ITC^DeltaCom Announces Fourth Quarter and Full Year 2009 Results
HUNTSVILLE, Ala., March 22 /PRNewswire-FirstCall/ -- ITC^DeltaCom, Inc. (OTC Bulletin Board: ITCD), a leading provider of integrated communications services to customers in the southeastern United States, today announced its operating and financial results for the quarter and year ended December 31, 2009.
For the quarter ended December 31, 2009, ITC^DeltaCom reported total operating revenues of $112.3 million, a net loss of $3.5 million, and adjusted EBITDA* of $19.9 million. For the year ended December 31, 2009, ITC^DeltaCom reported total operating revenues of $469.3 million, a net loss of $11.0 million, and adjusted EBITDA of $88.1 million.
"Entering 2009, it was anticipated that many of our customers would experience hardships related to the recession. In fact, elevated levels of business downsizings, closures and cost cutting efforts did occur across the Company's customer base in 2009 as compared to historical standards," said Richard E. Fish, ITC^DeltaCom's Chief Financial Officer. "Despite the difficult economic environment, we are pleased that we improved our adjusted EBITDA, generated over $31.4 million of adjusted unlevered free cash flow in 2009 and ended the year with cash and cash equivalents of $67.8 million."
Among its operating highlights for the fourth quarter and year, ITC^DeltaCom:
- increased cash flows provided by operating activities by $6.2 million, or 9.9%, to $68.9 million for 2009 from $62.7 million for 2008;
- increased adjusted unlevered free cash flow,** as defined by ITC^DeltaCom, by $12.1 million, or 62.7%, to $31.4 million for 2009 from $19.3 million for 2008, reflecting an increase of $4.0 million in adjusted EBITDA, as defined by ITC^DeltaCom, and a decrease in capital expenditures of $8.1 million;
- invested $56.7 million in network and other property and equipment in 2009, representing a decrease of $8.1 million from $64.8 million in 2008, which included an investment in the fourth quarter of 2008 of $15.4 million in its $20 million network upgrade that it completed in 2009;
- experienced a decrease in the number of its facilities-based retail business lines in service (including UNE-T and other UNE lines) of approximately 2,100 net lines and a decrease in its non-facilities based lines of approximately 11,000 lines, resulting in an increase in the percentage of facilities-based retail business lines in service from 86% to 88%;
- reduced its cost of services and equipment as a percentage of total operating revenues to 45.3% for 2009 from 46.8% for 2008 by eliminating excess costs from its network;
- reduced its selling, operations and administration expense by $11.5 million, or 6.3%, to $171.6 million for 2009 from $183.1 million for 2008;
- recorded a net loss of $11.0 million for 2009 compared to a net loss of $22.9 million for 2008; and
- increased adjusted EBITDA by $4.0 million, or 4.8%, to $88.1 million for 2009 from $84.1 million for 2008.
"We expect certain revenue challenges will continue into 2010," said Randall E. Curran, ITC^DeltaCom's Chief Executive Officer. "In the fourth quarter of 2009, to position the Company for future revenue growth, we began making investments in personnel, additional products that increase efficiencies for our customers, and programs that improve customer experience and increase market awareness of the value proposition we offer."
Additional information about ITC^DeltaCom's business and operating results is contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed with the Securities and Exchange Commission.
------------------------------------
* 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, 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 information about management's reasons for providing data with respect to adjusted EBITDA, the limitations associated with the use of adjusted EBITDA and a quantitative reconciliation of adjusted EBITDA to net loss, as net loss is calculated in accordance with generally accepted accounting principles, see the accompanying tables 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 information about management's reasons for providing data with respect to adjusted unlevered free cash flow, the limitations associated with the use of adjusted unlevered free cash flow, and 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 tables captioned "Adjusted Unlevered Free Cash Flow Reconciliation."
---------------------------------------------------------------------------------------------------
ABOUT ITC^DELTACOM, INC.
ITC^DeltaCom, Inc., headquartered in Huntsville, Alabama, provides, through its operating subsidiaries, integrated telecommunications and technology services to businesses and other communications providers in the southeastern United States. ITC^DeltaCom has a fiber optic network spanning approximately 12,161 route miles, and offers a comprehensive suite of data and voice communications services, including high-speed or broadband data communications (which consist of Ethernet and Internet access connectivity), local exchange, long-distance and conference calling, and mobile data and voice services. ITC^DeltaCom is one of the largest competitive telecommunications providers in its primary eight-state region. For more information about ITC^DeltaCom, visit ITC^DeltaCom's web site at http://www.deltacom.com.
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 December 31, 2009, and in the Company's subsequent SEC reports, include the Company's dependence on new product development, rapid technological and market changes, the Company's dependence upon rights of way and other third-party agreements, debt service and other cash requirements, liquidity constraints and risks related to future growth and rapid expansion. Other important risk factors that could cause actual events or results to differ from those contained or implied in the forward-looking statements include, without limitation, customer attrition, delays or difficulties in deployment and implementation of colocation arrangements and facilities, appeals of or failures by third parties to comply with rulings of governmental entities, inability to meet installation schedules, general economic and business conditions, failure to maintain underlying service/vendor arrangements, competition, adverse changes in the regulatory or legislative environment, and various other factors beyond the Company's control. ITC^DeltaCom disclaims any responsibility to update these forward-looking statements.
ITC^DeltaCom, Inc.
Financial Highlights
(In thousands, except share and per share data)
Year Ended December 31,
--------------------------
2009 2008
-------- ---------
OPERATING REVENUES:
Integrated communications services $394,156 $413,981
Wholesale services 59,401 65,798
Equipment sales and related services 15,767 18,084
-------- ---------
TOTAL OPERATING REVENUES 469,324 497,863
-------- ---------
COSTS AND EXPENSES:
Cost of services and equipment,
excluding depreciation and
amortization 212,630 232,899
Selling, operations and
administration expense 171,579 183,123
Depreciation and amortization 69,064 73,514
Total operating expenses 453,273 489,536
-------- ---------
OPERATING INCOME 16,051 8,327
-------- ---------
OTHER (EXPENSE) INCOME:
Interest expense (27,441) (32,538)
Interest income 46 1,233
Other income 369 81
-------- ---------
Total other expense, net (27,026) (31,224)
-------- ---------
LOSS BEFORE INCOME TAXES (10,975) (22,897)
INCOME TAX EXPENSE - -
NET LOSS (10,975) (22,897)
PREFERRED STOCK DIVIDENDS AND
ACCRETION - (7,073)
-------- ---------
NET LOSS APPLICABLE TO COMMON
STOCKHOLDERS $(10,975) $(29,970)
======== =========
BASIC AND DILUTED NET LOSS PER
COMMON SHARE $(0.14) $(0.38)
======== =========
BASIC AND DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 81,091,458 79,892,779
========== ===========
COMPREHENSIVE LOSS
NET LOSS $(10,975) $(22,897)
OTHER COMPREHENSIVE LOSS:
Change in unrealized gains (losses) on
derivative instrument designated as cash
flow hedging instrument, net of tax 5,610 (1,369)
-------- ---------
COMPREHENSIVE LOSS $(5,365) $(24,266)
======== =========
ITC^DeltaCom, Inc.
Quarterly Highlights
(Unaudited)
(In thousands)
Three Months Ended
--------------------------------------------------
Dec 31, Sept 30, June 30, March 31, Dec 31,
2009 2009 2009 2009 2008
------ ------- ------- -------- -------
Integrated communications
services revenues:
Long distance
and access $14,007 $15,375 $15,529 $16,021 $16,312
Business local,
data and internet 80,352 82,293 84,524 86,055 86,445
------- ------- ------- ------- -------
Total integrated
communications
services revenues 94,359 97,668 100,053 102,076 102,757
------- ------- ------- ------- -------
Wholesale services revenues:
Broadband transport 12,327 12,284 12,237 12,664 12,983
Local interconnection 127 181 308 740 1,034
Directory assistance
and operator services 925 986 1,019 1,029 1,093
Other 1,215 1,113 1,061 1,185 1,122
------- ------- ------- ------- -------
Total wholesale services
revenues 14,594 14,564 14,625 15,618 16,232
------- ------- ------- ------- -------
Equipment sales and related
services revenues 3,394 4,167 3,925 4,281 3,826
------- ------- ------- ------- -------
Total operating
revenues 112,347 116,399 118,603 121,975 122,815
------- ------- ------- ------- -------
COSTS AND EXPENSES:
Cost of services and
equipment, excluding
depreciation and
amortization 48,899 52,627 54,627 56,477 58,824
Selling, Operations
and administration
expense 44,714 41,378 41,817 43,670 45,158
Depreciation and
amortization 17,819 17,110 17,216 16,919 17,035
------- ------- ------- ------- -------
Total operating
expenses 111,432 111,115 113,660 117,066 121,017
------- ------- ------- ------- -------
OPERATING INCOME $915 $5,284 $4,943 $4,909 $1,798
======= ======= ======= ======= ======
ITC^DeltaCom, Inc.
Quarterly Highlights (continued)
(Unaudited)
Dec. 31, Sept 30, June 30, March 31, Dec. 31,
2009 2009 2009 2009 2008
------- ------- ------- -------- -------
Retail business
voice lines in
service(1)
UNE-T and Other
UNE lines(2) 367,403 369,752 372,413 369,787 369,496
Increase from
previous quarter (0.6)% (0.7)% 0.7% 0.1% 0.2%
Resale and UNEP
lines(3) 51,602 53,456 56,022 59,017 62,629
(Decrease) from
previous quarter (3.5)% (4.6)% (5.1)% (5.8)% (5.5)%
Total retail business
voice lines in
service 419,005 423,208 428,435 428,804 432,125
------- ------- ------- ------- -------
Wholesale voice
lines in service(4) 8,004 6,969 8,625 12,489 26,151
Increase (decrease)
from previous
quarter 14.9% (19.2)% (30.9)% (52.2)% (31.5)%
Total business voice lines
in service(5) 427,009 430,177 437,060 441,293 458,276
======= ======= ======= ======= =======
Number of employees(6) 1,398 1,437 1,452 1,511 1,565
(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
transport through its owned and operated switching facilities.
(3) Resale service offerings in which ITC^DeltaCom provides local and
mobile services.
(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)
Year Ended December 31,
Balance Sheet Data (at period end): 2009 2008
-----------------------
Cash and cash equivalents (unrestricted) $67,786 $56,683
Working capital 40,371 33,902
Total assets 368,494 382,661
Long-term liabilities 303,747 307,880
Stockholders' deficit (16,724) (12,401)
Total liabilities and stockholders' deficit 368,494 382,661
Year Ended December 31,
Other Financial Data: 2009 2008
------ ------
Capital expenditures(1) $56,679 $64,776
Cash flows provided by operating activities 68,902 62,660
Cash flows (used in) investing activities (54,655) (69,517)
Cash flows provided by (used in)
financing activities (3,144) 6,035
Adjusted EBITDA(2) 88,084 84,068
Adjusted unlevered free cash flow(3) 31,405 19,292
Three Months Ended
-----------------------------------------------------
Dec. 31, Sept 30, June 30, March 31, Dec. 31,
2009 2009 2009 2009 2008
-------- -------- -------- --------- --------
Other Financial Data: (Unaudited)
---------------------
Capital
expenditures(1) $24,570 $10,315 $13,465 $8,329 $29,843
Cash flows (used in)
provided by:
Operating activities 15,579 14,622 21,430 17,271 10,685
Investing activities (24,683) (10,385) (12,795) (6,792) (9,593)
Financing activities (573) (576) (581) (1,414) 2,918
Adjusted EBITDA(2) 19,936 23,094 22,697 22,357 19,269
Adjusted unlevered
free cash flow(3) (4,634) 12,779 9,232 14,028 (10,574)
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,
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 information about
management’s reasons for providing data with respect to adjusted
EBITDA and a quantitative reconciliation of adjusted EBITDA to net
loss, as net loss is calculated in accordance with generally accepted
accounting principles, see the accompanying tables 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
consolidated statements of cash flows. Adjusted unlevered free cash
flow is not a measurement of financial performance under generally
accepted accounting principles. For information about management’s
reasons for providing data with respect to adjusted unlevered free
cash flow and 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 tables
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, asset impairment
loss and other income or loss, all as disclosed in the 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"). See "Management's Discussion and Analysis of Financial
Condition and Results of Operations—Overview—Adjusted EBITDA" in our
Annual Report on Form 10-K for our 2009 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 years and 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):
Year Ended December 31,
-----------------------
2009 2008
-------- ---------
Net loss $(10,975) $(22,897)
Add: non-EBITDA items included in net loss:
Interest income and expense, net 27,395 31,305
Depreciation and amortization 69,064 73,514
Stock-based compensation 2,969 2,227
Other (income) (369) (81)
--------- --------
Adjusted EBITDA $88,084 $84,068
========= ========
Three Months Ended
------------------------------------------------------
Dec. 31, Sept 30, June 30, March 31, Dec. 31,
2009 2009 2009 2009 2008
-------- ------- ------- -------- --------
(Unaudited)
Net loss $(3,516) $(2,117) $(2,746) $(2,596) $(6,848)
Add: non-EBITDA
items included in
net loss:
Interest income
and expense, net 4,889 7,444 7,538 7,524 8,367
Depreciation and
amortization 17,819 17,110 17,216 16,919 17,035
Stock-based
compensation 1,202 700 538 529 436
Other (income) loss (458) (43) 151 (19) 279
-------- ------- ------- ------- -------
Adjusted EBITDA $19,936 $23,094 $22,697 $22,357 $19,269
======== ======= ======= ======= =======
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 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. ITC^DeltaCom's management believes that consideration of adjusted unlevered free cash flow should be supplemental, however, because adjusted unlevered free cash flow has limitations as an analytical financial measure, including the following:
- adjusted unlevered free cash flow does not reflect ITC^DeltaCom's cash expenditures for changes in current operating assets and liabilities;
- adjusted unlevered free cash flow does not reflect ITC^DeltaCom's cash expenditures for interest expense or accrued restructuring and merger costs, prepayment penalties on debt paid in cash, equity commitment fees, changes in restricted cash balances, or proceeds from sales of fixed assets;
- ITC^DeltaCom does not pay income taxes due to net operating losses and, therefore, generates greater adjusted unlevered free cash flow than a comparable business that does pay income taxes; and
- adjusted unlevered free cash flow may be calculated in a different manner by other companies in ITC^DeltaCom's industry, which limits its usefulness as a comparative measure.
ITC^DeltaCom's management compensates for these limitations by relying primarily on ITC^DeltaCom's results under GAAP to evaluate its operating performance and by considering independently the economic effects of the foregoing items that are not reflected in adjusted unlevered free cash flow. As a result of these limitations, adjusted unlevered free cash flow should not be considered as a measure of liquidity nor as an alternative to net cash provided by operating activities, cash used in investing activities, cash provided by (used in) financing activities or change in cash and cash equivalents, as calculated in accordance with GAAP. The following tables present adjusted unlevered free cash flow amounts for the fiscal years and fiscal quarters indicated and also set 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):
Year Ended
December 31,
------------
2009 2008
------- ---------
Net cash provided by operating activities $68,902 $62,660
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 (598) (3,401)
Provision for bad debts (5,255) (4,055)
Interest expense excluding amortization of Debt
issuance costs and debt discount, net of interest
income 24,976 28,864
Other loss 59 -
------ ------
Adjusted EBITDA 88,084 84,068
Less:
Capital expenditures (57,739) (61,952)
Change in accounts payable–construction 1,060 (2,824)
------ ------
Adjusted unlevered free cash flow $31,405 $19,292
====== ======
ITC^DeltaCom, Inc.
Adjusted Unlevered Free Cash Flow Reconciliation
(In thousands)
(Unaudited)
Three Months Ended
----------------------------------------------------
Dec. 31, Sept 30, June 30, March 31, Dec. 31,
2009 2009 2009 2009 2008
------- ------- ------- -------- --------
(Unaudited)
Net cash provided by
operating activities $15,579 $14,622 $21,430 $17,271 $10,685
======= ======= ======= ======= =======
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 1,369 2,858 (4,671) (154) 2,025
Provision for bad
debts (1,300) (1,225) (1,050) (1,680) (1,200)
Interest expense
excluding amortization
of debt issuance
costs and debt
discount, net of
interest income 4,288 6,839 6,932 6,917 7,759
Other loss - - 56 3 -
Adjusted EBITDA 19,936 23,094 22,697 22,357 19,269
Less:
Capital expenditures (24,716) (10,437) (12,490) (10,096) (22,063)
Change in accounts
payable–construction 146 122 (975) 1,767 (7,780)
------- ------- ------- ------- -------
Adjusted unlevered
free cash flow $(4,634) $12,779 $9,232 $14,028 $(10,574)
======= ======= ======= ======= =======
Investor Contact: |
|
Richard E. Fish |
|
Chief Financial Officer |
|
256-382-3827 |
|
SOURCE ITC^DeltaCom, Inc.
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article