Several paging carriers released their second-quarter earnings reports last week, each revealing a continued effort toward achieving profitability and reducing debt.
Metrocall Inc. capped off a busy second quarter with a reported net loss of $28.7 million, or 76 cents per share, compared with $12.3 million, or 55 cents per share.
The company, which announced its intention to acquire the Advanced Messaging Division of AT&T Wireless Services Inc. during the period, also said it achieved a free cash flow of $200,000, two quarters ahead of plan. The free cash flow figure was derived from $28.8 million in earnings before interest, taxes, depreciation and amortization, minus capital expenditures of $12.5 million and $16.1 million in interest expense-on net revenues of $95.8 million.
The company reported a cash flow deficit of $6 million in the first quarter and its debt-to-cash-flow ratio was 5.31.
Metrocall gained 107,121 net subscriber additions during the period. Average monthly revenue per unit fell from $7.28 in the first quarter to $7.23.
The quarter’s most significant operational measures by Metrocall included the AT&T deal, as well as a strategic long-term joint distribution fulfillment partnership with Motorola Inc., which led to several joint marketing and distribution agreements with other entities-such as America Online, LCI International Inc. and Washington Gas Co.
“This was one of the most positive and exciting quarters in the company’s history,” said Vince Kelly, Metrocall chief financial officer.
Paging Network Inc. reported a second quarter net loss of $15.6 million, or 15 cents per share, compared with $47.5 million, or 31 cents per share, reported for the same period last year.
The company also reported consolidated net revenues of $241.3 million and saw its domestic average monthly revenue per unit grow to $7.44, compared with $7.36 in the first quarter and $7.03 for the second quarter of 1997. Finally, the company added 101,148 domestic pagers to service during the period.
After capital spending and interest expenses, the company achieved positive free cash flow of $9 million, or 9 cents per share.
“We are running the business with a goal of profitability and are making steady progress in reaching that goal,” said John Frazee, Jr., chairman and chief executive officer.
PageNet long has espoused a strategy of promoting value-added services as a way of raising prices and meeting that profitability goal. In line with this philosophy, the company said it began marketing a two-way wireless e-mail service late in the quarter, taking advantage of its resale agreements with SkyTel Communications Inc. More than 46,000 of the company’s second-quarter domestic subscriber adds were SurePage guaranteed messaging and two-way wireless e-mail subscribers.
Arch Communications Group Inc., currently undergoing an extensive operating unit restructuring, said it recorded a second-quarter charge of $16.1 million, or 77 cents per share, related to those efforts. This charge led to a net loss for the period of $64 million, or $3.05 cents per share, compared with $49.3 million, or $2.38 per share for the same period last year.
Additionally, the company reported net revenues of $96.2 million, up 5 percent from the $91.5 million reported in the second quarter last year, and added 115,000 new subscriber units.
Arch, one of the more highly levered paging carriers in the industry, said its total debt fell by about $11 million. As part of its restructuring process, the company underwent a substantial recapitalization effort during the quarter.
In the second quarter, Arch initiated a plan to consolidate its business units that is expected to reduce costs by about $15 million. The carrier also completed the first phase of its site-management business sale to OmniAmerica Inc., which generated another $15 million.
“We continue to make incremental progress toward our goal of becoming more capital efficient and generating true free cash flow,” said J. Roy Pottle, Arch’s executive vice president and chief financial officer. “We believe our recently launched plan to realign Arch’s operating units, which is off to a very good start, will be a key contributor to that process.”
