Alaska Communications Systems Group, Inc. (NASDAQ: ALSK) today reported financial results for the third quarter of 2015.
“Our focus on reliable broadband technologies, differentiated by customer service, resulted in strong sales and financial performance in the third quarter. Q3 Adjusted EBITDA, as expected, grew significantly, up 13.7% sequentially to $12.6 million. We expect Q4 performance will show continued strong sequential growth from revenue uplift and additional cost reductions. This supports our goal to achieve a 2015 Adjusted EBITDA exit run rate of $54 million to $56 million and strengthens our financial foundation going into 2016.
“Consistently performing to our plan over the last four years, we have transformed Alaska Communications into a pure play broadband and IT managed services provider. Our management team has strengthened our balance sheet, refinanced our debt, and achieved industry-leading growth. We are focused on our future, positioning Alaska Communications for further success in broadband and IT managed services and creating shareholder value. We are at a natural place in our evolution to provide leadership opportunities for our deeply experienced management team,” said President and CEO Anand Vadapalli.
Laurie Butcher, who has been a key financial leader at Alaska Communications for many years, has been promoted to senior vice president of finance and will lead the finance organization, succeeding CFO Wayne Graham. Butcher joined Alaska Communications in 1997 and served as vice president of finance for the past 10 years. The company has also aligned its core sales and operations functions in three key areas. Bill Bishop, who has led the company’s growth in business sales, has been promoted to senior vice president of business services and will lead the business and wholesale segment. Mike Todd, who has led Alaska Communications’ successful network expansion, has been named senior vice president of consumer services and will lead the consumer segment. Randy Ritter, named senior vice president of shared services, previously led the company’s successful entry into IT managed services.
“Collectively, our team has five decades’ experience at Alaska Communications and over 100 years in the telecom sector. This extensive knowledge of the telecommunications industry and the Alaska market, along with our focus on customer experience, will serve our investors, customers and employees well,” said Vadapalli.
Wayne Graham, chief financial officer, along with David Eisenberg, chief revenue officer, will be separating from Alaska Communications effective the end of November. “I thank Wayne and David for their leadership and service. Their dedication and stellar performance record helped create today’s Alaska Communications,” noted Vadapalli.
“I am proud of our rising executives and confident in their talent. We are in the right markets, at the right time, with the right team. We have built a platform to increase shareholder value by delivering top-line performance, growing Adjusted EBITDA and generating strong free cash flow while operating at some of the lowest leverage levels in our sector,” concluded Vadapalli.
Third Quarter 2015 Revenue Highlights Compared to Third Quarter 2014
-
Total Service and Other:
- Revenue was $54.7 million. Compared to $53.4 million, revenue grew 2.5 percent year over year.
- Total broadband revenue reached $18.6 million, up 7.6 percent from $17.3 million.
-
Business and Wholesale:
- Comprised 54.3 percent of total service and other revenue and is expected to continue to generate an increasing percentage of our top line performance.
- Revenue grew to $29.7 million, up 6.2 percent from $28.0 million, led by continued strong broadband performance.
- Broadband revenue reached $12.5 million, up 14.1 percent from $11.0 million.
-
Consumer:
- Comprised 18.2 percent of total service and other revenue.
- Revenue was $9.9 million, down 4.7 percent from $10.4 million, reflecting general industry trends.
- Broadband revenue was $6.1 million, down 3.5 percent from $6.3 million.
-
Access and Other:
- Comprised 27.5 percent of total service and other revenue.
- Revenue grew to $15.1 million, up 0.6 percent from $15.0 million, led by an increase in equipment sales and installations.
Financial Highlights from Third Quarter 2015
- Completed the refinancing of our senior loan facility on September 14, 2015, entering into $100 million of senior secured financing, including a $10 million undrawn revolving loan. The company has no debt maturities prior to 2018.
- Reported continued benefits from the wind down of the wireless business resulting in increased Adjusted EBITDA to $12.6 million, up from $11.1 million in Q2. The remaining wind down activities and the resulting benefits will be completed in Q4.
- Total debt was $188.7 million, and cash balances were $42.1 million at September 30, 2015.
“During Q3, we achieved several financial milestones. We refinanced our senior debt facility, lowered our cost structure and turned up record sales activities that are expected to result in a strong Q4. The management team is focused on building on this success with an increasing focus on not only top-line and Adjusted EBITDA performance, but driving free cash flow growth in 2016,” said CFO Wayne Graham.
2015 Guidance
The company reaffirmed 2015 guidance as follows:
- Total service and other revenue of approximately $220 million
- Run rate Adjusted EBITDA exiting 2015 of $54 million to $56 million
- Net capital expenditures range of $34 million to $36 million1
- Net debt at year end of approximately $159 million
1. The purchase of the North Slope Network is not included in capital spending guidance. Schedule 5 presents the impact of this investment on overall capital spending results for the year.
Conference Call
The company will host a conference call and live webcast on Thursday, November 5, 2015 at 3:00 p.m. Eastern Standard Time to discuss the results. The live webcast will include a slide presentation. Parties in the U.S. and Canada can access the call at 1-888-523-1208 and enter pass code 737999. All other parties can access the call at 1-719-955-1569.
The live webcast of the conference call will be accessible from the "Events Calendar" section of the company's website (www.alsk.com). The webcast will be archived for 90 days. A replay of the call will be available two hours after the call and will run until December 7, 2015, at 4:00 p.m. EST. To hear the replay, parties in the U.S. and Canada can call 1-888-203-1112 and enter pass code 1306436. All other parties can call 1-719-457-0820 and enter pass code 1306436.
About Alaska Communications
Alaska Communications (NASDAQ: ALSK) is the leading provider of advanced broadband and IT managed services for businesses and consumers in Alaska. The company operates a highly reliable, advanced statewide data network with the latest technology and the most diverse undersea fiber optic system connecting Alaska to the contiguous U.S. For more information, visit www.alaskacommunications.com or www.alsk.com.
Non-GAAP Measures
In an effort to provide investors with additional information regarding our financial results, in particular with regards to our liquidity and capital resources, we have disclosed certain non-GAAP financial information such as Adjusted EBITDA, Free Cash Flow and Net Debt, which management utilizes to assess performance and believes provides useful information to investors. The definition of these non-GAAP measures are on Schedules 4 and 5 to this press release. Adjusted EBITDA, and Free Cash Flow are non-GAAP measures and should not be considered a substitute for net cash provided by operating activities and other measures of financial performance recorded in accordance with GAAP. Reconciliations of our non-GAAP measures to our nearest GAAP measures can be found on our website at http://www.alsk.com in the investment data section. Other companies may not calculate non-GAAP measures in the same manner as ACS.
Forward-Looking Statements
This press release includes certain "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's beliefs as well as on a number of assumptions concerning future events made using information currently available to management. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside ACS' control. Such factors include, without limitation, Universal Service Fund changes, adverse economic conditions, the effects of competition in our markets, our relatively small size compared with our competitors, the Company’s ability to compete, manage, integrate, market, maintain, and attract sufficient customers for its products and services, adverse changes in labor matters, including workforce levels, labor negotiations, and benefits costs, disruption of our suppliers’ provisioning of critical products or services, the impact of natural or man-made disasters, changes in Company's relationships with large customers, unforeseen changes in public policies, and changes in accounting policies, which could result in an impact on earnings. For further information regarding risks and uncertainties associated with ACS' business, please refer to the Company's SEC filings, including, but not limited to, the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of the Company's SEC filings may be obtained by contacting its investor relations department at (907) 564-7556 or by visiting its investor relations website at www.alsk.com.
| Schedule 1 | |||||||||||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | |||||||||||||||||
| CONSOLIDATED SCHEDULE OF OPERATIONS | |||||||||||||||||
| (Unaudited, In Thousands Except Per Share Amounts) | |||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| Operating revenues: | |||||||||||||||||
| Operating revenues, non-affiliates | $ | 54,735 | $ | 76,683 | $ | 175,611 | $ | 232,031 | |||||||||
| Operating revenues, affiliates | - | 1,782 | 575 | 5,323 | |||||||||||||
| Total operating revenues | 54,735 | 78,465 | 176,186 | 237,354 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Cost of services and sales, non-affiliates | 24,673 | 31,416 | 81,056 | 91,274 | |||||||||||||
| Cost of services and sales, affiliates | - | 13,534 | 4,961 | 43,295 | |||||||||||||
| Selling, general & administrative | 20,387 | 25,017 | 70,982 | 74,926 | |||||||||||||
| Depreciation and amortization | 8,475 | 8,585 | 25,491 | 25,850 | |||||||||||||
| (Gain) loss on disposal of assets, net | (6,978 | ) | (199 | ) | (46,364 | ) | 612 | ||||||||||
| Earnings from equity method investments | - | (11,556 | ) | (3,056 | ) | (29,247 | ) | ||||||||||
| Total operating expenses | 46,557 | 66,797 | 133,070 | 206,710 | |||||||||||||
| Operating income | 8,178 | 11,668 | 43,116 | 30,644 | |||||||||||||
| Other income and expense: | |||||||||||||||||
| Interest expense | (4,077 | ) | (8,615 | ) | (18,381 | ) | (26,144 | ) | |||||||||
| Loss on extinguishment of debt | (2,250 | ) | - | (2,250 | ) | - | |||||||||||
| Interest income | 14 | 28 | 56 | 42 | |||||||||||||
| Total other income and expense | (6,313 | ) | (8,587 | ) | (20,575 | ) | (26,102 | ) | |||||||||
| Income before income tax expense | 1,865 | 3,081 | 22,541 | 4,542 | |||||||||||||
| Income tax expense | (663 | ) | (1,203 | ) | (9,982 | ) | (1,964 | ) | |||||||||
| Net income | 1,202 | 1,878 | 12,559 | 2,578 | |||||||||||||
Less net loss attributable to non-controlling interest | (37 | ) | - | (56 | ) | - | |||||||||||
Net income attributable to ACS | $ | 1,239 | $ | 1,878 | $ | 12,615 | $ | 2,578 | |||||||||
| Net income per share: | |||||||||||||||||
| Basic and Diluted | $ | 0.02 | $ | 0.04 | $ | 0.25 | $ | 0.05 | |||||||||
| Weighted average shares outstanding: | |||||||||||||||||
| Basic | 50,399 | 49,498 | 50,191 | 49,265 | |||||||||||||
| Diluted | 51,588 | 50,155 | 51,246 | 49,730 | |||||||||||||
| Schedule 2 | |||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | |||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||
| (Unaudited, In Thousands Except Per Share Amounts) | |||||||||
| September 30, | December 31, | ||||||||
| Assets | 2015 | 2014 | |||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 42,104 | $ | 31,709 | |||||
| Restricted cash | 2,052 | 467 | |||||||
| Accounts receivable, net of allowance of $2,022 and $2,338 | 24,506 | 30,900 | |||||||
| Materials and supplies | 4,927 | 4,321 | |||||||
| Prepayments and other current assets | 7,846 | 6,575 | |||||||
| Deferred income taxes | 12,943 | 104,245 | |||||||
| Current assets held-for-sale | - | 9,565 | |||||||
| Total current assets | 94,378 | 187,782 | |||||||
| Property, plant and equipment | 1,332,184 | 1,333,134 | |||||||
| Less: accumulated depreciation and amortization | (967,140 | ) | (976,401 | ) | |||||
| Property, plant and equipment, net | 365,044 | 356,733 | |||||||
| Deferred income taxes | 5,047 | - | |||||||
| Equity method investments | - | 252,067 | |||||||
| Non-current assets held-for-sale | - | 14,664 | |||||||
| Other assets | 1,843 | 301 | |||||||
| Total assets | $ | 466,312 | $ | 811,547 | |||||
| Liabilities and Stockholders' Equity (Deficit) | |||||||||
| Current liabilities: | |||||||||
| Current portion of long-term obligations | $ | 3,249 | $ | 15,521 | |||||
| Accounts payable, accrued and other current liabilities, non-affiliates | 58,030 | 54,373 | |||||||
| Accounts payable, accrued and other current liabilities, affiliates, net * | - | 4,853 | |||||||
| Advance billings and customer deposits | 4,603 | 4,490 | |||||||
| Current liabilities held-for-sale | - | 18,728 | |||||||
| Total current liabilities | 65,882 | 97,965 | |||||||
| Long-term obligations, net of current portion | 185,403 | 413,978 | |||||||
| Deferred income taxes | - | 81,267 | |||||||
| Other long-term liabilities, net of current portion | 61,776 | 24,370 | |||||||
| Non-current liabilities held-for-sale | - | 2,107 | |||||||
| Deferred AWN capacity revenue, net of current portion | - | 56,734 | |||||||
| Total liabilities | 313,061 | 676,421 | |||||||
| Commitments and contingencies | |||||||||
| Stockholders' equity (deficit): | |||||||||
| Common stock, $.01 par value; 145,000 authorized | 504 | 497 | |||||||
| Additional paid in capital | 156,724 | 154,368 | |||||||
| Accumulated deficit | (1,973 | ) | (14,588 | ) | |||||
| Accumulated other comprehensive loss | (3,120 | ) | (5,151 | ) | |||||
| Total ACS stockholders' equity | 152,135 | 135,126 | |||||||
Non-controlling interest | 1,116 | - | |||||||
| Total stockholders' equity | 153,251 | 135,126 | |||||||
| Total liabilities and stockholders' equity | $ | 466,312 | $ | 811,547 | |||||
| * Affiliate balances are related to activity with our equity method investment in AWN. | |||||||||
| On February 2, 2015 we sold our interest in AWN. | |||||||||
| Schedule 3 | |||||||||||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | |||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||||||||
| (Unaudited, In Thousands) | |||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| Cash Flows from Operating Activities: | |||||||||||||||||
| Net income | $ | 1,202 | $ | 1,878 | $ | 12,559 | $ | 2,578 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||
| Depreciation and amortization | 8,475 | 8,585 | 25,491 | 25,850 | |||||||||||||
| Gain on wireless sale | (7,092 | ) | - | (48,232 | ) | - | |||||||||||
| Loss (gain) on the disposal of assets, net | 114 | (199 | ) | 1,868 | 612 | ||||||||||||
| Unrealized gain on ineffective hedge | (278 | ) | - | (820 | ) | - | |||||||||||
| Amortization of debt issuance costs and debt discount | 1,019 | 1,260 | 5,690 | 3,926 | |||||||||||||
| Amortization of ineffective hedge | - | 362 | 1,970 | 1,276 | |||||||||||||
| Loss on extinguishment of debt | 2,250 | - | 2,250 | - | |||||||||||||
| Cash paid for debt extinguishment | (391 | ) | - | (391 | ) | - | |||||||||||
| Amortization of deferred capacity revenue | (693 | ) | (809 | ) | (2,162 | ) | (2,819 | ) | |||||||||
| Stock-based compensation | 619 | 684 | 1,898 | 1,877 | |||||||||||||
| Deferred income tax expense | 6,965 | 961 | 3,571 | 1,708 | |||||||||||||
| Provision for uncollectible accounts | 66 | 1,467 | 1,385 | 2,942 | |||||||||||||
| Cash distribution from equity method investments | - | 11,556 | 3,056 | 29,247 | |||||||||||||
| Earnings from equity method investments | - | (11,556 | ) | (3,056 | ) | (29,247 | ) | ||||||||||
| Other non-cash expense, net | 274 | 111 | 817 | 318 | |||||||||||||
| Income taxes payable | (6,302 | ) | - | 1,736 | - | ||||||||||||
| Changes in operating assets and liabilities | 7,127 | 5,538 | (2,521 | ) | 1,623 | ||||||||||||
| Net cash provided by operating activities | 13,355 | 19,838 | 5,109 | 39,891 | |||||||||||||
| Cash Flows from Investing Activities: | |||||||||||||||||
| Capital expenditures | (12,083 | ) | (16,042 | ) | (38,216 | ) | (33,916 | ) | |||||||||
| Capitalized interest | (444 | ) | (720 | ) | (1,232 | ) | (2,082 | ) | |||||||||
| Change in unsettled capital expenditures | 2,713 | 3,114 | 3,387 | (1,300 | ) | ||||||||||||
| Cash received in acquisition of business | - | - | - | 68 | |||||||||||||
| Proceeds on wireless sale | 7,092 | - | 285,160 | - | |||||||||||||
| Proceeds on sale of assets | 3 | 136 | 3,129 | 136 | |||||||||||||
| Return of capital from equity investment | - | 944 | 1,875 | 8,286 | |||||||||||||
| Net change in restricted accounts | (1,357 | ) | - | (1,357 | ) | - | |||||||||||
| Net cash (used) provided by investing activities | (4,076 | ) | (12,568 | ) | 252,746 | (28,808 | ) | ||||||||||
| Cash Flows from Financing Activities: | |||||||||||||||||
| Repayments of long-term debt | (90,553 | ) | (5,280 | ) | (333,390 | ) | (24,022 | ) | |||||||||
| Proceeds from the issuance of long-term debt | 90,061 | - | 90,061 | - | |||||||||||||
| Debt issuance costs | (3,513 | ) | - | (4,555 | ) | - | |||||||||||
| Cash paid in acquisition of business | - | (795 | ) | (291 | ) | (795 | ) | ||||||||||
| Cash proceeds from non-controlling interest | - | - | 250 | - | |||||||||||||
| Payment of withholding taxes on stock-based compensation | - | (3 | ) | (402 | ) | (586 | ) | ||||||||||
| Excess tax benefit from share-based payments | - | - | 733 | - | |||||||||||||
| Proceeds from issuance of common stock | (1 | ) | - | 134 | 132 | ||||||||||||
| Net cash used by financing activities | (4,006 | ) | (6,078 | ) | (247,460 | ) | (25,271 | ) | |||||||||
| Change in cash and cash equivalents | 5,273 | 1,192 | 10,395 | (14,188 | ) | ||||||||||||
| Cash and cash equivalents, beginning of period | 36,831 | 27,659 | 31,709 | 43,039 | |||||||||||||
| Cash and cash equivalents, end of period | $ | 42,104 | $ | 28,851 | $ | 42,104 | $ | 28,851 | |||||||||
| Supplemental Cash Flow Data: | |||||||||||||||||
| Interest paid | $ | 2,179 | $ | 6,008 | $ | 11,120 | $ | 22,036 | |||||||||
| Income taxes paid, net | $ | - | $ | 206 | $ | 3,942 | $ | 220 | |||||||||
| Schedule 4 | |||||||||||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | |||||||||||||||||
| ADJUSTED EBITDA | |||||||||||||||||
| (Unaudited, In Thousands) | |||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| Net income | $ | 1,202 | $ | 1,878 | $ | 12,559 | $ | 2,578 | |||||||||
| Add (subtract): | |||||||||||||||||
| Interest expense | 4,077 | 8,615 | 18,381 | 26,144 | |||||||||||||
| Loss on extinguishment of debt | 2,250 | - | 2,250 | - | |||||||||||||
| Interest income | (14 | ) | (28 | ) | (56 | ) | (42 | ) | |||||||||
| Depreciation and amortization | 8,475 | 8,585 | 25,491 | 25,850 | |||||||||||||
| Loss (gain) on disposal of assets, net | 114 | (199 | ) | 1,868 | 612 | ||||||||||||
| Earnings from equity method investment in TekMate | - | - | - | (12 | ) | ||||||||||||
| Earnings from equity method investment in AWN | - | (11,556 | ) | (3,056 | ) | (29,235 | ) | ||||||||||
| Gain on sale of assets | (7,092 | ) | - | (48,232 | ) | - | |||||||||||
| AWN distributions received/receivable, net | - | 12,500 | 765 | 37,500 | |||||||||||||
| AWN distributions received for the prior period | - | (4,167 | ) | - | (4,167 | ) | |||||||||||
| AWN distributions receivable within 12 days | - | 4,167 | - | 4,167 | |||||||||||||
| Income tax expense | 663 | 1,203 | 9,982 | 1,964 | |||||||||||||
| Stock-based compensation | 619 | 684 | 1,898 | 1,877 | |||||||||||||
| Long-term cash incentives | 714 | 587 | 1,356 | 1,572 | |||||||||||||
| Pension adjustment | 210 | - | 210 | - | |||||||||||||
Earthquake-related expense | - | 1,228 | - | 1,228 | |||||||||||||
Net loss attributable to non-controlling interest | 37 | - | 56 | - | |||||||||||||
| Wireless sale transaction-related and wind down costs | 1,321 | 28 | 12,629 | 240 | |||||||||||||
| Adjusted EBITDA | $ | 12,576 | $ | 23,525 | $ | 36,101 | $ | 70,276 | |||||||||
Non-GAAP Measures: |
In an effort to provide investors with additional information regarding the Company’s results as determined by GAAP, the Company also discloses certain non-GAAP information which management utilizes to assess recurring performance and believes provides useful information to investors regarding baseline operating results. |
The Company has disclosed Adjusted EBITDA as net income before interest, loss on extinguishment of debt, depreciation and amortization, gain or loss on asset purchases or disposals, earnings on equity method investments, gain on the sale of our wireless operations, provisions for taxes, wireless transaction-related costs, loss attributable to non-controlling interest, stock-based compensation, pension adjustments, earthquake-related expenses and expenses under the company’s long-term cash incentive plan (“LTCI”). LTCI expenses are considered part of an interim compensation structure to mitigate the dilutive impact of additional share issuances for executive compensation. Distributions from AWN are included in Adjusted EBITDA. |
| Schedule 5 | |||||||||||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | |||||||||||||||||
| FREE CASH FLOW | |||||||||||||||||
| (Unaudited, In Thousands) | |||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| Adjusted EBITDA | $ | 12,576 | $ | 23,525 | $ | 36,101 | $ | 70,276 | |||||||||
| Less: | |||||||||||||||||
Capital expenditures | (12,083 | ) | (16,042 | ) | (27,216 | ) | (33,916 | ) | |||||||||
| Milestone billings for fiber build project for a carrier customer | - | 2,000 | 2,500 | 2,000 | |||||||||||||
Net capital expenditures | (12,083 | ) | (14,042 | ) | (24,716 | ) | (31,916 | ) | |||||||||
| Purchase of North Slope fiber network | |||||||||||||||||
| Acquisition price | - | - | (11,000 | ) | - | ||||||||||||
| Less: 50% due in 2016 | - | - | 5,500 | - | |||||||||||||
| Less: proceeds on sale of fiber to JV partner | - | - | 2,650 | - | |||||||||||||
| Less: other cash proceeds | - | - | 400 | - | |||||||||||||
| Net North Slope purchase | - | - | (2,450 | ) | - | ||||||||||||
| Amortization of GCI/AWN capacity revenue | (520 | ) | (647 | ) | (1,649 | ) | (2,337 | ) | |||||||||
Earthquake-related expense | - | (1,228 | ) | - | (1,228 | ) | |||||||||||
| Cash interest expense | (2,179 | ) | (6,008 | ) | (11,120 | ) | (22,036 | ) | |||||||||
| Free cash flow | $ | (2,206 | ) | $ | 1,600 | $ | (3,834 | ) | $ | 12,759 | |||||||
Non-GAAP Measures: |
In an effort to provide investors with additional information regarding the Company's results as determined by GAAP, the Company also discloses certain non-GAAP information which management utilizes to assess recurring performance and believes provides useful information to investors regarding baseline operating results. |
Free cash flow ("FCF") is defined as Adjusted EBITDA, less recurring operating cash requirements which include capital expenditures, net of cash received for a fiber build for carrier customer, less cash interest expense, earthquake-related expenses, significant non-cash revenue associated with our interconnection agreement with AWN and GCI, and in Q2 2015 the purchase of the North Slope fiber network. |
| ACS continues to have net operating losses and is not a significant taxpayer on ordinary income. Income taxes paid in 2015 are related to the Wireless retail sale and are not included in free cash flow. |
| Schedule 6 | ||||||||||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||||||||||
| REVENUE GROWTH | ||||||||||||||||
| (Unaudited, In Thousands) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| Service revenue: | 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Business and wholesale customers | ||||||||||||||||
| Voice | $ | 5,562 | $ | 5,666 | $ | 16,544 | $ | 16,948 | ||||||||
| Broadband | 12,506 | 10,962 | 36,569 | 32,658 | ||||||||||||
| Managed IT services | 708 | 1,007 | 2,247 | 2,540 | ||||||||||||
| Other | 2,108 | 1,800 | 5,708 | 5,256 | ||||||||||||
| Wholesale | 8,816 | 8,544 | 26,932 | 24,723 | ||||||||||||
| Business and wholesale service revenue | 29,700 | 27,979 | 88,000 | 82,125 | ||||||||||||
| Consumer customers | ||||||||||||||||
| Voice | 3,487 | 3,686 | 10,257 | 11,399 | ||||||||||||
| Broadband | 6,114 | 6,336 | 19,136 | 18,441 | ||||||||||||
| Other | 337 | 409 | 873 | 1,191 | ||||||||||||
| Consumer service revenue | 9,938 | 10,431 | 30,266 | 31,031 | ||||||||||||
| Total service revenue | 39,638 | 38,410 | 118,266 | 113,156 | ||||||||||||
| Growth in service revenue | 3.2 | % | 4.5 | % | ||||||||||||
| Growth in broadband service revenue | 7.6 | % | 9.0 | % | ||||||||||||
| Other revenue: | ||||||||||||||||
| Equipment sales and installations | 1,757 | 1,310 | 4,667 | 3,421 | ||||||||||||
| Access | 8,420 | 8,771 | 25,477 | 26,732 | ||||||||||||
| High cost support | 4,920 | 4,922 | 14,761 | 18,271 | ||||||||||||
| Total service and other revenue | 54,735 | 53,413 | 163,171 | 161,580 | ||||||||||||
| Growth in service and other revenue | 2.5 | % | 1.0 | % | ||||||||||||
| Growth excluding equipment sales | 1.7 | % | 0.2 | % | ||||||||||||
| Wireless and AWN related revenue: | ||||||||||||||||
| Service revenue, equipment sales and other | - | 19,685 | 6,300 | 58,856 | ||||||||||||
| Transition services | - | - | 4,769 | - | ||||||||||||
| CETC | - | 4,720 | 1,654 | 14,581 | ||||||||||||
| Amortization of deferred AWN capacity revenue | - | 647 | 292 | 2,337 | ||||||||||||
| Total wireless & AWN related revenue | - | 25,052 | 13,015 | 75,774 | ||||||||||||
| Total revenue | $ | 54,735 | $ | 78,465 | $ | 176,186 | $ | 237,354 | ||||||||
| Adjusted for prior year access reserve releases: | ||||||||||||||||
| Total service and other revenue | 54,735 | 53,413 | 163,171 | 161,580 | ||||||||||||
| Prior year access reserve releases | - | - | - | (3,502 | ) | |||||||||||
| Adjusted total service and other revenue | 54,735 | 53,413 | 163,171 | 158,078 | ||||||||||||
| Growth in service and other revenue | 2.5 | % | 3.2 | % | ||||||||||||
| Schedule 7 | |||||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | |||||||||||
| KEY OPERATING STATISTICS | |||||||||||
| (Unaudited) | |||||||||||
| Three Months Ended | |||||||||||
| September 30, | June 30, | September 30, | |||||||||
| 2015 | 2015 | 2014 | |||||||||
| Voice: | |||||||||||
| Consumer access lines | 39,016 | 40,888 | 45,177 | ||||||||
| Business access lines | 78,164 | 78,544 | 79,563 | ||||||||
| Voice ARPU consumer | $ | 29.09 | $ | 26.73 | $ | 26.73 | |||||
| Voice ARPU business | $ | 23.66 | $ | 23.53 | $ | 23.65 | |||||
| Broadband: | |||||||||||
| Consumer connections | 33,488 | 34,895 | 38,257 | ||||||||
| Business connections (2) | 19,125 | 18,976 | 18,765 | ||||||||
| ARPU consumer | $ | 59.16 | $ | 60.37 | $ | 54.18 | |||||
| ARPU business (1) (2) | $ | 218.54 | $ | 218.90 | $ | 195.04 | |||||
| (1) | Business broadband ARPU was restated to reflect the movement of Managed IT services revenue into a separate category. | |
| (2) | How we calculate broadband connections has changed to exclude certain internal use circuits. Historical amounts have been restated to reflect appropriate comparisons period over period. | |
| Schedule 8 | |||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | |||||||||
Long-Term Debt and Net Debt | |||||||||
| (Unaudited, In Thousands) | |||||||||
| September 30, | December 31, | ||||||||
| 2015 | 2014 | ||||||||
| 2015 senior secured credit facilities due 2018 | $ | 90,000 | $ | - | |||||
| Debt issuance costs - 2015 senior secured credit facilities due 2018 | (3,824 | ) | - | ||||||
| 2010 senior credit facility term loan due 2016 | - | 322,700 | |||||||
| Debt discount - 2010 senior credit facility term loan due 2016 | - | (1,014 | ) | ||||||
| Debt issuance costs - 2010 senior credit facility term loan due 2016 | - | (2,810 | ) | ||||||
| 6.25% convertible notes due 2018 | 104,000 | 114,000 | |||||||
| Debt discount - 6.25% convertible notes due 2018 | (5,141 | ) | (7,242 | ) | |||||
| Debt issuance costs - 6.25% convertible notes due 2018 | (1,132 | ) | (1,659 | ) | |||||
| Capital leases and other long-term obligations | 4,749 | 5,524 | |||||||
| Total debt | 188,652 | 429,499 | |||||||
| Less current portion | (3,249 | ) | (15,521 | ) | |||||
| Long-term obligations, net of current portion | $ | 185,403 | $ | 413,978 | |||||
| Total debt | $ | 188,652 | $ | 429,499 | |||||
| Plus debt discounts and debt issuance costs | 10,097 | 12,725 | |||||||
| Gross debt | 198,749 | 442,224 | |||||||
| Cash and cash equivalents | (42,104 | ) | (31,709 | ) | |||||
| Net debt | $ | 156,645 | $ | 410,515 | |||||
| Midpoint of 2015 run rate Adjusted EBITDA guidance | 55,000 | ||||||||
| Net debt year end guidance | 159,000 | ||||||||
| Net leverage at 2015 year end guidance | 2.9x | ||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20151105005494/en/
Contacts:
Investor Contact:
Tiffany
Dunn, 907-297-3103
Manager, Board and Investor Relations
investors@acsalaska.com
or
Media
Contact:
Hannah Blankenship, 907-564-1326
Associate Manager,
Corporate Communications
Hannah.Blankenship@acsalaska.com
