EarthLink Holdings Corp. (ELNK) swung to a net profit for the quarter ended Sep. 30, 2016. The company has made a net profit of $0.23 million in the quarter, against a net loss of $10.52 million in the last year period.
Revenue during the quarter dropped 13.21 percent to $235.12 million from $270.90 million in the previous year period. Gross margin for the quarter contracted 141 basis points over the previous year period to 53.41 percent. Total expenses were 95.27 percent of quarterly revenues, down from 97.88 percent for the same period last year. This has led to an improvement of 261 basis points in operating margin to 4.73 percent.
Operating income for the quarter was $11.12 million, compared with $5.75 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $50.52 million compared with $61.37 million in the prior year period. At the same time, adjusted EBITDA margin contracted 117 basis points in the quarter to 21.49 percent from 22.65 percent in the last year period.
"EarthLink delivered another quarter of solid operational and financial results in the third quarter," said EarthLink chief executive officer Joe Eazor. "We launched our SD-WAN product and have signed new deals with customers who are excited about EarthLink's Concierge Service supporting this important new technology. The combination of EarthLink's robust SD-WAN capability coupled with this proactive support model has been very impactful in the early days of our introduction. Eazor continued, "We are also excited to announce that we have signed a definitive agreement to merge with Windstream in an all-stock transaction valued at approximately $1.1 billion that will create a stronger, more competitive company. We look forward to partnering with Windstream upon the close of the transaction in the first half of 2017 and capitalizing on this outstanding strategic fit."
Working capital increases sharply
EarthLink Holdings Corp. has recorded an increase in the working capital over the last year. It stood at $4.51 million as at Sep. 30, 2016, up 294.06 percent or $3.37 million from $1.15 million on Sep. 30, 2015. Current ratio was at 1.03 as on Sep. 30, 2016, up from 1.01 on Sep. 30, 2015.
Days sales outstanding went up to 31 days for the quarter compared with 29 days for the same period last year.
At the same time, days payable outstanding went up to 12 days for the quarter from 11 for the same period last year.
Debt comes down
EarthLink Holdings Corp. has recorded a decline in total debt over the last one year. It stood at $442.51 million as on Sep. 30, 2016, down 15.54 percent or $81.39 million from $523.90 million on Sep. 30, 2015. Total debt was 68.75 percent of total assets as on Sep. 30, 2016, compared with 68.21 percent on Sep. 30, 2015. Debt to equity ratio was at 16.63 as on Sep. 30, 2016, up from 14.11 as on Sep. 30, 2015.
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