NTELOS Holdings Corp. Reports Third Quarter 2010 Operating Results
NTELOS Net Income of $10.8 million, or $0.26 per share
Wireless Postpay Net Subscriber Additions of 2,405
Record Wireline Adjusted EBITDA of $19.7 million
Company Declares Quarterly Dividend
WAYNESBORO, Va.--(BUSINESS WIRE)-- NTELOS Holdings Corp. (NASDAQ: NTLS), a leading provider of wireless and wireline communications services (branded as NTELOS) in seven Mid-Atlantic states, today announced operating results for its third quarter of 2010.
Operating highlights for the quarter include:
- Operating revenues of $134.3 million
- Adjusted EBITDA (a non-GAAP measure) of $55.1 million, representing a 41% margin
- Wireless postpay subscriber revenues up $1.2 million from second quarter 2010
- Wireline Adjusted EBITDA of $19.7 million, representing a 58% margin
“Our postpay subscriber development efforts continued to gain momentum and to show positive results for the third quarter,” said James A. Hyde, CEO of NTELOS Holdings Corp. “The net gain of more than 2,400 was our best postpay performance in six quarters, driven by the highest gross additions over that same time period and a much improved churn rate. Wireline continued to perform solidly for the quarter, setting another record for Adjusted EBITDA at $19.7 million.”
Recent Developments
Declaration of Dividend: On November 2, 2010, the Board of Directors of NTELOS Holdings Corp. declared a quarterly cash dividend on its common stock in the amount of $0.28 per share to be paid on January 14, 2011 to stockholders of record on December 14, 2010.
FiberNet Acquisition: The Company expects to close on the acquisition of the FiberNet business from One Communications Corp. by year-end 2010. FiberNet service revenues and adjusted EBITDA for the first nine months of 2010 were approximately $58 million and $19 million, respectively. The acquisition remains subject to receiving approval from the FCC and the West Virginia Public Service Commission (all other relevant state public service commission approvals have been obtained). The transaction has been granted early termination under the Hart-Scott-Rodino Act. The purchase agreement is subject to termination if the acquisition is not completed before December 31, 2010.
Business Segment Highlights
Wireless
- Wireless operating revenues for the third quarter 2010 were $100.4 million, up 1% from second quarter 2010 due primarily to a $0.7 million increase in wholesale revenues. Subscriber revenues were $66.0 million in third quarter 2010 compared to $66.2 million in the previous quarter. Adjusted EBITDA for Wireless was $36.4 million for the third quarter 2010 with a margin of 36%. Revenues from the Sprint wholesale agreement were $27.1 million for third quarter 2010, supported by the $9.0 million per month minimum. The calculated revenues underlying the minimum increased $1.9 million from second quarter 2010 to $26.2 million for third quarter 2010, representing a 19% increase from the same quarter last year. Calculated revenues exceeded the $9 million monthly minimum for the month of October 2010, the first time since the travel data rate reset became effective July 1, 2009.
- Retail wireless subscribers were 433,698 at September 30, 2010. Postpay subscriber net additions were 2,405, the best performance in six quarters, with 305,680 postpay subscribers at quarter-end. Wireless gross subscriber additions for third quarter 2010 were 38,935. Total and postpay churn rates were significantly improved from the third quarter 2009, with total subscriber churn of 3.42% and postpay monthly subscriber churn of 2.09%. Prepay subscribers at September 30, 2010 were 128,018.
- Postpay ARPU was $57.53 for the third quarter of 2010 with postpay data ARPU continuing solid growth, increasing $3.80, or 37%, from $10.26 in third quarter 2009 to $14.06 in third quarter 2010. Sequentially, postpay data ARPU was up 6%, or $0.83, compared to second quarter 2010.
“We are encouraged by our third quarter postpay results,” said Hyde. “Postpay sales of 21,451 were the best since first quarter 2009 and churn has improved 30 basis points from third quarter last year. We continue to focus on the improvement of our direct distribution channels and the expansion of our indirect distribution channels and we expect continued growth in the coming quarters.”
Wireline
- Wireline operating revenues for the third quarter 2010 were $33.8 million, up 8% from third quarter 2009. Adjusted EBITDA for Wireline was $19.7 million for the third quarter 2010, up 6% from the same quarter last year.
- RLEC: RLEC revenues for the third quarter of 2010 were $13.9 million, down 3% from third quarter 2009 as an increase in tandem switched access revenues from other carriers only partially offset a decline in access lines. RLEC adjusted EBITDA, with a margin of 75%, was $10.5 million for third quarter 2010, compared to $10.0 million in second quarter 2010 and $11.1 million in third quarter 2009.
- Competitive Wireline: Revenues from wireline strategic products increased approximately $3.2 million, or 23% from third quarter 2009 to $17.2 million in third quarter 2010. This improvement is due to increases related to the Allegheny fiber acquisition, as well as customer growth and continued growth in data connectivity and bandwidth demand. Broadband growth in the RLEC footprint continued with a 2.5% year-over-year customer gain, increasing customer penetration from 52% at September 30, 2009 to 58% at September 30, 2010. Adjusted EBITDA for Competitive Wireline was $9.2 million for the third quarter 2010, an increase of 22% over third quarter 2009, reflecting revenue growth and a margin increase which improved from 44% in third quarter 2009 to 46% for third quarter 2010.
“Our wireline business continues to deliver on all fronts,” stated Hyde. “We look forward to closing on the FiberNet transaction during the fourth quarter and welcoming the FiberNet employees to Team nTelos. The opportunities the FiberNet acquisition provides to our high-bandwidth data product offerings positions wireline for accelerated growth into the future.”
Business Outlook
The Company will provide 2010 financial guidance updates on the Third Quarter 2010 Earnings Conference Call scheduled for November 5, 2010 at 10:00 A.M. ET.
Statements are based on management’s current expectations. These statements are forward-looking and actual results may differ materially. Please see “Special Note from the Company Regarding Forward-Looking Statements.”
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 interest rate swap agreement, net income attributable to noncontrolling interests, other expenses/income, equity based compensation charges, acquisition related charges, and charges from voluntary early retirement and workforce reduction plans.
ARPU, or average monthly revenues per subscriber/unit with service, is computed by dividing service revenues per period by the weighted average number of subscribers with service during that period. Please see the footnotes in the exhibits for a complete definition of this measure.
Adjusted EBITDA and ARPU are non-GAAP financial performance measures. They should not be considered in isolation or as an alternative to measures determined in accordance with 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. (NASDAQ: NTLS) is an integrated communications provider with headquarters in Waynesboro, VA. NTELOS provides products and services to customers in Virginia, West Virginia, Pennsylvania, Kentucky, Ohio, Tennessee, Maryland and North Carolina, including nationwide 3G wireless voice and data services, local and long distance telephone, high capacity transport, networking and high-speed Broadband data services and IPTV-based video products. Detailed information about NTELOS is available at www.ntelos.com.
SPECIAL NOTE FROM THE COMPANY REGARDING FORWARD-LOOKING STATEMENTS
Any statements contained in this presentation 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. 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, include, but are not limited to: rapid development and intense competition in the telecommunications industry; adverse economic conditions; operating and financial restrictions imposed by our senior credit facility; our cash and capital requirements; declining prices for our services; the potential to experience a high rate of customer turnover; our dependence on our affiliation with Sprint Nextel (“Sprint”); a potential increase in our roaming rates and wireless handset subsidy costs; the potential for Sprint to build networks in our markets; federal and state regulatory fees, requirements and developments; loss of our cell sites; the rates of penetration in the wireless telecommunications industry; our reliance on certain suppliers and vendors; the successful completion of the pending acquisition of the FiberNet business, and the effect thereof on our business; our ability to successfully integrate the operations of the FiberNet business upon its acquisition; the failure to realize synergies and cost savings from the pending acquisition of the FiberNet business or delay in realization thereof; and other unforeseen difficulties that may occur. These risks and uncertainties are not intended to represent a complete list of all risks and uncertainties inherent in our business, and should be read in conjunction with the more detailed cautionary statements and risk factors included in our SEC filings, including our Annual Reports filed on Forms 10-K.
Exhibits:
- Condensed Consolidated Balance Sheets
- Condensed Consolidated Statements of Operations
- Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Operating Income
- Reconciliation of Operating Income to Adjusted EBITDA
Additional exhibits include:
- Summary of Operating Results
- Customer Summary
- Wireless Customer Detail
- Wireless Key Performance Indicators (KPI)
- Wireless ARPU Reconciliation
These exhibits are available in the Company’s 8-K filing with the SEC or on the Company’s Investor Relations website.
| NTELOS Holdings Corp. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| September 30, 2010 | December 31, 2009 | |||||||
| (in thousands) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 188,844 | $ | 51,097 | ||||
| Accounts receivable, net | 44,589 | 45,767 | ||||||
| Inventories and supplies | 6,131 | 10,870 | ||||||
| Other receivables | 881 | 1,705 | ||||||
| Income tax receivable | 9,379 | 4,368 | ||||||
| Prepaid expenses and other | 11,416 | 10,196 | ||||||
| 261,240 | 124,003 | |||||||
| Securities and investments | 1,172 | 1,023 | ||||||
| Property, plant and equipment, net | 512,487 | 500,975 | ||||||
| Other Assets | ||||||||
| Goodwill | 113,041 | 113,041 | ||||||
| Franchise rights | 32,000 | 32,000 | ||||||
| Other intangibles, net | 55,575 | 64,360 | ||||||
| Radio spectrum licenses in service | 115,449 | 115,449 | ||||||
| Radio spectrum licenses not in service | 16,857 | 16,850 | ||||||
| Deferred charges and other assets | 14,287 | 12,845 | ||||||
| 347,209 | 354,545 | |||||||
| Total Assets | $ | 1,122,108 | $ | 980,546 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current Liabilities | ||||||||
| Current portion of long-term debt | $ | 8,193 | $ | 6,876 | ||||
| Accounts payable | 28,504 | 30,756 | ||||||
| Dividends payable | 11,680 | 11,604 | ||||||
| Advance billings and customer deposits | 20,468 | 20,006 | ||||||
| Accrued compensation | 7,675 | 5,583 | ||||||
| Accrued operating taxes | 3,895 | 3,070 | ||||||
| Other accrued liabilities | 5,863 | 4,832 | ||||||
| 86,278 | 82,727 | |||||||
| Long-Term Liabilities | ||||||||
| Long-term debt | 741,396 | 622,032 | ||||||
| Other long-term liabilities | 111,071 | 99,678 | ||||||
| 852,467 | 721,710 | |||||||
| Equity | 183,363 | 176,109 | ||||||
| Total Liabilities and Equity | $ | 1,122,108 | $ | 980,546 | ||||
| NTELOS Holdings Corp. | |||||||||||||||||
| Condensed Consolidated Statements of Operations | Three months ended: | Nine months ended: | |||||||||||||||
| (in thousands, except per share amounts) | September 30, 2010 | September 30, 2009 | September 30, 2010 | September 30, 2009 | |||||||||||||
| Operating Revenues | $ | 134,267 | $ | 135,686 | $ | 404,140 | $ | 416,351 | |||||||||
| Operating Expenses 1 | |||||||||||||||||
| Cost of sales and services (exclusive of items shown separately below) | 43,582 | 44,610 | 128,086 | 134,306 | |||||||||||||
| Customer operations | 29,360 | 29,015 | 88,829 | 87,199 | |||||||||||||
| Corporate operations 2,3 | 8,563 | 6,130 | 27,177 | 23,092 | |||||||||||||
| Depreciation and amortization | 21,736 | 22,678 | 65,329 | 68,927 | |||||||||||||
| Accretion of asset retirement obligations | 219 | 399 | 556 | 960 | |||||||||||||
| 103,460 | 102,832 | 309,977 | 314,484 | ||||||||||||||
| Operating Income | 30,807 | 32,854 | 94,163 | 101,867 | |||||||||||||
| Other Income (Expenses) | |||||||||||||||||
| Interest expense | (11,124 | ) | (8,657 | ) | (31,238 | ) | (20,447 | ) | |||||||||
| Gain on interest rate swap agreement | - | 662 | - | 2,100 | |||||||||||||
| Other expense | (645 | ) | (876 | ) | (614 | ) | (933 | ) | |||||||||
| 19,038 | 23,983 | 62,311 | 82,587 | ||||||||||||||
| Income Tax Expense | 7,847 | 9,517 | 25,009 | 32,910 | |||||||||||||
| Net Income | 11,191 | 14,466 | 37,302 | 49,677 | |||||||||||||
| Net Income Attributable to Noncontrolling Interests | (368 | ) | (196 | ) | (1,146 | ) | (669 | ) | |||||||||
| Net Income Attributable to NTELOS Holdings Corp. | $ | 10,823 | $ | 14,270 | $ | 36,156 | $ | 49,008 | |||||||||
| Basic and Diluted Earnings per Common Share Attributable to NTELOS Holdings Corp. Stockholders: | |||||||||||||||||
| Income per share - basic | $ | 0.26 | $ | 0.34 | $ | 0.88 | $ | 1.16 | |||||||||
| Income per share - diluted | $ | 0.26 | $ | 0.34 | $ | 0.87 | $ | 1.16 | |||||||||
| Weighted average shares outstanding - basic | 41,364 | 42,161 | 41,299 | 42,163 | |||||||||||||
| Weighted average shares outstanding - diluted | 41,748 | 42,414 | 41,660 | 42,398 | |||||||||||||
| Cash Dividends Declared per Share - Common Stock | $ | 0.28 | $ | 0.26 | $ | 0.84 | $ | 0.78 | |||||||||
| 1 | Includes equity based compensation charges related to all of the Company’s share-based awards and the Company’s 401(k) matching contributions (commencing June 1, 2009) of $1.5 million and $4.2 million for the three months and nine months ended September 30, 2010, respectively, and $0.7 million and $3.3 million for the three months and nine months ended September 30, 2009, respectively. | |
| 2 | First quarter 2010 included a $0.9 million charge related to severance benefits pursuant to an executive employment agreement. Please see Form 8-K filed with the SEC on March 12, 2010 for additional information. First quarter 2009 included a one-time cash payment of $1.0 million to James A. Hyde, NTELOS' then newly hired president and COO. | |
| 3 | Acquisition related charges represent legal and professional fees related to the pending acquisition of FiberNet. | |
| NTELOS Holdings Corp. | |||||||||||||||||
| Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Operating Income | |||||||||||||||||
| (in thousands) | |||||||||||||||||
| Three months ended: | Nine months ended: | ||||||||||||||||
| September 30, 2009 | September 30, 2010 | September 30, 2009 | September 30, 2010 | ||||||||||||||
| Net income attributable to NTELOS Holdings Corp. | $ | 14,270 | $ | 10,823 | $ | 49,008 | $ | 36,156 | |||||||||
| Net income attributable to noncontrolling interests | 196 | 368 | 669 | 1,146 | |||||||||||||
| Net Income | 14,466 |
|
11,191 | 49,677 | 37,302 | ||||||||||||
| Interest expense | 8,657 | 11,124 | 20,447 | 31,238 | |||||||||||||
| Gain on interest rate swap agreement | (662 | ) | - | (2,100 | ) | - | |||||||||||
| Income taxes | 9,517 | 7,847 | 32,910 | 25,009 | |||||||||||||
| Other expense | 876 | 645 | 933 | 614 | |||||||||||||
| Operating income | $ | 32,854 |
|
$ | 30,807 | $ | 101,867 | $ | 94,163 | ||||||||
| Wireless | $ | 22,974 | $ | 21,702 | $ | 76,375 | $ | 68,844 | |||||||||
| RLEC | 7,327 | 6,933 | 21,534 | 19,740 | |||||||||||||
| Competitive Wireline | 4,227 | 5,214 | 11,491 | 14,690 | |||||||||||||
| Other | (1,674 | ) | (3,042 | ) | (7,533 | ) | (9,111 | ) | |||||||||
| Operating income | $ | 32,854 | $ | 30,807 | $ | 101,867 | $ | 94,163 | |||||||||
| NTELOS Holding Corp. | |||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Operating Income to Adjusted EBITDA | |||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2009 | 2010 | |||||||||||||||||||||||||||||||||||||||
| Wireless | Competitive | Wireless | Competitive | ||||||||||||||||||||||||||||||||||||||
| PCS | RLEC | Wireline | Other | Total | PCS | RLEC | Wireline | Other | Total | ||||||||||||||||||||||||||||||||
| For The Three Months Ended September 30 | |||||||||||||||||||||||||||||||||||||||||
| Operating Income | $ | 22,974 | $ | 7,327 | $ | 4,227 | $ | (1,674 | ) | $ | 32,854 | $ | 21,702 | $ | 6,933 | $ | 5,214 | $ | (3,042 | ) | $ | 30,807 | |||||||||||||||||||
| Depreciation and amortization | 15,685 | 3,736 | 3,245 | 12 | 22,678 | 14,348 | 3,474 | 3,896 | 18 | 21,736 | |||||||||||||||||||||||||||||||
| Sub-total: | 38,659 | 11,063 | 7,472 | (1,662 | ) | 55,532 | 36,050 | 10,407 | 9,110 | (3,024 | ) | 52,543 | |||||||||||||||||||||||||||||
| Accretion of asset retirement obligations | 380 | 6 | 14 | (1 | ) | 399 | 198 | 5 | 15 | 1 | 219 | ||||||||||||||||||||||||||||||
| Equity based compensation | 81 | - | 12 | 614 | 707 | 168 | 93 | 18 | 1,194 | 1,473 | |||||||||||||||||||||||||||||||
| Acquisition related charges 1 | - | - | - | - | - | - | - | 21 | 828 | 849 | |||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 39,120 | $ | 11,069 | $ | 7,498 | $ | (1,049 | ) | $ | 56,638 | $ | 36,416 | $ | 10,505 | $ | 9,164 | $ | (1,001 | ) | $ | 55,084 | |||||||||||||||||||
| Adjusted EBITDA Margin | 37.5 | % | 76.9 | % | 44.3 | % | NM | 41.7 | % | 36.3 | % | 75.4 | % | 46.2 | % | NM | 41.0 | % | |||||||||||||||||||||||
| For The Nine Months Ended September 30 | |||||||||||||||||||||||||||||||||||||||||
| Operating Income | $ | 76,375 | $ | 21,534 | $ | 11,491 | $ | (7,533 | ) | $ | 101,867 | $ | 68,844 | $ | 19,740 | $ | 14,690 | $ | (9,111 | ) | $ | 94,163 | |||||||||||||||||||
| Depreciation and amortization | 48,327 | 11,049 | 9,464 | 87 | 68,927 | 42,981 | 10,535 | 11,755 | 58 | 65,329 | |||||||||||||||||||||||||||||||
| Sub-total: | 124,702 | 32,583 | 20,955 | (7,446 | ) | 170,794 | 111,825 | 30,275 | 26,445 | (9,053 | ) | 159,492 | |||||||||||||||||||||||||||||
| Accretion of asset retirement obligations | 902 | 15 | 43 | - | 960 | 580 | 16 | (41 | ) | 1 | 556 | ||||||||||||||||||||||||||||||
| Equity based compensation | 323 | 153 | 27 | 2,769 | 3,272 | 525 | 276 | 54 | 3,327 | 4,182 | |||||||||||||||||||||||||||||||
| Acquisition related charges 1 | - | - | - | - | - | - | - | 21 | 828 | 849 | |||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 125,927 | $ | 32,751 | $ | 21,025 | $ | (4,677 | ) | $ | 175,026 | $ | 112,930 | $ | 30,567 | $ | 26,479 | $ | (4,897 | ) | $ | 165,079 | |||||||||||||||||||
| Adjusted EBITDA Margin | 39.1 | % | 75.2 | % | 41.9 | % | NM | 42.0 | % | 37.1 | % | 73.5 | % | 45.5 | % | NM | 40.8 | % | |||||||||||||||||||||||
CONTACT:
NTELOS Holdings Corp.
Wesley B. Wampler
Director, Investor Relations
540-949-3447
KEYWORDS: United States North America Virginia
INDUSTRY KEYWORDS: Technology Telecommunications Mobile/Wireless Retail Specialty
MEDIA:
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