XO Q2 2006

logo_xo.gifXO Holdings, Inc. (OTCBB: XOHO.OB) today reported its second quarter 2006 financial and operational results. For the second quarter ended June 30, 2006, XO Holdings reported $354.3 million in revenue, $20.3 million in adjusted EBITDA2 and a net loss of $36.1 million. XO Holdings (XOH) operates two business units, XO Communications, LLC (XOC), its wireline business, and Nextlink Wireless, Inc. (Nextlink), its wireless business.

XO Communications Highlights for the Quarter
• Revenue increased 1% to $354.2 million from $349.6 million in the previous quarter
• Continued strong quarter over quarter growth in commercial and wholesale VoIP services revenue
• Revenue from XOptions Flex increased to $7.7 million in the second quarter compared to $5.4 million in the previous quarter
• Revenue from XO wholesale VoIP services increased to $7.1 million in the second quarter compared to $4.1 million in the previous quarter

Nextlink Highlights for the Quarter
• Achieved revenue of $0.1 million in second quarter and $0.2 million in first six months of 2006
• Announced strategic partnership that will enable Covad Communications Group, Inc. to deploy higher speed wireless Ethernet services nationally using Nextlink’s licensed 28-31 GHz Local Multipoint Distribution System (LMDS) wireless spectrum

“We are very pleased with our progress this quarter as we focus on key areas of growth for the Company,” said Carl Grivner, CEO of XO Holdings. “During the second quarter we continued to grow revenue in our core services and new Voice over IP solutions for business and wholesale customers. Our carrier business is in a much stronger position to compete in the market and is already starting to see strong demand for high-bandwidth transport services as we near the completion of our new next generation inter-city long haul network. Nextlink, our wireless business, officially launched in the second quarter and continues to build out its network and develop partnerships to deliver services to enterprise customers.”

Revenue
Revenue from XOC in the second quarter of 2006 was $354.2 million compared to $349.6 million in the first quarter of 2006 and $362.2 million in the second quarter of 2005. Revenue from Nextlink was $0.1 million in both the second and first quarters of 2006.

Revenue from voice services – consisting of local, long distance and other voice services – was $180.3 million in the second quarter of 2006 compared with $179.4 million in the first quarter of 2006 and $188.5 million for the second quarter of 2005. Revenue from data services – consisting of Internet access, network access and web hosting – was $107.0 million in the second quarter of 2006 compared with $103.8 million in the first quarter of 2006 and $107.8 million for the second quarter of 2005. Revenue from integrated services – consisting of integrated data and voice services – was $66.9 million in the second quarter of 2006 compared with $66.5 million in the first quarter of 2006 and $65.9 million for the second quarter of 2005.

Gross Margin
Gross margin1 for XOC in the second quarter of 2006 was $201.1 million, or 56.8% of revenue, compared to $195.2 million, or 55.8% of revenue, in the first quarter of 2006 and $224.1 million, or 61.9% of revenue, in the second quarter of 2005. Gross margin for Nextlink in the second quarter of 2006 was $0.1 million, or 100% of revenue, compared to $0.1 million, or 100% of revenue, in the first quarter of 2006. Nextlink had no revenue and no gross margin in the second quarter of 2005. Nextlink currently provides services between wireless hubs and remotes for which there is no corresponding cost of service. In the future, Nextlink expects to incur cost of service as its product and customer base expands. Gross margin is a non-GAAP financial measure. For a reconciliation to our GAAP net loss, as well as other important information regarding our use of non-GAAP financial measures, please read carefully the section below entitled “Non-GAAP Financial Measures”.

Selling, Operating and General Expenses
Selling, Operating and General Expenses (SOG) expenses for XOC in the second quarter of 2006 were $179.1 million, or 50.6% of revenue, compared with $173.7 million, or 49.7% of revenue, in the first quarter of 2006 and $187.2 million, or 51.7% of revenue, in the second quarter of 2005. XOC recognized $1.9 million of professional and legal services expenses in the second quarter of 2006 related to the terminated sale of the Company’s wireline business. SOG expenses for Nextlink in the second quarter of 2006 were $2.2 million compared with $5.2 million in the first quarter of 2006 and $0.6 million in the second quarter of 2005. Nextlink incurred $2.9 million of professional and legal services expenses in the first quarter of 2006 related to the terminated sale of the Company’s wireline business.

Adjusted EBITDA
Adjusted EBITDA2 for XOH in the second quarter of 2006 was $20.3 million compared with $17.4 million in the first quarter of 2006 and $36.4 million in the second quarter of 2005. Adjusted EBITDA for XOC in the second quarter of 2006 was $22.4 million compared with $22.5 million in the first quarter of 2006 and $37.0 million in the second quarter of 2005. XOC recognized $1.9 million of professional and legal services expenses in the second quarter of 2006 related to the terminated sale of the Company’s wireline business. Adjusted EBITDA for Nextlink in the second quarter of 2006 was a loss of $2.1 million compared with a loss of $5.1 million in the first quarter of 2006 and a loss of $0.6 million in the second quarter of 2005. Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation to our GAAP net loss, as well as other important information regarding our use of non-GAAP financial measures, please read carefully the section below entitled “Non-GAAP Financial Measures”.

Net Loss Attributable to Common Shares
Net loss attributable to common shares for XOH in the second quarter of 2006 was $39.5 million, or $0.22 per share, compared with a net loss of $46.9 million, or $0.26 per share, in the first quarter of 2006 and a net loss of $32.7 million, or $0.18 per share, in the second quarter of 2005.

Capital Expenditures
Capital expenditures for XOC were $26.5 million in the second quarter of 2006 compared to $20.9 million in the first quarter of 2006 and $17.9 million in the second quarter of 2005. During the second quarter of 2006 XOC began the deployment of new digital optical systems across its wholly-owned inter-city long haul network. Capital expenditures for Nextlink were $0.3 million in the second quarter of 2006 compared to $1.9 million in the first quarter of 2006 and $0.0 million in the second quarter of 2005.

Cash Flow
XOH’s balance of cash and cash equivalents at the end of the second quarter of 2006 was $166.5 million compared to $161.4 million at the end of the first quarter of 2006 and $270.1 million at the end of the second quarter of 2005.

Recent Announcements
On August 2, XOC announced that that it is now carrying customer traffic on major segments of its new, wholly-owned next generation nationwide long haul inter-city fiber optic network. XOC is upgrading its long haul network by deploying the industry’s most advanced digital fiber optic technology, across its wholly-owned nationwide fiber assets. The upgrade will allow XOC to more than double network capacity and enable XOC to offer a broader range of higher-speed data transport services to meet the increased bandwidth demands of content providers, enterprises and service providers.

On July 31, XOC announced that its award-winning, business-class Voice over Internet Protocol (VoIP) services bundle, XOptions Flex, surpassed the 5,000 customer milestone. Launched just fifteen months ago, XOptions Flex’s rapid adoption has firmly established it as one of the fastest growing VoIP solutions for businesses.

On July

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: