HUNTSVILLE, Ala., May 10 /PRNewswire-FirstCall/ -- ITC^DeltaCom, Inc. (BULLETIN BOARD: ITCD) , a leading provider of integrated communications services to customers in the southeastern United States, today reported its operating and financial results for the quarter ended March 31, 2007.
For the quarter ended March 31, 2007, ITC^DeltaCom reported total operating revenues of $121.8 million, a net loss of $15.3 million, and net earnings before interest, taxes, depreciation and amortization (EBITDA) of $16.8 million.
"Our goal is to provide our customers an outstanding experience and the most innovative products in the marketplace while growing the Company's earnings," said Randall E. Curran, ITC^DeltaCom's Chief Executive Officer. "Our first quarter results, including an 18% annualized increase in facilities-based voice lines and the success of our Simpli-Business product offering, illustrate that we're making solid progress towards that goal."
Among its operating highlights for the first quarter, ITC^DeltaCom:
-- Increased earnings before interest, taxes, depreciation and
amortization, or EBITDA, to $16.8 million, a 25% annualized growth rate
over the preceding quarter and a 41% increase over the first quarter of
2006;
-- Increased business local revenues for the fourth consecutive quarter,
with an increase of $5.7 million, or 10%, over the first quarter of
2006;
-- Reported net growth in billable retail business voice lines in service
for the sixth consecutive quarter, with an increase of approximately
8,700 lines, ending the quarter with 403,551 voice lines in service;
-- Grew its core, facilities-based business voice lines in service by
approximately 13,200 lines, representing an annualized growth rate of
approximately 18%;
-- Increased the percentage of local retail voice lines for which service
is provided on its own network to 77%, up from 70% at the end of the
first quarter of 2006;
-- Demonstrated strong growth in its equipment sales and related services
business, increasing revenues by 18% over the fourth quarter of 2006
and by 50% over the first quarter of 2006;
-- Reported continued improvement in gross margin, as it reduced cost of
services and equipment, excluding depreciation and amortization, from
52.0% percent of total revenue for the first quarter of 2006 to 47.7%
for the first quarter of 2007, representing $6.1 million or 11% growth
in gross margin from the first quarter of 2006; and
-- Enhanced its future liquidity position with a $7.5 million capital
lease commitment.
We're pleased to report strong results for the first quarter, including a 25% sequential increase in quarterly EBITDA" said Richard E. Fish, Executive Vice President and Chief Financial Officer. "Even though Wholesale Services revenue is down for the quarter on a year over year basis, volume activity in that channel remains very active. Sustained growth in our core facilities- based voice lines is building a strong foundation as we continue to pursue profitable growth and focus on managing our cost structure more efficiently."
* EBITDA is not a measurement of financial performance under accounting principles generally accepted in the United States. For a quantitative reconciliation of the differences between EBITDA and net loss, as net loss is calculated in accordance with generally accepted accounting principles, see the accompanying table captioned 'EBITDA Reconciliation.'
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 March 31, 2007 filed with the Securities and Exchange Commission.
ABOUT ITC^DELTACOM, INC.
ITC^DeltaCom, Inc. ("ITC^DeltaCom") headquartered in Huntsville, Alabama, provides, through its operating subsidiaries, integrated telecommunications and technology services to businesses and consumers in the southeastern United States. ITC^DeltaCom has a fiber optic network spanning approximately 14,500 route miles, including more than 11,000 route miles of owned fiber, and offers a comprehensive suite of voice and data communications services, including local, long distance, broadband data communications, Internet connectivity, and customer premise equipment to end-user customers. ITC^DeltaCom is one of the largest competitive telecommunications providers in its primary eight- state region. ITC^DeltaCom has interconnection agreements with BellSouth, Verizon, SBC, CenturyTel and Sprint for resale and access to unbundled network elements and is a certified competitive local exchange carrier (CLEC) in Arkansas, Texas, Virginia and all nine BellSouth states. 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, 2006, and in the Company's subsequent SEC reports, include the Company's dependence on new product development, rapid technological and market change, 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 collocation 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
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended March 31,
2007 2006
OPERATING REVENUES:
Integrated communications services $96,593 $94,371
Equipment sales and related services 6,893 4,576
Wholesale services 18,348 20,991
TOTAL OPERATING REVENUES 121,834 119,938
COSTS AND EXPENSES:
Cost of services and equipment, excluding
depreciation and amortization 58,109 62,316
Selling, operations and administration 46,963 45,675
Depreciation and amortization 17,378 13,635
Restructuring expenses 24 90
Total operating expenses 122,474 121,716
OPERATING LOSS (640) (1,778)
OTHER (EXPENSE) INCOME:
Interest expense (15,309) (13,729)
Interest income 611 646
Other income 12 1
Total other expense, net (14,686) (13,082)
LOSS BEFORE INCOME TAXES (15,326) (14,860)
INCOME TAX EXPENSE - -
NET LOSS (15,326) (14,860)
PREFERRED STOCK DIVIDENDS AND ACCRETION (1,942) (1,814)
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS $(17,268) $(16,674)
BASIC AND DILUTED NET LOSS PER SHARE
APPLICABLE TO COMMON STOCKHOLDERS $(0.92) $(0.89)
BASIC AND DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 18,766,942 18,745,166
ITC^DeltaCom, Inc.
Quarterly Highlights
(Unaudited)
(In thousands)
March 31 Dec.31 Sept.30 June 30 March 31
2007 2006 2006 2006 2006
Integrated communications
services revenues:
Long distance $14,752 $14,284 $15,844 $16,844 $17,696
Business local,
data and internet 81,841 80,567 80,659 79,197 76,675
Total integrated
communications
services revenues 96,593 94,851 96,503 96,041 94,371
Equipment sales and
related services
revenues 6,893 5,827 6,826 6,860 4,576
Wholesale services
revenues:
Broadband transport 13,976 14,318 15,040 14,947 14,975
Local interconnection 1,900 1,507 1,945 1,982 2,139
Directory assistance
and operator services 1,429 1,985 2,633 2,604 2,634
Other 1,043 1,285 1,171 1,377 1,243
Total wholesale services
revenues 18,348 19,095 20,789 20,910 20,991
Total operating
revenues 121,834 119,773 124,118 123,811 119,938
COSTS AND EXPENSES:
Cost of services
and equipment,
excluding
depreciation and
amortization 58,109 56,722 61,492 63,748 62,316
Selling, operations
and administration 46,963 47,376 45,102 44,219 45,675
Depreciation and
amortization 17,378 16,448 15,345 14,404 13,635
Restructuring expenses 24 22 242 147 90
Total operating
expenses 122,474 120,568 122,181 122,518 121,716
OPERATING INCOME(LOSS) $(640) $(795) $1,937 $1,293 (1,778)
ITC^DeltaCom, Inc.
Quarterly Highlights (continued)
(Unaudited)
March 31 Dec.31 Sept.30 June 30 March 31
2007 2006 2006 2006 2006
Retail business voice
lines in service(1)
UNE-T and UNE lines(2) 309,178 295,995 284,415 274,083 262,224
Increase from
previous quarter 4.5 % 4.1 % 3.8 % 4.5 % 4.8 %
Resale and UNEP
lines(3) 94,373 98,847 101,999 108,198 112,681
(Decrease) from
previous quarter (4.5)% (3.1)% (5.7)% (4.0)% (3.7)%
Total 403,551 394,842 386,414 382,281 374,905
Wholesale voice
lines in service(4) 49,427 47,702 53,222 53,774 62,974
Increase (decrease)
from previous quarter 3.6 % (10.4)% (1.0)% (14.6)% 0.6 %
Total business voice
lines in service (5) 452,978 442,544 439,636 436,055 437,879
Voice lines in
service/sold
percentage:
Integrated communications
services 97 % 96 % 96 % 96 % 97 %
Wholesale services (4) 99 % 98 % 98 % 98 % 99 %
Number of employees (6) 1,867 1,975 1,976 1,917 1,925
(1) Lines in service include only voice lines in service. Conversion of
data services provided to customers to a voice line equivalent is not
calculated.
(2) Facilities-based service offering in which ITC^DeltaCom provides
local transport through its owned and operated switching facilities.
(3) Resale service offering in which ITC^DeltaCom provides local service
through a leased switch port and loop from the local operating
company.
(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, Dec. 31,
2007 2006
(Unaudited)
Cash and cash equivalents (unrestricted) $60,699 $67,643
Working capital 18,383 24,009
Total assets 420,676 435,582
Long-term liabilities 342,090 338,512
Convertible redeemable
preferred stock 74,428 74,170
Stockholders' (deficit) (107,815) (91,039)
Total liabilities and
stockholders' deficit 420,676 435,582
Three Months Ended
(Unaudited)
March 31 Dec.31 Sept.30 June 30 March 31
Other Financial Data: 2007 2006 2006 2006 2006
Capital expenditures(1) $13,661 $13,092 $10,960 10,284 $12,544
Cash flows (used in)
provided by operating
activities 6,396 6,154 21,355 1,866 (699)
Cash flows (used in)
provided by investing
activities (13,157) (13,622) (11,062) (9,294) (12,935)
Cash flows (used in)
provided by financing
activities (183) 17,534 - - (1,014)
EBITDA (2)(3) 16,750 15,762 17,449 16,251 11,858
Notes:
(1) Including equipment purchased through capital leases.
(2) EBITDA represents net income (loss) before interest, taxes,
depreciation and amortization. EBITDA is not a measurement of
financial performance under accounting principles generally accepted
in the United States. For information about management's reasons for
providing data with respect to EBITDA and the limitations associated
with the use of EBITDA, and for a quantitative reconciliation of the
differences between EBITDA and net loss, as net loss is calculated in
accordance with generally accepted accounting principles, see the
accompanying table captioned "EBITDA Reconciliation."
(3) For 2007 and 2006, EBITDA included the following items:
Three Months Ended
March 31 Dec.31 Sept.30 June 30 March 31
Included in EBITDA: 2007 2006 2006 2006 2006
Restructuring expenses $24 $22 $242 $147 $90
Stock-based
compensation 721 684 569 570 746
Hurricane Katrina
impact - - - - 330
$745 $706 $811 $717 $1,166
ITC^DeltaCom, Inc.
EBITDA Reconciliation
(In thousands)
EBITDA represents net income (loss) before interest, taxes, depreciation and amortization. EBITDA is not a measurement of financial performance under accounting principles generally accepted in the United States. The following table presents EBITDA amounts for the fiscal quarters indicated. The table also sets forth for these periods a quantitative reconciliation of the differences between EBITDA and net loss, as net loss is calculated in accordance with generally accepted accounting principles:
Three Months Ended
March 31 Dec.31 Sept.30 June 30 March 31
2007 2006 2006 2006 2006
(Unaudited)
Net loss $(15,326) $(15,006) $(11,911) (11,682) (14,860)
Add back non-EBITDA
items included in net
loss:
Depreciation and
amortization 17,378 16,448 15,345 14,404 13,635
Interest expense,
net of interest
income 14,698 14,320 14,015 13,529 13,083
EBITDA $16,750 $15,762 $17,449 $16,251 $11,858
ITC^DeltaCom has included data with respect to EBITDA because its management evaluates and projects the performance of ITC^DeltaCom's business using several measures, including EBITDA. Management considers EBITDA to be an important supplemental indicator of its operating performance, particularly as compared to the operating performance of its competitors, because this measure eliminates many differences among companies in financial, capitalization and tax structures, capital investment cycles and ages of related assets, as well as some recurring non-cash and non-operating supplemental information to investors regarding its operating performance and facilitates comparisons by investors between the operating performance of ITC^DeltaCom and the operating performance of ITC^DeltaCom's competitors. ITC^DeltaCom's management believes that consideration of EBITDA should be supplemental, because EBITDA has limitations as an analytical financial measure. These limitations include the following:
-- EBITDA does not reflect ITC^DeltaCom's cash expenditures, or future
requirements for capital expenditures, or contractual commitments;
-- EBITDA does not reflect the interest expense, or the cash requirements
necessary to service interest or principal payments, on ITC^DeltaCom's
indebtedness;
-- although depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in the
future, and EBITDA does not reflect any cash requirements for such
replacements;
-- EBITDA does not reflect the effect of earnings or charges resulting
from matters ITC^DeltaCom's management considers not to be indicative
of its ongoing operations; and
-- not all of the companies in ITC^DeltaCom's industry may calculate
EBITDA in the same manner in which it calculates EBITDA, which limits
its usefulness as a comparative measure.
ITC^DeltaCom's management compensates for these limitations by relying primarily on its results under generally accepted accounting principles to evaluate its operating performance and by considering independently the economic effects of the foregoing items that are not reflected in EBITDA. As a result of these limitations, EBITDA should not be considered as an alternative to net income (loss), as calculated in accordance with generally accepted accounting principles, as a measure of operating performance, nor should it be considered as an alternative to cash flows, as calculated in accordance with generally accepted accounting principles, as a measure of liquidity.
Investor Contact: Media Contact:
Richard E. Fish Lee A. Kimball
Chief Financial Officer Vice President, Marketing
256-382-3827 919-863-7149
