- Fiscal 2013 revenue of $189 million was up 3 percent
- Full year EBITDA grew 2 percent to $47 million
- Fiber and data revenue grew 5 percent in fourth quarter, 11 percent for 2013
- Closed on favorable, amended credit agreement
- Increased fourth quarter cash dividend
- Rebranded all products and services as Enventis
MANKATO, Minn., March 3, 2014 — HickoryTech Corporation (NASDAQ:HTCO, news, filings) today reported fourth quarter revenue of $46.2 million. Net income for the fourth quarter totaled $1.9 million, and earnings per share totaled $0.14 per diluted share.
“For the quarter and full year we delivered strong Fiber and Data revenue growth, a key objective in our plan to expand fiber access networks and further diversify our company’s revenue stream,” said John Finke, HickoryTech’s president and chief executive officer. “More than three-fourths of our revenue is from business and broadband services and our Fiber and Data segment revenue is now larger than our Telecom Segment revenue, signifying Enventis’ strong position as a leading business and broadband provider. Looking forward, we are focused on increasing our profitability, growth in strategic business services and delivering the best customer experience through a unified brand.”
Fiber and Data Segment (before inter-segment eliminations)
- Fourth quarter Fiber and Data revenue totaled $17.3 million, up 5 percent year over year. This improvement is the result of 7 percent growth in business revenue and 3 percent growth in wholesale revenue within this segment.
- Costs and expenses for the segment totaled $15.1 million, up 11 percent driven by our investments in resources to support this segment’s revenue growth and due to increased depreciation.
- Fiber and Data Segment operating income totaled $2.1 million, a $610,000 decrease year over year.
- Net income totaled $1.4 million, a $350,000 decrease from the fourth quarter 2012.
Equipment Segment (before inter-segment eliminations)
- Fourth quarter Equipment Segment revenue totaled $14 million, a 6 percent decrease year over year, driven by lower equipment hardware sales.
- Equipment revenue was $10.3 million, a 22 percent decrease from a year ago and Support Services revenue was $3.7 million, an increase of 131 percent from fourth quarter 2012 driven by a higher level of professional services related to customer installations.
- Total costs and expenses were 7 percent lower than one year ago due to lower equipment sales
- Equipment Segment operating income totaled $577,000, an increase $179,000 year over year.
- Net income totaled $404,000, a $135,000 increase from fourth quarter 2012.
Telecom Segment (before inter-segment eliminations)
- Fourth quarter Telecom Segment revenue totaled $14.3 million, down 3 percent year over year. Telecom results were affected by declines in network access, local service and other legacy service revenue, due to access reform regulation, access line and minute-of-use erosion and increased competition.
- DSL subscribers increased 5 percent and Digital TV subscribers were up 10 percent; boosting broadband revenue 8 percent year over year.
- Costs and expenses totaled $12.3 million, and were down 3 percent year over year due to the company’s focus on controlling expenses in this line of business in order to maximize free cash flow.
- Net income totaled $1.4 million, down $31,000 compared to the fourth quarter 2012.
Total Company Capex, Depreciation and Amortization
Capital expenditures in the fourth quarter totaled $7.2 million, which is down from $11.5 million of capital expenditures in the fourth quarter 2012.
Depreciation and amortization expense increased $596,000 or 9 percent in the fourth quarter, primarily attributed to investments in capital expenditures associated with fiber network expansion and funding of success-based projects associated with routine capital expenditures to enhance our network.
Consolidated Fiscal 2013 Results
- Revenue for 2013 totaled $189.2 million, a 3 percent increase from fiscal 2012. The increase was driven by higher revenue in Fiber and Data, and higher support service revenue from the Equipment Segment which more than offset declines in the Telecom segment.
- Operating income in 2013 was $17.6 million, down 9 percent from 2012, and net income was $7.7 million, down $566,000 from 2012. Earnings per share totaled $0.57 in 2013, compared to $0.61 in 2012. An increase in depreciation and amortization expense caused the operating income decline.
- EBITDA totaled $47 million, a 2 percent increase compared to 2012.
- Fiber and Data Segment revenue totaled $67.9 million, an 11 percent increase from 2012.
- Equipment Segment revenue was $61.7 million, up 3 percent from 2012.
- Telecom Segment revenue was $57.9 million, down 4 percent from 2012.
- Capital expenditures were $28 million, a decrease from the $30.4 million invested in 2012. Sixty-seven percent of the 2013 capex investments funded projects directly related to new, success-based, revenue generating opportunities.
Long-term debt and current maturities, including capitalized leases, totaled $135.2 million at Dec. 31, 2013. The 2013 debt balance represents a year-over-year decrease of $1.6 million as a result of operating cash flow applied to ongoing debt reduction.
In the fourth quarter, the company closed on an amendment to its credit facility, which provides financing for six years through December 31, 2019, a reduction in interest costs, and expanded terms and features within the agreement. The Company has an unused revolving credit line of $30 million within the credit facility, and access to additional term debt for acquisitions.
HickoryTech increased its fourth quarter 2013 dividend 3.4 percent to $0.15 cents per share of HickoryTech common stock, representing the company’s fifth dividend increase in the past six years. The company declared the first quarter 2013 dividend of $0.15 payable March 5. HickoryTech has paid a cash dividend to shareholders for more than 65 years.
“The strong free cash flow generated across our business segments allows us to invest in strategic growth initiatives, pay down debt and pay a shareholder dividend,” added Finke. “Being a vibrant communications provider for more than a century requires adaptability, stability and commitment. We believe we are well positioned to deliver shareholder and customer value. As the next step in our unified brand strategy, we will ask for shareholder approval on our 2014 proxy to change our corporate name to Enventis Corporation aligning our service brand and corporate name.”
Fiscal Outlook for 2014
The Company expects revenue in 2014 to be within a range of $189 million to $199 million. Net income is expected to be in a range of $6.4 million to $8.4 million. EBITDA is expected to be in a range of $47.0 to $49.5 million. Capital expenditures are expected to be $24 million to $28 million with approximately 60 percent of capex expected for success-based opportunities. The company expects its year-end 2014 debt balance to be in a range of $133 million to $135 million.
For financial tables, click here.
Conference Call and Webcast
HickoryTech will hold a conference call and webcast on Tuesday, March 4 at 9 a.m. CT to review the company’s fourth quarter and fiscal 2013 results. The conference call dial-in number is 877-372-0867, conference ID 59515217. A simultaneous webcast with audio and presentation will be available at http://investor.hickorytech.com.
About HickoryTech Corporation
HickoryTech Corporation is a leading communications provider serving business and residential customers in the upper Midwest and is doing business as Enventis. With headquarters in Mankato, Minn., the corporation has 520 employees and an expanded, multi-state fiber network spanning more than 4,200 route miles serving Minnesota, Iowa, North Dakota and South Dakota. The company provides IP-based voice and data solutions, MPLS networking, data center and managed hosted services and communication systems to businesses across a five-state region. The company also offers broadband Internet, Digital TV, voice and data services to businesses and consumers in southern Minnesota and northwest Iowa. The Company trades on the NASDAQ, symbol: HTCO, and is a member of the Russell 2000 Index. For more information, visit www.enventis.com.
To supplement the Company’s financial statements presented in accordance with GAAP, the Company provides certain non-GAAP financial measures of financial performance and position. The Company’s reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, or superior to, GAAP results. These non-GAAP measures are provided to enhance investors’ overall understanding of the Company’s current financial performance, financial position and ability to generate cash flows. In many cases non-GAAP financial measures are used by analysts and investors to evaluate the Company’s performance and financial position. Reconciliation to the nearest GAAP measure included in this press release can be found in the financial table included below.
Certain statements included in this press release that are not historical facts are "forward-looking statements." Such forward-looking statements are based on current expectations, estimates and projections about the industry in which HickoryTech operates and management's beliefs and assumptions. The forward-looking statements are subject to uncertainties. These statements are not guarantees of future performance and involve certain risks, uncertainties and probabilities. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they were made. HickoryTech undertakes no obligation to update any of its forward-looking statements, except as required by law.