Alaska Communications Systems Group, Inc. (NASDAQ: ALSK) today
reported financial results for the first quarter of 2019.
“We are pleased to report another quarter of solid performance,
consistent with our plan and expectations. Market demand for our
Enterprise and Carrier business is strong, reflected in our
quarterly Business and Wholesale broadband revenue performance, up
9.9% year over year. Cost management is receiving continued
attention as evidenced by reduction in the executive team and
proposed reductions to the Board of Directors.
“Growth revenues, combined with stable high cost support
revenues, now stand at 69% of total revenues for the quarter. These
combined revenues continue to outpace declines in legacy revenues,
as reflected in our total revenue growth. This positions us to
deliver Adjusted EBITDA expansion over the long-term. We look
forward to reporting progress over the upcoming quarters,” said
Anand Vadapalli, president and CEO of Alaska Communications.
Revenue Highlights: First Quarter 2019 Compared to First
Quarter 2018
- Total revenue:
- Revenue was $56.9 million, compared to
$56.0 million.
- Total broadband revenue was $32.0
million, compared to $29.7 million.
- Business and wholesale:
- Comprised 64.1 percent of total
revenue.
- Revenue was $36.5 million, compared to
$33.8 million.
- Broadband revenue was $25.5 million,
compared to $23.2 million.
- Consumer:
- Comprised 16.2 percent of total
revenue.
- Revenue was $9.2 million, compared to
$9.4 million.
- Broadband revenue was flat at $6.5
million.
- Regulatory:
- Comprised 19.7 percent of total
revenue.
- Revenue was $11.2 million, compared to
$12.8 million.
Financial Metrics: First Quarter 2019 compared to First
Quarter 2018
- Operating income was $5.9 million,
compared to $5.3 million.
- Net income, including $2.8 million loss
on extinguishment of debt, was $0.2 million, compared to net income
of $2.1 million.
- Net cash provided by operating
activities was $15.5 million, compared to $13.4 million.
- Capital expenditures were $8.6 million,
compared to $8.7 million.
Balance Sheet Metrics: March 31, 2019 compared to December
31, 2018
- Cash was $24.5 million, compared to
$15.0 million.
- Net debt was $159.9 million, compared
to $161.2 million.
- Reflects additional assets and
liabilities of $81.5 and $81.2 million, respectively, from adoption
of the new lease accounting standard in the first quarter.
Non-GAAP Metrics: First Quarter 2019 compared to First
Quarter 2018
- Adjusted EBITDA was $15.2 million,
compared to $14.4 million.
- Adjusted free cash flow was $3.0
million, compared to $1.8 million.
Reconciliations of non-GAAP financial measures to GAAP financial
measures can be found in tables at the end of this release and on
the company’s website at http://www.alsk.com in the investment data
section.
2019 Guidance
Laurie Butcher, Alaska Communications senior vice-president of
finance, said, “During the quarter, with our refinancing we
increased access to capital, creating greater stability and
flexibility in our balance sheet. We see great opportunity in the
market and continue to invest for long-term growth. Having met our
expectations for the first quarter, we re-affirm guidance for
2019.”
The company re-affirms guidance as follows:
- Total Revenue to be between $230
million and $235 million
- Adjusted EBITDA to be between $60
million and $62 million
- Capital Expenditures to be between $40
million and $42 million
- Adjusted Free Cash Flow to be between
$10 million and $12 million
Conference Call
The Company will host a conference call and live webcast on
Tuesday, May 7, 2019 at 2:00 p.m. Eastern Time to discuss the
results. Parties in the United States and Canada can access the
call at 1-888-378-4398 and enter pass code 331303. All other
parties can access the call at 1-856-344-9295 and use the same
code. On the call, the management team will answer questions
submitted in advance.
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 30
days. A telephonic replay of the conference call will also be
available two hours after the call and will run until June 6, 2019
at 5:00 p.m. Eastern Time. To hear the replay, parties in the U.S.
and Canada can call 1-888-203-1112 and enter pass code 4054244. All
other parties can call 1-719-457-0820 and enter pass code
4054244.
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 and computation
of these non-GAAP measures are 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. 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 inflows of $4.0 million in the three-month period
of 2019).
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 changes in technology and
related standards, the impact of natural or man-made disasters and
accidents, Federal and Alaska Universal Service Fund changes and
our current and historical compliance with the obligations of those
programs, structural declines for voice and other legacy services,
maintenance or IT issues, third-party intellectual property claims,
potential pension shortfalls, the success or failure of future
strategic transactions, funding through the rural health care
universal service support mechanism and our ability to comply and
our history of compliance with the regulatory requirements to
receive those support payments, our ability to service our debt and
refinance as required, adverse economic conditions, our success in
providing broadband services on the Northslope and Western Alaska,
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, labor negotiations,
employee benefit costs, our ability to control other operating
costs, disruption of our supplier’s provisioning of critical
products or services, the actions of activist shareholders, changes
in Company's relationships with large customers, unforeseen changes
in public policies, regulatory changes, 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 March 31,
2019 2018
Operating revenues $ 56,909 $ 55,972 Operating
expenses: Cost of services and sales (excluding depreciation and
amortization) 25,627 25,833 Selling, general & administrative
16,656 16,012 Depreciation and amortization 8,679 8,787 Gain on
disposal of assets, net
(2 )
(3 ) Total operating
expenses
50,960
50,629 Operating income 5,949 5,343
Other income and (expense): Interest expense (3,056 ) (3,504
) Loss on extinguishment of debt (2,799 ) - Interest income 75 14
Other income, net
122
104 Total other income and (expense)
(5,658 ) (3,386
) Income before income tax (expense) benefit
291 1,957 Income tax (expense) benefit
(98 ) 112
Net income 193 2,069 Less net loss attributable to
noncontrolling interest
(34 )
(32 ) Net income
attributable to Alaska Communications
$
227 $ 2,101
Net income per share attributable to Alaska Communications:
Net income applicable to common shares
$
227 $ 2,101
Basic and Diluted
$ 0.00
$ 0.04 Weighted average
shares outstanding: Basic
53,382
52,681 Diluted
54,605
53,857 Schedule
2 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited, In Thousands
Except Per Share Amounts) March
31, December 31, Assets 2019
2018 Current assets: Cash and cash
equivalents $ 22,845 $ 13,351 Restricted cash 1,632 1,634
Short-term investments 134 134 Accounts receivable, net of
allowance of $4,175 and $3,936 25,659 31,472 Materials and supplies
8,362 6,737 Prepayments and other current assets
12,453 12,169 Total
current assets 71,085 65,497 Property, plant and equipment
1,395,150 1,390,622 Less: accumulated depreciation and amortization
(1,021,664 )
(1,017,442 ) Property, plant and
equipment, net 373,486 373,180 Deferred income taxes 456 498
Operating lease right of use asset 81,455 - Other assets
15,483 16,010 Total
assets
$ 541,965 $
455,185 Liabilities and Stockholders'
Equity Current liabilities: Current portion of long-term
obligations $ 3,418 $ 2,289 Accounts payable, accrued and other
current liabilities 39,153 40,957 Advance billings and customer
deposits 4,002 4,024 Operating lease liabilities - current
2,503 - Total
current liabilities 49,076 47,270 Long-term obligations, net
of current portion 174,357 168,023 Deferred income taxes 2,336
2,315 Operating lease liabilities - noncurrent 78,662 - Other
long-term liabilities, net of current portion
67,469 67,827 Total
liabilities
371,900
285,435 Commitments and contingencies Alaska
Communications stockholders' equity: Common stock, $.01 par value;
145,000 authorized 536 533 Additional paid in capital 160,704
160,514 Retained earnings 10,666 10,439 Accumulated other
comprehensive loss
(2,746 )
(2,675 ) Total Alaska Communications
stockholders' equity 169,160 168,811 Noncontrolling interest
905 939 Total
stockholders' equity
170,065
169,750 Total liabilities and
stockholders' equity
$ 541,965
$ 455,185
Schedule 3 ALASKA COMMUNICATIONS SYSTEMS GROUP,
INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited,
In Thousands) Three Months
Ended March 31, 2019
2018 Cash Flows from Operating Activities: Net
income $ 193 $ 2,069
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 8,679 8,787 Gain on the disposal of
assets, net (2 ) (3 ) Amortization of debt issuance costs and debt
discount 303 356 Loss on extinguishment of debt 2,799 -
Amortization of deferred capacity revenue (1,126 ) (947 )
Stock-based compensation 498 242 Income tax expense (benefit) 98
(112 ) Charge for uncollectible accounts (697 ) 537 Amortization of
ROU asset 565 - Other non-cash expense, net 121 90 Changes in
operating assets and liabilities
4,044
2,402 Net cash provided by operating
activities
15,475
13,421 Cash Flows from Investing
Activities: Capital expenditures (8,563 ) (8,680 ) Capitalized
interest (355 ) (420 ) Change in unsettled capital expenditures
(1,121 )
(1,272 ) Net cash used by investing
activities
(10,039 )
(10,372 ) Cash Flows from
Financing Activities: Repayments of long-term debt (171,758 )
(8,807 ) Proceeds from the issuance of long-term debt 180,000 7,000
Debt issuance costs and discounts (2,659 ) - Cash paid for debt
extinguishment (1,222 ) - Cash proceeds from noncontrolling
interest - 40 Payment of withholding taxes on stock-based
compensation
(305 )
(410 ) Net cash provided (used) by
financing activities
4,056
(2,177 ) Change in cash, cash
equivalents and restricted cash 9,492 872 Cash, cash
equivalents and restricted cash, beginning of period
14,985 16,168
Cash, cash equivalents and restricted cash, end of period
$ 24,477 $
17,040 Supplemental Cash Flow Data:
Interest paid $ 3,075 $ 3,441 Income taxes paid, net $ 10 $ -
Schedule 4 ALASKA COMMUNICATIONS
SYSTEMS GROUP, INC. ADJUSTED EBITDA (Unaudited, In
Thousands) Three Months
Ended March 31, 2019
2018 Net income $ 193 $ 2,069 Add
(subtract): Interest expense 3,056 3,504 Loss on extinguishment of
debt 2,799 - Interest income (75 ) (14 ) Depreciation and
amortization 8,679 8,787 Other income, net (122 ) (104 ) Gain on
the disposal of assets, net (2 ) (3 ) Income tax expense (benefit)
98 (112 ) Stock-based compensation 498 242 Net loss attributable to
noncontrolling interest
34
32 Adjusted EBITDA
$
15,158 $ 14,401
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 inflows of $4.0 million in the
three-month period ended March 31, 2019).
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 2019 Senior
Credit Facility, 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
expense and income, loss on extinguishment of debt, depreciation
and amortization, other income and expense, gain or loss on asset
purchases or disposals, provision for income taxes, stock-based
compensation, and net loss attributable to noncontrolling
interest.
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 March 31,
2019 2018
Net cash provided by operating activities $ 15,475 $ 13,421
Adjustments to reconcile net cash provided
by operating activities to adjusted free cash flow:
Capital expenditures (8,563 ) (8,680 ) Amortization of deferred
capacity revenue 1,126 947 Amortization of GCI capacity revenue
(511 ) (511 ) Amortization of debt issuance costs and debt discount
(303 ) (356 ) Interest expense 3,056 3,504 Interest paid (3,075 )
(3,441 ) Interest income (75 ) (14 ) Income taxes paid, net (10 ) -
Charge for uncollectible accounts 697 (537 ) Amortization of ROU
asset (565 ) - Other income, net (122 ) (104 ) Net loss
attributable to noncontrolling interest 34 32 Other non-cash
expense, net (121 ) (90 ) Changes in operating assets and
liabilities
(4,044 )
(2,402 ) Adjusted free cash flow
$ 2,999 $
1,769 Schedule 6
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. ADJUSTED FREE
CASH FLOW (Unaudited, In Thousands)
Three Months Ended March 31,
2019 2018 Adjusted
EBITDA $ 15,158 $ 14,401 Less: Capital expenditures (8,563 )
(8,680 ) Amortization of GCI capacity revenue (511 ) (511 ) Income
taxes paid, net (10 ) - Interest paid
(3,075
) (3,441 ) Adjusted
free cash flow*
$ 2,999
$ 1,769 * 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 a non-GAAP liquidity measure and is
defined as Adjusted EBITDA, less recurring operating cash
requirements which include capital expenditures, less cash income
taxes refunded or paid, cash interest paid, amortization of GCI
capacity revenue and cash receipts and payments. 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 recognized as 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 provided (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 March 31,
2019 2018 Business and
wholesale revenue Business broadband $ 15,267 $ 13,659 Business
voice and other 7,001 6,851 Managed IT services 1,659 1,265
Equipment sales and installations 880 922 Wholesale broadband
10,262 9,578 Wholesale voice and other
1,426
1,488 Total business and
wholesale revenue
36,495
33,763 Growth in business and wholesale 8.1 % Consumer
revenue Broadband 6,468 6,492 Voice and other
2,733 2,877 Total
consumer revenue
9,201
9,369 Total business, wholesale, and consumer
revenue
45,696
43,132 Growth in business, wholesale and consumer
revenue 5.9 % Growth in broadband revenue 7.6 % Regulatory
revenue Access 6,289 7,917 High cost support
4,924 4,923 Total
regulatory revenue
11,213
12,840 Total revenue
$
56,909 $ 55,972
Growth in total revenue 1.7 %
Growth Revenues: Business broadband,
Managed IT services, Equipment sales and installations, Wholesale
broadband, Consumer broadband
Legacy Revenues: Business voice and other,
Wholesale voice and other, Consumer voice and other, and Access
CAF II Revenue: High Cost Support
Schedule
8 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
KEY OPERATING STATISTICS (Unaudited)
Three Months Ended March 31,
December 31, March 31,
2019 2018
2018 Voice: Business access lines
68,788 69,382 71,002 Consumer access lines 25,156 25,784 28,221
Voice ARPU business $ 25.21 $ 25.64 $ 24.76 Voice ARPU
consumer $ 33.77 $ 34.04 $ 31.57
Broadband: Business
connections 15,126 15,234 15,306 Consumer connections 32,840 32,793
33,675 Broadband ARPU business $ 334.94 $ 324.37 $ 297.38
Broadband ARPU consumer $ 65.39 $ 65.00 $ 63.77
Monthly
Average Churn: Business voice 1.1 % 1.0 % 1.0 % Consumer
broadband 2.2 % 2.3 % 2.4 % Consumer voice 1.1 % 1.2 % 1.5 %
Schedule 9 ALASKA COMMUNICATIONS SYSTEMS
GROUP, INC. LONG TERM DEBT AND NET DEBT (Unaudited,
In Thousands) March 31,
December 31, 2019
2018 2019 senior secured credit facility due
2025 $ 180,000 $ - Debt discount - 2019 senior secured credit
facilities due 2025 (2,226 ) - Debt issuance costs - 2019 senior
secured credit facilities due 2025 (2,759 ) - 2017 senior secured
credit facility due 2023 - 171,750 Debt discount - 2017 senior
secured credit facilities due 2023 - (2,024 ) Debt issuance costs -
2017 senior secured credit facilities due 2023 - (2,182 ) Capital
leases and other long-term obligations
2,760
2,768 Total debt 177,775 170,312
Less current portion
(3,418 )
(2,289 ) Long-term obligations,
net of current portion
$ 174,357
$ 168,023 Total debt $
177,775 $ 170,312 Plus debt discounts and debt issuance costs
4,985 4,206
Gross debt 182,760 174,518 Cash and cash equivalents
(22,845 ) (13,351
) Net debt
$ 159,915
$ 161,167
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190506005705/en/
Media ContactHeather Cavanaugh, 907-564-7722Director, External
Affairs and Corporate Communications
Investor ContactTiffany Smith, 907-564-7556Manager, Board and
Investor Relationsinvestors@acsalaska.com
Alaska Communications Sy... (NASDAQ:ALSK)
Historical Stock Chart
From Jul 2024 to Jul 2024
Alaska Communications Sy... (NASDAQ:ALSK)
Historical Stock Chart
From Jul 2023 to Jul 2024