Exhibit 99.1
Alaska Communications Reports Second Quarter 2015 Results
-Continued Industry Leading Revenue Growth, Posting 9.4 Percent Total Broadband Revenue Increase-
-On Track to Achieve 2015 Run Rate EBITDA Target-
-Significant New Customer Wins Drive Momentum-
ANCHORAGE, Alaska--(BUSINESS WIRE)--August 10, 2015--Alaska Communications Systems Group, Inc. (NASDAQ: ALSK) today reported financial results for the second quarter of 2015.
“Solid second quarter results tracked with our expectations, delivering good sequential top line growth and meeting targeted operational milestones all of which bode well for continued performance.
“In July, we posted a record breaking month of new sales activity with signed contracts representing annualized new revenues of $7.8 million. This incremental new revenue is expected to begin in the fourth quarter of this year giving further support to the momentum in Business and Wholesale revenue growth that makes us one of the fastest growing companies in our sector.
“We are also on track with our planned synergies related to the sale of our wireless operations and achieved significant cost reductions toward the back half of the quarter. We expect the financial benefits in the form of lower operating expense to be reflected in the third quarter as planned. With lower operating expense levels going forward and our continued top line performance, we reaffirm our run rate Adjusted EBITDA exiting 2015 guidance and are well poised to deliver shareholder value,” said President and CEO Anand Vadapalli.
Second Quarter 2015 Financial Highlights Compared to Second Quarter 2014
Top line performance was solid, as reflected by the following revenue categories.
- Total service and other:
- Revenue was $54.7 million. Compared to $53.4 million excluding the benefit of a $2.1 million release of revenue reserve, revenue grew 2.5 percent year over year.
- Total broadband revenue reached $19.0 million, up 9.4 percent from $17.3 million.
- Business and wholesale:
- Revenue grew to $29.9 million, up 7.7 percent from $27.7 million, led by continued strong broadband performance.
- Broadband revenues reached $12.4 million, up 12.1 percent from $11.1 million.
- Business broadband average revenue per user grew sequentially $12.88, or 6.4 percent, to $213.96.
- Business and wholesale comprised 54.6 percent of total service and other revenue.
- Consumer:
- Revenue was $10.1 million, down 3.1 percent from $10.4 million. The decrease, as expected, reflects general industry trends of the erosion of wireline connections and the company’s decision to discontinue non-profitable lower bandwidth speed products.
- Broadband revenues increased to $6.5 million, up 4.5 percent from $6.2 million.
- Consumer broadband average revenue per user grew sequentially $2.30, or 4.0 percent, to $60.37.
- Consumer comprised 18.5 percent of total service and other revenue.
Impact of Cost Savings and Synergies Related to the Sale of Wireless Business
- The sale of the wireless business closed on Feb. 2, 2015, and obligations under a transition services agreement were completed on Apr. 17, 2015. Thereafter, Alaska Communications accelerated its plan to achieve cost savings related to the wind down of the wireless business. These savings are from avoided costs associated with the wireless business as well as additional synergies derived from being a more focused Broadband and IT Managed services company. All the major avoided costs milestones have been achieved, but only partially benefited this quarter with the full benefit expected in the third quarter. Synergies will continue to be achieved throughout the rest of 2015.
- Adjusted EBITDA for the second quarter was $11.1 million and is expected to improve from the aforementioned actions as well as from continued top line performance. The company continues to target a run rate Adjusted EBITDA of $54 million to $56 million exiting 2015.
June 30, 2015 Balance Sheet Highlights
- Cash balances stand at $36.8 million, compared to $31.7 million at Dec. 31, 2014. During the first half of 2015, $7.0 million of wireless wind down costs associated with severance and store buyouts impacted cash as planned. For the second half of 2015, wind down costs are projected to be substantially lower.
- Total debt was $192.4 million, compared to $436.4 million at Dec. 31, 2014.
“In addition to positioning the business for future strong performance, we have been diligently working to refinance the current balance of $80.4 million on the term loan facility that matures late next year. We are pleased we have secured commitment letters from lenders and look forward to finalizing the credit agreements to bring this process to a close,” said CFO Wayne Graham.
2015 Guidance
The company’s 2015 guidance is confirmed as follows:
- Total service and other revenue of approximately $220 million
- Run rate Adjusted EBITDA exiting 2015 of $54 million to $56 million
- Net capital expenditures range of $34 million to $36 million, inclusive of $16 million of success based capital1
- Net debt at year end of approximately $159 million
1. The purchase of the North Slope Network is not included in capital spending guidance. Schedule 5 presents the impact of this investment on overall capital spending results for the year.
Conference Call
The company will host a conference call and live webcast on Monday, August 10, 2015 at 2:00 p.m. Eastern Daylight Time to discuss the results. The live webcast will include a slide presentation. Parties in the U.S. and Canada can access the call at 1-888-542-1137 and enter pass code 148513. All other parties can access the call at 1-719-955-1569.
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 90 days. A replay of the call will be available two hours after the call and will run until September 11, 2015, at 5:00 p.m. EDT. To hear the replay, parties in the U.S. and Canada can call 1-888-203-1112 and enter pass code 5979520. All other parties can call 1-719-457-0820 and enter pass code 5979520.
About Alaska Communications
Alaska Communications (NASDAQ: ALSK) is the leading provider of advanced broadband and IT managed 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, in particular with regards to our liquidity and capital resources, we have disclosed certain non-GAAP financial information such as Adjusted EBITDA, and Free Cash Flow, which management utilizes to assess performance and believes provides useful information to investors. The definition of these non-GAAP measures are on Schedules 4 and 5 to this press release. Adjusted EBITDA, and Free Cash Flow are non-GAAP measures and should not be considered a substitute for 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 on our website at http://www.alsk.com in the investment data section. Other companies may not calculate non-GAAP measures in the same manner as ACS.
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 ACS’ control. Such factors include, without limitation, our ability to realize cost savings from the sale of our wireless operations, Universal Service Fund changes, adverse economic conditions, adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing, including the refinancing of our senior credit facility maturing in October 2016, and 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, and benefits 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, and changes in accounting policies, which could result in an impact on earnings. For further information regarding risks and uncertainties associated with ACS’ 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 | Six Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||
Operating revenues: | ||||||||||||||||||||||||
Operating revenues, non-affiliates | $ | 55,665 | $ | 78,803 | $ | 120,876 | $ | 155,348 | ||||||||||||||||
Operating revenues, affiliates | - | 1,755 | 575 | 3,541 | ||||||||||||||||||||
Total operating revenues | 55,665 | 80,558 | 121,451 | 158,889 | ||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Cost of services and sales, non-affiliates | 30,078 | 29,800 | 56,383 | 59,858 | ||||||||||||||||||||
Cost of services and sales, affiliates | - | 15,001 | 4,961 | 29,761 | ||||||||||||||||||||
Selling, general & administrative | 22,611 | 25,314 | 50,595 | 49,909 | ||||||||||||||||||||
Depreciation and amortization | 8,075 | 8,475 | 17,016 | 17,265 | ||||||||||||||||||||
(Gain) loss on disposal of assets, net | (724 | ) | 410 | (39,386 | ) | 811 | ||||||||||||||||||
Earnings from equity method investments | - | (9,168 | ) | (3,056 | ) | (17,691 | ) | |||||||||||||||||
Total operating expenses | 60,040 | 69,832 | 86,513 | 139,913 | ||||||||||||||||||||
Operating (loss) income | (4,375 | ) | 10,726 | 34,938 | 18,976 | |||||||||||||||||||
Other income and expense: | ||||||||||||||||||||||||
Interest expense | (4,257 | ) | (8,672 | ) | (14,304 | ) | (17,529 | ) | ||||||||||||||||
Interest income | 17 | 6 | 42 | 14 | ||||||||||||||||||||
Total other income and expense | (4,240 | ) | (8,666 | ) | (14,262 | ) | (17,515 | ) | ||||||||||||||||
(Loss) income before income tax benefit (expense) | (8,615 | ) | 2,060 | 20,676 | 1,461 | |||||||||||||||||||
Income tax benefit (expense) | 3,755 | (975 | ) | (9,319 | ) | (761 | ) | |||||||||||||||||
Net (loss) income | (4,860 | ) | 1,085 | 11,357 | 700 | |||||||||||||||||||
Less net loss attributable to noncontrolling interest | (19 | ) | - | (19 | ) | - | ||||||||||||||||||
Net (loss) income attributable to ACS | $ | (4,841 | ) | $ | 1,085 | $ | 11,376 | $ | 700 | |||||||||||||||
Net (loss) income per share: | ||||||||||||||||||||||||
Basic | $ | (0.10 | ) | $ | 0.02 | $ | 0.23 | $ | 0.01 | |||||||||||||||
Diluted | $ | (0.10 | ) | $ | 0.02 | $ | 0.22 | $ | 0.01 | |||||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||||||
Basic | 50,252 | 49,377 | 50,085 | 49,146 | ||||||||||||||||||||
Diluted | 50,252 | 49,910 | 51,082 | 49,649 | ||||||||||||||||||||
Schedule 2 | ||||||||||||
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||
(Unaudited, In Thousands Except Per Share Amounts) | ||||||||||||
June 30, | December 31, | |||||||||||
Assets | 2015 | 2014 | ||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 36,831 | $ | 31,709 | ||||||||
Restricted cash | 9,467 | 467 | ||||||||||
Accounts receivable, net of allowance of $2,240 and $2,338 | 28,202 | 30,900 | ||||||||||
Materials and supplies | 4,727 | 4,321 | ||||||||||
Prepayments and other current assets | 7,309 | 6,575 | ||||||||||
Deferred income taxes | 13,798 | 104,245 | ||||||||||
Current assets held-for-sale | - | 9,565 | ||||||||||
Total current assets | 100,334 | 187,782 | ||||||||||
Property, plant and equipment | 1,322,906 | 1,333,134 | ||||||||||
Less: accumulated depreciation and amortization | (961,829 | ) | (976,401 | ) | ||||||||
Property, plant and equipment, net | 361,077 | 356,733 | ||||||||||
Debt issuance costs | 2,092 | 4,469 | ||||||||||
Deferred income taxes | 11,360 | - | ||||||||||
Equity method investments | - | 252,067 | ||||||||||
Non-current assets held-for-sale | 22 | 14,664 | ||||||||||
Other assets | 1,854 | 301 | ||||||||||
Total assets | $ | 476,739 | $ | 816,016 | ||||||||
Liabilities and Stockholders' Equity (Deficit) | ||||||||||||
Current liabilities: | ||||||||||||
Current portion of long-term obligations | $ | 4,297 | $ | 15,521 | ||||||||
Accounts payable, accrued and other current liabilities, non-affiliates | 64,979 | 54,373 | ||||||||||
Accounts payable, accrued and other current liabilities, affiliates, net * | - | 4,853 | ||||||||||
Advance billings and customer deposits | 4,734 | 4,490 | ||||||||||
Current liabilities held-for-sale | - | 18,728 | ||||||||||
Total current liabilities | 74,010 | 97,965 | ||||||||||
Long-term obligations, net of current portion | 188,100 | 418,447 | ||||||||||
Deferred income taxes | - | 81,267 | ||||||||||
Other long-term liabilities, net of current portion | 63,489 | 24,370 | ||||||||||
Non-current liabilities held-for-sale | - | 2,107 | ||||||||||
Deferred AWN capacity revenue, net of current portion | - | 56,734 | ||||||||||
Total liabilities | 325,599 | 680,890 | ||||||||||
Commitments and contingencies | ||||||||||||
Stockholders' equity (deficit): | ||||||||||||
Common stock, $.01 par value; 145,000 authorized | 504 | 497 | ||||||||||
Additional paid in capital | 156,106 | 154,368 | ||||||||||
Accumulated deficit | (3,212 | ) | (14,588 | ) | ||||||||
Accumulated other comprehensive loss | (3,411 | ) | (5,151 | ) | ||||||||
Total ACS stockholders' equity | 149,987 | 135,126 | ||||||||||
Noncontrolling interest | 1,153 | - | ||||||||||
Total stockholders' equity | 151,140 | 135,126 | ||||||||||
Total liabilities and stockholders' equity | $ | 476,739 | $ | 816,016 | ||||||||
* Affiliate balances are related to activity with our equity method investment in AWN. | ||||||||||||
On February 2, 2015 we sold our interest in AWN. |
Schedule 3 | ||||||||||||||||||||||||
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||||||||||||||||||
(Unaudited, In Thousands) | ||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||||||||||
Net (loss) income | $ | (4,860 | ) | $ | 1,085 | $ | 11,357 | $ | 700 | |||||||||||||||
Adjustments to reconcile net (loss) income to net cash (used) provided by operating activities: | ||||||||||||||||||||||||
Depreciation and amortization | 8,075 | 8,475 | 17,016 | 17,265 | ||||||||||||||||||||
Gain on wireless sale | (1,421 | ) | - | (41,140 | ) | - | ||||||||||||||||||
Loss on the disposal of assets, net | 697 | 410 | 1,754 | 811 | ||||||||||||||||||||
Unrealized gain on ineffective hedge | (275 | ) | - | (542 | ) | - | ||||||||||||||||||
Amortization of debt issuance costs and debt discount | 990 | 1,268 | 4,671 | 2,666 | ||||||||||||||||||||
Amortization of ineffective hedge | 10 | 307 | 1,970 | 914 | ||||||||||||||||||||
Amortization of deferred capacity revenue | (694 | ) | (1,009 | ) | (1,469 | ) | (2,010 | ) | ||||||||||||||||
Stock-based compensation | 795 | 540 | 1,279 | 1,193 | ||||||||||||||||||||
Deferred income tax (benefit) expense | (879 | ) | 974 | (3,394 | ) | 747 | ||||||||||||||||||
Provision for uncollectible accounts | (204 | ) | 910 | 1,319 | 1,475 | |||||||||||||||||||
Cash distribution from equity method investments | - | 9,168 | 3,056 | 17,691 | ||||||||||||||||||||
Earnings from equity method investments | - | (9,168 | ) | (3,056 | ) | (17,691 | ) | |||||||||||||||||
Other non-cash expense, net | 1,016 | 40 | 543 | 207 | ||||||||||||||||||||
Income taxes payable | (5,574 | ) | - | 8,038 | - | |||||||||||||||||||
Changes in operating assets and liabilities | (7,303 | ) | (6,773 | ) | (9,648 | ) | (3,915 | ) | ||||||||||||||||
Net cash (used) provided by operating activities | (9,627 | ) | 6,227 | (8,246 | ) | 20,053 | ||||||||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||||||
Capital expenditures | (20,233 | ) | (10,710 | ) | (26,133 | ) | (17,874 | ) | ||||||||||||||||
Capitalized interest | (297 | ) | (624 | ) | (788 | ) | (1,362 | ) | ||||||||||||||||
Change in unsettled capital expenditures | 5,117 | 2,772 | 674 | (4,414 | ) | |||||||||||||||||||
Proceeds on sale of assets | 3,126 | - | 3,126 | - | ||||||||||||||||||||
Cash received in acquisition of business | - | - | - | 68 | ||||||||||||||||||||
Proceeds on wireless sale | 1,680 | - | 278,068 | - | ||||||||||||||||||||
Return of capital from equity investment | - | 3,332 | 1,875 | 7,342 | ||||||||||||||||||||
Net cash (used) provided by investing activities | (10,607 | ) | (5,230 | ) | 256,822 | (16,240 | ) | |||||||||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||||||
Repayments of long-term debt | (1,119 | ) | (5,388 | ) | (242,837 | ) | (18,742 | ) | ||||||||||||||||
Debt issuance costs | (15 | ) | - | (1,042 | ) | - | ||||||||||||||||||
Cash paid in acquisition of business | - | - | (291 | ) | - | |||||||||||||||||||
Cash proceeds from non-controlling interest | 250 | - | 250 | - | ||||||||||||||||||||
Payment of withholding taxes on stock-based compensation | (3 | ) | (2 | ) | (402 | ) | (583 | ) | ||||||||||||||||
Excess tax benefit from share-based payments | (10 | ) | - | 733 | - | |||||||||||||||||||
Proceeds from issuance of common stock | 135 | 132 | 135 | 132 | ||||||||||||||||||||
Net cash used by financing activities | (762 | ) | (5,258 | ) | (243,454 | ) | (19,193 | ) | ||||||||||||||||
Change in cash and cash equivalents | (20,996 | ) | (4,261 | ) | 5,122 | (15,380 | ) | |||||||||||||||||
Cash and cash equivalents, beginning of period | 57,827 | 31,920 | 31,709 | 43,039 | ||||||||||||||||||||
Cash and cash equivalents, end of period | $ | 36,831 | $ | 27,659 | $ | 36,831 | $ | 27,659 | ||||||||||||||||
Supplemental Cash Flow Data: | ||||||||||||||||||||||||
Interest paid | $ | 5,557 | $ | 9,466 | $ | 8,941 | $ | 16,028 | ||||||||||||||||
Income taxes paid | $ | 1,965 | $ | 1 | $ | 3,942 | $ | 14 | ||||||||||||||||
Schedule 4 | ||||||||||||||||||||||||
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||||||||||||||||||
ADJUSTED EBITDA | ||||||||||||||||||||||||
(Unaudited, In Thousands) | ||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||
Net (loss) income | $ | (4,860 | ) | $ | 1,085 | $ | 11,357 | $ | 700 | |||||||||||||||
Add (subtract): | ||||||||||||||||||||||||
Interest expense | 4,257 | 8,672 | 14,304 | 17,529 | ||||||||||||||||||||
Interest income | (17 | ) | (6 | ) | (42 | ) | (14 | ) | ||||||||||||||||
Depreciation and amortization | 8,075 | 8,475 | 17,016 | 17,265 | ||||||||||||||||||||
Loss on disposal of assets, net | 697 | 410 | 1,754 | 811 | ||||||||||||||||||||
Earnings from equity method investment in TekMate | - | - | - | (12 | ) | |||||||||||||||||||
Earnings from equity method investment in AWN | - | (9,168 | ) | (3,056 | ) | (17,679 | ) | |||||||||||||||||
Gain on sale of assets | (1,421 | ) | - | (41,140 | ) | - | ||||||||||||||||||
AWN distributions received/receivable, net | - | 12,500 | 765 | 25,000 | ||||||||||||||||||||
AWN distributions received for the prior period | - | (4,167 | ) | - | (4,167 | ) | ||||||||||||||||||
AWN distributions receivable within 12 days | - | 4,167 | - | 4,167 | ||||||||||||||||||||
Income tax (benefit) expense | (3,755 | ) | 975 | 9,319 | 761 | |||||||||||||||||||
Stock-based compensation | 795 | 540 | 1,279 | 1,193 | ||||||||||||||||||||
Long-term cash incentives | 308 | 301 | 642 | 985 | ||||||||||||||||||||
Net loss attributable to noncontrolling interest | 19 | - | 19 | - | ||||||||||||||||||||
Wireless sale transaction-related and wind down costs | 6,962 | 40 | 11,308 | 212 | ||||||||||||||||||||
Adjusted EBITDA | $ | 11,060 | $ | 23,824 | $ | 23,525 | $ | 46,751 | ||||||||||||||||
|
NonGAAP Measures:
In an effort to provide investors with additional information regarding the Company’s results as determined by GAAP, the Company also discloses certain non-GAAP information which management utilizes to assess recurring performance and believes provides useful information to investors regarding baseline operating results.
The Company has disclosed Adjusted EBITDA as net income before interest, depreciation and amortization, gain or loss on asset purchases or disposals, earnings on equity method investments, gain on the sale of our wireless operations, provisions for taxes, wireless transaction-related costs, loss attributable to noncontrolling interest, stock-based compensation, and expenses under the company’s long term cash incentive plan (“LTCI”). LTCI expenses are considered part of an interim compensation structure to mitigate the dilutive impact of additional share issuances for executive compensation. Distributions from AWN are included in Adjusted EBITDA.
Schedule 5 | ||||||||||||||||||||||||
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||||||||||||||||||
FREE CASH FLOW | ||||||||||||||||||||||||
(Unaudited, In Thousands) | ||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||
Adjusted EBITDA | $ | 11,060 | $ | 23,824 | $ | 23,525 | $ | 46,751 | ||||||||||||||||
Less: | ||||||||||||||||||||||||
Capital expenditures | (9,233 | ) | (10,710 | ) | (15,133 | ) | (17,874 | ) | ||||||||||||||||
Milestone billings for fiber build project for a carrier customer | - | - | 2,500 | - | ||||||||||||||||||||
Net capital expenditures | (9,233 | ) | (10,710 | ) | (12,633 | ) | (17,874 | ) | ||||||||||||||||
Purchase of North Slope fiber network | ||||||||||||||||||||||||
Acquisition price | (11,000 | ) | - | (11,000 | ) | - | ||||||||||||||||||
Less: 50% due in 2016 | 5,500 | - | 5,500 | - | ||||||||||||||||||||
Less: proceeds on sale of fiber to JV partner | 2,650 | - | 2,650 | - | ||||||||||||||||||||
Less: other cash proceeds | 400 | - | 400 | - | ||||||||||||||||||||
Net North Slope purchase | (2,450 | ) | - | (2,450 | ) | - | ||||||||||||||||||
Amortization of GCI/AWN capacity revenue | (694 | ) | (1,009 | ) | (1,469 | ) | (2,010 | ) | ||||||||||||||||
Cash interest expense | (5,557 | ) | (9,466 | ) | (8,941 | ) | (16,028 | ) | ||||||||||||||||
Free cash flow | $ | (6,874 | ) | $ | 2,639 | $ | (1,968 | ) | $ | 10,839 | ||||||||||||||
NonGAAP Measures:
In an effort to provide investors with additional information regarding the Company’s results as determined by GAAP, the Company also discloses certain non-GAAP information which management utilizes to assess recurring performance and believes provides useful information to investors regarding baseline operating results.
Free cash flow (“FCF”) is defined as Adjusted EBITDA, less recurring operating cash requirements which include capital expenditures, net of cash received for a fiber build for carrier customer, less cash interest expense, significant non-cash revenue associated with our interconnection agreement with AWN and GCI, and in Q2 2015 the purchase of the North Slope fiber network.
ACS continues to have net operating losses and is not a significant taxpayer on ordinary income. Income taxes paid in 2015 are related to the Wireless retail sale and are not included in free cash flow.
Option two | Schedule 6 | |||||||||||||||||||||||
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||||||||||||||||||
REVENUE GROWTH | ||||||||||||||||||||||||
(Unaudited, In Thousands) | ||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
Service revenue: | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||
Business and wholesale customers | ||||||||||||||||||||||||
Voice | $ | 5,552 | $ | 5,671 | $ | 10,982 | $ | 11,282 | ||||||||||||||||
Broadband | 12,431 | 11,085 | 24,063 | 21,696 | ||||||||||||||||||||
IT Services | 810 | 945 | 1,539 | 1,533 | ||||||||||||||||||||
Other | 1,901 | 1,775 | 3,600 | 3,456 | ||||||||||||||||||||
Wholesale | 9,174 | 8,266 | 18,116 | 16,179 | ||||||||||||||||||||
Business and wholesale service revenue | 29,868 | 27,742 | 58,300 | 54,146 | ||||||||||||||||||||
Consumer customers | ||||||||||||||||||||||||
Voice | 3,342 | 3,837 | 6,770 | 7,713 | ||||||||||||||||||||
Broadband | 6,523 | 6,244 | 13,022 | 12,105 | ||||||||||||||||||||
Other | 247 | 359 | 536 | 782 | ||||||||||||||||||||
Consumer service revenue | 10,112 | 10,440 | 20,328 | 20,600 | ||||||||||||||||||||
Total service revenue | 39,980 | 38,182 | 78,628 | 74,746 | ||||||||||||||||||||
Growth in service revenue | 4.7 | % | 5.2 | % | ||||||||||||||||||||
Growth in broadband service revenue | 9.4 | % | 9.7 | % | ||||||||||||||||||||
Other revenue: | ||||||||||||||||||||||||
Equipment sales | 1,333 | 1,274 | 2,910 | 2,111 | ||||||||||||||||||||
Access | 8,471 | 8,968 | 17,057 | 17,961 | ||||||||||||||||||||
High cost support | 4,920 | 7,075 | 9,841 | 13,349 | ||||||||||||||||||||
Total service and other revenue | 54,704 | 55,499 | 108,436 | 108,167 | ||||||||||||||||||||
Growth in service and other revenue | -1.4 | % | 0.2 | % | ||||||||||||||||||||
Growth excluding equipment sales | -1.6 | % | -0.5 | % | ||||||||||||||||||||
Wireless and AWN related revenue: | ||||||||||||||||||||||||
Service revenue, equipment sales and other | 242 | 19,694 | 6,300 | 39,171 | ||||||||||||||||||||
Transition services | 719 | - | 4,769 | - | ||||||||||||||||||||
CETC | - | 4,516 | 1,654 | 9,861 | ||||||||||||||||||||
Amortization of deferred AWN capacity revenue | - | 849 | 292 | 1,690 | ||||||||||||||||||||
Total wireless & AWN related revenue | 961 | 25,059 | 13,015 | 50,722 | ||||||||||||||||||||
Total revenue | $ | 55,665 | $ | 80,558 | $ | 121,451 | $ | 158,889 | ||||||||||||||||
Adjusted for prior year access reserve releases: | ||||||||||||||||||||||||
Total service and other revenue | 54,704 | 55,499 | 108,436 | 108,167 | ||||||||||||||||||||
Prior year access reserve releases | - | (2,152 | ) | - | (3,502 | ) | ||||||||||||||||||
Adjusted total service and other revenue | 54,704 | 53,347 | 108,436 | 104,665 | ||||||||||||||||||||
Growth in service and other revenue | 2.5 | % | 3.6 | % | ||||||||||||||||||||
Schedule 7 | ||||||||||||||||||
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||||||||||||
KEY OPERATING STATISTICS | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
June 30, | March 31, | June 30, | ||||||||||||||||
2015 | 2015 | 2014 | ||||||||||||||||
Voice: | ||||||||||||||||||
Consumer access lines | 40,888 | 42,492 | 46,740 | |||||||||||||||
Business access lines | 78,544 | 78,734 | 80,172 | |||||||||||||||
Voice ARPU consumer | $ | 26.73 | $ | 26.49 | $ | 26.95 | ||||||||||||
Voice ARPU business | $ | 23.53 | $ | 22.93 | $ | 23.63 | ||||||||||||
Broadband: | ||||||||||||||||||
Consumer connections | 34,895 | 36,612 | 39,022 | |||||||||||||||
Business connections (2) | 19,412 | 19,270 | 19,077 | |||||||||||||||
ARPU consumer | $ | 60.37 | $ | 58.07 | $ | 52.51 | ||||||||||||
ARPU business (1) (2) | $ | 213.96 | $ | 201.08 | $ | 194.96 | ||||||||||||
Churn: | ||||||||||||||||||
Voice connections | 1.1 | % | 1.0 | % | 1.9 | % | ||||||||||||
Broadband connections | 2.6 | % | 2.0 | % | 2.4 | % | ||||||||||||
|
(1) | Business broadband ARPU was restated to reflect the movement of IT services revenue into a separate category. | ||
(2) | How we calculate broadband connections has changed to exclude certain internal use circuits. Historical amounts have been restated to reflect appropriate comparisons period over period. | ||
Schedule 8 | ||||||||||||
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||||||
Long Term Debt | ||||||||||||
(Unaudited, In Thousands) | ||||||||||||
June 30, | December 31, | |||||||||||
2015 | 2014 | |||||||||||
2010 senior credit facility term loan due 2016 | $ | 80,355 | $ | 322,700 | ||||||||
Debt discount - 2010 senior credit facility term loan due 2016 | (972 | ) | (1,014 | ) | ||||||||
6.25% convertible notes due 2018 | 114,000 | 114,000 | ||||||||||
Debt discount - 6.25% convertible notes due 2018 | (6,172 | ) | (7,242 | ) | ||||||||
Capital leases and other long-term obligations | 5,186 | 5,524 | ||||||||||
192,397 | 433,968 | |||||||||||
Less current portion | (4,297 | ) | (15,521 | ) | ||||||||
Long-term obligations, net of current portion | $ | 188,100 | $ | 418,447 | ||||||||
CONTACT:
Alaska Communications Systems Group, Inc.
Investor Contact:
Tiffany Dunn, 907-297-3103
Manager, Board and Investor Relations
investors@acsalaska.com
or
Media Contact:
Hannah Blankenship, 907-564-1326
Associate Manager, Corporate Communications
Hannah.Blankenship@acsalaska.com