ALSK - Alaska Communications

[kab60]

Anyone have a take on as to whether or not GCI could gobble these guys up without it getting blocked for competitive reasons?  Even if they paid a nice premium to todays price it would seem accretitive (I own both) and that's before synergies. My worry is Alsks management don't wanna go down that route due to lack of incentives (high salary, too little stock), but it makes all the sense in the world, no? (ripe for an activist or just a hostile take over?)

[bookie71]

GCI did buy their cell phone business. 

[kab60]

Yep. But do you think that means the coast is clear?

 

[Packer16]

The difference in wireless vs. other wireline providers is in Wireless you have multiple providers like Verizon & AT&T and in wireline not as much.  So getting an approval for the wireless merger is a lot easier than for a wireline deal.

 

Packer

[kab60]

Yeah, that is pretty much what I fear(ed). Doesn't change that it's cheap but a possible buyout would be a nice option. Do you think players like AT&A or Verizon could be interested? I'm really not familiar with their strategies.

[Gamecock-YT]

Yeah, that is pretty much what I fear(ed). Doesn't change that it's cheap but a possible buyout would be a nice option. Do you think players like AT&A or Verizon could be interested? I'm really not familiar with their strategies.

 

Not really an acquisition that moves the needle for them. Think smaller telcos would be the likely choice. A deal with HCOM might be interesting.

[zippy1]

https://finance.yahoo.com/news/alaska-communications-reports-1q-loss-122741743.html

ANCHORAGE, Alaska (AP) _ Alaska Communications Systems Group Inc. (ALSK) on Thursday reported a first-quarter loss of $676,000, after reporting a profit in the same period a year earlier.

 

On a per-share basis, the Anchorage, Alaska-based company said it had a loss of 1 cent. Earnings, adjusted to extinguish debt, were 2 cents per share.

 

The Alaskan broadband and service company posted revenue of $56.7 million in the period.

 

The company's shares closed at $2.37. A year ago, they were trading at $1.77.

[kab60]

New board member. Introduced to the Company by one of the major shareholders. I like.

 

Shawn O’Donnell

 

O’Donnell is a managing director at FTI Consulting. He also serves on the Lumos Networks board of directors, chairing its compensation committee. Previously, O’Donnell served as the President and CEO of Caribbean Asset Holdings, a telecommunications company based in the U.S. Virgin Islands, where he oversaw its sale to Atlantic Tele-Network, Inc.

 

https://seekingalpha.com/pr/16902354-alaska-communications-appoints-shawn-o-donnell-board-directors

[kab60]

New presentation. Can't remember seeing this before, but Company expects wholesale and business revenue to grow 8% cagr over the next few years. Might be the reason it popped at little bit the other day:

https://seekingalpha.com/article/4111664-alaska-communications-alsk-presents-deutsche-banks-25th-annual-leveraged-finance-conference

[kab60]

And now we have an activist onboard. It has run up a bit but it might be even better value than before. There seems to be quiet a lot of costs to cut (just look at CEO pay) if it was taken over and I see that happening eventually.

[zippy1]

http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=12447696

We need an activist to shake this management up!

Item 4 of the Statement is hereby amended to add the following:

The purpose of this Amendment No. 1 is to voice the Reporting Persons outrage at, among other things, the implementation of the purported adoption by the Issuer of the Amended and Restated Bylaws (the “ Amended Bylaws ”) on December 22, 2017.

 

The Reporting Person or its representatives have attempted to engage with management of the Issuer to discuss strategic alternatives for the benefit of the Issuer’s shareholders. Among other things, the Reporting Person has requested that the Issuer retain a financial advisor to review such strategic alternatives. In response to such request, the Issuer and its current management have purported to implement an improper and inappropriate Amended Bylaws change which appears intended to entrench management and the Issuer’s board of directors (the “ Board ”) to the detriment of the Issuer shareholders. As a consequence, the Issuer has given the Reporting Person no alternative but to put up an opposing slate to run against the current Board at the upcoming annual meeting of the Issuer’s shareholders.

 

In addition, the Reporting Person believes that it is outrageous, given the mismanagement and non-profitability of this relatively small company, that its Chief Executive Officer (“ CEO ”) (i) commutes to Alaska at the cost of the Issuer’s shareholders, (ii) has recently sold a significant amount of the Common Stock, and (iii) receives approximately a $3,000,000 dollar salary, which is far in excess of executive compensation in any comparable public company. It appears obvious to the Reporting Person that the CEO has no incentive to maximize shareholder value. The Reporting Person submits that such actions should warrant his termination.

 

The Reporting Person reasonably offered to avoid a costly proxy contest if management had agreed to appoint the Reporting Persons representatives to the Board. Management, however, refused.

 

The Reporting Person hopes that other members of the Board will exercise their fiduciary duties and engage with the Reporting Person, as one of the Issuer’s largest shareholders, in good faith, in order to avoid a costly proxy contest and unlock the true value of the Issuer in the near future.

 

Except in connection with the matters described in this Item 4 and as contemplated herein, Ms. Singer does not currently have any specific plans or proposals that relate to or would result in any of the actions or events specified in clauses (a) through (j) of Item 4 of Schedule 13D. Ms. Singer reserves the right to change plans and take any and all actions that Ms. Singer may deem appropriate to maximize the value of her investment, including, among other things, purchasing or otherwise acquiring additional securities of the Issuer, selling or otherwise disposing of any securities of the Issuer beneficially owned by her, in each case in the open market or in privately negotiated transactions or formulating other plans or proposals regarding the Issuer or its securities to the extent deemed advisable by Ms. Singer in light of her general investment policies, market conditions, subsequent developments affecting the Issuer and the general business and future prospects of the Issuer. Ms. Singer may take any other action with respect to the Issuer or any of the Issuer’s debt or equity securities in any manner permitted by applicable law.

[zippy1]

The bylaw in question.

I hope more shareholders will join this fight.

http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=12444029

 

[bookie71]

http://www.ktva.com/story/37162805/activist-investor-pressures-alaska-communications-to-sell?utm_source=KTVA+Newsletter&utm_campaign=dc8b6db2e9-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_9a8bbcb136-dc8b6db2e9-259313157

[Neversummer]

I understood the investment case at lower levels...is there something to this one I am missing beyond for just ebitda multiple? It doesn't seem like a screaming cheap buy but to be fair I am probably looking somewhat superficially. I see low FCF due to high capex which at best seems to be keeping things "stable", so I cant call it maintenance. Yes the CEO is overpaid but how much in cost savings could there be? I feel like they sold a slug of their hidden assets, is there anything else here that has significant value? it doesn't seem to be a fiber play as density isn't that high but being that I'm no telecom expert I'm probably missing something...what is the real upside here left to play for?

[Neversummer]

Did I break the board? I ask one question and a lively board goes dead...I feel like the nerd who sits at the cool kid table in the cafeteria! I keep looking at this and I want to like it around 5ish EBITDA but is there any hidden value here? They seem very reliant on government money which I can not imagine is worth the "same multiple" as traditional telcos. Its a bit geographically unique (like HCOM was) so are the synergies even appealing for anyone back in the lower 48?

 

I guess I keep coming back to: what are the strategic reasons for any acquirer (or shareholder frankly) to want to own this..the FCF isn't solid and all of their "growth" capex at best is holding the line...

[Gamecock-YT]

 

I guess I keep coming back to: what are the strategic reasons for any acquirer (or shareholder frankly) to want to own this..the FCF isn't solid and all of their "growth" capex at best is holding the line...

 

GNCMA, to consolidate their monopoly.

 

[maybe4less]

 

I guess I keep coming back to: what are the strategic reasons for any acquirer (or shareholder frankly) to want to own this..the FCF isn't solid and all of their "growth" capex at best is holding the line...

 

GNCMA, to consolidate their monopoly.

 

Is it realistic that GNCMA would be allowed to acquire ALSK in light of anti-trust concerns?

[Gamecock-YT]

I don't think I am qualified to answer. But just spitballing, is it any different than cable one/charter/etc having a local monopoly over fiber internet? What's Alaska's population versus a major metropolitan area? Could even argue that due to the lack of population density, efficiencies gained could help to lower the added costs they incure versus normal cable/telcos due to having to spread out their services to a greater area.

 

But I'd say an acquisition would be a little ways off given the debt load Liberty is taking on to acquire GCI.

[kab60]

I sold out after earnings between 2.13-2.20. I think I left money on the table, but this management gives me headaches. I decided to sell after they decided only to take written questions in their earnings call - shortly after introducing a poison pills. Fucking sissies.

[zippy1]

I sold out after earnings between 2.13-2.20. I think I left money on the table, but this management gives me headaches. I decided to sell after they decided only to take written questions in their earnings call - shortly after introducing a poison pills. Fucking sissies.

Can't agree more!

[zippy1]

Alaska Communications Reaches Agreement with TAR Holdings

https://finance.yahoo.com/news/alaska-communications-reaches-agreement-tar-211500701.html

Alaska Communications (ALSK), the leading provider of advanced broadband and managed IT services for businesses and consumers in Alaska, today announced that it has entered into a cooperation agreement with TAR Holdings LLC and its affiliates, which, in the aggregate, beneficially own approximately 4.97% of Alaska Communications’ outstanding common shares. Under the terms of the cooperation agreement, the Alaska Communications Board of Directors has appointed two new independent directors, Wayne Barr, Jr. and Robert M. Pons, to the Alaska Communications Board, effective immediately, and will support their re-election at the 2018 Annual Meeting of Stockholders as part of an eight-person slate of nominees recommended by the Alaska Communications Board.

[zippy1]

Q1 earning out

https://finance.yahoo.com/news/alaska-communications-reports-first-quarter-210500412.html

Revenue Highlights: First Quarter 2018 Compared to First Quarter 2017

 

Total revenue:

Revenue was $56.0 million, compared to $56.7 million.

Total broadband revenue was $29.7 million, compared to $31.0 million.

Business and wholesale:

Comprised 60.3 percent of total revenue.

Revenue was $33.8 million, compared to $34.5 million.

Broadband revenue was $23.2 million, compared to $24.6 million.

Consumer:

Comprised 16.7 percent of total revenue.

Revenue was $9.4 million, compared to $9.3 million.

Broadband revenue was $6.5 million, compared to $6.4 million.

Regulatory:

Comprised 23.0 percent of total revenue.

Revenue was $12.8 million, compared to $12.9 million.

Financial Metrics: First Quarter 2018 compared to First Quarter 2017

 

Operating income was $5.3 million, compared to $4.7 million.

Net income was $2.1 million compared to a net loss of $0.7 million.

Net cash provided by operating activities was $13.4 million, compared to $5.3 million.

Capital expenditures were $8.7 million, compared to $5.1 million.

Balance Sheet Metrics: March 31, 2018 compared to December 31, 2017

 

Cash was $17.0 million, compared to $16.2 million.

Net debt was $174.5 million, compared to $177.2 million.

On May 1, 2018 the company repurchased the remaining $10 million of its convertible debt.

Non-GAAP Metrics: First Quarter 2018 compared to First Quarter 2017

 

Adjusted EBITDA was $14.4 million, compared to $14.3 million.

Adjusted free cash flow was $1.8 million, compared to $7.7 million.

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.

 

2018 Guidance

 

Laurie Butcher, Alaska Communications senior vice-president of finance, said, “Our guidance for 2018 reflects our expectations of stability across all our financial metrics as compared to the prior year. We remain in compliance with our debt covenants despite delays in rural health care cash receipts, and retain the ability to create additional headroom through rigorous cash management and, if needed, by working with our lenders. Subsequent to quarter end, we retired our convertible debt on schedule and are pleased to have further simplified our balance sheet. We see great opportunity in the market and continue to invest for long term growth.”

 

The company provides guidance as follows:

 

Total Revenue between $225 million and $230 million

Adjusted EBITDA between $55 million and $58 million

Capital Expenditures between $33 million and $35 million

Adjusted Free Cash Flow between $5 million and $8 million

 

 

[DeepSouth]

Company has turned in 3 quarters of accelerating revenue growth, management seems better incentivized/aligned, trading @ 4X EBITDA, could be find a buyer somewhere down the line in a reorg'd WIN or FTR or delevered CTL.

 

 

“Our 2018 results are robust with total revenue growth of 2.5% for full year 2018 and annual adjusted EBITDA growth of 4.9%. Free cash flow performance was strong at $7.2 million while our capital expenditures position us for continued growth in future years.

 

“These results reflect our continued performance in Business and Wholesale, driven by our growth engine of the larger Enterprise and Carrier customers. Our technology differentiation was further strengthened by investments in Fixed Wireless, satellite, and Software Defined Networking, along with continued investments in our fiber network particularly in support of 5G wireless backhaul.

 

“Attention to prudent cost management has been and will continue to be a focus reflecting our commitment to adjusted EBITDA and adjusted free cash flow improvements.

 

“With clear line of sight to continued growth in our Enterprise and Carrier customer segment, combined with the recent balance sheet refinancing work, we have conviction about high quality future operating results, while we continue to explore all strategic opportunities for shareholder value creation,” said Anand Vadapalli, president and CEO of Alaska Communications.

 

Revenue Highlights

 

Total revenue:

Revenue grew to $58.7 million for the fourth quarter of 2018, compared to $54.9 in the fourth quarter of 2017. Annual revenue grew to $232.5 million for 2018, from $226.9 million in 2017.

Total broadband revenue was $31.5 million for the fourth quarter of 2018, compared to $28.4 million for the fourth quarter of 2017, and was $125.4 million for 2018, compared to $123.1 million for 2017.

Business and wholesale:

Business and wholesale revenue was $37.0 million for the fourth quarter of 2018, compared to $33.1 million for the fourth quarter of 2017. 2018 revenue was $144.6 million, comprising 62.2 percent of total revenue, compared to $139.1 million for 2017, comprising 61.3 percent of total revenue.

Business and wholesale broadband revenue was $25.0 million for the fourth quarter of 2018 compared to $22.1 million for the fourth quarter of 2017, and was $99.3 million for 2018, compared to $97.6 million for 2017.

Consumer:

Consumer revenue was $9.2 million for the fourth quarters of 2018 and 2017. 2018 revenue was $37.3 million, comprising 16.0 percent of total revenue, compared to $37.1 million for 2017, comprising 16.4 percent of total revenue.

Consumer broadband revenue was $6.4 million for the fourth quarter of 2018, compared to $6.2 million for the fourth quarter of 2017, and was $26.1 million for 2018, compared to $25.4 million for 2017.

Regulatory:

Regulatory revenue was $12.5 million for the fourth quarter of 2018, compared to $12.6 million for the fourth quarter of 2017. 2018 revenue was $50.6 million, comprising 21.8 percent of total revenue, compared to $50.7 million for 2017, comprising 22.3 percent of total revenue.

Financial Metrics

 

Net income for the fourth quarter of 2018 was $1.7 million, compared to net loss of $2.9 million in the fourth quarter of 2017. 2018 net income was $9.1 million, compared to net loss of $6.1 million for 2017.

Net cash provided by operating activities for the fourth quarter of 2018 was $9.3 million, compared to $4.7 million in the fourth quarter of 2017. 2018 cash provided by operating activities was $56.2 million, compared to $30.4 million for 2017.

Capital expenditures for the fourth quarter of 2018 were $12.5 million, compared to $8.9 million fourth quarter of 2017.2018 capital expenditures were $38.0 million, compared to $32.9 million in 2017.

Non-GAAP Metrics:

 

Adjusted EBITDA for the fourth quarter of 2018 was $14.1 million, compared to $15.0 million for the fourth quarter of 2017. 2018 Adjusted EBITDA was $60.2 million, compared to $57.3 million for 2017.

Adjusted free cash outflow for the fourth quarter of 2018 was $3.0 million, compared to free cash inflow of $2.3 million for the fourth quarter of 2017. 2018 Adjusted free cash flow was $7.2 million, compared to $8.8 million for 2017.

Reconciliations of non-GAAP financial measures to GAAP financial measures can be found in tables at the end of this release.

 

Balance Sheet Metrics

 

Cash was $15.0 million at December 31, 2018, compared to $16.2 million at December 31, 2017.

Net debt was $161.2 million at December 31, 2018, compared to $177.2 million at December 31, 2017.

Laurie Butcher, Alaska Communications senior vice-president of finance, said, “We are pleased to report that we met or exceeded our guidance in all areas for 2018. Additionally, on January 15, 2019 we closed a transaction securing favorable terms for a new senior credit facility in a volatile market, while increasing access to capital. As we enter 2019, we are well positioned to perform to our business plan which is expected to generate attractive adjusted free cash flow for the year.”

 

2019 Guidance

 

The company sets guidance as follows:

 

Total Revenue to be between $230 million and $235 million

Adjusted EBITDA to be between $60 million and $62 million

Capital Expenditures to be between $40 million and $42 million

Adjusted Free Cash Flow to be between $10 million and $12 million

[DeepSouth]

 

Company has turned in 3 quarters of accelerating revenue growth, management seems better incentivized/aligned, trading @ 4X EBITDA, could find a buyer somewhere down the line in a reorg'd WIN or FTR or delevered CTL. If management is conservative on this guide and their "growth" capex is actually driving sustainable growth, looks quite cheap here.

 

 

“Our 2018 results are robust with total revenue growth of 2.5% for full year 2018 and annual adjusted EBITDA growth of 4.9%. Free cash flow performance was strong at $7.2 million while our capital expenditures position us for continued growth in future years.

 

“These results reflect our continued performance in Business and Wholesale, driven by our growth engine of the larger Enterprise and Carrier customers. Our technology differentiation was further strengthened by investments in Fixed Wireless, satellite, and Software Defined Networking, along with continued investments in our fiber network particularly in support of 5G wireless backhaul.

 

“Attention to prudent cost management has been and will continue to be a focus reflecting our commitment to adjusted EBITDA and adjusted free cash flow improvements.

 

“With clear line of sight to continued growth in our Enterprise and Carrier customer segment, combined with the recent balance sheet refinancing work, we have conviction about high quality future operating results, while we continue to explore all strategic opportunities for shareholder value creation,” said Anand Vadapalli, president and CEO of Alaska Communications.

 

Revenue Highlights

 

Total revenue:

Revenue grew to $58.7 million for the fourth quarter of 2018, compared to $54.9 in the fourth quarter of 2017. Annual revenue grew to $232.5 million for 2018, from $226.9 million in 2017.

Total broadband revenue was $31.5 million for the fourth quarter of 2018, compared to $28.4 million for the fourth quarter of 2017, and was $125.4 million for 2018, compared to $123.1 million for 2017.

Business and wholesale:

Business and wholesale revenue was $37.0 million for the fourth quarter of 2018, compared to $33.1 million for the fourth quarter of 2017. 2018 revenue was $144.6 million, comprising 62.2 percent of total revenue, compared to $139.1 million for 2017, comprising 61.3 percent of total revenue.

Business and wholesale broadband revenue was $25.0 million for the fourth quarter of 2018 compared to $22.1 million for the fourth quarter of 2017, and was $99.3 million for 2018, compared to $97.6 million for 2017.

Consumer:

Consumer revenue was $9.2 million for the fourth quarters of 2018 and 2017. 2018 revenue was $37.3 million, comprising 16.0 percent of total revenue, compared to $37.1 million for 2017, comprising 16.4 percent of total revenue.

Consumer broadband revenue was $6.4 million for the fourth quarter of 2018, compared to $6.2 million for the fourth quarter of 2017, and was $26.1 million for 2018, compared to $25.4 million for 2017.

Regulatory:

Regulatory revenue was $12.5 million for the fourth quarter of 2018, compared to $12.6 million for the fourth quarter of 2017. 2018 revenue was $50.6 million, comprising 21.8 percent of total revenue, compared to $50.7 million for 2017, comprising 22.3 percent of total revenue.

Financial Metrics

 

Net income for the fourth quarter of 2018 was $1.7 million, compared to net loss of $2.9 million in the fourth quarter of 2017. 2018 net income was $9.1 million, compared to net loss of $6.1 million for 2017.

Net cash provided by operating activities for the fourth quarter of 2018 was $9.3 million, compared to $4.7 million in the fourth quarter of 2017. 2018 cash provided by operating activities was $56.2 million, compared to $30.4 million for 2017.

Capital expenditures for the fourth quarter of 2018 were $12.5 million, compared to $8.9 million fourth quarter of 2017.2018 capital expenditures were $38.0 million, compared to $32.9 million in 2017.

Non-GAAP Metrics:

 

Adjusted EBITDA for the fourth quarter of 2018 was $14.1 million, compared to $15.0 million for the fourth quarter of 2017. 2018 Adjusted EBITDA was $60.2 million, compared to $57.3 million for 2017.

Adjusted free cash outflow for the fourth quarter of 2018 was $3.0 million, compared to free cash inflow of $2.3 million for the fourth quarter of 2017. 2018 Adjusted free cash flow was $7.2 million, compared to $8.8 million for 2017.

Reconciliations of non-GAAP financial measures to GAAP financial measures can be found in tables at the end of this release.

 

Balance Sheet Metrics

 

Cash was $15.0 million at December 31, 2018, compared to $16.2 million at December 31, 2017.

Net debt was $161.2 million at December 31, 2018, compared to $177.2 million at December 31, 2017.

Laurie Butcher, Alaska Communications senior vice-president of finance, said, “We are pleased to report that we met or exceeded our guidance in all areas for 2018. Additionally, on January 15, 2019 we closed a transaction securing favorable terms for a new senior credit facility in a volatile market, while increasing access to capital. As we enter 2019, we are well positioned to perform to our business plan which is expected to generate attractive adjusted free cash flow for the year.”

 

2019 Guidance

 

The company sets guidance as follows:

 

Total Revenue to be between $230 million and $235 million

Adjusted EBITDA to be between $60 million and $62 million

Capital Expenditures to be between $40 million and $42 million

Adjusted Free Cash Flow to be between $10 million and $12 million

[kab60]

I'm surprised this hasn't moved after the CEO was booted and they announced a share buyback. Trades at a +10 pct. FCF yield, some 4,2xev/ebitda while growing revenue (managed by a terrible CEO who didn't even live in Alaska). I'm back in and would expect a sale. I'd expect a bigger co. could manage this better and cheaper and save interest on their debt.