NTELOS Holdings Corp. Reports Second Quarter 2014 Results
-Renewed Agreement with Sprint extended to December 2022
-Ninth Consecutive Quarter of Positive Net Postpay Adds
WAYNESBORO, Va., July 28, 2014 /PRNewswire/ -- NTELOS Holdings Corp. (the "Company,"NASDAQ: NTLS), a leading regional provider of nationwide wireless voice and data communications and home to the "best value in wireless," announced today operating and financial results for its second quarter ended June 30, 2014.
Second Quarter 2014 Highlights
- Extended and amended Strategic Network Alliance ("SNA") with Sprint until December 2022;
- Launched 4G LTE in Richmond and Norfolk metropolitan markets, providing coverage of 2.8 million POPs as of June 30, 2014;
- Operating revenues were $117.8 million for the second quarter 2014; compared to $119.9 million for the second quarter 2013; and
- Adjusted EBITDA was $34.4 million for the second quarter 2014, compared to $41.2 million for the second quarter 2013.
"The successful extension and expansion of our SNA with Sprint during the quarter marked a significant milestone for nTelos. We are pleased with this outcome as it paves the way for nTelos to build the most robust network in our footprint and to deliver an improved user experience to our retail and wholesale customers," said Michael A. Huber, Chairman of the Board of NTELOS Holdings Corp.
Subscriber Highlights
Total Subscribers
- Total subscribers were 458,100 as of June 30, 2014, compared to 454,800 for the same period of 2013;
- Total subscriber gross additions for the second quarter 2014 were 39,000, compared to 40,100 for the same period of 2013; and
- Total net subscriber additions for the second quarter 2014 were 400, compared to 3,800 for the same period of 2013.
Postpay Subscribers
- Postpay subscriber gross additions for the second quarter 2014 were 20,400, compared to 16,300 for the second quarter 2013 and 20,200 for the first quarter 2014;
- Net postpay subscriber additions were 3,300 for the second quarter 2014, compared to 200 for the second quarter 2013 and 300 for the first quarter 2014;
- Postpay churn for the second quarter 2014 was 1.8%, compared to 1.8% for the second quarter 2013;
- ARPA increased 2.9% to $137.20 for the second quarter 2014, compared to $133.34 for the same period in 2013; and
- As of June 30, 2014, total postpay subscribers were 308,200.
Prepay Subscribers
- Prepay subscriber gross additions for the second quarter 2014 were 18,600, compared to 23,800 for the second quarter 2013 and 25,200 for the first quarter 2014;
- Net prepay subscriber additions (losses) were (2,900) for the second quarter 2014, compared to 3,600 for the second quarter 2013 and 3,100 for the first quarter 2014;
- Prepay churn for the second quarter 2014 was 4.5%, compared to 4.4% for the second quarter 2013; and
- As of June 30, 2014, total prepay subscribers were 149,900.
"During the quarter, we delivered solid results in an increasingly competitive operating environment. We will continue to make strategic investments in the business to improve our operations and to drive increased shareholder value," said Stebbins B. Chandor, EVP & Chief Financial Officer of NTELOS Holdings Corp.
Net Income
Net income after net income attributable to noncontrolling interests was $0.5 million, or $0.02 per diluted share, for the first quarter 2014, compared to $9.4 million, or $0.43 per diluted share, for the second quarter 2013.
Business Outlook
For the year ending December 31, 2014, the Company reiterates its full year 2014 Adjusted EBITDA guidance of between $128.0 million and $135.0 million and full year 2014 capital expenditures guidance of between $110.0 million and $120.0 million.
Conference Call
The Company will host a conference call with investors and analysts to discuss its second quarter 2014 results this morning, July 28, 2014, at 8:00 a.m. ET. To participate, please dial 1-888-317-6002, 1-855-669-9657 in Canada and 1-412-317-1083 for international, approximately 10 minutes before the scheduled start of the call. The conference call and accompanying presentation will also be accessible live on the Investor Relations section of the Company's website at http://ir.ntelos.com.
An archive of the conference call will be available online at http://ir.ntelos.com beginning approximately one hour after the call. A replay will also be available via telephone by dialing 1-877-344-7529, 1-855-669-9658 in Canada or 1-412-317-0088 internationally and entering access code 10049798 beginning approximately one hour after the call and continuing until August 12, 2014.
Non-GAAP Measures
Adjusted EBITDA is defined as net income attributable to NTELOS Holdings Corp. before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, gain/loss on sale of assets and derivatives, net income attributable to noncontrolling interests, other expenses/income, equity-based compensation charges, separation charges, secondary offering costs, net loss from discontinued operations, adjustments for impact of recognizing a portion of the billed SNA contract revenues on a straight line basis and acquisition related charges.
ARPA, or average monthly revenue per account, is computed by dividing service revenues per period by the average number of accounts during that period. Please see the footnotes in the exhibits for a complete definition of this measure.
Adjusted EBITDA is a key metric used by investors to determine if the Company is generating sufficient cash flows to continue to produce shareholder value and provide liquidity for future growth. ARPA provides management with useful information concerning the appeal of the Company's postpay rate plans and service offerings and the Company's performance in attracting and retaining high value customers.
Adjusted EBITDA and ARPA are non-GAAP financial performance measures. They should not be considered in isolation or as an alternative to measures determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Please refer to the exhibits and materials posted on the Company's website for a reconciliation of these non-GAAP financial performance measures to the most comparable measures reported in accordance with GAAP and for a discussion of the presentation, comparability and use of such financial performance measures.
During the quarter, the Company terminated approximately 2,100 postpay subscribers that repeatedly exceeded their terms and conditions relating to permitted usage. Additionally, the Company changed its business rules related to reporting of long-term, non-revenue producing prepay subscribers. This change resulted in approximately 8,200 prepay subscribers being excluded from our ending subscriber base. The impact of these Company-initiated terminations and change in business rules is reflected in the ending subscriber totals as of June 30, 2014 and is not reflected in our disconnections, net additions and churn calculations for the periods ended June 30, 2014.
About NTELOS
NTELOS Holdings Corp. (NTLS), operating through its subsidiaries as "nTelos Wireless," is headquartered in Waynesboro, VA, and provides high-speed, dependable nationwide voice and data coverage for approximately 458,100 retail subscribers based in Virginia, West Virginia and portions of Maryland, North Carolina, Pennsylvania, Ohio and Kentucky. The Company's licensed territories have a total population of approximately 8.0 million residents, of which its wireless network covers approximately 6.0 million residents. The Company is also the exclusive wholesale provider of network services to Sprint Corporation in the western Virginia and West Virginia portions of its territories for all Sprint CDMA and LTE wireless customers.
FORWARD-LOOKING STATEMENTS
Any statements contained in this press release that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. The words "anticipates," "believes," "expects," "intends," "plans," "estimates," "targets," "projects," "should," "may," "will" and similar words and expressions are intended to identify forward-looking statements. Such forward-looking statements reflect, among other things, our current expectations, plans and strategies, and anticipated financial results, all of which are subject to known and unknown risks, uncertainties and factors that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements. Many of these risks are beyond our ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. We do not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise. There are important factors with respect to any such forward-looking statements, including certain risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements. We advise the reader to review in detail the cautionary statements and risk factors included in our SEC filings, including our most recent Annual Report filed on Form 10-K.
Exhibits:
- Condensed Consolidated Balance Sheets
- Condensed Consolidated Statements of Income
- Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Adjusted EBITDA
- Key Metrics
- ARPA Reconciliation – Postpay
Investor Relations Contacts:
Jeffrey Goldberger / Rob Fink
KCSA Strategic Communications
P: 212-896-1249 / 212-896-1206
Email: [email protected] / [email protected]
| NTELOS Holdings Corp. |
|||||
| Condensed Consolidated Balance Sheets |
(Unaudited) |
(Unaudited) |
|||
| June 30, 2014 |
December 31, 2013 |
||||
| (In thousands) |
|||||
| ASSETS |
|||||
| Current Assets |
|||||
| Cash |
$ 108,340 |
$ 88,441 |
|||
| Restricted cash |
2,167 |
2,167 |
|||
| Accounts receivable, net |
41,947 |
37,740 |
|||
| Inventories and supplies |
15,501 |
23,962 |
|||
| Deferred income taxes |
8,970 |
10,650 |
|||
| Prepaid expenses and other current assets |
18,819 |
20,808 |
|||
| 195,744 |
183,768 |
||||
| Securities and Investments |
1,499 |
1,499 |
|||
| Property, Plant and Equipment, net |
320,795 |
319,376 |
|||
| Intangible Assets |
|||||
| Goodwill |
63,700 |
63,700 |
|||
| Radio spectrum licenses |
131,838 |
131,834 |
|||
| Customer relationships and trademarks, net |
5,479 |
6,985 |
|||
| Deferred Charges and Other Assets |
11,117 |
9,089 |
|||
| Total Assets |
$ 730,172 |
$ 716,251 |
|||
| LIABILITIES AND EQUITY |
|||||
| Current Liabilities |
|||||
| Current portion of long-term debt |
$ 5,835 |
$ 5,410 |
|||
| Accounts payable |
21,812 |
33,677 |
|||
| Dividends payable |
9,104 |
9,034 |
|||
| Accrued expenses and other current liabilities |
32,318 |
31,389 |
|||
| 69,069 |
79,510 |
||||
| Long-Term Debt |
521,978 |
484,956 |
|||
| Other Long-Term Liabilities |
109,716 |
107,992 |
|||
| Equity |
29,409 |
43,793 |
|||
| Total Liabilities and Equity |
$ 730,172 |
$ 716,251 |
|||
| NTELOS Holdings Corp. |
||||||
| Condensed Consolidated Statements of Income |
Three Months Ended |
Six Months Ended |
||||
| (Unaudited) |
(Unaudited) |
|||||
| (In thousands, except per share amounts) |
June 30, 2014 |
June 30, 2013 |
June 30, 2014 |
June 30, 2013 |
||
| Operating Revenues |
$ 117,795 |
$ 119,859 |
$ 239,877 |
$ 239,204 |
||
| Operating Expenses |
||||||
| Cost of sales and services |
47,439 |
42,567 |
94,763 |
87,102 |
||
| Customer operations |
31,329 |
29,977 |
65,420 |
60,931 |
||
| Corporate operations |
9,194 |
7,760 |
18,931 |
15,664 |
||
| Depreciation and amortization |
19,929 |
20,443 |
38,996 |
38,899 |
||
| Gain on sale of intangible assets |
- |
(4,442) |
- |
(4,442) |
||
| 107,891 |
96,305 |
218,110 |
198,154 |
|||
| Operating Income |
9,904 |
23,554 |
21,767 |
41,050 |
||
| Other Expense |
||||||
| Interest expense |
(8,315) |
(7,398) |
(16,274) |
(14,759) |
||
| Other income (expense), net |
(92) |
151 |
(1,164) |
(218) |
||
| (8,407) |
(7,247) |
(17,438) |
(14,977) |
|||
| Income before Income Taxes |
1,497 |
16,307 |
4,329 |
26,073 |
||
| Income Taxes |
640 |
6,380 |
1,750 |
10,124 |
||
| Net Income |
857 |
9,927 |
2,579 |
15,949 |
||
| Net Income Attributable to Noncontrolling Interests |
(373) |
(541) |
(809) |
(1,070) |
||
| Net Income Attributable to NTELOS Holdings Corp. |
$ 484 |
$ 9,386 |
$ 1,770 |
$ 14,879 |
||
| Earnings per Share Attributable to NTELOS Holdings Corp.: |
||||||
| Basic |
$ 0.02 |
$ 0.45 |
$ 0.08 |
$ 0.71 |
||
| Weighted average shares outstanding - basic |
21,099 |
21,027 |
21,090 |
20,962 |
||
| Diluted |
$ 0.02 |
$ 0.43 |
$ 0.08 |
$ 0.69 |
||
| Weighted average shares outstanding - diluted |
22,039 |
21,779 |
22,037 |
21,613 |
||
| Cash Dividends Declared per Share - Common Stock |
$ 0.42 |
$ 0.42 |
$ 0.84 |
$ 0.84 |
||
| NTELOS Holdings Corp. |
|||||||||
| Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Adjusted EBITDA |
|||||||||
| (In thousands) |
|||||||||
| Three Months Ended |
Six Months Ended |
||||||||
| June 30, 2014 |
June 30, 2013 |
June 30, 2014 |
June 30, 2013 |
||||||
| Net income attributable to NTELOS Holdings Corp. |
$ 484 |
$ 9,386 |
$ 1,770 |
$ 14,879 |
|||||
| Net income attributable to noncontrolling interests |
373 |
541 |
809 |
1,070 |
|||||
| Net income |
$ 857 |
$ 9,927 |
$ 2,579 |
$ 15,949 |
|||||
| Interest expense |
8,315 |
7,398 |
16,274 |
14,759 |
|||||
| Income taxes |
640 |
6,380 |
1,750 |
10,124 |
|||||
| Other expense (income), net |
92 |
(151) |
1,164 |
218 |
|||||
| Operating income |
$ 9,904 |
$ 23,554 |
$ 21,767 |
$ 41,050 |
|||||
| Depreciation and amortization |
19,929 |
20,443 |
38,996 |
38,899 |
|||||
| Gain on sale of intangible assets |
- |
(4,442) |
- |
(4,442) |
|||||
| Accretion of asset retirement obligations |
331 |
173 |
646 |
316 |
|||||
| Equity-based compensation |
1,283 |
1,460 |
2,594 |
2,781 |
|||||
| SNA straight-line adjustment 1 |
2,043 |
- |
2,043 |
- |
|||||
| Other 2 |
874 |
- |
2,241 |
- |
|||||
| Adjusted EBITDA |
$ 34,364 |
$ 41,188 |
$ 68,287 |
$ 78,604 |
|||||
| 1 |
Adjustment for impact of recognizing a portion of the billed SNA contract revenues on a straight line basis. |
||||||||
| 2 |
Other includes legal and advisory fees related to new Sprint agreement and certain employee |
||||||||
| separation charges. |
|||||||||
| NTELOS Holdings Corp. |
||||||||||
| Key Metrics |
Six Months Ended |
|||||||||
| Quarter Ended: |
6/30/2013 |
9/30/2013 |
12/31/2013 |
3/31/2014 |
6/30/2014 |
6/30/2013 |
6/30/2014 |
|||
| Subscribers |
||||||||||
| Beginning Subscribers |
451,000 |
454,800 |
457,100 |
464,600 |
468,000 |
439,600 |
464,600 |
|||
| Postpay |
299,700 |
298,700 |
298,000 |
306,700 |
306,800 |
297,400 |
306,700 |
|||
| Prepay |
151,300 |
156,100 |
159,100 |
157,900 |
161,200 |
142,200 |
157,900 |
|||
| Gross Additions |
40,100 |
44,500 |
50,800 |
45,400 |
39,000 |
88,600 |
84,400 |
|||
| Postpay |
16,300 |
20,000 |
28,700 |
20,200 |
20,400 |
36,500 |
40,600 |
|||
| Prepay |
23,800 |
24,500 |
22,100 |
25,200 |
18,600 |
52,100 |
43,800 |
|||
| Disconnections 1 |
36,300 |
42,200 |
43,300 |
42,000 |
38,600 |
73,400 |
80,600 |
|||
| Postpay |
16,100 |
19,600 |
19,800 |
19,900 |
17,100 |
33,000 |
37,000 |
|||
| Prepay |
20,200 |
22,600 |
23,500 |
22,100 |
21,500 |
40,400 |
43,600 |
|||
| Net Additions (Losses) 1 |
3,800 |
2,300 |
7,500 |
3,400 |
400 |
15,200 |
3,800 |
|||
| Postpay |
200 |
400 |
8,900 |
300 |
3,300 |
3,500 |
3,600 |
|||
| Prepay |
3,600 |
1,900 |
(1,400) |
3,100 |
(2,900) |
11,700 |
200 |
|||
| Ending Subscribers 1 |
454,800 |
457,100 |
464,600 |
468,000 |
458,100 |
454,800 |
458,100 |
|||
| Postpay |
298,700 |
298,000 |
306,700 |
306,800 |
308,200 |
298,700 |
308,200 |
|||
| Prepay |
156,100 |
159,100 |
157,900 |
161,200 |
149,900 |
156,100 |
149,900 |
|||
| Churn, net 1 |
2.7% |
3.1% |
3.1% |
3.0% |
2.8% |
2.7% |
2.9% |
|||
| Postpay |
1.8% |
2.2% |
2.2% |
2.2% |
1.8% |
1.8% |
2.0% |
|||
| Prepay |
4.4% |
4.8% |
4.9% |
4.6% |
4.5% |
4.5% |
4.6% |
|||
| Other Items |
||||||||||
| ARPA Statistics |
||||||||||
| ARPA |
$ 133.34 |
$ 136.90 |
$ 136.88 |
$ 137.47 |
$ 137.20 |
$ 132.01 |
$ 137.34 |
|||
| Ending Postpay Accounts |
141,400 |
140,200 |
141,200 |
138,400 |
140,500 |
141,400 |
140,500 |
|||
| Postpay Subscribers per Account |
2.1 |
2.1 |
2.2 |
2.2 |
2.2 |
2.1 |
2.2 |
|||
| Strategic Network Alliance Revenues (000's)2 |
||||||||||
| Billed Revenue |
$ 39,607 |
$ 48,644 |
$ 39,326 |
$ 39,284 |
$ 37,997 |
$ 79,759 |
$ 77,281 |
|||
| Straight-Line Adjustment |
- |
- |
- |
- |
(2,043) |
- |
(2,043) |
|||
| Spectrum Lease Consideration |
- |
- |
- |
- |
822 |
- |
822 |
|||
| SNA Revenues - As Reported |
$ 39,607 |
$ 48,644 |
$ 39,326 |
$ 39,284 |
$ 36,776 |
$ 79,759 |
$ 76,060 |
|||
| Network Statistics |
||||||||||
| Licensed Population (millions) |
7.9 |
7.9 |
8.0 |
8.0 |
8.0 |
7.9 |
8.0 |
|||
| Covered Population (millions) |
6.0 |
6.0 |
6.0 |
6.0 |
6.0 |
6.0 |
6.0 |
|||
| Total Cell Sites |
1,432 |
1,434 |
1,444 |
1,444 |
1,445 |
1,432 |
1,445 |
|||
| 1 |
During the quarter, the Company terminated approximately 2,100 postpay subscribers that repeatedly exceeded their terms and conditions relating to permitted usage. Additionally, the Company changed its business rules related to reporting of long-term, non-revenue prepay subscribers. This change resulted in approximately 8,200 prepay subscribers being excluded from our ending subscriber base. The impact of these Company-initiated terminations and change in business rules is reflected in our ending subscriber totals as of June 30, 2014, and is not reflected in our disconnections, net additions and churn calculations for the periods ended June 30, 2014. |
|||||||||
| 2 |
Effective 5/1/14, SNA Revenues include the impact of recognizing the fixed fee element of SNA contract revenues on a straightline basis, which is a reduction of billed revenue, and the non-cash consideration attributable to spectrum lease. We have recognized an equal charge for spectrum lease expense within cost of sales and services. |
|||||||||
| NTELOS Holdings Corp. |
||||||||
| ARPA Reconciliation - Postpay |
Three Months Ended |
Six Months Ended |
||||||
| Average Monthly Revenue per Account (ARPA) 1 |
June 30, 2014 |
June 30, 2013 |
June 30, 2014 |
June 30, 2013 |
||||
| (In thousands, except for accounts and ARPA) |
||||||||
| Operating revenues |
$ 117,795 |
$ 119,859 |
$ 239,877 |
$ 239,204 |
||||
| Less: prepay service revenues |
(16,206) |
(16,182) |
(33,166) |
(31,866) |
||||
| Less: equipment revenues |
(6,560) |
(5,499) |
(14,051) |
(12,137) |
||||
| Less: wholesale and other adjustments |
(37,900) |
(41,179) |
(77,918) |
(82,097) |
||||
| Postpay service revenues |
$ 57,129 |
$ 56,999 |
$ 114,742 |
$ 113,104 |
||||
| Average number of postpay accounts |
138,800 |
142,500 |
139,200 |
142,800 |
||||
| Postpay ARPA |
$ 137.20 |
$ 133.34 |
$ 137.34 |
$ 132.01 |
||||
| 1 |
Average monthly revenue per account (ARPA) is computed by dividing postpay service revenues per period by the average number of postpay accounts during that period. ARPA as defined may not be similar to ARPA measures of other companies, is not a measurement under GAAP and should be considered in addition to, but not as a substitute for, the information contained in the Company's consolidated statements of operations. The Company closely monitors the effects of new rate plans and service offerings on ARPA in order to determine their effectiveness. ARPA provides management useful information concerning the appeal of NTELOS rate plans and service offerings and the Company's performance in attracting and retaining high-value customers. |
|||||||
SOURCE NTELOS Holdings Corp.
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