Thanks to its December acquisition of Cavalier Telephone, PAETEC Holding Corp. reported stronger revenues in the first quarter of 2011.
Compared to the quarter a year ago, revenues climbed 27 percent, or $105.5 million, to $495.5 million. PAETEC attributed the gains to growth in network services revenues, thanks primarily to sales from Cavalier Telephone.
The Cavalier acquisition, however, also was responsible for a wider loss at PAETEC. The companys net loss grew from $9.5 million in the first quarter of 2010 to $11.9 million.
The increase in net loss was primarily due to a 34.2 percent or $15.1 million increase in non-cash deprecation and amortization expense,” said the company, which explained that the expense related to Cavalier assets, including fiber-optic infrastructure.
On the NASDAQ Global Select Market, shares of PAETEC (PAET) were trading at $3.59 early Thursday afternoon, up 10.43 percent or 34 cents.
In other news Thursday, PAETEC announced plans to open a data center in McLean, Va., about ten miles northwest of Washington, D.C. PAETEC said it will offer colocation services and geographic diversity to businesses and government entities along the East Coast and nationwide.” The company plans to open the facility at the end of the year after converting a three-story, 62,500 square foot facility into a data center.
Through PAETECs acquisition of Cavalier Telephone, the company will become the largest competitive local exchange carrier in the United States based on operating scale, according to Moodys Investors Service, the credit ratings agency.
Fairport, N.Y.-based PAETEC, which served roughly 54,000 business customers as of March 1, 2011, reaffirmed its guidance for the year. The company forecasts 2011 revenues of $2.025 billion to $2.125 billion and adjusted EBITDA of $375 million to $395 million.
Excluding a senior secured revolving credit facility, PAETEC ended the quarter with $1.4 billion in debt, comprised of $650 million in senior secured notes and $750 million of senior unsecured notes.
PAETEC, which had a cash balance of $103.9 million as of March 31, 2011, announced plans last month to borrow $225 million to replace its existing credit facilities and expects to close on the transaction in the second quarter.
The company said it would use the proceeds for general corporate purposes, including repayment of the $25 million principal amount of borrowings outstanding under the Companys existing senior secured revolving credit facility and to complete the recently announced acquisition of XETA Technologies, Inc., the closing of which is subject to customary closing conditions.”