,343 $17,034,377 Data center - technology infrastructure - 11,832,745 - Construction contracts - 1,329,526 1,179,362 ------------- ------------- ------------- Total operating revenues 62,529,282 48,147,614 18,213,739 ------------- ------------- ------------- Expenses Data center operations - services excluding depreciation 38,823,880 26,377,861 16,413,021 Data center - technology infrastructure - 9,711,022 - Construction contract expenses, excluding depreciation - 809,372 918,022 General and administrative 15,624,516 13,243,073 13,336,400 Sales and marketing 8,548,049 5,402,886 3,424,411 Depreciation and amortization 8,678,168 5,697,071 4,698,292 Impairement of long-lived assets and goodwill - 813,073 - ------------- ------------- ------------- Total operating expenses 71,674,613 62,054,358 38,790,146 ------------- ------------- ------------- Net loss from operations (9,145,331) (13,906,744) (20,576,407) ------------- ------------- ------------- Other income (expense) Change in fair value of derivatives embedded within convertible debt (4,761,000) 15,283,500 - Gain on restructuring and extinguishment, net - 3,420,956 8,475,000 Interest expense (25,048,519) (15,493,610) (14,624,922) Interest income 1,742,609 666,286 131,548 Gain on sale of an asset 499,388 - - Other income (expense), net (436,321) 170,260 4,104,204 ------------- ------------- ------------- Total other expense (28,003,843) 4,047,392 (1,914,170) ------------- ------------- ------------- Loss from continuing operations before income taxes (37,149,174) (9,859,352) (22,490,577) ------------- ------------- ------------- Income taxes - - - Net loss (37,149,174) (9,859,352) (22,490,577) Preferred dividend (726,889) (915,250) (1,158,244) ------------- ------------- ------------- Net loss to common shareholders $(37,876,063) $(10,774,602) $(23,648,821) ============= ============= ============= Net (loss) income per common share: Basic $(0.88) $(0.31) $(0.78) ============= ============= ============= Diluted $(0.88) $(0.40) $(0.78) ============= ============= ============= Weighted average common shares outstanding - basic 42,973,114 35,147,503 30,502,819 Weighted average common shares outstanding - diluted 42,973,114 40,610,003 30,502,819 Reconciliation of Loss from Operations to EBITDA, as adjusted Loss from operations (9,145,331) (13,906,744) (20,576,407) Depreciation and amortization 8,678,168 5,697,071 4,698,292 Stock based compensation 1,020,870 ------------- ------------- ------------- EBITDA, as adjusted $553,707 $(8,209,673) $(15,878,115) ============= ============= ============= Calculation of Gross Profit Margin Operating revenues 62,529,282 48,147,614 18,213,739 Less: Data center operations - services, excluding depreciation 38,823,880 26,377,861 16,413,021 Data center - technology infrastructure 9,711,022 - Construction contract expenses - 809,372 918,022 ------------- ------------- ------------- Gross Profit $23,705,402 $11,249,359 $882,696 ============= ============= ============= Gross Profit Margin as a % of operating revenues 38% 23% 5%
