-Posted 2016 Total Wireline Revenues of
$226.9 million, a 3.2% increase-
-Reported 2016 Business and Wholesale
Revenue growth of 8.2% -
-Completed debt refinance and expect to
launch Convertible Note tender offer-
-Established Share Repurchase Program for up
to $10 million-
Alaska Communications Systems Group, Inc. (NASDAQ: ALSK) today
reported financial results for its fourth quarter and full year
ended Dec. 31, 2016.
“We delivered wireline growth for a third consecutive year in
2016. Year-over-year wireline revenue growth of 3.2% was driven by
Business and Wholesale, which reported another year of solid growth
at 8.2%. Our guidance for 2017 affirms our confidence in continued
operating performance fueled by broadband market growth, continued
share gain, securing an increased share of wallet with managed IT
services and continued attention to cost management.
“Additionally, we are pleased to note several developments that
we believe will generate further value to our shareholders. We have
executed capacity agreements with Quintillion Networks that will
open new markets in Northwest Alaska, creating yet another growth
driver. We also entered into a senior credit facility that will
extend our debt maturities and allow us to launch, in the
near-term, a tender offer for all of our outstanding convertible
notes. Lastly, by approving a stock repurchase program for up to
$10 million with purchases expected to begin no earlier than some
time during the second quarter, the Board has created another
avenue of capital allocation for shareholder value creation.”
“We are confident in performing to our organic plan. In
addition, we will continue to explore strategic actions to develop
scale and geographic diversification for Alaska Communications by
evaluating opportunities that leverage the very unique portfolio of
skills and competencies we have developed over the last several
years. We look forward to reporting progress on all fronts over the
upcoming quarters,” said Anand Vadapalli, Alaska Communications
president and CEO.
Revenue Highlights: Fourth Quarter 2016 compared to Fourth
Quarter 2015 and Full Year 2016 to 2015
- Wireline revenues:
- Revenue increased quarterly 2.1 percent
to $57.8 million and annually 3.2 percent to $226.9 million.
- Total broadband revenue increased
quarterly 8.3 percent to $30.1 million and annually 10.5 percent to
$115.8 million.
- Business and wholesale:
- Comprised 60.3 percent of total revenue
in 2016.
- Increased quarterly 4.6 percent to
$35.4 million and annually 8.2 percent to $136.9 million.
- Broadband revenues increased quarterly
9.6 percent to $23.7 million and annually 14.7 percent to $90.8
million.
- Consumer:
- Comprised 16.6 percent of total revenue
in 2016.
- Revenue decreased quarterly 3.3 percent
to $9.4 million and annually 5.7 percent to $37.7 million.
- Broadband revenue increased quarterly
3.8 percent to $6.4 million and decreased annually 2.5 percent to
$25.0 million.
- Regulatory:
- Comprised 23.0 percent of total revenue
in 2016.
- Revenue decreased quarterly 0.5 percent
to $13.0 million and annually 2.0 percent to $52.3 million.
Financial Metrics: Fourth Quarter 2016 compared to Fourth
Quarter 2015 and Full Year 2016
- Net income for the fourth quarter was
$1.6 million, compared to $0.3 million. Full year net income was
$2.3 million, and represents the first full year of operations as a
pure play broadband and managed IT services provider.
- Net cash provided by operating
activities for the fourth quarter was $8.8 million, compared to
$7.1 million. Full year cash provided by operating activities was
$37.3 million.
- Capital expenditures for the fourth
quarter were $8.6 million, compared to $12.7 million. Full year
capital expenditures were $30.9 million.
Non-GAAP Metrics: Fourth Quarter 2016 compared to Fourth
Quarter 2015 and Full Year 2016 to 2015
- Adjusted EBITDA for the fourth quarter
was $16.4 million, compared to $13.8 million. Full year Adjusted
EBITDA was $58.2 million, up from $49.9 million.
- Adjusted free cash flow for the fourth
quarter was $2.7 million, compared to $0.1 million. Full year
Adjusted free cash flow was $9.8 million, improving $13.5 million
from a net outflow of $3.7 million.
Information regarding non-GAAP financial measures, including
reconciliations of non-GAAP financial measures to GAAP financial
measures can be found below, in tables at the end of this release
and on the company’s website at http://www.alsk.com in the
investment data section.
Balance Sheet Metrics: December 31, 2016 compared to December
31, 2015
- Cash remained strong at $21.2 million,
compared to $36.0 million, primarily reflecting the repayment of
$13.4 million of long-term debt.
- Net debt was $162.8 million, compared
to $161.7 million.
Debt
In a separate release today, Alaska Communications announced it
entered into a senior credit facility that provides for a $120
million tranche maturing in 2022 and a $60 million tranche maturing
in 2023, together with a $15 million revolving credit facility.
Share Repurchase Program
In a separate release today, Alaska Communications announced its
board of directors has authorized a share repurchase program for up
to $10 million of shares of Common Stock. Purchases of Common Stock
will be subject to, among other things, federal and state
securities, corporate and other laws and regulations and Alaska
Communications financing arrangements.
2017 Guidance
Laurie Butcher, Alaska Communications senior vice-president of
finance, said, “During 2016, we delivered solid operating
performance. Additionally, we have refinanced our long-term debt,
removing uncertainty and extending our maturities. Our guidance for
2017 reflects our commitment to maintain strong operating
results.”
Guidance for 2017 is provided as follows:
- Total Wireline Revenue between $229
million and $235 million
- Adjusted EBITDA between $59 million and
$61 million
- Capital Expenditures between $35
million and $38 million
- Adjusted Free Cash Flow expected to be
announced on Q1 call after completion of anticipated tender offer
process for convertible debt
Conference Call
The Company will host a conference call and live webcast on
Tuesday, March 14, 2017 at 5:00 p.m. Eastern Time to discuss the
results. The live webcast will include a slide presentation.
Parties in the United States and Canada can access the call at
1-800-245-1683 and enter pass code 264066. All other parties can
access the call at 1-719-325-2120.
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 April 13,
2017 at 8:00 p.m. Eastern Time. To hear the replay, parties in the
United States and Canada can call 1-888-203-1112 and enter pass
code 5845595. All other parties can call 1-719-457-0820 and enter
pass code 5845595.
About Alaska Communications
Alaska Communications (NASDAQ: ALSK) is the leading provider of
advanced broadband and managed IT 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, we have provided certain non-GAAP
financial information, including Adjusted EBITDA, Adjusted Free
Cash Flow and Net Debt. Adjusted EBITDA and Adjusted Free Cash Flow
measure the Company’s primary business activities without regard
for the effects of special items and income tax structure. Adjusted
EBITDA eliminates the effects of period to period changes in costs
that are not directly attributable to the underlying performance of
the Company’s business operations and is used by Management and the
Company’s Board of Directors to evaluate current operating
financial performance, analyze and evaluate strategic and
operational decisions and better evaluate comparability between
periods. Adjusted Free Cash Flow is a non-GAAP liquidity measured
used by Management and the Company’s Board of Directors to assess
the Company’s ability to generate cash and plan for future
operating and capital actions. Adjusted EBITDA and Adjusted Free
Cash Flow are common measures utilized by our peers (other
telecommunications companies) and we believe they provide useful
information to investors and analysts about the Company’s operating
results, financial condition and cash flows. Net Debt provides
Management and the Company’s Board of Directors with a measure of
the Company’s current leverage position. The definition of these
non-GAAP measures is provided on Schedules 4, 6 and 9 to this press
release. Adjusted EBITDA and Adjusted Free Cash Flow should not be
considered a substitute for Net Income, 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 in the tables in
this release and on our website in the investment data section.
Other companies may not calculate non-GAAP measures in the same
manner as Alaska Communications. The Company does not provide
reconciliations of guidance for Adjusted EBITDA to Net Income, and
Adjusted Free Cash Flow to Net Cash from Operating Activities, in
reliance on the unreasonable efforts exception provided under Item
10(e)(1)(i)(B) of Regulation S-K. The Company does not forecast
certain items required to develop the comparable GAAP financial
measures. These items are realized and unrealized gains and losses
on effective and ineffective hedges, charges and benefits for
uncollectible accounts, certain other non-cash expenses, unusual
items typically excluded from Adjusted EBITDA and Adjusted Free
Cash Flow, and changes in operating assets and liabilities
(generally the most significant of these items, representing cash
outflows of $6.1 million and $3.9 million in the twelve-month
periods of 2016 and 2015, respectively).
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, our ability to meet the terms and conditions
of the new credit facility, draw down funds under the facility and
continue to meet its requirements, our ability to commence the
expected tender offer for our 6.25% Convertible Notes or otherwise
repurchase such notes due 2018 or make repurchases of shares of
Common Stock under the Company’s repurchase plan or otherwise,
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 (including pursuant to our
refinanced credit arrangements) 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 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, 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 most recent annual report on Form
10-K and subsequent 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 or at the SEC’s website,
www.sec.gov.
Important Information Regarding the Expected Tender
Offer
This press release is for informational purposes only and is
neither an offer to buy nor the solicitation of an offer to sell
any and all of Alaska Communications Systems Group Inc.’s
outstanding 6.25% Convertible Notes due 2018. The expected tender
offer described in this press release has not yet commenced, and
there can be no assurances that Alaska Communications will commence
the tender offer on the terms and conditions described in this
press release or at all. If Alaska Communications commences the
tender offer, the tender offer will be made solely by an Offer to
Purchase, the Letter of Transmittal and related materials, as they
may be amended or supplemented. Stockholders should read Alaska
Communications’ commencement tender offer statement on Schedule TO
expected to be filed with the SEC in connection with the tender
offer, which will include as exhibits the Offer to Purchase, the
Letter of Transmittal and related materials, as well as any
amendments or supplements to the Schedule TO when they become
available, because they will contain important information. If
Alaska Communications commences the tender offer, each of these
documents will be filed with the SEC, and, when available,
stockholders may obtain them for free from the SEC at its website
(www.sec.gov) or from the Company’s information agent in connection
with the tender offer.
Schedule 1 ALASKA COMMUNICATIONS SYSTEMS GROUP,
INC. CONSOLIDATED SCHEDULE OF OPERATIONS (Unaudited,
In Thousands Except Per Share Amounts) Three Months
Ended Twelve Months Ended December
31, December 31,
2016 2015
2016 2015 Operating
revenues: Operating revenues, non-affiliates $ 57,793 $ 56,631 $
226,866 $ 232,242 Operating revenues, affiliates
- -
- 575 Total
operating revenues
57,793
56,631 226,866
232,817 Operating expenses: Cost
of services and sales (excluding depreciation and amortization),
non-affiliates 25,073 26,106 102,137 107,162 Cost of services and
sales (excluding depreciation and amortization), affiliates - - -
4,961 Selling, general & administrative 17,173 17,407 70,209
88,389 Depreciation and amortization 8,782 8,376 34,690 33,867 Loss
(gain) on disposal of assets, net 37 112 321 (46,252 ) Earnings
from equity method investments
-
- -
(3,056 ) Total operating expenses
51,065 52,001
207,357 185,071
Operating income 6,728 4,630 19,509 47,746
Other income and (expense): Interest expense (3,857 ) (4,088 )
(15,447 ) (19,841 ) Loss on extinguishment of debt - - (336 )
(4,878 ) Interest income
8
2 26
58 Total other income and (expense)
(3,849 ) (4,086
) (15,757 )
(24,661 ) Income before income tax
expense 2,879 544 3,752 23,085 Income tax expense
(1,282 ) (218
) (1,499 )
(10,200 ) Net income 1,597 326
2,253 12,885 Less net loss attributable to noncontrolling
interest
(32 )
(13 ) (133
) (69 ) Net
income attributable to Alaska Communications
$
1,629 $ 339
$ 2,386 $
12,954 Net income per share attributable
to Alaska Communications: Basic
$ 0.03
$ 0.01 $
0.05 $ 0.26
Diluted
$ 0.03 $
0.01 $ 0.05
$ 0.25 Weighted average
shares outstanding: Basic
51,358
50,415 51,169
50,247 Diluted
53,004
51,617 52,188
51,368
Schedule 2 ALASKA
COMMUNICATIONS SYSTEMS GROUP, INC. CONSOLIDATED BALANCE
SHEETS (Unaudited, In Thousands Except Per Share
Amounts) December 31, December 31,
Assets 2016 2015
Current assets: Cash and cash equivalents $ 21,228 $ 36,001
Restricted cash 1,917 1,824 Accounts receivable, net of allowance
of $1,115 and $1,693 25,062 25,225 Materials and supplies 4,917
4,674 Prepayments and other current assets
5,995 8,068 Total
current assets 59,119 75,792 Property, plant and equipment
1,349,899 1,337,098 Less: accumulated depreciation and amortization
(983,050 )
(967,776 ) Property, plant and equipment,
net 366,849 369,322 Deferred income taxes 14,718 16,660
Other assets
1,674
1,827 Total assets
$
442,360 $ 463,601
Liabilities and Stockholders' Equity Current
liabilities: Current portion of long-term obligations $ 1,973 $
3,671 Accounts payable, accrued and other current liabilities
38,180 51,275 Advance billings and customer deposits
4,167 4,513 Total
current liabilities 44,320 59,459 Long-term obligations, net
of current portion 177,626 185,018 Other long-term liabilities, net
of current portion
61,538
65,265 Total liabilities
283,484 309,742
Commitments and contingencies Alaska Communications stockholders'
equity: Common stock, $.01 par value; 145,000 authorized 515 505
Additional paid in capital 159,474 156,971 Retained earnings
(accumulated deficit) 752 (1,634 ) Accumulated other comprehensive
loss
(2,910 )
(3,086 ) Total Alaska Communications
stockholders' equity 157,831 152,756 Noncontrolling interest
1,045 1,103 Total
stockholders' equity
158,876
153,859 Total liabilities and
stockholders' equity
$ 442,360
$ 463,601
Schedule 3
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited, In
Thousands) Three Months Ended Twelve Months
Ended December 31, December
31, 2016 2015
2016 2015 Cash Flows from
Operating Activities: Net income $ 1,597 $ 326 $ 2,253 $ 12,885
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 8,782 8,376 34,690 33,867 Gain on
wireless sale - - - (48,232 ) Loss on the disposal of assets, net
37 112 321 1,980 Unrealized gain on ineffective hedge - 83 - (737 )
Amortization of debt issuance costs and debt discount 1,011 1,052
4,046 4,114 Amortization of ineffective hedge - - - 1,970 Loss on
extinguishment of debt - - 336 4,878 Amortization of deferred
capacity revenue (872 ) (849 ) (3,436 ) (3,011 ) Stock-based
compensation 683 110 2,830 2,008 Deferred income tax expense 1,312
1,312 1,855 4,883 Charge (benefit) for uncollectible accounts 212
(127 ) 378 1,258 Cash distribution from equity method investments -
- - 3,056 Earnings from equity method investments - - - (3,056 )
Other non-cash expense, net 155 117 621 934 Income taxes payable
(receivable) 338 (2,087 ) (514 ) (351 ) Changes in operating assets
and liabilities
(4,417 )
(1,344 ) (6,127
) (3,865 ) Net cash
provided by operating activities
8,838
7,081 37,253
12,581 Cash Flows from Investing
Activities: Capital expenditures (8,569 ) (12,698 ) (30,920 )
(50,914 ) Capitalized interest (266 ) (326 ) (1,077 ) (1,558 )
Change in unsettled capital expenditures 877 608 (8,304 ) 3,995
Proceeds on wireless sale - - - 285,160 Proceeds on sale of assets
- 11 2,664 3,140 Return of capital from equity investment - - -
1,875 Net change in restricted cash
(106
) - (93
) (1,357 ) Net cash
(used) provided by investing activities
(8,064
) (12,405 )
(37,730 ) 240,341
Cash Flows from Financing Activities: Repayments of
long-term debt (1,066 ) (571 ) (13,421 ) (333,961 ) Proceeds from
the issuance of long-term debt - - - 90,061 Debt issuance costs
(500 ) (346 ) (544 ) (4,901 ) Cash paid for debt extinguishment - -
(150 ) (391 ) Cash paid in acquisition of business - - - (291 )
Cash proceeds from noncontrolling interest - - 75 250 Payment of
withholding taxes on stock-based compensation (4 ) (6 ) (476 ) (408
) Excess tax benefit (expense) from share-based payments 4 - (47 )
733 Proceeds from issuance of common stock
137
144 267
278 Net cash used by financing
activities
(1,429 )
(779 ) (14,296
) (248,630 )
Change in cash and cash equivalents (655 ) (6,103 ) (14,773 ) 4,292
Cash and cash equivalents, beginning of period
21,883 42,104
36,001 31,709
Cash and cash equivalents, end of period
$
21,228 $ 36,001
$ 21,228 $
36,001 Supplemental Cash Flow Data:
Interest paid $ 4,596 $ 4,981 $ 12,608 $ 16,101 Income taxes paid,
net $ (372 ) $ 994 $ 205 $ 4,936
Schedule 4
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. ADJUSTED
EBITDA (Unaudited, In Thousands) Three Months
Ended Twelve Months Ended December
31, December 31,
2016 2015
2016 2015 Net income
$ 1,597 $ 326 $ 2,253 $ 12,885 Add (subtract): Interest expense
3,857 4,088 15,447 19,841 Loss on extinguishment of debt - - 336
4,878 Interest income (8) (2) (26) (58) Depreciation and
amortization 8,782 8,376 34,690 33,867 Loss (gain) on disposal of
assets, net 37 112 321 (46,252) Earnings from equity method
investments - - - (3,056) AWN distributions received/receivable,
net - - - 765 Income tax expense 1,282 218 1,499 10,200 Stock-based
compensation 683 110 2,830 2,008 Long-term cash incentives 179 425
764 1,781 Pension adjustment - (76) - 134 Gift of services - (388)
- (388) Net loss attributable to noncontrolling interest 32 13 133
69 Wireless sale transaction-related and wind down costs
- 643 - 13,272
Adjusted EBITDA
$ 16,441 $ 13,845
$ 58,247 $ 49,946
NonGAAP Measures:
The Company provides certain non-GAAP
financial information, including Adjusted EBITDA, Adjusted Free
Cash Flow and Net Debt. Adjusted EBITDA and Adjusted Free Cash Flow
measure the Company’s primary business activities without regard
for the effects of special items and income tax structure. Adjusted
EBITDA eliminates the effects of period to period changes in costs
that are not directly attributable to the underlying performance of
the Company’s business operations and is used by Management and the
Company’s Board of Directors to evaluate current operating
financial performance, analyze and evaluate strategic and
operational decisions and better evaluate comparability between
periods. Adjusted Free Cash Flow is a non-GAAP liquidity measure
used by Management and the Company's Board of Directors to assess
the Company’s ability to generate cash and plan for future
operating and capital actions. Adjusted EBITDA and Adjusted Free
Cash Flow are common measures utilized by our peers (other
telecommunications companies) and we believe they provide useful
information to investors and analysts about the Company’s operating
results, financial condition and cash flows. Net Debt provides
Management and the Board of Directors with a measure of the
Company’s current leverage position.
The Company does not provide reconciliations of guidance for
Adjusted EBITDA to Net Income, and Adjusted Free Cash Flow to Net
Cash Provided by Operating Activities, in reliance on the
unreasonable efforts exception provided under Item 10(e)(1)(i)(B)
of Regulation S-K. The Company does not forecast certain items
required to develop the comparable GAAP financial measures. These
items are realized and unrealized gains and losses on effective and
ineffective hedges, charges and benefits for uncollectible
accounts, certain other non-cash expenses, unusual items typically
excluded from Adjusted EBITDA and Adjusted Free Cash Flow, and
changes in operating assets and liabilities (generally the most
significant of these items, representing cash outflows of $6.1 and
$3.9 million in the years ended December 31, 2016 and 2015,
respectively). Adjusted EBITDA and Adjusted Free Cash Flow
are not GAAP measures and should not be considered a substitute for
net income, net cash provided by operating activities, or net cash
provided or used. Adjusted EBITDA as computed below is not
consistent with the definition of Consolidated EBITDA referenced in
our 2015 Senior Credit Agreements, and other companies may not
calculate Non-GAAP measures in the same manner we do.
Adjusted EBITDA is defined as net income (loss) before interest,
loss on extinguishment of debt, depreciation and amortization, gain
or loss on asset purchases or disposals including the sale of our
wireless operations, earnings from equity method investments,
income taxes, Wireless Sale transaction and wind-down related
costs, stock-based compensation, pension adjustments, gift of
services, net loss attributable to noncontrolling interest and
expenses under the Company’s long term cash incentive plan
(“LTCI”). LTCI expenses are considered part of an interim
compensation structure, which ended in 2016, 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.
RECONCILIATION OF NET CASH FROM
OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW
(Unaudited, In Thousands) Three Months Ended
Twelve Months Ended December 31,
December 31, 2016
2015 2016
2015 Net cash provided by operating
activities $ 8,838 $ 7,081 $ 37,253 $ 12,581
Adjustments to reconcile net cash provided
by operating activities to adjusted free cash flow:
Capital expenditures excluding acquisition
price of North Slope fiber network
(8,569 ) (12,698 ) (30,920 ) (39,914 ) Milestone billings for fiber
build project for a carrier customer - 4,500 - 7,000 Purchase of
North Slope fiber network: Acquisition price - - - (11,000 ) (Paid)
less: 50% due in 2016 - - (5,500 ) 5,500 Proceeds on sale of fiber
to joint venture partner - - 2,650 2,650 Other cash proceeds - - -
400 Amortization of deferred capacity revenue 872 849 3,436 3,011
Amortization of GCI/AWN capacity revenue (535 ) (520 ) (2,082 )
(2,169 ) Amortization of debt issuance costs and debt discount
(1,011 ) (1,052 ) (4,046 ) (4,114 ) Interest expense 3,857 4,088
15,447 19,841 Interest paid (4,596 ) (4,981 ) (12,608 ) (16,101 )
Interest income (8 ) (2 ) (26 ) (58 ) Unrealized gain on
ineffective hedge - (83 ) - 737 Amortization of ineffective hedge -
- - (1,970 ) Income tax expense 1,282 218 1,499 10,200 Income taxes
(payable) receivable (338 ) 2,087 514 351 Deferred income tax
expense (1,312 ) (1,312 ) (1,855 ) (4,883 ) (Charge) benefit for
uncollectible accounts (212 ) 127 (378 ) (1,258 ) Cash distribution
from equity method investments - - - (3,056 ) Long-term cash
incentives 179 425 764 1,781 Pension adjustment - (76 ) - 134 Gift
of services - (388 ) - (388 ) Net loss attributable to
noncontrolling interest 32 13 133 69 Wireless sale
transaction-related and wind down costs - 643 - 13,272 AWN
distributions received/receivable, net - - - 765 Other non-cash
expense, net (155 ) (117 ) (621 ) (934 ) Changes in operating
assets and liabilities
4,417
1,344 6,127
3,865 Adjusted free cash flow
$
2,741 $ 146
$ 9,787 $
(3,688 )
Schedule 6
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. ADJUSTED FREE
CASH FLOW (Unaudited, In Thousands) Three
Months Ended Twelve Months Ended December
31, December 31,
2016 2015
2016 2015 Adjusted
EBITDA $ 16,441 $ 13,845 $ 58,247 $ 49,946 Less:
Capital expenditures excluding acquisition
price of North Slope fiber network
(8,569 ) (12,698 ) (30,920 ) (39,914 ) Milestone billings for fiber
build project for a carrier customer
-
4,500 -
7,000 Net capital expenditures
(8,569 ) (8,198
) (30,920 )
(32,914 ) Purchase of North Slope
fiber network Acquisition price - - - (11,000 ) (Paid) less: 50%
due in 2016 - - (5,500 ) 5,500 Proceeds on sale of fiber to joint
venture partner - - 2,650 2,650 Less: other cash proceeds
- -
- 400 Net North
Slope purchase
- -
(2,850 )
(2,450 ) Amortization of GCI/AWN
capacity revenue (535 ) (520 ) (2,082 ) (2,169 ) Interest paid
(4,596 )
(4,981 ) (12,608
) (16,101 )
Adjusted free cash flow*
$ 2,741
$ 146 $
9,787 $ (3,688
) * Quarterly Adjusted Free Cash Flow
fluctuates and should not be viewed as an indicator of annual
performance. Onetime events, seasonality of capital spend and the
timing of interest payments may result in negative Adjusted Free
Cash Flow in one or more quarters.
NonGAAP Measures:
Adjusted Free Cash Flow is a non-GAAP
liquidity measure and 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 paid, amortization of GCI/AWN capacity revenue, and
cash receipts and payments associated with the purchase of the
North Slope fiber network and establishment of our joint venture
with QHL. Amortization of deferred revenue associated with our
interconnection agreement with AWN and GCI is excluded from
Adjusted Free Cash Flow because no cash was received by the Company
in connection with this agreement. Amortization of all other
deferred revenue, including that associated with other IRU capacity
arrangements, is included in Adjusted Free Cash Flow because cash
was received by the Company, typically at contract inception, and
is being amortized to revenue over the term of the relevant
agreement.
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 Adjusted Free Cash Flow. See Schedule 3
for Net cash provided by operating activities, Net cash (used)
provided by investing activities, and Net cash used by financing
activities. See Schedule 5 for the reconciliation of net
cash provided by operating activities to Adjusted Free Cash Flow.
Schedule 7 ALASKA COMMUNICATIONS SYSTEMS
GROUP, INC. REVENUE BY CUSTOMER GROUP (Unaudited, In
Thousands) Three Months Ended Twelve Months
Ended December 31, December
31, 2016 2015
2016 2015 Business and
wholesale revenue Business broadband $ 15,506 $ 13,947 $ 59,218 $
51,058 Business voice and other 6,678 7,273 27,903 28,909 Managed
IT services 1,202 1,069 4,173 3,316 Equipment sales and
installations 1,938 1,691 6,441 6,274 Wholesale broadband 8,222
7,709 31,581 28,126 Wholesale voice and other
1,861 2,175
7,539 8,764 Total business
and wholesale revenue
35,407
33,864 136,855
126,447 Growth in business and wholesale 4.6% 8.2%
Consumer revenue Broadband 6,360 6,127 24,981 25,621 Voice and
other
2,998 3,552
12,763 14,408 Total
consumer revenue
9,358
9,679 37,744
40,029 Total business, wholesale, and consumer
revenue
44,765 43,543
174,599 166,476 Growth in
business, wholesale and consumer revenue 2.8% 4.9% Growth in
broadband revenue 8.3% 10.5% Regulatory revenue Access 8,096
8,167 32,412 33,644 High cost support
4,932
4,921 19,855
19,682 Total regulatory revenue
13,028 13,088
52,267 53,326 Total
wireline revenue 57,793
56,631 226,866
219,802 Growth in wireline revenue 2.1%
3.2% Total wireless & AWN related revenue
- - -
13,015 Total revenue
$ 57,793
$ 56,631
$ 226,866
$ 232,817
Schedule 8
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. KEY OPERATING
STATISTICS (Unaudited) Three Months Ended
December 31, September 30, December 31,
2016 2016
2015 Voice: Business access lines
73,977 74,328 76,598 Consumer access lines 33,418 34,319 37,683
Voice ARPU business $ 22.44 $ 23.78 $ 23.37 Voice ARPU
consumer $ 27.83 $ 28.25 $ 28.45
Broadband: Business
connections (1) 15,239 15,321 15,340 Consumer connections 34,603
33,922 33,275 Broadband ARPU business (1) $ 337.98 $ 328.83
$ 299.10 Broadband ARPU consumer $ 61.26 $ 61.03 $ 60.75
Churn: Business voice 1.1 % 1.4 % 1.2 % Consumer broadband
2.2 % 2.7 % 2.4 % Consumer voice 1.4 % 1.7 % 1.7 %
(1) How we calculate broadband connections has
changed to exclude certain connections. Historical amounts have
been restated to reflect appropriate comparisons period over
period.
Schedule 9
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. LONG
TERM DEBT AND NET DEBT (Unaudited, In Thousands)
December 31, December 31, 2016
2015 2015 senior secured credit facilities due
2018 $ 86,750 $ 89,750 Debt issuance costs - 2015 senior secured
credit facilities due 2018 (1,738 ) (3,406 ) 6.25% convertible
notes due 2018 94,000 104,000 Debt discount - 6.25% convertible
notes due 2018 (2,271 ) (4,641 ) Debt issuance costs - 6.25%
convertible notes due 2018 (467 ) (1,010 ) Revolving credit
facility loan - - Capital leases and other long-term obligations
3,325 3,996
Total debt 179,599 188,689 Less current portion
(1,973 ) (3,671
) Long-term obligations, net of current portion
$ 177,626 $
185,018 Total debt $ 179,599 $ 188,689
Plus debt discounts and debt issuance costs
4,476 9,057 Gross
debt 184,075 197,746 Cash and cash equivalents
(21,228 ) (36,001
) Net debt
$ 162,847
$ 161,745
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170314005598/en/
Alaska CommunicationsInvestor Contact:Tiffany Dunn,
907-564-7556Manager, Board and Investor
Relationsinvestors@acsalaska.comorMedia Contact:Hannah Blankenship,
907-564-1326Manager, Corporate
CommunicationsHannah.Blankenship@acsalaska.com
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