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May 06, 2019
Alaska Communications Reports First Quarter 2019 Results


ANCHORAGE, Alaska--(BUSINESS WIRE)--May 6, 2019-- Alaska Communications Systems Group, Inc. (NASDAQ: ALSK) today reported financial results for the first quarter of 2019.

“We are pleased to report another quarter of solid performance, consistent with our plan and expectations. Market demand for our Enterprise and Carrier business is strong, reflected in our quarterly Business and Wholesale broadband revenue performance, up 9.9% year over year. Cost management is receiving continued attention as evidenced by reduction in the executive team and proposed reductions to the Board of Directors.

“Growth revenues, combined with stable high cost support revenues, now stand at 69% of total revenues for the quarter. These combined revenues continue to outpace declines in legacy revenues, as reflected in our total revenue growth. This positions us to deliver Adjusted EBITDA expansion over the long-term. We look forward to reporting progress over the upcoming quarters,” said Anand Vadapalli, president and CEO of Alaska Communications.

Revenue Highlights: First Quarter 2019 Compared to First Quarter 2018

  • Total revenue:
    • Revenue was $56.9 million, compared to $56.0 million.
    • Total broadband revenue was $32.0 million, compared to $29.7 million.
  • Business and wholesale:
    • Comprised 64.1 percent of total revenue.
    • Revenue was $36.5 million, compared to $33.8 million.
    • Broadband revenue was $25.5 million, compared to $23.2 million.
  • Consumer:
    • Comprised 16.2 percent of total revenue.
    • Revenue was $9.2 million, compared to $9.4 million.
    • Broadband revenue was flat at $6.5 million.
  • Regulatory:
    • Comprised 19.7 percent of total revenue.
    • Revenue was $11.2 million, compared to $12.8 million.

Financial Metrics: First Quarter 2019 compared to First Quarter 2018

  • Operating income was $5.9 million, compared to $5.3 million.
  • Net income, including $2.8 million loss on extinguishment of debt, was $0.2 million, compared to net income of $2.1 million.
  • Net cash provided by operating activities was $15.5 million, compared to $13.4 million.
  • Capital expenditures were $8.6 million, compared to $8.7 million.

Balance Sheet Metrics: March 31, 2019 compared to December 31, 2018

  • Cash was $24.5 million, compared to $15.0 million.
  • Net debt was $159.9 million, compared to $161.2 million.
  • Reflects additional assets and liabilities of $81.5 and $81.2 million, respectively, from adoption of the new lease accounting standard in the first quarter.

Non-GAAP Metrics: First Quarter 2019 compared to First Quarter 2018

  • Adjusted EBITDA was $15.2 million, compared to $14.4 million.
  • Adjusted free cash flow was $3.0 million, compared to $1.8 million.

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.

2019 Guidance

Laurie Butcher, Alaska Communications senior vice-president of finance, said, “During the quarter, with our refinancing we increased access to capital, creating greater stability and flexibility in our balance sheet. We see great opportunity in the market and continue to invest for long-term growth. Having met our expectations for the first quarter, we re-affirm guidance for 2019.”

The company re-affirms guidance as follows:

  • Total Revenue to be between $230 million and $235 million
  • Adjusted EBITDA to be between $60 million and $62 million
  • Capital Expenditures to be between $40 million and $42 million
  • Adjusted Free Cash Flow to be between $10 million and $12 million

Conference Call

The Company will host a conference call and live webcast on Tuesday, May 7, 2019 at 2:00 p.m. Eastern Time to discuss the results. Parties in the United States and Canada can access the call at 1-888-378-4398 and enter pass code 331303. All other parties can access the call at 1-856-344-9295 and use the same code. On the call, the management team will answer questions submitted in advance.

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 30 days. A telephonic replay of the conference call will also be available two hours after the call and will run until June 6, 2019 at 5:00 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 4054244. All other parties can call 1-719-457-0820 and enter pass code 4054244.

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 and computation of these non-GAAP measures are 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. 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 inflows of $4.0 million in the three-month period of 2019).

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 changes in technology and related standards, the impact of natural or man-made disasters and accidents, Federal and Alaska Universal Service Fund changes and our current and historical compliance with the obligations of those programs, structural declines for voice and other legacy services, maintenance or IT issues, third-party intellectual property claims, potential pension shortfalls, the success or failure of future strategic transactions, funding through the rural health care universal service support mechanism and our ability to comply and our history of compliance with the regulatory requirements to receive those support payments, our ability to service our debt and refinance as required, adverse economic conditions, our success in providing broadband services on the Northslope and Western Alaska, 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, labor negotiations, employee benefit costs, our ability to control other operating costs, disruption of our supplier’s provisioning of critical products or services, the actions of activist shareholders, changes in Company's relationships with large customers, unforeseen changes in public policies, regulatory changes, 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,
2019     2018
 
 
Operating revenues $ 56,909 $ 55,972
 
Operating expenses:
Cost of services and sales (excluding depreciation and amortization) 25,627 25,833
Selling, general & administrative 16,656 16,012
Depreciation and amortization 8,679 8,787
Gain on disposal of assets, net   (2 )   (3 )
 
Total operating expenses   50,960     50,629  
 
Operating income 5,949 5,343
 
Other income and (expense):
Interest expense (3,056 ) (3,504 )
Loss on extinguishment of debt (2,799 ) -
Interest income 75 14
Other income, net   122     104  
Total other income and (expense)   (5,658 )   (3,386 )
 
Income before income tax (expense) benefit 291 1,957
 
Income tax (expense) benefit   (98 )   112  
 
Net income 193 2,069
 
Less net loss attributable to noncontrolling interest   (34 )   (32 )
 
Net income attributable to Alaska Communications $ 227   $ 2,101  
 
Net income per share attributable to Alaska Communications:
Net income applicable to common shares $ 227   $ 2,101  
 
Basic and Diluted $ 0.00   $ 0.04  
 
Weighted average shares outstanding:
Basic   53,382     52,681  
Diluted   54,605     53,857  
 

 
Schedule 2
 
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, In Thousands Except Per Share Amounts)
       
March 31, December 31,
Assets 2019 2018
 
Current assets:
Cash and cash equivalents $ 22,845 $ 13,351
Restricted cash 1,632 1,634
Short-term investments 134 134
Accounts receivable, net of allowance of $4,175 and $3,936 25,659 31,472
Materials and supplies 8,362 6,737
Prepayments and other current assets   12,453     12,169  
Total current assets 71,085 65,497
 
Property, plant and equipment 1,395,150 1,390,622
Less: accumulated depreciation and amortization   (1,021,664 )   (1,017,442 )
Property, plant and equipment, net 373,486 373,180
 
Deferred income taxes 456 498
Operating lease right of use asset 81,455 -
Other assets   15,483     16,010  
Total assets $ 541,965   $ 455,185  
 
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term obligations $ 3,418 $ 2,289
Accounts payable, accrued and other current liabilities 39,153 40,957
Advance billings and customer deposits 4,002 4,024
Operating lease liabilities - current   2,503     -  
Total current liabilities 49,076 47,270
 
Long-term obligations, net of current portion 174,357 168,023
Deferred income taxes 2,336 2,315
Operating lease liabilities - noncurrent 78,662 -
Other long-term liabilities, net of current portion   67,469     67,827  
Total liabilities   371,900     285,435  
Commitments and contingencies
Alaska Communications stockholders' equity:
Common stock, $.01 par value; 145,000 authorized 536 533
Additional paid in capital 160,704 160,514
Retained earnings 10,666 10,439
Accumulated other comprehensive loss   (2,746 )   (2,675 )
Total Alaska Communications stockholders' equity 169,160 168,811
Noncontrolling interest   905     939  
Total stockholders' equity   170,065     169,750  
 
Total liabilities and stockholders' equity $ 541,965   $ 455,185  
 

 
Schedule 3
 
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, In Thousands)
       
Three Months Ended
March 31,
2019 2018
Cash Flows from Operating Activities:
Net income $ 193 $ 2,069

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 8,679 8,787
Gain on the disposal of assets, net (2 ) (3 )
Amortization of debt issuance costs and debt discount 303 356
Loss on extinguishment of debt 2,799 -
Amortization of deferred capacity revenue (1,126 ) (947 )
Stock-based compensation 498 242
Income tax expense (benefit) 98 (112 )
Charge for uncollectible accounts (697 ) 537
Amortization of ROU asset 565 -
Other non-cash expense, net 121 90
Changes in operating assets and liabilities   4,044     2,402  
Net cash provided by operating activities   15,475     13,421  
 
Cash Flows from Investing Activities:
Capital expenditures (8,563 ) (8,680 )
Capitalized interest (355 ) (420 )
Change in unsettled capital expenditures   (1,121 )   (1,272 )
Net cash used by investing activities   (10,039 )   (10,372 )
 
Cash Flows from Financing Activities:
Repayments of long-term debt (171,758 ) (8,807 )
Proceeds from the issuance of long-term debt 180,000 7,000
Debt issuance costs and discounts (2,659 ) -
Cash paid for debt extinguishment (1,222 ) -
Cash proceeds from noncontrolling interest - 40
Payment of withholding taxes on stock-based compensation   (305 )   (410 )
Net cash provided (used) by financing activities   4,056     (2,177 )
 
Change in cash, cash equivalents and restricted cash 9,492 872
 
Cash, cash equivalents and restricted cash, beginning of period   14,985     16,168  
 
Cash, cash equivalents and restricted cash, end of period $ 24,477   $ 17,040  
 
Supplemental Cash Flow Data:
Interest paid $ 3,075 $ 3,441
Income taxes paid, net $ 10 $ -
 

 
Schedule 4
 
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
ADJUSTED EBITDA
(Unaudited, In Thousands)
       
Three Months Ended
March 31,
2019 2018
 
Net income $ 193 $ 2,069
Add (subtract):
Interest expense 3,056 3,504
Loss on extinguishment of debt 2,799 -
Interest income (75 ) (14 )
Depreciation and amortization 8,679 8,787
Other income, net (122 ) (104 )
Gain on the disposal of assets, net (2 ) (3 )
Income tax expense (benefit) 98 (112 )
Stock-based compensation 498 242
Net loss attributable to noncontrolling interest   34     32  
 
Adjusted EBITDA $ 15,158   $ 14,401  
 

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 inflows of $4.0 million in the three-month period ended March 31, 2019).

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 above is not consistent with the definition of Consolidated EBITDA referenced in our 2019 Senior Credit Facility, 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 expense and income, loss on extinguishment of debt, depreciation and amortization, other income and expense, gain or loss on asset purchases or disposals, provision for income taxes, stock-based compensation, and net loss attributable to noncontrolling interest.

 
Schedule 5
 
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW

(Unaudited, In Thousands)
 
    Three Months Ended
March 31,
2019     2018
 
Net cash provided by operating activities $ 15,475 $ 13,421

Adjustments to reconcile net cash provided by operating activities to adjusted free cash flow:

Capital expenditures (8,563 ) (8,680 )
Amortization of deferred capacity revenue 1,126 947
Amortization of GCI capacity revenue (511 ) (511 )
Amortization of debt issuance costs and debt discount (303 ) (356 )
Interest expense 3,056 3,504
Interest paid (3,075 ) (3,441 )
Interest income (75 ) (14 )
Income taxes paid, net (10 ) -
Charge for uncollectible accounts 697 (537 )
Amortization of ROU asset (565 ) -
Other income, net (122 ) (104 )
Net loss attributable to noncontrolling interest 34 32
Other non-cash expense, net (121 ) (90 )
Changes in operating assets and liabilities   (4,044 )   (2,402 )
Adjusted free cash flow $ 2,999   $ 1,769  
 

 
Schedule 6
 
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
ADJUSTED FREE CASH FLOW
(Unaudited, In Thousands)
       
Three Months Ended
March 31,
2019 2018
 
Adjusted EBITDA $ 15,158 $ 14,401
 
Less:
Capital expenditures (8,563 ) (8,680 )
Amortization of GCI capacity revenue (511 ) (511 )
Income taxes paid, net (10 ) -
Interest paid   (3,075 )   (3,441 )
Adjusted free cash flow* $ 2,999   $ 1,769  
 
* 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 a non-GAAP liquidity measure and is defined as Adjusted EBITDA, less recurring operating cash requirements which include capital expenditures, less cash income taxes refunded or paid, cash interest paid, amortization of GCI capacity revenue and cash receipts and payments. 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 recognized as 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
March 31,
2019 2018
Business and wholesale revenue
Business broadband $ 15,267 $ 13,659
Business voice and other 7,001 6,851
Managed IT services 1,659 1,265
Equipment sales and installations 880 922
Wholesale broadband 10,262 9,578
Wholesale voice and other   1,426     1,488
 
Total business and wholesale revenue   36,495     33,763
Growth in business and wholesale 8.1 %
Consumer revenue
Broadband 6,468 6,492
Voice and other   2,733     2,877
 
Total consumer revenue   9,201     9,369
 
Total business, wholesale, and consumer revenue   45,696     43,132
Growth in business, wholesale and consumer revenue 5.9 %
Growth in broadband revenue 7.6 %
 
Regulatory revenue
Access 6,289 7,917
High cost support   4,924     4,923
 
Total regulatory revenue   11,213     12,840
 
Total revenue $ 56,909   $ 55,972
Growth in total revenue 1.7 %
 

Growth Revenues: Business broadband, Managed IT services, Equipment sales and installations, Wholesale broadband, Consumer broadband

 

Legacy Revenues: Business voice and other, Wholesale voice and other, Consumer voice and other, and Access

 
CAF II Revenue: High Cost Support
 

 
Schedule 8
 
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
KEY OPERATING STATISTICS
(Unaudited)
 
    Three Months Ended
March 31,     December 31,     March 31,
2019 2018 2018
 
Voice:
Business access lines 68,788 69,382 71,002
Consumer access lines 25,156 25,784 28,221
 
Voice ARPU business $ 25.21 $ 25.64 $ 24.76
Voice ARPU consumer $ 33.77 $ 34.04 $ 31.57
 
Broadband:
Business connections 15,126 15,234 15,306
Consumer connections 32,840 32,793 33,675
 
Broadband ARPU business $ 334.94 $ 324.37 $ 297.38
Broadband ARPU consumer $ 65.39 $ 65.00 $ 63.77
 
Monthly Average Churn:
Business voice 1.1 % 1.0 % 1.0 %
Consumer broadband 2.2 % 2.3 % 2.4 %
Consumer voice 1.1 % 1.2 % 1.5 %
 

 
Schedule 9
 
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
LONG TERM DEBT AND NET DEBT
(Unaudited, In Thousands)
       
March 31, December 31,
2019 2018
2019 senior secured credit facility due 2025 $ 180,000 $ -
Debt discount - 2019 senior secured credit facilities due 2025 (2,226 ) -
Debt issuance costs - 2019 senior secured credit facilities due 2025 (2,759 ) -
2017 senior secured credit facility due 2023 - 171,750
Debt discount - 2017 senior secured credit facilities due 2023 - (2,024 )
Debt issuance costs - 2017 senior secured credit facilities due 2023 - (2,182 )
Capital leases and other long-term obligations   2,760     2,768  
Total debt 177,775 170,312
Less current portion   (3,418 )   (2,289 )
Long-term obligations, net of current portion $ 174,357   $ 168,023  
 
Total debt $ 177,775 $ 170,312
Plus debt discounts and debt issuance costs   4,985     4,206  
Gross debt 182,760 174,518
Cash and cash equivalents   (22,845 )   (13,351 )
Net debt $ 159,915   $ 161,167  
 

Source: Alaska Communications Systems Group, Inc.

Media Contact
Heather Cavanaugh, 907-564-7722
Director, External Affairs and Corporate Communications

Investor Contact
Tiffany Smith, 907-564-7556
Manager, Board and Investor Relations
investors@acsalaska.com

Apr 24, 2019
Alaska Communications to Announce Q1 2019 Financial Results May 6 and Conduct Conference Call May 7


ANCHORAGE, Alaska--(BUSINESS WIRE)--Apr. 24, 2019-- Alaska Communications (NASDAQ: ALSK), will release financial results for the first quarter 2019 after markets close Monday, May 6, 2019. The company will host a conference call and live webcast to discuss operating results Tuesday, May 7, 2019 at 2 p.m. ET. The live webcast will include a slide presentation. There will be a live question and answer session after prepared remarks.

Parties in the U.S. and Canada can access the call at 1-888-378-4398 and enter code 331303. All other parties can access the call at 1-856-344-9295 using the same code.

The live webcast of the conference call will be accessible from the "Events Calendar" section of the company's investor website (www.alsk.com). The webcast will be archived for 30 days. A replay of the conference call will also be available two hours after the call ends and will run until June 6, 2019 at 5 p.m. ET. To hear the replay, parties in the U.S. and Canada can call 1-888-203-1112 and enter code 4054244. All other parties can call 1-719-457-0820 and enter code 4054244.

About Alaska Communications

Alaska Communications (NASDAQ: ALSK) is a leading provider of advanced broadband and managed IT services for businesses and consumers in Alaska. The company operates a highly reliable, advanced statewide data and voice network with the latest technology and the most diverse undersea fiber optic system connecting Alaska to the contiguous U.S. For more information, visit http://www.alaskacommunications.com or http://www.alsk.com.

Source: Alaska Communications

Alaska Communications Systems Group, Inc.
Media Contact:
Heather Marron, 907-564-1326
or
Investor Contact:
Tiffany Smith, 907-564-7556
investors@acsalaska.com

Apr 09, 2019
Alaska Communications Promotes William H. Bishop to Chief Operations Officer


ANCHORAGE, Alaska--(BUSINESS WIRE)--Apr. 9, 2019-- Alaska Communications (NASDAQ: ALSK), the state’s leading broadband and managed IT services provider, today announced William H. Bishop, senior vice president, customer and revenue management, is being promoted to senior vice president and chief operations officer as of April 9, 2019. In the newly created role reporting to President and CEO Anand Vadapalli, Bishop will assume responsibility for business operations including revenue across all market segments, customer service, network and IT.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20190409005259/en/

Bill Bishop, new COO at Alaska Communications (Photo: Business Wire)

Bill Bishop, new COO at Alaska Communications (Photo: Business Wire)

“Bill established our carrier and federal sales capabilities over a decade ago and has been the operational leader driving our industry-leading revenue growth in enterprise and carrier over the past 10 years. We see significant opportunity for continued growth in the markets we serve, and Bill is positioned perfectly to help us drive our business performance given his track record, strong leadership, deep knowledge of Alaska and experience in our industry. I am excited for Alaska Communications and the value Bill will create for our people, customers and shareholders,” Vadapalli said.

Bishop added, “In this new capacity, I look forward to serving customers, providing solutions for Alaska businesses as their technology partner and building upon our success as a customer-focused organization.”

WILLIAM H. BISHOP

Bishop joined Alaska Communications in 2004 and has served in several leadership roles in consumer and business sales and operations, including director of retail operations, director of business and wholesale, vice president of business and wholesale, and senior vice president of customer and revenue management. He brings more than 25 years of telecom and business leadership experience to this role, including positions at AT&T, McCaw Communications, and a federal government logistic contracting company.

Originally from Fairbanks, Bishop is active in the Alaska community. He has served on many community boards including as past board member for the Alaska State Chamber of Commerce and current board member for Alaska Business Week. Bishop holds a bachelor’s degree from the University of Alaska Anchorage.

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.

Source: Alaska Communications

Media Contact:
Heather Marron, 907-564-1326

Investor Contact:
Tiffany Smith, 907-564-7556
investors@acsalaska.com

Apr 03, 2019
Simplified IT Support Available to Alaska Small Businesses


ANCHORAGE, Alaska--(BUSINESS WIRE)--Apr. 3, 2019-- Alaska businesses have convenient, simplified access to IT applications to help them run their business, improve productivity and keep their information safe thanks to AKTechDirect from Alaska Communications (NASDAQ: ALSK).

AKTechDirect, an online marketplace powered through cloud commerce platform AppDirect, is a one-stop shop for managing and purchasing IT applications, designed to support the essential IT needs of small businesses. Cloud backup from Mozy delivers data protection and business continuity. Security from Symantec provides advanced end-point protection from ever-evolving cybersecurity threats. Microsoft Office products offer important productivity and collaboration tools. And, Business Cloud Helpdesk provides immediate access to personalized 24/7 support from an IT specialist, all at prices realistic for small businesses.

“These applications are essential tools to maintain and enhance business operations,” said Alaska Communications Senior Director of Product Management Jim Gutcher. “Perfect for small businesses, AKTechDirect’s hand-picked applications can be purchased and managed through one portal and are a scalable model – allowing the freedom and flexibility to add users as needed.”

"Today, small businesses have access to more powerful technology than ever before, but sorting through all the options can be confusing and time-consuming," said Dan Saks, co-Founder and co-CEO of AppDirect. "We know that businesses prefer to buy technology from local providers, and we are excited to work with a company like Alaska Communications that understands this and is moving forward with an innovative vision to become a trusted source for the software and services that small businesses need to thrive."

AKTechDirect demonstrates Alaska Communications’ commitment to offering cutting-edge IT solutions to small business customers.

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.

About AppDirect

AppDirect provides the only end-to-end cloud commerce platform for succeeding in the digital economy. The AppDirect ecosystem connects channels, developers, and customers through its platform to simplify the digital supply chain by enabling the onboarding and sale of products with third-party services, for any channel, on any device, with support. Powering millions of cloud subscriptions worldwide, AppDirect helps organizations, including Jaguar Land Rover, Comcast, ADP, and Deutsche Telekom, connect their customers to the solutions they need to reach their full potential in the digital economy.

Source: Alaska Communications

Media Contact
Heather Marron, 907-564-1326
Manager, Corporate Communications
Heather.Marron@acsalaska.com

Investor Contact
Tiffany Smith, 907-564-7556
Manager, Board and Investor Relations
investors@acsalaska.com

Mar 06, 2019
Alaska Communications Reports Fourth Quarter and Year-end 2018 Results


ANCHORAGE, Alaska--(BUSINESS WIRE)--Mar. 6, 2019-- Alaska Communications Systems Group, Inc. (NASDAQ: ALSK) today reported financial results for the fourth quarter and full year ended December 31, 2018.

“Our 2018 results are robust with total revenue growth of 2.5% for full year 2018 and annual adjusted EBITDA growth of 4.9%. Free cash flow performance was strong at $7.2 million while our capital expenditures position us for continued growth in future years.

“These results reflect our continued performance in Business and Wholesale, driven by our growth engine of the larger Enterprise and Carrier customers. Our technology differentiation was further strengthened by investments in Fixed Wireless, satellite, and Software Defined Networking, along with continued investments in our fiber network particularly in support of 5G wireless backhaul.

“Attention to prudent cost management has been and will continue to be a focus reflecting our commitment to adjusted EBITDA and adjusted free cash flow improvements.

“With clear line of sight to continued growth in our Enterprise and Carrier customer segment, combined with the recent balance sheet refinancing work, we have conviction about high quality future operating results, while we continue to explore all strategic opportunities for shareholder value creation,” said Anand Vadapalli, president and CEO of Alaska Communications.

Revenue Highlights

  • Total revenue:
    • Revenue grew to $58.7 million for the fourth quarter of 2018, compared to $54.9 in the fourth quarter of 2017. Annual revenue grew to $232.5 million for 2018, from $226.9 million in 2017.
    • Total broadband revenue was $31.5 million for the fourth quarter of 2018, compared to $28.4 million for the fourth quarter of 2017, and was $125.4 million for 2018, compared to $123.1 million for 2017.
  • Business and wholesale:
    • Business and wholesale revenue was $37.0 million for the fourth quarter of 2018, compared to $33.1 million for the fourth quarter of 2017. 2018 revenue was $144.6 million, comprising 62.2 percent of total revenue, compared to $139.1 million for 2017, comprising 61.3 percent of total revenue.
    • Business and wholesale broadband revenue was $25.0 million for the fourth quarter of 2018 compared to $22.1 million for the fourth quarter of 2017, and was $99.3 million for 2018, compared to $97.6 million for 2017.
  • Consumer:
    • Consumer revenue was $9.2 million for the fourth quarters of 2018 and 2017. 2018 revenue was $37.3 million, comprising 16.0 percent of total revenue, compared to $37.1 million for 2017, comprising 16.4 percent of total revenue.
    • Consumer broadband revenue was $6.4 million for the fourth quarter of 2018, compared to $6.2 million for the fourth quarter of 2017, and was $26.1 million for 2018, compared to $25.4 million for 2017.
  • Regulatory:
    • Regulatory revenue was $12.5 million for the fourth quarter of 2018, compared to $12.6 million for the fourth quarter of 2017. 2018 revenue was $50.6 million, comprising 21.8 percent of total revenue, compared to $50.7 million for 2017, comprising 22.3 percent of total revenue.

Financial Metrics

  • Net income for the fourth quarter of 2018 was $1.7 million, compared to net loss of $2.9 million in the fourth quarter of 2017. 2018 net income was $9.1 million, compared to net loss of $6.1 million for 2017.
  • Net cash provided by operating activities for the fourth quarter of 2018 was $9.3 million, compared to $4.7 million in the fourth quarter of 2017. 2018 cash provided by operating activities was $56.2 million, compared to $30.4 million for 2017.
  • Capital expenditures for the fourth quarter of 2018 were $12.5 million, compared to $8.9 million fourth quarter of 2017.2018 capital expenditures were $38.0 million, compared to $32.9 million in 2017.

Non-GAAP Metrics:

  • Adjusted EBITDA for the fourth quarter of 2018 was $14.1 million, compared to $15.0 million for the fourth quarter of 2017. 2018 Adjusted EBITDA was $60.2 million, compared to $57.3 million for 2017.
  • Adjusted free cash outflow for the fourth quarter of 2018 was $3.0 million, compared to free cash inflow of $2.3 million for the fourth quarter of 2017. 2018 Adjusted free cash flow was $7.2 million, compared to $8.8 million for 2017.

Reconciliations of non-GAAP financial measures to GAAP financial measures can be found in tables at the end of this release.

Balance Sheet Metrics

  • Cash was $15.0 million at December 31, 2018, compared to $16.2 million at December 31, 2017.
  • Net debt was $161.2 million at December 31, 2018, compared to $177.2 million at December 31, 2017.

Laurie Butcher, Alaska Communications senior vice-president of finance, said, “We are pleased to report that we met or exceeded our guidance in all areas for 2018. Additionally, on January 15, 2019 we closed a transaction securing favorable terms for a new senior credit facility in a volatile market, while increasing access to capital. As we enter 2019, we are well positioned to perform to our business plan which is expected to generate attractive adjusted free cash flow for the year.”

2019 Guidance

The company sets guidance as follows:

  • Total Revenue to be between $230 million and $235 million
  • Adjusted EBITDA to be between $60 million and $62 million
  • Capital Expenditures to be between $40 million and $42 million
  • Adjusted Free Cash Flow to be between $10 million and $12 million

Conference Call

The Company will host a conference call and live webcast on Thursday, March 7, 2019 at 2:00 p.m. Eastern Time to discuss the results. Parties in the United States and Canada can access the call at 1-888-205-6786 and enter pass code 366695. All other parties can access the call at 1-856-344-9315 and use the same code. There will be a live question and answer session after the prepared remarks.

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 April 6, 2019 at 5:00 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 8903679. All other parties can call 1-719-457-0820 and enter pass code 8903679.

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 and computation of these non-GAAP measures are 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. 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 inflows of $9.9 million in the twelve-month period of 2018).

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, funding through the rural health care universal service support mechanism and our ability to comply with the regulatory requirements to receive those support payments, 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, employee benefit costs, our ability to control other operating costs, disruption of our supplier’s provisioning of critical products or services, the actions of activist shareholders, 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 couldaffect 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 Twelve Months Ended
December 31, December 31,
2018 2017 2018 2017
 
 
Operating revenues $ 58,689 $ 54,935 $ 232,468 $ 226,905
 
Operating expenses:
Cost of services and sales (excluding depreciation and amortization) 27,914 26,318 107,509 104,604
Selling, general & administrative 17,249 14,281 66,647 66,612
Depreciation and amortization 8,572 9,193 33,908 36,317
Loss (gain) on disposal of assets, net   69     (23 )   125     50  
 
Total operating expenses   53,804     49,769     208,189     207,583  
 
Operating income 4,885 5,166 24,279 19,322
 
Other income and (expense):
Interest expense (3,238 ) (3,525 ) (13,429 ) (14,860 )
Loss on extinguishment of debt - - - (7,527 )
Interest income 82 7 156 34
Other (expense) income, net   (56 )   (154 )   23     (615 )
Total other income and (expense)   (3,212 )   (3,672 )   (13,250 )   (22,968 )
 
Income (loss) before income tax benefit (expense) 1,673 1,494 11,029 (3,646 )
 
Income tax benefit (expense)   39     (4,470 )   (2,041 )   (2,584 )
 
Net income (loss) 1,712 (2,976 ) 8,988 (6,230 )
 
Less net loss attributable to noncontrolling interest   (8 )   (29 )   (92 )   (129 )
 
Net income (loss) attributable to Alaska Communications $ 1,720   $ (2,947 ) $ 9,080   $ (6,101 )
 
Net income (loss) per share attributable to Alaska Communications:
Net income (loss) applicable to common shares $ 1,720   $ (2,947 ) $ 9,080   $ (6,101 )
 
Basic and Diluted $ 0.03   $ (0.06 ) $ 0.17   $ (0.12 )
 
Weighted average shares outstanding:
Basic   53,185     52,448     53,042     52,232  
Diluted   54,277     52,448     53,840     52,232  
 

Schedule 2
 
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, In Thousands Except Per Share Amounts)
   
December 31, December 31,
Assets 2018 2017
 
Current assets:
Cash and cash equivalents $ 13,351 $ 4,354
Restricted cash 1,634 11,814
Short-term investments 134 -
Accounts receivable, net of allowance of $3,936 and $2,729 31,472 32,535
Materials and supplies 6,737 7,046
Prepayments and other current assets   12,169     6,115  
Total current assets 65,497 61,864
 
Property, plant and equipment 1,390,622 1,357,929
Less: accumulated depreciation and amortization   (1,017,442 )   (991,816 )
Property, plant and equipment, net 373,180 366,113
 
Deferred income taxes 498 3,394
Other assets   16,010     11,415  
Total assets $ 455,185   $ 442,786  
 
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term obligations $ 2,289 $ 17,030
Accounts payable, accrued and other current liabilities 40,957 36,148
Advance billings and customer deposits   4,024     4,213  
Total current liabilities 47,270 57,391
 
Long-term obligations, net of current portion 168,023 168,959
Deferred income taxes 2,315 596
Other long-term liabilities, net of current portion   67,827     61,330  
Total liabilities   285,435     288,276  
Commitments and contingencies
Alaska Communications stockholders' equity:
Common stock, $.01 par value; 145,000 authorized 533 525
Additional paid in capital 160,514 158,969
Retained earnings (accumulated deficit) 10,439 (3,579 )
Accumulated other comprehensive loss   (2,675 )   (2,396 )
Total Alaska Communications stockholders' equity 168,811 153,519
Noncontrolling interest   939     991  
Total stockholders' equity   169,750     154,510  
 
Total liabilities and stockholders' equity $ 455,185   $ 442,786  
 

Schedule 3
       
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, In Thousands)
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2018 2017 2018 2017
Cash Flows from Operating Activities:
Net income (loss) $ 1,712 $ (2,976 ) $ 8,988 $ (6,230 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 8,572 9,193 33,908 36,317
Loss (gain) on the disposal of assets, net 69 (23 ) 125 50
Amortization of debt issuance costs and debt discount 331 412 1,353 2,363
Loss on extinguishment of debt - - - 7,527
Amortization of deferred capacity revenue (1,101 ) (911 ) (4,098 ) (3,512 )
Stock-based compensation 548 667 1,757 1,509
Income tax (benefit) expense (39 ) 4,470 2,041 2,584
Charge for uncollectible accounts 374 1,015 2,745 3,577
Other non-cash expense, net 57 145 225 575
Income taxes receivable (692 ) (8,629 ) (729 ) (8,052 )
Changes in operating assets and liabilities   (515 )   1,355     9,880     (6,302 )
Net cash provided by operating activities   9,316     4,718     56,195     30,406  
 
Cash Flows from Investing Activities:
Capital expenditures (12,525 ) (8,891 ) (37,957 ) (32,945 )
Capitalized interest (545 ) (368 ) (2,001 ) (1,140 )
Change in unsettled capital expenditures 1,584 (507 ) (227 ) 1,500
Proceeds on sale of assets   -     34     1     40  
Net cash used by investing activities   (11,486 )   (9,732 )   (40,184 )   (32,545 )
 
Cash Flows from Financing Activities:
Repayments of long-term debt (1,866 ) (2,088 ) (31,030 ) (176,466 )
Proceeds from the issuance of long-term debt - - 14,000 183,000
Debt issuance costs and discounts - - - (5,559 )
Cash paid for debt extinguishment - - - (5,522 )
Cash proceeds from noncontrolling interest - - 40 75
Payment of withholding taxes on stock-based compensation (5 ) (4 ) (415 ) (605 )
Proceeds from issuance of common stock   100     123     211     239  
Net cash used by financing activities   (1,771 )   (1,969 )   (17,194 )   (4,838 )
 
Change in cash, cash equivalents and restricted cash (3,941 ) (6,983 ) (1,183 ) (6,977 )
 
Cash, cash equivalents and restricted cash, beginning of period   18,926     23,151     16,168     23,145  
 
Cash, cash equivalents and restricted cash, end of period $ 14,985   $ 16,168   $ 14,985   $ 16,168  
 
Supplemental Cash Flow Data:
Interest paid $ 3,531 $ 3,630 $ 14,254 $ 14,504
Income taxes (refunded) paid, net $ (1 ) $ (322 ) $ 3 $ (946 )
 

Schedule 4
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
ADJUSTED EBITDA
(Unaudited, In Thousands)
       
Three Months Ended Twelve Months Ended
December 31, December 31,
2018 2017 2018 2017
 
Net income (loss) $ 1,712 $ (2,976 ) $ 8,988 $ (6,230 )
Add (subtract):
Interest expense 3,238 3,525 13,429 14,860
Loss on extinguishment of debt - - - 7,527
Interest income (82 ) (7 ) (156 ) (34 )
Depreciation and amortization 8,572 9,193 33,908 36,317
Other expense (income), net 56 154 (23 ) 615
Loss (gain) on the disposal of assets, net 69 (23 ) 125 50
Income tax (benefit) expense (39 ) 4,470 2,041 2,584
Stock-based compensation 548 667 1,757 1,509
Net loss attributable to noncontrolling interest   8     29     92     129  
 
Adjusted EBITDA $ 14,082   $ 15,032   $ 60,161   $ 57,327  
 

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 inflows of $9.9 million in the twelve-month period ended December 31, 2018).

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 above is not consistent with the definition of Consolidated EBITDA referenced in our 2017 Senior Credit Facility and 2019 Senior Credit Facility, 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 expense and income, loss on extinguishment of debt, depreciation and amortization, other income and expense, gain or loss on asset purchases or disposals, provision for income taxes, stock-based compensation, and net loss attributable to noncontrolling interest.

Schedule 5
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW

(Unaudited, In Thousands)
         
Three Months Ended Twelve Months Ended
December 31, December 31,
2018 2017 2018 2017
 
Net cash provided by operating activities $ 9,316 $ 4,718 $ 56,195 $ 30,406

Adjustments to reconcile net cash provided by operating activities to adjusted free cash flow:

Capital expenditures (12,525 ) (8,891 ) (37,957 ) (32,945 )
Milestone payments received for special projects - - 1,850 -
Deferred cost of sales for special projects (500 ) - (500 ) -
Amortization of deferred capacity revenue 1,101 911 4,098 3,512
Amortization of GCI capacity revenue (522 ) (523 ) (2,071 ) (2,072 )
Amortization of debt issuance costs and debt discount (331 ) (412 ) (1,353 ) (2,363 )
Interest expense 3,238 3,525 13,429 14,860
Interest paid (3,531 ) (3,630 ) (14,254 ) (14,504 )
Interest income (82 ) (7 ) (156 ) (34 )
Income taxes receivable 692 8,629 729 8,052
Income taxes refunded (paid), net 1 322 (3 ) 946
Charge for uncollectible accounts (374 ) (1,015 ) (2,745 ) (3,577 )
Other expense (income), net 56 154 (23 ) 615
Net loss attributable to noncontrolling interest 8 29 92 129
Other non-cash expense, net (57 ) (145 ) (225 ) (575 )
Changes in operating assets and liabilities   515     (1,355 )   (9,880 )   6,302  
Adjusted free cash flow $ (2,995 ) $ 2,310   $ 7,226   $ 8,752  
 

Schedule 6
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
ADJUSTED FREE CASH FLOW
(Unaudited, In Thousands)
       
Three Months Ended Twelve Months Ended
December 31, December 31,
2018 2017 2018 2017
 
Adjusted EBITDA $ 14,082 $ 15,032 $ 60,161 $ 57,327
 
Less:
Capital expenditures (12,525 ) (8,891 ) (37,957 ) (32,945 )
Amortization of GCI capacity revenue (522 ) (523 ) (2,071 ) (2,072 )
Income taxes refunded (paid), net 1 322 (3 ) 946
Interest paid   (3,531 )   (3,630 )   (14,254 )   (14,504 )
  (2,495 )   2,310     5,876     8,752  
Impact of special projects:
Milestone payments received for special projects - - 1,850 -
Deferred cost of sales for special projects   (500 )   -     (500 )   -  
  (500 )   -     1,350     -  
Adjusted free cash flow* $ (2,995 ) $ 2,310   $ 7,226   $ 8,752  
 
* 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, less cash income taxes refunded or paid, cash interest paid, amortization of GCI capacity revenue and cash receipts and payments, deferred costs and amortized revenue and expense associated with certain prefunded special projects as defined in the 2019 Senior Credit Facility. 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 recognized as revenue over the term of the relevant agreement. Items associated with certain prefunded special projects as defined in the 2019 Senior Credit Facility are excluded from Adjusted Free Cash Flow primarily due to the magnitude and timing of the cash receipts relative to the subsequent recognition of revenue and expense.

See Schedule 3 for Net cash provided by operating activities, Net cash used by investing activities, and Net cash 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 Twelve Months Ended
December 31, December 31,
2018 2017 2018 2017
Business and wholesale revenue
Business broadband $ 14,898 $ 12,298 $ 60,934 $ 61,559
Business voice and other 7,341 6,590 28,429 26,508
Managed IT services 1,806 1,215 5,742 4,293
Equipment sales and installations 1,257 1,695 5,127 4,412
Wholesale broadband 10,141 9,829 38,362 36,081
Wholesale voice and other   1,545     1,464   6,000     6,267
 
Total business and wholesale revenue   36,988     33,091   144,594     139,120
Growth in business and wholesale 11.8 % 3.9 %
Consumer revenue
Broadband 6,418 6,241 26,144 25,441
Voice and other   2,803     2,978   11,158     11,676
 
Total consumer revenue   9,221     9,219   37,302     37,117
 
Total business, wholesale, and consumer revenue   46,209     42,310   181,896     176,237
Growth in business, wholesale and consumer revenue 9.2 % 3.2 %
Growth in broadband revenue 10.9 % 1.9 %
 
Regulatory revenue
Access 7,557 7,701 30,878 30,974
High cost support   4,923     4,924   19,694     19,694
 
Total regulatory revenue   12,480     12,625   50,572     50,668
 
Total revenue $ 58,689   $ 54,935 $ 232,468   $ 226,905
Growth in total revenue 6.8 % 2.5 %
 

      Schedule 8
 
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
KEY OPERATING STATISTICS
(Unaudited)
 
Three Months Ended
December 31, September 30, December 31,
2018 2018 2017
 
Voice:
Business access lines 69,382 70,110 71,699
Consumer access lines 25,784 26,497 29,262
 
Voice ARPU business $ 25.64 $ 25.35 $ 23.29
Voice ARPU consumer $ 34.04 $ 32.05 $ 31.65
 
Broadband:
Business connections 15,234 15,372 15,293
Consumer connections 32,793 32,741 33,904
 
Broadband ARPU business $ 324.37 $ 332.33 $ 267.44
Broadband ARPU consumer $ 65.00 $ 65.61 $ 60.72
 
Monthly Average Churn:
Business voice 1.0 % 0.8 % 0.9 %
Consumer broadband 2.3 % 2.8 % 2.7 %
Consumer voice 1.2 % 1.4 % 1.6 %
 

Schedule 9
   
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
LONG TERM DEBT AND NET DEBT
(Unaudited, In Thousands)
 
December 31, December 31,
2018 2017
2017 senior secured credit facility due 2023 $ 171,750 $ 178,350
Debt discount - 2017 senior secured credit facilities due 2023 (2,024 ) (2,668 )
Debt issuance costs - 2017 senior secured credit facilities due 2023 (2,182 ) (2,869 )
6.25% convertible notes due 2018 - 10,044
Debt discount - 6.25% convertible notes due 2018 - (18 )
Debt issuance costs - 6.25% convertible notes due 2018 - (4 )
Capital leases and other long-term obligations   2,768     3,154  
Total debt 170,312 185,989
Less current portion   (2,289 )   (17,030 )
Long-term obligations, net of current portion $ 168,023   $ 168,959  
 
Total debt $ 170,312 $ 185,989
Plus debt discounts and debt issuance costs   4,206     5,559  
Gross debt 174,518 191,548
Cash and cash equivalents (13,351 ) (4,354 )
Restricted cash held for 6.25% convertible notes due 2018   -     (10,044 )
Net debt $ 161,167   $ 177,150  

Source: Alaska Communications Systems Group, Inc.

Media Contact
Heather Cavanaugh, 907-564-7722
Director, External Affairs and Corporate Communications

Investor Contact
Tiffany Smith, 907-564-7556
Manager, Board and Investor Relations
investors@acsalaska.com

Feb 20, 2019
Alaska Communications Appoints Peter D. Aquino to Its Board of Directors


ANCHORAGE, Alaska--(BUSINESS WIRE)--Feb. 20, 2019-- Alaska Communications Systems Group, Inc. (NASDAQ: ALSK), the leading provider of advanced broadband and managed IT services for businesses and consumers in Alaska, will appoint Peter D. Aquino, an industry veteran, to the board effective March 18, 2019. An independent director, Mr. Aquino will expand the board to nine members.

“We are pleased to welcome Pete to our Board. With over 35 years of experience in the telecommunications industry, including very recent board-level experience in driving shareholder value, Pete brings additional strength to our Board. We would like to thank Aegis Financial, our largest shareholder, for the introduction,” said Ned Hayes, Alaska Communications’ Chairman of the Board.

Peter D. Aquino

Peter D. Aquino is President, Chief Executive Officer, and Director of Internap Corporation (INAP). Mr. Aquino has a track record of successfully guiding major expansion efforts, turnarounds, and strategic partnerships and transactions at both public and private companies.

Prior to assuming his role at INAP, from 2010 until 2013, Mr. Aquino served as Chairman and Chief Executive Officer, and later as Executive Chairman, of Primus Telecommunications Group, Incorporated (PTGi). Under his leadership, PTGi grew into an integrated telecommunications company serving consumer and business customers with voice, data, high-capacity fiber and data center services globally. From 2004 until 2010, Mr. Aquino was the President and Chief Executive Officer of RCN Corporation where he built the company into an all-digital HDTV cable multiple system operator and created an advanced Metro-fiber network through organic and acquisition strategies. Mr. Aquino began his career at Bell Atlantic (now Verizon) in 1983.

Mr. Aquino recently served on the board of directors of Lumos Networks (Nasdaq: LMOS) and FairPoint Communications, Inc. (Nasdaq: FRP), prior to both being sold in 2017.

Mr. Aquino holds a Bachelor’s Degree from Montclair State University in New Jersey, and an M.B.A. from George Washington University in Washington, D.C.

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.

Source: Alaska Communications Systems Group, Inc.

Alaska Communications Systems Group, Inc.
Media Contact:
Heather Marron, 907-564-1326
or
Investor Contact:
Tiffany Smith, 907-564-7556
investors@acsalaska.com

Feb 19, 2019
Alaska Communications to Announce Q4 and Full Year 2018 Financial Results March 6 and Conduct Conference Call March 7


ANCHORAGE, Alaska--(BUSINESS WIRE)--Feb. 19, 2019-- Alaska Communications (NASDAQ: ALSK) will release financial results for the fourth quarter and full year 2018 after markets close Wednesday, March 6, 2019. The company will host a conference call and live webcast to discuss operating results Thursday, March 7, 2019 at 2 p.m. ET. The live webcast will include a slide presentation. There will be a live question and answer session after prepared remarks.

Parties in the U.S. and Canada can access the call at 1-888-205-6786 and enter code 366695. All other parties can access the call at 1-856-344-9315 using the same code.

The live webcast of the conference call will be accessible from the "Events Calendar" section of the company's investor website (www.alsk.com). The webcast will be archived for 90 days. A replay of the conference call will also be available two hours after the call ends and will run until April 6, 2019 at 5 p.m. ET. To hear the replay, parties in the U.S. and Canada can call 1-888-203-1112 and enter code 8903679. All other parties can call 1-719-457-0820 and enter code 8903679.

About Alaska Communications

Alaska Communications (NASDAQ: ALSK) is a leading provider of advanced broadband and managed IT services for businesses and consumers in Alaska. The company operates a highly reliable, advanced statewide data and voice network with the latest technology and the most diverse undersea fiber optic system connecting Alaska to the contiguous U.S. For more information, visit http://www.alaskacommunications.com or http://www.alsk.com.

Source: Alaska Communications Systems Group, Inc.

Alaska Communications Systems Group, Inc.
Media Contact:
Heather Marron, 907-564-1326
or
Investor Contact:
Tiffany Smith, 907-564-7556
investors@acsalaska.com

Jan 15, 2019
Alaska Communications Strengthens its Liquidity and Financial Flexibility, While Reducing Borrowing Rates, With Refinancing of its Debt


ANCHORAGE, Alaska--(BUSINESS WIRE)--Jan. 15, 2019-- Alaska Communications (NASDAQ: ALSK) today announced it refinanced its credit agreements, thereby negotiating a reduction in its interest rates, extending the term, increasing capacity for shareholder friendly actions, resetting and widening key covenant thresholds and establishing incremental flexible capacity for success-based capital expenditures.

Alaska Communications Systems Holdings, Inc., as Borrower, Alaska Communications Systems Group, Inc., as Parent (collectively “Alaska Communications”) and subsidiaries of Alaska Communications, as guarantors, and ING Capital LLC (“ING”), as sole book runner and joint-lead arranger, entered into a new senior credit facility with existing and additional lenders. A summary of the terms follows:

  • Established a single Term Loan of $180 million with a reduced interest rate of LIBOR + 450 basis points (bps), replacing the previous A1 tranche at LIBOR + 500 bps and the A2 tranche at LIBOR + 700 bps, and extending the term to 2024 from 2022.
  • Increased the Revolving Credit Facility to $20 million at LIBOR + 450 bps from $15 million at LIBOR + 500 bps.
  • Secured a new Delayed Draw Term Loan (“DDTL”) of $25 million at LIBOR + 450 bps, which is available for a period of twenty-four months, to be used specifically for success-based capital projects.
  • At close, net total debt available to the Company will be $225 million, with $180 million drawn.

"In the context of a very volatile and challenging market situation, our ability to secure favorable terms while concurrently increasing our access to capital reflects our credit group’s confidence in the credibility of the Company’s business plan, and our ability to execute against that plan. Important highlights from the transaction include:

  • Retiring the high cost A2 tranche while favorably repricing the new Term Loan compared to the A1 tranche.
  • Extending the term loan by 2 years, creating even greater stability and certainty.
  • Creating flexible capacity between the DDTL and Revolver to enable investment in meaningful growth opportunities we see ahead of us. The DDTL capacity is not for the purpose of financing acquisitions, but specifically targeted to strengthening our fiber footprint only in the support of contracted revenue opportunities.
  • Resetting our key covenants while widening the thresholds and providing us with greater flexibility.
  • Creating an initial restricted payments basket of $5 million for dividends or share buybacks, while allowing additional restricted payments from certain operating cash flows, allowing the Board to consider a range of shareholder friendly actions.

Our refinancing gives us the tools we need to execute to our organic plan. This positions us well and in no way detracts our attention from active consideration of appropriate strategic actions to enhance shareholder value,” said Anand Vadapalli, president and CEO of Alaska Communications.

“ING is pleased to continue its great partnership with Alaska Communications as its lead lender, and we look forward to continuing our great partnership with the company. We believe the success of this transaction demonstrates that there are a group of thoughtful lending institutions that recognize Alaska Communications’ intrinsic value and long-term potential,” said Stephen Nettler, Managing Director of ING Capital LLC.

Alaska Communications will file a Current Report on Form 8-K that describes the transactions in greater detail.

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, funding through the rural health care universal service support mechanism and our ability to comply with the regulatory requirements to receive those support payments, 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, employee benefit costs, our ability to control other operating costs, disruption of our supplier’s provisioning of critical products or services, the actions of activist shareholders, 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 couldaffect 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.

Source: Alaska Communications

Media Contact
Heather Cavanaugh, 907-564-7722
Director, External Affairs and Corporate Communications

Investor Contact
Tiffany Smith, 907-564-7556
Manager, Board and Investor Relations
investors@acsalaska.com

Jan 04, 2019
Alaska Communications to Present at the 21st Annual Needham Growth Conference January 16, 2019


ANCHORAGE, Alaska--(BUSINESS WIRE)--Jan. 4, 2019-- Alaska Communications (NASDAQ:ALSK) today announced that Anand Vadapalli, president and chief executive officer, will present at the 21st Annual Needham Growth Conference on Wednesday, Jan. 16, at 2:50 p.m. Eastern Standard Time (10:50 a.m. Alaska Standard Time). Additionally, Mr. Vadapalli will host one-on-one meetings on January 15 and 16. Interested investors should contact conferences@needhamco.com for availability. The conference will be held at the Lotte New York Palace Hotel in New York City, New York.

A live webcast, including a slide presentation, 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.

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.

Source: Alaska Communications

Alaska Communications Media Contact:
Heather Marron, 907-564-1326
heather.marron@acsalaska.com

Alaska Communications Investor Contact:
Tiffany Smith, 907-564-7556
investors@acsalaska.com