 ONEONTA, Ala., Aug. 04, 2020 GLOBE NEWSWIRE -- Otelco Inc. NASDAQ: OTEL Otelco or the Company, a wireline telecommunications services provider in Alabama, Maine, Massachusetts, Missouri, New Hampshire, Vermont and West Virginia, today announced operational and financial results for its second quarter ended June 30, 2020. Key operational and financial highlights for Otelco include: Total revenues of 15.5 million for second quarter 2020. Operating income of 2.8 million for second quarter 2020. Net income of 1.4 million for second quarter 2020. Consolidated EBITDA as defined below of 5.0 million for second quarter 2020. Scheduled principal payments of 1.1 million in second quarter 2020 reduced debt to 68.0 million at the end of second quarter 2020.SECOND QUARTER 2020 RESULTS The Company continued to execute on its strategy of fiber deployment and data speed enhancement in second quarter 2020. Revenues for second quarter 2020 declined 0.2 million, or 1.2, from second quarter 2019, primarily from a reduction in voice services and access fees, partially offset by increases in internet, transport services, video and security and managed services. Cost of services decreased by 0.2 million, or 2.6, from second quarter 2019. Selling, general and administrative expense, excluding 0.7 million in Board project expenses related to Oak Hill Capitals Oak Hill plan to acquire the Company see details below, was unchanged from second quarter 2019. Interest expense declined 0.4 million reflecting lower interest rates and the reduction in principal outstanding under the Companys credit agreement. Other income increased 0.1 million, reflecting the sale of unused land in Vermont. Net income was 1.4 million in second quarter 2020, compared to 1.7 million in second quarter 2019. The Company invested 2.2 million in its network and operations during second quarter 2020. Consolidated EBITDA was 5.0 million for second quarter 2020, compared to 5.7 million for the same period in the previous year. Excluding the Board project expense, Consolidated EBITDA was 5.7 million for second quarter 2020. The ratio of debt, net of cash, to Consolidated EBITDA was 2.65, reflecting the scheduled payments made on the debt. Basic net income per share was 0.42 for second quarter 2020, compared to 0.50 per share in the same period of 2019.COVID-19 UPDATE A novel strain of coronavirus COVID-19 was first identified in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. Otelco has closely monitored developments in the states it serves and taken the necessary steps to mitigate the potential risks related to the COVID-19 pandemic to the Company, its employees and its customers. Otelco provides essential voice and data services to its customers. To protect its employees while continuing to provide the communications services needed by our customers, the Company adapted installation and repair service processes to limit customer contact and minimize employee contact with other employees.As COVID-19 restrictions have been eased in some states, Otelco has begun having employees who have been working from home since March 2020 return to their normal work locations while continuing to empower the Companys technicians to reschedule any in-person installation or repair if they determine that circumstances at the location present a health risk. During second quarter 2020, the Company saw an increase in customer calls for new and changed service, payment arrangements and for service troubles, a trend which has recently begun to return to more normal levels.As a result of the measures implemented by the Company, no significant adverse impact on results of operations or its financial position at June 30, 2020, has occurred. While the Company is beginning to return to a new normal for operations, the full extent of the future impacts of COVID-19 on its operations is uncertain. An increase of COVID-19 cases in the Companys service areas could have a material adverse impact on financial results and business operations of the Company, including the timing and ability of Company to collect accounts receivable and procure materials and services from its suppliers. As there is a return to more normal operations, the Company will continue to work with customers who have been affected by the coronavirus on payment strategies that avoid discontinuance of voice and data services while allowing for the Company to receive payment for services provided.Commenting on these COVID-19 operational changes at Otelco, Richard Clark, President and Chief Executive Officer, stated Otelcos employees have successfully navigated the challenges presented by the coronavirus to serve our customers while protecting themselves and their families. The crisis does not appear to be over, but many of our communities are beginning the process of opening their local economies. We will adapt to balance service provision and safety as we return to a new normal, which is expected to continue to evolve for some time into the future. ALABAMA FIBER ALLATION SERVING CUSTOMERS; CABLE UPGRADE TO DOCSIS 3.1 TO BE COMPLETED IN FOURTH QUARTER 2020; VDSL UPGRADES FOR QUALIFYING CUSTOMERS In June 2019, the Company announced plans to install 113 miles of additional fiber in Alabama by early 2020, focusing on the northern part of its territory in and around Arab, Alabama. All of the planned fiber is in service and marketing is underway to 4,167 Arab locations. Fiber-To-The-Premise FTTP provides up to one gigabit speed internet capability. Through June, 817 customers in the Arab market have upgraded their existing service or signed up for the new Lightwave fiber service. Equipment is being deployed in New England service territories to support higher speed VDSL service and standardize on the same platform that provides service in Alabama and Missouri locations. In the southern part of its Alabama territory in and around Oneonta, Alabama, where Otelco is also the cable provider, work to upgrade its hybrid fiber coax network to DOCSIS 3.1 is ongoing. Upon completion of this project, Otelco expects that all its cable customers will also gain access to gigabit internet speeds, similar to speeds available over a FTTP network.Both the VDSL upgrade project and DOCSIS 3.1 upgrade project have been affected by COVID-19. Travel restrictions and other precautions have limited resource availability to do hands-on work. While other project work took place during quarantine periods, the Company is now able to resume work on all fronts of these network enhancement projects.The Company also continues to increase the speed of its Lightwave FTTP service and is now offering gigabit speeds in several of its FTTP communities in Maine, as well as in Oneonta, Alabama. Lightwave Gigabit is being expanded throughout the Companys FTTP service areas later this year, though this initiative has also experienced delays due to COVID-19 restrictions.Commenting on these developments, Clark pointed out that the Company continues to increase the speed of its Lightwave FTTP service and looks forward to expanding its fiber network in 2021 using additional investment from Oak Hill see details below. Clark said, Our offer of gigabit speeds in several of our FTTP communities in Maine, as well as the FTTP network in Oneonta, Alabama, has been well received by our customers. While gigabit service is probably not necessary for most customers today, the higher speeds not available through standard DSL, but now available through our network improvements, allow customers to support multiple devices simultaneously as more work and study at home requirements are instituted. Our network is positioned to also provide for future increased requirements.NETWORK INVESTMENT Otelco invested 12.4 million in 2019 to grow its fiber distribution network and improve its broadband capabilities. The Company is connecting customers to the 268 new miles of fiber in its service territories and leveraging VDSL technology where deployed. During 2020, the Company continues to invest in VDSL technology to meet or exceed its revised federal Alternative Connect America Model requirements while also standardizing on a single company-wide broadband access platform. Network investment in 2020 also includes upgrading cable equipment to DOCSIS 3.1 and expanding availability of Gigabit service in the fiber footprint.BALANCE SHEET At the end of second quarter 2020, the Company reported cash of 8.5 million compared to 3.1 million at the end of 2019, including 3.0 million in Paycheck Protection Program loan proceeds received in April 2020. Total assets increased from 120.7 million at the end of 2019 to 126.6 million at June 30, 2020. During the first half of 2020, the Company invested 5.5 million in improving its network and operational capabilities, compared to 4.4 million during the same period in 2019. The Companys leverage ratio as defined in its credit agreement of consolidated indebtedness to Consolidated EBITDA was 3.03 at the end of second quarter 2020, reflecting the use of additional cash generated from business operations to improve its network. Its ratio of debt, net of cash, to Consolidated EBITDA is 2.65. The interest rate margin on its loan will increase from 4.25 to 4.50 for 2020, while the current one-month LIBOR rate is projected to remain well below 1.0 for the balance of 2020.SUMMARY Otelcos employees have remained engaged in meeting our customers needs in the face of the risks and uncertainties brought on by the COVID-19 pandemic, noted Clark. New work routines and locations presented challenges for making and keeping commitments. 