EX-99.1 2 a52395665ex99_1.htm EXHIBIT 99.1
Exhibit 99.1

Alaska Communications Reports Fourth Quarter and Year-end 2020 Results

  • Reported total revenue of $240.6 million, exceeding guidance and an increase of 3.8% year over year
  • Delivered strong fourth quarter revenue, driven by 12.7% increase in business and wholesale revenue
  • Met Adjusted EBITDA and Adjusted Free Cash Flow guidance
  • Increased broadband service locations in underserved areas by approximately 33%
  • Alaska Communications shareholders approved transaction with ATN International

ANCHORAGE, Alaska--(BUSINESS WIRE)--March 15, 2021--Alaska Communications Systems Group, Inc. (NASDAQ: ALSK) today reported financial results for the fourth quarter and year ended December 31, 2020.

“We are pleased with our strong financial performance for 2020, driven by broadband growth and increased customer cloud infrastructure during this unprecedented year. We are proud of our team and their continued exemplary customer service to our communities, particularly the education and healthcare areas. During 2020, we continued to invest in our network and expanded our broadband service by more than 3,700 locations in underserved areas of Alaska, an increase in locations of approximately 33%. In addition, we began mesh fixed wireless trials, offering internet speeds up to 1 Gig. In 2021, we plan to expand our mesh network as part of our strategy to upgrade one third of our network, extending our reach to approximately 42,000 new and existing customer locations with new or improved service.

“On March 12, 2021, our shareholders approved our merger with a subsidiary of ATN International, Inc. This transaction positions us to remain the premier communications partner within the state of Alaska, while providing significant opportunities to grow. We expect synergies in fiber infrastructure expansion and in the latest technologies for commercial customers, including next-generation managed services and private network solutions,” said Bill Bishop, President & CEO.

Fourth Quarter 2020 Compared to Fourth Quarter 2019

  • Total revenue was $62.3 million, compared to $58.3 million, an increase of 7.0%.
    • Business and wholesale revenue was $43.2 million, compared to $38.3 million, up 12.7%.
    • Consumer revenue was $9.0 million, compared to $9.2 million, a decrease of 2.6%.
    • Regulatory revenue was $10.2 million, compared to $10.8 million, a decrease of 5.2%.
  • Operating expenses were $68.2 million, including $9.6 million of transaction expenses, compared to $51.3 million.
  • Operating loss was $5.8 million, compared to operating income of $7.0 million.
  • Net loss attributable to Alaska Communications was $8.2 million, compared to net income of $2.6 million.
  • Capital expenditures were $15.3 million, compared to $13.2 million, or excluding prefunded projects were $13.5 million, compared to $10.0 million.
  • Adjusted EBITDA was $14.9 million, compared to $17.9 million.
  • Adjusted Free Cash Flow was $2.9 million, compared to $9.7 million, or excluding prefunded projects was $2.4 million, compared to $9.3 million.

Full Year 2020 Compared to Full Year 2019

  • Total revenue was $240.6 million, compared to $231.7 million, an increase of 3.8%.
    • Business and wholesale revenue was $162.9 million, compared to $150.6 million, up 8.2%.
    • Consumer revenue was $36.6 million, compared to $37.0 million, a decrease of 1.2%.
    • Regulatory revenue was $41.1 million, compared to $44.1 million, a decrease of 6.7%.
  • Operating expenses were $228.7 million, including $9.6 million of transaction expenses, compared to $209.8 million.
  • Operating income was $11.9 million, compared to $21.9 million.
  • Net loss attributable to Alaska Communications was $1.1 million, compared to net income of $4.9 million.
  • Capital expenditures were $48.2 million, compared to $44.8 million, or excluding prefunded projects were $39.9 million, compared to $41.4 million.
  • Adjusted EBITDA was $64.1 million, compared to $62.7 million.
  • Adjusted Free Cash Flow was $14.4 million, compared to $16.0 million, or excluding prefunded projects was $15.3 million, compared to $10.4 million.

Balance Sheet Highlights

  • Cash was $21.0 million at December 31, 2020, compared to $28.0 million at December 31, 2019.
  • Net debt was $151.9 million at December 31, 2020, compared to $153.8 million at December 31, 2019.

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 Chief Financial Officer, said, “In 2020, we delivered strong financial performance even with the impact of the COVID-19 pandemic. We exceeded revenue guidance, driven by increased broadband revenue, equipment sales and special project revenue coming online. Our business and wholesale growth offset our consumer and regulatory decreases, and our growth revenues continue to outpace our legacy declines. Regarding capex, due to the timing of certain projects, we were able to accelerate expansion of our fiber network and spent slightly more than guidance. Adjusted Free Cash Flow was on target, and even with incurring $7.2 million in payments associated with transaction costs in the fourth quarter, our cash balances remain strong. As a result, we are well positioned for 2021.”

2020 Performance

Operating Statement ($ in M)

2020 Guidance

2020 Performance

Total Revenue

$232 - $237

$240.6

Adjusted EBITDA

$63 - $65

$64.1

Capital Expenditures
(excluding prefunded projects)

$37 - $39

$39.9

Adjusted Free Cash Flow
(excl. prefunded projects)

$14 - $16

$15.3

Transaction Update

On December 31, 2020, Alaska Communications and ATN International, Inc. (NASDAQ: ATNI) signed a definitive agreement under which the Company will become a consolidated, majority owned subsidiary of ATN. After the expiration of the Hart-Scott-Rodino antitrust waiting period, on March 12, 2021, Alaska Communications held a special shareholder meeting where the Company’s shareholders approved the merger, pending certification of the vote results. The transaction is expected to close in the second half of 2021, subject to certain regulatory approvals and other conditions. Under the terms of the agreement, a subsidiary of ATN will acquire all the outstanding shares of Alaska Communications common stock for $3.40 per share in cash. Alaska Communications’ prior agreement to be acquired by an affiliate of Macquarie Capital and GCM Grosvenor, through its Labor Impact Fund, L.P., was terminated on December 31, 2020. The company paid a termination fee of $6.8 million.

Conference Call

Due to the pending transaction, the Company will not hold a conference call.

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 orwww.alsk.com.

Revenue Category Definitions

Growth Revenues are defined as business broadband, managed IT services, equipment sales and installations, wholesale broadband and consumer broadband. Legacy Revenues are defined as business voice and other, Wholesale voice and other, consumer voice and other, and Access. CAF II Revenues are defined as high cost support.

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 $15.9 million in the twelve-month period of 2020).

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 impacts of the COVID-19 pandemic on the economy of Alaska and on the Company, 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 North Slope 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

 

Twelve Months Ended



December 31,

 

December 31,



2020

 

2019

 

2020

 

2019









 








 
Operating revenues

$

62,333

 


$

58,262

 


$

240,569

 


$

231,694

 









 
Operating expenses:







Cost of services and sales (excluding depreciation and amortization)

 

30,316

 


 

26,847

 


 

112,443

 


 

105,615

 

Selling, general & administrative

 

17,610

 


 

14,512

 


 

65,773

 


 

66,718

 

Transaction and termination costs

 

9,550

 


 

-

 


 

9,550

 


 

-

 

Depreciation and amortization

 

10,560

 


 

9,851

 


 

40,667

 


 

37,276

 

Loss on disposal of assets, net

 

117

 


 

55

 


 

240

 


 

156

 









 
Total operating expenses

 

68,153

 


 

51,265

 


 

228,673

 


 

209,765

 









 
Operating (loss) income

 

(5,820

)


 

6,997

 


 

11,896

 


 

21,929

 









 
Other income and (expense):







Interest expense

 

(2,643

)


 

(2,910

)


 

(11,000

)


 

(12,059

)

Loss on extinguishment of debt

 

-

 


 

-

 


 

-

 


 

(2,830

)

Interest income

 

18

 


 

94

 


 

174

 


 

385

 

Other income (expense), net

 

(8

)


 

(17

)


 

439

 


 

175

 

Total other income and (expense)

 

(2,633

)


 

(2,833

)


 

(10,387

)


 

(14,329

)









 
(Loss) income before income tax benefit (expense)

 

(8,453

)


 

4,164

 


 

1,509

 


 

7,600

 









 

Income tax benefit (expense)


 

232

 


 

(1,537

)


 

(2,665

)


 

(2,765

)









 
Net (loss) income

 

(8,221

)


 

2,627

 


 

(1,156

)


 

4,835

 









 
Less net loss attributable to noncontrolling interest

 

(19

)


 

(17

)


 

(83

)


 

(93

)









 
Net (loss) income attributable to Alaska Communications

$

(8,202

)


$

2,644

 


$

(1,073

)


$

4,928

 









 
Net (loss) income per share attributable to Alaska Communications:







Net (loss) income applicable to common shares

$

(8,202

)


$

2,644

 


$

(1,073

)


$

4,928

 









 
Basic

$

(0.15

)


$

0.05

 


$

(0.02

)


$

0.09

 

Diluted

$

(0.15

)


$

0.05

 


$

(0.02

)


$

0.09

 









 
Weighted average shares outstanding:







Basic

 

54,179

 


 

53,012

 


 

54,013

 


 

53,379

 

Diluted

 

54,179

 


 

53,975

 


 

54,013

 


 

54,277

 









 

Schedule 2





 
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, In Thousands Except Per Share Amounts)




 


December 31,


December 31,

Assets

2020


2019





 
Current assets:



Cash and cash equivalents

$

19,644

 


$

26,662

 

Restricted cash

 

1,326

 


 

1,331

 

Short-term investments

 

434

 


 

434

 

Accounts receivable, net of allowance of $4,060 and $4,627

 

41,893

 


 

34,354

 

Materials and supplies

 

7,624

 


 

8,900

 

Prepayments and other current assets

 

6,404

 


 

9,617

 

Total current assets

 

77,325

 


 

81,298

 





 
Property, plant and equipment

 

1,452,943

 


 

1,424,904

 

Less: accumulated depreciation and amortization

 

(1,062,027

)


 

(1,042,546

)

Property, plant and equipment, net

 

390,916

 


 

382,358

 





 
Operating lease right of use assets

 

89,821

 


 

80,991

 

Other assets

 

11,370

 


 

12,598

 

Total assets

$

569,432

 


$

557,245

 





 
Liabilities and Stockholders' Equity



Current liabilities:



Current portion of long-term obligations

$

9,067

 


$

8,906

 

Accounts payable, accrued and other current liabilities

 

49,700

 


 

42,869

 

Operating lease liabilities - current

 

3,392

 


 

2,795

 

Total current liabilities

 

62,159

 


 

54,570

 





 
Long-term obligations, net of current portion

 

159,641

 


 

167,476

 

Deferred income taxes

 

5,846

 


 

4,403

 

Operating lease liabilities - noncurrent

 

81,103

 


 

78,767

 

Other long-term liabilities, net of current portion

 

94,764

 


 

78,520

 

Total liabilities

 

403,513

 


 

383,736

 









 
Commitments and contingencies



Alaska Communications stockholders' equity:



Common stock, $.01 par value; 145,000 authorized

 

549

 


 

541

 

Treasury stock, 1,000 shares at cost

 

(1,812

)


 

(1,812

)

Additional paid in capital

 

163,317

 


 

161,844

 

Retained earnings

 

9,442

 


 

15,367

 

Accumulated other comprehensive loss

 

(6,340

)


 

(3,277

)

Total Alaska Communications stockholders' equity

 

165,156

 


 

172,663

 

Noncontrolling interest

 

763

 


 

846

 

Total stockholders' equity

 

165,919

 


 

173,509

 





 
Total liabilities and stockholders' equity

$

569,432

 


$

557,245

 





 

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,




2020

 

2019

 

2020

 

2019

Cash Flows from Operating Activities:








Net (loss) income

$

(8,221

)


$

2,627

 


$

(1,156

)


$

4,835

 


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








Depreciation and amortization

 

10,560

 


 

9,851

 


 

40,667

 


 

37,276

 


Loss on disposal of assets, net

 

117

 


 

55

 


 

240

 


 

156

 


Amortization of debt issuance costs and debt discount

 

292

 


 

304

 


 

1,234

 


 

1,215

 


Loss on extinguishment of debt

 

-

 


 

-

 


 

-

 


 

2,830

 


Amortization of deferred capacity revenue

 

(1,789

)


 

(1,255

)


 

(6,670

)


 

(4,655

)


Stock-based compensation

 

475

 


 

814

 


 

1,693

 


 

1,580

 


Deferred income tax (benefit) expense

 

(232

)


 

1,385

 


 

2,658

 


 

2,919

 


Charge for uncollectible accounts

 

739

 


 

(18

)


 

(216

)


 

257

 


Amortization of ROU assets

 

825

 


 

572

 


 

2,897

 


 

2,288

 


Other non-cash expense (income), net

 

8

 


 

18

 


 

(91

)


 

70

 


Changes in operating assets and liabilities


 

3,459

 


 

1,842

 


 

15,863

 


 

10,044

 


Net cash provided by operating activities

 

6,233

 


 

16,195

 


 

57,119

 


 

58,815

 










 
Cash Flows from Investing Activities:








Capital expenditures

 

(15,303

)


 

(13,208

)


 

(48,243

)


 

(44,764

)


Capitalized interest

 

(358

)


 

(396

)


 

(1,364

)


 

(1,379

)


Change in unsettled capital expenditures

 

(981

)


 

57

 


 

(579

)


 

640

 


Proceeds on sale of assets

 

-

 


 

5

 


 

-

 


 

25

 


Net cash used by investing activities

 

(16,642

)


 

(13,542

)


 

(50,186

)


 

(45,478

)










 
Cash Flows from Financing Activities:








Repayments of long-term debt

 

(2,267

)


 

(1,137

)


 

(8,908

)


 

(174,040

)


Proceeds from the issuance of long-term debt

 

-

 


 

-

 


 

-

 


 

180,000

 


Debt issuance costs and discounts

 

-

 


 

-

 


 

-

 


 

(2,683

)


Cash paid for debt extinguishment

 

-

 


 

-

 


 

-

 


 

(1,252

)


Payment of cash dividend on common stock

 

-

 


 

-

 


 

(4,836

)


 

-

 


Payment of withholding taxes on stock-based compensation

 

(17

)


 

(5

)


 

(456

)


 

(453

)


Purchases of treasury stock

 

-

 


 

-

 


 

-

 


 

(1,812

)


Proceeds from issuance of common stock

 

120

 


 

105

 


 

244

 


 

211

 


Net cash used by financing activities

 

(2,164

)


 

(1,037

)


 

(13,956

)


 

(29

)










 
Change in cash, cash equivalents and restricted cash

 

(12,573

)


 

1,616

 


 

(7,023

)


 

13,308

 










 
Cash, cash equivalents and restricted cash, beginning of period

 

33,543

 


 

26,377

 


 

27,993

 


 

14,685

 










 
Cash, cash equivalents and restricted cash, end of period

$

20,970

 


$

27,993

 


$

20,970

 


$

27,993

 










 
Supplemental Cash Flow Data:








Interest paid

$

2,705

 


$

2,992

 


$

11,137

 


$

12,228

 


Dividends payable at December 31, 2020

$

16

 


$

-

 


$

16

 


$

-

 


Income taxes paid, net

$

(4,311

)


$

(5,051

)


$

(4,307

)


$

(5,041

)










 
Schedule 4
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
ADJUSTED EBITDA
(Unaudited, In Thousands)








 


Three Months Ended

 

Twelve Months Ended



December 31,

 

December 31,



2020

 

2019

 

2020

 

2019









 
Net (loss) income

$

(8,221

)


$

2,627

 


$

(1,156

)


$

4,835

 

Add (subtract):







Interest expense

 

2,643

 


 

2,910

 


 

11,000

 


 

12,059

 

Loss on extinguishment of debt

 

-

 


 

-

 


 

-

 


 

2,830

 

Interest income

 

(18

)


 

(94

)


 

(174

)


 

(385

)

Depreciation and amortization

 

10,560

 


 

9,851

 


 

40,667

 


 

37,276

 

Other expense (income), net

 

8

 


 

17

 


 

(439

)


 

(175

)

Loss on disposal of assets, net

 

117

 


 

55

 


 

240

 


 

156

 

Income tax (benefit) expense

 

(232

)


 

1,537

 


 

2,665

 


 

2,765

 

Stock-based compensation

 

475

 


 

814

 


 

1,693

 


 

1,580

 

Transaction-related costs

 

9,550

 


 

-

 


 

9,550

 


 

-

 

Cash severance expense

 

-

 


 

120

 


 

-

 


 

1,715

 

Net loss attributable to noncontrolling interest

 

19

 


 

17

 


 

83

 


 

93

 









 
Adjusted EBITDA

$

14,901

 


$

17,854

 


$

64,129

 


$

62,749

 

Non-GAAP 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 $15.9 million in the twelve-month period ended December 31, 2020).

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 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, transaction-related costs, cash severance expense, 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,



 

2020

 

2019

 

2020

 

2019



 
 
 
   
Net cash provided by operating activities  

$

6,233

 

 

$

16,195

 

 

$

57,119

 

 

$

58,815

 


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

Capital expenditures excluding prefunded projects  

 

(13,536

)

 

 

(9,981

)

 

 

(39,881

)

 

 

(41,355

)


Capital expenditures for prefunded projects  

 

(1,767

)

 

 

(3,227

)

 

 

(8,362

)

 

 

(3,409

)


Milestone payments received for prefunded projects  

 

2,615

 

 

 

3,785

 

 

 

16,895

 

 

 

9,070

 


Milestone payments made for prefunded projects  

 

-

 

 

 

-

 

 

 

(8,250

)

 

 

-

 


Deferred cost of sales for prefunded projects  

 

175

 

 

 

-

 

 

 

525

 

 

 

-

 


Amortization of revenue for prefunded projects  

 

(523

)

 

 

(113

)

 

 

(1,753

)

 

 

(113

)


Amortization of deferred capacity revenue  

 

1,789

 

 

 

1,255

 

 

 

6,670

 

 

 

4,655

 


Amortization of GCI capacity revenue  

 

(523

)

 

 

(522

)

 

 

(2,077

)

 

 

(2,071

)


Amortization of debt issuance costs and debt discount  

 

(292

)

 

 

(304

)

 

 

(1,234

)

 

 

(1,215

)


Interest expense  

 

2,643

 

 

 

2,910

 

 

 

11,000

 

 

 

12,059

 


Interest paid  

 

(2,705

)

 

 

(2,992

)

 

 

(11,137

)

 

 

(12,228

)


Interest income  

 

(18

)

 

 

(94

)

 

 

(174

)

 

 

(385

)


Deferred income tax benefit (expense)  

 

232

 

 

 

(1,385

)

 

 

(2,658

)

 

 

(2,919

)


Income tax (benefit) expense  

 

(232

)

 

 

1,537

 

 

 

2,665

 

 

 

2,765

 


Income taxes paid, net  

 

4,311

 

 

 

5,051

 

 

 

4,307

 

 

 

5,041

 


Charge for uncollectible accounts  

 

(739

)

 

 

18

 

 

 

216

 

 

 

(257

)


Amortization of ROU assets  

 

(825

)

 

 

(572

)

 

 

(2,897

)

 

 

(2,288

)


Transaction-related costs  

 

9,550

 

 

 

-

 

 

 

9,550

 

 

 

-

 


Other expense (income), net  

 

8

 

 

 

17

 

 

 

(439

)

 

 

(175

)


Net loss attributable to noncontrolling interest  

 

19

 

 

 

17

 

 

 

83

 

 

 

93

 


Other non-cash (expense) income, net  

 

(8

)

 

 

(18

)

 

 

91

 

 

 

(70

)


Changes in operating assets and liabilities  

 

(3,459

)

 

 

(1,842

)

 

 

(15,863

)

 

 

(10,044

)

Adjusted free cash flow  

$

2,948

 

 

$

9,735

 

 

$

14,396

 

 

$

15,969

 



 
 
 
   
Schedule 6
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
ADJUSTED FREE CASH FLOW
(Unaudited, In Thousands)

 
 
 
   

 

Three Months Ended

 

Twelve Months Ended


 

December 31,

 

December 31,


 

2020

 

2019

 

2020

 

2019


 
 
 
   
Adjusted EBITDA  

$

14,901

 

 

$

17,854

 

 

$

64,129

 

 

$

62,749

 


 
 
 
   
Less:  
 
 
 
Capital expenditures excluding prefunded projects  

 

(13,536

)

 

 

(9,981

)

 

 

(39,881

)

 

 

(41,355

)

Amortization of GCI capacity revenue  

 

(523

)

 

 

(522

)

 

 

(2,077

)

 

 

(2,071

)

Cash severance expense  

 

-

 

 

 

(120

)

 

 

-

 

 

 

(1,715

)

Income taxes paid, net  

 

4,311

 

 

 

5,051

 

 

 

4,307

 

 

 

5,041

 

Interest paid  

 

(2,705

)

 

 

(2,992

)

 

 

(11,137

)

 

 

(12,228

)


 

 

2,448

 

 

 

9,290

 

 

 

15,341

 

 

 

10,421

 

Impact of prefunded projects:  
 
 
 
Capital expenditures for prefunded projects  

 

(1,767

)

 

 

(3,227

)

 

 

(8,362

)

 

 

(3,409

)

Milestone payments received for prefunded projects  

 

2,615

 

 

 

3,785

 

 

 

16,895

 

 

 

9,070

 

Milestone payments made for prefunded projects  

 

-

 

 

 

-

 

 

 

(8,250

)

 

 

-

 

Deferred cost of sales for prefunded projects  

 

175

 

 

 

-

 

 

 

525

 

 

 

-

 

Amortization of revenue for prefunded projects  

 

(523

)

 

 

(113

)

 

 

(1,753

)

 

 

(113

)


 

 

500

 

 

 

445

 

 

 

(945

)

 

 

5,548

 

Adjusted free cash flow*  

$

2,948

 

 

$

9,735

 

 

$

14,396

 

 

$

15,969

 

* 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.

Non-GAAP 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, cash income taxes refunded or paid, cash interest paid, amortization of GCI capacity revenue, cash severance expense for the Company's former Chief Executive Officer, 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.

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,


 

2020

 

2019

 

2020

 

2019

Business and wholesale revenue  
 
 
 
Business broadband  

$

16,288

 

 

$

15,427

 

$

64,238

 

 

$

61,785

Business voice and other  

 

7,189

 

 

 

7,218

 

 

28,936

 

 

 

28,660

Managed IT services  

 

1,148

 

 

 

1,529

 

 

5,052

 

 

 

6,494

Equipment sales and installations  

 

4,800

 

 

 

1,868

 

 

9,508

 

 

 

4,698

Wholesale broadband  

 

12,456

 

 

 

11,321

 

 

49,878

 

 

 

43,310

Wholesale voice and other  

 

1,282

 

 

 

929

 

 

5,256

 

 

 

5,617


 
 
 
   
Total business and wholesale revenue  

 

43,163

 

 

 

38,292

 

 

162,868

 

 

 

150,564

Growth in business and wholesale  

 

12.7

%

 
 

 

8.2

%

 
Consumer revenue  
 
 
 
Broadband  

 

6,706

 

 

 

6,709

 

 

27,180

 

 

 

26,589

Voice and other  

 

2,245

 

 

 

2,484

 

 

9,379

 

 

 

10,431


 
 
 
   
Total consumer revenue  

 

8,951

 

 

 

9,193

 

 

36,559

 

 

 

37,020


 
 
 
   
Total business, wholesale, and consumer revenue  

 

52,114

 

 

 

47,485

 

 

199,427

 

 

 

187,584

Growth in business, wholesale and consumer revenue  

 

9.7

%

 
 

 

6.3

%

 
Growth in broadband revenue  

 

6.0

%

 
 

 

7.3

%

 

 
 
 
   
Regulatory revenue  
 
 
 
Access  

 

5,295

 

 

 

5,853

 

 

21,448

 

 

 

24,416

High cost support  

 

4,924

 

 

 

4,924

 

 

19,694

 

 

 

19,694


 
 
 
   
Total regulatory revenue  

 

10,219

 

 

 

10,777

 

 

41,142

 

 

 

44,110


 
 
 
   
Total revenue  

$

62,333

 

 

$

58,262

 

$

240,569

 

 

$

231,694

Growth in total revenue  

 

7.0

%

 
 

 

3.8

%

 

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

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

CAF II Revenues: High Cost Support

Schedule 8


 
 
   
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
KEY OPERATING STATISTICS
(Unaudited)

 
 
   

 

Three Months Ended


 

December 31,

 

September 30,

 

December 31,


 

2020

 

2020

 

2019


 
 
   
Voice:  
 
 
Business access lines  

 

65,294

 

 

 

66,253

 

 

 

68,242

 

Consumer access lines  

 

20,578

 

 

 

21,229

 

 

 

22,829

 


 
 
   
Voice ARPU business  

$

28.61

 

 

$

27.98

 

 

$

26.56

 

Voice ARPU consumer  

$

34.77

 

 

$

34.13

 

 

$

33.90

 


 
 
   
Broadband:  
 
 
Business connections  

 

14,652

 

 

 

14,672

 

 

 

14,880

 

Consumer connections  

 

30,598

 

 

 

32,012

 

 

 

31,480

 


 
 
   
Broadband ARPU business  

$

371.60

 

 

$

364.04

 

 

$

343.83

 

Broadband ARPU consumer  

$

72.84

 

 

$

72.41

 

 

$

70.81

 


 
 
   
Monthly Average Churn:  
 
 
Business voice  

 

0.4

%

 

 

0.9

%

 

 

0.7

%

Consumer broadband  

 

1.5

%

 

 

3.0

%

 

 

2.9

%

Consumer voice  

 

1.1

%

 

 

1.1

%

 

 

1.3

%


 
 
   
Schedule 9

 
   
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
LONG TERM DEBT AND NET DEBT
(Unaudited, In Thousands)

 
 

 


 

December 31,

 

December 31,


 

2020

 

2019

2019 senior secured credit facility due 2024  

$

168,896

 

 

$

177,750

 

Debt discount - 2019 senior secured credit facilities due 2024  

 

(1,523

)

 

 

(2,234

)

Debt issuance costs - 2019 senior secured credit facilities due 2024  

 

(1,341

)

 

 

(1,863

)

Capital leases and other long-term obligations  

 

2,676

 

 

 

2,729

 

Total debt  

 

168,708

 

 

 

176,382

 

Less current portion  

 

(9,067

)

 

 

(8,906

)

Long-term obligations, net of current portion  

$

159,641

 

 

$

167,476

 


 
   
Total debt  

$

168,708

 

 

$

176,382

 

Plus debt discounts and debt issuance costs  

 

2,864

 

 

 

4,097

 

Gross debt  

 

171,572

 

 

 

180,479

 

Cash and cash equivalents  

 

(19,644

)

 

 

(26,662

)

Net debt  

$

151,928

 

 

$

153,817

 

 

Contacts

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