Alaska Communications Systems Reports Fourth Quarter and Full Year 2012 Results

Alaska Communications Systems Reports Fourth Quarter and Full Year 2012 Results

- Full Year Revenue of $367.8 million, exceeded guidance -

- Full Year EBITDA of $121.8 million, exceeded guidance -


- Full year Free Cash Flow of $33.0 million, at high end of guidance -

- Full year Business and Wholesale Revenue increased 8.0% -

- De-levering continues with $19.5 million of repayments of long term debt for the year -

ANCHORAGE, Alaska--(BUSINESS WIRE)-- Alaska Communications Systems Group, Inc. ("ACS") (NAS: ALSK) today reported financial results for its fourth quarter and full year ended December 31, 2012.

"We are pleased with our performance this year. We generated strong growth in business and wholesale revenues. Ending the year at the high end of guidance for free cash flow, with our debt balances declining for the first time in three years, is also an indication of our progress.

"Looking ahead, we expect continued top line growth in the business and wholesale segment, solid free cash flow performance and significant deleveraging with the successful closing of the Alaska Wireless Network ("AWN") transaction. Our investments in sales and service, product and network, and process improvements provide the platform for future growth. The AWN transaction is a defining transaction for Alaska Communications as it de-risks our wireless business, provides a predictable path for further deleveraging and builds shareholder value over time. These are all elements of our business plan in action, giving us confidence in our future.

"Growing demand for our core broadband product, the trust our customers have in the reliability of our products and network and the local service provided by our employees will drive our continued performance to our business plan," said Anand Vadapalli, president and CEO of Alaska Communications.

Financial Highlights: Fourth Quarter 2012 Compared to Fourth Quarter 2011

  • Revenues of $95.1 million increased by $7.6 million, or 8.7%, from $87.5 million in the prior year.
    • Business and wholesale revenue increased by $3.7 million, or 14.0%. We benefited from a non-recurring equipment sale in the fourth quarter 2012 of $1.4 million.
    • Consumer revenue increased by $0.3 million, or 2.8%.
    • Wireless revenue increased by $4.9 million, or 16.2%.
    • Access and CETC revenue declined, as expected by $1.3 million, or 5.9%.
    • Broadband revenue as a percentage of total service revenue was 47%, compared to 42% in the prior year.
  • Adjusted EBITDA of $33.3 million increased by $2.5 million, or 8.2%, from $30.8 million in the prior year.
    • Cost of services and sales increased by $1.9 million, or 5.6%, which was impacted by a non-recurring equipment sale and a $0.5 increase in wireless equipment and device costs.
    • Selling, general & administrative, excluding AWN transaction related costs of $1.1 million compared to $0.5 million in the prior year, increased by $2.8 million, or 12.1%, resulting primarily from increased sales and customer service costs.

Metric Highlights: Fourth Quarter 2012 Compared to Third Quarter 2012

  • Wireless subscribers decreased by 5,958 to 115,017. We conducted a recertification of all of our Lifeline customers to verify that they continue to meet the FCC's recently revised eligibility criteria. Because of that effort, our wireless Lifeline enrollment decreased by 3,115 connections or 24.5% of our lifeline customer base. We were also impacted by the delay in availability of the iPhone 5 relative to our competition.
  • Wireless average monthly retail service revenue per subscriber ("ARPU") increased by 2.3% to $52.96.
  • Business broadband connections increased to 19,202 from 19,063 and business broadband ARPU increased to $153.59 from $150.58.
  • Consumer broadband connections increased to 38,760 from 38,491 and consumer broadband ARPU increased to $42.53 from $39.90.
  • Consumer access lines declined to 55,823 from 57,483.
  • Business access lines decreased to 80,852 from 81,330.

"Alaska Communications continues to target free cash flow for debt reduction, with debt net of cash and short term investments at $536.5 million and our leverage ratio for the twelve months ended December 31, 2012 at 4.4x. Because our operating results in 2013 will be impacted by the timing of the AWN transaction, we are delaying providing full year 2013 guidance until we have established a firm closing date. The AWN transaction will result in approximately $65.0 million of debt pay downs at closing, and our Adjusted EBITDA following close will reflect the preferred distribution that we expect to generate from AWN," said Wayne Graham, Alaska Communications chief financial officer.

Conference Call

The company will host a conference call and live webcast today at 5:00 p.m. Eastern time to discuss the results. Parties in the United States and Canada can access the call at 1-800-762-8779. Parties outside the United States and Canada can access the call at 1-480-629-9645. 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 Thursday, March 7, 2013, at midnight Eastern time. To hear the replay, parties in the United States and Canada can call 1-800-406-7325 and enter pass code 4593495. Parties outside the United States and Canada can call 1-303-590-3030 and enter pass code 4593495.

About Alaska Communications

Headquartered in Anchorage, Alaska Communications Systems Group, Inc. (NAS: ALSK) is a leading provider of high-speed wireless, mobile broadband, Internet, local, long-distance and advanced broadband solutions for businesses and consumers in Alaska. The Alaska Communications network includes the most advanced wireline and wireless broadband and voice networks and the most diverse undersea fiber optic system connecting Alaska to the contiguous United States. For more information, visit www.alaskacommunications.com or www.alsk.com.

Non-GAAP Measures

Adjusted EBITDA, as defined by the Company, may not be similar to Adjusted EBITDA measures used by other companies and is not a measurement under generally accepted accounting principles (GAAP). Management believes that Adjusted 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, stock-based compensation expense and AWN transaction costs that are not directly attributable to the underlying performance of the Company's operations. Management believes the most directly comparable GAAP measure would be Net cash provided by operating activities.

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, Verizon's entry into the Alaska market, Universal Service Fund reforms, our ability to consummate the AWN transaction and AWN's subsequent financial and operational performance, the outcome of on-going IRS audits, adverse national economic conditions, adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing, adverse local economic conditions, including an unexpected downturn in the Alaskan oil and gas or tourism markets, changes in capital expenditures, the effects of competition in our markets, the entry of one or more additional facilities-based carriers into the Alaska market; the Company's ability to complete, manage, integrate, market, maintain, and attract sufficient customers to the products and services it may derive, adverse changes in labor matters, including workforce levels, labor negotiations, and benefits costs; disruption of our suppliers' provisioning of critical products or services; the impact of natural or man-made disasters; changes in Company's relationships with large carrier or enterprise customers or its roaming partners; changes in revenue from universal service funds; unforeseen changes in public policies; changes in accounting policies, including the Company's application of regulatory accounting rules, which could result in an impact on earnings; or disruptive technological developments in the telecommunications industry. 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 atwww.alsk.com.

        
Schedule 1
 
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED SCHEDULE OF OPERATIONS
(Unaudited, In Thousands Except Per Share Amounts)
 
 
Three Months EndedTwelve Months Ended
December 31,December 31,
2012201120122011
 
Operating revenues$95,075$87,472$367,829$349,314
 
Operating expenses:
Cost of services and sales36,79834,852148,400135,732
Selling, general & administrative26,94223,577107,31691,962
Depreciation and amortization13,03515,04951,48758,559
(Gain) loss on disposal of assets, net (528) 25  (2,668) (565)
Total operating expenses 76,247  73,503  304,535  285,688 
 
Operating income18,82813,96963,29463,626
 
Other income and expense:
Interest expense(10,367)(9,456)(39,570)(38,271)
Loss on extinguishment of debt(252)-(575)(13,445)
Interest income1284334
Other -  -  -  174 
Total other income and expense (10,607) (9,448) (40,102) (51,508)
 
Income before income tax expense8,2214,52123,19212,118
 
Income tax benefit (expense) 602  (2,277) (5,783) (11,646)
 
Net income$8,823 $2,244 $17,409 $472 
 
Net income per share:
Net income applicable to common shares$8,823$2,244$17,409$472
Tax-effected expense attributable to convertible notes 1,767  -  - $- 
Net income assuming dilution$10,590 $2,244 $17,409 $472 
 
Basic$0.19 $0.05 $0.38 $0.01 
Diluted$0.18 $0.05 $0.38 $0.01 
 
Weighted average shares outstanding:
Basic 45,677  45,229  45,553  45,103 
Diluted 58,920  45,485  45,878  45,417 
 

Read Full Story

Can't get enough business news?

Sign up for Finance Report by AOL and get everything from retailer news to the latest IPOs delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

More to Explore
Sat, Nov 18
Set Your Location
City, State, or Zip
    
Schedule 2
 
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, In Thousands Except Per Share Amounts)
 
 
December 31,December 31,
Assets20122011
 
Current assets:
Cash and cash equivalents$16,839$20,490
Restricted cash3,8754,956
Short-term investments2,050-
Accounts receivable-trade, net of allowance of $6,231 and $5,78839,71336,986
Materials and supplies9,4095,412
Prepayments and other current assets5,5664,920
Deferred income taxes 8,301  6,596 
Total current assets85,75379,360
 
Property, plant and equipment1,463,3201,428,597
Less: accumulated depreciation and amortization (1,052,459) (1,023,360)
Property, plant and equipment, net410,861405,237
 
Goodwill8,8508,850
Intangible assets, net24,11824,118
Debt issuance costs10,5589,515
Deferred income taxes69,04972,814
Equity method investment2,0282,060
Other assets 3,510  3,154 
Total assets$614,727 $605,108 
 
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Current portion of long-term obligations$21,628$30,930
Accounts payable, accrued and other current liabilities56,37848,919
Advance billings and customer deposits 8,970  9,218 
Total current liabilities86,97689,067
 
Long-term obligations, net of current portion533,772538,624
Other long-term liabilities 28,662  28,340 
Total liabilities 649,410  656,031 
Commitments and contingencies
Stockholders' equity (deficit):
Common stock, $.01 par value; 145,000 authorized458453
Additional paid in capital144,377144,631
Accumulated deficit(170,279)(187,688)
Accumulated other comprehensive loss (9,239) (8,319)
Total stockholders' equity (deficit) (34,683) (50,923)
 
Total liabilities and stockholders' equity (deficit)$