Alaska Communications Systems Group, Inc. (NASDAQ: ALSK) today reported financial results for the second quarter of 2016.
“We are performing to our business plan, delivering consistent results in-line with our long-term directional guidance. For the second quarter 2016 compared to a year ago, revenue grew 2.8 percent for total wireline and 8.6 percent for business and wholesale. Revenue contribution from Business and Wholesale as a percentage of total wireline revenue has grown from 51.7 percent in the first quarter 2014 to 60.2 percent in the second quarter 2016, reflecting our steady progress as a fiber broadband and managed IT services focused company. With strong customer wins in the quarter, and investments in a flagship Business Technology Center, we remain confident in the growth opportunities ahead of us and look forward to reporting continued progress in upcoming quarters,” Anand Vadapalli, president and CEO of Alaska Communications, said.
Revenue Highlights: Second Quarter 2016 Compared to Second Quarter 2015
-
Total Wireline revenues:
- Revenue increased to $56.3 million from $54.7 million, up 2.8 percent.
- Total broadband revenue reached $28.4 million from $26.2 million, up 8.4 percent.
-
Business and wholesale:
- Comprised 60.2 percent of total wireline revenue.
- Revenue grew to $33.9 million from $31.2 million, up 8.6 percent.
- Broadband revenues reached $22.2 million from $19.6 million, up 13.2 percent.
-
Consumer:
- Comprised 16.9 percent of total wireline revenue.
- Revenue was $9.5 million, down 6.4 percent from $10.1 million.
- Broadband revenue was $6.2 million, down 5.8 percent from $6.6 million.
-
Regulatory:
- Comprised 22.9 percent of total wireline revenue.
- Revenue was $12.9 million, down 3.6 percent from $13.4 million.
Financial Metrics: Second Quarter 2016 compared to Second Quarter 2015 and Year to Date June 30, 2016
- Net income was $0.3 million, compared to a net loss of $4.9 million. Year to date net income was $0.4 million.
- Net cash provided by operating activities was $8.7 million, compared to net cash used of $9.6 million. Year to date cash provided by operating activities was $18.9 million.
- Capital expenditures were $8.5 million, compared to $20.2 million. Year to date capital expenditures were $13.7 million.
Balance Sheet Metrics: June 30, 2016 compared to December 31, 2015
- Cash remained strong at $22.2 million, compared to $36.0 million.
- Net debt was $163.8 million, compared to $161.7 million.
Non-GAAP Metrics: Second Quarter 2016 compared to Second Quarter 2015 and Year to Date June 30, 2016
- Adjusted EBITDA was $14.0 million, compared to $11.1 million. Year to date Adjusted EBITDA was $28.0 million.
- Free cash flow was ($5.0) million, compared to ($6.7) million. Year to date free cash flow was $4.1 million.
Reconciliations of non-GAAP financial measures to GAAP financial measures can be found in tables at the end of this release and on the company’s website at http://www.alsk.com in the investment data section.
Laurie Butcher, Alaska Communications senior vice-president of finance, said, “We are pleased with our results for the quarter, which are aligned with our business plan. We remain committed to growing Adjusted EBITDA and free cash flow and reaffirm our guidance for 2016.”
2016 Guidance:
The company reaffirmed 2016 guidance as follows:
- Total Wireline Revenue of approximately $228 million
- Adjusted EBITDA of approximately $59 million
- Capital Expenditures of approximately $35 million
- Free Cash Flow of approximately $5 million
Conference Call
The Company will host a conference call and live webcast on Thursday, Aug. 4, 2016, at 3:00 p.m. Eastern Time to discuss the results. Parties in the United States and Canada can access the call at 1-888-481-2848 and enter pass code 410670. All other parties can access the call at 1-719-325-2219 and use the same code.
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 a period of 90 days. A telephonic replay of the conference call will also be available two hours after the call and will run until Sept. 3, 2016, at 6:00 p.m. Eastern Time. To hear the replay, parties in the U.S. and Canada can call 1-888-203-1112 and enter pass code 7519974. All other parties can call 1-719-457-0820 and enter pass code 7519974.
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 Income, Net Cash Provided (Used) 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 in the tables at the end of this release or 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 Alaska Communications. We do not provide guidance for Net Income and Net Cash Provided (Used) By Operating Activities.
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 the Company’s control. Such factors include, without limitation, Federal and Alaska 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, our ability to service our debt and refinance as required, labor negotiations, including renegotiating our collective bargaining agreement, employee benefit costs, our ability to control other operating costs, disruption of our supplier’s provisioning of critical products or services, the impact of natural or man-made disasters, changes in the Company’s relationships with large customers, unforeseen changes in public policies, regulatory changes, changes in technology and standards, our internal control over financial reporting, and changes in accounting standards or policies, which could affect reported financial results. For further information regarding risks and uncertainties associated with the Company’s 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 | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Operating revenues: | |||||||||||||||||
| Operating revenues, non-affiliates | $ | 56,262 | $ | 55,665 | $ | 112,590 | $ | 120,876 | |||||||||
| Operating revenues, affiliates | - | - | - | 575 | |||||||||||||
| Total operating revenues | 56,262 | 55,665 | 112,590 | 121,451 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Cost of services and sales, non-affiliates | 25,543 | 30,078 | 51,671 | 56,383 | |||||||||||||
| Cost of services and sales, affiliates | - | - | - | 4,961 | |||||||||||||
| Selling, general & administrative | 17,586 | 22,611 | 34,926 | 50,595 | |||||||||||||
| Depreciation and amortization | 8,640 | 8,075 | 17,160 | 17,016 | |||||||||||||
| Loss (gain) on disposal of assets, net | 128 | (724 | ) | 152 | (39,386 | ) | |||||||||||
| Earnings from equity method investments | - | - | - | (3,056 | ) | ||||||||||||
| Total operating expenses | 51,897 | 60,040 | 103,909 | 86,513 | |||||||||||||
| Operating income (loss) | 4,365 | (4,375 | ) | 8,681 | 34,938 | ||||||||||||
| Other income and (expense): | |||||||||||||||||
| Interest expense | (3,852 | ) | (4,257 | ) | (7,721 | ) | (11,676 | ) | |||||||||
| Loss on extinguishment of debt | - | - | (336 | ) | (2,628 | ) | |||||||||||
| Interest income | 6 | 17 | 11 | 42 | |||||||||||||
| Total other income and (expense) | (3,846 | ) | (4,240 | ) | (8,046 | ) | (14,262 | ) | |||||||||
| Income before income tax (expense) benefit | 519 | (8,615 | ) | 635 | 20,676 | ||||||||||||
| Income tax (expense) benefit | (236 | ) | 3,755 | (299 | ) | (9,319 | ) | ||||||||||
| Net income (loss) | 283 | (4,860 | ) | 336 | 11,357 | ||||||||||||
| Less net loss attributable to noncontrolling interest | (34 | ) | (19 | ) | (67 | ) | (19 | ) | |||||||||
| Net income (loss) attributable to Alaska Communications | $ | 317 | $ | (4,841 | ) | $ | 403 | $ | 11,376 | ||||||||
| Basic | $ | 0.01 | $ | (0.10 | ) | $ | 0.01 | $ | 0.23 | ||||||||
| Diluted | $ | 0.01 | $ | (0.10 | ) | $ | 0.01 | $ | 0.22 | ||||||||
| Weighted average shares outstanding: | |||||||||||||||||
| Basic | 51,231 | 50,252 | 50,986 | 50,085 | |||||||||||||
| Diluted | 52,138 | 50,252 | 52,006 | 51,082 | |||||||||||||
| Schedule 2 | ||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited, In Thousands Except Per Share Amounts) | ||||||||
| June 30, | December 31, | |||||||
| Assets | 2016 | 2015 | ||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 22,248 | $ | 36,001 | ||||
| Restricted cash | 1,811 | 1,824 | ||||||
| Accounts receivable, net of allowance of $1,215 and $1,693 | 23,348 | 25,225 | ||||||
| Materials and supplies | 4,984 | 4,674 | ||||||
| Prepayments and other current assets | 4,280 | 8,068 | ||||||
| Total current assets | 56,671 | 75,792 | ||||||
| Property, plant and equipment | 1,346,470 | 1,337,098 | ||||||
| Less: accumulated depreciation and amortization | (979,952 | ) | (967,776 | ) | ||||
| Property, plant and equipment, net | 366,518 | 369,322 | ||||||
| Deferred income taxes | 16,063 | 16,660 | ||||||
| Other assets | 1,762 | 1,827 | ||||||
| Total assets | $ | 441,014 | $ | 463,601 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term obligations | $ | 4,018 | $ | 3,671 | ||||
| Accounts payable, accrued and other current liabilities | 38,381 | 51,275 | ||||||
| Advance billings and customer deposits | 4,052 | 4,513 | ||||||
| Total current liabilities | 46,451 | 59,459 | ||||||
| Long-term obligations, net of current portion | 175,483 | 185,018 | ||||||
| Other long-term liabilities, net of current portion | 63,622 | 65,265 | ||||||
| Total liabilities | 285,556 | 309,742 | ||||||
| Commitments and contingencies | ||||||||
| Alaska Communications stockholders' equity: | ||||||||
| Common stock, $.01 par value; 145,000 authorized | 513 | 505 | ||||||
| Additional paid in capital | 157,954 | 156,971 | ||||||
| Accumulated deficit | (1,231 | ) | (1,634 | ) | ||||
| Accumulated other comprehensive loss | (2,889 | ) | (3,086 | ) | ||||
| Total Alaska Communications stockholders' equity | 154,347 | 152,756 | ||||||
| Noncontrolling interest | 1,111 | 1,103 | ||||||
| Total stockholders' equity | 155,458 | 153,859 | ||||||
| Total liabilities and stockholders' equity | $ | 441,014 | $ | 463,601 | ||||
| Schedule 3 | |||||||||||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | |||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||||||||
| (Unaudited, In Thousands) | |||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Cash Flows from Operating Activities: | |||||||||||||||||
| Net income (loss) | $ | 283 | $ | (4,860 | ) | $ | 336 | $ | 11,357 | ||||||||
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: | |||||||||||||||||
| Depreciation and amortization | 8,640 | 8,075 | 17,160 | 17,016 | |||||||||||||
| Gain on wireless sale | - | (1,421 | ) | - | (41,140 | ) | |||||||||||
| Loss on the disposal of assets, net | 128 | 697 | 152 | 1,754 | |||||||||||||
| Unrealized gain on ineffective hedge | - | (275 | ) | - | (542 | ) | |||||||||||
| Amortization of debt issuance costs and debt discount | 1,005 | 990 | 2,021 | 2,043 | |||||||||||||
| Amortization of ineffective hedge | - | 10 | - | 1,970 | |||||||||||||
| Loss on extinguishment of debt | - | - | 336 | 2,628 | |||||||||||||
| Amortization of deferred capacity revenue | (855 | ) | (694 | ) | (1,702 | ) | (1,469 | ) | |||||||||
| Stock-based compensation | 642 | 795 | 1,447 | 1,279 | |||||||||||||
| Deferred income tax expense (benefit) | 228 | (136 | ) | 495 | (3,394 | ) | |||||||||||
| Charge (benefit) for uncollectible accounts | 209 | (204 | ) | 77 | 1,319 | ||||||||||||
| Cash distribution from equity method investments | - | - | - | 3,056 | |||||||||||||
| Earnings from equity method investments | - | - | - | (3,056 | ) | ||||||||||||
| Other non-cash expense, net | 197 | 273 | 414 | 543 | |||||||||||||
| Income taxes payable (receivable) | 8 | (5,574 | ) | (722 | ) | 8,038 | |||||||||||
| Changes in operating assets and liabilities | (1,780 | ) | (7,303 | ) | (1,077 | ) | (9,648 | ) | |||||||||
| Net cash provided (used) by operating activities | 8,705 | (9,627 | ) | 18,937 | (8,246 | ) | |||||||||||
| Cash Flows from Investing Activities: | |||||||||||||||||
| Capital expenditures | (8,487 | ) | (20,233 | ) | (13,662 | ) | (26,133 | ) | |||||||||
| Capitalized interest | (245 | ) | (297 | ) | (548 | ) | (788 | ) | |||||||||
| Change in unsettled capital expenditures | (4,931 | ) | 5,117 | (9,156 | ) | 674 | |||||||||||
| Proceeds on wireless sale | - | 1,680 | - | 278,068 | |||||||||||||
| Proceeds on sale of assets | - | 3,126 | 2,663 | 3,126 | |||||||||||||
| Return of capital from equity investment | - | - | - | 1,875 | |||||||||||||
| Net change in restricted cash | (86 | ) | - | 13 | - | ||||||||||||
| Net cash (used) provided by investing activities | (13,749 | ) | (10,607 | ) | (20,690 | ) | 256,822 | ||||||||||
| Cash Flows from Financing Activities: | |||||||||||||||||
| Repayments of long-term debt | (869 | ) | (1,119 | ) | (11,486 | ) | (242,837 | ) | |||||||||
| Debt issuance costs | (7 | ) | (15 | ) | (44 | ) | (1,042 | ) | |||||||||
| Cash paid for debt extinguishment | - | - | (150 | ) | - | ||||||||||||
| Cash paid in acquisition of business | - | - | - | (291 | ) | ||||||||||||
| Cash proceeds from non-controlling interest | 75 | 250 | 75 | 250 | |||||||||||||
| Payment of withholding taxes on stock-based compensation | - | (3 | ) | (472 | ) | (402 | ) | ||||||||||
| Excess tax (expense) benefit from share-based payments | - | (10 | ) | (51 | ) | 733 | |||||||||||
| Proceeds from issuance of common stock | 128 | 135 | 128 | 135 | |||||||||||||
| Net cash used by financing activities | (673 | ) | (762 | ) | (12,000 | ) | (243,454 | ) | |||||||||
| Change in cash and cash equivalents | (5,717 | ) | (20,996 | ) | (13,753 | ) | 5,122 | ||||||||||
| Cash and cash equivalents, beginning of period | 27,965 | 57,827 | 36,001 | 31,709 | |||||||||||||
| Cash and cash equivalents, end of period | $ | 22,248 | $ | 36,831 | $ | 22,248 | $ | 36,831 | |||||||||
| Supplemental Cash Flow Data: | |||||||||||||||||
| Interest paid | $ | 4,562 | $ | 5,557 | $ | 6,359 | $ | 8,941 | |||||||||
| Income taxes paid, net | $ | - | $ | 1,965 | $ | 577 | $ | 3,942 | |||||||||
| Schedule 4 | ||||||||||||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||||||||||||
| ADJUSTED EBITDA | ||||||||||||||||||
| (Unaudited, In Thousands) | ||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Net cash provided (used) by operating activities | $ | 8,705 | $ | (9,627 | ) | $ | 18,937 | $ | (8,246 | ) | ||||||||
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: | ||||||||||||||||||
| Depreciation and amortization | 8,640 | 8,075 | 17,160 | 17,016 | ||||||||||||||
| Gain on wireless sale | - | (1,421 | ) | - | (41,140 | ) | ||||||||||||
| Loss on the disposal of assets, net | 128 | 697 | 152 | 1,754 | ||||||||||||||
| Unrealized gain on ineffective hedge | - | (275 | ) | - | (542 | ) | ||||||||||||
| Amortization of debt issuance costs and debt discount | 1,005 | 990 | 2,021 | 2,043 | ||||||||||||||
| Amortization of ineffective hedge | - | 10 | - | 1,970 | ||||||||||||||
| Loss on extinguishment of debt | - | - | 336 | 2,628 | ||||||||||||||
| Amortization of deferred capacity revenue | (855 | ) | (694 | ) | (1,702 | ) | (1,469 | ) | ||||||||||
| Stock-based compensation | 642 | 795 | 1,447 | 1,279 | ||||||||||||||
| Deferred income tax expense (benefit) | 228 | (136 | ) | 495 | (3,394 | ) | ||||||||||||
| Charge (benefit) for uncollectible accounts | 209 | (204 | ) | 77 | 1,319 | |||||||||||||
| Cash distribution from equity method investments | - | - | - | 3,056 | ||||||||||||||
| Earnings from equity method investments | - | - | - | (3,056 | ) | |||||||||||||
| Other non-cash expense, net | 197 | 273 | 414 | 543 | ||||||||||||||
| Income taxes payable (receivable) | 8 | (5,574 | ) | (722 | ) | 8,038 | ||||||||||||
| Changes in operating assets and liabilities | (1,780 | ) | (7,303 | ) | (1,077 | ) | (9,648 | ) | ||||||||||
| Net income (loss) | $ | 283 | $ | (4,860 | ) | $ | 336 | $ | 11,357 | |||||||||
| Add (subtract): | ||||||||||||||||||
| Interest expense | 3,852 | 4,257 | 7,721 | 11,676 | ||||||||||||||
| Loss on extinguishment of debt | - | - | 336 | 2,628 | ||||||||||||||
| Interest income | (6 | ) | (17 | ) | (11 | ) | (42 | ) | ||||||||||
| Depreciation and amortization | 8,640 | 8,075 | 17,160 | 17,016 | ||||||||||||||
| Loss (gain) on disposal of assets, net | 128 | (724 | ) | 152 | (39,386 | ) | ||||||||||||
| Earnings from equity method investments | - | - | - | (3,056 | ) | |||||||||||||
| AWN distributions received/receivable, net | - | - | - | 765 | ||||||||||||||
| Income tax (expense) benefit | 236 | (3,755 | ) | 299 | 9,319 | |||||||||||||
| Stock-based compensation | 642 | 795 | 1,447 | 1,279 | ||||||||||||||
| Long-term cash incentives | 194 | 308 | 405 | 642 | ||||||||||||||
| Pension adjustment | 20 | - | 41 | - | ||||||||||||||
| Net loss attributable to noncontrolling interest | 34 | 19 | 67 | 19 | ||||||||||||||
| Wireless sale transaction-related and wind down costs | - | 6,962 | - | 11,308 | ||||||||||||||
| Adjusted EBITDA | $ | 14,023 | $ | 11,060 | $ | 27,953 | $ | 23,525 | ||||||||||
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 including the gain on the sale of our wireless operations, earnings from equity method investments, taxes, wireless transaction-related costs, loss attributable to noncontrolling interest, stock-based compensation, pension adjustments, 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 | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Adjusted EBITDA | $ | 14,023 | $ | 11,060 | $ | 27,953 | $ | 23,525 | |||||||||
| Less: | |||||||||||||||||
| Capital expenditures excluding acquisition price of North Slope fiber network | (8,487 | ) | (9,233 | ) | (13,662 | ) | (15,133 | ) | |||||||||
| Milestone billings for fiber build project for a carrier customer | - | - | - | 2,500 | |||||||||||||
| Net capital expenditures | (8,487 | ) | (9,233 | ) | (13,662 | ) | (12,633 | ) | |||||||||
| Purchase of North Slope fiber network | |||||||||||||||||
| Acquisition price | - | (11,000 | ) | - | (11,000 | ) | |||||||||||
| (Paid) less: 50% due in 2016 | (5,500 | ) | 5,500 | (5,500 | ) | 5,500 | |||||||||||
| Proceeds on sale of fiber to joint venture partner | - | 2,650 | 2,650 | 2,650 | |||||||||||||
| Less: other cash proceeds | - | 400 | - | 400 | |||||||||||||
| Net North Slope purchase | (5,500 | ) | (2,450 | ) | (2,850 | ) | (2,450 | ) | |||||||||
| Amortization of GCI/AWN capacity revenue | (516 | ) | (514 | ) | (1,025 | ) | (1,129 | ) | |||||||||
| Interest paid | (4,562 | ) | (5,557 | ) | (6,359 | ) | (8,941 | ) | |||||||||
| Free cash flow* | $ | (5,042 | ) | $ | (6,694 | ) | $ | 4,057 | $ | (1,628 | ) | ||||||
| * Quarterly FCF fluctuates and should not be viewed as an indicator of annual performance. While onetime events, seasonality of capital spend and the timing of interest payments may result in negative FCF in one or more quarters, we reaffirm our guidance for annual FCF. |
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 a carrier customer, less cash interest expense, significant non-cash revenue associated with our interconnection agreement with AWN and GCI, and proceeds on sale of fiber to our joint venture partner. |
| Alaska Communications continues to have net operating losses and is not a significant taxpayer on ordinary income. Income taxes paid in 2015 and 2016 are related to the Wireless retail sale and are not included in free cash flow. |
| See Schedule 3 for Net cash provided (used) by operating activities, Net cash (used) provided by investing activities, and Net cash used by financing activities. |
| Schedule 6 | |||||||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | |||||||||||||
| REVENUE GROWTH FROM CONTINUING OPERATIONS | |||||||||||||
| (Unaudited, In Thousands) | |||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||
| June 30, | June 30, | ||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||
| Business and wholesale revenue | |||||||||||||
| Business broadband | $ | 14,392 | $ | 12,618 | $ | 28,572 | $ | 24,420 | |||||
| Business voice and other | 7,022 | 7,240 | 14,112 | 14,175 | |||||||||
| Managed IT services | 818 | 810 | 1,899 | 1,539 | |||||||||
| Equipment sales and installations | 2,097 | 1,305 | 3,684 | 2,853 | |||||||||
| Wholesale broadband | 7,791 | 6,984 | 15,389 | 13,600 | |||||||||
| Wholesale voice and other | 1,743 | 2,216 | 3,758 | 4,566 | |||||||||
| Total business and wholesale revenue | 33,863 | 31,173 | 67,414 | 61,153 | |||||||||
| Growth in business and wholesale | 8.6% | 10.2% | |||||||||||
| Consumer revenue | |||||||||||||
| Broadband | 6,234 | 6,621 | 12,376 | 13,259 | |||||||||
| Voice and other | 3,259 | 3,519 | 6,641 | 7,126 | |||||||||
| Total consumer revenue | 9,493 | 10,140 | 19,017 | 20,385 | |||||||||
| Total business, wholesale, and consumer revenue | 43,356 | 41,313 | 86,431 | 81,538 | |||||||||
| Growth in business, wholesale and consumer revenue | 4.9% | 6.0% | |||||||||||
| Growth in broadband revenue | 8.4% | 9.9% | |||||||||||
| Regulatory revenue | |||||||||||||
| Access | 7,986 | 8,471 | 16,158 | 17,057 | |||||||||
| High cost support | 4,920 | 4,920 | 10,001 | 9,841 | |||||||||
| Total regulatory revenue | 12,906 | 13,391 | 26,159 | 26,898 | |||||||||
| Total wireline revenue | 56,262 | 54,704 | 112,590 | 108,436 | |||||||||
| Growth in wireline revenue | 2.8% | 3.8% | |||||||||||
| Total wireless & AWN related revenue | - | 961 | - | 13,015 | |||||||||
| Total revenue | $ | 56,262 | $ | 55,665 | $ | 112,590 | $ | 121,451 | |||||
| Schedule 7 | |||||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | |||||||||||
| KEY OPERATING STATISTICS | |||||||||||
| (Unaudited) | |||||||||||
| Three Months Ended | |||||||||||
| June 30, | March 31, | June 30, | |||||||||
| 2016 | 2016 | 2015 | |||||||||
| Voice: | |||||||||||
| Business access lines | 75,646 | 76,302 | 78,544 | ||||||||
| Consumer access lines | 35,600 | 36,567 | 40,888 | ||||||||
| Voice ARPU business | $ | 23.79 | $ | 23.35 | $ | 23.53 | |||||
| Voice ARPU consumer | $ | 28.61 | $ | 28.39 | $ | 26.73 | |||||
| Broadband: | |||||||||||
| Business connections (1) | 15,347 | 15,189 | 15,781 | ||||||||
| Consumer connections | 33,913 | 33,850 | 34,895 | ||||||||
| Broadband ARPU business (1) | $ | 314.31 | $ | 309.36 | $ | 267.97 | |||||
| Broadband ARPU consumer | $ | 60.91 | $ | 60.59 | $ | 61.28 | |||||
| Churn: | |||||||||||
| Business voice | 1.0% | 1.0% | 0.8% | ||||||||
| Consumer broadband | 2.5% | 2.2% | 2.9% | ||||||||
| Consumer voice | 1.5% | 1.6% | 1.8% | ||||||||
| (1) | 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) | ||||||||
| June 30, | December 31, | |||||||
| 2016 | 2015 | |||||||
| 2015 senior secured credit facilities due 2018 | $ | 88,250 | $ | 89,750 | ||||
| Debt issuance costs - 2015 senior secured credit facilities due 2018 | (2,584 | ) | (3,406 | ) | ||||
| 6.25% convertible notes due 2018 | 94,000 | 104,000 | ||||||
| Debt discount - 6.25% convertible notes due 2018 | (3,240 | ) | (4,641 | ) | ||||
| Debt issuance costs - 6.25% convertible notes due 2018 | (685 | ) | (1,010 | ) | ||||
| Capital leases and other long-term obligations | 3,760 | 3,996 | ||||||
| Total debt | 179,501 | 188,689 | ||||||
| Less current portion | (4,018 | ) | (3,671 | ) | ||||
| Long-term obligations, net of current portion | $ | 175,483 | $ | 185,018 | ||||
| Total debt | $ | 179,501 | $ | 188,689 | ||||
| Plus debt discounts and debt issuance costs | 6,509 | 9,057 | ||||||
| Gross debt | 186,010 | 197,746 | ||||||
| Cash and cash equivalents | (22,248 | ) | (36,001 | ) | ||||
| Net debt | $ | 163,762 | $ | 161,745 | ||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20160804005458/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
