News Room

MANKATO, Minn., October 25, 2010 — HickoryTech Corporation (Nasdaq: HTCO) today reported third quarter fiscal 2010 operating results highlighted by strong growth in its Enventis Sector and progress with its fiber expansion plans. HickoryTech’s third quarter revenue totaled $43.5 million, up 25 percent year over year. Net income totaled $5.0 million, or 38 cents per diluted share. A release of income tax reserves added $1.9 million to the third quarter fiscal 2010 net income, and a similar release of tax reserve in the third quarter of fiscal 2009 added $4.4 million. Excluding the income tax release in both years, net income would have increased $1.5 million, or 89 percent over the same quarter one year ago. Pre-tax income for the third quarter 2010 was $5.3 million, an increase of 77 percent compared to a year ago, due to operational success and a decrease in interest expense.

                                 

“We are on track to meet our financial objectives for the year and complete the fiber expansion projects to Sioux Falls, South Dakota and Fargo, North Dakota by year end,” said John Finke, HickoryTech’s president and chief executive officer. “Our business is performing well and I’m pleased with the 53 percent growth in fiber and data services, the strong rebound in our equipment and services business and the 16 percent growth in broadband services.” 

“We are moving forward with implementation plans for our broadband stimulus project following the notification of our $16.8 million U.S. Department of Commerce’s National Telecommunication and Information Administration (NTIA) broadband infrastructure award this past quarter,” said Finke.

                                                                                                   

“While our traditional telephone business remains an important component in our strategy, we continue to transform HickoryTech into a company focused primarily on delivering broadband and business services over our regional fiber optic network,” added Finke. “As we work toward our five-year goal to double the value of our company, we are executing a disciplined growth strategy, one that will increase shareholder value and strengthen our position as a leading communications provider.”

 

As part of HickoryTech’s growth plan, the company is extending its fiber network to Sioux Falls, South Dakota and Fargo, North Dakota and is upgrading its fiber network in Des Moines, Iowa. HickoryTech’s fiber expansion efforts  include a joint construction project with another carrier, which contributed $3.3 million of revenue and $1.9 million of pretax income to third quarter operating results within the Enventis fiber and data product line. These projects will be completed by year-end 2010.

                                                                                                    

Enventis Sector (before intersegment eliminations)

Enventis Sector revenue before eliminations totaled $25.5 million in the third quarter of fiscal 2010, up 45 percent compared to one year ago. Costs and expenses in the Enventis Sector, including depreciation, totaled $22.1 million, an increase of 38 percent year-over-year. Enventis Sector net income totaled $2.0 million, up 125 percent from the $0.9 million reported one year ago. 

Telecom Sector (before intersegment eliminations)

Telecom Sector revenue totaled $18.7 million for the third quarter of fiscal 2010, a 5 percent increase year-over-year, primarily driven from the 16 percent growth in broadband revenue and 35 percent increase in bill processing revenue. Additionally, a one-time Telecom customer settlement of $275,000 increased Other Revenue during the quarter.  Costs and expenses including depreciation totaled $15.6 million, up 8 percent year-over-year. Telecom net income for the quarter totaled $1.8 million, a 10 percent decrease from one year ago.   

Capital expenditures totaled $6.5 million for the third quarter of fiscal 2010, and were $2.5 million higher than the comparable period in fiscal 2009. Enventis Sector capital expenditures totaled $4.8 million and the Telecom Sector capital expenditures were $1.7 million. HickoryTech’s long-term and current debt position, as of September 30, 2010, was $122 million, an increase of $700,000 from the previous quarter ended June 30, 2010. The company’s fiber construction project along with increased equipment sales caused a temporary increase in debt at the end of third quarter. 

                                                                                                               

HickoryTech increased its fiscal 2010 net income guidance and affirmed its previous guidance as follows:

 

HickoryTech will host a conference call and webcast on Tuesday, October 26 at 9 a.m. CT. The dial-in number for the call is 877-774-2369 (U.S. and Canada) and the participant pass code is 15945152. A simultaneous webcast of the call and presentation will be available through a link on HickoryTech’s Investor Relations webpage at http://investor.hickorytech.com.

About HickoryTech
HickoryTech Corporation (dba HickoryTech and Enventis) is a leading integrated communications provider in the markets it serves. With headquarters in Mankato, Minn., the corporation has approximately 450 employees and a regional fiber network with facilities-based operations in Minnesota and Iowa. Enventis serves businesses of all sizes across a five-state region with IP-based voice, data and network solutions. HickoryTech provides bundled residential and business services including high-speed Internet, Digital TV and voice services in its legacy telecom markets. The Company trades on the Nasdaq Stock Exchange (symbol: HTCO). For more information, visit www.hickorytech.com.

Non-GAAP Measures

To supplement the Company’s financial statements presented in accordance with GAAP, the Company provides certain non-GAAP financial measures of financial performance. These non-GAAP measures include earnings before interest, income taxes, depreciation and amortization. The Company’s reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, or superior to, GAAP results. These non-GAAP measures are provided to enhance investors’ overall understanding of the Company’s current financial performance and ability to generate cash flows. In many cases non-GAAP financial measures are used by analysts and investors to evaluate the Company’s performance. Reconciliation to the nearest GAAP measure included in this press release can be found in the financial table included below.  

Forward-looking Statement
Certain statements included in this press release that are not historical facts are "forward-looking statements." Such forward-looking statements are based on current expectations, estimates and projections about the industry in which HickoryTech operates and management's beliefs and assumptions. The forward-looking statements are subject to uncertainties. These statements are not guarantees of future performance and involve certain risks, uncertainties and probabilities. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they were made. HickoryTech undertakes no obligation to update any of its forward-looking statements, except as required by law.