Otelco Inc. (NASDAQ:OTEL) Q3 2019 Earnings Conference Call - Final Transcript

Nov 06, 2019 • 11:30 am ET

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Otelco Inc. (NASDAQ:OTEL) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Otelco's Third Quarter 2019 Earnings Conference Call. Today's conference is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Ms. Dru Anderson. Please go ahead, ma'am.

Executive
Dru Anderson

Thank you, Cody, and welcome to the Otelco conference call to review the company's results for the third quarter ended September 30, 2019. Conducting the call today will be Rob Souza, Chief Executive Officer; Richard Clark, President and Chief Operating Officer; and Curtis Garner, Chief Financial Officer.

Before we start, let me offer the cautionary note that statements made during this call that are not statements of historical or current fact constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could have caused the actual results of the company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements.

In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms believes, belief, expects, intends, anticipates, plans or similar terms to be uncertain and forward-looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the company's filings with the Securities and Exchange Commission.

With that stated, I will now turn the call over to Rob Souza. Please go ahead.

Executive
Robert Souza

Thank you, Dru. Good morning, and welcome to our third quarter 2019 investor call. Richard and I will discuss the third quarter's performance and other key issues affecting our business, and then Curtis will review our financial results. After that, we'll take everyone's questions.

While our results for the third quarter continued to reflect the trends impacting our industry as traditional access revenues and residential RLEC customers decline, they also reflect our strategic focus on increased investment in fiber and other network improvements to bring higher-speed broadband service to our customers, on which Richard will provide an update in just a few minutes.

Total revenue was $15.8 million, a 3% decrease from the third quarter 2018. These results were in line with $15.7 million and $15.8 million in revenue reported for second and first quarter 2019. Third quarter included the FCC's conversion of our Vermont property to ACAM, which included a positive retroactive revenue true-up dating back to January of this year, providing a one-time impact of a little more than $0.1 million.

We were encouraged that third quarter 2019 saw a slower customer churn rate when compared to the previous two quarters. Excluding the impact of the ACAM revenue increases in Vermont and Missouri, the decrease in revenue compared to third quarter 2018 was primarily due to the decrease in residential local services and traditional switch access revenue affected by the FCC's 2011 intercarrier compensation order.

Net income decreased 21.8% to $1.8 million in the third quarter 2019 compared to $2.3 million in the third quarter 2018. Consolidated EBITDA