Q1 2020 Earnings Call

Ladies and gentlemen, you kind of ultra today's Alaska Communications systems first quarter 2020 earnings call.

So many additional partnerships.

On the true I.

I appreciate your patience.

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Please standby without speaking.

Good day, one can see Alaska Communications systems first quarter 2020 earnings call Today's conference is being recorded.

Just like to turn the conference over to Mr. Smith. Please go ahead.

Welcome to the Alaska Communications first quarter 2020 conference call I Tiffany's, Yes manager of Investor Inboard relations.

With me today are built Fischer, President and Chief Executive Officer, Laurie Butcher, Chief Financial Officer, Leonard Steinberg General Counsel.

During this call will be using a slide deck that we'd encourage everyone to have available for those listening to this call via the webcast presentation will be displayed on your screen for others, you will find it on our Investor website, Www Dot L.S.K. dot com.

Now Please review slide three for our Safe Harbor statement. During this call company participants will make forward looking statements as defined under U.S. Securities laws.

You are cautioned not to put undue reliance on forward looking statements and actual results could differ materially as a result of a variety of factors many of which are outside the company's control.

Additionally, any non-GAAP measurements referred to during this call happened reconciled to their nearest GAAP measure. These reconciliations are in the appendix to our presentation.

Following our remarks, we will open the lines for questions with that I would like to turn the call over to Bill Bill.

Thanks, Stephanie Hello, and thanks for joining.

Turning to slide five.

David overnight chain 2020 has started off with the unprecedented in our lifetime.

We are grateful for all the health care at essential service workers were supporting arch Mi or Douglas.

Extend that same store employees on the front line or making it possible. So people stay calm and state connected.

We are actively serving healthcare customers teachers and students as wireless deals with large increased bandwidth due to the current children's place directive.

Let's turn to slide six.

The first quarter, we delivered strong performance strengthening foundation, which will support the company as we manage the uncertainties that may arise.

Our gross revenues continue to perform.

Largely driven by expansion at broadband needs for business and wholesale customers.

Well the outlets for small and medium business, it's more I'm sure.

We expect Frac sand demands for enterprise customers continue to grow with increase your stage lobster says.

Oh Gee wireless backhaul.

And the overall need for more streamlined capacity.

For example in April we sold our first 100 gig circuit from Alaska to the lower 48 for a carrier customer.

With the completion of construction and installation of our recent responded high capacity Fibernet work in Alaska, We have increased our network capabilities across the state.

Becoming fully operational in the first quarter. This network provides additional capacity for anchored catchmark.

Well be leverage test or other customer opportunities.

We continue to focus and win new business. There are managed Nike solutions data center capabilities and you need cloud based solutions our share of wallet also continues to increase.

Oh, I guess, you build out continues which will accelerate our fiber expansion and 2020.

We expect this they continue to create ourselves and sustain long term growth for shareholders.

In addition to our enterprise it carrier customers, we continue to focus on the broadband needs for our small business and consumer customers.

We continue to expand the number multi dwelling units that are receiving high speed Internet service and we are increasing our presence.

The military basis across Alaska.

[noise] fixed wireless it's the other half of our consumer broadband strategy.

Laying it as far cap to service, we continue to expand that plan across roll out stuff.

We recognize the additional capabilities that this product and we're working to introduce similar technologies and our urban markets.

Turning to slide seven.

Cobot 19 top of mind for all of Us.

How it impacts our employees and community as well, that's how it impacts that companies with which we do business.

I am proud of how our employees and our company have responded to the situation.

Our first and foremost priority, it's the safety of our employees customers and our communities.

We immediately implement its Greg safety procedures, including no contact installations.

Customer facing employees.

We have successfully transitioned approximately 80% of our workforce.

To remote works.

In addition, I take critical infrastructure provider, we're working closely with government emergency response, and public health teams, making sure our communities me Matt.

We quickly supported the FCC, Keith Ameritech's connected Slach [noise].

We have provided increased bandwidth at no charge for world Tele health providers. That's many remote villages of cost allow that I think strict in travel and it out.

Awful set school districts have shifted the distance learning were offering new Internet service for teachers and students, providing free installation and free Internet there the end of the school year.

We had committed to maintaining services are those customers impacted by the pandemic, who are not able to pay.

Now I'll frame flexible payment plans.

[noise]. In addition, we are monitoring programs under the cares Act today, we have taken advantage of the new tax rules that wants to celebrate our AMC tax rates on.

We will continue to evaluate additional programs as they become available and will apply for those for which we qualify.

Well apparently it is too early to understand the full impact at the pandemic our company as well prepared well continue to provide updates with us.

Let me now I'll hand, the call the Laurie there will cover our financials Laurie.

Thank you Bill.

Turning to slide nine let's review our revenue performance for the first quarter of 2020 compared to the same corridor in the prior year.

Total revenue was 58.3 million compared to 56.9 million up 2.4%.

Looking at our individual customer groups business and wholesale revenue increased 6.3% and consumer remain steady.

As expected regulatory revenue had a moderate decline.

This is in contrast to the steep decline in regulatory revenue we experienced in the prior year.

Our total growth revenues, which consist of business wholesale and consumer broadband.

Equipment sales and installation and managed IP services increased 7% year over year.

Broadband revenue alone, which represents 92.9% of our gross revenues and 58.9% of our total revenues grew 7.2%.

There's nothing wholesale revenue was 38.8 million in the quarter and contributed 66.6% of our total revenues compared to 64.1% in 2019.

Consumer revenue was 9.1 million in the quarter and contributed 15.7% Soundbar total revenues compared to 16.2% in 2019.

Regulatory revenue was 10.3 million in the quarter, representing 17.7% of total revenue compared to 19.7% in 2019.

Turning to slide 10.

Adjusted EBITDA for the first quarter was strong at 16.1 million increasing from 15.2 million in Q1 of 2019.

In the quarter, our capital spending was 6.8 million, excluding pre funded projects compared to 8.6 million in Q1 of 2019.

Typically capital spending is well for the first quarter of a year and in the first quarter of 2020, we implemented a measured approach to capital spending to preserve cash as we monitor any economic challenges associated with low oil prices and the potential impact of Covance 19.

For the first quarter adjusted free cash flow was 10.1 million increasing from 3 million in the same period of 2019.

This increase was the result of lower capital spending and is inclusive of 5.1 million of cash inflows for special projects for which the capital has yet to be incurred.

At March 31st 2020.

Josh was 35.4 million compared to 28.3 million at December 31st 2019.

And our 20 million dollar revolver, and 25 million dollar delayed draw instruments remain undrawn.

We ended the quarter with net debt on the balance sheet of 143.4 million net leverage of 2.68 times as calculated under our credit agreement.

With the Colgate 19 pandemic beginning to impact our business in mid March the effect on our first quarter was limited.

As the year Progressive we expect some industries and Alaska, such as oil and gas retail tourism and transportation to be more impacted than others.

We are evaluating any impact to the economy honor business, including longer sales and delivery cycle potential supply chain interruptions and increases in bad debt.

At this time with current operating results, we've chosen to maintain our 2020 guidance.

Once we have a more thorough assessment of the potential financial impacts other pandemic, we will reassess guidance.

Although we expect some impacts are 2020, we have confidence in our long term business plan and our ability to drive shareholder value.

With that let me hand, the call back to Bill Bill.

Thanks, Laurie, let's turn to slide 11.

As I stated I am proud of how our employees have responded to the current pandemic.

We continue to drive ahead, but she permission.

Meter customer stage in this most difficult time.

[noise]. This this is keeping people connected.

In today's environment as our customers negotiate increasing amounts of remote work our solutions are even more critical.

In closing.

This management team and aboard art minutes maximizing shareholder value and we continue to consider all options to do so.

We are excited about our progress and we look forward to keeping you updated.

Thanks, again, that's why and what that I will open the call for questions operator.

Thank you.

Yes, good question pretty sick about pressing star one on your telephone keypad. If you are using a speakerphone. Please make sure. Your mute function is turned off to like your signal to reach our equipment.

Once again that is star one if you'd like to ask a question, we'll pause for just a moment hello, everyone and opportunity to sick.

And that star one if you'd like to ask a question.

No questions in queue with me I like that when it comes back room is technicians for dish for closing remarks.

Thank you we would like to thank all of you for joining us on the call today, we always welcome the opportunity to talk with our shareholders. If you're interested in meeting with us whether by phone or eventually in person on future Road shows. Please reach out to me Tiffany Smith in Investor Relations. Thank you.

Thank you that does conclude today's conference. Thank you all for your participation you may now disconnect.

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