-Posted 2017 Total Revenues of $226.9
Million-
-Reported 2017 Broadband Revenue Growth of
6.3%-
Alaska Communications Systems Group, Inc. (NASDAQ: ALSK) today
reported financial results for its fourth quarter and full year
ended Dec. 31, 2017.
“The results for 2017 reflect year over year stability in our
top-line performance. Revenue stability combined with tight
management of operating and capital expenditures enabled us to
generate $8.1 million in free cash flow, which was above our
guidance for the year.
Our full year revenue performance was driven by growth in
broadband, in particular by Wholesale broadband including wireless
carrier backhaul and federal end-user demand, moderated by lower
than expected growth from our health care vertical. While our full
year revenue was flat year over year, our fourth quarter 2017
revenue declined due to the cumulative impact of price compression
for the Rural Health Care 2017-2018 funding year for the period
July 1 through December 31, 2017. 2017 Adjusted EBITDA, which
includes a $2.6 million bad debt expense related to Rural Health
Care customers, was $56.7 million, meeting annual guidance. Lastly,
about 59% of our capital expenditures were directed toward
success-based investments providing a foundation for future
growth.
Entering 2018, we expect our Enterprise & Carrier business
to continue to drive our top-line performance as we benefit from
our increasing wireless backhaul business and additional
opportunities from federal and energy sector investments in Alaska.
Further the recent turn up of arctic fiber capacity by our partner,
Quintillion Networks, opens several Arctic markets for us further
driving our market opportunity. We are strengthening our mass
market business serving residential and small businesses by
investing in fiber-fed WiFi, Fixed Wireless technologies and an
increasingly online customer interaction model, while positioning
to meet our CAF II obligations in a cost-effective manner.
Looking ahead, we remain focused on operating a quality business
that enables us to leverage the significant opportunities in the
market. In parallel, we continue to evaluate our current long-term
business plan against a broad range of strategic alternatives to
enhance shareholder value. I look forward to reporting progress on
all fronts over the upcoming months and quarters,” said Anand
Vadapalli, Alaska Communications president and CEO.
Revenue Highlights
- Total revenue:
- Revenue was $54.9 million for the
fourth quarter of 2017, compared to $57.8 in the fourth quarter of
2016. Annual revenue was $226.9 million for both 2017 and
2016.
- Total broadband revenue was $28.4
million for the fourth quarter of 2017, compared to $30.1 million
for the fourth quarter of 2016, and was $123.1 million for 2017,
compared to $115.8 million for 2016.
- Business and wholesale:
- Business and wholesale revenue was
$33.1 million for the fourth quarter of 2017, compared to $35.4
million for the fourth quarter 2016. 2017 revenue was $139.1
million, comprising 61.3 percent of total revenue, compared to
$136.9 million for 2016, comprising 60.3 percent of total
revenue.
- Business and wholesale broadband
revenue was $22.1 million for the fourth quarter of 2017 compared
to $23.7 million for the fourth quarter of 2016, and was $97.6
million for 2017, compared to $90.8 million for 2016.
- Consumer:
- Consumer revenue was $9.2 million for
the fourth quarter of 2017, compared to $9.4 million for the fourth
quarter of 2016. 2017 revenue was $37.1 million, comprising 16.4
percent of total revenue, compared to $37.7 million for 2016,
comprising 16.7 percent of total revenue.
- Consumer broadband revenue was $6.2
million for the fourth quarter of 2017, compared to $6.4 million
for the fourth quarter of 2016, and was $25.4 million for 2017,
compared to $25.0 million for 2016.
- Regulatory:
- Regulatory revenue was $12.6 million
for the fourth quarter of 2017, compared to $13.0 million for the
fourth quarter of 2016. 2017 revenue was $50.7 million for 2017,
comprising 22.3 percent of total revenue, compared to $52.3 million
for 2016, comprising 23.0 percent of total revenue.
Financial Metrics
- Net loss for the fourth quarter of 2017
was $3.0 million, compared to net income of $1.6 million in the
fourth quarter of 2016. 2017 net loss was $6.1 million, compared to
net income of $2.4 million for 2016.
- Net cash provided by operating
activities for the fourth quarter of 2017 was $4.7 million,
compared to $8.8 million in the fourth quarter of 2016. 2017 cash
provided by operating activities was $30.4 million, compared to
$37.2 million for 2016.
- Capital expenditures for the fourth
quarter of 2017 were $8.9 million, compared to $8.6 million fourth
quarter of 2016. 2017 capital expenditures were $32.9 million,
compared to $30.9 million in 2016.
Non-GAAP Metrics: Fourth Quarter 2017 compared to Fourth
Quarter 2016 and Full Year 2017 to 2016
- Adjusted EBITDA for the fourth quarter
of 2017 was $14.9 million, compared to $16.4 million for the fourth
quarter of 2016. 2017 Adjusted EBITDA was $56.7 million, compared
to $58.2 million for 2016.
- Adjusted free cash flow for the fourth
quarter of 2017 was $2.2 million, compared to $3.1 million for the
fourth quarter of 2016. 2017 Adjusted free cash flow was $8.1
million, compared to $9.6 million for 2016.
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
- Cash was $16.2 million at December 31,
2017, compared to $23.1 million at December 31, 2016.
- Net debt was $177.2 million at December
31, 2017, compared to $162.8 million at December 31, 2016.
2018 Outlook
Laurie Butcher, Alaska Communications senior vice-president of
finance, said, “Going into 2018, we continue to focus our attention
on optimizing capital allocation and cost management, while
pursuing opportunities to grow target verticals in our Enterprise
& Carrier business. While we continue to evaluate the impact of
the Rural Health Care program funding status, we are targeting
stable performance across all our key financial metrics and expect
to provide 2018 guidance by the time we report our first quarter
results.”
Conference Call
The Company will host a conference call and live webcast on
Monday, March 19, 2018 at 2:30 p.m. Eastern Time to discuss the
results. Please submit questions for the management team in advance
to investors@acsalaska.com. The live webcast will include a slide
presentation. Parties in the United States and Canada can access
the call at 1-877-612-6725 and enter pass code 660348. All other
parties can access the call at 1-323-794-2558.
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 18,
2018 at 5:30 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 2301835. All other parties can call 1-719-457-0820 and enter
pass code 2301835.
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 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 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 $15.3
million for 2017).
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. Such statements include all statements regarding our
review of our current long-term business plan against a broad range
of alternatives that have the potential to enhance shareholder
value, the timing of such review, and the possible outcomes of such
review and our current and projected financial and operating
performance and all guidance related thereto. 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 including Rural
Health Care Program funding limitations, adverse economic
conditions, expectations regarding capital allocation and cost
management, the effects of competition in our markets, unforeseen
challenges when entering new 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 Company's
relationships with large customers, unforeseen changes in public
policies, regulatory changes, changes in technology and standards,
risks, disruption, costs and uncertainty caused by or related to
the actions of activist shareholders, including that if individuals
are elected to our Board with a specific agenda, it may adversely
affect our ability to effectively implement our business strategy
and create value for our shareholders and perceived uncertainties
as to our future direction as a result of potential changes to the
composition of our Board may lead to the perception of a change in
the direction of our business, instability or a lack of continuity
which may be exploited by our competitors, cause concern to our
current or potential customers, and may result in the loss of
potential business opportunities and make it more difficult to
attract and retain qualified personnel and business partners, 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 Twelve Months
Ended December 31, December
31, 2017 2016
2017 2016
Operating revenues $ 54,935 $ 57,793 $ 226,905 $ 226,866
Operating expenses: Cost of services and sales (excluding
depreciation and amortization) 26,318 25,073 104,604 102,137
Selling, general & administrative 14,435 17,173 67,227 70,209
Depreciation and amortization 9,193 8,782 36,317 34,690 Loss on
disposal of assets, net
(23 )
37 50
321 Total operating expenses
49,923 51,065
208,198 207,357
Operating income 5,012 6,728 18,707 19,509 Other
income and (expense): Interest expense (3,525 ) (3,857 ) (14,860 )
(15,447 ) Loss on extinguishment of debt - - (7,527 ) (336 )
Interest income
7 8
34 26
Total other income and (expense)
(3,518
) (3,849 )
(22,353 ) (15,757
) Income (loss) before income tax expense 1,494
2,879 (3,646 ) 3,752 Income tax expense
(4,470 ) (1,282
) (2,584 )
(1,499 ) Net (loss) income (2,976
) 1,597 (6,230 ) 2,253 Less net loss attributable to
noncontrolling interest
(29 )
(32 ) (129
) (133 ) Net
(loss) income attributable to Alaska Communications
$
(2,947 ) $
1,629 $ (6,101
) $ 2,386 Net
(loss) income per share attributable to Alaska Communications: Net
(loss) income applicable to common shares
$
(2,947 ) $
1,629 $ (6,101
) $ 2,386
Basic and Diluted
$ (0.06 )
$ 0.03 $
(0.12 ) $ 0.05
Weighted average shares outstanding: Basic
52,448 51,358
52,232 51,169
Diluted
52,448
53,004 52,232
52,188 Schedule 2
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. CONSOLIDATED
BALANCE SHEETS (Unaudited, In Thousands Except Per Share
Amounts) December 31, December 31,
Assets 2017 2016
Current assets: Cash and cash equivalents $ 4,354 $ 21,228
Restricted cash 11,814 1,917 Accounts receivable, net of allowance
of $2,729 and $1,115 32,535 25,062 Materials and supplies 7,046
4,917 Prepayments and other current assets
6,115 5,995 Total
current assets 61,864 59,119 Property, plant and equipment
1,357,929 1,349,899 Less: accumulated depreciation and amortization
(991,816 )
(983,050 ) Property, plant and equipment,
net 366,113 366,849 Deferred income taxes 3,394 14,718 Other
assets
11,415 1,674
Total assets
$ 442,786
$ 442,360 Liabilities
and Stockholders' Equity Current liabilities: Current portion
of long-term obligations $ 17,030 $ 1,973 Accounts payable, accrued
and other current liabilities 36,148 38,180 Advance billings and
customer deposits
4,213
4,167 Total current liabilities 57,391 44,320
Long-term obligations, net of current portion 168,959
177,626 Deferred income taxes 596 - Other long-term liabilities,
net of current portion
61,330
61,538 Total liabilities
288,276 283,484
Commitments and contingencies Alaska Communications stockholders'
equity: Common stock, $.01 par value; 145,000 authorized 525 515
Additional paid in capital 158,969 159,474 (Accumulated deficit)
retained earnings (3,579 ) 752 Accumulated other comprehensive loss
(2,396 )
(2,910 ) Total Alaska Communications
stockholders' equity 153,519 157,831 Noncontrolling interest
991 1,045 Total
stockholders' equity
154,510
158,876 Total liabilities and
stockholders' equity
$ 442,786
$ 442,360 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, 2017 2016
2017 2016 Cash Flows from
Operating Activities: Net (loss) income $ (2,976 ) $ 1,597 $ (6,230
) $ 2,253
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization 9,193 8,782 36,317 34,690 (Gain) loss
on the disposal of assets, net (23 ) 37 50 321 Amortization of debt
issuance costs and debt discount 412 1,011 2,363 4,046 Loss on
extinguishment of debt - - 7,527 336 Amortization of deferred
capacity revenue (911 ) (872 ) (3,512 ) (3,436 ) Stock-based
compensation 667 683 1,509 2,830 Deferred income tax 13,422 1,312
11,582 1,855 Tax deficiencies from share-based payments - 4 - (47 )
Charge for uncollectible accounts 1,015 212 3,577 378 Other
non-cash expense, net 145 155 575 621 Change in income tax payable
or receivable (8,629 ) 338 (8,052 ) (514 ) Changes in operating
assets and liabilities
(7,597 )
(4,417 )
(15,300 ) (6,127
) Net cash provided by operating activities
4,718 8,842
30,406 37,206
Cash Flows from Investing Activities: Capital expenditures (8,891 )
(8,569 ) (32,945 ) (30,920 ) Capitalized interest (368 ) (266 )
(1,140 ) (1,077 ) Change in unsettled capital expenditures (507 )
877 1,500 (8,304 ) Proceeds on sale of assets
34 -
40 2,664 Net cash
used by investing activities
(9,732
) (7,958 )
(32,545 ) (37,637
) Cash Flows from Financing Activities:
Repayments of long-term debt (2,088 ) (1,066 ) (176,466 ) (13,421 )
Proceeds from the issuance of long-term debt - - 183,000 - Debt
issuance costs and discounts - (500 ) (5,559 ) (544 ) Cash paid for
debt extinguishment - - (5,522 ) (150 ) Cash proceeds from
noncontrolling interest - - 75 75 Payment of withholding taxes on
stock-based compensation (4 ) (4 ) (605 ) (476 ) Proceeds from
issuance of common stock
123
137 239
267 Net cash used by financing activities
(1,969 )
(1,433 ) (4,838
) (14,249 )
Change in cash, cash equivalents and restricted cash (6,983 ) (549
) (6,977 ) (14,680 ) Cash, cash equivalents and restricted
cash, beginning of period
23,151
23,694 23,145
37,825 Cash, cash equivalents and
restricted cash, end of period
$ 16,168
$ 23,145 $
16,168 $ 23,145
Supplemental Cash Flow Data: Interest paid $ 3,630 $
4,596 $ 14,504 $ 12,608 Income taxes (refunded) paid, net $ (322 )
$ (372 ) $ (946 ) $ 205
Schedule 4 ALASKA
COMMUNICATIONS SYSTEMS GROUP, INC. ADJUSTED EBITDA
(Unaudited, In Thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2017 2016
2017 2016 Net (loss)
income $ (2,976 ) $ 1,597 $ (6,230 ) $ 2,253 Add (subtract):
Interest expense 3,525 3,857 14,860 15,447 Loss on extinguishment
of debt - - 7,527 336 Interest income (7 ) (8 ) (34 ) (26 )
Depreciation and amortization 9,193 8,782 36,317 34,690 (Gain) loss
on the disposal of assets, net (23 ) 37 50 321 Income tax expense
4,470 1,282 2,584 1,499 Stock-based compensation 667 683 1,509
2,830 Long-term cash incentives - 179 - 764 Net loss attributable
to noncontrolling interest
29
32 129
133 Adjusted EBITDA
$
14,878 $ 16,441
$ 56,712 $
58,247
NonGAAP Measures:
The Company provides certain non-GAAP
financial information, including Adjusted EBITDA, Adjusted Free
Cash Flow and Net Debt. 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 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 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 $15.3 million in the
twelve-month period ended December 31, 2017). 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 above is not consistent with the definition of
Consolidated EBITDA referenced in our 2017 Senior Credit Agreement
and 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, income taxes, stock-based
compensation, 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.
Schedule 5 ALASKA COMMUNICATIONS
SYSTEMS GROUP, INC.
RECONCILIATION OF NET CASH PROVIDED BY
OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW
(Unaudited, In Thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2017 2016
2017 2016 Net cash
provided by operating activities $ 4,718 $ 8,842 $ 30,406 $ 37,206
Adjustments to reconcile net cash provided
by operating activities to adjusted free cash flow:
Capital expenditures (8,891 ) (8,569 ) (32,945 ) (30,920 ) Payment
for North Slope fiber network - - - (5,500 ) Proceeds on sale of
fiber to joint venture partner - - - 2,650 Amortization of deferred
capacity revenue 911 872 3,512 3,436 Amortization of GCI capacity
revenue (523 ) (535 ) (2,072 ) (2,082 ) Amortization of debt
issuance costs and debt discount (412 ) (1,011 ) (2,363 ) (4,046 )
Interest expense 3,525 3,857 14,860 15,447 Interest paid (3,630 )
(4,596 ) (14,504 ) (12,608 ) Interest income (7 ) (8 ) (34 ) (26 )
Income tax expense 4,470 1,282 2,584 1,499 Income taxes (payable)
receivable 8,629 (338 ) 8,052 514 Income taxes refunded (paid), net
322 372 946 (205 ) Deferred income tax (13,422 ) (1,312 ) (11,582 )
(1,855 ) Tax deficiencies from share-based payments - (4 ) - 47
Charge for uncollectible accounts (1,015 ) (212 ) (3,577 ) (378 )
Long-term cash incentives - 179 - 764 Net loss attributable to
noncontrolling interest 29 32 129 133 Other non-cash expense, net
(145 ) (155 ) (575 ) (621 ) Changes in operating assets and
liabilities
7,597
4,417 15,300
6,127 Adjusted free cash flow
$
2,156 $ 3,113
$ 8,137 $
9,582 Schedule 6 ALASKA
COMMUNICATIONS SYSTEMS GROUP, INC. ADJUSTED FREE CASH
FLOW (Unaudited, In Thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2017 2016
2017 2016 Adjusted
EBITDA $ 14,878 $ 16,441 $ 56,712 $ 58,247 Less: Capital
expenditures (8,891 ) (8,569 ) (32,945 ) (30,920 ) Payment for
North Slope fiber network - - - (5,500 ) Proceeds on sale of fiber
to joint venture partner - - - 2,650 Amortization of GCI capacity
revenue (523 ) (535 ) (2,072 ) (2,082 ) Income taxes refunded
(paid), net 322 372 946 (205 ) Interest paid
(3,630 ) (4,596
) (14,504 )
(12,608 ) Adjusted free cash flow*
$ 2,156 $
3,113 $ 8,137
$ 9,582 * 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,
cash income taxes refunded or paid, cash interest paid,
amortization of GCI 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 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.
See Schedule 3 for Net cash provided by operating
activities, Net cash used 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, 2017 2016
2017 2016 Business and
wholesale revenue Business broadband $ 12,298 $ 15,506 $ 61,559 $
59,218 Business voice and other 6,590 6,678 26,508 27,903 Managed
IT services 1,215 1,202 4,293 4,173 Equipment sales and
installations 1,695 1,938 4,412 6,441 Wholesale broadband 9,829
8,222 36,081 31,581 Wholesale voice and other
1,464 1,861
6,267 7,539 Total
business and wholesale revenue
33,091
35,407 139,120
136,855 Growth in business and wholesale -6.5 %
1.7 % Consumer revenue Broadband 6,241 6,360 25,441 24,981 Voice
and other
2,978
2,998 11,676
12,763 Total consumer revenue
9,219 9,358
37,117 37,744 Total
business, wholesale, and consumer revenue
42,310 44,765
176,237 174,599 Growth in
business, wholesale and consumer revenue -5.5 % 0.9 % Growth in
broadband revenue -5.7 % 6.3 % Regulatory revenue Access
7,701 8,096 30,974 32,412 High cost support
4,924 4,932
19,694 19,855 Total
regulatory revenue
12,625
13,028 50,668
52,267 Total revenue
$
54,935 $ 57,793
$ 226,905 $
226,866 Growth in total revenue -4.9 % 0.0 %
Schedule 8 ALASKA COMMUNICATIONS
SYSTEMS GROUP, INC. KEY OPERATING STATISTICS
(Unaudited) Three Months Ended December
31, September 30, December 31,
2017 2017
2016 Voice: Business access lines
71,699 72,068 73,977 Consumer access lines 29,262 30,361 33,418
Voice ARPU business $ 23.29 $ 23.51 $ 22.44 Voice ARPU
consumer $ 31.65 $ 30.68 $ 27.83
Broadband: Business
connections 15,293 15,334 15,239 Consumer connections 33,904 34,295
34,603 Broadband ARPU business $ 267.44 $ 345.78 $ 337.98
Broadband ARPU consumer $ 60.72 $ 60.80 $ 61.26
Monthly
Average Churn: Business voice 0.9 % 1.2 % 1.1 % Consumer
broadband 2.7 % 3.1 % 2.2 % Consumer voice 1.6 % 1.7 % 1.4 %
Schedule 9 ALASKA COMMUNICATIONS SYSTEMS
GROUP, INC. LONG TERM DEBT AND NET DEBT (Unaudited,
In Thousands) December 31, December 31,
2017 2016 2017 senior
secured credit facility due 2023 $ 178,350 $ - Debt discount - 2017
senior secured credit facilities due 2023 (2,668 ) - Debt issuance
costs - 2017 senior secured credit facilities due 2023 (2,869 ) -
2015 senior secured credit facilities due 2018 - 86,750 Debt
issuance costs - 2015 senior secured credit facilities due 2018 -
(1,738 ) 6.25% convertible notes due 2018 10,044 94,000 Debt
discount - 6.25% convertible notes due 2018 (18 ) (2,271 ) Debt
issuance costs - 6.25% convertible notes due 2018 (4 ) (467 )
Capital leases and other long-term obligations
3,154 3,325 Total
debt 185,989 179,599 Less current portion
(17,030 ) (1,973
) Long-term obligations, net of current portion
$ 168,959 $
177,626 Total debt $ 185,989 $ 179,599
Plus debt discounts and debt issuance costs
5,559 4,476 Gross
debt 191,548 184,075 Cash and cash equivalents (4,354 ) (21,228 )
Restricted cash held for 6.25% convertible notes due 2018
(10,044 ) -
Net debt
$ 177,150 $
162,847
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180316005848/en/
Alaska CommunicationsInvestor Contact:Tiffany Smith,
907-564-7556Manager, Board and Investor
Relationsinvestors@acsalaska.comorMedia Contact:Hannah Blankenship,
907-564-1326Manager, Corporate
CommunicationsHannah.Blankenship@acsalaska.com
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