In what may be its last report if Icahn’s purchase goes through, XO Holdings (news, filings) posted its second quarter numbers yesterday at the last possible moment – as always. Unless a judge intervenes, majority shareholder Carl Icahn will probably close the deal in just a few weeks and de-list the company. But before then, here’s a quick tabular summary in the context of the past few quarters:
|$ in millions||Q2/10||Q3/10||Q4/10||Q1/11||Q2/11|
|– Strategic Core||216.3||234.9||237.8||242.8|
|Cost of Revenue||218.9||218.3||223.7||229.6||223.6|
|Adj. EBITDA margin||10.6%||15.8%||15.1%||9.3%||11.4%|
Strategic core revenues were up steadily during the quarter – faster than in Q1 but not as fast as during the second half of 2010. However, that growth was more than offset by declines in Legacy and particularly non-core revenues. The company is churning off low margin LD voice and other stuff and moving to what ought to be a higher margin revenue stream based more on their substantial fiber assets.
Thus far, however, EBITDA and EBITDA margins remain very low – with this quarter checking in at $43.4M and 11.4%, respectively. Expenses were down from the first quarter, when they are generally seasonally high.
Capex, however, stayed high at $54.5M or 14.3% of revenues. Cash levels fell to just $28.7M by the end of the quarter, although they do still have that short term $50M promissory note to draw on – renegotiated to work through next August now.
It’s a bit of an odd juxtaposition as always, low EBITDA margins befitting a company with a more traditional fiber-light revenue base, and high capex befitting one focusing on its fiber. Little if any cash, yet no dip in spending and a continuing aversion to taking on debt. One would expect that state of affairs wouldn’t last for as long as it has, but this is XO.
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