Alaska Communications Reports Fourth Quarter and Year-end 2020 Results
Alaska Communications Systems Group (NASDAQ: ALSK) reported 2020 financial results highlighting a 7% rise in Q4 revenue to $62.3 million, despite operational challenges. Business and wholesale revenue increased by 12.7% to $43.2 million, while consumer and regulatory revenues fell. The company incurred a net loss of $8.2 million in Q4 and $1.1 million for the full year. Successful expansions included broadband access to over 3,700 new locations. A merger with ATN International was approved, promising further growth and infrastructural synergies.
- Q4 2020 revenue rose to $62.3 million, up 7% year-over-year.
- Business and wholesale revenue increased by 12.7% to $43.2 million in Q4.
- Broadband access expanded by over 3,700 locations, a 33% increase.
- Merger with ATN International approved, expected to enhance growth opportunities.
- Q4 net loss attributable to Alaska Communications was $8.2 million, compared to net income of $2.6 million in Q4 2019.
- Consumer revenue decreased by 2.6% to $9.0 million in Q4.
- Operating loss of $5.8 million in Q4 compared to operating income of $7.0 million in Q4 2019.
- Full-year net loss was $1.1 million, reversing from net income of $4.9 million in 2019.
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
“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 of7.0% .-
Business and wholesale revenue was
$43.2 million , compared to$38.3 million , up12.7% . -
Consumer revenue was
$9.0 million , compared to$9.2 million , a decrease of2.6% . -
Regulatory revenue was
$10.2 million , compared to$10.8 million , a decrease of5.2% .
-
Business and wholesale revenue was
-
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 of3.8% .-
Business and wholesale revenue was
$162.9 million , compared to$150.6 million , up8.2% . -
Consumer revenue was
$36.6 million , compared to$37.0 million , a decrease of1.2% . -
Regulatory revenue was
$41.1 million , compared to$44.1 million , a decrease of6.7% .
-
Business and wholesale revenue was
-
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$153.8 million at December 31, 2019.
Reconciliations of non-GAAP financial measures to GAAP financial measures can be found in tables at the end of this release and on the Company’s website at http://www.alsk.com in the investment data section.
Laurie Butcher, Alaska Communications Chief Financial Officer, said, “In 2020, we delivered strong financial performance even with the impact of the COVID-19 pandemic. We exceeded revenue guidance, driven by increased broadband revenue, equipment sales and special project revenue coming online. Our business and wholesale growth offset our consumer and regulatory decreases, and our growth revenues continue to outpace our legacy declines. Regarding capex, due to the timing of certain projects, we were able to accelerate expansion of our fiber network and spent slightly more than guidance. Adjusted Free Cash Flow was on target, and even with incurring
2020 Performance
Operating Statement ($ in M) |
2020 Guidance |
2020 Performance |
Total Revenue |
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Adjusted EBITDA |
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Capital Expenditures
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Adjusted Free Cash Flow
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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
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 or www.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
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 |
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| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||||||||||
| CONSOLIDATED SCHEDULE OF OPERATIONS | ||||||||||||||||
| (Unaudited, In Thousands Except Per Share Amounts) | ||||||||||||||||
Three Months Ended |
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Twelve Months Ended |
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December 31, |
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December 31, |
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2020 |
|
2019 |
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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 |
|
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FAQ
What were Alaska Communications' total revenues for 2020?
Alaska Communications reported total revenues of $240.6 million for the year 2020.
How much did Alaska Communications lose in the fourth quarter of 2020?
In the fourth quarter of 2020, Alaska Communications recorded a net loss of $8.2 million.
What is the expected impact of the ATN merger on Alaska Communications?
The ATN merger is anticipated to enhance Alaska Communications' growth and fiber infrastructure expansion.
What was the percentage increase in business and wholesale revenue in Q4 2020?
Business and wholesale revenue increased by 12.7% to $43.2 million in Q4 2020.
How did consumer revenue perform in Q4 2020 compared to Q4 2019?
Consumer revenue decreased by 2.6%, totaling $9.0 million in Q4 2020, compared to $9.2 million in Q4 2019.
ALSK
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