Company Expects to be Generating Positive Cash Flows From Operations by Mid-2005
VIA NET.WORKS, Inc. today announced that the integration of the continental Europe operations of PSINet Europe, which it acquired on August 19, is proceeding as planned, with significant progress achieved to date on several marketing, operational, administrative and financial initiatives. As part of the integration, moreover, the company said it is adopting the PSINet Europe brand for the VIA Industry Solutions business in five of its country operations.
VIA also provided guidance related to its financial performance for the remainder of 2004, as well as to its timetable for generating positive cash flows from operations. The update takes into account the expected contribution of the acquired PSINet Europe operations and the impact of the recent sale of VIA NET.WORKS UK.
"We are extremely pleased with the progress of the PSINet Europe integration," stated Rhett Williams, VIA’s Chief Executive Officer. "We are on target in realizing our objectives. We continue to be impressed with the quality of the customers, people, assets and financials, and with the current strength and future prospects of the business we bought.
"Our experience with PSINet Europe’s customers has been particularly rewarding, as they are much bigger than VIA’s legacy customer base and demonstrate a much higher loyalty — or stickiness — to the company than we anticipated."
Mr. Williams emphasized that progress to date in the integration of PSINet Europe into VIA is being achieved at levels meeting or exceeding those VIA had articulated at the time it announced the transaction. Specifically, the company cited the following:
* PSINet Europe revenue. To date, VIA said, the five PSINet Europe operations are producing revenues at an annualized run rate consistent with the $42 million annualized run rate anticipated in pre-acquisition planning. VIA also said the five operations are generating positive cash flows on an annualized run rate consistent with planning expectations.
* Product integration. Consistent with its previously stated integration objectives, VIA said that joint VIA-PSINet Europe teams have completed the initial evaluation of the combined company’s product portfolio — both from feature/function and geographic standpoints. Rationalization activities currently are under way, as are efforts to identify cost-effective ways of combining products and/or migrating customers to common service platforms. Cross-selling opportunities have been implemented in managed security, MPLS VPNs and voice, while the VIA and PSINet Europe teams have already successfully partnered on new business opportunities.
* Organizational structure. As promised, the new executive management structure has been decided in each of the countries in which VIA has a duplicate presence, and physical moves have been decided — and begun, in some cases — so as to bring the organizations together.
* Cost synergies. Based on integration progress to date. VIA said it will achieve the previously disclosed $4 million a year in cost- related synergies following the completion of the integration.
* Cost savings. VIA stated that, as previously forecast, immediate SG&A savings are being realized in several SG&A expense categories, including business insurance, head count and physical facilities.
"The dedicated integration team is making great progress in moving the PSINet Europe integration along," stated Dennis Roth, the experienced former AT&T executive who was brought into VIA to serve as Integration Program Director. "We continue to be confident that we will achieve our financial, operational and marketplace objectives."
In addition, the integration process has allowed management to assess the strength of the PSINet Europe customer base and of the PSINet Europe brand. This has led VIA to adopt the PSINet Europe brand for its Industry Solutions channel in Belgium, France, Germany, the Netherlands and Switzerland — the five countries in which VIA and PSINet Europe both operate. The Industry Solutions channel will continue to market and sell a high-value portfolio of bundled services, centered on dedicated hosting, through a direct sales force to large SMEs and small corporations.
"We are delighted with the initial results of the integration process and believe that the decision to present our Industry Solutions business through the PSINet Europe brand will both focus and strengthen our presence in the market," Mr. Williams said.