[May 04, 2017] |
|
Alaska Communications Reports First Quarter 2017 Results
Alaska Communications Systems Group, Inc. (NASDAQ: ALSK) today reported
financial results for the first quarter of 2017.
"We continue steady progress on the operating front with top and bottom
line growth, driven primarily by broadband revenue growth of 11.1%. New
fiber capacity to the North Slope through our Quintillion partnership
and several new IT partnership certifications provide opportunities for
differentiation and continued growth," said Anand Vadapalli, president
and CEO of Alaska Communications.
"With a successful tender for our convertible notes, we are also pleased
with the completion of our refinancing activity extending our debt
maturities. We remain well positioned to drive long term shareholder
value," concluded Vadapalli.
Revenue Highlights: First Quarter 2017 Compared to First Quarter 2016
-
Total revenues:
-
Revenue increased to $56.7 million, up 0.7 percent from $56.3
million.
-
Total broadband revenue reached $31.0 million, up 11.1 percent
from $27.9 million.
-
Business and wholesale:
-
Comprised 60.9 percent of total revenue.
-
Revenue grew to $34.5 million, up 2.9 percent from $33.6 million.
-
Broadband revenues reached $24.6 million, up 12.9 percent from
$21.8 million.
-
Consumer:
-
Comprised 16.4 percent of total revenue.
-
Revenue was $9.3 million, down 2.1 percent from $9.5 million.
-
Broadband revenue was $6.4 million, up 4.5 percent from $6.1
million.
-
Regulatory:
-
Comprised 22.7 percent of total revenue.
-
Revenue was $12.9 million, down 2.9 percent from $13.3 million.
Financial Metrics: First Quarter 2017 compared to First Quarter 2016
-
Operating income was $4.6 million, compared to $4.3 million.
-
Net loss was $0.7 million, compared to net income of $0.1 million,
including loss on extinguishment of debt of $2.3 million and $0.3
million, respectively.
-
Net cash provided by operating activities was $5.3 million, compared
to $10.2 million. The difference reflects higher accounts receivable
at March 31 2017 over 2016 reflecting several transactions closing
late in the quarter.
-
Capital expenditures were $5.1 million, compared to $5.2 million.
Balance Sheet Metrics: March 31, 2017 compared to December 31, 2016
-
Cash was $12.0 million, compared to $21.2 million. In March, the
company entered into a new $180.0 million senior credit facility
and placed $94.0 million in restricted cash designated for the
repurchase, or settlement at maturity, of its 6.25% convertible notes
due 2018. The remaining proceeds, plus cash on hand, were used to
repay long-term debt and related expenses of $93.3 million. On April
17, $84.0 million of the restricted cash was used to settle 89.3% of
the convertible notes, leaving $10 million in restricted cash for
settlement of the notes.
-
Net debt was $171.3 million, compared to $162.8 million. This increase
reflects the utilization of $6.5 million cash in the settlement of the
2015 Senior Credit Facilities and other changes in working capital.
Non-GAAP Metrics: First Quarter 2017 compared to First Quarter 2016
-
Adjusted EBITDA was $14.1 million, compared to $13.9 million.
-
Adjusted free cash flow was $7.5 million, compared to $8.5 million,
which included $2.7 million of proceeds on the sale of fiber.
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.
Laurie Butcher, Alaska Communications senior vice-president of finance,
said, "We are pleased with the results of the refinance of our balance
sheet and expect to see the benefits going forward. For 2017, we are on
track for our annual revenue guidance, while providing free cash flow
guidance for the year as below. While timing of revenue and cash flow
will fluctuate quarter to quarter, we believe our full-year 2017 free
cash flow performance will provide a baseline from which we expect to
see annual increases."
2017 Guidance:
The company updated guidance as follows:
-
Confirmed Total Wireline Revenue between $229 million and $235 million
-
Confirmed Adjusted EBITDA between $59 million and $61 million
-
Confirmed Capital Expenditures between $35 million and $38 million
-
Adjusted Free Cash Flow between $4 million and $7 million
Conference Call
The Company will host a conference call and live webcast on Thursday,
May 4, 2017 at 3:00 p.m. Eastern Time to discuss the results. Parties in
the United States and Canada can access the call at 1-855-303-0062 and
enter pass code 842937. All other parties can access the call at
1-719-785-1762 and use the same code.
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 90 days. A telephonic
replay of the conference call will also be available two hours after the
call and will run until June 3, 2017 at 6:00 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 8667848. All other parties can call 1-719-457-0820 and
enter pass code 8667848.
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 of
these non-GAAP measures is 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 and on
our website in the investment data section. 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 outflows of $6.0 million
in the three-month period of 2017).
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, Federal and Alaska
Universal Service Fund changes, adverse economic conditions, 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,
our ability to service our debt and refinance as required, labor
negotiations, including renegotiating our collective bargaining
agreement, employee benefit costs, our ability to control other
operating 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, regulatory changes, changes in technology
and standards, 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,
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
|
|
$
|
56,731
|
|
|
$
|
56,328
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
Cost of services and sales (excluding depreciation and amortization)
|
|
|
|
|
25,142
|
|
|
|
26,128
|
|
Selling, general & administrative
|
|
|
|
|
18,093
|
|
|
|
17,340
|
|
Depreciation and amortization
|
|
|
|
|
8,903
|
|
|
|
8,520
|
|
Loss on disposal of assets, net
|
|
|
|
|
19
|
|
|
|
24
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
|
52,157
|
|
|
|
52,012
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
4,574
|
|
|
|
4,316
|
|
|
|
|
|
|
|
|
Other income and (expense):
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
(3,845
|
)
|
|
|
(3,869
|
)
|
Loss on extinguishment of debt
|
|
|
|
|
(2,276
|
)
|
|
|
(336
|
)
|
Interest income
|
|
|
|
|
7
|
|
|
|
5
|
|
Total other income and (expense)
|
|
|
|
|
(6,114
|
)
|
|
|
(4,200
|
)
|
|
|
|
|
|
|
|
(Loss) income before income tax benefit (expense)
|
|
|
|
|
(1,540
|
)
|
|
|
116
|
|
|
|
|
|
|
|
|
Income tax benefit (expense)
|
|
|
|
|
832
|
|
|
|
(63
|
)
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
|
|
(708
|
)
|
|
|
53
|
|
|
|
|
|
|
|
|
Less net loss attributable to noncontrolling interest
|
|
|
|
|
(32
|
)
|
|
|
(33
|
)
|
|
|
|
|
|
|
|
Net (loss) income attributable to Alaska Communications
|
|
|
|
$
|
(676
|
)
|
|
$
|
86
|
|
|
|
|
|
|
|
|
Net (loss) income per share attributable to Alaska Communications:
|
Basic and Diluted
|
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
|
|
52,011
|
|
|
|
50,742
|
|
Diluted
|
|
|
|
|
52,011
|
|
|
|
51,637
|
|
|
Schedule 2
|
|
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
|
CONSOLIDATED BALANCE SHEETS
|
(Unaudited, In Thousands Except Per Share Amounts)
|
|
|
|
|
|
March 31,
|
|
December 31,
|
Assets
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
11,978
|
|
|
$
|
21,228
|
|
Restricted cash
|
|
|
|
|
95,917
|
|
|
|
1,917
|
|
Accounts receivable, net of allowance of $1,089 and $1,115
|
|
|
|
|
28,938
|
|
|
|
25,062
|
|
Materials and supplies
|
|
|
|
|
5,281
|
|
|
|
4,917
|
|
Prepayments and other current assets
|
|
|
|
|
6,506
|
|
|
|
5,995
|
|
Total current assets
|
|
|
|
|
148,620
|
|
|
|
59,119
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
|
|
1,355,147
|
|
|
|
1,349,899
|
|
Less: accumulated depreciation and amortization
|
|
|
|
|
(991,577
|
)
|
|
|
(983,050
|
)
|
Property, plant and equipment, net
|
|
|
|
|
363,570
|
|
|
|
366,849
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
|
|
15,521
|
|
|
|
14,718
|
|
Other assets
|
|
|
|
|
1,621
|
|
|
|
1,674
|
|
Total assets
|
|
|
|
$
|
529,332
|
|
|
$
|
442,360
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Current portion of long-term obligations
|
|
|
|
$
|
3,570
|
|
|
$
|
1,973
|
|
Accounts payable, accrued and other current liabilities
|
|
|
|
|
37,554
|
|
|
|
38,180
|
|
Advance billings and customer deposits
|
|
|
|
|
4,196
|
|
|
|
4,167
|
|
Total current liabilities
|
|
|
|
|
45,320
|
|
|
|
44,320
|
|
|
|
|
|
|
|
|
Long-term obligations, net of current portion
|
|
|
|
|
265,060
|
|
|
|
177,626
|
|
Other long-term liabilities, net of current portion
|
|
|
|
|
60,569
|
|
|
|
61,538
|
|
Total liabilities
|
|
|
|
|
370,949
|
|
|
|
283,484
|
|
Commitments and contingencies
|
|
|
|
|
|
|
Alaska Communications stockholders' equity:
|
|
|
|
|
|
|
Common stock, $.01 par value; 145,000 authorized
|
|
|
|
|
524
|
|
|
|
515
|
|
Additional paid in capital
|
|
|
|
|
158,198
|
|
|
|
159,474
|
|
Retained earnings
|
|
|
|
|
1,421
|
|
|
|
752
|
|
Accumulated other comprehensive loss
|
|
|
|
|
(2,773
|
)
|
|
|
(2,910
|
)
|
Total Alaska Communications stockholders' equity
|
|
|
|
|
157,370
|
|
|
|
157,831
|
|
Noncontrolling interest
|
|
|
|
|
1,013
|
|
|
|
1,045
|
|
Total stockholders' equity
|
|
|
|
|
158,383
|
|
|
|
158,876
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
|
|
$
|
529,332
|
|
|
$
|
442,360
|
|
|
Schedule 3
|
|
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
|
CONSOLIDATED STATEMENT OF CASH FLOWS
|
(Unaudited, In Thousands)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2017
|
|
2016
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
Net (loss) income
|
|
|
|
$
|
(708
|
)
|
|
$
|
53
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
8,903
|
|
|
|
8,520
|
|
Loss on the disposal of assets, net
|
|
|
|
|
19
|
|
|
|
24
|
|
Amortization of debt issuance costs and debt discount
|
|
|
|
|
1,025
|
|
|
|
1,016
|
|
Loss on extinguishment of debt
|
|
|
|
|
2,276
|
|
|
|
336
|
|
Amortization of deferred capacity revenue
|
|
|
|
|
(847
|
)
|
|
|
(847
|
)
|
Stock-based compensation
|
|
|
|
|
610
|
|
|
|
805
|
|
Deferred income tax (benefit) expense
|
|
|
|
|
(832
|
)
|
|
|
267
|
|
Tax deficiencies from share-based payments
|
|
|
|
|
-
|
|
|
|
(51
|
)
|
Charge (benefit) for uncollectible accounts
|
|
|
|
|
89
|
|
|
|
(132
|
)
|
Other non-cash expense, net
|
|
|
|
|
145
|
|
|
|
217
|
|
Income taxes payable (receivable)
|
|
|
|
|
574
|
|
|
|
(730
|
)
|
Changes in operating assets and liabilities
|
|
|
|
|
(5,956
|
)
|
|
|
703
|
|
Net cash provided by operating activities
|
|
|
|
|
5,298
|
|
|
|
10,181
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(5,148
|
)
|
|
|
(5,175
|
)
|
Capitalized interest
|
|
|
|
|
(243
|
)
|
|
|
(303
|
)
|
Change in unsettled capital expenditures
|
|
|
|
|
(1,225
|
)
|
|
|
(4,225
|
)
|
Proceeds on sale of assets
|
|
|
|
|
3
|
|
|
|
2,663
|
|
Net cash used by investing activities
|
|
|
|
|
(6,613
|
)
|
|
|
(7,040
|
)
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
Repayments of long-term debt
|
|
|
|
|
(86,806
|
)
|
|
|
(10,617
|
)
|
Proceeds from the issuance of long-term debt
|
|
|
|
|
180,000
|
|
|
|
-
|
|
Debt issuance costs and discounts
|
|
|
|
|
(5,217
|
)
|
|
|
(37
|
)
|
Cash paid for debt extinguishment
|
|
|
|
|
(1,313
|
)
|
|
|
(150
|
)
|
Payment of withholding taxes on stock-based compensation
|
|
|
|
|
(599
|
)
|
|
|
(472
|
)
|
Net cash provided (used) by financing activities
|
|
|
|
|
86,065
|
|
|
|
(11,276
|
)
|
|
|
|
|
|
|
|
Change in cash, cash equivalents and restricted cash
|
|
|
|
|
84,750
|
|
|
|
(8,135
|
)
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash, beginning of period
|
|
|
|
|
23,145
|
|
|
|
37,825
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash, end of period
|
|
|
|
$
|
107,895
|
|
|
$
|
29,690
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Data:
|
|
|
|
|
|
|
Interest paid
|
|
|
|
$
|
1,536
|
|
|
$
|
1,797
|
|
Income taxes (refunded) paid, net
|
|
|
|
$
|
(574
|
)
|
|
$
|
577
|
|
Schedule 4
|
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
|
ADJUSTED EBITDA
|
(Unaudited, In Thousands)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
|
$
|
(708
|
)
|
|
$
|
53
|
|
Add (subtract):
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
3,845
|
|
|
|
3,869
|
|
Loss on extinguishment of debt
|
|
|
|
|
2,276
|
|
|
|
336
|
|
Interest income
|
|
|
|
|
(7
|
)
|
|
|
(5
|
)
|
Depreciation and amortization
|
|
|
|
|
8,903
|
|
|
|
8,520
|
|
Loss on disposal of assets, net
|
|
|
|
|
19
|
|
|
|
24
|
|
Income tax (benefit) expense
|
|
|
|
|
(832
|
)
|
|
|
63
|
|
Stock-based compensation
|
|
|
|
|
610
|
|
|
|
805
|
|
Long-term cash incentives
|
|
|
|
|
-
|
|
|
|
211
|
|
Pension adjustment
|
|
|
|
|
-
|
|
|
|
21
|
|
Net loss attributable to noncontrolling interest
|
|
|
|
|
32
|
|
|
|
33
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
14,138
|
|
|
$
|
13,930
|
|
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 outflows of $6.0
million in the three-month period ended March 31, 2017.
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 below is not consistent with the definition of Consolidated
EBITDA referenced in our 2015 Senior Credit Agreements, 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, loss on
extinguishment of debt, depreciation and amortization, gain or loss on
asset purchases or disposals, income taxes, stock-based compensation,
pension adjustments, net loss attributable to noncontrolling interest
and expenses under the Company's long term cash incentive plan
("LTCI"). LTCI expenses are considered part of an interim compensation
structure, which ended in 2016, to mitigate the dilutive impact of
additional share issuances for executive compensation.
|
Schedule 5
|
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
|
RECONCILIATION OF NET CASH FROM OPERATING ACTIVITIES TO
ADJUSTED FREE CASH FLOW
|
(Unaudited, In Thousands)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
$
|
5,298
|
|
|
$
|
10,181
|
|
Adjustments to reconcile net cash provided by operating activities
to adjusted free cash flow:
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(5,148
|
)
|
|
|
(5,175
|
)
|
Proceeds on sale of fiber to joint venture partner
|
|
|
|
|
-
|
|
|
|
2,650
|
|
Amortization of deferred capacity revenue
|
|
|
|
|
847
|
|
|
|
847
|
|
Amortization of GCI capacity revenue
|
|
|
|
|
(511
|
)
|
|
|
(509
|
)
|
Amortization of debt issuance costs and debt discount
|
|
|
|
|
(1,025
|
)
|
|
|
(1,016
|
)
|
Interest expense
|
|
|
|
|
3,845
|
|
|
|
3,869
|
|
Interest paid
|
|
|
|
|
(1,536
|
)
|
|
|
(1,797
|
)
|
Interest income
|
|
|
|
|
(7
|
)
|
|
|
(5
|
)
|
Income tax expense
|
|
|
|
|
(832
|
)
|
|
|
63
|
|
Income taxes (payable) receivable
|
|
|
|
|
(574
|
)
|
|
|
730
|
|
Income taxes refunded (paid), net
|
|
|
|
|
574
|
|
|
|
(577
|
)
|
Deferred income tax benefit (expense)
|
|
|
|
|
832
|
|
|
|
(267
|
)
|
Tax deficiencies from share-based payments
|
|
|
|
|
-
|
|
|
|
51
|
|
(Charge) benefit for uncollectible accounts
|
|
|
|
|
(89
|
)
|
|
|
132
|
|
Long-term cash incentives
|
|
|
|
|
-
|
|
|
|
211
|
|
Pension adjustment
|
|
|
|
|
-
|
|
|
|
21
|
|
Net loss attributable to noncontrolling interest
|
|
|
|
|
32
|
|
|
|
33
|
|
Other non-cash expense, net
|
|
|
|
|
(145
|
)
|
|
|
(217
|
)
|
Changes in operating assets and liabilities
|
|
|
|
|
5,956
|
|
|
|
(703
|
)
|
Adjusted free cash flow
|
|
|
|
$
|
7,517
|
|
|
$
|
8,522
|
|
|
Schedule 6
|
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
|
ADJUSTED FREE CASH FLOW
|
(Unaudited, In Thousands)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
14,138
|
|
|
$
|
13,930
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(5,148
|
)
|
|
|
(5,175
|
)
|
Proceeds on sale of fiber to joint venture partner
|
|
|
|
|
-
|
|
|
|
2,650
|
|
Amortization of GCI capacity revenue
|
|
|
|
|
(511
|
)
|
|
|
(509
|
)
|
Income taxes refunded (paid), net
|
|
|
|
|
574
|
|
|
|
(577
|
)
|
Interest paid
|
|
|
|
|
(1,536
|
)
|
|
|
(1,797
|
)
|
|
|
|
|
|
|
|
Adjusted free cash flow*
|
|
|
|
$
|
7,517
|
|
|
$
|
8,522
|
|
* 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 is a non-GAAP liquidity measure and is defined
as Adjusted EBITDA, less recurring operating cash requirements which
include capital expenditures, cash income taxes refunded or paid, cash
interest paid, amortization of GCI capacity revenue, and cash receipts
and payments associated with the purchase of the North Slope fiber
network and establishment of our joint venture with QHL. 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
amortized to 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
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
March 31,
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Business and wholesale revenue
|
|
|
|
|
|
|
|
|
|
|
Business broadband
|
|
|
|
$
|
16,281
|
|
|
$
|
14,180
|
|
$
|
16,281
|
|
|
$
|
14,180
|
Business voice and other
|
|
|
|
|
6,631
|
|
|
|
7,090
|
|
|
6,631
|
|
|
|
7,090
|
Managed IT services
|
|
|
|
|
907
|
|
|
|
1,081
|
|
|
907
|
|
|
|
1,081
|
Equipment sales and installations
|
|
|
|
|
774
|
|
|
|
1,587
|
|
|
774
|
|
|
|
1,587
|
Wholesale broadband
|
|
|
|
|
8,317
|
|
|
|
7,598
|
|
|
8,317
|
|
|
|
7,598
|
Wholesale voice and other
|
|
|
|
|
1,629
|
|
|
|
2,015
|
|
|
1,629
|
|
|
|
2,015
|
|
|
|
|
|
|
|
|
|
|
|
Total business and wholesale revenue
|
|
|
|
|
34,539
|
|
|
|
33,551
|
|
|
34,539
|
|
|
|
33,551
|
Growth in business and wholesale
|
|
|
|
|
2.9
|
%
|
|
|
|
|
2.9
|
%
|
|
|
Consumer revenue
|
|
|
|
|
|
|
|
|
|
|
Broadband
|
|
|
|
|
6,418
|
|
|
|
6,142
|
|
|
6,418
|
|
|
|
6,142
|
Voice and other
|
|
|
|
|
2,910
|
|
|
|
3,382
|
|
|
2,910
|
|
|
|
3,382
|
Total consumer revenue
|
|
|
|
|
9,328
|
|
|
|
9,524
|
|
|
9,328
|
|
|
|
9,524
|
|
|
|
|
|
|
|
|
|
|
|
Total business, wholesale, and consumer revenue
|
|
|
|
|
43,867
|
|
|
|
43,075
|
|
|
43,867
|
|
|
|
43,075
|
Growth in business, wholesale and consumer revenue
|
|
|
|
|
1.8
|
%
|
|
|
|
|
1.8
|
%
|
|
|
Growth in broadband revenue
|
|
|
|
|
11.1
|
%
|
|
|
|
|
11.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory revenue
|
|
|
|
|
|
|
|
|
|
|
Access
|
|
|
|
|
7,941
|
|
|
|
8,172
|
|
|
7,941
|
|
|
|
8,172
|
High cost support
|
|
|
|
|
4,923
|
|
|
|
5,081
|
|
|
4,923
|
|
|
|
5,081
|
Total regulatory revenue
|
|
|
|
|
12,864
|
|
|
|
13,253
|
|
|
12,864
|
|
|
|
13,253
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
|
$
|
56,731
|
|
|
$
|
56,328
|
|
$
|
56,731
|
|
|
$
|
56,328
|
Growth in total revenue
|
|
|
|
|
0.7
|
%
|
|
|
|
|
0.7
|
%
|
|
|
|
Schedule 8
|
|
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
|
KEY OPERATING STATISTICS
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
|
|
|
|
|
2017
|
|
2016
|
|
2016
|
|
Sequential Change
|
|
YoY Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voice:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business access lines (1)
|
|
|
|
|
73,313
|
|
|
|
73,977
|
|
|
|
76,262
|
|
|
|
(664
|
)
|
|
-0.9
|
%
|
|
|
(2,949
|
)
|
-3.9
|
%
|
Consumer access lines
|
|
|
|
|
32,519
|
|
|
|
33,418
|
|
|
|
36,567
|
|
|
|
(899
|
)
|
|
-2.7
|
%
|
|
|
(4,048
|
)
|
-11.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voice ARPU business (1)
|
|
|
|
$
|
23.21
|
|
|
$
|
22.44
|
|
|
$
|
23.36
|
|
|
$
|
0.77
|
|
|
3.4
|
%
|
|
$
|
(0.15
|
)
|
-0.6
|
%
|
Voice ARPU consumer
|
|
|
|
$
|
27.66
|
|
|
$
|
27.83
|
|
|
$
|
28.39
|
|
|
$
|
(0.17
|
)
|
|
-0.6
|
%
|
|
$
|
(0.73
|
)
|
-2.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadband:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business connections
|
|
|
|
|
15,223
|
|
|
|
15,239
|
|
|
|
15,189
|
|
|
|
(16
|
)
|
|
-0.1
|
%
|
|
|
34
|
|
0.2
|
%
|
Consumer connections
|
|
|
|
|
34,917
|
|
|
|
34,603
|
|
|
|
33,850
|
|
|
|
314
|
|
|
0.9
|
%
|
|
|
1,067
|
|
3.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadband ARPU business
|
|
|
|
$
|
356.06
|
|
|
$
|
337.98
|
|
|
$
|
309.36
|
|
|
$
|
18.08
|
|
|
5.3
|
%
|
|
$
|
46.70
|
|
15.1
|
%
|
Broadband ARPU consumer
|
|
|
|
$
|
61.22
|
|
|
$
|
61.26
|
|
|
$
|
60.59
|
|
|
$
|
(0.04
|
)
|
|
-0.1
|
%
|
|
$
|
0.63
|
|
1.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Churn:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business voice
|
|
|
|
|
0.8
|
%
|
|
|
1.1
|
%
|
|
|
1.0
|
%
|
|
|
-0.3
|
%
|
|
-27.3
|
%
|
|
|
-0.2
|
%
|
-20.0
|
%
|
Consumer broadband
|
|
|
|
|
2.1
|
%
|
|
|
2.2
|
%
|
|
|
2.2
|
%
|
|
|
-0.1
|
%
|
|
-4.5
|
%
|
|
|
-0.1
|
%
|
-4.5
|
%
|
Consumer voice
|
|
|
|
|
1.3
|
%
|
|
|
1.4
|
%
|
|
|
1.6
|
%
|
|
|
-0.1
|
%
|
|
-7.1
|
%
|
|
|
-0.3
|
%
|
-18.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
How we calculate broadband and voice connections has changed to
exclude certain connections.
|
|
|
Historical amounts for the period March 31, 2016 have been
restated to reflect appropriate comparisons period over period.
|
|
Schedule 9
|
|
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
|
LONG TERM DEBT AND NET DEBT
|
(Unaudited, In Thousands)
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
|
2017
|
|
2016
|
2017 senior secured credit facility due 2023
|
|
|
|
$
|
180,000
|
|
|
$
|
-
|
|
Debt discount - 2017 senior secured credit facilities due 2023
|
|
|
|
|
(3,168
|
)
|
|
|
-
|
|
Debt issuance costs - 2017 senior secured credit facilities due 2023
|
|
|
|
|
(3,355
|
)
|
|
|
-
|
|
2015 senior secured credit facilities due 2018
|
|
|
|
|
-
|
|
|
|
86,750
|
|
Debt issuance costs - 2015 senior secured credit facilities due 2018
|
|
|
|
|
-
|
|
|
|
(1,738
|
)
|
6.25% convertible notes due 2018
|
|
|
|
|
94,000
|
|
|
|
94,000
|
|
Debt discount - 6.25% convertible notes due 2018
|
|
|
|
|
(1,754
|
)
|
|
|
(2,271
|
)
|
Debt issuance costs - 6.25% convertible notes due 2018
|
|
|
|
|
(361
|
)
|
|
|
(467
|
)
|
Revolving credit facility loan
|
|
|
|
|
-
|
|
|
|
-
|
|
Capital leases and other long-term obligations
|
|
|
|
|
3,268
|
|
|
|
3,325
|
|
Total debt
|
|
|
|
|
268,630
|
|
|
|
179,599
|
|
Less current portion
|
|
|
|
|
(3,570
|
)
|
|
|
(1,973
|
)
|
Long-term obligations, net of current portion
|
|
|
|
$
|
265,060
|
|
|
$
|
177,626
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
|
$
|
268,630
|
|
|
$
|
179,599
|
|
Plus debt discounts and debt issuance costs
|
|
|
|
|
8,638
|
|
|
|
4,476
|
|
Gross debt
|
|
|
|
|
277,268
|
|
|
|
184,075
|
|
Cash and cash equivalents
|
|
|
|
|
(11,978
|
)
|
|
|
(21,228
|
)
|
Restricted cash held for 6.25% convertible notes due 2018
|
|
|
|
|
(94,000
|
)
|
|
|
-
|
|
Net debt
|
|
|
|
$
|
171,290
|
|
|
$
|
162,847
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170504005605/en/
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