Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Enventis Corp | form8-k.htm |
Exhibit 99.1
| FOR IMMEDIATE RELEASE | Contacts: David Christensen, CFO |
| 507-387-3355 | |
| Jennifer Spaude, Investor Relations | |
| 507-386-3765 |
HickoryTech Reports Third Quarter 2012 Results
MANKATO, Minn., Nov. 8, 2012 — HickoryTech Corporation (NASDAQ: HTCO) today reported third quarter revenue of $45.8 million, up 1 percent compared to the corresponding quarter in 2011. Net income for the third quarter ended Sept. 30, 2012, totaled $1.7 million, down 18 percent year over year, and earnings per share totaled 13 cents per diluted share, a 19 percent decrease from last year primarily as a result of Telecom revenue declines and added depreciation expense companywide.
Year to date, revenue totaled $136.6 million, up 10 percent over the nine months ended Sept. 30, 2011. Earnings were $5.8 million a 15 percent decrease over the comparable nine-month period last year, and earnings per share of 43 cents were down 16 percent from last year.
“We continued to achieve solid growth in our fiber and data business in the third quarter and year-to-date, providing overall top-line growth, despite declines in our Telecom business,” said John Finke, HickoryTech’s president and chief executive officer. “The addition of IdeaOne to our operations is providing the growth we expected and we are on track to complete the integration in the fourth quarter.”
Fiber and Data Segment (before inter-segment eliminations)
Third quarter Fiber and Data Segment revenue totaled $15.7 million, up 36 percent year over year, attributed to success in retail and wholesale transport and data services and the addition of IdeaOne Telecom operations, which HickoryTech acquired on March 1, 2012. Costs and expenses for the segment totaled $13.3 million, an increase of 38 percent year over year. Net income totaled $1.5 million, up 27 percent from a year ago.
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Fiber and Data revenue, excluding IdeaOne operations, increased 8 percent year over year.
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Fiber and Data Segment operating income totaled $2.4 million for the third quarter of 2012, a 27 percent increase year over year.
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For the nine-month period, Fiber and Data revenue was up 31 percent compared to the nine-month period in 2011, including 10 percent organic growth and seven months of IdeaOne Telecom results.
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Equipment Segment (before inter-segment eliminations)
Third quarter Equipment Segment revenue totaled $15 million, a 9 percent decrease year over year, primarily as a result of lower equipment installations. For the nine-month period, Equipment Segment revenue increased 17 percent over 2011.
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Sales of equipment decreased 9 percent relative to the third quarter 2011, and support services revenue decreased 3 percent for the comparable period.
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Equipment Segment operating income totaled $890,000 in the third quarter of 2012, a reduction of $360,000 or 29 percent year over year. On a nine-month year-to-date basis, Equipment Segment operating income totaled $2.1 million in 2012, a $345,000, or 14 percent reduction over the same period 2011.
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Telecom Segment (before inter-segment eliminations)
Third quarter 2012 Telecom Segment revenue totaled $15.7 million, a 12 percent decrease from a year ago. Telecom results reflect continued declines in network access and local service revenue, along with decreases in bill processing revenue from the company’s SuiteSolution billing and customer management services. Costs and expenses totaled $14.4 million, down 3 percent year over year. Telecom Segment net income totaled $800,000, a 54 percent decrease compared to the third quarter 2011.
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Broadband revenue totaled $4.9 million, down 5 percent versus the third quarter in 2011. Broadband revenue includes DSL, Internet, data and digital TV services sold in the company’s legacy Telecom service area.
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Network access revenue totaled $4.7 million, a 15 percent decrease year over year, which reflects a higher level of decline this year due to: the expiration of interstate infrastructure support reimbursements, the cancelation of a conferencing company contract, the initial impacts of industry-wide access reform regulation and access line and minute-of-use erosion.
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Local service revenue totaled $3.1 million, down 12 percent year over year, a decline attributed to access line losses and regulatory reform.
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Capital Expenditures
Capital expenditures in the third quarter totaled $9.4 million, net of grants from the Greater Minnesota Broadband Collaborative Project, compared with $5.6 million in third quarter 2011. On a nine-month, year-to-date basis, capital expenditures were $18.9 million in 2012 compared to $14.1 million in 2011.
Depreciation, Amortization and Interest Expense
Depreciation and amortization expense increased $1.1 million or 19 percent in the third quarter. The IdeaOne acquisition added $850,000 of depreciation and the remainder is attributed to increased capital expenditure associated with expansion of the network and success-based capital expenditures associated with Fiber and Data revenue growth.
Interest expense in the third quarter of 2012 and 2011 reflect accounting for interest rate swap agreements and the changes in the fair value of the swap agreements as non-cash interest expense, conforming to the Company’s restated financial statements for earlier periods.
Interest expense in the third quarter statement of operations totaled $1.6 million. This sum accounts for interest rate swap agreements and the changes in the fair value of the agreements as a non-cash interest expense. Year over year, third quarter interest expense decreased $1.3 million, or 44 percent, as a result of the fair value change in the swap agreements, an amount that offsets the interest increase associated with the higher level of debt brought on by the IdeaOne acquisition and higher interest rate charges associated with the company’s debt refinancing in the third quarter 2011. The effective interest rate for the first nine months of 2012, without regard to the fair market value change in the swap agreements, was approximately 4.2 percent on an annualized basis in 2012 versus 4.1 percent in 2011.
Debt Position
Long-term debt and current maturities of debt, including capitalized leases, totaled $137.2 million as of Sept. 30, 2012. The 2012 debt balance represents an increase of $16.9 million from $120.2 million as of Dec. 31, 2011, as a result of the debt deployed to acquire IdeaOne Telecom. However, the level of debt is down $4.3 million from $141.5 million at the end of the previous quarter ended June 30, 2012.
“We continue to use the free cash flows of our business to achieve our strategic objectives,” Finke said. “Our ability to continue to invest, pay down our debt and increase our shareholder dividend in the third quarter can be attributed to the strong free cash flow generated by our operations.”
Dividend Increased
In the third quarter, HickoryTech declared an increased quarterly dividend of $14.5 cents per share of HickoryTech common stock to be paid in the fourth quarter, representing a 4 percent increase from the previous dividend of 14 cents. This is the company’s fourth dividend increase in the past five years. The company has declared shareholder dividends for more than 60 years.
Fiscal Outlook
HickoryTech made minor revisions to its previous fiscal 2012 outlook, as outlined below. Guidance reflects the IdeaOne Telecom acquisition as of March 1, 2012.
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Revenue is expected to range from $177 million to $183 million. (no change)
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Net Income is expected to range from $7.3 million to $8.6 million. (changed from $7.6 million to $8.6 million to reflect the increased interest expense associated with accounting for interest rate swap agreements and the changes in the fair value of the swap agreements as non-cash interest expense)
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Diluted Earnings per Share is expected to range between $0.54 to $0.64 per share. (previously $0.56 to $0.64 per share)
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CAPEX is expected to range from $27 million to $31 million, net of government grants for the Greater Minnesota Broadband Collaborative Project. (no change)
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EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is expected to range from $46 million to $48 million. (no change)
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Debt balance at Dec. 31, 2012 is expected to range from $135 million to $137 million. (previous guidance was $138 million to $141 million)
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Conference Call and Webcast
HickoryTech will host a conference call and webcast on Friday, November 9 at 9 a.m. CT. The conference call dial-in number 877-774-2369 for U.S. and Canadian callers, conference ID 36345775. A simultaneous webcast of the call and downloadable presentation will be available through a link on the Investor Relations page at http://investor.hickorytech.com.
About HickoryTech
HickoryTech Corporation is a leading communications provider serving business and residential customers in the upper Midwest. With headquarters in Mankato, Minn., HickoryTech has 500 employees and a five-state fiber network spanning more than 3,250 route miles across Minnesota and into Iowa, North Dakota, South Dakota and Wisconsin. Enventis provides business IP voice, data and video solutions, MPLS networking, data center and managed hosted services and communication systems. HickoryTech delivers broadband Internet, Digital TV, voice and data services to businesses and consumers in southern Minnesota and northwest Iowa. The Company trades on the NASDAQ, symbol: HTCO. For more information, visit www.hickorytech.com.
Non-GAAP Measures
To supplement the Company’s financial statements presented in accordance with GAAP, the Company provides certain non-GAAP financial measures of financial performance and position. The Company’s reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, or superior to, GAAP results. These non-GAAP measures are provided to enhance investors’ overall understanding of the Company’s current financial performance, financial position and ability to generate cash flows. In many cases non-GAAP financial measures are used by analysts and investors to evaluate the Company’s performance and financial position. Reconciliation to the nearest GAAP measure included in this press release can be found in the financial table included below.
Forward-looking statement
Certain statements included in this press release that are not historical facts are "forward-looking statements." Such forward-looking statements are based on current expectations, estimates and projections about the industry in which HickoryTech operates and management's beliefs and assumptions. The forward-looking statements are subject to uncertainties. These statements are not guarantees of future performance and involve certain risks, uncertainties and probabilities. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they were made. HickoryTech undertakes no obligation to update any of its forward-looking statements, except as required by law.
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HickoryTech Corporation
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Consolidated Statements of Operations
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(unaudited)
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Three Months Ended September 30
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%
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Nine Months Ended September 30
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%
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2012
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2011
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Change
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2012
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2011
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Change
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(Dollars in thousands, except share data)
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Restated
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Restated
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Operating revenue:
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Equipment
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$ | 12,915 | $ | 14,269 | -9 | % | $ | 38,954 | $ | 31,499 | 24 | % | ||||||||||||
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Services
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32,898 | 30,975 | 6 | % | 97,660 | 92,475 | 6 | % | ||||||||||||||||
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Total operating revenue
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45,813 | 45,244 | 1 | % | 136,614 | 123,974 | 10 | % | ||||||||||||||||
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Costs and expenses:
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Cost of sales, excluding depreciation and amortization
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10,906 | 12,223 | -11 | % | 33,664 | 27,146 | 24 | % | ||||||||||||||||
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Cost of services, excluding depreciation and amortization
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16,358 | 14,738 | 11 | % | 47,589 | 44,244 | 8 | % | ||||||||||||||||
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Selling, general and administrative expenses
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7,123 | 6,147 | 16 | % | 21,270 | 19,419 | 10 | % | ||||||||||||||||
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Depreciation and amortization
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6,869 | 5,794 | 19 | % | 19,795 | 17,155 | 15 | % | ||||||||||||||||
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Total costs and expenses
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41,256 | 38,902 | 6 | % | 122,318 | 107,964 | 13 | % | ||||||||||||||||
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Operating income
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4,557 | 6,342 | -28 | % | 14,296 | 16,010 | -11 | % | ||||||||||||||||
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Interest and other income
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3 | 26 | -88 | % | 37 | 50 | -26 | % | ||||||||||||||||
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Interest expense
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(1,625 | ) | (2,880 | ) | -44 | % | (4,635 | ) | (5,199 | ) | -11 | % | ||||||||||||
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Income before income taxes
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2,935 | 3,488 | -16 | % | 9,698 | 10,861 | -11 | % | ||||||||||||||||
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Income tax provision
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1,194 | 1,355 | -12 | % | 3,925 | 4,034 | -3 | % | ||||||||||||||||
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Net income
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$ | 1,741 | $ | 2,133 | -18 | % | $ | 5,773 | $ | 6,827 | -15 | % | ||||||||||||
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Basic earnings per share
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$ | 0.13 | $ | 0.16 | -19 | % | $ | 0.43 | $ | 0.51 | -16 | % | ||||||||||||
| $ | 0.91 | -24 | % | |||||||||||||||||||||
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Basic weighted average common shares outstanding
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13,511,009 | 13,394,225 | 13,483,358 | 13,363,874 | ||||||||||||||||||||
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Diluted earnings per share
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$ | 0.13 | $ | 0.16 | -19 | % | $ | 0.43 | $ | 0.51 | -16 | % | ||||||||||||
| -24 | % | |||||||||||||||||||||||
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Diluted weighted average common and equivalent shares outstanding
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13,526,875 | 13,409,414 | 13,498,268 | 13,376,261 | ||||||||||||||||||||
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Dividends per share
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$ | 0.14 | $ | 0.135 | 4 | % | $ | 0.42 | $ | 0.405 | 4 | % | ||||||||||||
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HickoryTech Corporation
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Consolidated Balance Sheets
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(unaudited)
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(Dollars and Share Data in Thousands)
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September 30, 2012 |
December 31, 2011
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(Restated)
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Assets
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Current assets:
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Cash and cash equivalents
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$ | 10,051 | $ | 13,057 | ||||
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Receivables, net of allowance for doubtful accounts of $289 and $436
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27,493 | 25,317 | ||||||
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Inventories
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7,294 | 9,297 | ||||||
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Income taxes receivable
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1,027 | 498 | ||||||
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Deferred income taxes, net
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1,559 | 1,559 | ||||||
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Prepaid expenses
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2,612 | 1,801 | ||||||
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Other
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1,085 | 964 | ||||||
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Total current assets
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51,121 | 52,493 | ||||||
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Investments
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3,210 | 4,277 | ||||||
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Property, plant and equipment
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424,782 | 396,816 | ||||||
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Accumulated depreciation
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(247,979 | ) | (242,886 | ) | ||||
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Property, plant and equipment, net
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176,803 | 153,930 | ||||||
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Other assets:
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Goodwill
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29,028 | 27,303 | ||||||
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Intangible assets, net
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5,034 | 2,314 | ||||||
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Deferred costs and other
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3,554 | 3,669 | ||||||
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Total other assets
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37,616 | 33,286 | ||||||
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Total assets
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$ | 268,750 | $ | 243,986 | ||||
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Liabilities and Shareholders' Equity
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Current liabilities:
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Accounts payable
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$ | 4,952 | $ | 4,661 | ||||
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Extended term payable
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14,008 | 6,920 | ||||||
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Deferred revenue
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4,832 | 6,251 | ||||||
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Accrued expenses and other
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9,645 | 10,175 | ||||||
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Current maturities of long-term obligations
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1,636 | 1,407 | ||||||
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Total current liabilities
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35,073 | 29,414 | ||||||
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Long-term liabilities:
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Debt obligations, net of current maturities
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135,519 | 118,828 | ||||||
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Accrued income taxes
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142 | 154 | ||||||
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Deferred revenue
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1,045 | 1,131 | ||||||
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Financial derivative instruments
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2,764 | 2,469 | ||||||
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Accrued employee benefits and deferred compensation
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19,968 | 18,166 | ||||||
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Deferred income taxes
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30,281 | 30,627 | ||||||
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Total long-term liabilities
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189,719 | 171,375 | ||||||
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Total liabilities
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224,792 | 200,789 | ||||||
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Commitments and contingencies
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Shareholders' equity:
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Common stock, no par value, $.10 stated value
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Shares authorized: 100,000
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Shares issued and outstanding: 13,528 in 2012 and 13,396 in 2011
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1,353 | 1,340 | ||||||
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Additional paid-in capital
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16,661 | 15,683 | ||||||
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Retained earnings
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30,424 | 30,309 | ||||||
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Accumulated other comprehensive (loss)
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(4,480 | ) | (4,135 | ) | ||||
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Total shareholders' equity
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43,958 | 43,197 | ||||||
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Total liabilities and shareholders' equity
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$ | 268,750 | $ | 243,986 | ||||
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HickoryTech Corporation
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Fiber and Data Segment
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(unaudited)
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Three Months Ended September 30
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Nine Months Ended September 30
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(Dollars in thousands)
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2012
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2011
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% Change
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2012
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2011
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% Change
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Revenue before intersegment eliminations:
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Services
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$ | 15,528 | $ | 11,368 | 37 | % | $ | 43,924 | $ | 33,296 | 32 | % | ||||||||||||
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Intersegment
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215 | 219 | -2 | % | 601 | 566 | 6 | % | ||||||||||||||||
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Total Fiber and Data revenue
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15,743 | 11,587 | 36 | % | 44,525 | 33,862 | 31 | % | ||||||||||||||||
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Cost of services (excluding depreciation and amortization)
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7,735 | 5,834 | 33 | % | 21,819 | 17,335 | 26 | % | ||||||||||||||||
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Selling, general and administrative expenses
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2,925 | 2,230 | 31 | % | 8,477 | 6,455 | 31 | % | ||||||||||||||||
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Depreciation and amortization
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2,638 | 1,597 | 65 | % | 7,155 | 4,739 | 51 | % | ||||||||||||||||
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Total costs and expenses
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13,298 | 9,661 | 38 | % | 37,451 | 28,529 | 31 | % | ||||||||||||||||
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Operating income
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$ | 2,445 | $ | 1,926 | 27 | % | $ | 7,074 | $ | 5,333 | 33 | % | ||||||||||||
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Net income
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$ | 1,454 | $ | 1,146 | 27 | % | $ | 4,208 | $ | 3,173 | 33 | % | ||||||||||||
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Capital expenditures
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$ | 6,390 | $ | 2,988 | 114 | % | $ | 11,958 | $ | 7,211 | 66 | % | ||||||||||||
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HickoryTech Corporation
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Equipment Segment
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(unaudited)
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Three Months Ended September 30
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Nine Months Ended September 30
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(Dollars in thousands)
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2012
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2011
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% Change
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2012
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2011
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% Change
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Revenue before intersegment eliminations:
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Equipment
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$ | 12,915 | $ | 14,269 | -9 | % | $ | 38,954 | $ | 31,499 | 24 | % | ||||||||||||
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Support Services
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2,086 | 2,147 | -3 | % | 6,332 | 7,087 | -11 | % | ||||||||||||||||
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Total Equipment revenue
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15,001 | 16,416 | -9 | % | 45,286 | 38,586 | 17 | % | ||||||||||||||||
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Cost of sales (excluding depreciation and amortization)
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10,906 | 12,223 | -11 | % | 33,664 | 27,146 | 24 | % | ||||||||||||||||
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Cost of services (excluding depreciation and amortization)
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1,802 | 1,634 | 10 | % | 5,141 | 5,008 | 3 | % | ||||||||||||||||
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Selling, general and administrative expenses
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1,332 | 1,235 | 8 | % | 4,159 | 3,765 | 10 | % | ||||||||||||||||
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Depreciation and amortization
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71 | 74 | -4 | % | 213 | 213 | 0 | % | ||||||||||||||||
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Total costs and expenses
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14,111 | 15,166 | -7 | % | 43,177 | 36,132 | 19 | % | ||||||||||||||||
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Operating income
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$ | 890 | $ | 1,250 | -29 | % | $ | 2,109 | $ | 2,454 | -14 | % | ||||||||||||
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Net income
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$ | 529 | $ | 744 | -29 | % | $ | 1,254 | $ | 1,458 | -14 | % | ||||||||||||
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Capital expenditures
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$ | (15 | ) | $ | 213 | -107 | % | $ | 175 | $ | 306 | -43 | % | |||||||||||
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HickoryTech Corporation
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Telecom Segment
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(unaudited)
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Three Months Ended September 30
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%
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Nine Months Ended September 30
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%
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(Dollars in thousands)
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2012
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2011
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Change
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2012
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2011
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Change
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Revenue before intersegment eliminations:
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Local Service
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$ | 3,124 | $ | 3,534 | -12 | % | $ | 9,901 | $ | 10,822 | -9 | % | ||||||||||||
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Network Access
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4,677 | 5,512 | -15 | % | 14,329 | 17,088 | -16 | % | ||||||||||||||||
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Broadband
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4,861 | 5,101 | -5 | % | 14,840 | 15,245 | -3 | % | ||||||||||||||||
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Directory
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764 | 845 | -10 | % | 2,316 | 2,563 | -10 | % | ||||||||||||||||
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Long Distance
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611 | 717 | -15 | % | 1,895 | 2,173 | -13 | % | ||||||||||||||||
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Bill Processing
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950 | 1,330 | -29 | % | 3,190 | 2,917 | 9 | % | ||||||||||||||||
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Intersegment
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465 | 404 | 15 | % | 1,319 | 1,220 | 8 | % | ||||||||||||||||
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Other
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297 | 421 | -29 | % | 933 | 1,284 | -27 | % | ||||||||||||||||
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Total Telecom revenue
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$ | 15,749 | $ | 17,864 | -12 | % | $ | 48,723 | $ | 53,312 | -9 | % | ||||||||||||
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Total Telecom revenue before intersegment eliminations
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Unaffiliated Customers
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$ | 15,284 | $ | 17,460 | $ | 47,404 | $ | 52,092 | ||||||||||||||||
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Intersegment
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465 | 404 | 1,319 | 1,220 | ||||||||||||||||||||
| 15,749 | 17,864 | 48,723 | 53,312 | |||||||||||||||||||||
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Cost of services (excluding depreciation and amortization)
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7,447 | 7,844 | -5 | % | 22,373 | 23,540 | -5 | % | ||||||||||||||||
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Selling, general and administrative expenses
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2,779 | 2,919 | -5 | % | 8,429 | 9,035 | -7 | % | ||||||||||||||||
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Depreciation and amortization
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4,146 | 4,101 | 1 | % | 12,364 | 12,137 | 2 | % | ||||||||||||||||
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Total costs and expenses
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14,372 | 14,864 | -3 | % | 43,166 | 44,712 | -3 | % | ||||||||||||||||
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Operating income
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$ | 1,377 | $ | 3,000 | -54 | % | $ | 5,557 | $ | 8,600 | -35 | % | ||||||||||||
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Net income
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$ | 816 | $ | 1,787 | -54 | % | $ | 3,301 | $ | 5,102 | -35 | % | ||||||||||||
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Capital expenditures
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$ | 2,979 | $ | 2,440 | 22 | % | $ | 6,777 | $ | 6,615 | 2 | % | ||||||||||||
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Key Metrics
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Business access lines
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20,546 | 23,378 | -12 | % | ||||||||||||||||||||
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Residential access lines
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22,715 | 25,329 | -10 | % | ||||||||||||||||||||
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Total access lines
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43,261 | 48,707 | -11 | % | ||||||||||||||||||||
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Long distance customers
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30,662 | 32,730 | -6 | % | ||||||||||||||||||||
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Digital Subscriber Line customers
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19,751 | 19,749 | 0 | % | ||||||||||||||||||||
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Digital TV customers
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10,341 | 10,503 | -2 | % | ||||||||||||||||||||
| HickoryTech Corporation | ||||||||
| Reconciliation of Non-GAAP Measures | ||||||||
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Year Ending
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December 31, 2012
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(Dollars in thousands)
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Guidance Range
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Reconciliation of net income to 2012 EBITDA guidance1:
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Low
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High
|
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Projected net income
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$ | 7,300 | $ | 8,600 | ||||
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Add back:
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Depreciation and amortization
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27,400 | 27,200 | ||||||
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Interest expense
|
6,300 | 6,200 | ||||||
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Taxes
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5,000 | 6,000 | ||||||
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Projected EBITDA guidance 1
|
$ | 46,000 | $ | 48,000 | ||||
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1 EBITDA, a non-GAAP financial measure, is as defined in our credit agreement
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