NTELOS Holdings Corp. Reports Third Quarter 2014 Results

-Tenth Consecutive Quarter of Positive Net Postpay Adds

-Launched Equipment Installment Plan in August 2014

News provided by

NTELOS Holdings Corp.

Oct 31, 2014, 06:00 ET

WAYNESBORO, Va., Oct. 31, 2014 /PRNewswire/ -- NTELOS Holdings Corp. (the "Company,"NASDAQ: NTLS), a leading regional provider of nationwide wireless voice and data communications announced today operating and financial results for its third quarter ended September 30, 2014.

Third Quarter 2014 Operational Update

  • Expanded 4G LTE network to cover 3.2 million of 6.0 million total covered POPs in footprint as of September 30, 2014;
  • Successfully introduced Equipment Installment Plan ("EIP") on August 15, 2014 with program gaining increasing popularity;
  • Operating revenues were $119.6 million for the third quarter 2014; compared to $130.9 million (or $121.9 million when excluding the one-time Strategic Network Alliance ("SNA") settlement) for the third quarter 2013, reflecting an increase in retail revenues and wholesale revenues consistent with our expectations following the May 2014 signing of the Sprint SNA amendment; and
  • Adjusted EBITDA was $32.8 million for the third quarter 2014, compared to $45.6 million (or $36.0 million when excluding the one-time impact from the SNA settlement) for the third quarter 2013.

"In what continues to be a challenging competitive environment, nTelos is focused on executing on our partnership with Sprint and strengthening our retail sales operations. The launch of our EIP midway through the third quarter helped us achieve our tenth consecutive quarter of positive net postpay adds and our thirteenth consecutive quarter of positive total net ports," said Michael A. Huber, Chairman of the Board of NTELOS Holdings Corp. "We are also working diligently to improve our processes, drive additional operational efficiencies and optimize our retail offerings. Overall, we remain optimistic that nTelos is on track to execute our strategic objectives."

Subscriber Update

Total Subscribers

  • Total subscribers were 457,200 as of September 30, 2014, compared to 457,100 for the same period of 2013;
  • Total subscriber gross additions for the third quarter 2014 were 41,400, compared to 44,500 for the same period of 2013; and
  • Total net subscriber additions (losses) for the third quarter 2014 were (900), compared to 2,300 for the same period of 2013.

Postpay Subscribers

  • Postpay subscriber gross additions for the third quarter 2014 were 20,800, compared to 20,000 for the third quarter 2013 and 20,400 for the second quarter 2014;
  • Net postpay subscriber additions were 1,900 for the third quarter 2014, compared to 400 for the third quarter 2013 and 3,300 for the second quarter 2014;
  • Postpay churn for the third quarter 2014 was 2.0%, compared to 2.2%, for the third quarter 2013;
  • ARPA was $134.18 for the third quarter 2014, compared to $136.91 for the same period in 2013; and
  • As of September 30, 2014, total postpay subscribers were 310,200.

Prepay Subscribers

  • Prepay subscriber gross additions for the third quarter 2014 were 20,600, compared to 24,500 for the third quarter 2013 and 18,600 for the second quarter 2014;
  • Net prepay subscriber additions (losses) were (2,800) for the third quarter 2014, compared to 1,900 for the third quarter 2013 and (2,900) for the second quarter 2014;
  • Prepay churn for the third quarter 2014 was 5.3%, compared to 4.8% for the third quarter 2013; and
  • As of September 30, 2014, total prepay subscribers were 147,000.

Net Income

Net income after net income attributable to noncontrolling interests was $0.8 million, or $0.04 per diluted share, for the third quarter 2014, compared to $10.6 million, or $0.48 per diluted share, for the third quarter 2013.

Business Outlook

For the year ending December 31, 2014, the Company is narrowing its full year 2014 Adjusted EBITDA guidance to between $128.0 million and $132.0 million and lowering its full year 2014 capital expenditures guidance to be approximately $105.0 million.

Conference Call

The Company will host a conference call with investors and analysts to discuss its third quarter 2014 results this morning, October 31, 2014, at 10:00 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 November 14, 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.

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 457,200 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

NTELOS Holdings Corp.

Condensed Consolidated Balance Sheets



(Unaudited)

(Unaudited)

(In thousands)

September 30, 2014

December 31, 2013

ASSETS





Current Assets





Cash

$

105,788

$

88,441

Restricted cash

2,167

2,167

Accounts receivable, net

38,737

37,741

Inventories and supplies

19,655

23,962

Deferred income taxes

8,522

10,650

Prepaid expenses

11,951

15,891

Other current assets

935

4,916


187,755

183,768

Securities and Investments

1,522

1,499

Property, Plant and Equipment, net

335,637

319,376

Intangible Assets





Goodwill

63,700

63,700

Radio spectrum licenses

131,825

131,834

Customer relationships and trademarks, net

5,282

6,985

Deferred Charges and Other Assets

11,539

9,089

Total Assets

$

737,260

$

716,251

LIABILITIES AND EQUITY





Current Liabilities





Current portion of long-term debt

$

5,835

$

5,410

Accounts payable

30,537

24,748

Dividends payable

—

9,034

Accrued expenses and other current liabilities

39,943

40,399


76,315

79,591

Long-Term Debt

520,779

484,956

Other Long-Term Liabilities

110,242

107,911

Equity

29,924

43,793

Total Liabilities and Equity

$

737,260

$

716,251

NTELOS Holdings Corp.

Condensed Consolidated Statements of Income



Three Months Ended
September 30,

Nine Months Ended
September 30,


(Unaudited)

(Unaudited)

(In thousands, except per share amounts)

2014

2013

2014

2013

Operating Revenues

$

119,638

$

130,912

$

359,515

$

370,116

Operating Expenses











Cost of sales and services

56,881

49,580

159,963

141,020

Customer operations

25,381

26,502

78,383

78,321

Corporate operations

8,580

10,850

31,610

31,294

Depreciation and amortization

18,473

16,559

57,469

55,458

Gain on sale of intangible assets

—

—

—

(4,442)


109,315

103,491

327,425

301,651

Operating Income

10,323

27,421

32,090

68,465

Other Expense











Interest expense

(8,371)

(7,480)

(24,644)

(22,232)

Other expense, net

(29)

(430)

(1,194)

(649)


(8,400)

(7,910)

(25,838)

(22,881)

Income before Income Taxes

1,923

19,511

6,252

45,584

Income Taxes

767

8,340

2,517

18,464

Net Income

1,156

11,171

3,735

27,120

Net Income Attributable to Noncontrolling Interests

(352)

(588)

(1,161)

(1,658)

Net Income Attributable to NTELOS Holdings Corp.

$

804

$

10,583

$

2,574

$

25,462

Earnings per Share Attributable to NTELOS Holdings Corp.:











Basic

$

0.04

$

0.50

$

0.12

$

1.21

Weighted average shares outstanding - basic

21,119

21,047

21,100

20,987

Diluted

$

0.04

$

0.48

$

0.12

$

1.17

Weighted average shares outstanding - diluted

21,894

21,910

21,706

21,708

Cash Dividends Declared per Share - Common Stock

$

—

$

0.42

$

0.84

$

1.26

NTELOS Holdings Corp.

Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Adjusted EBITDA



Three Months Ended
September 30,

Nine Months Ended
September 30,

(In thousands)

2014

2013

2014

2013

Net income attributable to NTELOS Holdings Corp.

$

804

$

10,583

$

2,574

$

25,462

Net income attributable to noncontrolling interests

352

588

1,161

1,658

Net income

$

1,156

$

11,171

$

3,735

$

27,120

Interest expense

8,371

7,480

24,644

22,232

Income taxes

767

8,340

2,517

18,464

Other expense, net

29

430

1,194

649

Operating income

10,323

27,421

32,090

68,465

Depreciation and amortization

18,473

16,559

57,469

55,458

Gain on sale of intangible assets

—

—

—

(4,442)

Accretion of asset retirement obligations

280

135

926

451

Equity-based compensation

(403)

1,442

2,191

4,223

SNA straight-line adjustment 1

3,065

—

5,108

—

Other 2

1,040

1

3,279

—

Adjusted EBITDA

$

32,778

$

45,558

$

101,063

$

124,155



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 Amended and Restated Sprint agreement and certain employee separation charges.

NTELOS Holdings Corp.

Key Metrics




















Nine Months Ended


Quarter 
Ended:

9/30/2013

12/31/2013

3/31/2014

6/30/2014

9/30/2014

9/30/2013

9/30/2014

Subscribers






















Beginning Subscribers


454,800

457,100

464,600

468,000

458,100

439,600

464,600


Postpay

298,700

298,000

306,700

306,800

308,200

297,400

306,700


Prepay

156,100

159,100

157,900

161,200

149,900

142,200

157,900

Gross Additions


44,500

50,800

45,400

39,000

41,400

133,100

125,800


Postpay

20,000

28,700

20,200

20,400

20,800

56,500

61,400


Prepay

24,500

22,100

25,200

18,600

20,600

76,600

64,400

Disconnections1


42,200

43,300

42,000

38,600

42,300

115,600

122,900


Postpay

19,600

19,800

19,900

17,100

18,900

52,600

55,900


Prepay

22,600

23,500

22,100

21,500

23,400

63,000

67,000

Net Additions (Losses)1


2,300

7,500

3,400

400

(900)

17,500

2,900


Postpay

400

8,900

300

3,300

1,900

3,900

5,500


Prepay

1,900

(1,400)

3,100

(2,900)

(2,800)

13,600

(2,600)

Ending Subscribers 1


457,100

464,600

468,000

458,100

457,200

457,100

457,200


Postpay

298,000

306,700

306,800

308,200

310,200

298,000

310,200


Prepay

159,100

157,900

161,200

149,900

147,000

159,100

147,000

Churn, net 1


3.1

%

3.1

%

3.0

%

2.8

%

3.1

%

2.8

%

2.9

%


Postpay

2.2

%

2.2

%

2.2

%

1.8

%

2.0

%

2.0

%

2.0

%


Prepay

4.8

%

4.9

%

4.6

%

4.5

%

5.3

%

4.6

%

4.8

%

Other Items






















ARPA Statistics




















ARPA

$

136.91

$

136.89

$

137.47

$

137.20

$

134.18

$

133.64

$

136.27

Ending Postpay Accounts

140,200

141,200

138,400

140,500

142,100

140,200

142,100

Postpay Subscribers per Account

2.1

2.2

2.2

2.2

2.2

2.1

2.2

Strategic Network Alliance Revenues (000's) 2




















Billed Revenue

$

48,644

$

39,326

$

39,284

$

37,997

$

38,144

$

128,403

$

115,425

Straight-Line Adjustment

—

—

—

(2,043)

(3,065)




(5,108)

Spectrum Lease Consideration

—

—

—

822

1,234




2,056

SNA Revenues - As Reported

$

48,644

$

39,326

$

39,284

$

36,776

$

36,313

$

128,403

$

112,373

Network Statistics




















Licensed Population (millions)

7.9

8.0

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

1,434

1,444

1,444

1,445

1,446

1,434

1,446


1

During the second 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 leases. We have recognized an equal charge for spectrum lease expense within cost of sales and services.

NTELOS Holdings Corp.

ARPA Reconciliation – Postpay

Average Monthly Revenue per Account (ARPA) 1



Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands, except for accounts and ARPA)

2014

2013

2014

2013

Operating revenues

$

119,638

$

130,912

$

359,515

$

370,116

Less: prepay service revenues

(15,521)

(16,478)

(48,687)

(48,344)

Less: equipment revenues

(9,802)

(6,540)

(23,853)

(18,673)

Less: wholesale and other adjustments

(37,231)

(50,142)

(115,149)

(132,229)

Postpay service revenues

$

57,084

$

57,752

$

171,826

$

170,870

Average number of postpay accounts

141,800

140,600

140,100

142,100

Postpay ARPA

$

134.18

$

136.91

$

136.27

$

133.64


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.

Investor Relations Contacts:
Jeffrey Goldberger / Rob Fink
KCSA Strategic Communications
P: 212-896-1249 / 212-896-1206
Email: [email protected] / [email protected]

SOURCE NTELOS Holdings Corp.

Related Links

http://ir.ntelos.com

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