ITC DeltaCom Reports, Nobody Notices

itcd reported earnings on Friday after the bell, as always waiting until the last possible moment.  And the news?  Well, the economy may suck but you wouldn’t know it from their earnings report.  But then, when the economy was good it never showed up then either.  Not much ever seems to change at ITC Deltacom.

Revenues of $124.7M were down slightly from $125.5 in Q2 which had been up from $124.8M in Q1.  Adjusted EBITDA has been trending up, from $20.8M in Q1 to $21.8M in Q2, to a blockbuster $22.1M in Q3.  The company has been reducing headcount steadily, and thus reducing its SG&A expense bit by bit.  They don’t give guidance, so they didn’t say much about future revenue trends.  They must not be too worried though, in October they announced a $20M expansion with Infinera gear.  That may increase capex somewhat going forward, but in Q3 capex was quite low at $8M.

ITC Deltacom did experience the most direct effect of the credit crisis of any telecom I have seen.  It wasn’t discussed in their PR, but in the 10-Q they disclose that they had to move $25.4M of cash and equivalents (a third of their cash balance) to short term investments when a money market fund went into liquidation on September 16 after losing a pile in Lehman debt securities.  They got $12.9M of it back two weeks ago but are still trying to recover the rest.

Ah well, the stock only traded 5000 shares the day before earnings and they get very little coverage – nobody pays attention to this company except maybe me.  Why do I?  Well, it’s a $500M stack of revenues that I think someone may snap up sooner or later when consolidation starts up again.

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Categories: CLEC · Financials