CT Communications (NASDAQ:CTCI)
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CONCORD, N.C., July 27 /PRNewswire-FirstCall/ --
Second Quarter 2006 Highlights
- Company received $16.0 million from Clearwire wireless spectrum
transaction
- Operating revenue increased 7.1% to $44.0 million vs. year ago quarter
- Operating income increased 34.3% to $4.8 million vs. year ago quarter
- Net income increased 31.8% to $3.9 million vs. year ago quarter
- DSL subscribers increased 40% vs. year ago quarter
- Wireless customer churn improved to 1.3% while subscribers increased 7%
Second Quarter 2006 Consolidated Results
CT Communications, Inc. (NASDAQ:CTCI) announces consolidated operating revenue for the quarter ended June 30, 2006 increased 7.1% to $44.0 million from $41.0 million in the second quarter of 2005. The increase resulted primarily from a $0.8 million increase in customer recurring revenue, a $0.4 million increase in Wireless roaming revenue and a $1.1 million increase in access and interconnection revenue. The growth in customer recurring revenue was driven by a 40% increase in DSL customers, a 15% increase in Greenfield access lines and a 7% increase in Wireless subscribers. The increase in Wireless roaming revenue was driven by higher roaming minutes of use on the Company's wireless network.
Operating expense in the second quarter of 2006 increased 4.6% to $39.2 million from $37.5 million in the second quarter of 2005. The increase in operating expense was primarily attributable to a $0.9 million increase in marketing expense and to $0.7 million in non-cash compensation expense related to fair value adjustments for CTC stock units held in the Company's nonqualified deferred compensation plan. The increase in marketing expense was related to additional advertising and promotional efforts, as well as proactive retention programs in preparation for the entrance of cable telephone competition in the Company's ILEC service territory. Operating income increased 34.3% to $4.8 million in the second quarter of 2006, compared to $3.5 million in the second quarter of 2005.
Other income was $1.4 million in the second quarter of 2006 and 2005. Net income for the second quarter of 2006 was $3.9 million, or $0.20 per diluted common share, compared to $3.0 million, or $0.15 per diluted common share in the second quarter of 2005.
Consolidated operating revenue for the six months ended June 30, 2006 increased 5.7% to $87.1 million compared to $82.4 million in the same period last year. The increase in operating revenue was mainly driven by a $1.3 million increase in customer recurring revenue, a $0.8 million increase in roaming and settlement revenue and a $1.6 million increase in access and interconnection revenue. Operating expense for the six months ended June 30, 2006 increased 4.7% to $77.2 million compared to $73.8 million in the same period last year. The increase in operating expense was mainly due to an increase in administrative expense related to marketing, professional fees and a charge for non-cash compensation expense related to fair value adjustments for CTC stock units held in the Company's nonqualified deferred compensation plan. Operating income for the six months ended June 30, 2006 increased 14.3% to $9.9 million compared to $8.6 million in the same period last year. Net income for the six months ended June 30, 2006 was $61.4 million, or $3.17 per diluted common share, compared to $5.9 million, or $0.31 per diluted common share. Included in net income for the six months ended June 30, 2006 was $54.2 million, or $2.80 per diluted common share, related to the sale of Palmetto MobileNet's ("PMN") interests in several wireless partnerships to Alltel. Excluding the PMN transaction, diluted earnings per share increased 19.4% from the same six-month period last year.
Second Quarter 2006 Results by Business Unit
* ILEC - ("Concord Telephone")
Concord Telephone's operating revenue in the second quarter of 2006
increased 7.1% to $23.6 million from $22.0 million in the same quarter
last year. The $1.6 million increase in operating revenue was driven
by a $0.9 million increase in access and interconnection revenue, a
$0.4 million increase in telephone system sales and a $0.3 million
increase in universal service revenue. Operating expense for the
second quarter of 2006 increased 6.1% to $19.0 million from $17.9
million in the second quarter of 2005. The increase in operating
expense was due to a $1.3 million increase in selling, general and
administrative expense that was primarily attributable to a $0.7
million increase in personnel expense largely due to a non-cash charge
for compensation expense related to fair value adjustments for CTC
stock units held in the Company's nonqualified deferred compensation
plan and to a $0.5 million increase in marketing expense. Operating
income for the second quarter of 2006 increased to $4.6 million from
$4.1 million in the same period last year. Operating margin for the
second quarter of 2006 was 19.4% compared to 18.6% for the second
quarter of 2005. Concord Telephone ended the second quarter of 2006
with 109,356 access lines in service, a 2.2% decrease from the second
quarter of 2005.
* Wireless Service - ("Wireless")
Wireless operating revenue in the second quarter of 2006 increased 7.6%
to $9.6 million from $9.0 million in the second quarter of 2005. The
increase was attributable to a $0.3 million increase in customer
recurring revenue driven by a 7% increase in Wireless subscribers, as
well as a $0.4 million increase in roaming and settlement revenue.
Operating expense in the second quarter of 2006 increased $0.3 million
to $8.9 million compared to the second quarter of 2005. The increase
in operating expense was primarily attributable to a $0.3 million
increase in marketing expense and a $0.2 million increase in Wireless
handset and accessories expense associated with retention and contract
renewal programs targeted to reduce customer churn. Partially
offsetting these expense increases was a $0.2 million reduction in
roaming and settlement expense. Operating income in the second quarter
of 2006 increased to $0.8 million from $0.4 million in the same period
last year. Wireless ended the second quarter of 2006 with 47,932
subscribers, a 7% increase in customers compared to the second quarter
of 2005. Customer churn in the second quarter of 2006 improved to 1.3%
from 1.7% in the second quarter of 2005.
* CLEC
CLEC operating revenue in the second quarter of 2006 was $4.8 million,
which was relatively flat in comparison to the same period last year.
Operating revenue in the second quarter of 2006 included a $0.2 million
increase in access and interconnection revenue from the recovery of
previously disputed billings, but was offset by a $0.1 million decrease
in customer recurring revenue. The operating loss for the second
quarter of 2006 and 2005 was $0.3 million. CLEC ended the second
quarter of 2006 with 34,372 access lines compared to 31,644 access
lines for the same quarter last year.
* Greenfield
Greenfield's operating revenue in the second quarter of 2006 increased
$0.1 million to $2.6 million compared to the second quarter of 2005.
The increase in operating revenue was attributable to growth in
customer recurring revenue driven by a 15% increase in access lines.
Operating expense in the second quarter of 2006 increased $0.3 million
to $3.4 million compared to the same period last year, due primarily to
a $0.2 million increase in depreciation expense. Operating loss for
the second quarter of 2006 was $0.8 million compared to $0.6 million in
the second quarter of 2005. Greenfield ended the second quarter of
2006 with 15,895 access lines compared to 13,864 access lines in the
second quarter of 2005. As of June 30, 2006 the Company had 124
Greenfield projects, which represent a potential of more than 54,500
marketable lines upon completion of the projects.
* Internet & Data - ("CTC Internet Services")
CTC Internet Services operating revenue in the second quarter of 2006
increased 17.3% to $3.4 million from $2.9 million in the same period
last year. DSL revenue increased $0.6 million, or 32.0% to $2.5
million, while operating expense decreased 3.2% to $2.4 million from
the same quarter last year. Operating income in the second quarter of
2006 increased to $1.0 million from $0.4 million in the same quarter
last year. CTC Internet Services ended the second quarter of 2006 with
22,907 DSL customers, an increase of 6,573 customers compared to the
second quarter of 2005. Dial-up customers declined to 5,594, while
high-speed customers increased to 754 at June 30, 2006.
Future Period Guidance
We currently expect operating results to approximate the following during these future periods:
* 3rd Quarter 2006
-- Revenue of $43.0 to $44.0 million
-- Operating income of $5.5 to $6.5 million
-- Depreciation expense of $8.1 to $8.3 million
-- Diluted earnings per share of $0.20 to $0.22
-- Capital expenditures of $10.0 to $12.0 million
* Full Year 2006
-- Revenue of $173.0 to $175.0 million
-- Operating income of $21.0 to $23.0 million
-- Depreciation expense of $32.5 to $33.5 million
-- Diluted earnings per share of $0.71 to $0.75, excluding $2.77
related to the estimated full-year impact of the PMN transaction
-- Capital expenditures of $35.5 to $39.5 million
CT Communications will host a conference call to discuss the results of the second quarter on Friday, July 28, 2006 at 10:00 AM ET. You are invited to listen to the conference call that will be broadcast live over the Internet at http://www.ctc.net/. If you are unable to listen during the live webcast, the call will be archived on the web site at http://www.ctc.net/ until August 31, 2006. Additionally, a replay of the call will be available until 5:00 PM ET on Friday, August 4, 2006 at 800-633-8284. Enter access number 21299818.
CT Communications, Inc. is headquartered in Concord, N.C. and is a growing provider of integrated telecommunications and related services to residential and business customers located primarily in North Carolina. CT Communications, Inc. offers a comprehensive package of telecommunications services, including local and long distance telephone services, Internet and data services and wireless services.
Certain statements contained in this press release are "forward-looking statements," within the meaning of federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks, uncertainties and assumptions made by management about us, including, among other things, changes in industry conditions created by the Telecommunications Act of 1996 and related state and federal legislation and regulations, the impact of economic conditions related to financial performance of customers, business partners, competitors and peers within the telecommunications industry, the recovery of the substantial costs incurred over the past few years in connection with our expansion into new businesses, retention of our existing customer base and our ability to attract new customers, our ability to control pricing and product offerings in a highly competitive industry, our ability to attract and retain key personnel, the performance of our investments, rapid changes in technology, our ability to manage capital expenditures related to changes in technology, actions of our competitors, and the impact of economic and political events on our business, operating regions and customers, including terrorist attacks. In some cases, these forward- looking statements can be identified by the use of words such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "project," "intend" or "potential" or the negative of those words or other comparable words. These forward-looking statements may differ materially from actual events or results because they involve estimates, assumptions and uncertainties and should be viewed with caution. We undertake no obligation to update or revise any forward-looking statements, whether as the result of new information, future events or otherwise. Readers are also directed to consider the risks, uncertainties and other factors discussed in documents filed by us with the Securities and Exchange Commission, including those matters summarized under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2005.
CT Communications, Inc.
Consolidated Statements of Income
(Unaudited, in thousands, except per share amounts)
Three Months Ended June 30, %
2006 2005 Change
Operating Revenue
ILEC Services $23,558 $21,996 7.1%
Wireless Services 9,645 8,963 7.6%
CLEC Services 4,763 4,721 0.9%
Greenfield Services 2,559 2,427 5.4%
Internet & Data Services 3,432 2,926 17.3%
Total Operating Revenue 43,957 41,033 7.1%
Operating Expense
ILEC Services 18,981 17,894 6.1%
Wireless Services 8,870 8,554 3.7%
CLEC Services 5,049 4,992 1.1%
Greenfield Services 3,351 3,014 11.2%
Internet & Data Services 2,431 2,511 (3.2%)
Other 511 520 (1.7%)
Total Operating Expense 39,193 37,485 4.6%
Operating Income 4,764 3,548 34.3%
Other Income (Expense)
Investment, Equity Method 263 1,305
Gains, Interest, Dividends 1,945 1,529
Impairment on Investments - (111)
Other Expenses, Principally Interest (838) (1,356)
Total Other Income (Expense) 1,370 1,367
Pre-Tax Income 6,134 4,915
Income Tax Expense 2,241 1,962
Net Income $3,893 $2,953
Diluted Weighted Average Shares 19,452 19,090
Diluted Earnings Per Share $0.20 $0.15
CT Communications, Inc.
Consolidated Statements of Income
(Unaudited, in thousands, except per share amounts)
Six Months Ended June 30, %
2006 2005 Change
Operating Revenue
ILEC Services $47,145 $44,675 5.5%
Wireless Services 18,772 17,455 7.5%
CLEC Services 9,393 9,856 (4.7%)
Greenfield Services 5,070 4,718 7.5%
Internet & Data Services 6,716 5,726 17.3%
Total Operating Revenue 87,096 82,430 5.7%
Operating Expense
ILEC Services 36,758 35,155 4.6%
Wireless Services 17,476 16,241 7.6%
CLEC Services 10,256 10,243 0.1%
Greenfield Services 6,628 5,977 10.9%
Internet & Data Services 4,900 5,114 (4.2%)
Other 1,195 1,052 13.6%
Total Operating Expense 77,213 73,782 4.7%
Operating Income 9,883 8,648 14.3%
Other Income (Expense)
Investment, Equity Method 90,103 2,548
Gains, Interest, Dividends 2,758 1,677
Impairment on Investments (876) (529)
Other Expenses, Principally Interest (1,872) (2,531)
Total Other Income (Expense) 90,113 1,165
Pre-Tax Income 99,996 9,813
Income Tax Expense 38,614 3,871
Net Income $61,382 $5,942
Diluted Weighted Average Shares 19,359 19,035
Diluted Earnings Per Share $3.17 $0.31
CT Communications, Inc.
Consolidated Balance Sheets
(Unaudited, in thousands)
June 30, December 31,
2006 2005
ASSETS
Cash and Cash Equivalents $16,882 $23,011
Short-term Investments 94,869 -
Accounts Receivable and Unbilled
Revenue, Net 15,563 16,336
Wireless Spectrum Held-for-Sale - 15,646
Other Assets 8,479 7,220
Current Assets 135,793 62,213
Investment Securities 5,270 5,845
Investments in Unconsolidated
Companies 7,145 15,618
Property, Plant and Equipment, Net 196,897 200,179
Other Assets 38,365 37,565
TOTAL ASSETS $383,470 $321,420
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Portion of Long-Term Debt $5,000 $15,000
Accounts Payable 7,877 8,482
Customer Deposits and Advance
Billings 2,307 2,538
Income Taxes Payable 15,887 2,107
Other Accrued Liabilities 9,240 11,814
Current Liabilities 40,311 39,941
Long-Term Debt 37,500 40,000
Deferred Credits and Other
Liabilities 45,055 45,599
Stockholders' Equity 260,604 195,880
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $383,470 $321,420
CT Communications, Inc.
Customer Information
June 30, June 30, %
2006 2005 Change
ILEC Access Lines
Business Lines 28,404 28,560 (0.5%)
Residential Lines 80,952 83,207 (2.7%)
Total ILEC Access Lines 109,356 111,767 (2.2%)
CLEC Access Lines 34,372 31,644 8.6%
Greenfield Access Lines 15,895 13,864 14.6%
Total Wired Access Lines 159,623 157,275 1.5%
Wireless Subscribers 47,932 44,723 7.2%
Long Distance Lines
In ILEC 86,422 84,774 1.9%
In CLEC 23,605 24,739 (4.6%)
In Greenfield 9,633 7,631 26.2%
Total Long Distance Lines 119,660 117,144 2.1%
Internet Access Customers
Dial-Up 5,594 7,774 (28.0%)
DSL 22,907 16,334 40.2%
High Speed 754 632 19.3%
Total Internet Access Customers 29,255 24,740 18.2%
Greenfield Projects Projected
Lines in Marketable Total
Service Lines Projects
By Year Signed
Previous Years 13,918 40,000 75
2003 1,070 5,000 18
2004 743 4,000 12
2005 100 4,500 13
2006 64 1,000 6
Total 15,895 54,500 124
By Type
Mall 2,591 3,000 3
Single Family Homes 9,412 38,500 69
Multi-Dwelling Units 2,844 11,500 41
Business 1,048 1,500 11
Total 15,895 54,500 124
CT Communications, Inc.
Other Selected Financial Data
(Unaudited, in thousands)
Three Months Six Months
Capital Expenditures Ended June 30, Ended June 30,
2006 2005 2006 2005
ILEC $3,077 $3,748 $6,635 $8,207
Wireless 491 374 687 1,467
CLEC 441 437 1,683 660
Greenfield 1,342 1,655 2,934 3,003
Internet 307 170 557 598
Other 406 206 555 413
Total $6,064 $6,590 $13,051 $14,348
% of Revenue 13.8% 16.1% 15.0% 17.4%
Depreciation Three Months Six Months
Ended June 30, Ended June 30,
2006 2005 2006 2005
ILEC $5,105 $5,129 $10,307 $10,238
Wireless 641 576 1,276 1,080
CLEC 677 634 1,335 1,263
Greenfield 996 840 1,969 1,650
Internet 329 455 703 934
Other 225 339 503 674
Total $7,973 $7,973 $16,093 $15,839
Reconciliation of Reported Results to Normalized Results
For the six months ended June 30, 2006
Palmetto
GAAP MobileNet Normalized
Operating Revenue $87,096 $- $87,096
Operating Expense 77,213 - 77,213
Operating Income 9,883 - 9,883
Other Income (Expense) 90,113 (89,164) 949
Pre-Tax Income 99,996 (89,164) 10,832
Income Tax Expense 38,614 (34,943) 3,671
Net Income $61,382 $(54,221) $7,161
Diluted EPS $3.17 $(2.80) $0.37
DATASOURCE: CT Communications, Inc.
CONTACT: Jim Hausman, +1-704-722-2410, or Ron Marino, +1-704-722-2212,
both of CT Communications, Inc.
Web site: http://www.ctc.net/