RCN Corporation Q1 2008 Earnings Call Transcript

RCN Corporation (RCNI)

Q1 2008 Earnings Call

May 8, 2008 8:30 am ET

Executives

Richard Ramlall – SVP of Strategic Affairs and Programming.

Peter Aquino – President and CEO

Michael Sicoli – CFO

Ben Preston – General Counsel

Felipe Alvarez – President, RCN Metro

Analysts

Colby Synesael – Merriman Curhan Ford & Co

David Joyce – Miller Tabak

David Kestenbaum – Morgan Joseph

Ian Zaffino – Oppenheimer

Steve Anniger – Bear, Stearns & Co.

Gregg Miller – Deutsche Bank

Presentation

Operator

Welcome to the RCN Corporation first quarter 2008 conference call. At this time, all participants are in a listen only mode. Following management’s prepared remarks we will hold a question and answer session. (Operator Instructions). As a reminder, this conference is being recorded today, Thursday, May 8, 2008.

I would now like to turn this call over to Richard Ramlall, Senior Vice President of Strategic Affairs and Programming. Thank you, sir please go ahead.

Richard Ramlall

Thank you operator. Welcome everyone and thank you for joining us today to discuss RCN’s first quarter 2008 results. Joining me on the line are Peter Aquino, President, Chief Executive Officer of RCN, Mike Sicoli our Chief Financial Officer and Ben Preston our General Counsel. After management’s prepared remarks we will open up the line for Q&A.

Before we get started, I wanted to point out today’s call and web cast are being accompanied by a slide presentation that we invite you to join, by accessing RCN’s website at www.RCN.com, clicking on company and events calendar. We have also posted a PDF document of our slides on our website, so that you can down load them for easier viewing. And if you haven’t done so already you can access the results press release we have provided today at the same site.

We will refer to GAAP and non-GAAP measures in today’s call and in the press release and web cast slides. Table of reconciliation of income statements, balance sheets and operating metric measures and segment results are available in pages eight through ten of today’s press release and can also be found on RCN website at RCN.com, clicking on company and investor relations.

Before we begin, I would like to remind you that today’s release, conference call and presentation contain forward-looking statements regarding future events and future performance of RCN that involve risks and uncertainties that could materially affect actual results. This information is qualified in its entirety by cautionary statements and risk factor disclosures contained in certain of RCN’s Security and Exchange Commission filings. For a description of certain factors that could cause actual results to vary from current expectations and forward-looking statements please refer to documents that RCN files with the SEC and that are available through RCN.com.


With that, I will turn the call over to Peter Aquino. Pete

Peter Aquino

Thank you, Richard and good morning everyone. We are off to a great start in 2008 reaching record levels for revenues at 180 million, a 17% increase and EBITDA of 44 million, a 21% increase year-over-year.

Our success is driven by continued operation improvements and early benefits from the integration of our latest CLEC acquisition, NEON last November. This quarter we also exceeded expectations in customers and connection growth once again, supported by strategic investments in operations, and small medium business.

As we walk through today’s presentation, you will note that we are capturing broadband demand not only at the consumer level with triple play, but also vertically by addressing the business sector. We are building future value for our shareholders by leveraging through robust fiber assets that we have in New York City, New England, the Mid-Atlantic and Chicago.

We serve five of the top ten markets in the country and we also expanded into several tier two markets, from Richmond Virginia to Portland Maine. We now have a new canvas to work with, especially in the northeast corridor, where customer expectations sit very well with RCN high-end services.

So let’s get started and turn to slide three to discuss our strong competitive position. RCN continues to build a leading edge and sustainable growth model that goes beyond our traditional residential success.


What begins to emerge this first quarter is evidence of our competitive advantage in the business community. Over the last three years we focused on investing in facilities that enabled us to achieve a strong northeast cluster. We targeted acquisitions that not only deepened our penetration but also extended our reach.

If you refer to the map on this chart the geography we now cover is a combination of the original RCN network plus ConEd, the MCI Pops and now NEON. Our expansion strategy within our footprint has strengthened our competitive position in all three business units, residential, small medium business, and especially within our CLEC called RCN Metro Optical Networks.

Regarding RCN Metro, we are expecting double-digit revenue growth to put us on track for nearly 200 million in annual revenue and 25% EBITDA margins right out of the gate. So as a results of it’s relative contribution to RCN, we are now separately reporting our CLEC results for the first time this quarter. ….to read more visit http://seekingalpha.com/