ONEONTA, Ala., Aug. 01, 2017 (GLOBE NEWSWIRE) -- Otelco Inc. (NASDAQ:OTEL), a wireline telecommunications, cloud hosting and managed services provider in Alabama, Maine, Massachusetts, Missouri, New Hampshire, Vermont and West Virginia, today announced results for its second quarter ended June 30, 2017. Key highlights for Otelco include:
- Total revenues of $17.4 million for second quarter 2017.
- Operating income of $5.1 million for second quarter 2017.
- Net income of $1.5 million for second quarter 2017.
- Consolidated EBITDA (as defined below) of $7.0 million for second quarter 2017.
During second quarter 2017, Otelco’s operating income increased by $0.2 million to $5.1 million when compared to the same period last year. As previously reported, the Company began receiving revenue during the first quarter from the FCC’s Alternative Connect America Model (or “ACAM”) program in the five states where the program is applicable, which is the primary factor driving revenue improvement during second quarter. The program provides a known level of support for ten years to enhance and build out the Company’s broadband network to provide increased speed and accessibility to customers. The new model-based support plus higher Connect America Fund (or “CAF”) funding provides an increase of approximately $0.4 million in revenue each quarter this year when compared with the revenue it replaced in 2016. As a result, the Company reported an increase of $0.2 million in total revenue for second quarter 2017 compared with second quarter 2016 and up slightly from first quarter 2017.
Net income for the second quarter of 2017 increased by $0.2 million, compared to the same period in 2016. The decline in residential RLEC voice service was more than offset by the decrease in interest costs associated with the Company’s credit agreements, and the increase in ACAM and CAF revenue. Consolidated EBITDA declined by less than $0.1 million.
The Company continues to make significant progress in implementing its strategic goals. The first phase of ACAM fiber-to-the-home projects in Missouri, Maine and Alabama totaling $2.4 million are underway with completion of this work expected in the fourth quarter of 2017. The projects will drive fiber deeper into Otelco’s network and provide customers the opportunity to subscribe to greater bandwidth offerings and benefit from enhanced service. Today, the Company has over 1,600 fiber route miles in its current network. On April 1, 2017, the Company successfully connected over 1,000 voice and data access lines to its network under a multi-year contract with the community of Leverett, Massachusetts. Discussions continue with several communities in Massachusetts on similar projects.
The work on consolidating and streamlining our business operations continues to move forward. The Company is making significant progress in replacing its billing and operations systems with a common platform across its entire operation. “We are adjusting our current bill cycles on October 1, 2017, to common dates in preparation for the system conversion in 2018,” noted Rob Souza, President and Chief Executive Officer of Otelco. “Carrier billing is expected to begin converting to the new system during first quarter 2018 with end-user billing to follow in second quarter 2018. Our sales, marketing, customer service and technical teams are already functioning on a company-wide basis in advance of the conversion to effectively plan for the enhanced customer service and improved efficiency provided by the consolidated system.”
Cash grew from $10.5 million at the end of 2016 to $11.3 million at June 30, 2017. The growth in cash reflects the continuing strength of the Company’s operations. In addition to its scheduled quarterly $1.0 million principal payment on its senior credit facility, Otelco is today making a $3.0 million additional principal payment to further reduce its senior debt as part of its plan to reduce leverage toward current industry norms. The Company’s total leverage ratio, net of cash, at June 30, 2017, as defined and calculated below, was 2.95.
“In the fall of 2016, we announced the engagement of The Bank Street Group LLC to explore the Company’s strategic alternatives,” added Souza. “While the Company will continue to restrict public comments on the process, discussions are ongoing with a number of entities who have been engaged in reviewing both the Company’s performance and its future possibilities. The discussions are consistent with other telecommunications industry announcements within the broadly defined telecom market.” However, there can be no assurance that any transactions will occur as a result of these discussions.
| Second Quarter 2017 Financial Summary | |||||||||||||||||||
| (Dollars in thousands, except per share amounts) | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Three Months Ended June 30, | Change | ||||||||||||||||||
| 2017 | 2016 | Amount | Percent | ||||||||||||||||
| Revenues | $ | 17,406 | $ | 17,232 | $ | 174 | 1.0 | % | |||||||||||
| Operating income | $ | 5,053 | $ | 4,899 | $ | 154 | 3.1 | % | |||||||||||
| Interest expense | $ | (2,571 | ) | $ | (2,721 | ) | $ | (150 | ) | (5.5 | ) | % | |||||||
| Net income available to stockholders | $ | 1,536 | $ | 1,324 | $ | 212 | 16.0 | % | |||||||||||
| Basic net income per share | $ | 0.46 | $ | 0.40 | $ | 0.06 | 15.0 | % | |||||||||||
| Diluted net income per share | $ | 0.45 | $ | 0.39 | $ | 0.06 | 15.4 | % | |||||||||||
| Consolidated EBITDA(1) | $ | 7,005 | $ | 7,053 | $ | (48 | ) | (0.7 | ) | % | |||||||||
| Capital expenditures | $ | 2,488 | $ | 1,509 | $ | 979 | 64.9 | % | |||||||||||
| Six Months Ended June 30, | Change | ||||||||||||||||||
| 2017 | 2016 | Amount | Percent | ||||||||||||||||
| Revenues | $ | 34,786 | $ | 34,722 | $ | 64 | 0.2 | % | |||||||||||
| Operating income | $ | 10,074 | $ | 9,645 | $ | 429 | 4.4 | % | |||||||||||
| Interest expense | $ | (5,182 | ) | $ | (5,203 | ) | $ | (21 | ) | (0.4 | ) | % | |||||||
| Net income | $ | 3,144 | $ | 3,074 | $ | 70 | 2.3 | % | |||||||||||
| Net income per share | $ | 0.94 | $ | 0.94 | $ | - | - | % | |||||||||||
| Diluted net income per share | $ | 0.91 | $ | 0.91 | $ | - | - | % | |||||||||||
| Consolidated EBITDA(1) | $ | 14,203 | $ | 14,680 | $ | (477 | ) | (3.2 | ) | % | |||||||||
| Capital expenditures | $ | 3,758 | $ | 2,215 | $ | 1,543 | 69.7 | % | |||||||||||
| Reconciliation of Consolidated EBITDA(1) to Net Income | Twelve Months | ||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | Ended June 30, | |||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2017 | |||||||||||||||
| Net income | $ | 1,536 | $ | 1,324 | $ | 3,144 | $ | 3,074 | $ | 5,215 | |||||||||
| Add: | Depreciation | 1,741 | 1,792 | 3,479 | 3,571 | 7,046 | |||||||||||||
| Interest expense less interest income | 2,260 | 2,400 | 4,562 | 4,439 | 9,359 | ||||||||||||||
| Interest expense - amortized loan cost | 311 | 321 | 620 | 764 | 1,254 | ||||||||||||||
| Income tax expense | 946 | 858 | 1,951 | 1,991 | 3,617 | ||||||||||||||
| Amortization - intangibles | 101 | 259 | 202 | 518 | 570 | ||||||||||||||
| Loan fees | 39 | 40 | 79 | 124 | 158 | ||||||||||||||
| Stock-based compensation (earn-out) | - | (78 | ) | - | - | - | |||||||||||||
| Stock-based compensation (senior management) | 71 | 137 | 166 | 199 | 382 | ||||||||||||||
| Consolidated EBITDA(1) | $ | 7,005 | $ | 7,053 | $ | 14,203 | $ | 14,680 | $ | 27,601 | |||||||||
(1) Consolidated EBITDA is defined as consolidated net income (loss) 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 the United States (“GAAP”). Consolidated EBITDA corresponds to the definition of Consolidated EBITDA in the Company’s credit facilities. The lenders under the Company’s credit facilities utilize this measure to determine compliance with credit facility requirements. The Company uses Consolidated EBITDA as an operational performance measurement to focus attention on the operational generation of cash, which is used for reinvestment into the business; to repay its debt and to pay interest on its debt; to pay income taxes; and for other corporate requirements. The Company reports Consolidated EBITDA to allow current and potential investors to understand this performance metric and because the Company 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 enhance understanding of the Company’s financial performance and highlight operational trends. However, Consolidated EBITDA 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 Consolidated EBITDA may not be comparable to similarly titled measures used by other companies.
| Otelco Inc. - Key Operating Statistics | |||||||||||||||
| (unaudited) | |||||||||||||||
| As of | December 31, | March 31, | June 30, | % Change from | |||||||||||
| 2015 | 2016 | 2017 | 2017 | March 31, 2017 | |||||||||||
| Business/Enterprise | |||||||||||||||
| CLEC | |||||||||||||||
| Voice lines | 18,606 | 17,034 | 16,852 | 16,582 | (1.6 | ) | % | ||||||||
| HPBX seats | 10,880 | 11,487 | 11,532 | 11,322 | (1.8 | ) | % | ||||||||
| Data lines | 3,629 | 3,655 | 3,315 | 3,435 | 3.6 | % | |||||||||
| Wholesale network lines | 2,743 | 2,570 | 2,584 | 2,521 | (2.4 | ) | % | ||||||||
| RLEC | |||||||||||||||
| Voice lines | 16,123 | 16,621 | 16,359 | 15,853 | (3.1 | ) | % | ||||||||
| Data lines | 1,539 | 1,634 | 1,624 | 1,625 | 0.1 | % | |||||||||
| Access line equivalents(1) | 53,520 | 53,001 | 52,266 | 51,338 | (1.8 | ) | % | ||||||||
| Residential | |||||||||||||||
| CLEC | |||||||||||||||
| Voice lines | 225 | 199 | 192 | 631 | 228.6 | % | |||||||||
| Data lines | 2,432 | 2,291 | 2,275 | 2,882 | 26.7 | % | |||||||||
| RLEC | |||||||||||||||
| Voice lines | 23,143 | 20,978 | 20,556 | 20,154 | (2.0 | ) | % | ||||||||
| Data lines | 20,089 | 19,622 | 19,562 | 19,421 | (0.7 | ) | % | ||||||||
| Other services | 3,728 | 3,682 | 3,665 | 3,633 | (0.9 | ) | % | ||||||||
| Access line equivalents(1) | 49,617 | 46,772 | 46,250 | 46,721 | 1.0 | % | |||||||||
| Otelco access line equivalents(1) | 103,137 | 99,773 | 98,516 | 98,059 | (0.5 | ) | % | ||||||||
(1) The Company defines access line equivalents as retail and wholesale voice lines, data lines (including cable modems, digital subscriber lines, other broadband connections and dedicated data access trunks) and other services (including entertainment and security services).
The Company uses the ratio of debt, net of cash, to Consolidated EBITDA for the last twelve months as an operational performance measurement. 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 and because the Company 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 enhance understanding of the Company’s financial performance and highlight 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 June 30, 2017.
| Total leverage ratio, net of cash | |||||
| as of | June 30, 2017 | ||||
| ($ 000) | |||||
| Senior notes payable | $ | 73,450 | |||
| Debt issuance costs | 3,425 | ||||
| Senior notes outstanding | $ | 76,875 | |||
| Subordinated notes payable | $ | 15,056 | |||
| Debt issuance costs | 674 | ||||
| Subordinated notes outstanding | $ | 15,730 | |||
| Total notes outstanding | $ | 92,605 | |||
| Less cash | (11,274 | ) | |||
| Notes outstanding, net of cash | $ | 81,331 | |||
| Consolidated EBITDA for the | |||||
| last twelve months | $ | 27,601 | |||
| Total leverage ratio, net of cash | 2.95 | ||||
FINANCIAL DISCUSSION FOR SECOND QUARTER 2017:
Revenues
Total revenues increased 1.0% in the three months ended June 30, 2017, to $17.4 million from $17.2 million in the three months ended June 30, 2016. The increase in network access associated with the FCC’s ACAM program, internet, video and security revenue were partially offset by the decrease in local service revenue associated with residential RLEC access line equivalents. The table below provides the components of the Company’s revenues for the three months ended June 30, 2017, compared to the same period of 2016.
| Three Months Ended June 30, | Change | ||||||||||||||
| 2017 | 2016 | Amount | Percent | ||||||||||||
| (dollars in thousands) | |||||||||||||||
| Local services | $ | 5,762 | $ | 5,849 | $ | (87 | ) | (1.5 | ) | % | |||||
| Network access | 5,604 | 5,345 | 259 | 4.8 | % | ||||||||||
| Internet | 3,958 | 3,879 | 79 | 2.0 | % | ||||||||||
| Transport services | 1,168 | 1,230 | (62 | ) | (5.0 | ) | % | ||||||||
| Video and security | 747 | 718 | 29 | 4.0 | % | ||||||||||
| Managed services | 167 | 211 | (44 | ) | (20.9 | ) | % | ||||||||
| Total | $ | 17,406 | $ | 17,232 | $ | 174 | 1.0 | % | |||||||
Local services revenue decreased 1.5% in the three months ended June 30, 2017, to slightly less than $5.8 million from slightly more than $5.8 million in the three months ended June 30, 2016. The decline in RLEC residential voice access lines and related revenue, such as long distance, accounted for a decrease of $0.3 million. A portion of the RLEC decrease is recovered through the CAF, which is categorized as interstate access revenue. The decline in RLEC residential voice access revenue was partially offset by an increase in HPBX and fiber revenue of $0.2 million. Network access revenue increased 4.8% in the three months ended June 30, 2017, to $5.6 million from $5.3 million in the three months ended June 30, 2016. The initial ACAM revenue and transition payments and CAF revenue increased $2.1 million. A one-time settlement accounted for an increase of $0.2 million. These increases were partially offset by a $1.6 million decrease in interstate access, including universal service funding. End-user based fees decreased $0.2 million and special access charges decreased by $0.2 million. Internet revenue increased 2.0% in the three months ended June 30, 2017, to $4.0 million from $3.9 million in the three months ended June 30, 2016. Increased data speeds and equipment rental fees accounted for the increase in revenue. Transport services revenue decreased 5.0% in the three months ended June 30, 2017, to just under $1.2 million from just over $1.2 million in the three months ended June 30, 2016, reflecting customer churn and market pricing. Video and security revenue in the three months ended June 30, 2017, increased 4.0% from the three months ended June 30, 2016, to remain at $0.7 million in both periods reflecting increases in IPTV and security revenue. Managed services revenue decreased 20.9% in the three months ended June 30, 2017, to just under $0.2 million from just over $0.2 million in the three months ended June 30, 2016, reflecting a decrease in professional services revenue.
Operating Expenses
Operating expenses in the three months ended June 30, 2017, increased 0.2% to $12.4 million from $12.3 million in the three months ended June 30, 2016. Cost of services increased 2.1% to just over $8.0 million in the three months ended June 30, 2017, from just under $7.9 million in the three months ended June 30, 2016. Network and other operations expense increased just over $0.1 million and pole rental expense increased by $0.1 million. These increases were partially offset by a decrease of $0.1 million in customer service and sales costs. Circuit, access, internet and cable costs were unchanged. Selling, general and administrative expenses increased 2.5% to $2.5 million in the three months ended June 30, 2017, from $2.4 million in the three months ended June 30, 2016. The increase was the result of a transition from the stock-based senior management bonus plan, which had been in place for three years, to a cash-based bonus plan for 2017. Depreciation and amortization decreased 10.2% in the three months ended June 30, 2017, to $1.8 million from $2.1 million in three months ended June 30, 2016. The amortization of the telephone plant adjustment decreased $0.1 million. New England RLEC depreciation and amortization of other intangible assets decreased $0.1 million, driven primarily by the end of amortization of intangibles associated with acquisitions.
Operating Income
Operating income in the three months ended June 30, 2017, increased 3.1% to $5.1 million from $4.9 million in the three months ended June 30, 2016, primarily related to the increase in revenue associated with the FCC’s A-CAM program during second quarter 2017.
Interest Expense
Interest expense in the three months ended June 30, 2017, decreased 5.5% to $2.6 million from $2.7 million in the three months ended June 30, 2016. The lower outstanding balance on the senior credit facility accounted for the decrease. The Company has repaid $8.1 million of principal since it funded new senior and subordinated credit facilities in February 2016. The credit facilities mature in 2021.
Net Income
Reflecting the changes noted above, net income increased $0.2 million to $1.5 million for the three months ended June 30, 2017, when compared to $1.3 million for the three months ended June 30, 2016, primarily driven by new ACAM revenue.
Consolidated EBITDA
Based on the changes noted above, Consolidated EBITDA decreased by less than $0.1 million to $7.0 million for the three months ended June 30, 2017, when compared to just under $7.1 million for the three months ended June 30, 2016. Consolidated EBITDA was $7.2 million in the first quarter of 2017, including $0.2 million in annual CoBank dividends. Stock-based compensation and other excluded expenses are added back in the calculation of Consolidated EBITDA. See financial tables for a reconciliation of Consolidated EBITDA to net income.
Balance Sheet
As of June 30, 2017, the Company had cash and cash equivalents of $11.3 million compared to $10.5 million at the end of 2016. The growth in cash reflects the continuing strength of the Company’s operations. During second quarter 2017, the Company reduced its senior credit facility balance to $76.9 million through $1.0 million in scheduled principal payments. Total notes payable as of June 30, 2017, was $92.6 million. The $5.0 million revolver remains undrawn. The Company made an additional prepayment of $3.0 million today on its senior credit facility as part of its strategy to reduce its leverage.
Capital Expenditures
Capital expenditures were $2.5 million for the three months ended June 30, 2017, compared to $1.5 million in the same period in 2016. The buildout requirements of the ACAM program and the Company’s plans to convert its billing and operations systems to a single platform are primarily responsible for this increase. The Company has amended its credit facility to allow for the potential increase in capital expenditures to $8.5 million and $7.5 million in 2017 and 2018, respectively.
Second Quarter Earnings Conference Call
Otelco has scheduled a conference call, which will be broadcast live over the internet, on Wednesday, August 2, 2017, at 11:30 a.m. (Eastern Time). To participate in the call, participants should dial (719) 457-2698 and ask for the Otelco call 10 minutes prior to the start time. Investors, analysts and the general public will also have the opportunity to listen to the conference call free over the internet by visiting the Company’s website at www.OtelcoInc.com. To listen to the live call online, please visit the website at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live webcast, a replay of the webcast will be available on the Company's website at www.OtelcoInc.com for 30 days. A two-week telephonic replay may also be accessed by calling (719) 457-0820 and entering the Confirmation Code 1377732.
ABOUT OTELCO
Otelco Inc. provides wireline telecommunications services in Alabama, Maine, Massachusetts, Missouri, New Hampshire, Vermont and West Virginia. The Company’s services include local and long distance telephone, digital high-speed data lines, transport services, network access, cable television and other related services. With over 98,000 voice and data access lines and other related services, which are collectively referred to as access line equivalents, Otelco is among the top 25 largest local exchange carriers in the United States based on number of access lines. Otelco operates eleven incumbent telephone companies serving rural markets, or rural local exchange carriers. It also provides competitive retail and wholesale communications services and technology consulting, managed services and private/hybrid cloud hosting services through several subsidiaries. For more information, visit the Company’s website at www.OtelcoInc.com.
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 that could impact the Company’s strategic review and exploration process or 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. There can be no assurance regarding the outcome of any decisions that the Company may make regarding strategic alternatives in connection with the strategic review and exploration process. 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 Securities and Exchange Commission.
| OTELCO INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||||||
| (in thousands, except share par value and share amounts) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| June 30, | December 31, | |||||||||||||||
| 2017 | 2016 | |||||||||||||||
| Assets | ||||||||||||||||
| Current assets | ||||||||||||||||
| Cash and cash equivalents | $ | 11,274 | $ | 10,538 | ||||||||||||
| Accounts receivable: | ||||||||||||||||
| Due from subscribers, net of allowance for doubtful | ||||||||||||||||
| accounts of $203 and $187, respectively | 4,631 | 5,035 | ||||||||||||||
| Other | 1,537 | 1,528 | ||||||||||||||
| Materials and supplies | 2,533 | 2,184 | ||||||||||||||
| Prepaid expenses | 1,337 | 2,912 | ||||||||||||||
| Total current assets | 21,312 | 22,197 | ||||||||||||||
| Property and equipment, net | 49,604 | 49,271 | ||||||||||||||
| Goodwill | 44,976 | 44,976 | ||||||||||||||
| Intangible assets, net | 1,542 | 1,785 | ||||||||||||||
| Investments | 1,644 | 1,821 | ||||||||||||||
| Other assets | 243 | 222 | ||||||||||||||
| Total assets | $ | 119,321 | $ | 120,272 | ||||||||||||
| Liabilities and Stockholders' Deficit | ||||||||||||||||
| Current liabilities | ||||||||||||||||
| Accounts payable | $ | 751 | $ | 1,477 | ||||||||||||
| Accrued expenses | 5,346 | 4,730 | ||||||||||||||
| Advance billings and payments | 1,525 | 1,487 | ||||||||||||||
| Customer deposits | 67 | 62 | ||||||||||||||
| Current maturity of long-term notes payable, net of debt issuance cost | 2,959 | 6,071 | ||||||||||||||
| Total current liabilities | 10,648 | 13,827 | ||||||||||||||
| Deferred income taxes | 28,280 | 28,280 | ||||||||||||||
| Advance billings and payments | 2,444 | 1,987 | ||||||||||||||
| Other liabilities | 8 | 26 | ||||||||||||||
| Long-term notes payable, less current maturities and debt issuance cost | 85,547 | 86,860 | ||||||||||||||
| Total liabilities | 126,927 | 130,980 | ||||||||||||||
| Stockholders' deficit | ||||||||||||||||
| Class A Common Stock, $.01 par value-authorized 10,000,000 shares; | ||||||||||||||||
| issued and outstanding 3,346,689 and 3,291,750 shares, respectively | 34 | 33 | ||||||||||||||
| Additional paid in capital | 4,143 | 4,186 | ||||||||||||||
| Accumulated deficit | (11,783 | ) | (14,927 | ) | ||||||||||||
| Total stockholders' deficit | (7,606 | ) | (10,708 | ) | ||||||||||||
| Total liabilities and stockholders' deficit | $ | 119,321 | $ | 120,272 | ||||||||||||
| OTELCO INC. AND SUBSIDIARIES | |||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||
| (in thousands, except share and per share amounts) | |||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
| Revenues | $ | 17,406 | $ | 17,232 | $ | 34,786 | $ | 34,722 | |||||||||||||
| Operating expenses | |||||||||||||||||||||
| Cost of services | 8,044 | 7,875 | 15,857 | 16,005 | |||||||||||||||||
| Selling, general and administrative expenses | 2,467 | 2,407 | 5,174 | 4,983 | |||||||||||||||||
| Depreciation and amortization | 1,842 | 2,051 | 3,681 | 4,089 | |||||||||||||||||
| Total operating expenses | 12,353 | 12,333 | 24,712 | 25,077 | |||||||||||||||||
| Income from operations | 5,053 | 4,899 | 10,074 | 9,645 | |||||||||||||||||
| Other income (expense) | |||||||||||||||||||||
| Interest expense | (2,571 | ) | (2,721 | ) | (5,182 | ) | (5,203 | ) | |||||||||||||
| Other income | - | 4 | 203 | 623 | |||||||||||||||||
| Total other expense | (2,571 | ) | (2,717 | ) | (4,979 | ) | (4,580 | ) | |||||||||||||
| Income before income tax expense | 2,482 | 2,182 | 5,095 | 5,065 | |||||||||||||||||
| Income tax expense | (946 | ) | (858 | ) | (1,951 | ) | (1,991 | ) | |||||||||||||
| Net income | $ | 1,536 | $ | 1,324 | $ | 3,144 | $ | 3,074 | |||||||||||||
| Weighted average number of common shares outstanding: | |||||||||||||||||||||
| Basic | 3,346,689 | 3,283,177 | 3,346,689 | 3,283,177 | |||||||||||||||||
| Diluted | 3,445,632 | 3,380,445 | 3,445,632 | 3,378,090 | |||||||||||||||||
| Basic net income per common share | $ | 0.46 | $ | 0.40 | $ | 0.94 | $ | 0.94 | |||||||||||||
| Diluted net income per common share | $ | 0.45 | $ | 0.39 | $ | 0.91 | $ | 0.91 | |||||||||||||
| OTELCO INC. AND SUBSIDIARIES | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
| (in thousands) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Six Months Ended June 30, | |||||||||||||||
| 2017 | 2016 | ||||||||||||||
| Cash flows from operating activities: | |||||||||||||||
| Net income | $ | 3,144 | $ | 3,074 | |||||||||||
| Adjustments to reconcile net income to cash flows provided by operating activities: | |||||||||||||||
| Depreciation | 3,479 | 3,571 | |||||||||||||
| Amortization | 202 | 518 | |||||||||||||
| Amortization of loan costs | 621 | 609 | |||||||||||||
| Loss on extinguishment of debt | - | 155 | |||||||||||||
| Provision for uncollectible accounts receivable | 206 | 119 | |||||||||||||
| Stock-based compensation | 166 | 199 | |||||||||||||
| Payment in kind interest - subordinated debt | 157 | 115 | |||||||||||||
| Changes in operating assets and liabilities | |||||||||||||||
| Accounts receivable | 189 | 115 | |||||||||||||
| Materials and supplies | (349 | ) | (173 | ) | |||||||||||
| Prepaid expenses and other assets | 1,554 | 1,246 | |||||||||||||
| Accounts payable and accrued expenses | (110 | ) | 217 | ||||||||||||
| Advance billings and payments | 495 | (67 | ) | ||||||||||||
| Other liabilities | (13 | ) | (14 | ) | |||||||||||
| Net cash from operating activities | 9,741 | 9,684 | |||||||||||||
| Cash flows used in investing activities: | |||||||||||||||
| Acquisition and construction of property and equipment | (3,758 | ) | (2,215 | ) | |||||||||||
| Net cash used in investing activities | (3,758 | ) | (2,215 | ) | |||||||||||
| Cash flows used in financing activities: | |||||||||||||||
| Loan origination costs | (77 | ) | (5,215 | ) | |||||||||||
| Principal repayment of long-term notes payable | (5,125 | ) | (101,053 | ) | |||||||||||
| Proceeds from loan refinancing | - | 100,300 | |||||||||||||
| Retirement of CoBank equity | 164 | - | |||||||||||||
| Tax withholdings paid on behalf of employees for restricted stock units | (209 | ) | (109 | ) | |||||||||||
| Net cash used in financing activities | (5,247 | ) | (6,077 | ) | |||||||||||
| Net increase in cash and cash equivalents | 736 | 1,392 | |||||||||||||
| Cash and cash equivalents, beginning of period | 10,538 | 6,884 | |||||||||||||
| Cash and cash equivalents, end of period | $ | 11,274 | $ | 8,276 | |||||||||||
| Supplemental disclosures of cash flow information: | |||||||||||||||
| Interest paid | $ | 4,456 | $ | 3,728 | |||||||||||
| Income taxes paid | $ | 692 | $ | 685 | |||||||||||
| Conversion of Class B common stock to Class A common stock | $ | - | $ | 2 | |||||||||||
| Issuance of Class A common stock | $ | 1 | $ | 1 | |||||||||||