North State Reports Second Quarter 2016 Results

North State, a leading fiber optic network, cloud and IT services provider, announced today its financial results for the second quarter ended June 30, 2016.

Summary of Selected Financial Data

Quarter Ended June 30, 20161

  • Consolidated net operating revenue (NOR) of $27.8 million, up 20%.2
  • Total strategic revenue3 of $18.2 million, up 37%, and 65% of NOR.2
  • Operating income of $1.7 million, up 59%.
  • Net income of $2.4 million, up 26%.
  • EBITDA of $9.3 million, up 12%, representing a margin of 33%.
  • Earnings per share of $1.05, up 27%.
  • Total cash generation4 of $8.8 million, up 185%.
  • Capital expenditures of $5.1 million, up 2%.
  • Free cash flow5 of $3.7 million, up from negative $1.9 million.

Six Months Ended June 30, 20166

  • Consolidated NOR of $56.5 million, up 23%.2
  • Total strategic revenue3 of $37.1 million, up 44%, and 66% of NOR.2
  • Operating income of $4.3 million, up 40%.
  • Net income of $4.8 million, up 9%.
  • EBITDA of $18.3 million, up 8%, representing a margin of 32%.
  • Earnings per share of $2.09, up 9%.
  • Total cash generation4 of $18.5 million, up 66%.
  • Capital expenditures of $9.3 million, down 28%.
  • Free cash flow5 of $9.2 million, up from negative $1.8 million.

North State CEO Royster Tucker III commented, “North State’s journey forward in the second quarter resulted in strong performance, reflecting positive results as we execute on our strategy of delivering best in class business IT and cloud services and continued fiber network expansion enabling internet speeds of one gigabit per second. For the quarter, nearly 65% of our revenue came from business customers, enabled by our acquisitions in recent years in the data center and IT security space. Our colocation, cloud and IT security services have been a strong contributor to growing this customer base.

“At the same time, we expanded our strategic fiber-focused consumer business, which grew 15% as we expand fiber into new markets and increase penetration in existing markets. In addition, we realized strong operating leverage as we grew the company’s top line.”

Mr. Tucker concluded, “Demand for high-bandwidth IP-based data services is strong and the adoption of cloud services is accelerating. North State’s fiber expansion and IT services portfolio provide an excellent platform for growth.

“We recently partnered with a prominent set of lenders in a new credit facility that strengthens our ability to advance our transition into a leading provider of IT security, cloud and managed services for businesses as well as a strong, fiber-focused product line. In the second half of 2016, we plan to continue to build upon our strategy and leverage the assets we have in order to take advantage of the growing digital landscape.”

For more information, please see 2016 Q2 Earnings Report.

About North State

North State is a technology company focused on inspiring the Internet-driven lifestyle through high touch experiences. Its fiber-delivered, ultrafast Internet and Internet-driven applications enable residential customers and businesses to efficiently and securely take advantage of the Internet. Through its wholly owned subsidiaries, Data Chambers and Stalwart Systems, North
State provides best-in-class data center colocation, customized cloud and IT solutions, managed disaster recovery services, managed security and unified communications. For more information, visit

North State
Andrew Stevenson

Harriet Fried, SVP

1 All comparisons are between the three months ended June 30, 2016 and the three months ended June 30, 2015.
2 Largely due to the acquisition of Stalwart Systems in July of 2015 and revenue growth across all of our strategic services.
3 Total strategic revenue is strategic Internet and communications revenue and all IT services and hardware revenue, for both business and consumer segments.
4 Total cash generation is cash flows from operations plus partnership cash distributions.
5 Free cash flow is total cash generated minus capital expenditures.
6 All comparisons are between the six months ended June 30, 2016 and the six months ended June 30, 2015.