Otelco Inc. (NASDAQ: OTEL), a wireline telecommunications services
provider in Alabama, Maine, Massachusetts, Missouri, New Hampshire,
Vermont and West Virginia, today announced operational and
financial results for its second quarter ended June 30, 2018. Key
operational and financial highlights for Otelco include:
- Total revenues of $16.9 million for second quarter 2018.
- Operating income of $5.2 million for second quarter 2018.
- Net income of $2.9 million for second quarter 2018.
- Consolidated EBITDA (as defined below) of $7.1 million for
second quarter 2018.
- Additional $3.0 million voluntary principal prepayment reduces
debt.
“We are pleased with another quarter of solid
execution against our strategy,” said Rob Souza, President and CEO
of Otelco. “Operating income increased 2.4%, net income increased
89.3% and Consolidated EBITDA increased 1.5% for second quarter
2018 from second quarter 2017. The ratio of debt, net of cash, to
Consolidated EBITDA is below 3.0 for the third consecutive
quarter.”
SECOND QUARTER RESULTSRevenue
for the three months ended June 30, 2018, declined 3.0%, while
Otelco controlled its expenses, allowing operating income to
increase 2.4% for the same period, when compared to the three
months ended June 30, 2017. Net income increased to $2.9 million in
second quarter 2018 from $1.5 million in second quarter 2017,
primarily driven by a $1.1 million decrease in interest expense
associated with the Company’s new CoBank credit facility. Basic net
income per share increased to $0.86 per share for second quarter
2018, compared to $0.46 per share in the same period of 2017.
EBITDAConsolidated EBITDA (as
defined below) was $7.1 million for second quarter 2018, an
increase of $0.1 million from the same period last year.
ALTERNATIVE CONNECT AMERICA (COST) MODEL
(ACAM)During 2018, the FCC expanded the ACAM program to
provide additional funding to locations that had been initially
capped. The Company accepted the FCC’s enhanced ACAM offer in
Missouri, which will provide an additional $1.5 million in funding
over the ten-year life of the program, which began in 2017. The FCC
has also adjusted the budget control payments for 2017 and 2018,
which positively affected the Company’s Vermont property, providing
a one-time benefit of $0.2 million. Results for the second quarter
included the additional ACAM revenue approved by the FCC for
investment in Missouri and the positive adjustment in the FCC’s
budget controls for Vermont.
CONNECT AMERICA FUND II (CAF
II)Otelco was accepted as a bidder by the FCC in the CAF
II auction process that began on July 24, 2018. The FCC has not
confirmed the awards from the auction.
NETWORK INVESTMENTOtelco
invested $2.1 million in enhancing its network during second
quarter 2018. The Company has installed over 400 route miles of
fiber-to-the-home, including approximately 100 route miles in 2018.
This growth brings Otelco’s fiber network of transport and
fiber-to-the-home to over 2,000 route miles.
BALANCE SHEETCash increased to
$4.2 million at the end of second quarter from $3.6 million at the
end of 2017. During second quarter, the Company reduced the
outstanding principal on its credit facility by $4.1 million,
including a $3.0 million voluntary prepayment. An additional $1.0
million voluntary prepayment was made on July 31, 2018, reducing
the outstanding balance on July 31, 2018, to $79.7 million, or a
reduction of 8.4% since the $87.0 million facility was initiated in
November 2017. By the end of third quarter 2018, the leverage
ratio, as computed in accordance with the credit facility, is
expected to fall below 3.0, allowing the Company to benefit from a
0.25% reduction in interest margin to 4.25%. The lower margin will
save the Company approximately $0.2 million in interest expense on
an annual basis. The Company’s ratio of debt, net of cash, to
Consolidated EBITDA (as defined below), declined to 2.87 at June
30, 2018.
INCOME TAXESThe Tax Cuts and
Jobs Act, implemented at the end of 2017, increased bonus
depreciation from 50% to 100% and reduced the maximum federal
corporate tax rate from 35% to 21%. The Company is expected to
reduce its cash federal income tax for the year 2018 by
approximately $2.1 million under the new tax law. The provision for
income taxes for the three months ended June 30, 2018, decreased
15.6% to $0.8 million from $0.9 million in the three months ended
June 30, 2017.
RURAL MUNICIPALITIESDuring the
second quarter 2018, broadband committees in Hawley, Monroe,
Florida and Savoy, Massachusetts, working with WiValley and the
Massachusetts Executive Office of Housing and Economic Development,
unanimously agreed to engage Otelco as their partner to build and
operate a fixed-wireless network using only the $2.0 million in
broadband grant money allocated to the towns by Massachusetts. The
new network could be operating in Hawley as early as this October,
with the other towns to follow by early 2019. The grants are
intended to bring high-speed internet to underserved towns, mostly
located in western Massachusetts. The WiValley grants will make
higher speed service available to over 500 individual
locations.
“We look forward to partnering with four more
communities to enhance their voice and data services and make them
more competitive for the digital future,” commented Rob Souza,
President and CEO of Otelco. “Our previous work with the town of
Leverett, Massachusetts, demonstrates how municipal partnerships
can work to improve communities’ digital access. We expect all
approvals and contracts to be finalized before the end of the third
quarter.”
BILLING/OPERATIONS SUPPORT SYSTEM
REPLACEMENTFor the last two years, Otelco has been
planning for a new billing and operations support system that will
replace four existing systems. For the month of June, all carrier
customers were billed from the new system. As of the end of July,
all end user activity – from ordering to provisioning to
billing to collecting – is being handled in the new system.
“We have been patient and careful in working
with our vendor to create and implement a system we can use to
serve all of our customers well into the future,” added Souza. “We
are pleased to complete this deliberate process as both our
employees and customers make the transition to the new system. In
addition to keeping up with every customer’s needs, location,
servicing equipment and usage, from long-distance minutes to
gigabit ethernet circuits, the system will also enhance our ability
to market new products to meet targeted customer requirements. The
new system is expected to save us approximately $750,000 annually,
approximately half of which was realized in the first half of
2018.
SUMMARY“As you can see, our
employee team has been actively engaged in many initiatives for our
customers and stockholders during the past quarter,” continued
Souza. “We are focused on enhancing our customer experience,
improving available data speeds, adding new customers to the Otelco
family and reducing our leverage to give the Company more financial
flexibility for the future. While the price of our stock has more
than tripled in the last two years, our peers in the industry
continue to trade at somewhat higher multiples than Otelco.
Generating an improvement in revenue performance while maintaining
our focus on cost management should continue to serve our
employees, customers and stockholders well into the
future.”
OPERATING STATISTICSOver 53% of
the Company’s voice and data access lines serve enterprise
customers. Detailed operating information for the period ended June
30, 2018, is shown below:
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Otelco Inc. - Key Operating Statistics |
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June 30, |
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March 31, |
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% Change from |
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December 31, |
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% Change from |
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2018 |
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2018 |
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March 31, 2018 |
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2017 |
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December 31, 2017 |
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Business/Enterprise |
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CLEC |
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Voice lines |
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15,713 |
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16,030 |
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(2.0 |
) |
% |
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16,239 |
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(3.2 |
) |
% |
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HPBX seats |
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11,924 |
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11,369 |
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4.9 |
|
% |
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11,338 |
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5.2 |
|
% |
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Data lines |
|
3,218 |
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3,325 |
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(3.2 |
) |
% |
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3,359 |
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(4.2 |
) |
% |
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Wholesale
network lines |
2,391 |
|
2,398 |
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(0.3 |
) |
% |
|
2,417 |
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(1.1 |
) |
% |
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RLEC |
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Voice lines |
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15,119 |
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15,212 |
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(0.6 |
) |
% |
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15,400 |
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(1.8 |
) |
% |
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Data lines |
|
1,576 |
|
1,586 |
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(0.6 |
) |
% |
|
1,602 |
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(1.6 |
) |
% |
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|
Access line
equivalents (a) |
49,941 |
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49,920 |
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0.0 |
|
% |
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50,355 |
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(0.8 |
) |
% |
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Residential |
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CLEC |
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Voice lines |
|
616 |
|
621 |
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(0.8 |
) |
% |
|
628 |
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(1.9 |
) |
% |
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Data lines |
|
2,712 |
|
2,792 |
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(2.9 |
) |
% |
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2,815 |
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(3.7 |
) |
% |
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RLEC |
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Voice lines |
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18,375 |
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18,725 |
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(1.9 |
) |
% |
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19,147 |
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(4.0 |
) |
% |
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Data lines |
|
18,370 |
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18,558 |
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(1.0 |
) |
% |
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18,771 |
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(2.1 |
) |
% |
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Other services |
|
3,421 |
|
3,485 |
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(1.8 |
) |
% |
|
3,561 |
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(3.9 |
) |
% |
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Access line
equivalents (a) |
43,494 |
|
44,181 |
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(1.6 |
) |
% |
|
44,922 |
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(3.2 |
) |
% |
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Otelco
access line equivalents (a) |
93,435 |
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94,101 |
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(0.7 |
) |
% |
|
95,277 |
|
(1.9 |
) |
% |
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(a) The Company defines access line equivalents as
retail and wholesale voice lines, data lines (including cable
modems, digital subscriber lines, other broadband connections and
dedicated data access trunks) and other services (including
entertainment and security services).
SECOND QUARTER EARNINGS CONFERENCE
CALLOtelco has scheduled a conference call, which will be
broadcast live over the internet, on Tuesday, August 14, 2018, at
11:30 a.m. (Eastern Time). To participate in the call, participants
should dial (323) 794-2588 and ask for the Otelco call 10
minutes prior to the start time. Investors, analysts and the
general public will also have the opportunity to listen to the
conference call free over the internet by visiting the Company’s
website at www.Otelco.com. To listen to the live call online,
please visit the website at least 15 minutes early to register,
download and install any necessary audio software. For those who
cannot listen to the live webcast, a replay of the webcast will be
available on the Company's website at www.Otelco.com for 30 days. A
two-week telephonic replay may also be accessed by calling (719)
457-0820 and entering the Confirmation Code 4041809.
ABOUT
OTELCOOtelco Inc. provides wireline
telecommunications services in Alabama, Maine, Massachusetts,
Missouri, New Hampshire, Vermont and West Virginia. The Company’s
services include local and long distance telephone, digital
high-speed data lines, transport services, network access, cable
television and other related services. With more than 93,000 voice
and data access lines, which are collectively referred to as access
line equivalents, Otelco is among the top 25 largest local exchange
carriers in the United States based on number of access lines.
Otelco operates eleven incumbent telephone companies serving rural
markets, or rural local exchange carriers. It also provides
competitive retail and wholesale communications services and
technology consulting, managed services and private/hybrid cloud
hosting services through several subsidiaries. For more
information, visit the Company’s website at www.Otelco.com.
FORWARD LOOKING
STATEMENTSStatements in this press release that are not
statements of historical or current fact constitute forward-looking
statements. Such forward-looking statements involve known and
unknown risks, uncertainties, and other unknown factors that could
cause the actual results of the Company to be materially different
from the historical results or from any future results expressed or
implied by such forward-looking statements. In addition to
statements which explicitly describe such risks and uncertainties,
readers are urged to consider statements labeled with the terms
“believes,” “belief,” “expects,” “intends,” “anticipates,” “plans,”
or similar terms to be uncertain and forward-looking. The
forward-looking statements contained herein are also subject
generally to other risks and uncertainties that are described from
time to time in the Company’s filings with the Securities and
Exchange Commission. The Company assumes no obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
applicable law.
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OTELCO
INC. |
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CONDENSED CONSOLIDATED BALANCE
SHEETS |
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(in thousands, except share par value and share
amounts) |
|
(unaudited with the exception of December 31, 2017
being audited) |
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June 30, |
|
December 31, |
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2018 |
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2017 |
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Assets |
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Current
assets |
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Cash and cash equivalents |
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$ |
4,238 |
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$ |
3,570 |
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Accounts
receivable: |
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Due
from subscribers, net of allowance for doubtful |
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accounts of $254 and $206, respectively |
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|
4,533 |
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|
4,647 |
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Other |
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|
2,196 |
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|
1,875 |
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Materials
and supplies |
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|
2,826 |
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|
2,700 |
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|
Prepaid
expenses |
|
|
|
|
|
1,285 |
|
|
3,122 |
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|
Total
current assets |
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|
|
15,078 |
|
|
15,914 |
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|
|
|
|
|
|
|
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|
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|
|
Property
and equipment, net |
|
|
|
|
50,782 |
|
|
50,888 |
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|
|
|
Goodwill |
|
|
|
|
|
|
44,976 |
|
|
44,976 |
|
|
|
|
Intangible
assets, net |
|
|
|
|
|
1,118 |
|
|
1,328 |
|
|
|
|
Investments |
|
|
|
|
|
1,500 |
|
|
1,632 |
|
|
|
|
Interest
rate cap |
|
|
|
|
|
46 |
|
|
- |
|
|
|
|
Other
assets |
|
|
|
|
|
150 |
|
|
201 |
|
|
|
|
|
|
Total
assets |
|
|
|
|
$ |
113,650 |
|
$ |
114,939 |
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|
Liabilities and Stockholders'
Equity |
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Current liabilities |
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|
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|
|
|
|
Accounts
payable |
|
|
|
|
$ |
705 |
|
$ |
1,619 |
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|
|
|
|
Accrued
expenses |
|
|
|
|
|
4,927 |
|
|
4,803 |
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|
|
|
Advance
billings and payments |
|
|
|
|
1,558 |
|
|
1,684 |
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|
|
|
Customer
deposits |
|
|
|
|
|
62 |
|
|
58 |
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|
|
|
|
Current
maturity of long-term notes payable, net of debt issuance cost |
|
3,897 |
|
|
3,891 |
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|
|
|
|
|
Total
current liabilities |
|
|
|
|
11,149 |
|
|
12,055 |
|
|
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|
|
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|
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|
|
|
|
|
Deferred
income taxes |
|
|
|
|
|
18,939 |
|
|
18,939 |
|
|
|
|
Advance
billings and payments |
|
|
|
|
2,294 |
|
|
2,367 |
|
|
|
|
Other
liabilities |
|
|
|
|
|
8 |
|
|
13 |
|
|
|
|
Long-term
notes payable, less current maturities and debt issuance cost |
|
75,079 |
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|
80,058 |
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|
|
|
|
Total liabilities |
|
|
|
|
|
107,469 |
|
|
113,432 |
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Stockholders' equity |
|
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Class A
Common Stock, $.01 par value-authorized 10,000,000 shares; |
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|
issued and outstanding 3,388,624 and 3,346,689 shares,
respectively |
|
34 |
|
|
34 |
|
|
|
|
|
Additional
paid in capital |
|
|
|
|
4,056 |
|
|
4,285 |
|
|
|
|
|
Retained
earnings (deficit) |
|
|
|
|
2,091 |
|
|
(2,812 |
) |
|
|
|
|
|
Total
stockholders' equity |
|
|
|
|
6,181 |
|
|
1,507 |
|
|
|
|
|
|
Total
liabilities and stockholders' equity |
|
$ |
113,650 |
|
$ |
114,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTELCO INC. AND SUBSIDIARIES |
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
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(in thousands, except share and per share
amounts) |
|
(unaudited) |
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|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
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|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
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|
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|
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|
|
Revenues |
|
|
|
|
$ |
16,890 |
|
|
$ |
17,406 |
|
|
$ |
33,616 |
|
|
$ |
34,786 |
|
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|
|
|
|
Operating expenses |
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|
Cost of
services |
|
|
|
7,483 |
|
|
|
8,044 |
|
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|
15,447 |
|
|
|
15,857 |
|
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|
Selling,
general and administrative expenses |
|
2,428 |
|
|
|
2,467 |
|
|
|
5,310 |
|
|
|
5,174 |
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|
Depreciation and amortization |
|
|
1,807 |
|
|
|
1,842 |
|
|
|
3,626 |
|
|
|
3,681 |
|
|
|
|
Total operating expenses |
|
|
11,718 |
|
|
|
12,353 |
|
|
|
24,383 |
|
|
|
24,712 |
|
|
|
|
|
|
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|
|
|
|
|
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|
|
Income from
operations |
|
|
5,172 |
|
|
|
5,053 |
|
|
|
9,233 |
|
|
|
10,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
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|
|
Interest expense |
|
|
|
(1,467 |
) |
|
|
(2,571 |
) |
|
|
(2,925 |
) |
|
|
(5,182 |
) |
|
|
Other income |
|
|
|
1 |
|
|
|
- |
|
|
|
168 |
|
|
|
203 |
|
|
|
|
Total other expense |
|
|
(1,466 |
) |
|
|
(2,571 |
) |
|
|
(2,757 |
) |
|
|
(4,979 |
) |
|
|
|
|
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|
|
|
|
|
|
Income
before income tax expense |
|
|
3,706 |
|
|
|
2,482 |
|
|
|
6,476 |
|
|
|
5,095 |
|
|
Income tax
expense |
|
|
|
(798 |
) |
|
|
(946 |
) |
|
|
(1,573 |
) |
|
|
(1,951 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
$ |
2,908 |
|
|
$ |
1,536 |
|
|
$ |
4,903 |
|
|
$ |
3,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
3,388,624 |
|
|
|
3,346,689 |
|
|
|
3,388,624 |
|
|
|
3,346,689 |
|
|
|
|
Diluted |
|
|
|
|
3,439,659 |
|
|
|
3,445,632 |
|
|
|
3,429,974 |
|
|
|
3,445,632 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net
income per common share |
|
$ |
0.86 |
|
|
$ |
0.46 |
|
|
$ |
1.45 |
|
|
$ |
0.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net
income per common share |
|
$ |
0.85 |
|
|
$ |
0.45 |
|
|
$ |
1.43 |
|
|
$ |
0.91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTELCO INC. AND SUBSIDIARIES |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(in thousands) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June
30, |
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
Cash flows
from operating activities: |
|
|
|
|
|
|
Net
income |
|
|
|
|
$ |
4,903 |
|
|
$ |
3,144 |
|
|
|
Adjustments to reconcile net income to cash flows provided by
operating activities: |
|
|
|
|
|
Depreciation |
|
|
|
|
3,458 |
|
|
|
3,479 |
|
|
|
|
Amortization |
|
|
|
|
168 |
|
|
|
202 |
|
|
|
|
Amortization of loan costs |
|
|
|
239 |
|
|
|
621 |
|
|
|
|
Provision
for uncollectible accounts receivable |
|
|
163 |
|
|
|
206 |
|
|
|
|
Stock-based
compensation |
|
|
151 |
|
|
|
166 |
|
|
|
|
Payment in
kind interest - subordinated debt |
|
|
- |
|
|
|
157 |
|
|
|
|
Changes in
operating assets and liabilities |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
|
(370 |
) |
|
|
189 |
|
|
|
|
|
Materials
and supplies |
|
|
|
(126 |
) |
|
|
(349 |
) |
|
|
|
|
Prepaid
expenses and other assets |
|
|
1,888 |
|
|
|
1,554 |
|
|
|
|
|
Accounts
payable and accrued expenses |
|
|
(790 |
) |
|
|
(110 |
) |
|
|
|
|
Advance
billings and payments |
|
|
(199 |
) |
|
|
495 |
|
|
|
|
|
Other
liabilities |
|
|
|
- |
|
|
|
(13 |
) |
|
|
|
|
|
Net cash
from operating activities |
|
|
9,485 |
|
|
|
9,741 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows
used in investing activities: |
|
|
|
|
|
|
Acquisition
and construction of property and equipment |
|
|
(3,298 |
) |
|
|
(3,758 |
) |
|
|
|
|
|
Net cash
used in investing activities |
|
|
(3,298 |
) |
|
|
(3,758 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows
used in financing activities: |
|
|
|
|
|
|
Loan
origination costs |
|
|
|
(37 |
) |
|
|
(77 |
) |
|
|
Principal
repayment of long-term notes payable |
|
|
(5,175 |
) |
|
|
(5,125 |
) |
|
|
Interest
rate cap |
|
|
|
|
(46 |
) |
|
|
- |
|
|
|
Retirement
of CoBank equity |
|
|
|
119 |
|
|
|
164 |
|
|
|
Tax
withholdings paid on behalf of employees for restricted stock
units |
|
|
(380 |
) |
|
|
(209 |
) |
|
|
|
|
|
Net cash
used in financing activities |
|
|
(5,519 |
) |
|
|
(5,247 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents |
|
|
668 |
|
|
|
736 |
|
|
Cash and
cash equivalents, beginning of period |
|
|
3,570 |
|
|
|
10,538 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents, end of period |
|
$ |
4,238 |
|
|
$ |
11,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
Interest
paid |
|
|
|
|
$ |
2,701 |
|
|
$ |
4,456 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes paid |
|
|
|
$ |
435 |
|
|
$ |
692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
Class A common stock |
|
$ |
- |
|
|
$ |
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED EBITDA – Consolidated EBITDA is
defined as consolidated net income plus consolidated net interest
expense, depreciation and amortization, income taxes and certain
other fees, expenses and non-cash charges reducing consolidated net
income. Consolidated EBITDA is a supplemental measure of the
Company’s performance that is not required by, or presented in
accordance with, accounting principles generally accepted in the
United States (“GAAP”). Consolidated EBITDA corresponds to the
definition of Consolidated EBITDA in the Company’s credit facility.
The lenders under the Company’s credit facility utilize this
measure to determine compliance with credit facility requirements.
The Company uses Consolidated EBITDA as an operational performance
measurement to focus attention on the operational generation of
cash, which is used for reinvestment into the business; to repay
its debt and to pay interest on its debt; to pay income taxes; and
for other corporate requirements. The Company reports Consolidated
EBITDA to allow current and potential investors to understand this
performance metric and because the Company believes that it
provides current and potential investors with helpful information
with respect to the Company’s operating performance. However,
Consolidated EBITDA should not be considered as an alternative to
net income or any other performance measures derived in accordance
with GAAP. The Company’s presentation of Consolidated EBITDA may
not be comparable to similarly titled measures used by other
companies.
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Consolidated EBITDA
to Net Income |
|
|
|
|
|
|
|
|
Twelve Months |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
Ended June 30, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
2018 |
|
|
Net
income |
$ |
2,908 |
|
$ |
1,536 |
|
$ |
4,903 |
|
$ |
3,144 |
|
$ |
13,874 |
|
|
Add: |
Depreciation |
|
1,723 |
|
|
1,741 |
|
|
3,458 |
|
|
3,479 |
|
|
6,980 |
|
|
|
Interest expense less
interest income |
|
1,348 |
|
|
2,260 |
|
|
2,687 |
|
|
4,562 |
|
|
6,551 |
|
|
|
Interest expense -
amortized loan cost |
|
118 |
|
|
311 |
|
|
238 |
|
|
620 |
|
|
4,440 |
|
|
|
Income tax expense |
|
798 |
|
|
946 |
|
|
1,573 |
|
|
1,951 |
|
|
(8,234 |
) |
|
|
Amortization -
intangibles |
|
84 |
|
|
101 |
|
|
168 |
|
|
202 |
|
|
342 |
|
|
|
Loan fees |
|
19 |
|
|
39 |
|
|
38 |
|
|
79 |
|
|
2,406 |
|
|
|
Stock-based
compensation (senior management) |
|
80 |
|
|
71 |
|
|
151 |
|
|
166 |
|
|
294 |
|
|
Consolidated EBITDA |
$ |
7,078 |
|
$ |
7,005 |
|
$ |
13,216 |
|
$ |
14,203 |
|
$ |
26,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LEVERAGE RATIO – The Company uses the ratio of debt, net of
cash, to Consolidated EBITDA for the last twelve months as an
operational performance measurement of Otelco’s leverage. Such
ratio is a supplemental measure of the Company’s performance that
is not required by, or presented in accordance with, GAAP. The
Company reports such ratio to allow current and potential investors
to understand this performance metric. The Company also believes
that it provides current and potential investors with helpful
information with respect to the Company’s operating performance,
including the Company’s ability to generate earnings sufficient to
service its debt, and enhances understanding of the Company’s
financial performance and highlights operational trends. However,
such ratio should not be considered as an alternative to net income
or any other performance measures derived in accordance with GAAP.
The Company’s presentation of such ratio may not be comparable to
similarly titled ratios used by other companies. The table below
provides the calculation of such ratio as of June 30, 2018.
|
|
|
|
|
|
|
Ratio of Debt, Net of Cash, to Consolidated
EBITDA |
|
|
as of June 30, 2018 |
|
|
($ 000) |
|
|
|
|
|
|
|
|
Notes
payable |
|
$ |
78,976 |
|
|
|
Debt
issuance costs |
|
|
1,761 |
|
|
|
|
Notes outstanding |
|
|
80,737 |
|
|
|
|
|
|
|
|
|
Less
cash |
|
|
(4,238 |
) |
|
|
Notes
outstanding, net of cash |
|
$ |
76,499 |
|
|
|
Consolidated EBITDA for the |
|
|
|
|
|
last twelve months |
|
$ |
26,653 |
|
|
|
|
|
|
|
|
|
Leverage
ratio |
|
|
2.87 |
|
|
|
|
|
|
|
|
Contact: Curtis
Garner
Chief Financial Officer
Otelco Inc.
205-625-3580
Curtis.Garner@Otelco.com
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