Otelco Inc
Q4 2020 Earnings Call Transcript

Published: 17 Mar 2021

[Operator:]

Good day, and welcome to Otelco's 4Q '20 Earnings Conference Call. Today's conference is being recorded. At this time for opening remarks and introductions, I'd like to turn the call over to Ms. Dru Anderson. Please go ahead, ma'am.

[Dru Anderson:]

Thank you, John, and welcome to the Otelco conference call to review the company's results for the fourth quarter and year-ended December 31, 2020. Conducting the call today will be Richard Clark, President and Chief Executive Officer; and Curtis Garner, Chief Financial Officer. Richard will provide an update on the company's adjustments during and performance under the changed environment caused by the COVID-19 pandemic, the Oak Hill Capital transaction, and strategic and operational highlights from fourth quarter results. Curtis will highlight the financial results for the quarter. And then, we will take questions on quarterly results from investors. As a reminder, the earnings press release and the company's Form 10-K are now available in the Investors section of the company's Web site, which is located at otelco.com.

[Richard Clark:]

Thank you, Dru. Good morning to everyone joining us this morning for an update on Otelco's fourth quarter 2020 operational and financial results. I hope that you and your extended families, both home and work, remained healthy through these challenging times of social distancing, mask, virus testing, and vaccine. I appreciate the opportunity this morning to update you today on Otelco's results and activities. Let's start with an update on Otelco's actions during the COVID-19 pandemic. We've had an essential role to provide critical data and voice services to our customer's needs at all times, but especially now as working, learning, and playing home serves a vital role in affecting the spread of the virus. Since the outbreak, Otelco has adjusted our operations as needed to mitigate the potential risk related to COVID-19 to our employees and our customers, while continuing to provide communication services needed by our customers. As more vaccines become available, we expect our workers to be designated as essential, allowing them to register more quickly for vaccination, leading to fewer employees needing to work from home and lower risk from spreading the virus. The measures implemented by the company allowed us to experience no significant adverse impact on the results of operations in 2020. We like our customers look forward to the time when life returns to something closer to the pre-COVID-19 conditions. Turning to our pending acquisition by Oak Hill Capital, you may be a little frustrated the transaction has not closed yet allowing you to receive the $11.75 per share in cash. All regulatory filings have been made and where required hearing scheduled. Each jurisdiction has its own schedule for issuing a required approval. Our latest estimate is that all approval will be finalized and released in the next four to six weeks. Closing will occur as quickly as possible after the last order is published. In the interim, under contract with Oak Hill, we have already started the process necessary to build new growth fiber, engineering more than 800 miles through February, and beginning all the nitty-gritty work which proceeds fiber installation.

[Curtis Garner:]

Thank you, Richard. We appreciate everybody joining us today. The press release we issued yesterday contains the details of our fourth quarter results and our 10-K filing last night provides the details of our 2020 results. There were no significant changes in the trends reflected in the results for the quarter. I'll mention a few financial highlights for fourth quarter, and then we can take everyone's questions. Unless, otherwise noted, every comparison does against the same period in the previous year. Total revenues, as Richard mentioned, decreased to 0.5% to $15.5 million from $15.6 million. The decrease was primarily due to the decrease in residential local services and traditional access revenue affected by the FCC's intercarrier compensation order. These were partially offset by an increase in Internet services. The breakdown of revenue for fourth quarter compared to fourth quarter of 2019 local services decreased 5.5% to $4.5 million from $4.7 million, network access revenue decreased 5.6% to $4.9 million from $5.2 million, Internet revenue increased 13.5% to $4.1 million from $3.6 million, transport services revenue was basically unchanged at $1.1 million, video and security revenue was basically unchanged at $0.7 million, and managed services revenue was basically unchanged from $0.2 million.

[Operator:]

[Richard Clark:]

We'd like to thank you and appreciate you joining us this morning. Please stay healthy.

[Operator:]

And that will conclude today's conference. Thank you for your participation. You may now disconnect.