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Press Release -- February 8th, 2010
Source: Terremark
Tags: Colocation, Construction, Datacenter, Equipment

Terremark Worldwide Reports Third Quarter Fiscal Year 2010 Results

Company Delivers Record Bookings, Continues Strong Revenue and EBITDA Growth

  • Total revenues for the quarter ended December 31, 2009 were $74.3 million, representing a 13% year-over-year increase
  • EBITDA, as adjusted, was $19.8 million for the quarter, representing an 8% year-over-year increase
  • Income from operations was $18.9 million for the nine months ended December 31, 2009
  • Bookings were a record $37.6 million for the quarter
  • Total number of customers as of December 31, 2009 was 1,320, with 46 new customers added in the quarter and 191 customers added through the DS3 DataVaulting acquisition
  • Terremark completes construction of second, 50,000-square-foot datacenter at the NAP of the Capital Region

MIAMI, Feb 08, 2010 (BUSINESS WIRE) -- Terremark Worldwide, Inc. (NASDAQ:TMRK), a leading global provider of managed IT infrastructure services, today reported its results for the quarter ended December 31, 2009. Terremark delivered a record bookings quarter, with $37.6 million in annual contract value secured, and continued its strong revenue and EBITDA growth with $74.3 million in revenues and EBITDA, as adjusted, of $19.8 million.

"With CIOs increasingly focused on driving business growth while obtaining maximum value for every dollar spent, Terremark's differentiated business model and complete set of infrastructure services, from cloud computing to cyber security, ideally positions our Company to benefit from the shift in how IT solutions are procured and delivered," said Manuel D. Medina, Chairman and CEO of Terremark. "Our continued success is further evidence of the compelling value our innovative set of offerings provide Federal and enterprise customers and our ability to effectively execute our business plan."

"Following Terremark's strong performance through the first nine months of our fiscal year, we are confident in meeting our key financial targets based on our robust sales pipeline and high-level of visibility into the business," said Jose Segrera, Terremark's CFO. "With a sound balance sheet and strong liquidity, our Company is well positioned to continue delivering leading-edge solutions from our global footprint of world-class datacenter facilities."

Q3 FY10 Financial Highlights

  • Total revenues for the quarter ended December 31, 2009 were $74.3 million, which is in-line with previously announced guidance and represents a 13% year-over-year increase.
  • EBITDA, as adjusted, for the quarter ended December 31, 2009 was $19.8 million, in-line with previously announced guidance. EBITDA, as adjusted, is defined as income (loss) from operations less depreciation, amortization, integration expenses, certain legal and professional costs, litigation and employment settlements, share-based payments, including share-settled liabilities and other non-cash expenses. EBITDA, as adjusted, should be considered in addition to, but not in lieu of, income (loss) from operations reported under generally accepted accounting principles (GAAP).
  • Income from operations was $18.9 million for the nine months ended December 31, 2009.
  • Cross connects billed to customers increased to 8,883 as of December 31, 2009 from 7,857 a year earlier, representing a 13% year-over-year increase. The continued increase in cross connects billed to customers underscores the compelling value of Terremark's network-neutral model.
  • Utilization of total colocation space utilization was 29.6% as of December 31, 2009. Utilization of built-out colocation space was 63.9% as of December 31, 2009.

Q3 FY10 Business Highlights

  • Terremark increased the annualized cloud computing run rate to $17.2 million during the third quarter, a 30% increase from the previous quarter. The Company's recently launched Cloud Computing Strike Force Team has helped continue Terremark's success in increasing cloud revenue and gaining traction with Fortune 500 enterprises and Federal government agencies.
  • Terremark booked $37.6 million of new annual contract value in the quarter ended December 31, 2009, which represents the highest bookings quarter in the Company's history.
  • During the quarter ended December 31, 2009, Terremark added 46 new customers, for a total of 1,320 customers as of December 31, 2009. This includes 191 existing DS3 DataVaulting customers that were added through the acquisition.
  • Construction of the second datacenter at Terremark's NAP of the Capital Region campus was completed on budget and on schedule, and is currently open for customer deployments. The Company continues to see robust demand from Federal government agencies and enterprises for services offered from this highly secure datacenter campus.
  • In January, Terremark signed a lease agreement with Digital Realty Trust, Inc. (NYSE:DLR, news, filings) to establish a datacenter within one of Digital Realty Trust's Dallas facilities. Through the agreement, Terremark will occupy 10,000 square feet of raised floor space with the ability to lease additional space to accommodate future growth.
  • In November 2009, Terremark announced the acquisition of DS3 DataVaulting, a leading data management solutions Company. The team of experts from DS3, which has been successfully integrated into Terremark, has a proven track record of offering cost-effective, flexible and secure managed storage solutions for remote backup and restore which represented a strategically ideal fit with Terremark's suite of managed IT infrastructure services.

Business Outlook

  • For the fourth quarter of fiscal 2010, the Company expects revenues to range from $80.1 million to $85.1 million and EBITDA, as adjusted, to range from $25.4 million to $30.4 million.
  • For the full 2010 fiscal year, the Company expects EBITDA, as adjusted, of $80.0 million to $85.0 million and revenues to range between $290.0 million to $295.0 million.
  • For the full 2011 fiscal year, the Company expects revenues between $335.0 million and $340.0 million and EBITDA, as adjusted, to range from $95.0 million to $100.0 million.

The foregoing statements regarding targets for the quarter and full year are forward-looking and actual results may differ materially. These are the Company's targets, not predictions of actual performance.

Conference Call Information

  • The Company will hold a conference call today, February 8, 2010 at 5:00 p.m. ET, to discuss all of the above.
  • To hear the conference call live, dial 800-706-7741 (domestic) or 617-614-3471 (international) five to ten minutes before the call and reference the passcode TMRK Call.
  • A simultaneous live Webcast of the call will be available on the Internet at www.terremark.com , under the Investor Relations heading.
  • A replay of the call will be available beginning on Monday, February 8, 2010 at 8:00 p.m. (ET) by dialing 888-286-8010 (domestic) or 617-801-6888(international) and providing the following replay code: 59963849. In addition, a replay of the Webcast will be available on the Company's web site at www.terremark.com

Additional information regarding the Company's financial performance as of and for the three and nine months ended December 31, 2009 and 2008, and the financial performance as of and for the three months ended September 30, 2009 can be found on the attached balance sheet and statement of operations and in the Company's Quarterly Report on Form 10-Q.

About Terremark Worldwide, Inc.

Terremark Worldwide (NASDAQ:TMRK) is a leading global provider of IT infrastructure services delivered on the industry's most robust and advanced technology platform. Leveraging data centers in the United States, Europe and Latin America with access to massive and diverse network connectivity, Terremark delivers government and enterprise customers a comprehensive suite of managed solutions including managed hosting, colocation, disaster recovery, security, data storage and cloud computing services. Terremark's Enterprise Cloud computing architecture delivers the agility, scale and economic benefits of cloud computing to mission-critical enterprise and Web 2.0 applications and its DigitalOps(R) service platform combines end-to-end systems management workflow with a comprehensive customer portal. More information about Terremark Worldwide can be found at 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, ability to cross-sell across an acquired customer base, ability to increase revenue yields within facilities, ability to refinance existing debt, 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, and the successful integration of operations of acquired companies. 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 items that it believes are not good indicators of the Company's current or future operating performance. These items are depreciation, amortization, integration expenses, certain legal and professional costs, litigation and employment settlements, other non-cash expenses and share-based payments, including share-settled liabilities.

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 three and nine months ended December 31, 2009 and 2008 and the three months ended September 30, 2009, presented within this press release.

Terremark Worldwide, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)


December 31,
September 30,
December 31,



2009


2009


2008
Assets





Current assets





Cash and cash equivalents
$ 59,560

$ 130,724

$ 47,035
Restricted cash

-


-


1,107
Accounts receivable, net

41,885


37,677


34,333
Prepaid expenses and other current assets
13,234


11,951


9,688
Total current assets

114,679


180,352


92,163







Property and equipment, net
376,994


327,488


292,965
Debt issuance costs, net

3,369


3,362


7,839
Other assets

17,798


13,602


9,144
Intangibles, net

12,236


11,879


13,598
Goodwill

95,946


86,139


86,139
Total assets
$ 621,022

$ 622,822

$ 501,848







Liabilities and Stockholder's Equity




Current liabilities





Current portion of capital lease obligations and secured loans $ 4,212

$ 3,068

$ 3,701
Accounts payable and other current liabilities
62,557


49,433


50,766
Interest payable

3,247


14,685


4,179
Current portion of convertible debt
-


-


31,466
Total current liabilities

70,016


67,186


90,112
Secured loans, less current portion
388,207


387,596


251,846
Convertible debt, less current portion
57,192


57,192


57,192
Deferred rent and other liabilities
17,514


16,114


15,545
Deferred revenue

8,424


8,028


8,316
Total liabilities

541,353


536,116


423,011
Commitments and contingencies
-


-


-







Stockholders' equity





Series I convertible preferred stock
-


-


-
Common stock

65


65


59
Common stock warrants

8,901


8,927


10,674
Additional paid-in capital

454,364


452,591


425,485
Accumulated deficit

(383,486 )

(375,408 )

(357,141 )
Accumulated other comprehensive loss
(175 )

531


(240 )
Total stockholders' equity

79,669


86,706


78,837
Total liabilities and stockholders' equity $ 621,022

$ 622,822

$ 501,848
Terremark Worldwide, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)



For the Three Months Ended



December 31,
September 30,
December 31,




2009


2009


2008
Revenues

$ 74,272

$ 69,803

$ 65,877
Expenses






Cost of revenues, excluding depreciation and amortization


41,880


39,757


34,242
General and administrative


8,807


8,479


8,752
Sales and marketing


7,197


6,099


7,155
Depreciation and amortization


9,708


8,894


7,538
Operating expenses


67,592


63,229


57,687
Income from operations


6,680


6,574


8,190








Other (expenses) income






Interest expense


(13,656 )

(13,929 )

(8,176 )
Loss on early extinguishment of debt


-


-


-
Change in fair value of derivatives


(367 )

61


(8,223 )
Interest income


85


119


256
Other


59


265


(504 )
Total other expenses


(13,879 )

(13,484 )

(16,647 )
Loss before income taxes


(7,199 )

(6,910 )

(8,457 )
Income tax expense


(879 )

(326 )

(229 )
Net loss


(8,078 )

(7,236 )

(8,686 )
Preferred dividend


(234 )

(235 )

(195 )
Net loss attributable to common stockholders

$ (8,312 )
$ (7,471 )
$ (8,881 )
Net loss per common share:






Basic and diluted

$ (0.13 )
$ (0.12 )
$ (0.15 )
Weighted average common shares outstanding - basic and diluted


64,803


64,669


59,544








Reconciliation of Income from Operations to EBITDA, as adjusted:



Income from operations


6,680


6,574


8,190
Depreciation and amortization


9,708


8,894


7,538
Share-based payments, including share-settled liabilities


2,307


2,116


1,780
Certain legal and professional costs


801


288


87
Litigation and employment settlements


278


103


769
EBITDA, as adjusted

$ 19,774

$ 17,975

$ 18,364








Calculation of Gross Profit Margin:



Revenues


74,272


69,803


65,877
Less:






Cost of revenues, excluding depreciation and amortization


41,880


39,757


34,242
Gross profit

$ 32,392

$ 30,046

$ 31,635
Gross Profit Margin as a % of Revenues


44 %

43 %

48 %
Terremark Worldwide, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)


For the Nine Months Ended


December 31,
December 31,



2009


2008
Revenues
$ 209,836

$ 181,574
Expenses



Cost of revenues, excluding depreciation and amortization

118,362


101,459
General and administrative

25,522


28,702
Sales and marketing

19,572


19,633
Depreciation and amortization

27,474


20,086
Operating expenses

190,930


169,880
Income from operations

18,906


11,694





Other (expenses) income



Interest expense

(36,649 )

(21,823 )
Loss on early extinguishment of debt

(10,275 )

-
Change in fair value of derivatives

(1,806 )

(4,069 )
Interest income

297


1,203
Other

814


(696 )
Total other expenses

(47,619 )

(25,385 )
Loss before income taxes

(28,713 )

(13,691 )
Income tax expense

(1,779 )

(1,025 )
Net loss

(30,492 )

(14,716 )
Preferred dividend

(703 )

(586 )
Net loss attributable to common stockholders
$ (31,195 )
$ (15,302 )
Net loss per common share:



Basic and diluted
$ (0.49 )
$ (0.26 )
Weighted average common shares outstanding - basic and diluted

63,636


59,345
Reconciliation of Income from Operations to EBITDA, as adjusted:



Income from operations

18,906


11,694
Depreciation and amortization

27,474


20,086
Share-based payments, including share-settled liabilities

6,455


4,938
Certain legal and professional costs

1,194


1,356
Litigation and employment settlements

420


770
Other non-cash expenses

-


383
EBITDA, as adjusted
$ 54,449

$ 39,227





Calculation of Gross Profit Margin:



Revenues

209,836


181,574
Less:



Cost of revenues, excluding depreciation and amortization

118,362


101,459
Gross profit
$ 91,474

$ 80,115
Gross Profit Margin as a % of Revenues

44 %

44 %

SOURCE: Terremark Worldwide, Inc.

Terremark Worldwide, Inc., Miami
Media Relations:
Xavier Gonzalez, 305-961-3134
xgonzalez@terremark.com
or
Investor Relations:
Hunter Blankenbaker, 305-961-3109
hblankenbaker@terremark.com

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