CONCORD, N.C., May 1 /PRNewswire-FirstCall/ -- First Quarter 2007
Highlights -- Operating revenue increased 5% to $45.4 million vs.
year ago quarter -- Operating income increased 21% to $6.1 million
vs. year ago quarter -- Commercial trial launch of video services
-- 28% increase in broadband customers from first quarter last year
First Quarter 2007 Results CT Communications, Inc. (NASDAQ:CTCI)
announces operating revenue of $45.4 million for the first quarter
of 2007, an increase of 5.4% when compared to the first quarter of
2006. The increase in operating revenue was driven by a $1.2
million increase in customer recurring revenue due to strong
customer growth in several of the Company's businesses. Broadband
customers increased 28%, Wireless subscribers increased 6% and
Greenfield access lines increased 10% compared to the end of the
first quarter of 2006. In addition to the growth in customer
recurring revenue, revenue associated with telephone system sales
increased $0.4 million, while universal service and access and
interconnection revenue each increased $0.3 million compared to the
prior year quarter. Operating income increased 20.7%, or $1.0
million, to $6.1 million in the first quarter of 2007 compared to
the first quarter of 2006. Operating expense in the first quarter
of 2007 increased 3.3% to $39.3 million compared to the same period
last year. The $1.3 million increase in operating expense was
primarily attributable to a $0.6 million increase in stock based
compensation expense and a $0.5 million increase in Wireless
switching expense. Wireless switching expense in the first quarter
of 2006 included a $0.4 million expense reduction related to an
annual true-up of fiscal year 2005 Wireless switching rates by
Cingular. The 2006 true-up has not yet been finalized. Other income
in the first quarter of 2006 included the Company's income from the
operations of Palmetto MobileNet ("PMN") and gain from the sale of
PMN's interests in ten wireless partnerships that totaled $89.8
million. In addition, the Company recorded investment impairment
charges of $0.9 million in the first quarter of 2006. Excluding the
effect of these items, other income increased approximately $0.9
million from the first quarter of 2006 due to an increase in
investment income and a decrease in interest expense. Net income
for the quarter ended March 31, 2007 was $4.6 million, or $0.23 per
diluted share compared to $57.4 million, or $2.99 per diluted share
in the same quarter last year. Included in net income in the prior
year quarter was $54.4 million, or $2.84 per diluted share related
to the PMN sale and $0.7 million, or $0.04 per diluted share, in
asset and investment impairment charges. Excluding the PMN sale and
the impairment charges, earnings per share increased 21.1% to $0.23
per diluted share in the first quarter of 2007. Results by Business
Unit The following presentation has been modified to reflect the
Company's change in its business unit reporting for the quarter
ending March 31, 2007. The Company made these changes to report
operating results based on the complete product and service
relationship with customers in each business unit. As a result, the
former Internet and Data Services business unit historical and
first quarter 2007 results have been included in the ILEC, CLEC and
Greenfield business unit results. -- ILEC - ("Concord Telephone")
Concord Telephone's operating revenue increased $1.2 million to
$27.1 million in the first quarter of 2007 compared to the same
quarter in 2006. The increase in operating revenue was mainly due
to a $0.5 million increase in broadband revenue driven by broadband
customer growth, a $0.4 million increase in telephone system sales
and a $0.3 million increase in universal service revenue. Operating
expense increased $1.4 million to $20.7 million in the first
quarter of 2007 compared to the same quarter in 2006. The increase
in operating expense was primarily due to a $0.8 million increase
in personnel expense largely associated with an increase in stock
based compensation expense, a $0.3 million increase in selling
expenses and a $0.2 million increase in cost of materials sold
associated with the higher level of telephone system sales.
Operating income decreased 2.5% to $6.4 million in the first
quarter of 2007 compared to the same period last year. Operating
margin for the first quarter of 2007 was 23.6% compared to 25.3%
for the first quarter of 2006. ILEC average monthly customer churn
during the first quarter of 2007 was 1.3%, flat with the fourth
quarter of 2006 and up from the 1.0% rate in the same quarter last
year. Broadband accounts increased to 24,117, an increase of 26%
from the first quarter of 2006. Concord Telephone ended the first
quarter of 2007 with 104,990 access lines in service, a 4.4%
decrease from the end of the first quarter of 2006. The Company
launched a video trial to select customers in the ILEC service
territory at the end of the first quarter of 2007. The video
service offered to customers participating in this trial includes a
fully competitive channel line-up, as well as high definition
programming and digital video recording ("DVR") capabilities. The
trial participants have video, data and voice services delivered
through fiber optic facilities, which are part of the Company's
fiber initiative that passed over 11,000 ILEC homes at the end of
the first quarter of 2007. Initial broadband service download
speeds for customers in this trial are up to 15 Mbps, but future
product capabilities will likely move well beyond this rate. --
Wireless Wireless operating revenue increased 6.6% to $9.8 million
in the first quarter of 2007 compared to the same period in 2006.
Customer recurring revenue increased $0.7 million, driven by a 6%
growth in subscribers, but was partially offset by a decrease in
handset and accessory revenue. Operating expense increased $0.5
million, or 5.7%, from the same period last year primarily due to
the $0.4 million switching rate true-up reduction recorded in the
first quarter of 2006. The 2006 true-up has not been finalized.
Operating income in the first quarter of 2007 was $0.7 million
compared to $0.6 million in the same period last year. Wireless
ended the first quarter of 2007 with 49,806 subscribers, an
increase of 6% compared to the end of the first quarter of 2006. --
CLEC CLEC operating revenue increased 2.8% to $5.4 million in the
first quarter of 2007 compared to the same quarter last year. The
increase in operating revenue was due to a $0.2 million increase in
access and interconnection revenue related to growth in access
lines. Operating expense decreased 3.6% to $5.7 million in the
first quarter of 2007 compared to the same period last year. The
decrease in operating expense was largely due to a $0.3 million
decrease in cost of service, which was mainly attributable to
network efficiency initiatives. Operating loss for the first
quarter of 2007 improved to $0.3 million compared to $0.6 million
for the first quarter of 2006. CLEC ended the first quarter of 2007
with 36,099 access lines, an increase of 8% compared to 33,390
access lines at the end of the first quarter last year. In
addition, the CLEC ended the first quarter with 772 broadband
customers, an increase of 20% from the 644 at the end of the first
quarter of 2006. -- Greenfield Greenfield's operating revenue
increased 13.2% to $3.2 million in the first quarter of 2007
compared to the same period last year. The increase in operating
revenue was primarily due to a $0.3 million increase in customer
recurring revenue. The increase in customer revenue was driven by a
42% increase in Greenfield broadband customers and a 10% increase
in access lines. Operating expense decreased slightly to $3.5
million in the first quarter of 2007. Operating loss for the first
quarter of 2007 improved to $0.3 million from a $0.7 million
operating loss for the first quarter of 2006. Greenfield ended the
first quarter of 2007 with 16,797 access lines and 3,776 broadband
customers, which represent increases of 10% and 42%, respectively,
from the end of the first quarter of 2006. The Company continues to
focus on Greenfield opportunities that leverage Company-owned
network infrastructure to minimize the cost to serve additional
customers. As of March 31, 2007, the Company had 130 Greenfield
projects, which in total represent approximately 58,000 marketable
access lines at the completion of the projects. Future Period
Guidance We currently expect operating results to approximate the
following during these future periods: -- 2nd Quarter 2007 --
Revenue of $44.3 to $45.3 million -- Operating income of $5.8 to
$6.2 million -- Depreciation expense of $7.8 to $7.9 million --
Diluted earnings per share of $0.23 to $0.25 -- Capital
expenditures of $8.0 to $10.0 million -- Full Year 2007 -- Revenue
of $177.0 to $181.0 million -- Operating income of $22.0 to $25.0
million -- Depreciation expense of $31.0 to $32.0 million --
Diluted earnings per share of $0.81 to $0.85 -- Capital
expenditures of $32 to $35 million This guidance does not include
the impact of Cingular requiring us to replace certain cell site
equipment. This project, which has been previously discussed, is
now underway with an expected cash outlay of approximately $5
million. CT Communications will host a conference call to discuss
the results of the first quarter 2007 on Wednesday, May 2, 2007 at
10:00 AM local time. You are invited to listen live to the
conference call over the Internet at http://www.ctc.net/. If you
are unable to listen during the live webcast, the call will be
archived on the Web site at http://www.ctc.net/ until May 31, 2007.
Additionally, a replay of the call will be available until 5:00 PM
local time on Wednesday, May 9, 2007 at 800-633-8284. Enter access
number 21336891. CT Communications, Inc., headquartered in Concord,
N.C., is a growing provider of integrated telecommunications and
related services to residential and business customers located
primarily in North Carolina. CT Communications, Inc. offers a
comprehensive package of telecommunications services, including
broadband high-speed Internet services, local and long distance
telephone services, and digital wireless voice and data services.
Certain statements contained in this press release are
"forward-looking statements," within the meaning of federal
securities laws. We intend these forward-looking statements to be
covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are subject to risks,
uncertainties and assumptions made by management about us,
including, among other things, changes in industry conditions
created by the Telecommunications Act of 1996 and related state and
federal legislation and regulations, the impact of economic
conditions related to financial performance of customers, business
partners, competitors and peers within the telecommunications
industry, the recovery of the substantial costs incurred over the
past few years in connection with our expansion into new
businesses, retention of our existing customer base and our ability
to attract new customers, our ability to control pricing and
product offerings in a highly competitive industry, our ability to
attract and retain key personnel, the performance of our
investments, rapid changes in technology, our ability to manage
capital expenditures related to changes in technology, actions of
our competitors, the impact of economic and political events on our
business, operating regions and customers, including terrorist
attacks. In some cases, these forward-looking statements can be
identified by the use of words such as "may," "will," "should,"
"expect," "plan," "anticipate," "believe," "estimate," "predict,"
"project," "intend" or "potential" or the negative of those words
or other comparable words. These forward-looking statements may
differ materially from actual events or results because they
involve estimates, assumptions and uncertainties and should be
viewed with caution. We undertake no obligation to update or revise
any forward-looking statements, whether as the result of new
information, future events or otherwise. Readers are also directed
to consider the risks, uncertainties and other factors discussed in
documents filed by us with the Securities and Exchange Commission,
including those matters summarized under the caption "Risk Factors"
in our Annual Report on Form 10-K for the year ended December 31,
2006. CT Communications, Inc. Consolidated Statements of Income
(Unaudited, in thousands, except per share amounts) Three Months
Ended March 31, % 2007 2006 Change Operating Revenue ILEC Services
$27,122 $25,923 4.6% Wireless Services 9,761 9,157 6.6% CLEC
Services 5,365 5,219 2.8% Greenfield Services 3,164 2,796 13.2%
Total Operating Revenue 45,412 43,095 5.4% Operating Expense ILEC
Services 20,724 19,363 7.0% Wireless Services 9,095 8,606 5.7% CLEC
Services 5,650 5,861 (3.6%) Greenfield Services 3,477 3,506 (0.8%)
Other 343 684 (49.9%) Total Operating Expense 39,289 38,020 3.3%
Operating Income 6,123 5,075 20.7% Other Income (Expense)
Investment, Equity Method 11 89,840 Gains, Interest, Dividends
1,351 813 Impairment on Investments - (876) Other Expenses,
Principally Interest (653) (1,034) Total Other Income (Expense) 709
88,743 Pre-Tax Income 6,832 93,818 Income Tax Expense 2,206 36,452
Net Income $4,626 $57,366 Diluted Weighted Average Shares 20,137
19,187 Diluted Earnings Per Share $0.23 $2.99 CT Communications,
Inc. Consolidated Balance Sheets (Unaudited, in thousands) March
31, December 31, 2007 2006 ASSETS Cash and Cash Equivalents $13,662
$14,063 Short-Term Investments 82,467 86,741 Accounts Receivable
and Unbilled Revenue, Net 15,644 16,419 Other Assets 14,927 11,775
Current Assets 126,700 128,998 Investments 7,589 10,960 Property,
Plant and Equipment, Net 212,483 209,908 Other Assets 37,928 37,492
TOTAL ASSETS $384,700 $387,358 LIABILITIES AND STOCKHOLDERS' EQUITY
Current Portion of Long-Term Debt $5,000 $5,000 Accounts Payable
9,083 12,553 Customer Deposits and Advance Billings 4,884 4,618
Other Accrued Liabilities 10,524 12,714 Current Liabilities 29,491
34,885 Long-Term Debt 33,750 35,000 Deferred Credits and Other
Liabilities 38,966 38,095 Stockholders' Equity 282,493 279,378
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $384,700 $387,358 CT
Communications, Inc. Customer Information March 31, March 31, %
2007 2006 Change Wired Access Lines ILEC Access Lines 104,990
109,871 (4.4%) CLEC Access Lines 36,099 33,390 8.1% Greenfield
Access Lines 16,797 15,324 9.6% Total Wired Access Lines 157,886
158,585 (0.4%) Broadband Customers * 28,665 22,426 27.8% Wireless
Subscribers 49,806 47,145 5.6% Revenue Generating Units ILEC
Residential Access Lines 76,684 81,630 (6.1%) Business Access Lines
28,306 28,241 0.2% Broadband Customers 24,117 19,114 26.2% Total
ILEC 129,107 128,985 0.1% CLEC Business Access Lines 36,099 33,390
8.1% Broadband Customers 772 644 19.9% Total CLEC 36,871 34,034
8.3% Greenfield Residential Access Lines 11,035 10,328 6.8%
Business Access Lines 5,762 4,996 15.3% Broadband Customers 3,776
2,668 41.5% Total Greenfield 20,573 17,992 14.3% Wireless
Subscribers 49,806 47,145 5.6% Total Revenue Generating Units
236,357 228,156 3.6% * - Broadband customers include DSL and High
Speed customers previously reported separately. CT Communications,
Inc. Other Selected Financial Data (Unaudited, in thousands, except
per share amounts) Capital Expenditures Three Months Ended March
31, 2007 2006 ILEC $7,552 $3,742 Wireless 264 196 CLEC 345 1,280
Greenfield 1,135 1,620 Other 1,207 149 Total $10,503 $6,987
Depreciation Three Months Ended March 31, 2007 2006 ILEC $5,155
$5,478 Wireless 693 635 CLEC 721 715 Greenfield 1,114 1,014 Other
225 278 Total $7,908 $8,120 Reconciliation of Prior Period Reported
Results to Normalized Results For the quarter ended March 31, 2006
Fixed Investment Palmetto Asset Securities GAAP MobileNet*
Impairment Impairment Normalized Operating Revenue $43,095 $- $- $-
$43,095 Operating Expense 38,020 - (190) - 37,830 Operating Income
5,075 - 190 - 5,265 Other Income (Expense) 88,743 (88,939) - 876
680 Pre-Tax Income 93,818 (88,939) 190 876 5,945 Income Tax Expense
36,452 (34,508) 74 340 2,358 Net Income $57,366 $(54,431) $116 $536
$3,587 Diluted EPS $2.99 $(2.84) $0.01 $0.03 $0.19 * Equity income
related to the March 2006 sale of PMN's ownership interests in ten
wireless partnerships. DATASOURCE: CT Communications, Inc. CONTACT:
Jim Hausman, +1-704-722-2410, or Ron Marino, +1-704-722-2212, both
of CT Communications, Inc. Web site: http://www.ctc.net/
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