GCI REPORTS
FOURTH QUARTER 2015 FINANCIAL RESULTS
Consolidated Revenue of $241
million and $979 million for the Year
Adjusted EBITDA of $71 million and
$330 million for the Year
March 2, 2016,
Anchorage, Alaska - General Communication, Inc. ("GCI")
(NASDAQ: GNCMA) today announced its results for the fourth quarter
and year end 2015.
2015 Operating
and Financial Highlights and Significant Recent Events
Strong growth in Managed Broadband
and Consumer data drove fourth quarter revenues to $241 million, up
$13 million or five percent over the fourth quarter of 2014. Annual
revenues were $979 million, up $68 million or eight percent over
2014, driven by growth in wireless roaming and our broadband data
products.
Quarterly Adjusted EBITDA was $71
million, which is flat when compared with the fourth quarter of
2014. Adjusted EBITDA for the year was $330 million, up $7 million
or two percent over the prior year. Adjusted EBITDA for the quarter
was negatively affected by a reduction in political advertising
revenues, which were down approximately $5 million on a
year-over-year basis as well as approximately $4 million in
non-recurring SG&A charges.
Roaming Agreements: We mentioned
during our third quarter earnings call that we were completing
long-term agreements with our primary roaming partners. We have
completed these agreements, which will assist us in sustaining
stable wireless roaming revenues for GCI's future, and will enable
GCI to make capital investment decisions with the security of
long-term guaranteed roaming payments. The contracts are long-term
agreements with minimum cash payments. These agreements will reduce
the cash we receive from roaming and backhaul by approximately 20
percent or $25 million in 2016 when compared with 2015.
Notwithstanding the negative cash impact to GCI in 2016, we believe
these agreements are valuable to GCI, and substantially mitigate a
key risk factor in the business.
Tower Sales: During 2016, we
expect to monetize our urban wireless towers and rooftop locations
for approximately $90 million in a sale lease back transaction. We
will redeploy and invest the cash received into our broadband
infrastructure in Alaska.
Billing System Update: In order to
drive operational efficiency and improve our customer relationship
experience, we recently signed a contract with a billing system
provider to migrate our two primary billing platforms into a new
unified billing system. We anticipate the conversion will take
place in 2018. As part of this process, we are significantly
simplifying our rate plans and eliminating our non-core billing
systems. Already this year we have shut down two smaller
wireless billing systems.
"We finished 2015 on strong
operational footing, which sets us up to capitalize on
opportunities in 2016", said Ron Duncan, GCI's president and chief
executive officer. "Our broadband data products continue to
provide core growth and our new wireless roaming agreements secure
an important revenue source for the long-term health of the
company. We also anticipate selling our urban wireless towers in
2016, which will provide us additional capital that we intend to
re-invest in the growth of our company. This sale will
support significant investments in a diverse fiber to the North
Slope and continued expansion of our TERRA network. These steps
demonstrate GCI's commitment to being the leader in broadband
infrastructure in Alaska."
Wireless
Wireless segment revenues were $60
million for the quarter and $268 million for the year, a three
percent decline and one percent decline year-over-year
respectively. The decline is due to changes in revenue allocation
between the wireline and wireless segment after closing the AWN
transaction, which was offset by an increase in our roaming
revenues.
The wireless segment revenue detail is as
follows:
($ millions) |
4Q15 |
4Q14 |
|
2015 |
2014 |
Wholesale Wireless |
21 |
25 |
|
84 |
100 |
Roaming and Backhaul |
26 |
23 |
|
129 |
116 |
USF Support |
13 |
14 |
|
55 |
54 |
Total Wireless Revenue |
60 |
62 |
|
268 |
270 |
Wireless segment Adjusted EBITDA
was $39 million for the quarter, an increase of $6 million or 18
percent over the fourth quarter of 2014. Annual wireless Adjusted
EBITDA was $179 million in 2015, growing $21 million or 13 percent
over 2014. Growth in Adjusted EBITDA was a result of
increased roaming revenues along with a decrease in roaming
costs.
Wireline
Wireline segment revenues of $181
million for the fourth quarter were $14 million, or eight percent
higher than the fourth quarter of 2014. Full year revenues of $711
million were $71 million or 11 percent higher than the prior
year.
Adjusted EBITDA for the quarter
was $32 million and $151 million for the year. EBITDA declined by
eight percent for the year and 16 percent for the quarter on a
year-over-year basis. These declines are due to changes in
allocations between the segments, reduced political advertising and
one-time SG&A costs.
Wireline -
Consumer
Consumer revenues were $89 million
for the quarter, a year-over-year increase of $13 million or 17
percent. Annual revenues of $351 million represent growth of
$63 million or 22 percent from the prior year. Revenue growth in
2015 was driven by broadband data subscriber and ARPU growth, which
combined to provide a 15 percent increase in broadband data
revenues over 2014. Revenue also benefited in 2015 from
equipment installment plan revenues and the acquired wireless
subscriber base. Wireless ARPU was negatively impacted by
lower ARPUs from subscribers that bring their own device.
Our cable modem subscribers were
up 3,000 in the quarter and 8,200 for the year. Pro-forma for the
87,000 acquired wireless customers in the AWN transaction we saw a
reduction of 8,800 wireless subscribers for the year with 4,100 of
those coming in the fourth quarter. During the year we moved
53,100 or just over 60 percent of the acquired subscribers onto our
primary billing system. We expect to complete the migration
in the next year and will continue to have pressure on wireless
subscriber net adds until the transition is complete.
Broadband network investment and
improving our data product offering remains a key priority for the
Company. Our Gigabit red
consumer data service is now available to all of our Anchorage
subscribers, and was expanded to include the Matanuska Valley in
mid-January. GCI plans to launch the Gigabit red service in Fairbanks and
Juneau in 2016.
Wireline -
Business Services
Revenues in the business services
group were $52 million in the fourth quarter, a $7 million or 11
percent decline from the same period in 2014. Annual revenues
of $210 million marked a $16 million or seven percent decline from
the prior year. The substantial majority of these declines were
from lower advertising revenues as compared to 2014, which was a
particularly strong year for political advertising in Alaska.
Wireline -
Managed Broadband
Managed broadband revenues of $40
million for the quarter drove annual revenues to $150 million, up
$8 million or 24 percent over the fourth quarter of 2014 and $23
million or 19 percent over the prior full year. Our managed
broadband revenue growth has been driven primarily by customer
bandwidth upgrades that have been made possible by our significant
and ongoing investment in the TERRA network.
SG&A
SG&A expenses were $89 million
in the fourth quarter of 2015, up $10 million or 12 percent from a
year ago. Annual SG&A expenses totaled $338 million, an
increase of $45 million or 15 percent. Growth in SG&A is a
result of one-time AWN transition costs and other recurring costs
to support the acquired wireless subscribers. Additionally,
we have increased our spending in IT and network support and
maintenance.
Other Events
GCI repurchased 0.2 million shares
of its Class A common stock during the fourth quarter, bringing the
total shares repurchased in 2015 to 3.0 million.
2015 versus
Guidance
Our total revenue in 2015 was $979
million, above our guidance range of $920 -$970 million.
Our Adjusted EBITDA guidance was
$310 - $335 million for 2015, and at $330 million we were at the
high end of the range.
Capital expenditures for the year
totaled $176 million, slightly above guidance of $170 million.
2016
Guidance
Adjusted EBITDA Guidance
Adjusted EBITDA is expected to be between $295
million and $325 million in 2016 as compared to $330 million in
2015. In comparing 2015 to 2016, it is important to highlight
key differences.
-
GCI entered into new roaming and backhaul
agreements with its largest roaming partners that will result in
GCI receiving lower roaming payments in exchange for entering into
long-term agreements that provide GCI a high degree of visibility
of roaming payments for the next several years. For GAAP purposes,
associated roaming and backhaul revenues will be calculated based
on amortizing cumulative minimum cash payments evenly over the
contract life, which will result in a $30 million non-cash
reduction in 2016 GAAP revenues. Our Adjusted EBITDA guidance
adds back the non-cash impact on revenues. The year-over-year
cash impact of these agreements is a $25 million reduction in
EBITDA.
-
In connection with migrating billing platforms,
we will incur approximately $8 million of operating expenses in
2016, which will not be capitalized and will reduce Adjusted
EBITDA.
In total, these two changes represent a reduction of approximately
$33 million of Adjusted EBITDA. When adjusting for these impacts,
2016 mid-point Adjusted EBITDA guidance represents a four percent
increase year-over-year.
Revenue Guidance
Revenue is expected to be between
$930 million and $980 million in 2016. Of this amount, roaming and
backhaul revenues are expected to be between $70 million and $80
million compared to 2015 roaming and backhaul revenues of $129
million. It is important to note that the 2016 guidance on revenue
does not include $30 million of cash we will receive from our
roaming and backhaul partners in excess of our reported revenues.
This cash is included in our Adjusted EBITDA guidance.
Excluding the impact of the new
roaming and backhaul agreements, all other 2016 mid-point revenues
are expected to grow 4 percent year-over-year.
($ millions) |
2015 |
2016 |
% Change (Mid-Point) |
Revenues excluding Roaming and
Backhaul |
850 |
860-900 |
4% |
Reported Roaming and Backhaul |
129 |
70-80 |
-42% |
Total Reported Revenues |
979 |
930-980 |
-2% |
Add back non-cash reduction |
0 |
30 |
|
Total Reported Revenues and non-cash
reduction |
979 |
960-1,010 |
1% |
Capital Expenditure Guidance
Capital expenditures are expected
to be approximately $210 million, and capital expenditures net of
tower sale proceeds to be re-invested in 2016 are expected to be
approximately $150 million. The tower sale proceeds will be
used primarily to fund two projects. We will expand our network to
include a diverse fiber to the North Slope of Alaska. We will also
ring and expand our TERRA network to increase our rural networks
capacity and reliability. These multi-year projects are expected to
total $85 million with approximately $60 million being invested in
2016.
Use of Non-GAAP Measure
Adjusted EBITDA is presented
herein and is a non-GAAP measure. See our attached financials for a
reconciliation of this non-GAAP measure to the nearest GAAP
measure.
Conference Call
The Company will hold a conference
call to discuss the financial results on Thursday, March
3rd, at 2:00
p.m. (Eastern). To access the call, call the conference operator
between 1:45-2:00 p.m. (Eastern) at 844-850-0551 (International
callers should dial +1-412-902-4197) and identify your call as
"GCI".
In addition to dial-up access, GCI
will make available net conferencing. To access the call via net
conference, log on to gci.com and follow the instructions.
A replay of the call will be
available for 72-hours by dialing 877-344-7529, access code
10069357 (International callers should dial +1-412-317-0088).
Forward-Looking Statement Disclosure
The foregoing contains forward-looking statements regarding GCI's
expected results that are based on management's expectations as
well as on a number of assumptions concerning future events. Actual
results might differ materially from those projected in the
forward-looking statements due to uncertainties and other factors,
many of which are outside GCI's control. Additional information
concerning factors that could cause actual results to differ
materially from those in the forward-looking statements is
contained in GCI's cautionary statement sections of Forms 10-K and
10-Q filed with the Securities and Exchange Commission.
About GCI
GCI is the largest Alaska-based
and operated, integrated telecommunications provider, offering
wireless, voice, data, and video services statewide. Learn more
about GCI at www.gci.com.
Contacts:
Investors: Kyle Jones, 907.868.7105; kjones@gci.com
Media: David Morris, 907.265.5396, dmorris@gci.com
#
# #
Press Release Financials
12-31-2015
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: General Communication Inc via Globenewswire
HUG#1991002
Gci Liberty, Inc. (delisted) (NASDAQ:GNCMA)
Historical Stock Chart
From Jun 2024 to Jul 2024
Gci Liberty, Inc. (delisted) (NASDAQ:GNCMA)
Historical Stock Chart
From Jul 2023 to Jul 2024