Otelco Reports Second Quarter 2013 Results
Otelco Reports Second Quarter 2013 Results
ONEONTA, Ala.--(BUSINESS WIRE)-- Otelco Inc. (NAS: OTEL) , a wireline telecommunications services provider in Alabama, Maine, Massachusetts, Missouri, New Hampshire, Vermont and West Virginia, today announced results for its second quarter ended June 30, 2013. Key highlights for Otelco include:
Total revenues of $19.7 million for second quarter 2013.
Operating income of $5.1 million for second quarter 2013.
Adjusted EBITDA (as defined below) of $8.4 million for second quarter 2013.
"Second quarter 2013 results produced Adjusted EBITDA of $8.4 million and featured an improvement of 1.1% in our Adjusted EBITDA margin when compared to the first quarter," said Mike Weaver, President and Chief Executive Officer of Otelco. "This quarter, we invested $0.8 million in capital equipment and expect to increase our capital expenditures over the course of the year for a total investment of approximately $7.0 million for 2013.
"We emerged from bankruptcy on May 24 and our new Class A shares began trading on the NASDAQ Global Market on the next trading day under our new symbol OTEL," added Weaver. "As part of our reorganization plan, we reduced the outstanding balance on the senior debt by $28.7 million, refinancing the balance of $133.3 million through a new maturity date of April 30, 2016. In addition to the renewal of the senior debt, we have a $5 million revolving line of credit. The 13% senior subordinated notes were cancelled and exchanged for shares of our new Class A common stock. The payment on the senior debt and the cancellation of the senior subordinated notes resulted in a 50.6% reduction in total debt from $271.0 million to $133.3 million.
"After the principal payment on the senior debt and reflecting payment of the reorganization and loan cost fees associated with the restructuring transaction, we ended the quarter with $11.1 million in cash on hand. We are pleased the restructuring process has been completed and believe the 50% reduction in debt and corresponding lower interest cost makes us a stronger company," Weaver concluded.
Second Quarter 2013 Financial Summary | |||||||||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Three Months Ended June 30, | Change | ||||||||||||||||||||
2012 | 2013 | Amount | Percent | ||||||||||||||||||
Revenues | $ | 24,714 | $ | 19,666 | $ | (5,048 | ) | (20.4 | ) | % | |||||||||||
Operating income (loss) | $ | (148,061 | ) | $ | 5,121 | $ | 153,182 | * | |||||||||||||
Interest expense | $ | (5,655 | ) | $ | (2,225 | ) | $ | (3,430 | ) | (60.7 | ) | % | |||||||||
Net income (loss) available to stockholders | $ | (128,011 | ) | $ | 109,648 | $ | 237,659 | * | |||||||||||||
Basic net income (loss) per share | $ | (48.41 | ) | $ | 38.78 | $ | 87.19 | * | |||||||||||||
Adjusted EBITDA(a) | $ | 10,814 | $ | 8,449 | $ | (2,365 | ) | (21.9 | ) | % | |||||||||||
Capital expenditures | $ | 1,242 | $ | 783 | $ | (459 | ) | (37.0 | ) | % | |||||||||||
* Not a meaningful calculation | |||||||||||||||||||||
Six Months Ended June 30, | Change | ||||||||||||||||||||
2012 | 2013 | Amount | Percent | ||||||||||||||||||
Revenues | $ | 50,088 | $ | 40,654 | $ | (9,434 | ) | (18.8 | ) | % | |||||||||||
Operating income (loss) | $ | (141,444 | ) | $ | 10,009 | $ | 151,453 | * | |||||||||||||
Interest expense | $ | (11,488 | ) | $ | (7,779 | ) | $ | (3,709 | ) | (32.3 | ) | % | |||||||||
Net income (loss) available to stockholders | $ | (127,192 | ) | $ | 107,874 | $ | 235,066 | * | |||||||||||||
Basic net income (loss) per share | $ | (48.10 | ) | $ | 39.43 | $ | 87.53 | * | |||||||||||||
Adjusted EBITDA(a) | $ | 22,290 | $ | 17,235 | $ | (5,055 | ) | (22.7 | ) | % | |||||||||||
Capital expenditures | $ | 2,545 | $ | 1,582 | $ | (963 | ) | (37.8 | ) | % | |||||||||||
* Not a meaningful calculation | |||||||||||||||||||||
Reconciliation of Adjusted EBITDA to Net Income (Loss) | |||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
2012 | 2013 | 2012 | 2013 | ||||||||||||||||||
Net income (loss) | $ | (128,011 | ) | $ | 109,648 | $ | (127,192 | ) | $ | 107,874 | |||||||||||
Add: Depreciation | 2,747 | 2,389 | 5,475 | 4,769 | |||||||||||||||||
Interest expense - net of premium | 5,313 | 1,991 | 10,804 | 7,204 | |||||||||||||||||
Interest expense - amortize loan cost | 342 | 233 | 684 | 575 | |||||||||||||||||
Income tax expense (benefit) | (25,713 | ) | 4,942 | (25,189 | ) | 4,871 | |||||||||||||||
Change in fair value of derivatives | - | - | (241 | ) | - | ||||||||||||||||
Loan fees | 19 | 14 | 38 | 32 | |||||||||||||||||
Amortization - intangibles | 3,136 | 908 | 4,930 | 2,093 | |||||||||||||||||
Goodwill impairment | 143,998 | - | 143,998 | - | |||||||||||||||||
Impairment of long-lived assets | 8,622 | - | 8,622 | - | |||||||||||||||||
IXC tariff dispute settlement | - | - | - | 69 | |||||||||||||||||
Cancellation of debt | - | (114,210 | ) | - | (114,210 | ) | |||||||||||||||
Restructuring expense | 361 | 2,534 | 361 | 3,958 | |||||||||||||||||
Adjusted EBITDA(a) | $ | 10,814 | $ | 8,449 | $ | 22,290 | $ | 17,235 | |||||||||||||
(a) Adjusted EBITDA is defined as consolidated net income (loss) plus interest expense, depreciation and amortization, income taxes and certain non-recurring fees, expenses or charges and other non-cash charges reducing or increasing consolidated net income. Adjusted EBITDA is not a measure calculated in accordance with generally acceptable accounting principles (GAAP). While providing useful information, Adjusted EBITDA should not be considered in isolation or as a substitute for consolidated statement of operations or consolidated statement of cash flows data prepared in accordance with GAAP. The Company believes Adjusted EBITDA is useful as a tool to analyze the Company on the basis of operating performance and leverage. The definition of Adjusted EBITDA corresponds to the definition of Adjusted EBITDA in the Company's credit facility and certain of the covenants contained therein. The Company's presentation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. | |||||||||||||||||||||
Key Operating Statistics | ||||||||||||||||||||
(Unaudited) | Quarterly | |||||||||||||||||||
% Change | ||||||||||||||||||||
December 31, | March 31, | June 30, | from | |||||||||||||||||
2011 | 2012 | 2013 | 2013 | March 31, 2013 | ||||||||||||||||
Otelco access line equivalents (1) | 102,378 | 99,395 | 98,839 | 97,496 | (1.4 | )% | ||||||||||||||
RLEC and other services: | ||||||||||||||||||||
Voice access lines | 46,202 | 43,021 | 42,274 | 41,354 | (2.2 | )% | ||||||||||||||
Data access lines | 22,904 | 22,742 | 22,718 | 22,604 | (0.5 | )% | ||||||||||||||
Access line equivalents(1) | 69,106 | 65,763 | 64,992 | 63,958 | (1.6 | )% | ||||||||||||||
Cable television customers | 4,201 | 4,155 | 4,102 | 4,027 | (1.8 | )% | ||||||||||||||
Satellite television customers | 226 | 233 | 235 | 237 | 0.9 | % | ||||||||||||||
Security | - | 63 | 96 | 111 | 15.6 | % | ||||||||||||||
Additional internet customers | 5,414 | 4,506 | 4,312 | 4,124 | (4.4 | )% | ||||||||||||||
RLEC dial-up | 301 | 198 | 169 | 153 | (9.5 | )% | ||||||||||||||
Other dial-up | 2,797 | 1,895 | 1,726 | 1,590 | (7.9 | )% | ||||||||||||||
Other data lines | 2,316 | 2,413 | 2,417 | 2,381 | (1.5 | )% | ||||||||||||||
CLEC: | ||||||||||||||||||||
Voice access lines | 30,189 | 30,470 | 30,589 | 30,252 | (1.1 | )% | ||||||||||||||
Data access lines | 3,083 | 3,162 | 3,258 | 3,286 | 0.9 | % | ||||||||||||||
Access line equivalents(1) | 33,272 | 33,632 | 33,847 | 33,538 | (0.9 | )% | ||||||||||||||
Wholesale network connections | 157,144 | 162,117 | 2,608 | 2,709 | 3.9 | % | ||||||||||||||
For the Year Ended | For the Three Months Ended | |||||||||||||||||||
December 31, | March 31, | June 30, | ||||||||||||||||||
2011 | 2012 | 2013 | 2013 | |||||||||||||||||
Total revenues (in millions): | $ | 101.8 | $ | 98.4 | $ | 21.0 | $ | 19.7 | ||||||||||||
RLEC(2) | $ | 57.4 | $ | 62.8 | $ | 14.5 | $ | 13.5 | ||||||||||||
CLEC | $ | 44.4 | $ | 35.6 | $ | 6.5 | $ | 6.2 | ||||||||||||
(1) We define access line equivalents as voice access lines and data access lines (including cable modems, digital subscriber lines, and dedicated data access trunks). | ||||||||||||||||||||
