Multiband Announces 2012 First Quarter Results

MINNEAPOLIS, May 15, 2012 /PRNewswire/ -- Multiband Corporation, (NASDAQ:MBND), a leading Home Service Provider (HSP) for DIRECTV and the nation's largest DIRECTV Master System Operator (MSO) for Multiple Dwelling Units (MDU's), today announced financial results for the first quarter ended March 31, 2012.

2012 Financial and Business Highlights

• Revenue increased by 12% year-over-year fueled by contributions from businesses acquired in the last six months,
• Gross margins improved by approximately .75%  driven by employee retention
• Increased SG&A in employee retention initiatives and integration startup costs for cable fulfillment and engineering and wireless platforms drives reduced EBITDAFirst Quarter 2011 Results

Revenues for the three month period ended March 31, 2011 of $72.2 million increased $7.7 million, or 12%, compared to $64.5 million for the quarter ended March 31, 2011. Revenues by business segment performed as follows:

• In the 2012 quarter, Field Services segment (FS) revenues increased to $64.0 million compared to $58.9 million in the same period last year, an increase of 9%. In spite of flat work order volume, DIRECTV fulfillment revenue rose by $2.1 million (22%) based on an improvement in job mix. Additionally, the cable fulfillment businesses acquired in late 2011 and early 2012 contributed $2.8 million of revenue in the quarter.
• Multi-dwelling Unit (MDU) segment revenues increased by 21% from $4.7 million in the first quarter of 2011 to $5.7 million in the current quarter. The number of owned and managed subscribers grew to just under 200,000 subscribers.
• Energy, Engineering & Construction (EE&C) segment revenues improved to $2.6 million in the first three months of 2012, compared to $794,000 in the comparable period of 2011. The entities that Multiband acquired from WPCS in the third quarter of 2011 contributed $2.2 million of revenue in the current quarter.

First quarter 2012 gross margins were 26.6%, comparable to 25.9% for the year-ago period, an increase of approximately .75%

Selling, general and administrative expenses for the first quarter of 2012 increased $3.7 million, or 25.3%, to $18.3 million (25.3% of revenues) from $14.6 million (22.6% of revenues) in the same period last year. The Company experienced approximately $1.6 million increase in benefits expense in the 2012 quarter versus prior year's quarter. This increase was driven by a variety of factors including the implementation of a 401K plan with Company matching funds together with an increase in health plan expenses due an increase in the number of participants and certain significant medical claims incurred under the Company's deductible plan. The Company believes that offering improved benefits to employees will lead to improved retention, which will drive down recruitment and training costs.

For the quarter ended March 31, 2012, Multiband incurred an operating loss of $737,000, compared to operating income of $364,000 in the same period last year, again driven by the increased SG&A and mitigated by improved gross margins.

In the first quarter of 2012, Multiband incurred a net loss attributable to common stockholders of $1.5 million, or $(0.07) per basic and diluted share, compared to a net loss of $473,000, or $(0.05) per basic and diluted share in the year-ago period.

Adjusted EBITDA, a non-GAAP measure, was $1.6 million for the first quarter of 2012 compared to $3.1 million in the year-ago period.  The 2011 figures included a one-time addition from proceeds related to a life insurance claim of $409,000.  Multiband maintains a revolving lease facility for the vehicles used in its daily operations, which are required to be treated as an operating lease for purposes of GAAP.  Certain peers in our sector may have vehicle leases that qualify for capital lease treatment for GAAP purposes.  Accordingly, the vehicle lease payments made of approximately $3.1 million and $2.1 million during the three months ended March 31, 2012 and 2011, respectively, would need to be added back to the adjusted EBITDA figures above in order to be comparable to a company whose vehicle leases are accounted for as capital leases.  If these lease payments were added back, our adjusted EBITDA would be $4.7 million and $5.2 million for the three months ended March 31, 2012 and 2011, respectively.

Multiband used $4.3 million in operating cash flow for the year ended March 31, 2012 compared to cash generated of $5.8 million in the same period last year. During the 2012 quarter, cash was impacted by restricted cash placed as security for workers compensation insurance programs and to secure a mortgage in the connection with the acquisition of a new corporate headquarter facility, as well as payments to fund capital additions and to pay short-term debt and capital lease obligations. In addition, an accounting change from a customer reduced cash and accounts payable by approximately $3.2 million but had no effect on income.  Cash and cash equivalents, available-for-sale securities and accounts receivable, net totaled $33.2 million as of March 31, 2012 compared to $47.7 million at December 31, 2011.

James L. Mandel, CEO of Multiband, commented, "The first quarter of 2012 provided an additional challenge as we worked to integrate two new businesses into our operation, the cable fulfillment business in North Carolina and Florida and the engineering and wireless business acquired from WPCS. Both of these businesses had negative EBITDA in the first quarter. As we have found with other acquisitions, it takes two to three quarters to turn newly acquired operations. We are confident that this both businesses will show improved results before the end of 2012. Conversely, we are very happy with progress made in our Field Services and MDU operating segments as both experienced strong growth and results,"

Mr. Mandel continued, "Additionally, as we discussed previously, we are making a concerted effort to reduce employee turnover in an effort to reduce ongoing recruiting, hiring and training costs. During the first quarter of 2012, we implemented new employee benefit programs in an effort to reduce churn. The impact of making this investment in our employees cannot be evaluated in three months but, we are confident of the return that will be realized in the long-term."

Mr. Mandel concluded, "We continue to focus on achieving profitable results in all segments of our business."

Conference Call Information

A conference call and live webcast will take place Tuesday, May 15, 2012 at 4:30 p.m. Eastern Daylight Time.

Anyone interested in participating should call 1-877-941-1429 if calling within the United States or 1-480-629-9857 if calling internationally. There will be a playback available until May 22, 2012. To listen to the playback, please call 1-877-870-5176 if calling within the United States or 1-858-384-5517 if calling internationally. Please use pin number 4538288 for the replay.

The call will also be accompanied live by webcast over the Internet and accessible at http://viavid.net/dce.aspx?sid=000097AF.

About Multiband Corporation

Multiband Corporation (Nasdaq: MBND) engages with a vast and growing array of technologies including renewable energy, wireless infrastructure, electrical power systems, digital signage, commercial audio/video solutions, hospitality IPTV and VOD systems. Multiband completes nearly 20% of all DIRECTV's installations, maintenance and upgrades for residents of single-family homes. Multiband also supplies broadband cable and satellite internet solutions for homes and businesses across the nation. As the largest nationwide DIRECTV master system operator in the Multiple Dwelling Unit (MDU) market and one of the largest full-service home service providers (HSPs), Multiband is a driven leader in a competitive industry. Additionally, Multiband is a leading provider of software and integrated billing services to MDUs on a single bill, including video, voice, data and other value-added local services, both directly and through strategic partnerships. Multiband focuses on providing world-class customer service and the highest level of performance for all partners and customers, from multinational corporations to individual families. Multiband is headquartered in Minneapolis, Minn., and has offices strategically placed around the continental United States.

Statements about our future expectations are "forward-looking statements" within the meaning of applicable Federal Securities Laws, and are not guarantees of future performance. When used herein, the words "may," "will," "should," "anticipate," "believe," "appear," "intend," "plan," "expect," "estimate," "approximate," and similar expressions are intended to identify such forward-looking statements. These statements involve risks and uncertainties inherent in our business, including those set forth in our most recent Annual Report on Form 10-K for the year ended December 31, 2010, and other filings with the SEC, and are subject to change at any time. Our actual results could differ materially from these forward-looking statements. We undertake no obligation to update publicly any forward-looking statement.

Company Contact

Contact: James Mandel, CEO for Multiband Corporation at (763)504-3000

Investor Contact

Cameron Donahue, Hayden IR, (651) 653-1854 or [email protected]

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NON-GAAP Financial Measures

To comply with Regulation G promulgated pursuant to the Sarbanes-Oxley Act, Multiband has attached to this news release, and will post to the company's investor relations website (www.multibandusa.com), a reconciliation of differences between GAAP and non-GAAP financial information that may be required in connection with issuing the it's quarterly financial results.

Multiband, as is common in its industry, uses Adjusted EBITDA as a measure of performance to demonstrate earnings exclusive of interest and non-cash events. Multiband manages its business based on its cash flows. Multiband, in its daily management of its business affairs and analysis of its monthly, quarterly and annual performance, makes its decisions based on cash flows, not on the amortization of assets obtained through historical activities. Multiband, in managing its current and future affairs, cannot affect the amortization of the intangible assets to any material degree, and therefore uses Adjusted EBITDA as its primary management guide.  Since an outside investor may base its evaluation of Multiband's performance based on the net income of loss and not its cash flows, there is a limitation to the Adjusted EBITDA measurement. Adjusted EBITDA is not, and should not be considered, an alternative to net income or loss, income or loss from operations, or any other measure for determining operating performance of liquidity, as determined under accounting principals generally accepted in the United States (GAAP).  The most directly comparable GAAP reference in Multiband's case is the removal of interest, depreciation, amortization, taxes and other non-cash expense.

SOURCE Multiband Corporation

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