Primus Telecom First Quarter 2003 Financial Results
Greg Wilson Managing Director and Chief Operating Officer
Speech Notes 5 May 2003 Sydney
Speech Notes 5 May 2003 Sydney
Good morning and thank you for attending today.
I would like to touch on a couple of areas before inviting your questions.
Firstly, I will outline the financial results for the Australian operations for the first quarter to the end of March, 2003
Secondly, I would like to give you some detail about our key growth segments
And finally, I will touch on the latest financial results from our US parent company.
Australian Financial Results
I am very pleased to be able to report to you the continuation of solid growth and profitability for Primus Telecom Australia.
Primus Telecom Australia recorded a net profit from operations of A$10.7 million in the three months to March 31, 2003.
This was a record quarterly result and builds on a growing trend of profitability in the Australian business over the last year.
The March quarter net profit from operations is up 100 per cent from $5.4 million in the corresponding period last year, and up 24 per cent from $8.7 million in the fourth quarter of 2002.
Our first quarter 2003 operating EBITDA was a record A$21.6 million, which was 33% higher than the $16.2 million recorded in the first quarter of 2002, and 2% above the fourth quarter of 2002.
This was an impressive result during a time of depressed demand across most of Australia for basic telecommunications services.
Notwithstanding the relatively flat conditions, we have embarked on an aggressive growth strategy, with a renewed push into growing market segments, particularly Internet and data.
In addition, we have put in place changes across a large number of areas focussing on customer quality, servicing, marketing, new products and services, as well as in our own systems and processes.
We have developed a more robust organisation better able to compete in a difficult market, and one that will be even better placed once conditions improve.
All of this has come together to deliver what are truly excellent numbers, and which point to a period of increasing market share and sustained profitability.
We are witnessing very positive growth in the take-up of new services in key areas. Net revenue increased by 5.3% in the year to March, to A$122.2m compared with A$116.2 million in the first quarter of 2002.
Consumer Internet and data services grew by 9% during the March quarter, while Business Internet and data services rose by 4%.
And, of course, this latest quarterly result follows our financial results for the 2002 year, in which we recorded our first-ever profitable year in Australia with a net profit from operations of $25.3 million.
Primus Australia generated A$20 million of cash from operating activities during the first quarter of 2003 compared with A$15 million in the fourth quarter of 2002.
Cash and investments at March 31 totaled A$30 million compared with A$25 million at December 31, 2002. During the March quarter, Primus Australia spent A$3 million on capital expenditure and reduced inter-company debt by A$12 million. In the past year, Primus Australia has remitted A$60 million to its US parent company.
Key Growth Areas
Im sure that most of you would have seen our new advertising campaign which has been very successful, not only in increasing brand awareness, but in helping to attract many new customers to our broadband service.
We added almost 50,000 new services during the March quarter, of which 31,000 or 60% were for Internet services.
And almost half of our new customers took up one of our bundled service offerings.
During the March quarter, broadband DSL customers grew by 85% to total over 8,000 subscribers. This, I believe, establishes our position as the main competitor behind Telstra in the residential DSL market.
This strong market position has been driven by a combination of competitive pricing, reliable and flexible service offerings, a renewed marketing campaign, and innovative partnerships with a range of software and hardware providers.
We will continue to focus strongly on this element of the business as we see real opportunities for further profitable growth.
The idea of frustration-free broadband has clearly struck a chord. We are receiving a record level of inquiries from both people who are either switching from another provider, and those who have come to realise the clear benefits of broadband over dial-up Internet.
In connection with our broadband strategy, we have entered into a number of exciting partnerships with content providers in order to help drive demand for broadband, and demonstrate the rich and exciting possibilities it opens up.
In recent times, we have teamed up with:
Tropfest the worlds largest short film festival, which will see iPrimus subscribers with exclusive rights to the films.
The Secret Life of Us the producers, Southern Star Endemol have developed a branded premium content area which is exclusively available to iPrimus subscribers and is updated regularly.
The Melbourne International Chamber Music Competition this is regarded at the Olympics of chamber music and will see the worlds best musicians from 12 countries compete in Melbourne in July. All the content will be available to iPrimus subscribers.
I think its clear that a key element of our strategy is in linking with those partners that help us to deliver a more complete service package, and in turn, help us to achieve a competitive advantage over our opposition.
US Financial Results
I want to touch briefly on the financial results of our parent company.
Primus Australias parent company reported first quarter 2003 net revenue of US$300 million, a record gross margin of 36.8%, record income from operations of US$12 million, and net income of US$13 million.
This was an outstanding performance. It also announced that as part of its continuing program to further strengthen its balance sheet, it had reduced long-term debt by US$39 million during the quarter, plus a further US$25 million during the month of April.
The company was also named a winner in the Best Business Turnaround category for the first-ever American Business Awards. In the space of two years, Primus has come from the brink of expected oblivion to being one of the most remarkable business recoveries we have seen. It is a great credit to all those who have overseen and executed this successful strategy.
The company was relisted on the main boards of the NASDAQ market earlier this year.
Conclusion
In conclusion, I am delighted with the results to date and the direction of the Australian operations.
We have achieved this after a year in which there have been a number of important changes to the business which have clearly contributed to the superior performance we are now experiencing.
We are determined to build on that success with a range of new products and services offered at great value, new business acquisitions, and a continued focus on company-wide improvement.
Thank you for your time today.
I would now be happy to take any questions regarding todays announcement.
I would like to touch on a couple of areas before inviting your questions.
Firstly, I will outline the financial results for the Australian operations for the first quarter to the end of March, 2003
Secondly, I would like to give you some detail about our key growth segments
And finally, I will touch on the latest financial results from our US parent company.
Australian Financial Results
I am very pleased to be able to report to you the continuation of solid growth and profitability for Primus Telecom Australia.
Primus Telecom Australia recorded a net profit from operations of A$10.7 million in the three months to March 31, 2003.
This was a record quarterly result and builds on a growing trend of profitability in the Australian business over the last year.
The March quarter net profit from operations is up 100 per cent from $5.4 million in the corresponding period last year, and up 24 per cent from $8.7 million in the fourth quarter of 2002.
Our first quarter 2003 operating EBITDA was a record A$21.6 million, which was 33% higher than the $16.2 million recorded in the first quarter of 2002, and 2% above the fourth quarter of 2002.
This was an impressive result during a time of depressed demand across most of Australia for basic telecommunications services.
Notwithstanding the relatively flat conditions, we have embarked on an aggressive growth strategy, with a renewed push into growing market segments, particularly Internet and data.
In addition, we have put in place changes across a large number of areas focussing on customer quality, servicing, marketing, new products and services, as well as in our own systems and processes.
We have developed a more robust organisation better able to compete in a difficult market, and one that will be even better placed once conditions improve.
All of this has come together to deliver what are truly excellent numbers, and which point to a period of increasing market share and sustained profitability.
We are witnessing very positive growth in the take-up of new services in key areas. Net revenue increased by 5.3% in the year to March, to A$122.2m compared with A$116.2 million in the first quarter of 2002.
Consumer Internet and data services grew by 9% during the March quarter, while Business Internet and data services rose by 4%.
And, of course, this latest quarterly result follows our financial results for the 2002 year, in which we recorded our first-ever profitable year in Australia with a net profit from operations of $25.3 million.
Primus Australia generated A$20 million of cash from operating activities during the first quarter of 2003 compared with A$15 million in the fourth quarter of 2002.
Cash and investments at March 31 totaled A$30 million compared with A$25 million at December 31, 2002. During the March quarter, Primus Australia spent A$3 million on capital expenditure and reduced inter-company debt by A$12 million. In the past year, Primus Australia has remitted A$60 million to its US parent company.
Key Growth Areas
Im sure that most of you would have seen our new advertising campaign which has been very successful, not only in increasing brand awareness, but in helping to attract many new customers to our broadband service.
We added almost 50,000 new services during the March quarter, of which 31,000 or 60% were for Internet services.
And almost half of our new customers took up one of our bundled service offerings.
During the March quarter, broadband DSL customers grew by 85% to total over 8,000 subscribers. This, I believe, establishes our position as the main competitor behind Telstra in the residential DSL market.
This strong market position has been driven by a combination of competitive pricing, reliable and flexible service offerings, a renewed marketing campaign, and innovative partnerships with a range of software and hardware providers.
We will continue to focus strongly on this element of the business as we see real opportunities for further profitable growth.
The idea of frustration-free broadband has clearly struck a chord. We are receiving a record level of inquiries from both people who are either switching from another provider, and those who have come to realise the clear benefits of broadband over dial-up Internet.
In connection with our broadband strategy, we have entered into a number of exciting partnerships with content providers in order to help drive demand for broadband, and demonstrate the rich and exciting possibilities it opens up.
In recent times, we have teamed up with:
Tropfest the worlds largest short film festival, which will see iPrimus subscribers with exclusive rights to the films.
The Secret Life of Us the producers, Southern Star Endemol have developed a branded premium content area which is exclusively available to iPrimus subscribers and is updated regularly.
The Melbourne International Chamber Music Competition this is regarded at the Olympics of chamber music and will see the worlds best musicians from 12 countries compete in Melbourne in July. All the content will be available to iPrimus subscribers.
I think its clear that a key element of our strategy is in linking with those partners that help us to deliver a more complete service package, and in turn, help us to achieve a competitive advantage over our opposition.
US Financial Results
I want to touch briefly on the financial results of our parent company.
Primus Australias parent company reported first quarter 2003 net revenue of US$300 million, a record gross margin of 36.8%, record income from operations of US$12 million, and net income of US$13 million.
This was an outstanding performance. It also announced that as part of its continuing program to further strengthen its balance sheet, it had reduced long-term debt by US$39 million during the quarter, plus a further US$25 million during the month of April.
The company was also named a winner in the Best Business Turnaround category for the first-ever American Business Awards. In the space of two years, Primus has come from the brink of expected oblivion to being one of the most remarkable business recoveries we have seen. It is a great credit to all those who have overseen and executed this successful strategy.
The company was relisted on the main boards of the NASDAQ market earlier this year.
Conclusion
In conclusion, I am delighted with the results to date and the direction of the Australian operations.
We have achieved this after a year in which there have been a number of important changes to the business which have clearly contributed to the superior performance we are now experiencing.
We are determined to build on that success with a range of new products and services offered at great value, new business acquisitions, and a continued focus on company-wide improvement.
Thank you for your time today.
I would now be happy to take any questions regarding todays announcement.
