QSC AG: Focus on strengthening profitability and financial position paying off
- EBITDA rises to € 19.2 million in third quarter of 2009
- Net income reaches € 2.1 million
- Positive free cash flow stands at € 2.6 million
- Net debts planned to be eliminated entirely by year-end 2009
Cologne, November 9, 2009. QSC AG's strategy of focusing on strengthening its profitability and financial position in a very difficult economic environment is paying off. This has prompted the company to correspondingly revise its guidance for the full fiscal year: QSC now anticipates an EBITDA at the upper end of the € 68- to € 78-million corridor that had been announced at the outset of the year on revenues at the lower end of the € 420- to € 440-million corridor. At the same time, the company is also raising its free cash flow forecast: An anticipated free cash flow of at least € 12 million, instead of the previously announced figure of at least € 10 million, will enable net debts to be eliminated entirely by year-end. Moreover, the company continues to anticipate sustained net income.
Business develops on positive note in third quarter of 2009
In the third quarter of 2009, QSC grew its EBITDA to € 19.2 million on revenues of € 104.4 million, as opposed to an EBITDA of € 18.3 million on revenues of € 103.6 million for the same quarter one year earlier; the EBITDA margin stood at 18 percent. During the first nine months, the company has succeeded in improving EBITDA by 31 percent to € 57.7 million on a five-percent rise in revenues to € 315.7 million.
EBIT advanced to € 7.9 million during the first nine months of the current fiscal year, as opposed to € -1.8 million for the corresponding period the year before; quarterly EBIT rose to € 3.1 million, compared to € 2.6 million for the same quarter one year earlier. At € 2.1 million, QSC recorded its highest quarterly net income for the current fiscal year; after the first nine months of 2009, QSC has already earned net income of € 4.6 million. The year before, a net loss of € -3.5 million had still been incurred for this period.
Sustained positive free cash flow
QSC's good operative development, generating a corresponding cash flow from operating activities, combined with a significantly lower level of capital expenditures are enabling the company to earn a sustained positive free cash flow in the current fiscal year. This metric stood at € 2.6 million in the third quarter of 2009, while reaching a total of € 9.2 million for the first nine months. This has enabled QSC to reduce its net debts from € -12.2 million at the outset of the fiscal year to € -3.0 million as of September 30, 2009.
Capital expenditures were down by one half in the third quarter of 2009 to € 10.3 million, as opposed to € 21.1 million for the same quarter one year earlier, when the picture had been characterized by a large number of new customers in ADSL2+ business and the resulting capital expenses for connecting them. QSC anticipates capital expenditures of less than € 50 million for the full 2009 fiscal year, as opposed to € 91.4 million the year before. "Following the conclusion of the capital investment phase, we are now successfully focusing on marketing higher-margin products and services to enterprise customers, and are utilizing our nationwide Next Generation Network, in particular, for this purpose," explains QSC Chief Executive Officer Dr. Bernd Schlobohm. "Thanks to the expansion of our NGN early on and our unrivaled positioning in the German telecommunications market as a mid-size company serving mid-size companies, we have been able to grow our profitability and financial strength from quarter to quarter."
|In € millions||Q3 2009||Q3 2008||Q1-Q3 2009||Q1-Q3 2008|
|- Wholesale/Reseller segment||62.8||60.2||189.4||168.5|
|- Products segment||22.8||25.1||70.4||78.3|
|- Managed Services segment||18.8||18.4||55.9||54.5|
|- Wholesale/Reseller segment||12.1||12.2||37.3||28.8|
|- Products segment||4.7||4.2||13.4||10.2|
|- Managed Services segment||2.5||1.9||7.1||4.9|
The nine-month report is available for download at www.qsc.de/en/qsc-ag/investor-relations.html. This corporate news contains forward-looking statements. These forward-looking statements are based on current expectations and forecasts of future events by the management of QSC AG. Due to risks or mistaken assumptions, actual results may deviate substantially from those made in such forward-looking statements. The assumptions that may involve material deviations due to unforeseeable developments include, but are not limited to, the demand for our products and services, the competitive situation, the development, dissemination and technical performance of DSL technology and its prices, the development and dissemination of alternative broadband technologies and their respective prices, changes in respect of telecommunications regulation, legislation and adjudication, prices and timely availability of essential third-party services and products, the timely development of additional marketable value-added services, the ability to maintain and enlarge upon marketing and distribution agreements and to conclude new marketing and distribution agreements, the ability to obtain additional financing in the event that management's planning targets are not attained, the punctual and full payment of outstanding debts by sales partners and resellers of QSC AG, and the availability of sufficient skilled personnel.