Alaska Communications Reports Solid Third Quarter 2016 Results

Alaska Communications Systems Group, Inc. (NASDAQ:ALSK) today reported financial results for the third quarter of 2016.

"I am pleased to report another quarter of solid performance to our plan, furthering our record of delivering consistent results. For the third quarter 2016 compared to a year ago, revenue increased 3.2 percent, driven by an 8.3 percent increase for business and wholesale and a 14.0 percent increase for total broadband," said Anand Vadapalli, president and CEO of Alaska Communications.

On October 31, 2016, the Federal Communications Commission released its order for Connect America Fund Phase II (CAF II) for Alaska. The order is consistent with management's expectations. The CAF II order continues high cost support at $19.7 million per year for the next ten years, in exchange for providing broadband to approximately 31,500 locations in unserved and partially served census blocks, representing approximately 26,000 new unserved locations.

"The issuance of the CAF II order eliminates uncertainty for the company in this regard while setting the stage for a significant deployment of broadband in Alaska. Our emphasis on customer service, combined with a superior fiber optic network and strong managed IT services capabilities, creates value for our customers and differentiation in the market. We look forward to reporting continued progress in upcoming quarters," concluded Anand Vadapalli.

Revenue Highlights: Third Quarter 2016 Compared to Third Quarter 2015
  • Total revenues:
    • Revenue increased to $56.5 million, up 3.2 percent from $54.7 million.
    • Total broadband revenue reached $29.4 million, up 14.0 percent from $25.7 million.
  • Business and wholesale:
    • Comprised 60.3 percent of total revenue.
    • Revenue grew to $34.0 million, up 8.3 percent from $31.4 million.
    • Broadband revenues reached $23.1 million, up 18.5 percent from $19.5 million.
  • Consumer:
    • Comprised 16.6 percent of total revenue.
    • Revenue was $9.4 million, down 6.0 percent from $10.0 million.
    • Broadband revenue was $6.2 million for both periods.
  • Regulatory:
    • Comprised 23.1 percent of total revenue.
    • Revenue was $13.1 million, down 1.9 percent from $13.3 million.

Financial Metrics: Third Quarter 2016 compared to Third Quarter 2015 and Year to Date September 30, 2016
  • Net income was $0.3 million, compared to $1.2 million. Year to date net income was $0.7 million.
  • Net cash provided by operating activities was $9.5 million, compared to $13.7 million. Year to date cash provided by operating activities was $28.4 million.
  • Capital expenditures were $8.7 million, compared to $12.1 million. Year to date capital expenditures were $22.4 million.

Balance Sheet Metrics: September 30, 2016, compared to December 31, 2015
  • Cash remained strong at $21.9 million, compared to $36.0 million, primarily reflecting the repayment of $12.4 million of long-term debt.
  • Net debt was $163.3 million, compared to $161.7 million.

Non-GAAP Metrics: Third Quarter 2016 compared to Third Quarter 2015 and Year to Date September 30, 2016
  • Adjusted EBITDA was $13.9 million, compared to $12.6 million. Year to date Adjusted EBITDA was $41.8 million, up from $36.1 million.
  • Free cash flow for the quarter was $3.0 million, improving $5.2 million from a net outflow of $2.2 million. Year to date free cash flow was $7.0 million, improving $10.9 million from a net outflow of $3.8 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.

Laurie Butcher, Alaska Communications senior vice-president of finance, said, "Our results for the quarter are tracking to our expectations. This year we are meeting our performance targets in a more capital efficient manner; therefore, we have adjusted our capital spending and free cash flow guidance. We believe our continued emphasis on growing Free Cash Flow will drive shareholder value."

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