ICTC Group, Inc. Reports Fourth Quarter and Full Year 2014 Results, Board Authorizes Additional 25,000 Share Repurchase

NOME, N.D., April 1, 2015 /PRNewswire/ -- ICTC Group, Inc. (OTC Pink: ICTG) today announces its 2014 fourth quarter and full year earnings (see Attachment A).  ICTC's operating subsidiaries, Inter-Community Telephone Company, LLC, a rural local exchange carrier ("RLEC"), and Valley Communications, Inc., a competitive local exchange carrier ("CLEC"), provide telecommunications services in southeastern North Dakota.  ICTC's financial statements for the year ended December 31, 2014 are in the process of being audited by the Company's independent accounting firm.  This process could result in adjustments to our preliminary fourth quarter and full year 2014 results.

Fourth Quarter Results – During the fourth quarter of 2014, our revenues were $1,161,000, an increase of $185,000 or 18.9% from the fourth quarter of 2013. This increase was due primarily to the consolidation of our switching facilities in two communities, and to increased depreciation rates which were adopted during the fourth quarter to better reflect current industry standards and practice. EBITDA before corporate costs was $371,000 versus $326,000 in the fourth quarter of 2013, an increase of $45,000 or 13.8%.  Corporate office expense decreased from $79,000 in 2013 to $70,000 in 2014 due to lower legal fees and accounting fees in 2014, partially offset by a $25,000 fee to CIBL, Inc. for management and regulatory consulting services.

Regulated revenues were $909,000 compared with $755,000 in 2013, an increase of $154,000 or 20%.  Non-regulated revenues were $252,000, compared with $221,000 in 2013, an increase of $31,000 or 14%. There was an operating loss of $37,000 as compared with an operating profit of $140,000 in the fourth quarter of 2013, a decrease of $177,000. During the fourth quarter of 2014, as noted above, the Company adjusted its 2014 depreciation rates to be more consistent with industry norms.  This change resulted in an additional $184,000 of depreciation expense in the fourth quarter 2014 results. 

ICTC has substantial investments in three other telecommunications providers: Dakota Carrier Network, a state-wide North Dakota fiber optic network owned by North Dakota RLECs; and two providers of wireless communications services in southeastern North Dakota, North Dakota RSA # 3 and North Dakota RSA # 5, both operated by Verizon Wireless.  These investments contributed $159,000 to ICTC's fourth quarter 2014 income before income taxes, as compared to $175,000 in 2013.  These investments provided ICTC with cash distributions of $63,000 for the fourth quarter, as compared to cash distributions of $70,000 for the fourth quarter of 2013.

Earnings per share were $0.18 during the fourth quarter of 2014 versus $0.61 in 2013. As with operating profit and net income, this decrease in earnings per share resulted primarily from higher depreciation expense. 

Net income in the fourth quarter of 2014 was $70,000 compared to $246,000 in 2013, a decrease of $176,000; again, this was due primarily to increased depreciation expense in 2014 of $184,000, net of an associated income tax benefit of $69,000.

Full Year Results – ICTC finished 2014 with revenues of $4,063,000 compared with $3,853,000 for 2013, an increase of $210,000 or 5.5%.  Prior to corporate costs, EBITDA was $1,459,000 in 2014 compared with $1,535,000 in 2013, a decrease of $76,000 or 5%.  Earnings per share were $1.64 in 2014 as compared with $1.81 in 2013.  ICTC currently expects that revenues and EBITDA before corporate costs will be approximately $4.1 million and $1.5 million in 2015.

Capital Expenditures – Total capital expenditures were $1,170,000 in 2014 and $1,531,000 in 2013.  These amounts include funds spent under our American Recovery and Reinvestment Act stimulus project.  Our capital expenditures represent continued investment in our network infrastructure, particularly our broadband facilities.  The expenditure amounts are net of grants received under the stimulus project and contributions in aid to construction received from our customers.  Through December 31, 2014, the Company incurred unreimbursed costs of $481,000 under the stimulus project, of which $234,000 was reimbursed in February 2015 and the remainder is expected to be reimbursed during the second quarter of 2015.  By extending fiber optic facilities further throughout our network and installing upgraded electronics, we greatly improved the speed and reliability of our broadband network and will continue to do so through 2015.

Federal Regulation – In November 2011, the Federal Communications Commission ("FCC") ordered significant modifications to Intercarrier Compensation ("ICC") and the Universal Service Fund ("USF"), both of which provide revenues to the Company.  Since that time, the FCC has issued a number of additional orders clarifying and modifying its ICC and USF mechanisms.  Most recently, in April 2014 and March 2015, the FCC announced that it is making further reforms, the details of which are not yet available, that will impact companies such as ICTC.  ICC and USF programs generate, on a combined basis, approximately 60% of our revenues.  It is not possible to predict the impact these regulatory actions will have on the Company's future revenues at this time.  We believe that government policy will continue to encourage and support communications services in rural areas, but there is no certainty that such support will be continued at historical levels.  Because of this and the opportunities created by the internet and new technologies, we are developing unregulated high-speed services and seeking opportunities outside our franchised telephone service area, as well as expanding the products and services we provide in our traditional telephone business.         

Balance Sheet – As of December 31, 2014, ICTC had approximately $2,145,000 in cash and $2,555,000 in total debt, resulting in net debt of $410,000 (see Attachment B).  This compares to net cash of $74,000 as of December 31, 2013.  These figures exclude amounts of $481,000 at December 31, 2014 and $307,000 at December 31, 2013 recoverable under the stimulus program.

Additional Repurchase Authorization – In March 2015, the Board of Directors authorized the repurchase of an additional 25,000 shares of the Company's stock.  As previously announced, in November 2014 the Company's Board of Directors had authorized the repurchase of 25,000 shares of the Company's stock.  Under that authorization, the Company has to the date of this Release repurchased a total of 20,290 shares at an average price of $19.46.  There are currently 29,710 shares in total authorized to be repurchased by the Company on a discretionary basis.

Business Initiatives for 2015 – ICTC is actively expanding its broadband capacities and other communications services.   The Company is currently planning to extend its fiber optic facilities and the associated electronics to support enhanced communications services both within and outside its franchised telephone service territory, in growing North Dakota markets nearby.

This release contains certain forward-looking information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation anticipated financial results, capital expenditures and corporate transactions.  It should be recognized that such information is based upon certain assumptions, projections and forecasts, including without limitation business conditions and financial markets, regulatory and other approvals, and the cautionary statements set forth in documents filed by ICTC on its website, www.ictcgroup.net.  As a result, there can be no assurance that any possible transactions will be accomplished or be successful or that financial targets will be met, and such information is subject to uncertainties, risks and inaccuracies that could be material.

ICTC is a holding company with subsidiaries in voice, broadband and other communications services that may seek acquisitions, principally in its existing business areas.

ICTC is listed on the OTC Pink® under the symbol ICTG.  Its World Wide Web address is http://www.ictcgroup.net.

SOURCE ICTC Group, Inc.

Related Links

http://www.ictcgroup.net