Exhibit 99.1
Alaska Communications Systems Reports First Quarter 2007 Results
- Revenue Increased 9.6% to $90.6 Million, Up from $82.6 Million
First Quarter 2006 -
- Cash Provided by Operating Activities Increased 82.7% to $27.8
Million -
- EBITDA Increased 14.9% to $32.5 Million, Up from $28.3 Million
First Quarter 2006 -
- Increases 2007 Annual Guidance -
- Provides Insight into Strategic Investment -
ANCHORAGE, Alaska--(BUSINESS WIRE)--April 26, 2007--Alaska Communications
Systems Group, Inc. ("ACS") (NASDAQ:ALSK) today reported financial results for
its first quarter ended March 31, 2007.
"Our market position, strong business fundamentals and track record of
execution continue to contribute to superior financial performance, growing cash
flows and a strengthened balance sheet," said Liane Pelletier, ACS president,
chief executive officer and chair. "First quarter performance delivered
year-over-year revenue growth of 10 percent and EBITDA growth of 15 percent
fueled by our wireless and data offerings. Given first quarter performance, we
are increasing annual guidance today for revenue, EBITDA and wireless capital
expenditures."
Financial Highlights: First Quarter 2007 Compared to First Quarter 2006
-- Revenues increased 9.6 percent to $90.6 million, compared to $82.6
million in the prior year quarter.
-- Operating income increased 63.7 percent to $14.6 million, compared to
$8.9 million in the prior year quarter.
-- Net income was $7.6 million, or $0.17 per share (diluted). In the
first quarter 2006, the Company incurred a net loss of $8.4 million,
or $0.20 per share, of which $9.7 million was attributable to loss on
extinguishment of debt.
-- Net cash provided by operations increased 82.7 percent to $27.8
million, compared to $15.2 million in the prior year quarter.
-- EBITDA increased 14.9 percent to $32.5 million, compared to $28.3
million in the prior year quarter. First quarter 2007 EBITDA benefited
from the final out-of-period CETC receipt of $700,000.
-- Cash, restricted cash and short-term investments increased to $37.8
million, compared to $25.1 million in the prior year quarter.
-- Net leverage ratio declined to 3.2 times EBITDA, compared to 3.7 times
in the prior year quarter.
David Wilson, ACS senior vice president and chief financial officer, said,
"Wireless continues to drive significant top and bottom line expansion; wireless
revenue grew 29.5 percent over the prior year with subscribers and average
revenue per user (ARPU) growing by 15.4 percent and 5.8 percent, respectively,
and foreign roaming revenue increasing 74.7 percent to $3.2 million. In addition
to strong wireless revenue performance, wireline revenue increased marginally to
$58.8 million from $58.1 million in the prior year quarter."
"The strength of our revenue performance, coupled with stringent cost
containment driven by process improvement, delivered exceptional cash flow
performance. Net cash provided by operating activities increased to $27.8
million from $15.2 million in the prior year quarter, which included $8.9
million in debt redemption charges and accrued interest settlements. After
giving effect to these debt settlement cash outflows, cash from operations
increased over 15 percent," added Wilson.
Metric Highlights: First Quarter 2007 Compared to Fourth Quarter 2006
-- Increased the total number of retail customer relationships across all
product lines by approximately 4,300 to over 450,000.
-- Increased wireless subscribers by 2.6 percent, or over 3,500, bringing
the total to approximately 137,500.
-- Improved overall average wireless monthly churn to 1.4 percent
compared to 1.8 percent in the prior quarter. Prior period churn has
been restated to negate the gross up of installs and disconnects that
was caused by certain account changes.
-- Increased wireless ARPU, now $60.60, up from $60.01 in Q4, inclusive
of CETC revenue of $10.26 and $9.85, respectively.
-- Increased long distance subscribers by over 1,000 to approximately
65,000 customers.
-- Retail local access lines declined by 0.5 percent to 194,000 while DSL
lines increased 3.1 percent to 45,400 lines. DSL line gains were
almost 1,400, exceeding retail local access line losses of less than
1,000.
-- Recorded approximately 245,900 total local access lines. Total local
access lines decreased by approximately 6,800 or 2.7 percent, driven
by wholesale access lines leaving the network.
2007 Business Outlook
For the full-year 2007 ACS is increasing its revenue, EBITDA and wireless
growth capital expenditure guidance. Revenues are now expected to be in the
range of $360 million to $370 million versus prior guidance of $350 million to
$360 million; EBITDA to be in the range of $120 million to $124 million versus
prior guidance of $118 million to $122 million; and capital expenditures are
expected to be approximately $46 million versus prior guidance of approximately
$42 million. ACS is reaffirming its maintenance capital expenditure guidance at
approximately $37 million and the increase in guidance is solely attributable to
wireless, primarily related to customer-driven wireless footprint expansion, and
is funded by excess cash it expects to generate in 2007. ACS is reaffirming its
cash interest expense guidance which is expected to be approximately $27
million. The guidance presented is exclusive of ACS' strategic investment.
Strategic Investment
Pelletier stated, "Building on the company's track record of extracting
profitable growth from the Alaska market, ACS is looking to extend and enhance
its proven business model with a strategic investment in a fiber facility
between Alaska and the Pacific Northwest, positioning ACS to more effectively
compete for an estimated $200 million in existing carrier, enterprise and
government demand; serve burgeoning broadband growth; and benefit from favorable
macroeconomic trends in Alaska. We believe this investment would allow ACS to
capture the full value of its wireline and wireless Alaska infrastructure and
enable ACS to continue to deliver best-in-class growth. ACS is completing a very
detailed feasibility study and project plan for the fiber and we look forward to
providing additional insight on today's conference call including estimates of
an up front investment cost of $75 million to $90 million; annual cash costs,
inclusive of financing costs, of $10 million to $12 million; and a commercial
launch date of early 2009."
Wilson added, "We are well positioned from a liquidity standpoint, exiting
the quarter with $37.8 million in cash and restricted cash. We also have
adequate debt capacity to finance our strategic investment having reduced our
net leverage ratio by over a turn since year-end 2004 to 3.2 times. ACS remains
committed to its current dividend and management believes the strategic
investment can further expand future cash flow per share."
Conference Call
The company will host a conference call and live webcast today at 5:00 p.m.
Eastern Time to discuss first quarter results. For parties in the United States
and Canada, call 800-257-6566 to access the earnings call. Parties outside the
United States and Canada can access the call at 303-275-2170.
The live webcast of the conference call is accessible from the "Events
Calendar" section of the company's website (www.alsk.com). The webcast will be
archived on the ACS website. A telephonic replay of the conference call will
also be available two hours after the call and will run until April 30, 2007 at
midnight ET. To hear the replay, parties in the United States and Canada should
call 800-405-2236 and enter pass code 11088068. Parties outside the United
States and Canada should call 303-590-3000 and enter pass code 11088068.
About Alaska Communications Systems
ACS is the leading integrated communications provider in Alaska, offering
local telephone service, wireless, long distance, data, and Internet services to
business and residential customers throughout Alaska. More information can be
found on the company's website at www.acsalaska.com or at its investor site at
www.alsk.com.
Forward-Looking EBITDA Guidance
This press release includes information related to management's estimate of
EBITDA for the year ending December 31, 2007. EBITDA, as defined by the company,
may not be similar to EBITDA measures used by other companies and is not a
measurement under generally accepted accounting principles (GAAP). Management
believes that EBITDA provides useful information to investors about the
company's performance because it eliminates the effects of period-to-period
changes in costs associated with capital investments, interest and stock-based
compensation expense that are not directly attributable to the underlying
performance of the company's business operations. Management believes the most
directly comparable GAAP measure would be "Net cash provided by operating
activities." Due to the difficulty in forecasting and quantifying the amounts
that would be required to be included in this comparable GAAP measure, the
company is not providing an estimate of year-end net cash provided by operating
activities at this time.
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 are, without limitation, whether the company
undertakes the strategic investment described above as well as the company's
ability to complete, manage, integrate, market, maintain, and attract sufficient
customers to the infrastructure subject to the investment, and the products and
services it may derive therefrom. The company cannot assure you that the
strategic investment, if made, will generate sufficient revenue at acceptable
cost. Other factors are, without limitation, fluctuations in wireless revenue,
including roaming revenue; changes in company's relationships with its roaming
partners; increased competition, including wireline facilities-based
competition; changes in capital expenditures, strategic investments, or other
factors affecting the company's ability to generate sufficient earnings and cash
flows to continue to make dividend payments to its stockholders; changes in
revenue from Universal Service Funds; regulatory limitations on the company's
ability to change its pricing or bundle its communications services or other
public policy changes; the continued availability of financing necessary to
support future business; changes in accounting policies or practices; changes in
the demand for the company's products and services, retail and wholesale; rapid
technological developments in the telecommunications industry; changes in
interest rates or other general national, regional or local economic conditions,
including changes in tourism in Alaska. 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 for the year ended December 31,
2006. 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.
All information in this release is as of April 26, 2007. The company
undertakes no duty to update any forward-looking statement to conform the
statement to actual results or changes in the company's expectations.
Schedule 1
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in Thousands, Except per Share Amounts)
Three Months Ended
March 31,
-----------------------
2007 2006
-----------------------
Operating revenues:
Wireline $ 58,831 $ 58,134
Wireless 31,742 24,508
-----------------------
Total operating revenues 90,573 82,642
Operating expenses:
Wireline 43,849 42,105
Wireless 15,860 13,814
Depreciation and amortization 16,288 17,097
Loss on disposal of assets 3 722
-----------------------
Total operating expenses 76,000 73,738
Operating income 14,573 8,904
Other income and expense:
Interest expense (7,610) (7,974)
Loss on extinguishment of debt - (9,650)
Interest income 529 392
Other 80 (44)
-----------------------
Total other income and expense (7,001) (17,276)
-----------------------
Net income (loss) before income tax expense 7,572 (8,372)
Income tax expense (7) -
-----------------------
Net income (loss) $ 7,565 $ (8,372)
=======================
Net income (loss) per share:
Basic $ 0.18 $ (0.20)
=======================
Diluted $ 0.17 $ (0.20)
=======================
Weighted average shares outstanding:
Basic 42,384 41,790
-----------------------
Diluted 43,876 41,790
-----------------------
Schedule 2
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, In Thousands Except Per Share Amounts)
March 31, December 31,
Assets 2007 2006
-------------------------
Current assets:
Cash and cash equivalents $ 35,686 $ 36,860
Restricted cash 2,081 1,700
Accounts receivable-trade, net of allowance
of $7,507 and $7,434 36,071 39,801
Materials and supplies 9,325 7,977
Prepayments and other current assets 3,456 3,514
-------------------------
Total current assets 86,619 89,852
Property, plant and equipment 1,172,904 1,164,450
Less: accumulated depreciation and
amortization 782,163 767,907
-------------------------
Property, plant and equipment, net 390,741 396,543
Goodwill 38,403 38,403
Intangible Assets 21,604 21,604
Debt issuance costs 8,968 9,437
Deferred charges and other assets 4,698 6,482
-------------------------
Total assets $ 551,033 $ 562,321
=========================
Liabilities and Stockholders' Equity
(Deficit)
Current liabilities:
Current portion of long-term obligations $ 1,013 $ 1,025
Accounts payable-affiliate - 2,942
Accounts payable, accrued and other current
liabilities 56,656 62,307
Advance billings and customer deposits 9,703 10,667
-------------------------
Total current liabilities 67,372 76,941
Long-term obligations, net of current portion 436,837 437,188
Other deferred credits and long-term
liabilities 75,770 72,881
-------------------------
Total liabilities 579,979 587,010
-------------------------
Stockholders' equity (deficit):
Common stock, $.01 par value; 145,000
authorized 427 423
Paid in capital in excess of par value 278,514 288,055
Accumulated deficit (307,168) (314,733)
Accumulated other comprehensive income
(loss) (719) 1,566
-------------------------
Total stockholders' equity (deficit) (28,946) (24,689)
-------------------------
Commitments and contingencies
Total liabilities and stockholders' equity
(deficit) $ 551,033 $ 562,321
=========================
Schedule 3
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in Thousands)
Three Months Ended
March 31,
--------------------
2007 2006
--------------------
Cash Flows from Operating Activities:
Net income (loss) $ 7,565 $ (8,372)
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 16,288 17,097
Loss on disposal of assets, net 3 722
Gain on sale of long-term investment (152) -
Amortization of debt issuance costs and
original issue discount 473 3,734
Stock based compensation 1,682 1,576
Changes in components of assets and
liabilities:
Accounts receivable and other current
assets 2,440 4,415
Accounts payable and other current
liabilities (2,505) (538)
Deferred charges and other assets 146 (526)
Other deferred credits 1,814 (2,917)
--------------------
Net cash provided by operating activities 27,754 15,191
Cash Flows from Investing Activities:
Investment in construction and capital
expenditures (10,020) (8,415)
Change in unsettled construction and capital
expenditures (7,142) (7,319)
Purchase of short-term investments (17,225) (7,500)
Proceeds from the sale of short-term
investments 17,225 16,025
Liquidation of long-term investments 162 -
Placement of funds in restricted account (1,982) -
Release of funds from escrow 1,601 -
--------------------
Net cash used by investing activities (17,381) (7,209)
Cash Flows from Financing Activities:
Payments of long-term debt (418) (61,270)
Proceeds from the issuance of long-term debt - 52,900
Debt issuance costs - (1,349)
Payment of dividend on common stock (9,099) (8,336)
Issuance of common stock (2,030) (125)
--------------------
Net cash used by financing activities (11,547) (18,180)
Decrease in cash and cash equivalents (1,174) (10,198)
Cash and cash equivalents, beginning of period 36,860 28,877
--------------------
Cash and cash equivalents, end of period $ 35,686 $ 18,679
====================
Supplemental Cash Flow Data:
Interest paid $ 7,268 $ 9,992
Income taxes paid, net of refund 134 -
Supplemental Noncash Transactions:
Property acquired under capital leases and
mortgages $ 51 $ -
Dividend declared, but not paid 9,189 9,032
Schedule 4
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
SCHEDULE OF WIRELINE REVENUES AND EXPENSES
(Unaudited, in Thousands)
Three Months Ended
March 31,
---------------------
2007 2006
---------------------
Local network service and other $ 25,593 $ 24,249
Network access 21,737 24,026
---------------------
Local telephone 47,330 48,275
Internet 7,072 5,986
Interexchange 4,429 3,873
---------------------
Total wireline revenue $ 58,831 $ 58,134
=====================
Local telephone $ 32,710 $ 32,109
Internet 7,933 7,892
Interexchange 3,206 2,104
---------------------
Total wireline expense $ 43,849 $ 42,105
=====================
Schedule 5
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
SCHEDULE OF EBITDA CALCULATION
(Unaudited, in Thousands)
Three Months
Ended
March 31,
------------------
2007 2006
------------------
Net cash provided by operating activities $ 27,754 $ 15,191
Adjustments to reconcile net income to net cash
(provided) used by operating activities:
Depreciation and amortization (16,288) (17,097)
Loss on disposal of assets, net (3) (722)
Gain on sale of long-term investment 152 -
Amortization of debt issuance costs and
original issue discount (473) (3,734)
Stock based compensation (1,682) (1,576)
Changes in components of assets and
liabilities:
Accounts receivable and other current
assets (2,440) (4,415)
Accounts payable and other current
liabilities 2,505 538
Deferred charges and other assets (146) 526
Other deferred credits (1,814) 2,917
------------------
Net income (loss) $ 7,565 $ (8,372)
Add (subtract):
Interest expense 7,610 7,974
Loss on extinguishment of debt - 9,650
Interest income (529) (392)
Depreciation and amortization 16,288 17,097
Loss on disposal of assets, net 3 722
Gain on sale of equity investment in directory
business (152) -
Income tax expense 7 -
Stock based compensation 1,682 1,576
------------------
EBITDA $ 32,474 $ 28,255
==================
Note: In an effort to provide investors with additional information
regarding the Company's results as determined by generally
accepted accounting principles (GAAP), the Company also
discloses certain non-GAAP information which management
utilizes to assess performance and believes provides useful
information to investors. The Company has disclosed its net
gain before interest, provisions for taxes, depreciation
expense, gain or loss on asset purchases or disposals,
amortization of intangibles and stock based compensation
expense (EBITDA) because the Company believes it is an
important indicator as it provides information about our
ability to service debt, pay dividends and fund capital
expenditures. EBITDA is not a GAAP measure 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.
Schedule 6
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
ALLOCATION OF STOCK BASED COMPENSATION
(Unaudited, in Thousands)
Three Months Ended Three Months Ended
March 31, 2007 March 31, 2006
---------------------------- ----------------------------
As Stock As Stock
reported Based reported Based
on Compen- on Compen-
Schedule 1 sation Adjusted Schedule 1 sation Adjusted
---------- -------- -------- ---------- -------- --------
Operating
expenses:
Wireline $43,849 $(1,507) $42,342 $42,105 $(1,426) $40,679
Wireless 15,860 (175) 15,685 13,814 (150) 13,664
Depre-
ciation and
amor-
tization 16,288 - 16,288 17,097 - 17,097
Loss on
disposal of
assets, net 3 - 3 722 - 722
---------- -------- -------- ---------- -------- --------
Total
operating
expenses $76,000 $(1,682) $74,318 $73,738 $(1,576) $72,162
========== ======== ======== ========== ======== ========
The balances reported on Schedule 1 - Statement of Operations, include
the company's adoption of FAS 123R Accounting for Stock-Based
Compensation. This schedule shows the company's operating performance
prior to that expense being recorded to allow analysis of the
operating segments without these non-cash charges.
Schedule 7
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
INVESTMENT IN CONSTRUCTION AND CAPITAL
(Unaudited, in Thousands)
Three Months Ended
March 31,
2007 2006
------------------- -------------------
Cash outlay for construction
and capital expenditures $ 10,020 $ 8,415
Non-cash capital lease 51 -
------------------- -------------------
Investment in construction and
capital $ 10,071 $ 8,415
=================== ===================
Prefunded growth 1,860 4,066
Maintenance and other 8,211 4,349
------------------- -------------------
Investment in construction and
capital $ 10,071 $ 8,415
=================== ===================
Schedule 8A
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
KEY OPERATING STATISTICS
(Unaudited)
March 31, December 31, March 31,
2007 2006 2006
---------------------------------
Local telephone:
Retail access lines 193,851 194,815 197,415
Resale access lines 10,573 11,226 13,030
UNE lines 41,453 46,626 55,036
---------------------------------
Total local telephone access
lines 245,877 252,667 265,481
=================================
Average local telephone access
lines for the quarter 249,272 255,899 268,183
Average monthly local telephone
revenue per line for the
quarter $ 63.29 $ 63.09 $ 60.00
Quarterly growth rate in local
telephone access lines -2.7% -2.5% -2.0%
Wireless:
Covered population 542,193 541,940 527,509
Post-paid wireless subscribers 128,247 125,064 111,178
Average post-paid wireless
subscribers 126,656 123,065 109,161
Average monthly churn for
the quarter (a) 1.3% 1.5% 1.5%
Average monthly revenue
per subscriber for the
quarter (b) $ 63.11 $ 62.16 $ 60.36
Prepaid wireless subscribers 6,452 5,907 4,103
Resale wireless subscribers 2,812 3,017 3,859
Total wireless subscribers 137,511 133,988 119,140
Average subscribers for
the quarter 135,750 131,779 118,339
Average monthly churn for
the quarter (a) 1.4% 1.8% 2.0%
Penetration 25.4% 24.7% 22.6%
Average monthly revenue
per subscriber for the
quarter (b) $ 60.60 $ 60.01 $ 57.30
Long Distance:
Long distance subscribers 65,043 63,995 58,552
Average subscribers for the
quarter 64,519 62,990 57,435
Average monthly revenue per
subscriber for the quarter $ 22.88 $ 21.18 $ 22.48
Internet:
DSL subscribers 45,448 44,066 38,179
Dial-up subscribers 11,728 12,591 15,846
---------------------------------
Total Internet subscribers 57,176 56,657 54,025
=================================
Average subscribers for the
quarter 56,917 55,978 53,635
Average monthly DSL & dial-up
revenue per subscriber for the
quarter $ 29.01 $ 28.88 $ 29.23
(a) Prior period churn has been restated to negate the gross up of
installs and disconnects that were caused by certain account
changes. In prior periods, December 31, 2006 churn was reported
at 1.8% and 2.1% and March 31, 2006 churn was reported at 1.9%
and 2.4%, for post-paid and total subscribers, respectively.
(b) CETC added $10.76 and $10.29 to postpaid wireless ARPU in the
first quarter of 2007 and fourth quarter of 2006, respectively
and $9.33 in the first quarter of 2006. CETC added $10.26 and
$9.85 to total wireless ARPU in the first quarter of 2007 and
fourth quarter of 2006, respectively and $8.93 in the first
quarter of 2006. Out of period CETC revenue is excluded from
ARPU.
Schedule 8B
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
KEY OPERATING STATISTICS
(Unaudited)
March 31, December 31,
2007 2006 Net Movement
----------- ------------ -------------
Wireline retail relationships
Local telephone retail access
lines 193,851 194,815 (964)
Interexchange subscribers 65,043 63,995 1,048
Internet subscribers 57,176 56,657 519
----------- ------------ -------------
316,070 315,467 603
Wireless retail relationships
Post-paid wireless subscribers 128,247 125,064 3,183
Prepaid wireless subscribers 6,452 5,907 545
----------- ------------ -------------
134,699 130,971 3,728
----------- ------------ -------------
Total retail relationships 450,769 446,438 4,331
=========== ============ =============
CONTACT: ACS Investors (Investors)
Alaska Communications Systems
Investor Relations, 907-564-7556
investors@acsalaska.com
or
ACS Corporate Communications (Media)
Mary Gasperlin, 907-297-3000
Director, Corporate Communications
mary.gasperlin@acsalaska.com