1 / 19

5 th Annual Communications Conference September 11, 2007

5 th Annual Communications Conference September 11, 2007. Safe Harbor.

renata
Télécharger la présentation

5 th Annual Communications Conference September 11, 2007

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. 5th Annual Communications ConferenceSeptember 11, 2007

  2. Safe Harbor The statements in this presentation are “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on current expectations, are not strictly historical statements, and may differ materially from actual results. Forward looking statements include without limitation, those regarding management's plans, goals, expectations, guidance, objectives, strategy, and timing for future operations and products such as product plans and performance, predictions or expectations of future growth, management's assessment of market factors, currency exchange rates, the availability of financing and future financial performance. Among factors that could cause actual results to differ materially are changes in business conditions, including changes in the telecommunications or Internet industry or the general economy or capital markets; DSL, Internet, Voice over Internet Protocol (“VoIP”) and fixed line and wireless telecom competition; changes in service offerings or business strategies; fluctuations in currency exchange rates; difficulty in provisioning VoIP, DSL and data services; changes in the regulatory schemes and regulatory enforcement in the markets in which we operate; restrictions on our ability to follow certain strategies or complete certain transactions as a result of our capital structure or debt covenants; the possible inability to raise capital when needed, or at all; the inability to reduce debt significantly; risks associated with PRIMUS's limited DSL, Internet, data and web-hosting experience and expertise, entry into developing markets, the possible inability to hire and/or retain qualified sales, technical and other personnel; and risks associated with international operations (including foreign currency translation risks); dependence on effective information systems; dependence on third parties to enable us to expand and manage our global network and operations; and dependence on the performance of PRIMUS's global communications network. These factors are discussed more fully in PRIMUS's public filings, including its most recent 10Q and 10K filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date these statements were made. PRIMUS disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 2

  3. About PRIMUS We are a global, facilities-based, integrated communications service provider of bundled voice, VoIP, Internet and data hosting services to retail customers in select major international markets 3

  4. Australia Canada US Europe Global Wholesale Where We Do Business * All USD figures based on six months ended 6/30/07, annualized; customer numbers are as of July 31, 2007 4

  5. Small or Entry Position Strong Presence Developing Position The Services We Offer…. Long Distance Local Resale On-net Services Internet Access Enterprise IP Hosting Services VoIP (Local/LD) Bundled Services Australia Canada U.S. Europe 5

  6. Our Current Position • Strong cash position and an improved two-year liquidity outlook • No material debt maturities until 2nd half of 2009 • Revenue and margin from new growth services are showing 8% and 7% CQGR (compounded quarterly growth rate) • Revenue run-rate in excess of $210 million annually • With enhanced liquidity we are investing more in sales and marketing, improving our sales productivity and tailoring our spend toward growth services • Our competitors continue to out-spend us in advertising and marketing • We are seeing more contribution from new growth services to combat decline in legacy, high-margin stand-alone services (e.g., LD and dial-up Internet) • Due to usage declines stemming from mobile, broadband and VoIP substitution • Low-margin services (e.g., wholesale voice and pre-paid) may either decline or remain stable • Within our control and depend on profitability 6

  7. * Includes VoIP, data/hosting, broadband IP, on-net local and wireless Accelerating Growth/Expanding Margins from Growth Services* (US$ millions) 8% CQGR 7% CQGR $210 MM/Year Revenue Run Rate with Expanding Margins 7

  8. Two-Year Transformation Plan • Continue to strengthen the balance sheet and medium-term liquidity position • Invest in high-margin, high-growth initiatives to compensate for revenue decline in the legacy voice and dial-up ISP businesses • Expand margins by increasing the revenue mix in favor of higher- margin growth services and on-net services • Narrow geographic and product focus • Continue to improve the Company’s non-sales and non-marketing cost structure through increased outsourcing and/or off-shoring and aggressive cost management • Sell non-strategic businesses to generate $50 million - $100 million in cash by the year end 2008 8

  9. Growth Initiatives/Opportunities • Additional and expanded hosting centers in Canada and Australia • High margin, high growth service • Expanding direct and indirect sales channels in Canada, Australia, the US and the UK to grow hosting and IP services • Additional DSLAMs in Australia • Increasing from 180 to 255 for expanded coverage and more on-net revenue Goal: To generate quarter-over-quarter revenue and margin growth from these services that more than off-sets decline of legacy, high-margin, stand-alone services 9

  10. Financial Summary

  11. First Half 2007 2003 2004 2005 2006 ($ in millions) Net Revenue $1,288 $1,351 $1,177 $1,015 $457 Gross Margin 38.9% 39.2% 33.7% 34.7% 37.0% (1) Adjusted EBITDA $159 $135 $18 $62 $31 Interest Expense, net $61 $51 $51 $53 $28 (2) Free Cash Flow $40 $27 ($101) ($19) ($12) Capital Expenditures $25 $42 $50 $33 $17 Net Debt $478 $510 $592 $566 $571 Annual Financial Summary (1) Adjusted EBITDA defined as Net Income plus Interest Expense, Income Tax Expense, Depreciation and Amortization, Non-cash compensation Expense, Loss on Sale of Assets, Asset Impairment Write-down, and Equity investment Write-off and loss; minus (Gain) Loss on Early Extinguishment of Debt, Foreign Currency Transaction, Extraordinary Items, and Interest Income and Other Income. 2006 EBITDA includes $4MM non-recurring, non-cash restructuring charge related to PrePaid Services business (Q206) and $1.5MM non-cash compensation expense. (2) Free cash flow defined as net cash provided by (used in) operating activities less Capital Expenditures. 11

  12. Quarterly Adjusted EBITDA(1) _______________________________________________________ (1) Adjusted EBITDA defined as Net Income plus Interest Expense, Income Tax Expense, Depreciation and Amortization, Non-cash compensation Expense, Loss on Sale of Assets, Asset Impairment Write-down, and Equity investment Write-off and loss; minus (Gain) Loss on Early Extinguishment of Debt, Foreign Currency Transaction, Extraordinary Items, and Interest Income and Other Income.All EBITDA figures exclude results of Primus India which was sold in Q206. Q206 EBITDA includes $4MM non-recurring, non-cash restructuring charge related to Prepaid Services business and $1.5MM non-cash compensation expense. 12

  13. Revenue from Legacy Products Revenue from Growth Products(1) Total Company Gross Margin % EBITDA (1)Includes VoIP, data/hosting, broadband IP, on-net local and wireless Financial Trends (US$ millions) % of Net Revenue % of Net Revenue 13

  14. Capital Expenditures ($ in millions) Capital Investments • 2007 Cap Ex is expected to be in the range of $40 million - $45 million to be followed by lower Cap Ex in 2008 • 2007 Cap Ex includes investments for Australian DSLAM expansion, data center expansion in Canada and Australia, and soft switches in Europe and Canada • Significant investments in switching platforms and fiber capacity from 1998 to 2001 • Utilized IRUs and leases rather than laying fiber • Minimal future fiber capacity purchases due to: • Adequate existing capacity • Increased routing of voice traffic over public Internet 14

  15. Liquidity Enhancing Events • Issued $108 million of Second Lien Notes in Q107 • $75 million for cash • Exchanged $5 million of 7% Step-Up Debentures for equity in Q207 • Sold 22.5 million shares of common equity for $19 million net proceeds in Q307 • Extends the maturity of the 5% Exchangeable Notes to 2010 • Refinanced $35 million credit facility in Canada in Q107, pushing maturity from 2008 to 2012 • Refinanced Australian IRU maturity from Jan 2007 to Dec 2008 in Q107 15

  16. June 30, 2007 (1) PTGI Debt: 12.75% Senior Notes due Oct 2009 (1) $27.6 3.75% Convertible Senior Notes due Sept 2010 $77.3 Future Debt Maturities 7.00% Step-Up Debentures due Aug 2009 (2) $22.5 Total PTGI Debt $127.4 PTHI Debt: 8.00% Senior Notes due Jan 2014 $235.0 Senior Secured Term Loan due Feb 2011 $97.8 5.00% Exchangeable Notes due June 2010 (3) $56.3 Total PTHI Debt $389.1 ($ in millions) PTIHC Debt: 14.25% Second Lien Notes due May 2011 $108.2 Total PTIHC Debt $ 108.2 Operating Subsidiary Debt: Canadian Credit Facility due March 2012 $35.0 (As of June 30, 2007) Vendor Financing and Other Debt $21.2 Total Subsidiary Debt $56.2 TOTAL DEBT $680.9 (1) Includes Q3 2007 repurchase of $3.2 Million (2) Convertible into equity of $1.187/share if Primus stock trades above $1.78 for 20 days in any 30 consecutive day trading period (3) Convertible into equity at $1.20/share if Primus stock trades above $1.80 for 20 days in any 30 consecutive day trading period Current Debt Structure and Maturities (US$ millions) 16

  17. YTD 2007 2005 2006 Net Coverage Ratio 0.3x 1.1x 1.2x Total Debt / EBITDA 35.8x 10.3x 10.5x Net Debt / EBITDA 33.4x 9.2x 8.9x Credit Ratios Are Improving 17

  18. Investment Merits • Improved liquidity and debt maturity outlook • Investments to accelerate growth in select products • Increased revenue and expanding margin from growth products • Potential further deleveraging • Potential asset sales 18

  19. 5th Annual Communications ConferenceSeptember 11, 2007

More Related