Hickory Tech Corporation (
Q3 2010 Earnings Conference Call
October 26, 2010 10 AM ET
Jennifer Spaude – Director, IR and Public Relations
John Finke – President and CEO
David Christensen – SVP and CFO
Previous Statements by HTCO
» Hickory Tech Corporation. Q2 2010 Earnings Call Transcript
» Hickory Tech Corp. Q1 2010 Earnings Call Transcript
» Hickory Tech Corporation Q4 2009 Earnings Call Transcript
Good morning. My name is Lindsey and I will be your conference operator today. At this time, I’d like to welcome everyone to the Hickory Tech’s third quarter 2010 earnings conference call. (Operator Instructions) Thank you. I will now turn the conference over to Jennifer Spaude, Director of Investor Relations and Marketing. Please go ahead.
Good morning and thank you for joining Hickory Tech’s third quarter 2010 earnings conference call. I’m Jennifer Spaude and with me today are John Finke, Hickory Tech’s President and Chief Executive Officer and David Christensen, Senior Vice President and Chief Financial Officer.
Before we get started, let me remind you that our earnings release was issued yesterday afternoon and is available on the investor relations section of our website at hickorytech.com. In addition, you’ll find a presentation for today’s call which we hope you will find helpful in your analysis.
Now I’d like to draw your attention to our safe harbor statement on slide two. Information in today’s presentation contains certain statements and predictions that are not historical fact, but are forward-looking in nature. These forward-looking statements are based on current expectations, estimates and projections about the industry, in which Hickory Tech operates, and management’s beliefs and assumptions as of the time of the call. Such forward-looking statements are subject to uncertainties and actual results or outcomes may differ materially from those indicated or suggested by any forward-looking statement whether as a result of new information, future events or otherwise. You’re cautioned not to place undue reliance on these forward-looking statements made during the conference call today. These statements are not guarantees of future performance and involve certain risks, uncertainties and probabilities which are difficult to predict. There are many such risks and uncertainties which could affect the economy, our industry and our company in particular, some or all of which could affect future results. More information on potential risks and uncertainties is available in the company’s recent filings with the Securities and Exchange Commission including Hickory Tech’s annual Form 10-K report, our quarterly Form 10-Q report and our form 8-K reports.
This presentation also contains certain non-GAAP financial measures. Reconciliation of these non-GAAP measures to most directly comparable GAAP measures are available in the presentation.
All participants are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. The audio will be archived on Hickory Tech’s investor relations website for the next 30 days.
Following management’s discussion today, we will open the call to a Q&A session. At this time, I’d like to turn the call over to John Finke.
Thank you Jennifer. Good morning everyone. I’m very pleased with our third quarter results and the progress we’ve made implementing our strategic initiatives. I’ll begin my remarks today with highlights from the third quarter and I’ll update you on our fiber network expansion projects. Dave will then take you through the financial details of our third quarter 2010 results.
Hickory Tech’s third quarter revenue totaled $43.5 million, up 25 percent from a year ago. Operating income for the third quarter totaled $6.4 million and was up 36 percent from one year ago. Net income totaled $5 million, down 17 percent from the $6.1 million a year ago.
Our third quarter results included an income tax release in both 2010 and 2009. Excluding the income tax release in 2010 and 2009, net income increased $1.5 million or 89 percent.
Hickory Tech is no longer a peer play traditional telephone company. While delivering voice services to our customers remains important, we have transitioned our company to one focused on delivering competitive broadband and business services over our local and regional fiber optic networks.
We believe this strategic shift has better positioned Hickory Tech to be a leader in providing business services within our existing markets and opening up new opportunities as we expand our fiber network. Our overall third quarter earnings were positively impacted by three primary factors; solid growth in fiber and data services, equipment sales and broadband services and income tax reserve release, and a construction project which is part of our fiber network expansion. Dave will provide details on these factors during his remarks.
Our third quarter results demonstrated our continued growth within our Enventis Sector and our diligent focus on growing our business to business services. We’ve demonstrated our ability to cost effectively expand our fiber network to Sioux Falls, South Dakota and Fargo, North Dakota through a joint construction project.
And our $16.8 million stimulus award announced early this quarter will enable us to further expand our fiber network as we build high capacity routes to serve our customers in health care industry, higher education and state and government offices.
Looking specifically at our financial results in the Enventis Sector, third quarter revenue totaled $25.5 million, up 45 percent from a year ago. Enventis operating income totaled $3.4 million, up 123 percent, and Enventis net income of $2 million was up 125 percent.
Enventis fiber and data services revenue totaled $13.4 million, an increase of 53 percent year over year, and the fifth consecutive quarter of double digit revenue growth. This line of business continues to product steady, stable double digit revenue growth.