August 03, 2010
News Release
Contact: Curtis Garner
Chief Financial Officer
205-625-3571
Curtis@Otelcotel.com
Otelco Reports Second Quarter 2010 Results
ONEONTA, Alabama (August 3, 2010) – Otelco Inc. (NASDAQ: OTT) (TSX: OTT.un), a wireline telecommunications services provider in Alabama, Maine, Massachusetts, Missouri, New Hampshire and West Virginia, today announced results for its second quarter ended June 30, 2010. Key highlights for Otelco include:
• Total revenues of $26.5 million for second quarter 2010.
• Operating income of $7.0 million for second quarter 2010.
• Adjusted EBITDA (as defined below) of $12.9 million for second quarter 2010.
“The second quarter was productive as we completed several critical projects for future growth and experienced positive financial results,” said Mike Weaver, President and Chief Executive Officer of Otelco. “Our financial results include an increase in revenue and Adjusted EBITDA for the quarter and year-to-date over the same periods in 2009. In addition, all categories of revenue increased for the quarter. The second quarter is typically when we experience a net decline in access line equivalents and as expected, access line equivalents declined by 0.4% for the enterprise. The increase in Adjusted EBITDA to its highest quarterly level reflects the implementation of additional operational synergies, settlement of certain issues associated with FairPoint Communications’ bankruptcy proceedings, and continued growth in our CLEC operations. Clearly, while the delay in the economic recovery impacts our local markets, we continue pressing our growth plans in 2010,” Weaver concluded.
“In this quarter, we completed our integration process as the New England operations began utilizing the brand name OTT Communications in June. We invested in sales resources and network facilities in New Hampshire as we continue to expand our service footprint,” added Weaver. “We have also realigned our senior management team in New England to increase our focus on selling in all of our markets. In addition, we completed the exchange of all our Class B shares for IDSs in June, increasing the outstanding IDS units to 13.2 million.
“Our cash position has increased by $5.0 million so far this year, with capital investments in the business of $2.3 million for second quarter. These investments were concentrated in New England as we expand the technology infrastructure in Maine and New Hampshire to support additional customers and control costs,” said Weaver. “As evidenced by our growth in cash and the twenty-second consecutive IDS dividend, we remain committed to building value for and returning cash to our shareholders.”
Distribution to Income Deposit Security Holders
Each quarter, the Board will consider the declaration of dividends during its normally scheduled meeting. For this quarter, the Board is meeting on August 12, 2010. The scheduled interest and any dividend declared will be paid on September 30, 2010, to holders of record as of the close of business on September 15, 2010. The interest payment will cover the period from June 30, 2010 through September 29, 2010. Currently, it is anticipated that the Company’s dividends in 2010 will continue to be treated as a return of capital for tax purposes. The Company has made twenty-two successive quarterly distributions of dividends and interest since its IDS units were originally offered to the public in December 2004.
For complete financial summary, visit the Investor Relations link above.
ABOUT OTELCO
Otelco Inc. provides wireline telecommunications services in Alabama, Maine, Massachusetts, Missouri, New Hampshire and West Virginia. The Company’s services include local and long distance telephone, network access, transport, digital high-speed data lines and dial-up internet access, cable television and other telephone related services. With more than 100,000 voice and data access lines, 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 ten incumbent telephone companies serving rural markets, or rural local exchange carriers. It also provides competitive retail and wholesale communications 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, uncertainities, and other unknown factors that could cause the actual results of the Company to be materially different from the historical results of 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 similiar terms to be uncertain and forward-looking. 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.
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