Consolidated Communications Holdings
Oct 30, 2014

Consolidated Communications Reports Third Quarter 2014 Results

MATTOON, Ill., Oct. 30, 2014 (GLOBE NEWSWIRE) -- Consolidated Communications Holdings, Inc. (Nasdaq:CNSL) reported results for the third quarter 2014.

Third quarter financial summary:

"Our strategic growth areas continue to perform well led by a 4.7% year over year increase in commercial and carrier revenues," said Bob Currey, Chairman and Chief Executive Officer. "We are continuing our transition away from legacy regulated revenues and into a premier provider of business and broadband solutions to all of our customer groups."

"On October 16th we closed on the acquisition of Enventis Corporation and achieved approximately $4.5 million in annual synergies. The acquisition strengthens our market diversification and fiber driven strategy, and positions us well for the future with an attractive dividend and an improved capital structure," Currey concluded.

Operating Statistics at September 30, 2014, Compared to September 30, 2013.

  Period Ended September 30,    
  2014 2013 Increase/(decrease) %
         
Data connections 261,027 252,506  8,521 3.4%
Video connections 111,179 109,892  1,287 1.2%
ILEC access lines 245,185 259,605 (14,420) (5.6%)
Voice connections (non-ILEC) 118,950 124,418  (5,468) (4.4%)
Total connections 736,341 746,421 (10,080) (1.4%)

"We were pleased with the results of the $200.0 million offering in unsecured senior notes that we raised to pay off the outstanding debt of Enventis," said Steve Childers, Chief Financial Officer. "We used the excess proceeds to buy back $46.8 million of our outstanding 10 7/8% unsecured notes resulting in over $2.0 million of annual interest savings."  

Cash Available to Pay Dividends

For the quarter, cash available to pay dividends, or CAPD, was $21.4 million, and the dividend payout ratio was 72.9%. At September 30, 2014, cash and cash equivalents were $4.9 million. The Company made capital expenditures of $25.6 million during the quarter.  

Financial Highlights for the Third Quarter Ended September 30, 2014 

Financial Highlights for the Nine Months Ended September 30, 2014 

Financial Guidance

The Company is updating its full year guidance to include the Enventis acquisition. The figures below include Enventis as if we had owned the business for the entire 2014 fiscal year.

($ in millions) 2014 Pro Forma Guidance 
Cash Interest Expense $78.0 to $80.0
Cash Income Taxes $12.0 to $14.0
Capital Expenditures $129.0 to $133.0

Dividend Payments

On October 27, 2014, the Company's board of directors declared its next quarterly dividend of $0.38738 per common share, which is payable on February 2, 2015 to stockholders of record at the close of business on January 15, 2015. This will represent the 38th consecutive quarterly dividend paid by the Company. 

Conference Call Information 

The Company will host a conference call today at 11:00 a.m. Eastern Time / 10:00 a.m. Central Time to discuss third quarter earnings and developments with respect to the Company. The call is being webcast and archived on the "Investor Relations" section of the Company's website at http://www.consolidated.com. If you do not have internet access, the conference call dial-in number is 1-877-374-3981 with pass code 16943251. International parties can access the call by dialing 1-253-237-1158. A telephonic replay of the conference call will also be available starting three hours after completion of the call until November 6, 2014 at midnight Eastern Time. To hear the replay, parties in the United States and Canada should call 1-855-859-2056 and international parties should call 1-404-537-3406. 

Use of Non-GAAP Financial Measures

This press release, as well as the conference call, includes disclosures regarding "EBITDA", "adjusted EBITDA", "cash available to pay dividends" and the related "dividend payout ratio", "total net debt to last twelve month adjusted EBITDA coverage ratio", "adjusted diluted net income per share" and "adjusted net income attributable to common stockholders", all of which are non-GAAP financial measures and described in this section as not being in compliance with Regulation S-X. Accordingly, they should not be construed as alternatives to net cash from operating or investing activities, cash and cash equivalents, cash flows from operations, net income or net income per share as defined by GAAP and are not, on their own, necessarily indicative of cash available to fund cash needs as determined in accordance with GAAP. In addition, not all companies use identical calculations, and the non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. A reconciliation of the differences between these non-GAAP financial measures and the most directly comparable financial measures presented in accordance with GAAP is included in the tables that follow.

Adjusted EBITDA is comprised of EBITDA, adjusted for certain items as permitted or required by the lenders under our credit agreement in place at the end of each quarter in the periods presented. The tables that follow include an explanation of how adjusted EBITDA is calculated for each of the periods presented with the reconciliation to net income. EBITDA is defined as net earnings before interest expense, income taxes, depreciation and amortization on a historical basis.   

Cash available to pay dividends represents adjusted EBITDA plus cash interest income less (1) cash interest expense, (2) capital expenditures and (3) cash income taxes; this calculation differs in certain respects from the similar calculation used in our credit agreement. 

We present adjusted EBITDA, cash available to pay dividends and the related dividend payout ratio for several reasons. Management believes adjusted EBITDA, cash available to pay dividends and the dividend payout ratio are useful as a means to evaluate our ability to fund our estimated uses of cash (including interest on our debt) and pay dividends. In addition, we have presented adjusted EBITDA, cash available to pay dividends and the dividend payout ratio to investors in the past because they are frequently used by investors, securities analysts and other interested parties in the evaluation of companies in our industry, and management believes presenting them here provides a measure of consistency in our financial reporting. Adjusted EBITDA and cash available to pay dividends, referred to as Available Cash in our credit agreement, are also components of the restrictive covenants and financial ratios contained in our credit agreement that requires us to maintain compliance with these covenants and limit certain activities, such as our ability to incur debt and to pay dividends. The definitions in these covenants and ratios are based on adjusted EBITDA and cash available to pay dividends after giving effect to specified charges. In addition, adjusted EBITDA, cash available to pay dividends and the dividend payout ratio provide our board of directors with meaningful information to determine, with other data, assumptions and considerations, our dividend policy and our ability to pay dividends under the restrictive covenants in our credit agreement and to measure our ability to service and repay debt.  We present the related "total net debt to last twelve month adjusted EBITDA coverage ratio" principally to put other non-GAAP measures in context and facilitate comparisons by investors, security analysts and others; this ratio differs in certain respects from the similar ratio used in our credit agreement. These measures differ in certain respects from the ratios used in our Senior Notes indenture. 

These non-GAAP financial measures have certain shortcomings. In particular, adjusted EBITDA does not represent the residual cash flows available for discretionary expenditures, since items such as debt repayment and interest payments are not deducted from such measure. Similarly, while we may generate cash available to pay dividends, we are not required to use any such cash to pay dividends, and the payment of any dividends is subject to declaration by our board of directors, compliance with applicable law and the terms of our credit agreement. Because adjusted EBITDA is a component of the dividend payout ratio and the ratio of total net debt to last twelve month adjusted EBITDA, these measures are also subject to the material limitations discussed above. In addition, the ratio of total net debt to last twelve month adjusted EBITDA is subject to the risk that we may not be able to use the cash on the balance sheet to reduce our debt on a dollar-for-dollar basis. Management believes these ratios are useful as a means to evaluate our ability to incur additional indebtedness in the future. 

We present the non-GAAP measures adjusted diluted net income per share and adjusted diluted net income attributable to common stockholders because our net income and net income per share are regularly affected by items that occur at irregular intervals or are non-cash items. We believe that disclosing these measures assists investors, securities analysts and other interested parties in evaluating both our company over time and the relative performance of the companies in our industry.

About Consolidated

Consolidated Communications Holdings, Inc. is a leading communications provider within its eleven state operations. Headquartered in Mattoon, IL, the Company has been providing services in many of its markets for over a century. The Company leverages its advanced fiber optic network and multiple data centers to offer a wide range of communications services, including data, voice, video, managed services, cloud computing and wireless backhaul.

Safe Harbor 

The Securities and Exchange Commission ("SEC") encourages companies to disclose forward-looking information so that investors can better understand a company's future prospects and make informed investment decisions.  Certain statements in this press release are forward-looking statements and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995.  These forward-looking statements reflect, among other things, our current expectations, plans, strategies, and anticipated financial results.  There are a number of risks, uncertainties, and conditions that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements.  These risks and uncertainties include our ability to successfully integrate Enventis' operations and realize the synergies from the acquisition, as well as a number of factors related to our business, including economic and financial market conditions generally and economic conditions in our service areas; various risks to shareholders of not receiving dividends and risks to our ability to pursue growth opportunities if we continue to pay dividends according to the current dividend policy; various risks to the price and volatility of our common stock; changes in the valuation of pension plan assets; the substantial amount of debt and our ability to repay or refinance it or incur additional debt in the future; our need for a significant amount of cash to service and repay the debt and to pay dividends on the common stock; restrictions contained in our debt agreements that limit the discretion of management in operating the business; regulatory changes, including changes to subsidies, rapid development and introduction of new technologies and intense competition in the telecommunications industry; risks associated with our possible pursuit of acquisitions; system failures; losses of large customers or government contracts; risks associated with the rights-of-way for the network; disruptions in the relationship with third party vendors; losses of key management personnel and the inability to attract and retain highly qualified management and personnel in the future; changes in the extensive governmental legislation and regulations governing telecommunications providers and the provision of telecommunications services; telecommunications carriers disputing and/or avoiding their obligations to pay network access charges for use of our network; high costs of regulatory compliance; the competitive impact of legislation and regulatory changes in the telecommunications industry; and liability and compliance costs regarding environmental regulations. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements are discussed in more detail in our and Enventis' filings with the Securities and Exchange Commission, including our and Enventis' reports on Form 10-K and Form 10-Q. Many of these circumstances are beyond our ability to control or predict.  Moreover, forward-looking statements necessarily involve assumptions on our part.  These forward-looking statements generally are identified by the words "believe", "expect", "anticipate", "estimate", "project", "intend", "plan", "should", "may", "will", "would", "will be", "will continue" or similar expressions.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Consolidated Communications Holdings, Inc. and its subsidiaries to be different from those expressed or implied in the forward-looking statements.  All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements that appear throughout this press release.  Furthermore, forward-looking statements speak only as of the date they are made.  Except as required under the federal securities laws or the rules and regulations of the Securities and Exchange Commission, we disclaim any intention or obligation to update or revise publicly any forward-looking statements.  You should not place undue reliance on forward-looking statements.

Consolidated Communications Holdings, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except par value)
(Unaudited)
     
  September 30,  December 31, 
  2014  2013 
   
ASSETS     
Current assets:     
Cash and cash equivalents   $ 4,890  $ 5,551
Restricted cash   204,803  -- 
Accounts receivable, net   51,388  52,033
Income tax receivable   804  9,796
Deferred income taxes   8,905  7,960
Prepaid expenses and other current assets   13,756  12,380
Total current assets   284,546  87,720
Property, plant and equipment, net   859,620  885,362
Investments   113,594  113,099
Goodwill   603,446  603,446
Other intangible assets   33,018  40,084
Deferred debt issuance costs, net and other assets   19,231  17,667
Total assets   $ 1,913,455  $ 1,747,378
     
LIABILITIES AND SHAREHOLDERS' EQUITY     
Current liabilities:     
Accounts payable   $ 4,991  $ 4,885
Advance billings and customer deposits   23,512  25,934
Dividends payable   15,607  15,520
Accrued compensation   17,534  22,252
Accrued interest   12,433  3,524
Accrued expense   33,008  35,173
Current portion of long-term debt and capital lease obligations   9,809  9,751
Current portion of derivative liability   877  660
Total current liabilities   117,771  117,699
     
Long-term debt and capital lease obligations   1,407,354  1,212,134
Deferred income taxes   180,204  179,859
Pension and other post-retirement obligations   60,822  75,754
Other long-term liabilities   12,463  9,593
Total liabilities   1,778,614  1,595,039
     
Shareholders' equity:     
Common stock, par value $0.01 per share; 100,000,000 shares authorized, 40,289,154 and 40,065,246, shares outstanding as of September 30, 2014 and December 31, 2013, respectively   403  401
Additional paid in capital   130,055  148,433
Accumulated other comprehensive loss, net   (407)  (1,000)
Noncontrolling interest  4,790  4,505
Total shareholders' equity  134,841  152,339
Total liabilities and shareholders' equity  $ 1,913,455  $ 1,747,378
 
 
Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
     
  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2014  2013  2014  2013 
     
Net revenues   $ 149,040  $ 150,773  $ 449,724  $ 453,621
Operating expenses:         
Cost of services and products   56,435  55,780  167,653  166,774
Selling, general and administrative expenses   32,659  33,715  97,945  100,385
Financing and other transaction costs   729  355  1,995  712
Depreciation and amortization   34,968  34,756  106,515  104,306
Income from operations   24,249  26,167  75,616  81,444
Other income (expense):         
Interest expense, net of interest income   (20,721)  (20,632)  (60,280)  (65,929)
Other income, net   8,608  9,000  25,102  26,452
Income from continuing operations before income taxes   12,136  14,535  40,438  41,967
Income tax expense   4,387  4,205  14,380  15,219
Income from continuing operations   7,749  10,330  26,058  26,748
         
Income (loss) from discontinued operations, net of tax   --   92  --   (156)
Gain on sale of discontinued operations, net of tax   --   1,333  --   1,333
Total discontinued operations   --   1,425  --   1,177
         
Net income   7,749  11,755  26,058  27,925
Less: net income attributable to noncontrolling interest   107  61  285  254
         
Net income attributable to common shareholders   $ 7,642  $ 11,694  $ 25,773  $ 27,671
         
Net income per common share - basic and diluted         
Income from continuing operations  $ 0.19  $ 0.26  $ 0.63  $ 0.65
Loss from discontinued operations, net of tax  --   0.03  --   0.03
Net income per basic and diluted common share attributable to common shareholders  $ 0.19  $ 0.29  $ 0.63  $ 0.68
 
 
Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited) 
        
  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2014  2013  2014  2013 
OPERATING ACTIVITIES    
Net income  $ 7,749  $ 11,755  $ 26,058  $ 27,925
Loss from discontinued operations, net of tax  --  (1,425)  --  (1,177)
Net income from continuing operations  7,749  10,330  26,058  26,748
Adjustments to reconcile net income to cash provided by operating activities:        
Depreciation and amortization  34,968  34,756  106,515  104,306
Deferred income taxes  (423)  (205)  (958)  (329)
Cash distributions from wireless partnerships in excess of/(less than) earnings  (807)  (1,152)  (784)  (2,996)
Non- cash stock-based compensation  948  794  2,672  2,234
Amortization of deferred financing  1,773  584  3,114  1,703
Other adjustments, net  (311)  (1,060)  1,592  1,609
Changes in operating assets and liabilities, net  2,422  12,660  (4,845)  (9,222)
Net cash provided by continuing operations  46,319  56,707  133,364  124,053
Net cash used in discontinued operations  --   (315)  --   (3,412)
Net cash provided by operating activities  46,319  56,392  133,364  120,641
INVESTING ACTIVITIES        
Purchase of property, plant and equipment, net  (25,592)  (27,961)  (76,038)  (80,584)
Purchase of investments  --   (107)  --   (238)
Proceeds from sale of assets  313  61  1,563  111
Restricted cash related to acquisition  (149,917)  --   (149,917)  -- 
Net cash used by continuing operations  (175,196)  (28,007)  (224,392)  (80,711)
Net cash used in discontinued operations  --   2,379  --   2,331
Net cash used in investing activities  (175,196)  (25,628)  (224,392)  (78,380)
FINANCING ACTIVITIES        
Proceeds from bond offering  200,000  --   200,000  -- 
Restricted cash on bond offering  (54,886)    (54,886)  
Proceeds on issuance of long-term debt  2,000  8,000  28,000  57,000
Payment of capital lease obligation  (164)  (144)  (481)  (368)
Payment on long-term debt  (2,275)  (20,310)  (32,825)  (63,930)
Payment on financing costs  (183)  --   (2,707)  -- 
Dividends on common stock  (15,607)  (15,539)  (46,734)  (46,526)
Net cash used in financing activities  128,885  (27,993)  90,367  (53,824)
Net change in cash and cash equivalents  8  2,771  (661)  (11,563)
Cash and cash equivalents at beginning of period  4,882  3,520  5,551  17,854
Cash and cash equivalents at end of period  $ 4,890  $ 6,291  $ 4,890  $ 6,291
 
 
Consolidated Communications Holdings, Inc.
Consolidated Revenue by Category
(Dollars in thousands)
(Unaudited) 
     
  Three Months Ended  Nine Months Ended 
 September 30,  September 30, 
  2014  2013  2014  2013 
     
Operating Revenues        
Local calling services  $ 26,219  $ 27,049  $ 79,143  $ 79,923
Network access services  25,499  26,929  78,513  85,474
Subsidies  12,616  13,657  39,027  40,584
Long distance services  4,645  4,810  14,185  14,636
Data, video and internet services  69,675  68,163  207,457  202,063
Other services  10,386  10,165  31,399  30,941
Total operating revenue  $ 149,040  $ 150,773  $ 449,724  $ 453,621
 
 
Consolidated Communications Holdings, Inc.
Schedule of Adjusted EBITDA Calculation
(Dollars in thousands)
(Unaudited)
         
  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2014  2013  2014  2013 
Net income from continuing operations  $ 7,749  $ 10,330  $ 26,058  $ 26,748
Add (subtract):        
Income tax expense  4,387  4,205  14,380  15,219
Interest expense, net  20,721  20,632  60,280  65,929
Depreciation and amortization  34,968  34,756  106,515  104,306
EBITDA  67,825  69,923  207,233  212,202
         
Adjustments to EBITDA (1):        
Other, net (2)  (9,190)  (8,070)  (25,677)  (22,220)
Investment distributions (3)  7,564  8,555  25,356  24,316
Non-cash compensation (4)  948  794  2,672  2,234
Adjusted EBITDA  $ 67,147  $ 71,202  $ 209,584  $ 216,532
         
Footnotes for Adjusted EBITDA:        
(1) These adjustments reflect those required or permitted by the lenders under our credit agreement.
(2) Other, net includes the equity earnings from our investments, dividend income, income attributable to noncontrolling interests in subsidiaries, acquisition and non-recurring related costs and certain miscellaneous items.
(3) Includes all cash dividends and other cash distributions received from our investments.
(4) Represents compensation expenses in connection with our Restricted Share Plan, which because of the non-cash nature of the expenses are excluded from adjusted EBITDA. 
     
Consolidated Communications Holdings, Inc.
Cash Available to Pay Dividends
(Dollars in thousands)
(Unaudited)
    
 Three Months Ended
September 30, 2014
Nine Months Ended
September 30, 2014
Adjusted EBITDA  $ 67,147  $ 209,584
     
- Cash interest expense  (18,673)  (56,114)
- Capital expenditures  (25,592)  (76,038)
- Cash income taxes  (1,465)  (5,165)
     
Cash available to pay dividends  $ 21,417  $ 72,267
     
Dividends Paid  $ 15,607  $ 46,734
Payout Ratio 72.9% 64.7%
     
* The above calculation excludes the principal payments on the amortization of our debt and excludes interest paid and held in escrow on the bonds raised for the Enventis acquisition.
 
 
Consolidated Communications Holdings, Inc.
Total Net Debt to LTM Adjusted EBITDA Ratio
(Dollars in thousands)
(Unaudited)
  
Summary of Outstanding Debt 
Term loan, net of discount $4,096  $ 899,079
Revolving loan  15,000
Senior unsecured notes, net of discount of $1,557  298,443
Capital leases  4,641
Total debt as of September 30, 2014  $ 1,217,163
Less cash on hand  (4,890)
Total net debt as of September 30, 2014  $ 1,212,273
   
Adjusted EBITDA for the last twelve months ended September 30, 2014  $ 279,558
   
Total Net Debt to last twelve months  
Adjusted EBITDA  4.34x
   
* Excludes $200 million of bonds held in escrow for the Enventis acquisition.
 
 
Consolidated Communications Holdings, Inc.
Adjusted Net Income and Per Share Attributable to Common Stockholders
(in thousands, except per share amounts)
(Unaudited)
         
  Three Months Ended  Nine Months Ended 
  September 30,  September 30,  September 30,  September 30, 
  2014  2013  2014  2013 
Net income attributable to common shareholders  $ 7,642  $ 11,694  $ 25,773  $ 27,671
Transaction and severance related costs, net of tax  615  879  2,401  2,793
Loss related to sale of building, net of tax  --  --  476  --
Gain on the sale of discontinued operations, net of tax  --  (1,333)  --  (1,333)
Non-cash stock compensation, net of tax 605 565 1,721 1,423
Adjusted net income attributable to common stockholders  $ 8,862  $ 11,805  $ 30,372  $ 30,554
         
Weighted average number of shares outstanding  39,877  39,755  39,877  39,755
Adjusted diluted net income per share  $ 0.22  $ 0.30  $ 0.76  $ 0.77
         
* Calculations above assume a 36.2 and 28.9 percent effective tax rate for the three months ended September 30, 2014 and 2013, respectively and 35.6 and 36.3 percent for the nine months ended September 30, 2014 and 2013, respectively.
 
Consolidated Communications Holdings, Inc.
Key Operating Statistics
(Unaudited)
           
 September 30,June 30,March 31,December 31,September 30,
  2014  2014  2014  2013  2013 
ILEC access lines          
Residential 139,754 143,060 145,814 147,247 148,811
Business 105,431 106,926 108,247 109,558 110,794
Total local access lines  245,185 249,986 254,061 256,805 259,605
Quarterly change  (1.9%) (1.6%) (1.1%) (1.1%) (1.1%)
           
Voice Connections [1,2]          
Residential 68,393 70,276 72,080 73,219 74,588
Business 50,557 50,273 50,092 50,214 49,830
Total voice connections 118,950 120,549 122,172 123,433 124,418
Quarterly change  (1.3%) (1.3%) (1.0%) (0.8%) (1.3%)
           
Data and Internet Connections [2] 261,027 259,225 258,244 255,231 252,506
Quarterly change  0.7% 0.4% 1.2% 1.1% 0.5%
Res. penetration of marketable homes 30.3% 30.4% 30.5% 30.3% 30.2%
           
Video Connections [2] 111,179 111,211 110,805 110,621 109,892
Quarterly change  (0.0%) 0.4% 0.2% 0.7% 0.7%
Res. penetration of marketable homes 20.4% 20.4% 20.5% 20.5% 20.5%
           
Total Connections 736,341 740,971 745,282 746,090 746,421
Quarterly change  (0.6%) (0.6%) (0.1%) (0.0%) (0.4%)
           
Network Stats - Marketable Homes          
Fiber homes 206,665 205,545 203,273 201,720 199,826
HFC homes 94,609 94,598 94,568 94,559 94,540
Copper homes 399,547 399,547 399,547 399,547 399,547
Total 700,821 699,690 697,388 695,826 693,913
           
Data marketable homes 688,393 687,262 684,960 683,398 681,485
% of total marketable homes 98% 98% 98% 98% 98%
Video marketable homes 536,298 535,167 532,853 530,834 528,921
% of total marketable homes 77% 76% 76% 76% 76%
           
Note: The figures in the table, excluding ILEC access lines, do not entirely include SureWest business subscribers. 
           
[1] These include voice lines outside the ILECs and Voice-over-IP inside the ILECs.
[2] These connections are both residential and business (excluding SureWest business subscribers). They include services both inside and outside the ILECs. 
           
Enventis Corporation
Consolidated Statements of Income
(unaudited)
             
 Three Months Ended
September 30
 Nine Months Ended
September 30
 
(Dollars in thousands, except share data)2014 2013%
Change
2014 2013%
Change
Operating revenue:            
Services $ 34,861  $ 34,239 2% $ 104,745  $ 101,875 3%
Equipment 19,549  12,849 52% 43,628  41,123 6%
Total operating revenue 54,410  47,088 16% 148,373  142,998 4%
             
Costs and expenses:            
Cost of sales, excluding depreciation and amortization 16,940  10,929 55% 37,841  35,011 8%
Cost of services, excluding depreciation and amortization 17,873  17,406 3% 51,868  50,976 2%
Selling, general and administrative expenses 8,406  6,953 21% 23,696  21,449 10%
Asset impairment --   --    --   638  
Depreciation and amortization 7,467  7,514 -1% 22,557  21,775 4%
Total costs and expenses 50,686  42,802 18% 135,962  129,849 5%
           
Operating income 3,724  4,286 -13% 12,411  13,149 -6%
             
Interest and other income 3  1 200% 11  16 -31%
Interest expense (1,034)  (1,155) -10% (3,004)  (3,425) -12%
Income before income taxes 2,693  3,132 -14% 9,418  9,740 -3%
Income tax provision 1,091  1,270 -14% 3,832  3,931 -3%
             
Net income $ 1,602  $ 1,862 -14% $ 5,586  $ 5,809 -4%
 
 
Enventis Corporation
Reconciliation of Non-GAAP Measures
         
 Three Months Ended
September 30
Nine Months Ended
September 30
(Dollars in thousands)2014 20132014 2013
Reconciliation of consolidated net income to EBITDA:        
Net income $ 1,602  $ 1,862 $ 5,586  $ 5,809
Add:        
Depreciation and amortization 7,467  7,514 22,557  21,775
Interest expense 1,034  1,155 3,004  3,425
Income taxes 1,091  1,270 3,832  3,931
EBITDA 11,194  11,801 34,979  34,940
Adjustments allowed under our credit agreement:        
Merger Costs/Asset impairment 933  5 1,844  638
EBITDA per Enventis credit agreement $ 12,127  $ 11,806 $ 36,823  $ 35,578
 
Enventis' EBITDA is comprised of EBITDA, adjusted for certain items as permitted under its credit agreement in place at the end of the third quarter. The non-GAAP figure is presented due to its frequent use by investors, securities analysts and other interested parties in the evaluation of companies in our industry. 
CONTACT: Matt Smith

         VP of Finance & Treasurer

         217-258-2959

         matthew.smith@consolidated.com