Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE	Contacts:  David Christensen, CFO
	507-387-3355
	Jennifer Spaude, Investor Relations
	507-386-3765

"HickoryTech's strong momentum continues as we have increased strategic fiber and data revenue 17 percent year to date," said John Finke, HickoryTech's president and chief executive officer.  "Our disciplined approach to expanding our fiber access networks is well underway as we make targeted investments to drive future growth.  Net income increased 34 percent in the second quarter and our EBITDA grew 9 percent, demonstrating the progress we are making growing our business services and positioning HickoryTech for the future as we offset declines in our legacy telecom service."

Fiber and Data Segment (before inter-segment eliminations)

Second quarter Fiber and Data revenue totaled $17 million, up 11 percent year over year.  Revenue in this segment totaled $33.7 million for the six-month period at June 30, 2013, up 17 percent year over year.  This growth is the result of increased sales within our retail and wholesale customer segments.

·

Costs and expenses for this segment totaled $14.7 million, up 13 percent.

·

Operating income totaled $2.2 million, down 2 percent year over year.

·

Net income totaled $1.3 million, down 1 percent year over year.

Equipment Segment (before inter-segment eliminations)

Second quarter Equipment Segment revenue totaled $15.1 million, an 18 percent increase year over year.

·

Equipment revenue was $12.9 million, a 20 percent increase compared to a year ago, and Support Services revenue, which includes advisory, design, implementation and maintenance support services, was $2.2 million, a 4 percent increase over second quarter 2012.

·

Equipment Segment operating income totaled $934,000, a 134 percent increase over the prior year.

·

Net income totaled $555,000, a 132 percent increase over the second quarter 2012.

Telecom Segment (before inter-segment eliminations)

Second quarter Telecom Segment revenue totaled $15.8 million, down 3 percent from a year ago. Telecom results were affected by network access and local service revenue declines.

·

Broadband revenue increased 5 percent in the second quarter.  DSL subscribers increased 6 percent and Digital TV subscribers were up 9 percent, totaling 20,538 and 11,001 subscribers respectively.

·

Costs and expenses totaled $13.9 million, down 2 percent year over year.

·

Net income totaled $1.1 million, a 6 percent decrease compared to the second quarter 2012.

Total capital expenditures in the second quarter were $6.5 million, compared with $5.9 million in the comparable quarter in 2012.

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During the second quarter, the company purchased and retired approximately 72,000 shares of HickoryTech stock, at a cost of $746,000, as part of a previously authorized stock repurchase plan.

Debt Position

Long-term debt and current maturities, including capitalized leases, totaled $136 million as of June 30, 2013. The second quarter 2013 debt balance represents a decrease of $5.5 million from one year ago, as a result of the debt repayments made in the past 12 months.

"As we approach the second half of the year, we are on track to achieve our key objectives and position Enventis, our growth brand, for the future," added Finke.

Fiscal Outlook for 2013

HickoryTech confirms its previous fiscal 2013 outlook.  Revenue in 2013 is expected to be within a range of a 2 percent decline to a 3 percent increase as compared to 2012 revenue.  The company expects growth in business revenue to offset the majority of the legacy Telecom services decline.  Net income is expected to be in a range of a 7 percent decline to a 14 percent increase versus 2012 net income.  Capital expenditures are expected to decline by 6 percent to 20 percent compared with 2012 spending, ranging from $24 million to $28.2 million.  EBITDA is expected to be in a range of a 2 percent to 8 percent increase as compared to 2012 EBITDA.  The company expects its year-end debt balance to be down 1 percent to 3 percent and be in a range of $133 million to $136 million.

Conference Call and Webcast

HickoryTech will hold a conference call and webcast on Tuesday, August 6, at 9 a.m. CT to review the company's second-quarter 2013 results. The conference call dial-in number is 877-774-2369 for U.S. and Canadian callers, conference ID 12634558.  A simultaneous webcast with audio and presentation will be available at http://investor.hickorytech.com.

About HickoryTech

Non-GAAP Measures

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. 

Forward-looking statement
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.

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HickoryTech Corporation
Consolidated Statements of Operations
(unaudited)
		Three Months Ended June 30								%				Six Months Ended June 30								%
(Dollars in thousands, except share data)		2013				2012				Change				2013				2012				Change
Operating revenue:
Equipment		$	12,910			$	10,740				20	%		$	28,274			$	26,039				9	%
Services			34,231				33,117				3	%			67,636				64,762				4	%
Total operating revenue			47,141				43,857				7	%			95,910				90,801				6	%
Costs and expenses:
Cost of sales, excluding depreciation and amortization			10,860				9,292				17	%			24,082				22,758				6	%
Cost of services, excluding depreciation and amortization			16,971				15,905				7	%			33,570				31,231				7	%
Selling, general and administrative expenses			7,047				7,441				-5	%			14,496				14,147				2	%
Asset impairment			5				-								638				-
Depreciation and amortization			7,252				6,732				8	%			14,261				12,926				10	%
Total costs and expenses			42,135				39,370				7	%			87,047				81,062				7	%
Operating income			5,006				4,487				12	%			8,863				9,739				-9	%
Interest and other income			13				14				-7	%			15				34				-56	%
Interest expense			(1,131	)			(1,599	)			-29	%			(2,270	)			(3,010	)			-25	%
Income before income taxes			3,888				2,902				34	%			6,608				6,763				-2	%
Income tax provision			1,567				1,164				35	%			2,661				2,731				-3	%
Net income		$	2,321			$	1,738				34	%		$	3,947			$	4,032				-2	%
Basic earnings per share		$	0.17			$	0.13				31	%		$	0.29			$	0.30				-3	%
Basic weighted average common shares outstanding			13,531,007				13,404,628								13,543,690				13,377,209
Diluted earnings per share		$	0.17			$	0.13				31	%		$	0.29			$	0.30				-3	%
Diluted weighted average common and equivalent shares outstanding			13,576,967				13,454,707								13,584,749				13,433,277
Dividends per share		$	0.145			$	0.14				4	%		$	0.29			$	0.28				4	%

 

 

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HickoryTech Corporation
Consolidated Balance Sheets
(unaudited)
(Dollars and Share Data in Thousands)		June 30, 2013				December 31, 2012
Assets
Current assets:
Cash and cash equivalents		$	5,197			$	8,305
Receivables, net of allowance for doubtful accounts of $264 and $278			27,346				22,530
Inventories			6,312				8,379
Income taxes receivable			1,025				596
Deferred income taxes, net			1,623				1,887
Prepaid expenses			2,599				2,092
Other			917				1,399
Total current assets			45,019				45,188
Investments			3,408				3,213
Property, plant and equipment			448,535				437,623
Accumulated depreciation and amortization			(267,930	)			(254,664	)
Property, plant and equipment, net			180,605				182,959
Other assets:
Goodwill			29,028				29,028
Intangible assets, net			4,328				4,811
Deferred costs and other			3,002				3,105
Total other assets			36,358				36,944
Total assets		$	265,390			$	268,304
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable		$	3,332			$	5,818
Extended term payable			10,867				8,115
Deferred revenue			5,598				7,362
Accrued expenses and other			9,326				10,881
Current maturities of long-term obligations			1,655				1,648
Total current liabilities			30,778				33,824
Long-term liabilities:
Debt obligations, net of current maturities			134,324				135,133
Accrued income taxes			221				236
Deferred revenue			2,864				1,085
Financial derivative instruments			1,838				2,432
Accrued employee benefits and deferred compensation			12,634				12,481
Deferred income taxes			34,196				34,265
Total long-term liabilities			186,077				185,632
Total liabilities			216,855				219,456
Commitments and contingencies
Shareholders' equity:
Common stock, no par value, $.10 stated value
Shares authorized: 100,000
Shares issued and outstanding:  13,516 in 2013 and 13,519 in 2012			1,352				1,352
Additional paid-in capital			15,730				15,950
Retained earnings			30,998				30,987
Accumulated other comprehensive income			455				559
Total shareholders' equity			48,535				48,848
Total liabilities and shareholders' equity		$	265,390			$	268,304

 

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HickoryTech Corporation
Fiber and Data Segment
(unaudited)
		Three Months Ended June 30												Six Months Ended June 30
(Dollars in thousands)		2013				2012				% Change				2013				2012				% Change
Revenue before intersegment eliminations:
Services		$	16,779			$	15,177				11	%		$	33,250			$	28,396				17	%
Intersegment			213				193				10	%			426				386				10	%
Total Fiber and Data revenue			16,992				15,370				11	%			33,676				28,782				17	%
Cost of services
(excluding depreciation and amortization)			8,583				7,489				15	%			16,840				14,084				20	%
Selling, general and administrative expenses			3,233				3,046				6	%			6,593				5,552				19	%
Asset impairment			5				-								638				-
Depreciation and amortization			2,922				2,551				15	%			5,718				4,517				27	%
Total costs and expenses			14,743				13,086				13	%			29,789				24,153				23	%
Operating income		$	2,249			$	2,284				-2	%		$	3,887			$	4,629				-16	%
Net income		$	1,340			$	1,359				-1	%		$	2,301			$	2,754				-16	%
Capital expenditures		$	2,970			$	3,603				-18	%		$	5,913			$	5,568				6	%

 

HickoryTech Corporation
Equipment Segment
(unaudited)
		Three Months Ended June 30												Six Months Ended June 30
(Dollars in thousands)		2013				2012				% Change				2013				2012				% Change
Revenue before intersegment eliminations:
Equipment		$	12,910			$	10,740				20	%		$	28,274			$	26,039				9	%
Support Services			2,206				2,124				4	%			4,079				4,246				-4	%
Total Equipment revenue			15,116				12,864				18	%			32,353				30,285				7	%
Cost of sales
(excluding depreciation and amortization)			10,860				9,292				17	%			24,082				22,758				6	%
Cost of services
(excluding depreciation and amortization)			1,808				1,627				11	%			3,503				3,339				5	%
Selling, general and administrative expenses			1,390				1,475				-6	%			2,804				2,827				-1	%
Depreciation and amortization			124				71				75	%			209				142				47	%
Total costs and expenses			14,182				12,465				14	%			30,598				29,066				5	%
Operating income		$	934			$	399				134	%		$	1,755			$	1,219				44	%
Net income		$	555			$	239				132	%		$	1,040			$	725				43	%
Capital expenditures		$	403			$	117				244	%		$	961			$	190				406	%

 

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HickoryTech Corporation
Telecom Segment
(unaudited)
		Three Months Ended June 30								%				Six Months Ended June 30								%
(Dollars in thousands)		2013				2012				Change				2013				2012				Change
Revenue before intersegment eliminations:
Local Service		$	2,885			$	3,348				-14	%		$	5,848			$	6,777				-14	%
Network Access			4,482				4,749				-6	%			9,183				9,652				-5	%
Broadband			5,241				4,977				5	%			10,246				9,979				3	%
Directory			730				770				-5	%			1,460				1,552				-6	%
Long Distance			584				636				-8	%			1,156				1,284				-10	%
Bill Processing			1,040				1,035				0	%			1,853				2,240				-17	%
Intersegment			571				444				29	%			1,144				854				34	%
Other			284				301				-6	%			561				636				-12	%
Total Telecom revenue		$	15,817			$	16,260				-3	%		$	31,451			$	32,974				-5	%
Total Telecom revenue before intersegment eliminations
Unaffiliated Customers		$	15,246			$	15,816							$	30,307			$	32,120
Intersegment			571				444								1,144				854
			15,817				16,260								31,451				32,974
Cost of services (excluding depreciation and amortization)			7,305				7,365				-1	%			14,680				14,926				-2	%
Selling, general and administrative expenses			2,438				2,817				-13	%			4,971				5,650				-12	%
Depreciation and amortization			4,198				4,085				3	%			8,319				8,218				1	%
Total costs and expenses			13,941				14,267				-2	%			27,970				28,794				-3	%
Operating income		$	1,876			$	1,993				-6	%		$	3,481			$	4,180				-17	%
Net income		$	1,118			$	1,186				-6	%		$	2,061			$	2,485				-17	%
Capital expenditures		$	3,131			$	2,203				42	%		$	5,379			$	3,799				42	%
Key Metrics
Business access lines			19,628				20,764				-5	%
Residential access lines			21,496				23,209				-7	%
Total access lines			41,124				43,973				-6	%
Long distance customers			29,535				30,872				-4	%
Digital Subscriber Line customers			20,538				19,364				6	%
Digital TV customers			11,001				10,110				9	%

 

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HickoryTech Corporation
Reconciliation of Non-GAAP Measures
		Three Months Ended June 30								Six Months Ended June 30
(Dollars in thousands)		2013				2012				2013				2012
Reconciliation of consolidated net income to EBITDA:
Net income		$	2,321			$	1,738			$	3,947			$	4,032
Add:
Depreciation and amortization			7,252				6,732				14,261				12,926
Interest expense			1,131				1,599				2,270				3,010
Income taxes			1,567				1,164				2,661				2,731
EBITDA			12,271				11,233				23,139				22,699
Adjustments allowed under our credit agreement:
Asset impairment			5				-				638				-
Adjusted EBITDA as defined in our credit agreement		$	12,276			$	11,233			$	23,777			$	22,699

 

		Year Ending
		December 31, 2013
(Dollars in thousands)		Guidance Range
Reconciliation of net income to 2013 EBITDA guidance:		Low				High
Projected net income		$	7,700			$	9,500
Add back:
Depreciation and amortization			29,000				28,500
Interest expense			5,000				5,500
Taxes			5,300				6,500
Projected EBITDA guidance		$	47,000			$	50,000
Prior Year EBITDA		$	46,176			$	46,176
% Change			+2	%			+8	%

 

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HickoryTech Corporation
Reconciliation of Non-GAAP Measures
		Three Months Ended
(Dollars in thousands)		Jun-13				Mar-13				Dec-12				Sep-12
Reconciliation of net income to EBITDA:
Net income		$	2,321			$	1,626			$	2,525			$	1,741
Add:
Depreciation and amortization			7,252				7,009				6,951				6,869
Interest expense			1,131				1,139				1,114				1,625
Income taxes			1,567				1,094				1,458				1,194
EBITDA		$	12,271			$	10,868			$	12,048			$	11,429
Adjustments allowed under our credit agreement:
Asset impairment			5				633				-				-
Adjusted EBITDA as defined in our credit agreement		$	12,276			$	11,501			$	12,048			$	11,429

 

 

 

Debt to EBITDA ratio
Total outstanding debt (including outstanding letters of credit) as of June 30, 2013		$	135,999
Adjusted EBITDA for the last (4) consecutive fiscal quarters as presented above			47,254
Debt to EBITDA ratio as of June 30, 2013			2.88