HickoryTech (Nasdaq: HTCO) reported on Thursday that Q3 revenue rose 1 percent year-over-year to $45.8 million due to ongoing gains in its fiber and data business segment.
Despite seeing top line revenue gains, the telco's net income declined 18 percent year-over-year to $1.7 million, while earnings per share declined 19 percent to 13 cents per diluted share due to revenue declines in its Telecom segment and added depreciation expense companywide.
On a year-to-date basis, revenue was $136.6 million, up 10 percent over the nine months ended Sept. 30, 2011. Earnings, however, declined 15 percent to $5.8 million over the same nine-month period in 2011, and earnings per share of 43 cents were down 16 percent from last year.
"We continued to achieve solid growth in our fiber and data business in the third quarter and year-to-date, providing overall top-line growth, despite declines in our Telecom business," said John Finke, HickoryTech's president and CEO, in the earnings release. "The addition of IdeaOne to our operations is providing the growth we expected and we are on track to complete the integration in the fourth quarter."
Here's a breakdown of HickoryTech's key segment results:
Fiber and data services: With revenues rising 36 percent year-over-year to $15.7 million, HickoryTech's fiber and data services segment was the shining jewel in its Q3 results. The telco attributes the strong performance to success in both the retail and wholesale transport and data services and the addition of IdeaOne Telecom's assets, which it acquired in March. Fiber and Data revenue, excluding IdeaOne operations, rose 8 percent year-over-year. Operating income increased 27 percent year-over-year to $2.4 million.
Equipment Segment: Due to lower equipment installations, HickoryTech's Equipment Segment declined 9 percent year-over-year to $15 million. However, for the nine-month period that ended in September 2012, Equipment Segment revenue increased 17 percent over 2011. Equipment sales decreased 9 percent compared to Q3 2011, and support services revenue decreased 3 percent in the same period.
Telecom Segment: With expected declines in network access, local voice revenue and bill processing revenue, Q3 Telecom Segment revenue declined 12 percent to $15.7 million. Net income also declined 54 percent to $800,000 in the quarter. As seen with all wireline telcos this quarter, local service revenues declined 12 percent year-over-year due to ongoing access line losses and regulatory reforms. Besides local voice services, broadband revenue, which includes DSL, Internet, data and TV, also declined 5 percent to $4.9 million year-over-year. Finally, Network access revenue was down 15 percent year-over-year to $4.7 million due to three factors: the expiration of interstate infrastructure support reimbursements; the cancelation of a conferencing company contract; and the initial impacts of industry-wide access reform regulation and access line and minute-of-use erosion.
Including its IdeaOne acquisition, HickoryTech made some minor updates to its 2012 outlook. The company's revenue forecast of $177 million to $183 million remains unchanged, while they lowered their net income outlook to the range of $7.3 million to $8.6 million.
HickoryTech was trading at $9.95 in Friday morning trading on the NASDAQ stock exchange.
- see the earnings release
Special report: Wireline telecom earnings in the third quarter
HickoryTech Q2 revenue up 9% to $43.8M on strong business services sales
HickoryTech's Q1 revenue up 22% on strong fiber, data sales
HickoryTech completes acquisition of IdeaOne
HickoryTech acquires IdeaOne Telecom, bulks up broadband, business holdings
HickoryTech's Enventis enters telepresence service game