XO Pushes Through Q2

August 16th, 2011 by · 2 Comments

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
– Legacy 133.0 128.5 126.9 123.3
– Non-Core 34.3 26.9 18.7 15.6
Total Revenues 383.6 385.7 390.3 383.4 381.7
Cost of Revenue 218.9 218.3 223.7 229.6 223.6
SG&A 124.4 106.6 107.5 118.1 116.8
Adjusted EBITDA 40.5 60.8 59.2 35.7 43.4
Adj. EBITDA margin 10.6% 15.8% 15.1% 9.3% 11.4%
Capital Expenditures 57.6 50.1 39.9 53.2 54.5

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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Categories: CLEC · Financials · Metro fiber

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2 Comments So Far

  • Mr. Poppers says:

    Looks like they just went private …. see the news release that was just sent out …. odd that they would report Q2 numbers. Odd that the merger could go through w/o being stopped … or was all that a sham?

    • Vayomatic says:

      XO became private at 4:45 EDT.. Let the bidding begin. I predict sale of XO on 8/19/2012, one day after merger..wanna bet?

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