- Total revenues of
$15.5 million for fourth quarter 2020 and$62.0 million for 2020. - Operating income of
$2.8 million for fourth quarter 2020 and$11.5 million for 2020. - Net income of
$1.4 million for fourth quarter 2020 and$6.3 million for 2020. - Consolidated EBITDA (as defined below) of
$5.0 million for fourth quarter 2020 and$20.9 million for 2020. - Scheduled principal payments of
$1.1 million in fourth quarter 2020 and$4.4 million overall in 2020 reduced debt to$65.9 million at the end of 2020.
FOURTH QUARTER 2020 RESULTS
The Company continued to execute on its strategy of data speed enhancements and fiber deployment in fourth quarter 2020. Revenues for fourth quarter 2020 declined
COVID-19 UPDATE
The novel strain of coronavirus (COVID-19) continues to have an impact on the world’s economy and Otelco’s operations.
In the last two years, the Company has installed 278 miles of Fiber-To-The-Premise (“FTTP”) in its service territories. Approximately 4,346 customers have upgraded their service or signed up for the new Lightwave fiber service in
In the southern part of its
Commenting on these developments,
BALANCE SHEET
At the end of fourth quarter 2020, the Company reported cash of
SUMMARY
“Otelco is committed to meeting our customers’ need for increased internet speed in the face of the risks and uncertainties brought on by the COVID-19 pandemic and the corresponding changes in daily routines,” noted Clark. “We expect further changes in customer requirements as vaccines are distributed, and our dedicated team will adjust to meet new needs as they arise. We saw our customer base increase by 1.1% in 2020 compared to a loss of 3.7% for the 2019 calendar year. At the end of 2020, our projects have brought gigabit internet capability to more than 27% of our market, while increasing available speeds to 50 and 75 mbps to another 9% of our market with VDSL. Approximately 21% of the
OTELCO TO BE ACQUIRED BY
On
FOURTH QUARTER AND YEAR 2020 EARNINGS CONFERENCE CALL
Fourth Quarter and Annual 2020 Financial Summary | ||||||||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Change | |||||||||||||||
2020 | 2019 | Amount | Percent | |||||||||||||
Revenues | $ | 15,507 | $ | 15,591 | $ | (84 | ) | (0.5 | ) | % | ||||||
Operating income | $ | 2,802 | $ | 3,531 | $ | (729 | ) | (20.6 | ) | % | ||||||
Interest expense | $ | (925 | ) | $ | (1,227 | ) | $ | (302 | ) | (24.6 | ) | % | ||||
Net income available to stockholders | $ | 1,430 | $ | 1,979 | $ | (549 | ) | (27.7 | ) | % | ||||||
Basic net income per share | $ | 0.42 | $ | 0.58 | $ | (0.16 | ) | (27.6 | ) | % | ||||||
Diluted net income per share | $ | 0.42 | $ | 0.58 | $ | (0.16 | ) | (27.6 | ) | % | ||||||
Consolidated EBITDA | $ | 5,021 | $ | 5,582 | $ | (561 | ) | (10.1 | ) | % | ||||||
Capital expenditures | $ | 1,971 | $ | 4,845 | $ | (2,874 | ) | (59.3 | ) | % | ||||||
Twelve Months Ended | Change | |||||||||||||||
2020 | 2019 | Amount | Percent | |||||||||||||
Revenues | $ | 61,971 | $ | 62,766 | $ | (795 | ) | (1.3 | ) | % | ||||||
Operating income | $ | 11,542 | $ | 14,844 | $ | (3,302 | ) | (22.2 | ) | % | ||||||
Interest expense | $ | (4,025 | ) | $ | (5,271 | ) | $ | (1,246 | ) | (23.6 | ) | % | ||||
Net income available to stockholders | $ | 6,307 | $ | 7,796 | $ | (1,489 | ) | (19.1 | ) | % | ||||||
Basic net income per share | $ | 1.84 | $ | 2.28 | $ | (0.44 | ) | (19.3 | ) | % | ||||||
Diluted net income per share | $ | 1.83 | $ | 2.27 | $ | (0.44 | ) | (19.4 | ) | % | ||||||
Consolidated EBITDA | $ | 20,932 | $ | 23,410 | $ | (2,478 | ) | (10.6 | ) | % | ||||||
Capital expenditures | $ | 10,036 | $ | 12,440 | $ | (2,404 | ) | (19.3 | ) | % | ||||||
ABOUT
FORWARD LOOKING STATEMENTS
Statements in this press release that are not statements of historical or current fact constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties, and other unknown factors, some of which are listed below, that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms “believes,” “belief,” “expects,” “intends,” “anticipates,” “plans,” or similar terms to be uncertain and forward-looking, including statements regarding the Company’s response to the COVID-19 pandemic, network upgrade plans and customer growth. Important risk factors related to the Transaction that may cause such differences include: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreement, including a termination under circumstances that could require the Company to pay a termination fee; (2) Oak Hill’s failure to obtain the necessary equity and debt financing or the failure of that financing to be sufficient to complete the Transaction; (3) the inability to complete the Transaction due to the failure to satisfy certain conditions to completion of the Merger, including the receipt of required regulatory approvals, or for any other reason; (4) risks that the Transaction disrupts current plans and operations, including possible adverse effect on the Company’s business relationships, diversion of management’s attention, and the potential difficulties in employee retention as a result of the Transaction; (5) the outcome of any legal proceedings, regulatory proceedings or enforcement matters that have been or may be instituted against the Company or others relating to the Transaction; (6) the definitive agreement’s contractual restrictions on the conduct of the Company’s business prior to the completion of the Transaction; and (7) the possible adverse effect on the Company’s business and the price of its common stock if the Transaction is not consummated in a timely manner or at all. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company’s filings with the
CONSOLIDATED BALANCE SHEETS | |||||||||
(in thousands, except share par value and share amounts) | |||||||||
As of | |||||||||
2020 | 2019 | ||||||||
Assets | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 8,445 | $ | 3,113 | |||||
Accounts receivable: | |||||||||
Due from subscribers, net of allowance for doubtful | |||||||||
accounts of | 3,881 | 3,908 | |||||||
Other | 2,373 | 1,905 | |||||||
Materials and supplies | 3,615 | 3,954 | |||||||
Prepaid expenses | 1,274 | 1,624 | |||||||
Other assets | 187 | 251 | |||||||
Total current assets | 19,775 | 14,755 | |||||||
Property and equipment, net | 59,386 | 57,284 | |||||||
44,976 | 44,976 | ||||||||
Intangible assets, net | 158 | 530 | |||||||
Operating lease right-of-use asset | 1,539 | 1,146 | |||||||
Investments | 1,454 | 1,477 | |||||||
Other assets | 116 | 577 | |||||||
Total assets | $ | 127,404 | $ | 120,745 | |||||
Liabilities and Stockholders' Equity | |||||||||
Current liabilities | |||||||||
Accounts payable | $ | 1,498 | $ | 1,525 | |||||
Accrued expenses | 5,643 | 4,861 | |||||||
Advance billings and payments | 1,680 | 1,618 | |||||||
Customer deposits | 26 | 44 | |||||||
Current operating lease liability | 375 | 296 | |||||||
Current maturity of long-term notes payable, net of debt issuance costs | 6,946 | 3,929 | |||||||
Total current liabilities | 16,168 | 12,273 | |||||||
Deferred income taxes | 21,514 | 21,521 | |||||||
Advance billings and payments | 1,958 | 2,157 | |||||||
Other liabilities | 276 | 12 | |||||||
Long-term operating lease liability | 1,164 | 850 | |||||||
Paycheck Protection Program notes payable | 2,975 | - | |||||||
Long-term notes payable, less current maturities and debt issuance costs | 58,094 | 65,172 | |||||||
Total liabilities | 102,149 | 101,985 | |||||||
Stockholders' equity | |||||||||
Class A Common Stock, | |||||||||
issued and outstanding 3,421,794 and 3,412,805 shares, respectively | 34 | 34 | |||||||
Additional paid in capital | 4,463 | 4,275 | |||||||
Retained earnings | 20,758 | 14,451 | |||||||
Total stockholders' equity | 25,255 | 18,760 | |||||||
Total liabilities and stockholders' equity | $ | 127,404 | $ | 120,745 | |||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
(in thousands, except share and per share amounts) | ||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||
Revenues | $ | 15,507 | $ | 15,591 | $ | 61,971 | $ | 62,766 | ||||||||||
Operating expenses | ||||||||||||||||||
Cost of services | 8,016 | 7,445 | 30,251 | 30,075 | ||||||||||||||
Selling, general and administrative expenses | 2,543 | 2,669 | 11,869 | 10,204 | ||||||||||||||
Depreciation and amortization | 2,146 | 1,946 | 8,309 | 7,643 | ||||||||||||||
Total operating expenses | 12,705 | 12,060 | 50,429 | 47,922 | ||||||||||||||
Income from operations | 2,802 | 3,531 | 11,542 | 14,844 | ||||||||||||||
Other income (expense) | ||||||||||||||||||
Interest expense | (925 | ) | (1,227 | ) | (4,025 | ) | (5,271 | ) | ||||||||||
Other income | 7 | 11 | 820 | 616 | ||||||||||||||
Total other expenses | (918 | ) | (1,216 | ) | (3,205 | ) | (4,655 | ) | ||||||||||
Income before income tax expense | 1,884 | 2,315 | 8,337 | 10,189 | ||||||||||||||
Income tax expense | (454 | ) | (336 | ) | (2,030 | ) | (2,393 | ) | ||||||||||
Net income | $ | 1,430 | $ | 1,979 | $ | 6,307 | $ | 7,796 | ||||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||||
Basic | 3,421,794 | 3,412,805 | 3,421,794 | 3,412,805 | ||||||||||||||
Diluted | 3,440,772 | 3,430,453 | 3,440,772 | 3,430,453 | ||||||||||||||
Basic net income per common share | $ | 0.42 | $ | 0.58 | $ | 1.84 | $ | 2.28 | ||||||||||
Diluted net income per common share | $ | 0.42 | $ | 0.58 | $ | 1.83 | $ | 2.27 | ||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(in thousands) | |||||||||||
Years Ended | |||||||||||
2020 | 2019 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 6,307 | $ | 7,796 | |||||||
Adjustments to reconcile net income to cash flows provided by operating activities: | |||||||||||
Depreciation | 7,994 | 7,344 | |||||||||
Amortization | 315 | 299 | |||||||||
Amortization of loan costs | 502 | 452 | |||||||||
Non-cash lease amortization | 409 | 265 | |||||||||
(Benefit )provision for deferred income taxes | (23 | ) | 1,308 | ||||||||
Excess tax benefit from stock-based compensation | 16 | 68 | |||||||||
Provision for uncollectible accounts receivable | 371 | 214 | |||||||||
Stock-based compensation | 208 | 254 | |||||||||
Gain on the sale of property | (211 | ) | - | ||||||||
Changes in operating assets and liabilities | |||||||||||
Accounts receivable | (748 | ) | (196 | ) | |||||||
Materials and supplies | 339 | (1,152 | ) | ||||||||
Prepaid expenses and other assets | 811 | (860 | ) | ||||||||
Accounts payable and accrued expenses | 755 | 1 | |||||||||
Advance billings and payments | (137 | ) | (73 | ) | |||||||
Other liabilities | (163 | ) | (270 | ) | |||||||
Net cash from operating activities | 16,745 | 15,450 | |||||||||
Cash flows used in investing activities: | |||||||||||
Acquisition and construction of property and equipment | (10,036 | ) | (12,440 | ) | |||||||
Proceeds from the sale of property | 234 | - | |||||||||
Retirement of investment | (3 | ) | (4 | ) | |||||||
Net cash from investing activities | (9,805 | ) | (12,444 | ) | |||||||
Cash flows used in financing activities: | |||||||||||
Loan origination costs | (213 | ) | (12 | ) | |||||||
Principal repayment of long-term notes payable | (4,350 | ) | (4,350 | ) | |||||||
Interest rate cap | - | 4 | |||||||||
Tax withholdings paid on behalf of employees for restricted stock units | (20 | ) | (192 | ) | |||||||
Proceeds from Paycheck Protection Program loan | 2,975 | - | |||||||||
Net cash used in investing activities | (1,608 | ) | (4,550 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | 5,332 | (1,544 | ) | ||||||||
Cash and cash equivalents, beginning of period | 3,113 | 4,657 | |||||||||
Cash and cash equivalents, end of period | $ | 8,445 | $ | 3,113 | |||||||
Supplemental disclosures of cash flow information: | |||||||||||
Interest paid | $ | 3,502 | $ | 4,834 | |||||||
Income taxes paid | $ | 884 | $ | 1,993 | |||||||
Issuance of Class A common stock | $ | - | $ | - | |||||||
CONSOLIDATED EBITDA – Consolidated EBITDA is defined as consolidated net income plus consolidated net interest expense, depreciation and amortization, income taxes and certain other fees, expenses and non-cash charges reducing consolidated net income. Consolidated EBITDA is a supplemental measure of the Company’s performance that is not required by, or presented in accordance with, accounting principles generally accepted in
Reconciliation of Consolidated EBITDA to Net Income | |||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
Net income | $ | 1,430 | $ | 1,979 | $ | 6,307 | $ | 7,796 | |||||||||
Add: | Depreciation | 2,055 | 1,879 | 7,994 | 7,344 | ||||||||||||
Interest expense less interest income | 799 | 1,112 | 3,504 | 4,803 | |||||||||||||
Interest expense - amortize loan cost | 122 | 110 | 502 | 452 | |||||||||||||
Income tax expense | 454 | 336 | 2,030 | 2,393 | |||||||||||||
Amortization - intangibles | 91 | 67 | 315 | 299 | |||||||||||||
Stock-based compensation | 52 | 82 | 208 | 254 | |||||||||||||
Loan fees | 18 | 17 | 72 | 69 | |||||||||||||
Consolidated EBITDA | $ | 5,021 | $ | 5,582 | $ | 20,932 | $ | 23,410 | |||||||||
LEVERAGE RATIO – The Company uses the ratio of debt, net of cash, to Consolidated EBITDA for the last twelve months as an operational performance measurement of Otelco’s leverage. Such ratio is a supplemental measure of the Company’s performance that is not required by, or presented in accordance with, GAAP. The Company reports such ratio to allow current and potential investors to understand this performance metric. The Company also believes that it provides current and potential investors with helpful information with respect to the Company’s operating performance, including the Company’s ability to generate earnings sufficient to service its debt, and enhances understanding of the Company’s financial performance and highlights operational trends. However, such ratio should not be considered as an alternative to net income or any other performance measures derived in accordance with GAAP. The Company’s presentation of such ratio may not be comparable to similarly titled ratios used by other companies. The table below provides the calculation of such ratio as of
Ratio of Debt, Net of Cash, to Consolidated EBITDA | |||||||
as of | |||||||
( | |||||||
Notes payable (excluding PPP loan) | $ | 65,040 | |||||
Debt issuance costs | 822 | ||||||
Notes outstanding | $ | 65,862 | |||||
Less cash (excluding PPP loan) | (5,470 | ) | |||||
Notes outstanding, net of cash | $ | 60,392 | |||||
Consolidated EBITDA for the | |||||||
last twelve months | $ | 20,932 | |||||
Total leverage ratio, net of cash | 2.89 | ||||||
Contact: | Curtis Garner | |
Chief Financial Officer | ||
205-625-3580 | ||
Curtis.Garner@Otelco.com |
Source:
2021 GlobeNewswire, Inc., source