ATLANTA, GA, October 29, 2003 - Ptek Holdings, Inc. (NASDAQ: PTEK), a leading provider of business communications services, today announced results for the third quarter ended September 30, 2003. Revenue from continuing operations was $96.1 million for the quarter compared to $86.0 million in the third quarter of 2002. GAAP income from continuing operations increased to $8.1 million in the third quarter of 2003 from $2.8 million in the comparable prior year period. GAAP diluted EPS from continuing operations increased to $0.13 in the third quarter of 2003 from $0.05 in the third quarter of 2002. Diluted shares outstanding averaged 63.9 million for the quarter, an 11.9% increase from the third quarter of 2002.
During the third quarter of 2003, Ptek continued to lower its overall cost structure by reducing headcount, office lease obligations and the outstanding balance of its 5 ¾% convertible notes due 2004. These actions are expected to yield annual cost savings in excess of $4 million.
Cost Cutting Impact Offset by Tax Gain
As a result of the cost cutting initiatives, the Company recorded severance, lease termination and bond redemption expenses that negatively affected GAAP diluted EPS from continuing operations by $0.10 per share. The Company also recorded an additional expense of $0.01 per share resulting from an increase in non-cash equity based compensation associated with certain outstanding stock options subject to variable accounting due to the approximately 65% appreciation in the Company's share price during the period.
Conversely, due to a positive adjustment to income tax estimates during the third quarter of 2003, GAAP diluted EPS from continuing operations during the third quarter benefited by $0.14 per share.
"We remain focused on our mission to deliver superior business communications solutions to our enterprise customers, and to do so in the most cost effective manner possible," said Boland T. Jones, Founder, Chairman and CEO of Ptek Holdings, Inc. "As we look ahead to next year, we believe our new product innovation, enterprise customer base and improving operating efficiency will spur continued solid financial performance."
Balance Sheet Improvements
During the quarter, the Company issued $85.0 million of 5.0% convertible notes due 2008 and used the net proceeds to repurchase and redeem $83.0 million face value of its 5 ¾% convertible notes due July 2004. The Company had an outstanding balance of $50.0 million of the 2004 convertible notes as of September 30, 2003.
Ptek recently announced a partial redemption of an additional $10 million principal amount of its convertible notes due 2004. Upon completion of the pending redemption on November 17, 2003, the outstanding principal balance of the 2004 convertible notes will be reduced to $40 million, down from the original issue amount of $172.5 million.
In addition, total cash (cash and cash equivalents and current and non-current restricted cash) increased during the third quarter of 2003 to $37.5 million, from $35.1 million on June 30, 2003, despite $15.3 million in cash used for the acquisition of MediaLinq, completed September 15, 2003.
The Company continued to improve certain leverage measurements, as net debt to equity decreased to 0.9 to 1.0 on September 30, 2003, from 1.1 to 1.0 on June 30, 2003 (see table attached for a calculation of this non-GAAP financial measure).
Premiere Conferencing (www.premconf.com )
Premiere Conferencing's third quarter 2003 revenue grew 15.1%, totaling $40.3 million versus $35.0 million in the same period last year. Total conferencing minutes grew 40% during the third quarter of 2003 compared to the third quarter of 2002. Automated and new services accounted for approximately 75% of total revenue at Premiere Conferencing during the quarter.
Premiere Conferencing continues to invest in new services and in the fourth quarter of 2003 plans to introduce its own data conferencing solution, an easy-to-use, integrated audio and Web collaboration service.
Revenue at the Xpedite operating unit grew 9.5% during the third quarter of 2003, totaling $55.8 million versus $51.0 million in the same period last year. Excluding revenue from MediaLinq, Xpedite's revenue for the third quarter 2003 increased 5.5% from the comparable prior year period.
Xpedite delivered more than 760 million messages during the third quarter of 2003. messageREACH® volume increased 86% and voiceREACHSM volume increased 238% over the third quarter of 2002. Revenue from these new services grew 59% in the third quarter of 2003 from the same period last year and represented approximately 18% of Xpedite's total revenue.
Xpedite continues to invest in new services and in the fourth quarter of 2003 plans to launch its new fax to e-mail solution designed to enable large clients to better manage their fax delivery and receipt through their existing enterprise e-mail system.
Nine Month Financial Performance
Revenue from continuing operations for the nine months ended September 30, 2003, was $280.2 million compared to $256.7 million in the same period last year. Premiere Conferencing revenue for the nine month period ended September 30, 2003, totaled $116.6 million, up 12.8% from the comparable prior year period. Revenue at the Xpedite business unit for the first nine months of 2003 grew 6.7% to $163.7 million from $153.4 million in the comparable prior year period. GAAP income from continuing operations during the first nine months of 2003 increased to $19.6 million from $7.7 million in the first nine months of 2002. GAAP diluted EPS from continuing operations for the first nine months of 2003 was $0.35, up from $0.14 in the first nine months of 2002.
The following statements are based on Ptek's current expectations as of October 29, 2003. These statements are forward-looking statements and actual results may differ materially. The Company assumes no duty to update any forward-looking statements made in this press release. A discussion concerning forward-looking statements is included at the end of this press release and in the Company's filings with the Securities and Exchange Commission.
The Company believes revenue in the fourth quarter of 2003 will be in the range of $97.5 to $99.5 million. Diluted EPS from continuing operations for the fourth quarter is expected to be approximately $0.10. Diluted shares outstanding are expected to total 73.2 million in the fourth quarter of 2003, a 14.7% increase from the preceding quarter and a 31.2% increase from the fourth quarter of 2002.
The Company estimates revenue for 2004 will be in the range of $405 to $420 million. Diluted EPS from continuing operations for 2004 is expected to be in the range of $0.46 to $0.51. Diluted shares outstanding are expected to total approximately 75.0 million in 2004, a 22.2% increase from the estimated 61.4 million average diluted shares outstanding in 2003.
The Company will hold a conference call at 8:30 a.m. ET on Thursday, October 30, 2003, to discuss these results. To participate in the call, please dial-in to the appropriate number below 5-10 minutes prior to the scheduled start time: (800) 289-0468 (US & Canada) or (913) 981-5517 (International). The conference call will be simultaneously broadcast over the Internet via SoundCast®, a Premiere Conferencing service, and can be found at http://www.ptek.com. You may also follow this link for details on the Internet replay and for the text of the earnings release, including the financial and statistical information to be presented in the call.
A replay will be available following the call at 11:30 a.m. ET on October 30, 2003, through midnight November 7, 2003, and may be accessed by calling (888) 203-1112 (US & Canada) or (719) 457-0820 (International). The confirmation code is 360283. The Webcast of this call will be archived on the Company's Website at www.ptek.com.
About Ptek Holdings, Inc.
Ptek Holdings, Inc. is a leading provider of innovative business, data and group communications services for global enterprises. Companies use our audio and data conferencing solutions to conduct group meetings and presentations over the phone or Web. We also enable our customers to process and deliver large quantities of individualized, business critical information, such as electronic statements and invoices, financial transaction and travel confirmations, and drug prescriptions, via our global ASP platform. Ptek serves companies in nearly every business sector, including healthcare, technology, publishing, financial services, travel and hospitality. Our services are marketed under the Premiere Conferencing and Xpedite® brand names.
Ptek Holdings' corporate headquarters is located at 3399 Peachtree Road NE, Suite 700, Atlanta, GA 30326. Additional information can be found at www.ptek.com.
Forward-looking and cautionary statements
Statements made in this press release, other than those concerning historical information, should be considered forward-looking and subject to various risks and uncertainties. Such forward-looking statements are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and are made based on management's current expectations or beliefs as well as assumptions made by, and information currently available to, management. A variety of factors could cause actual results to differ materially from those anticipated in Ptek's forward-looking statements, including, but not limited to, the following factors: technological change; the development of alternatives to our services; our ability to manage our growth; integration of acquired companies; possible adverse effects on our financial condition if we are unable to retain IBM as a customer at the levels currently forecasted; possible adverse results of pending or future litigation or infringement claims; service interruptions; competitive pressures, including pricing pressures; general domestic and international economic, business or political conditions; legislative or regulatory changes; increased financial leverage; our dependence on our subsidiaries for cash flow; and other factors described from time to time in our press releases, reports and other filings with the SEC, including but not limited the "Risk Factors Affecting Future Performance" section of our Annual Report on Form 10-K for the year ended December 31, 2003. All forward-looking statements attributable to us or a person acting on our behalf are expressly qualified in their entirety by this cautionary statement.