Hawaiian Telcom Reports Third Quarter 2011 Results

"I am pleased with our third quarter results and particularly proud of what we have been able to accomplish to transform this business since completing our reorganization only a year ago," said Eric K. Yeaman, Hawaiian Telcom's president and CEO. "In spite of the fiercely competitive environment we face, we continue to execute on our strategic plan to profitably grow the business and position the Company for long-term success."

The business channel

"In the business channel, we continue to see good momentum in our IP-based services reflecting the strong value proposition and differentiation of those services, which positions us then for growth in coming quarters. As well, we continued our deployment of fiber facilities to enable 4G capabilities to wireless cell sites completing an additional 46 sites in the quarter increasing to 141 the total number of sites we have deployed year-to-date," Yeaman added.

"Hawaiian Telcom's goal is to be recognized by our clients as Hawaii's leading provider of integrated communications solutions through the execution of our strategy to profitably grow our business, deliver superior customer service, and improve our financial performance," concluded Yeaman.

Third quarter revenue was $97.0 million, compared to $101.5 million in the third quarter of 2010. The $4.5 million decrease was due primarily to lower equipment sales and the impact from access line loss, partially offset by growth from new IP-based business services and HSI. Adjusted EBITDA was $30.9 million, an increase of 6.5 percent year-over-year, due primarily to lower operating expenses as a result of various cost improvement initiatives. The Company generated net income of $7.4 million, or $0.68 per diluted share. 

Third quarter local services revenue was $36.9 million, down 5 percent from the same period a year ago, primarily due to the 5.6 percent year-over-year decline in access lines, which compares favorably to a 6.6 percent decline in third quarter 2010. The improvement in line loss is driven by successful retention and acquisition programs like the Company's "Price for Life" consumer bundle, which offers significant value and increases customer loyalty.

Third quarter network access services revenue was $32.8 million, down 1 percent from the same period a year ago, driven principally by a decline in retail subscriber line and switched access revenue largely due to the overall decline in access lines. The decline was partially offset by growth in special access revenue, which was driven by a 7 percent year-over-year increase in enterprise data services and increased bandwidth demand from wireless carriers. 

Revenue from long distance services was $7.8 million in the third quarter, down 10 percent from the same period a year ago, due to a 5.9 percent year-over-year decline in long distance lines and a decline in average revenue per line as a result of lower minutes of use due to wireless substitution and increased use of VoIP (Voice over Internet Protocol) based technologies for long distance calling.

Third quarter HSI revenue was $8.9 million, up 5 percent from the same period a year ago, driven by a 4.2 percent year-over-year increase in HSI subscribers. Third quarter other services and sales revenue was $9.5 million, down $1.6 million from the same period a year ago, driven primarily by lower levels of sales and installations of customer premise equipment which can vary significantly from quarter to quarter due to timing. 

Hawaiian Telcom Holdco, Inc., headquartered in Honolulu, is Hawaii's leading provider of integrated communications solutions for business and residential clients. With roots in Hawaii beginning in 1883, the Company offers a full range of services including voice, video, Internet, data, wireless, and advanced communication and network services supported by the reach and reliability of its network and Hawaii's only 24/7 state-of-the-art network operations center. With employees statewide sharing a commitment to technology and a passion for delivering superior service, Hawaiian Telcom provides an Always OnSM customer experience. For more information, visit www.hawaiiantel.com .

The ordinary course of business

(2) Adjusted EBITDA is EBITDA plus non-recurring costs not expected to occur regularly in the ordinary course of business. EBITDA is defined as net income plus interest expense, income taxes, depreciation and amortization, and non-cash stock compensation. The Company believes both of these non-GAAP measures, Adjusted EBITDA and EBITDA, are meaningful performance measures for investors because they are used by our Board and management to evaluate performance, enhance comparability between periods and make operating decisions. Our use of Adjusted EBITDA and EBITDA may not be comparable to similarly titled measures used by other companies in the telecommunications industry. A detailed reconciliation of adjusted earnings earlier interest, taxes, depreciation and amortization to comparable GAAP financial measures has been included in the tables distributed with this release.