ITC^DeltaCom Announces First Quarter 2009 Results
“We are pleased to report our highest quarterly profitability to date as measured by adjusted EBITDA,” said
Among its operating highlights for the first quarter, ITC^DeltaCom:
- recorded operating income of
$4.9 million compared to$1.8 million in the first quarter of 2008, and a net loss of$(2.6) million compared to a net loss of$(5.9) million in the first quarter of 2008; - increased adjusted EBITDA, as defined by ITC^DeltaCom, by 7.3% over the first quarter of 2008 to
$22.4 million ; - increased business local, data and Internet revenues by
$1.7 million , or 2%, over the first quarter of 2008; - ended the quarter with over 428,800 voice lines in service, of which 86.2% were provided on ITC^DeltaCom’s own network, which represented an increase from 82.5% at the end of the first quarter of 2008;
- increased its core, facilities-based business voice lines in service by approximately 20,250 lines over the first quarter of 2008;
- continued to derive benefit from investments in process redesign and other efficiency gains, resulting in selling, operations and administration expense of 35.8% of revenue compared to 37.1% in the first quarter of 2008;
- generated
$17.3 million in net cash provided by operating activities, which represented an increase of$427,000 over the first quarter of 2008; and - increased adjusted unlevered free cash flow**, as defined by ITC^DeltaCom, by 72.8% over the first quarter of 2008 to
$14 million from$8.1 million .
“Despite the challenging economic environment, we continue to strengthen our balance sheet,” said
Additional information about ITC^DeltaCom’s business and operating results is contained in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
* Adjusted EBITDA is defined by ITC^DeltaCom as net income (loss) before interest income and expense, net, provision for income taxes, depreciation and amortization, stock-based compensation, non-cash loss on extinguishment of debt, debt issue cost write-off, prepayment penalties on debt, equity commitment fees, restructuring expenses, merger-related expenses, asset impairment loss and other income or loss, all as disclosed in the consolidated statements of operations and comprehensive loss. Adjusted EBITDA is not a measurement of financial performance under generally accepted accounting principles. For a quantitative reconciliation of adjusted EBITDA to net loss, as net loss is calculated in accordance with generally accepted accounting principles, see the accompanying table captioned “Adjusted EBITDA Reconciliation.”
** Adjusted unlevered free cash flow is defined by ITC^DeltaCom as adjusted EBITDA (as defined above) less capital expenditures (including equipment purchased through capital leases) and changes in accounts payable – construction, all as disclosed in the consolidated statements of cash flows. Adjusted unlevered free cash flow is not a measurement of financial performance under generally accepted accounting principles. For a quantitative reconciliation of adjusted unlevered free cash flow to net cash provided by operating activities, as net cash provided by operating activities is calculated in accordance with generally accepted accounting principles, see the accompanying table captioned “Adjusted Unlevered Free Cash Flow Reconciliation.”
ABOUT ITC^DELTACOM, INC.
ITC^DeltaCom, Inc., headquartered in
FORWARD-LOOKING STATEMENTS
Except for the historical and present factual information contained herein, this release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this release, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and similar expressions as they relate to ITC^DeltaCom, Inc. or its management are intended to identify these forward-looking statements. All statements by the Company regarding its expected financial position, revenues, liquidity, cash flow and other operating results, balance sheet improvement, business strategy, financing plans, forecasted trends related to the markets in which it operates, legal proceedings and similar matters are forward-looking statements. The Company’s actual results could be materially different from its expectations because of various risks. These risks, some of which are discussed under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended
Investor Contact:
Richard E. Fish
Chief Financial Officer
256-382-3827
Richard.fish@deltacom.com
ITC^DeltaCom, Inc.
Financial Highlights
(In thousands, except share and per share data)
Three Months Ended
March 31,
2009 2008
OPERATING REVENUES:
Integrated communications services $102,076 $103,469
Wholesale services 15,618 16,639
Equipment sales and related services 4,281 4,675
TOTAL OPERATING REVENUES 121,975 124,783
COSTS AND EXPENSES:
Cost of services and equipment, excluding
depreciation and amortization 56,477 58,368
Selling, operations and administration
expense 43,670 46,254
Depreciation and amortization 16,919 18,316
Total operating expenses 117,066 122,938
OPERATING INCOME 4,909 1,845
OTHER (EXPENSE) INCOME:
Interest expense (7,539) (8,318)
Interest income 15 577
Other income 19 31
Total other expense, net (7,505) (7,710)
LOSS BEFORE INCOME TAXES (2,596) (5,865)
INCOME TAX EXPENSE - -
NET LOSS (2,596) (5,865)
PREFERRED STOCK DIVIDENDS AND ACCRETION - (7,073)
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS $(2,596) $(12,938)
BASIC AND DILUTED NET LOSS PER SHARE
APPLICABLE TO COMMON STOCKHOLDERS $(0.03) $(0.17)
BASIC AND DILUTED WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 80,867,040 76,387,873
COMPREHENSIVE LOSS:
NET LOSS $(2,596) $(5,865)
OTHER COMPREHENSIVE LOSS:
Change in unrealized gains (losses) on
derivative instrument designated as cash
flow hedging instrument, net of tax 1,807 (4,090)
COMPREHENSIVE LOSS $(789) $(9,955)
ITC^DeltaCom, Inc.
Quarterly Highlights
(Unaudited)
(In thousands)
Three Months Ended
March 31, Dec. 31, Sept 30, June 30, March 31,
2009 2008 2008 2008 2008
Integrated
communications
services revenues:
Long distance and
access $16,021 $16,312 $17,229 $17,996 $19,195
Business local,
data and internet 86,055 86,445 86,169 86,361 84,274
Total integrated
communications
services revenues 102,076 102,757 103,398 104,357 103,469
Wholesale services
revenues:
Broadband transport 12,664 12,983 13,046 13,186 13,451
Local interconnection 740 1,034 1,193 1,210 1,235
Directory assistance
and operator
services 1,029 1,093 1,146 1,141 1,140
Other 1,185 1,122 1,117 888 813
Total wholesale
services revenues 15,618 16,232 16,502 16,425 16,639
Equipment sales and
related services
revenues 4,281 3,826 4,817 4,766 4,675
Total operating
revenues 121,975 122,815 124,717 125,548 124,783
COSTS AND EXPENSES:
Cost of services and
equipment, excluding
depreciation and
amortization 56,477 58,824 58,246 57,461 58,368
Selling, operations
and administration
expense 43,670 45,158 44,893 46,818 46,254
Depreciation and
amortization 16,919 17,035 19,218 18,945 18,316
Total operating
expenses 117,066 121,017 122,357 123,224 122,938
OPERATING INCOME $4,909 $1,798 $2,360 $2,324 $1,845
ITC^DeltaCom, Inc.
Quarterly Highlights (continued)
(Unaudited)
March 31, Dec. 31, Sept 30, June 30, March 31,
2009 2008 2008 2008 2008
Retail business
voice lines in
service(1)
UNE-T and other
UNE lines(2) 369,787 369,496 368,724 362,174 349,537
Increase from
previous quarter 0.1% 0.2% 1.8% 3.6% 2.9%
Resale and
commercial
agreement
lines(3) 59,017 62,629 66,300 70,167 74,362
Decrease from
previous quarter (5.8)% (6.0)% (5.5)% (5.6)% (5.8)%
Total retail business
voice lines in
service 428,804 432,125 435,024 432,341 423,899
Wholesale voice lines
in service(4) 12,489 26,151 38,203 40,595 40,825
Increase (decrease)
from previous
quarter (52.2)% (31.5)% (5.9)% (0.6)% 1.3%
Total business voice
lines in service
(5) 441,293 458,276 473,227 472,936 464,724
Number of employees
(6) 1,511 1,565 1,615 1,700 1,724
(1) Lines in service include only voice lines in service. Conversion of
data services provided to customers to a voice line equivalent is not
included.
(2) Facilities-based service offering in which ITC^DeltaCom provides local
service through its owned and operated switching facilities.
(3) Voice lines for local and mobile services served via commercial
agreements and reselling incumbent local exchange carrier tariff
offerings.
(4) Represents primary rate interface circuits provided as part of
ITC^DeltaCom's local interconnection services for Internet service
providers.
(5) Reported net of lines disconnected or canceled.
(6) Includes full-time and part-time employees.
ITC^DeltaCom, Inc.
Balance Sheet and Other Financial Highlights
(In thousands)
Balance Sheet Data (at period end): March 31, December 31,
2009 2008
(Unaudited) (Unaudited)
Cash and cash equivalents
(unrestricted) $65,748 $56,683
Working capital 39,525 33,902
Total assets 379,602 382,661
Long-term liabilities 306,306 307,880
Stockholders' deficit (12,662) (12,401)
Total liabilities and stockholders'
deficit 379,602 382,661
Three Months Ended
March 31, Dec. 31, Sept 30, June 30, March 31,
Other Financial Data: 2009 2008 2008 2008 2008
(Unaudited)
Capital expenditures
(1) $8,329 $29,843 $8,005 $14,187 $12,741
Cash flows (used in)
provided by:
Operating
activities 17,271 10,685 21,267 13,864 16,844
Investing
activities (6,792) (9,593) (33,257) (13,435) (13,232)
Financing
activities (1,414) 2,918 4,417 (583) (717)
Adjusted EBITDA(2) 22,357 19,269 22,131 21,835 20,833
Adjusted unlevered
free cash flow(3) 14,028 (10,574) 14,126 7,648 8,092
ITC^DeltaCom, Inc.
Balance Sheet and Other Financial Highlights (continued)
(In thousands)
Notes:
(1) Includes equipment purchased through capital leases and
changes in accrued capital related costs.
(2) Adjusted EBITDA is defined by ITC^DeltaCom as net income
(loss) before interest income and expense, net, provision for
income taxes, depreciation and amortization, stock-based
compensation, non-cash loss on extinguishment of debt, debt
issue cost write-off, prepayment penalties on debt, equity
commitment fees, restructuring expenses, merger-related
expenses, asset impairment loss and other income or loss, all
as disclosed in the condensed consolidated statements of
operations and comprehensive loss. Adjusted EBITDA is not a
measurement of financial performance under generally accepted
accounting principles. For a quantitative reconciliation of
adjusted EBITDA to net loss, as net loss is calculated in
accordance with generally accepted accounting principles, see
the accompanying table captioned "Adjusted EBITDA
Reconciliation."
(3) Adjusted unlevered free cash flow is defined by ITC^DeltaCom
as adjusted EBITDA, as defined above in Note (2), less capital
expenditures (including equipment purchased through capital
leases) and changes in accounts payable-construction, all as
disclosed in the condensed consolidated statements of cash
flows. Adjusted unlevered free cash flow is not a measurement
of financial performance under generally accepted accounting
principles. For a quantitative reconciliation of adjusted
unlevered free cash flow to net cash provided by operating
activities, as net cash provided by operating activities is
calculated in accordance with generally accepted accounting
principles, see the accompanying table captioned "Adjusted
Unlevered Free Cash Flow Reconciliation."
ITC^DeltaCom, Inc.
Adjusted EBITDA Reconciliation
(In thousands)
(Unaudited)
Adjusted EBITDA is defined by ITC^DeltaCom as net income (loss) before
interest income and expense, net, provision for income taxes,
depreciation and amortization, stock-based compensation, non-cash loss
on extinguishment of debt, debt issue cost write-off, prepayment penalties
on debt, equity commitment fees, restructuring expenses, merger-related
expenses, asset impairment loss and other income or loss, all as
disclosed in the condensed consolidated statements of operations and
comprehensive loss. Not all of these adjustments are applicable in every
period. Adjusted EBITDA is not a financial measurement under generally
accepted accounting principles ("GAAP"). ITC^DeltaCom's management uses
adjusted EBITDA, together with financial measures prepared in accordance
with GAAP, such as revenue and cash flows from operations, to assess
ITC^DeltaCom's historical and prospective operating performance.
Management uses adjusted EBITDA to enhance its understanding of
ITC^DeltaCom's core operating performance, which represents management's
views concerning ITC^DeltaCom's performance in the ordinary, ongoing and
customary course of its operations. ITC^DeltaCom's management also uses
adjusted EBITDA to evaluate ITC^DeltaCom's core operating performance
relative to that of its competitors. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Overview--
Adjusted EBITDA" in ITC^DeltaCom's Annual Report on Form 10-K for our
2008 fiscal year for additional information regarding management's reasons
for including adjusted EBITDA data and for material limitations with
respect to the usefulness of this measure. The following tables present
adjusted EBITDA amounts for the fiscal quarters indicated and also sets
forth a quantitative reconciliation of adjusted EBITDA to net loss, as
net loss is calculated in accordance with GAAP (in thousands):
Three Months Ended
March 31, Dec. 31, Sept 30, June 30, March 31,
2009 2008 2008 2008 2008
(Unaudited)
Net loss $(2,596) $(6,848) $(5,336) $(4,848) $(5,865)
Add: non-EBITDA
items included in
net loss:
Interest income
and expense, net 7,524 8,367 7,628 7,569 7,741
Depreciation and
amortization 16,919 17,035 19,218 18,945 18,316
Stock-based
compensation 529 436 553 566 672
Other (income) loss (19) 279 68 (397) (31)
Adjusted EBITDA $22,357 $19,269 $22,131 $21,835 $20,833
ITC^DeltaCom, Inc.
Adjusted Unlevered Free Cash Flow Reconciliation
(In thousands)
(Unaudited)
Adjusted unlevered free cash flow is defined by ITC^DeltaCom as adjusted
EBITDA (as defined above) less capital expenditures (including equipment
purchased through capital leases) and changes in accounts payable-
construction, all as disclosed in the condensed consolidated statements
of cash flows. Adjusted unlevered free cash flow is not a measurement of
financial performance under GAAP. ITC^DeltaCom has included data with
respect to adjusted unlevered free cash flow because its management
considers adjusted unlevered free cash flow to be a useful, supplemental
indicator of its operating performance. When measured over time, adjusted
unlevered free cash flow provides supplemental information to investors
concerning the growth rate in ITC^DeltaCom's operating results and its
ability to generate cash flows to satisfy mandatory debt service
requirements and make other mandatory, non-discretionary expenditures.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Overview--Adjusted Unlevered Free Cash Flow" in
ITC^DeltaCom's Annual Report on Form 10-K for our 2008 fiscal year for
additional information regarding management's reasons for including
adjusted unlevered free cash flow data and for material limitations with
respect to the usefulness of this measure. The following tables present
adjusted unlevered free cash flow amounts for the fiscal quarters
indicated and also sets forth a quantitative reconciliation of adjusted
unlevered free cash flow to net cash provided by operating activities, as
net cash provided by operating activities is calculated in accordance
with GAAP (in thousands):
Three Months Ended
March 31, Dec. 31, Sept 30, June 30, March 31,
2009 2008 2008 2008 2008
(Unaudited)
Net cash provided by
operating
activities $17,271 $10,685 $21,267 $13,864 $16,844
Adjustments to
reconcile adjusted
unlevered free cash
flow to net cash
provided by operating
activities
Elements included in
net cash provided by
(used in) operating
activities not
included in adjusted
unlevered free
cash flow:
Total changes in
current operating
assets and
liabilities (154) 2,025 (5,204) 1,882 (2,104)
Provision for bad
debts (1,680) (1,200) (950) (900) (1,005)
Interest expense
excluding interest
paid in kind and in
common stock, and
amortization of debt
issuance costs and
debt discount, net
of interest
income 6,917 7,759 7,018 6,958 7,129
Other (income) loss 3 - - 31 (31)
Adjusted EBITDA 22,357 19,269 22,131 21,835 20,833
Less:
Capital
expenditures (10,096) (22,063) (15,486) (11,387) (13,016)
Change in accounts
payable -
construction 1,767 (7,780) 7,481 (2,800) 275
Adjusted unlevered
free cash flow $14,028 $(10,574) $14,126 $7,648 $8,092
SOURCE ITC^DeltaCom