XO Holdings Reports Fourth Quarter and 2008 Financial Results
Monday, March 16 2009 - 17:56
XOHO $0.18 $0.01 (%5.88)
HERNDON, VA -- (MARKET WIRE) -- 03/16/09 --
XO Holdings, Inc. (OTCBB: XOHO) today announced
its fourth quarter and full year 2008 financial and operational results,
reporting year-over-year growth in revenue, adjusted EBITDA and net income.
Total revenue for the fourth quarter of 2008 was $375.2 million, an
increase of $11.5 million, or 3.2 percent, compared to the same period last
year. Overall, total 2008 revenue was $1.478 billion, an increase of $48.9
million, or 3.4 percent, compared to 2007. The increase in revenue for both
the fourth quarter and full year was driven by growth in Data and IP
services, which is a strategic area of focus for the company as it
transitions to profitable higher-growth services.
Adjusted EBITDA (a non-GAAP financial measure) was $34.4 million in the
fourth quarter of 2008, compared to $19.5 million in the same period last
year, resulting from network optimization savings initiatives and lower
selling, general & administrative expenses (SG&A). Adjusted EBITDA
increased to $110.0 million for the full year 2008, compared to $106.7
million for 2007.
Net income for the fourth quarter 2008 was $21.5 million compared to a net
loss of $55.1 million for the same period last year. For the full year
2008, the company had a net loss of $75.3 million compared to a net loss of
$117.4 million in 2007. Net income for the fourth quarter and full year
2008 was impacted by an investment gain of $35.9 million related to the
$57.4 million Allegiance cash settlement.
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"We continue to deliver consistent growth in critical strategic areas for
the company, especially in Data and IP -- not only in the quarter but for
the entire year," said Carl J. Grivner, chief executive officer of XO
Holdings. "We believe that our customers clearly recognize the value of our
network and our products."
Fourth Quarter and Full Year 2008 Financial Results($'s in millions) Q4 2008 Q3 2008 Q4 2007 2008 2007========= ========= ========= ========= =========Revenue $ 375.2 $ 373.9 $ 363.7 $ 1,477.6 $ 1,428.7Adjusted EBITDA (1) $ 34.4 $ 43.3 $ 19.5 $ 110.0 $ 106.7Adjusted EBITDA %(2) 9% 12% 5% 7% 7%Net Income (Loss) $ 21.5 $ (23.3) $ (55.1) $ (75.3) $ (117.4)Capital Expenditures $ 42.0 $ 56.5 $ 40.4 $ 217.0 $ 215.2========= ========= ========= ========= =========(1) Adjusted EBITDA is a Non-GAAP financial measure. See thediscussion below entitled "Non-GAAP Financial Measures."(2) Adjusted EBITDA % is Adjusted EBITDA divided by revenue. See thediscussion below entitled "Non-GAAP Financial Measures."
Core Services
Revenues derived from core services such as high-speed Internet access,
Ethernet, IP, private line and wavelength services continued to accelerate
throughout the year, but were partially offset by traditional Legacy/TDM
services. In the fourth quarter of 2008, Data and IP services generated
$180.0 million in revenue, up 21.9 percent from the fourth quarter of 2007
and 3.8 percent from the third quarter of 2008. For the full year 2008,
Data and IP services generated $670.6 million in revenue, up 26.5 percent
from 2007.
Fourth Quarter and Full Year 2008 Service RevenueQuarterly December 31, % Change----------------------- ------------------- ------------------($'s in Q42008 2008millions) vs. vs.Q4 2008 Q3 2008 Q4 2007 2008 2007 Q42007 2007======= ======= ======= ========= ========= ========= =======CoreServicesData andIP (a) $ 180.0 $ 173.4 $ 147.7 $ 670.6 $ 530.3 21.9% 26.5%IntegratedVoice(b) $ 71.6 $ 77.8 $ 84.3 $ 317.4 $ 337.3 -15.0% -5.9%Total CoreServices $ 251.6 $ 251.2 $ 232.0 $ 988.0 $ 867.6 8.5% 13.9%Legacy/TDMServices(c) $ 123.6 $ 122.7 $ 131.7 $ 489.6 $ 561.1 -6.2% -12.8%TotalRevenue $ 375.2 $ 373.9 $ 363.7 $ 1,477.6 $ 1,428.7 3.2% 3.4%======= ======= ======= ========= ========= ========= =======(a) Data and IP Services, which is a subset of Core Services, includesservices such as Collocation, Dedicated Internet Access, Ethernet, MTNS,Private Line, VPN, Carrier VoIP and Commercial VoIP services.(b) Integrated/Voice Services, which is a subset of Core Services, includesservices such as integrated services and carrier voice services.(c) Legacy TDM/Other Services includes small business services, such assub- T1 (i.e. dial, DSL), Web hosting, interactive voice response and XOOne services.
2008 Network and Operations Highlights
In 2008, XO strengthened its position as one of the leading providers of
advanced, high-capacity network services to businesses and carriers. The
company completed several significant network upgrades, delivered key
operational milestones and was recognized by numerous industry
organizations for innovation and technological achievement.
During the fourth quarter of 2008, XO undertook a significant network
expansion in response to customer demand for the company's Data and IP
services, with the first deployment of a long haul transport system capable
of carrying 1.6 Terabits/second (Tbps). This particular expansion followed
an initial national deployment of 400 Gigabits per second (Gbps) long-haul
systems that was subsequently followed by multiple network capacity
upgrades using 800 Gbps systems. XO also continued to deploy additional
high-speed Provider Edge (PE) routers across its national IP MPLS network
to provide a scalable platform for 1GE and 10GE ports for high speed
Internet customers, as well as additional 10GE-capable peering routers to
support substantially greater traffic exchange with other Internet
backbones.
The company also continued its deployment of Ethernet over Copper
technology in 75 major metropolitan markets, enabling XO to utilize metro
copper loops to serve off-net businesses with Ethernet services at speeds
from 10 to 88 Megabits/second (Mbps). At the same time, the company also
demonstrated 100 Gigabits per second Ethernet (100GE) service over its
long-haul transport network.
XO has one of the largest deployments of soft-switches in the industry,
carrying over 20 billion minutes of Voice over Internet Protocol (VoIP)
traffic per year. In addition, the company also achieved another
significant milestone, having served 15,000 business VoIP customers in
2008.
"Our network provides an excellent platform to serve businesses and
carriers with high-bandwidth applications," said Grivner. "Despite the
broad economic downturn in 2008, we continued to invest in our core network
infrastructure as part of our long-term strategy. We believe that the
economics of moving traffic over Data and IP networks are compelling and
provide customers with a viable and cost-effective solution for even the
most challenging business environment."
XO's industry leadership is further supported by the external recognition
it received in 2008. The company was honored by:
-- Information Week as the top telecommunications provider and 27thoverall business in the publication's 2008 Information Week 500 ranking.The ranking identifies and honors the nation's most innovative users ofbusiness technology.-- Cisco, a worldwide leader in networking, as the "IP Innovator at theCOMPTEL PLUS 2008 Spring Expo" for XO's commitment to providing innovativeconverged voice and data services.-- ATLANTIC-ACM, a leading industry research consultancy, as the "best-in-class" for its sales representatives, billing, voice product price and dataproduct price.
2008 Financial Highlights
On July 25, 2008, XO completed a $780.0 million financing transaction in
which the company issued and sold shares from two new series of preferred
stock to affiliates of its Chairman. As a result of this financing, all of
XO's indebtedness for borrowed money (inclusive of accrued interest),
amounting to approximately $395.0 million under its Credit Facility, as
well as approximately $78.0 million under the Promissory Note, was fully
retired. The company intends to use the remaining cash proceeds from the
transaction, in the amount of $307.0 million (before deduction of
transaction expenses), to fund its business plans, provide ongoing working
capital for its business and pursue additional opportunities intended to
create value for its shareholders.
In the first quarter of 2009, ACF Industries Holding Corp. agreed to extend
the date on which XO Holdings would be required to redeem its shares of the
company's Class A Convertible Preferred Stock from January 15, 2010 to no
later than April 15, 2010. ACF Industries Holding Corp. is an affiliate of
Mr. Carl Icahn, the Chairman of the company's board of directors, and holds
approximately 77.4 percent of the outstanding shares of the Class A
Convertible Preferred Stock.
2009 Outlook
Throughout 2009, XO will continue to implement its long-term business plan.
"In each of the last four years, we've generated more than $1.4 billion in
revenue while executing our strategic long-term plan," said Grivner. "In
the last two years, we have invested more than $400.0 million to enhance
and expand our infrastructure, which includes our long-haul, metro, Data
and IP, and interconnection networks. As a result, our network footprint
now reaches more than 40 percent of the addressable business market in the
United States today, enabling XO to provide our customers with the most
advanced set of services available."
About XO Holdings
XO Holdings, Inc. (OTCBB: XOHO) is the holding company of XO
Communications, LLC (XOC) and Nextlink Wireless, Inc. (Nextlink).
XOC is a leading provider of 21st century communications services for
businesses and communications services providers, including 50 percent of
the Fortune 500 and leading cable companies, carriers, content providers
and mobile operators. Utilizing its unique and powerful nationwide IP
network and extensive local metro networks and broadband wireless
facilities, XOC offers customers a broad range of managed voice, data and
IP services in 75 metropolitan markets across the United States. For more
information, visit
www.xo.com.
Nextlink provides alternative access, backhaul and diverse network
solutions and services for the carrier, business and government markets. As
one of the nation's largest holders of fixed wireless spectrum, Nextlink
delivers high-quality, carrier-grade broadband wireless solutions that
scale to meet the demands of today's converged world of communications --
supporting next-generation mobile and wireline voice, data and video
applications. For more information, visit
Welcome to Nextlink - Nextlink.
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