ICTC Group, Inc. Reports Results for First Quarter of 2015

NOME, N.D., May 12, 2015 /PRNewswire/ -- ICTC Group, Inc. (OTC Pink: ICTG) today announces its financial results for the first quarter of 2015.  (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. 

First Quarter Results – During the first quarter of 2015, our revenues were $959,000, an increase of $29,000 or 3.2% from the first quarter of 2014.  This increase was due primarily to an increase in internet customers and circuit leases.  EBITDA before corporate costs was $336,000 versus $356,000 in the first quarter of 2014, a decrease of $20,000 or 5.5%, due primarily to the addition of a salesperson and increased administrative expenses.

Regulated revenues were $755,000 compared with $733,000 in 2014, an increase of $22,000 or 2.9%.  Non-regulated revenues were $205,000, compared with $197,000 in 2014, an increase of $8,000 or 4.1%.  Operating profit was $53,000 as compared with $133,000 in the first quarter of 2014, a decrease of $80,000 due primarily to the Company's adjustment of its depreciation rates during the fourth quarter of 2014 to be more consistent with industry norms.  Net income in the first quarter of 2015 was $137,000 compared to $188,000 in 2014, a decrease of $51,000; again, this was due primarily to increased depreciation expense in the first quarter of 2015.

Earnings per share, excluding unusual items, were $0.36 during the first quarter versus $0.46 in 2014. As with operating profit and net income, this decrease in earnings per share resulted primarily from higher depreciation expense. 

ICTC has substantial investments in three other telecommunications providers: Dakota Carrier Network, a state-wide North Dakota fiber network owned by North Dakota RLECs; and two providers of wireless voice and broadband communications services in Southeastern North Dakota, North Dakota RSA # 3 and North Dakota RSA # 5, both operated by Verizon Wireless.  These investments contributed $170,000 to ICTC's first quarter of 2015 income before income taxes, as compared to $175,000 in 2014.  These investments provided ICTC with cash distributions of $236,000 for the first quarter, as compared to cash distributions of $63,000 for the first quarter of 2014.

Capital Expenditures – Total capital expenditures were $142,000 in the first quarter of 2015 and $344,000 in the first quarter of 2014.  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.  The Company has incurred costs of $247,000 which are expected to be reimbursed through the stimulus funding during the second quarter of 2015.  By extending fiber optic cable further throughout our network and installing upgraded electronics, we are improving 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, which 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 communication services in rural areas, but there is no certainty that such support will be continued at historical levels.  Because of this and because of the opportunities created by the Internet and new technologies, we are developing un-regulated, 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 March 31, 2015, ICTC had approximately $2,935,000 in cash and $2,653,000 in total debt, resulting in net cash of $282,000 (See Attachment B).  This compares to net debt of $409,000 as of December 31, 2014.  These figures exclude amounts of $247,000 at March 31, 2015 and $481,000 at December 31, 2014 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 this authorization, the Company has to date repurchased a total of 20,290 shares at an average price of $19.46 (260 shares were purchased in the first quarter of 2015).  There are currently 4,710 shares remaining for repurchase under the November 2014 authorization, as well as the 25,000 shares authorized by the Board in March 2015.  The Company plans to continue to repurchase stock in the open market from time to time as it deems appropriate.

Business Initiatives for 2015 – ICTC seeks to expand its broadband capacities and other communication services.  The Company is currently planning the extension of 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 telecommunications services that may seek acquisitions, principally in its existing business areas.

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

SOURCE ICTC Group, Inc.

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