DENVER - February 11, 1998 (Nasdaq: QWST ) - Qwest Communications International Inc. today announced its fourth quarter and full year 1997 results, reflecting a fourth quarter revenue increase of 104 percent over the same period in 1996, and a full year revenue increase of 202 percent. Communications services revenue increased 80 percent over the fourth quarter 1996 and 26 percent for the full year.
The following data excludes the impact of Growth Share Plan charges (see Note 1): EBITDA for the fourth quarter 1997 increased 52 percent compared to the fourth quarter 1996, and full year EBITDA increased from $20.0 million to $115.2 million. Fourth quarter 1997 net income increased 43 percent over fourth quarter 1996, and net income per share increased from $0.12 to $0.14. Full year net income increased from $1.5 million to $61.6 million and net income per share increased from $0.02 to $0.63. The increase in net income per share was attained despite weighted average shares of common stock outstanding increasing 11 percent for the full year 1997 over 1996, and 22 percent for the fourth quarter 1997 over the fourth quarter 1996, as a result of the company's initial public offering of common stock in June 1997.
"We are very pleased with our fourth quarter results which reflect the strong progress Qwest made in 1997," said Joseph P. Nacchio, president and CEO at Qwest. "This establishes a solid base from which to grow the network asset and revenues in 1998. The announcements made so far this year reflect the growing momentum of the business. We are ahead of our expectations in every major area and see many opportunities to grow the business and shareholder value in 1998."
Fourth Quarter Revenue for the quarter ended December 31, 1997 totaled $206.4 million, an increase of $105.2 million, or 104 percent compared with $101.2 million for the quarter ended December 31, 1996. Communications services revenue for the quarter totaled $38.2 million, an increase of 80 percent over the $21.3 million reported in 1996. Net income for the fourth quarter of 1997 was $12.3 million, $0.11 per share, compared to net income of $1.9 million, $0.02 per share, for the same quarter of 1996. Net income for the fourth quarter of 1997, excluding the Growth Share Plan charges, was $14.9 million, $0.14 per share, compared to $10.4 million, $0.12 per share, for the fourth quarter of 1996. EBITDA for the fourth quarter of 1997 was $30.5 million compared to $9.7 million for the same quarter of 1996. EBITDA for the fourth quarter, excluding the Growth Share Plan charges, was $34.6 million compared to $22.8 million for the same quarter of 1996, a 52 percent increase.
Full Year Revenue for 1997 totaled $696.7 million, an increase of $465.7 million or 202 percent compared to $231.0 million for 1996. Net income for 1997, was $14.5 million, $0.15 per share, compared to a net loss of $7.0 million, $0.08 per share, for 1996. Net income for 1997, excluding the Growth Share Plan charge, was $61.6 million, $0.63 per share, compared to $1.5 million, $0.02 per share, for 1996. EBITDA for 1997 was $41.7 million compared to $6.9 million for 1996. EBITDA, excluding the Growth Share Plan charge, was $115.2 million for 1997, compared to $20.0 million for 1996, an increase of 476 percent.
"We are extremely pleased with the results for the quarter and the year, especially our significant revenue growth," said Robert S. Woodruff, executive vice president and chief financial officer at Qwest. "Our business units have invested in gaining market share with encouraging results, and we expect to continue this approach in 1998. The underlying volume increases are driving network cost efficiencies."
Carrier Services Carrier services revenue for the fourth quarter of 1997 was $16.6 million, an increase of 33 percent from $12.5 million for the same quarter of 1996 and an increase of 18 percent from the third quarter of 1997 of $14.1 million. Carrier services full year 1997 revenue of $55.6 million represents an increase of $16.9 million, or 44 percent, over recurring 1996 revenues (as adjusted for the sale of a portion of the company's dedicated line services revenue base effective July 1, 1996). The revenue mix for carrier services continued to improve with growth in "on net" dedicated line services. The increases in revenue were achieved despite limited network availability. As a result of recent multimillion dollar contract signings and further network buildout, carrier sales are expected to significantly increase.
Commercial Services Commercial services revenue for the fourth quarter of 1997 was $21.6 million, an increase of 146 percent from $8.8 million for the same quarter of 1996, and an increase of 18 percent from the third quarter of 1997. Commercial services full year 1997 revenue of $59.6 million represents an increase of $25.3 million, or 74 percent, over 1996 revenue of $34.3 million. The fourth quarter increase reflects the continued success of the dial-around service, the launch of the dial-1 branded offer, the expansion of direct and indirect sales channels, and the inclusion of approximately two months of revenue from the acquisition of SuperNet, which closed in late October. Regional direct sales office deployment continues commensurate with the network buildout.
Construction Services Construction services revenue for the fourth quarter of 1997 was $168.2 million, an increase of 111 percent from $79.9 million for the same quarter of 1996 and an increase of 7 percent from the third quarter of 1997. Construction services revenue for the full yearn increase of $442.2 million, or 318 percent, over 1996 revenue of $139.2 million. As of December 31, 1997, the company had approximately 15,000 miles of the rights-of-way secured; approximately 9,500 miles of conduit in the ground; approximately 6,700 miles of fiber optic cable installed; and, as of February 5, 1998, in excess of 3,600 miles of network activated.
Qwest Communications International Inc.
Summary of Unaudited Results
(Amounts in Thousands, Except Per Share Data)
Three Months Ended
December 31, 1996
September 30, 1997
Revenue: Carrier services $ 12,467 $ 14,098 $ 16,582
Commercial services 8,790 18,361 21,616
Total communication services revenue 21,257 32,459 38,198
Construction services 79,903 156,496 168,184
Total revenue 101,160 188,955 206,382
Operating expenses: Telecommunications services 17,969 26,417 25,856
Network construction services 49,881 106,160 114,681
Selling, general and administrative 11,525 27,316 31,203
Growth share plan 13,100 4,131 4,131
Depreciation and amortization 4,355 5,071 7,148
Total expenses 96,830 169,095 183,019
Income from operations 4,330 19,860 23,363
Other income (expense), net (1,320) (218) (4,237)
Income before income tax expense 3,010 19,642 19,126
Income tax expense 1,076 6,991 6,866
Net income $ 1,934 $ 12,651 $ 12,260
Weighted average common shares outstanding 88,158 105,812 107,758
Net income per share $ 0.02 $ 0.12 $ 0.11
EBITDA $ 9,654 $ 24,946 $ 30,487
As adjusted to exclude Growth
Share Plan: Net income $ 10,449 $ 15,336 $ 14,945
Weighted average common shares outstanding 88,158 105,812 107,758
Net income per share $ 0.12 $ 0.14 $ 0.14
EBITDA $ 22,754 $ 29,077 $ 34,618
This release may contain forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by Qwest with the SEC, specifically the most recent reports on Form 10-Q, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including potential fluctuations in quarterly results, dependence on new product development, rapid technological and market change, failure to complete the network on schedule, volatility of stock price, financial risk management and future growth subject to risks.
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