NTELOS Holdings Corp. Reports Third Quarter 2013 Operating Results

-Seventh Consecutive Quarter of Positive Net Adds
-Quarterly Adjusted EBITDA of $45.6 Million
-Company Declares Quarterly Dividend of $0.42 per Share

PR Newswire

WAYNESBORO, Va., Nov. 5, 2013 /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 results for its third quarter ended September 30, 2013.

Third Quarter Highlights

  • Operating revenues for the third quarter 2013 increased 14.4% to $130.9 million, compared to $114.5 million for the same period in 2012;
  • Subscriber revenues increased 14.4% to $73.7 million for the third quarter 2013, compared to $64.4 million for the third quarter 2012;
  • Total subscriber gross additions were 44,500 for the third quarter 2013, compared to 42,400 for the third quarter 2012 and 40,100 for the second quarter 2013; and
  • Total net subscriber additions were 2,300 for the third quarter 2013, marking the seventh straight quarter of positive subscriber growth.

"The favorable settlement with Sprint over disputes related to our Strategic Network Alliance announced last month capped off a successful third quarter of 2013. We believe the settlement ensures that our wholesale revenues will continue at levels consistent with recent quarters and, perhaps more importantly, establishes a foundation from which we will look to extend and expand our relationship," said James A. Hyde, CEO of NTELOS Holdings Corp. "Meantime, we continue to be pleased with the growth of our retail business as we increased subscribers for the seventh straight quarter."

Highlights from Operations

  • Retail revenues, which include subscriber and equipment revenue, increased 12.8% to $80.3 million for the third quarter 2013, compared to $71.1 million for the third quarter 2012;
  • Wholesale and other revenue derived primarily from the Company's Strategic Network Alliance with Sprint were $50.6 million for the third quarter 2013 (inclusive of $9.0 million related to the Sprint settlement), compared to $43.3 million for the third quarter 2012; and
  • Adjusted EBITDA was $45.6 million for the third quarter 2013, compared to $31.9 million for the third quarter 2012.

Total Subscribers

  • Total subscribers were 457,100 as of September 30, 2013, compared to 430,300 for the same period of 2012;
  • Total subscriber gross additions for the third quarter were 44,500, compared to 42,400 for the same period of 2012
  • Blended ARPU increased 6.6% to $54.29 for the third quarter, compared to $50.93 for the same period in 2012; and
  • Total net subscriber additions for the third quarter were 2,300, compared to 5,500 for the same period of 2012.

Postpay Subscribers

  • Postpay subscriber gross additions for the third quarter 2013 were 20,000, compared to 22,000 for the third quarter 2012 and 16,300 for the second quarter 2013; 
  • Net postpay subscriber additions were 400 for the third quarter 2013, compared to 4,900 for the third quarter 2012 and 200 for the second quarter 2013;
  • Postpay churn for the third quarter 2013 was 2.2%, compared to 2.0% for the third quarter 2012 and 1.8% for the second quarter of 2013;
  • Postpay ARPU increased 9.6% to $64.62 for the third quarter, compared to $58.97 for the same period in 2012; and
  • As of September 30, 2013, total postpay subscribers were 298,000.

Prepay Subscribers

  • Prepay subscriber gross additions for the third quarter 2013 were 24,500, compared to 20,400 for the third quarter 2012 and 23,800 for the second quarter 2013;
  • Net prepay subscriber additions were 1,900 for the third quarter 2013, compared to 600 for the third quarter 2012 and 3,600 for the second quarter 2013;
  • Prepay churn for the third quarter 2013 was 4.8%, compared to 4.7% for the third quarter 2012 and 4.4% for the second quarter of 2013;
  • Prepay ARPU increased 0.9% to $34.80 for the third quarter, compared to $34.50 for the same period in 2012; and
  • As of September 30, 2013, total prepay subscribers were 159,100.

Mr. Hyde concluded, "Looking ahead, we are implementing a number of initiatives that we expect will enhance our service offerings and value proposition. Our LTE roll out remains on schedule and we expect to launch the service in our first markets in the coming weeks. As we upgrade our network, we are optimizing our rate plans and expanding our smartphone lineup to better meet our customers' needs and further support the resurgence of our retail business. Finally, as we announced last month, we are expanding our pilot program with DISH Network to provide fixed-mobile broadband services across larger portions of our footprint, with Phase II coverage of approximately 500,000 residents. Overall, we are excited about the direction of our business and will continue to take definitive actions to drive value for all key stakeholders."

Net Income

Net income after net income attributable to noncontrolling interests was $10.6 million, or $0.48 per diluted share, for the third quarter 2013 compared to $4.6 million, or $0.22 per diluted share, for the third quarter 2012.

Declaration of Dividend

On October 23, 2013, the Company's Board of Directors declared a quarterly cash dividend on its common stock in the amount of $0.42 per share to be paid on January 10, 2014 to stockholders of record on December 13, 2013.

Business Outlook

For the year ending December 31, 2013, the Company reiterates its full year 2013 Adjusted EBITDA guidance of between $150.0 million and $155.0 million.  In addition, the Company expects its full year 2013 capital expenditures to be approximately $80.0 million (previous range was $75.0 million and $85.0 million).

Conference Call

The Company will host a conference call with investors and analysts to discuss its third quarter 2013 results this morning, November 5, 2013, at 11:00 a.m. ET. To participate, please dial 1-888-317-6016, 1-855-669-9657 in Canada and 1-412-317-6016 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 10035485 beginning approximately one hour after the call and continuing until November 20, 2013.

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 and business separation charges.

ARPU, or average monthly revenue per user, is computed by dividing service revenues per period by the average number of subscribers 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, provide liquidity for future growth and continue to fund dividends.  ARPU provides management with useful information concerning the appeal of the Company's rate plans and service offerings and the Company's performance in attracting and retaining high value customers.

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 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 457,100 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 7.9 million residents, of which its wireless network covers approximately 6.0 million residents. The Company is also the exclusive wholesale provider of wireless digital PCS services to Sprint Corporation in the Company's western Virginia and West Virginia service area for all Sprint CDMA 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:

  • Consolidated Balance Sheets
  • Consolidated Statements of Operations
  • Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Adjusted EBITDA
  • Key Metrics
  • ARPU Reconciliation

NTELOS Holdings Corp.




Condensed Consolidated Balance Sheets

(Unaudited)


(Unaudited)




September 30, 2013


December 31, 2012

(In thousands)












ASSETS




Current Assets  





Cash

$                110,897


$                 76,197


Restricted cash

2,167


-


Accounts receivable, net

30,832


51,301


Inventories and supplies

14,468


9,581


Deferred income taxes

8,403


4,297


Prepaid expenses and other current assets

18,294


17,695




185,061


159,071







Securities and Investments

1,499


1,499







Property, Plant and Equipment, net 

312,486


303,103







Intangible Assets 





Goodwill

63,700


63,700


Radio spectrum licenses

131,833


132,033


Customer relationships and trademarks, net

7,737


9,996







Deferred Charges and Other Assets

9,637


10,712







Total Assets

$                711,953


$                680,114















LIABILITIES AND EQUITY  




Current Liabilities 





Current portion of long-term debt

$                   5,430


$                   5,429


Accounts payable

28,781


23,445


Dividends payable

9,029


-


Accrued expenses and other current liabilities

30,620


34,457




73,860


63,331







Long-Term Debt

486,074


488,650







Other Long-Term Liabilities

104,285


83,598







Equity 

47,734


44,535







Total Liabilities and Equity 

$                711,953


$                680,114







 

 

NTELOS Holdings Corp.




Condensed Consolidated Statements of Operations

Three Months Ended


Nine Months Ended



(Unaudited)


(Unaudited)

(In thousands, except per share amounts)

September 30, 2013

September 30, 2012


September 30, 2013

September 30, 2012








Operating Revenues  

$        130,912

$        114,466


$        370,116

$        336,591








Operating Expenses 







Cost of sales and services

46,511

46,270


133,613

127,263


Customer operations 

32,206

30,068


93,137

89,459


Corporate operations 

8,214

8,599


23,878

24,908


Depreciation and amortization     

16,559

15,810


55,458

45,818


Gain on sale of intangible assets

-

-


(4,442)

-



103,490

100,747


301,644

287,448








Operating Income

27,422

13,719


68,472

49,143








Other Income (Expense)







Interest expense  

(7,480)

(5,432)


(22,239)

(16,293)


Other income (expense), net

(431)

(50)


(649)

(156)



(7,911)

(5,482)


(22,888)

(16,449)








Income before Income Taxes

19,511

8,237


45,584

32,694








Income Taxes   

8,340

3,141


18,464

13,130

Net Income

11,171

5,096


27,120

19,564








Net Income Attributable to Noncontrolling Interests

(588)

(488)


(1,658)

(1,498)








Net Income Attributable to NTELOS Holdings Corp.

$          10,583

$           4,608


$          25,462

$          18,066















Earnings per Share Attributable to NTELOS Holdings Corp.:














Basic

$             0.50

$             0.22


$             1.21

$             0.87


Weighted average shares outstanding - basic 

21,047

20,900


20,987

20,877









Diluted

$             0.48

$             0.22


$             1.17

$             0.85


Weighted average shares outstanding - diluted

21,910

21,375


21,708

21,317








Cash Dividends Declared per Share - Common Stock

$             0.42

$             0.42


$             1.26

$             1.26








 

 

NTELOS Holdings Corp.




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

(In thousands)











 Three Months Ended 


 Nine Months Ended 




September 30, 2013


September 30, 2012


September 30, 2013


September 30, 2012



Net income attributable to NTELOS Holdings Corp.

$                 10,583


$                   4,608


$                 25,462


$                 18,066



Net income attributable to noncontrolling interests 

588


488


1,658


1,498



Net income  

$                 11,171


$                   5,096


$                 27,120


$                 19,564













Interest expense 

7,480


5,432


22,239


16,293



Income taxes 

8,340


3,141


18,464


13,130



Other expense, net

431


50


649


156



Operating income

$                 27,422


$                 13,719


$                 68,472


$                 49,143













Depreciation and amortization     

16,559


15,810


55,458


45,818



Gain on sale of intangible assets

-


-


(4,442)


-



Accretion of asset retirement obligations

135


163


451


463



Equity-based compensation

1,442


1,478


4,223


4,683



Business separation charges 1 

-


684


-


1,604



Adjusted EBITDA

$                 45,558


$                 31,854


$               124,162


$               101,711












1

Charges for legal and consulting services in connection with the separation of the Company's wireless and wireline operations.













 

 

NTELOS Holdings Corp.








Key Metrics








Nine Months Ended


Quarter Ended:


9/30/2012

12/31/2012

3/31/2013

6/30/2013

9/30/2013


9/30/2012

9/30/2013

Subscribers











Beginning Subscribers


424,800

430,300

439,600

451,000

454,800


414,500

439,600


Postpay


285,400

288,900

297,400

299,700

298,700


292,400

297,400


Prepay


139,400

141,400

142,200

151,300

156,100


122,100

142,200













Gross Additions


42,400

46,200

48,500

40,100

44,500


125,100

133,100


Postpay


22,000

25,100

20,200

16,300

20,000


55,800

56,500


Prepay


20,400

21,100

28,300

23,800

24,500


69,300

76,600













Disconnections


36,900

36,900

37,100

36,300

42,200


109,300

115,600


Postpay


17,100

15,900

16,900

16,100

19,600


55,000

52,600


Prepay


19,800

21,000

20,200

20,200

22,600


54,300

63,000













Net Additions (Losses)


5,500

9,300

11,400

3,800

2,300


15,800

17,500


Postpay


4,900

9,200

3,300

200

400


800

3,900


Prepay


600

100

8,100

3,600

1,900


15,000

13,600













Ending Subscribers


430,300

439,600

451,000

454,800

457,100


430,300

457,100


Postpay


288,900

297,400

299,700

298,700

298,000


288,900

298,000


Prepay


141,400

142,200

151,300

156,100

159,100


141,400

159,100













Churn, net


2.9%

2.8%

2.8%

2.7%

3.1%


2.9%

2.8%


Postpay


2.0%

1.8%

1.9%

1.8%

2.2%


1.9%

2.0%


Prepay


4.7%

4.9%

4.6%

4.4%

4.8%


4.5%

4.6%























Other Items






















ARPU


$      50.93

$      52.78

$      53.87

$      53.82

$      54.29


$      49.82

$      53.99


Postpay


$      58.97

$      61.19

$      62.67

$      63.48

$      64.62


$      56.67

$      63.59


Prepay


$      34.50

$      35.41

$      35.85

$      35.04

$      34.80


$      35.28

$      35.21













Data ARPU


$      20.25

$      21.03

$      21.86

$      22.14

$      22.35


$      19.65

$      22.12













Licensed Population (millions)

8.1

7.9

7.9

7.9

7.9


8.1

7.9













Covered Population (millions)

6.0

6.0

6.0

6.0

6.0


6.0

6.0













Total Cell Sites


1,396

1,429

1,431

1,432

1,434


1,396

1,434













SNA Revenues (000's)


$    41,626

$    40,747

$    40,152

$    39,607

$    48,644


$  121,898

$  128,403

 

 


NTELOS Holdings Corp.








ARPU Reconciliation

 Three Months Ended 


 Nine Months Ended 

Average Monthly Revenue per User (ARPU) 1 

 September 30, 2013 


 September 30, 2012 


 September 30, 2013 


 September 30, 2012 

(In thousands, except for subscribers and ARPU)

















Operating Revenues

$               130,912


$               114,466


$               370,116


$               336,591

Less: Equipment revenue from sales to new customers

(3,595)


(3,333)


(10,220)


(11,233)

Less: Equipment revenue from sales to existing customers

(2,946)


(3,416)


(8,458)


(11,722)

Less: Wholesale, other and adjustments

(50,142)


(42,380)


(132,239)


(124,277)










 Gross subscriber revenue  

74,229


65,337


219,199


189,359










Less:  prepay subscriber revenue

(16,248)


(14,103)


(47,332)


(41,507)

Less:  adjustments to prepay subscriber revenue

(230)


(434)


(1,012)


(1,469)

 Gross postpay subscriber revenue   

$                 57,751


$                 50,800


$               170,855


$               146,383










Prepay subscriber revenue

16,248


14,103


47,332


41,507

Plus:  adjustments to prepay subscriber revenue

230


434


1,012


1,469

 Gross prepay subscriber revenue 

$                 16,478


$                 14,537


$                 48,344


$                 42,976










Average number of subscribers

455,724


427,610


451,077


422,351

 Total ARPU   

$                   54.29


$                   50.93


$                   53.99


$                   49.82










Average number of postpay subscribers

297,900


287,165


298,539


287,015

 Postpay ARPU   

$                   64.62


$                   58.97


$                   63.59


$                   56.67










Average number of prepay subscribers

157,824


140,446


152,537


135,336

 Prepay ARPU 

$                   34.80


$                   34.50


$                   35.21


$                   35.28










Gross subscriber revenue  

74,229


65,337


219,199


189,359

Less: voice and other feature revenue

(43,672)


(39,366)


(129,408)


(114,653)

 Data revenue  

$                 30,557


$                 25,971


$                 89,791


$                 74,706










Average number of subscribers

455,724


427,610


451,077


422,351

 Total Data ARPU   

$                   22.35


$                   20.25


$                   22.12


$                   19.65










Gross postpay subscriber revenue

57,751


50,800


170,855


146,383

Less: postpay voice and other feature revenue

(36,652)


(33,028)


(108,774)


(95,950)

 Postpay data revenue  

$                 21,099


$                 17,772


$                 62,081


$                 50,433










Gross prepay subscriber revenue

16,478


14,537


48,344


42,976

Less: prepay voice and other feature revenue

(7,020)


(6,338)


(20,634)


(18,703)

 Prepay data revenue  

$                   9,458


$                   8,199


$                 27,710


$                 24,273










Average number of postpay subscribers

297,900


287,165


298,539


287,015

 Postpay data ARPU   

$                   23.61


$                   20.63


$                   23.11


$                   19.52










Average number of prepay subscribers

157,824


140,446


152,537


135,336

 Prepay data ARPU   

$                   19.98


$                   19.46


$                   20.18


$                   19.93







1

Average monthly revenue per user (ARPU) is computed by dividing service revenues per period by the average number of subscribers during that period. ARPU as defined may not be similar to ARPU 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 ARPU in order to determine their effectiveness.  ARPU 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: jgoldberger@kcsa.com / rfink@kcsa.com

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