Revenue and Adjusted EBITDA in Line with Guidance for the Quarter
Strategic Data Revenue 50% of total revenue for the Quarter and grew 5% sequentially
Cash Dividend of $0.14 per Share Declared
WAYNESBORO, Va.–(BUSINESS WIRE)–
Lumos Networks Corp. (“Lumos Networks” or “the Company”) (LMOS), a fiber-based service provider of voice, data and IP-based telecommunication services in the Mid-Atlantic region, today announced financial results for its third quarter 2012.
Total revenue for third quarter 2012 was $52.0 million, compared to $51.6 million for third quarter 2011 and $50.8 million in second quarter 2012. Total adjusted EBITDA was $22.3 million for third quarter 2012, compared to $24.6 million in third quarter 2011 and to $21.1 million in second quarter 2012.
“For the first time in the Company’s history strategic data revenue represented half of our total revenue for the quarter and it grew sequentially by five percent,” said Tim Biltz, CEO and President of Lumos Networks. “We believe that strategic data revenue will continue to grow as a percent of our total revenue and we are on track to achieve year-over-over strategic revenue growth in excess of 16% for 2012,” concluded Biltz.
Highlights
- During third quarter 2012, the Company continued to achieve its targeted installation goals and is on track to more than double the number of FTTC installations from approximately 150 at the end of 2011 to approximately 300 at the end of 2012.
- In third quarter 2012, the Company continued to achieve its goal of ensuring that 75% of total capital expenditures are for success-based strategic data projects in its Enterprise and Carrier Data customer segments as compared to less than 50% in 2011.
- Revenue for all three categories of the Company’s strategic data products grew sequentially during the third quarter 2012, with an overall aggregate growth rate of approximately 5%. These product lines include: Enterprise Data, Carrier Data and IP Services.
- On November 1, 2012, the Board of Directors of Lumos Networks Corporation declared a dividend on its common stock in the amount of $0.14 per share to be paid on January 11, 2013 to stockholders of record on December 14, 2012.
Business Outlook
The Company updated its annual 2012 guidance for revenue and adjusted EBITDA, with total revenue expected to be approximately $206 million and adjusted EBITDA expected to be approximately $88 million. Capital expenditures for 2012 are currently expected to be at approximately $60 million.
For fourth quarter 2012, total revenue is expected to be approximately $52 million and adjusted EBITDA to be approximately $22 million.
Please see the schedule accompanying this release for additional financial guidance, including projected 2012 cash flows and non-GAAP reconciliations.
Statements made 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.”
Conference Call
A conference call and simultaneous webcast, hosted by Timothy G. Biltz, CEO, Harold L. Covert, CFO, and Joseph E. McCourt, CRO, to review these financial and operational results and financial guidance will be held at 8:30 A.M. (ET) on November 2, 2012.
The webcast may be accessed via the Internet at http://ir.lumosnetworks.com/ and the live call (“Lumos Networks Third Quarter 2012 Earnings Conference Call”) may be accessed with the following numbers:
| Domestic: 1-877-317-6789 |
| International: 1-412-317-6789 |
| Canada: 1-866-605-3852 |
The conference call will be archived and available for replay through November 15, 2012 before 9:00 A.M. (ET) and may be accessed with the following numbers:
| Domestic: 1-877-344-7529 |
| International: 1-412-317-0088 |
| Replay pass codes: Conference ID: 10019877 |
The webcast will also be archived and the replay may be accessed at http://ir.lumosnetworks.com/. |
About Lumos Networks
Lumos Networks is a fiber-based service provider in the Mid-Atlantic region serving carrier, business and residential customers over a dense fiber network offering data, voice and IP services. With headquarters in Waynesboro, VA, Lumos Networks serves Virginia, West Virginia and portions of Pennsylvania, Kentucky, Ohio, and Maryland over a fiber network of 5,800 long haul miles. Detailed information about Lumos Networks is available at www.lumosnetworks.com.
Non-GAAP Measures
Adjusted EBITDA is defined as net income attributable to Lumos Networks before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, net income attributable to noncontrolling interests, other expenses/income, equity based compensation charges, acquisition related charges, amortization of actuarial losses on retirement plans, employee separation charges, gain or loss on settlements and gain or loss on interest rate derivatives.
Adjusted EBITDA is a non-GAAP financial performance measure. It 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 Lumos Networks 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.
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; our ability to achieve benefits from our separation from NTELOS Holdings Corp; our ability to offset expected revenue declines in our Competitive business from legacy voice products and in our RLEC business related to the recent regulatory developments and carriers grooming their networks; 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; federal and state regulatory fees, requirements and developments; our reliance on certain suppliers and vendors; 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
- Condensed Consolidated Statements of Cash Flows
- Summary of Operating Results, Customer and Network Statistics
- Reconciliation of Net Income Attributable to Lumos Networks Corp. to Operating Income
- Reconciliation of Operating Income to Adjusted EBITDA
- Business Outlook
| Lumos Networks Corp. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| September 30, 2012 | December 31, 2011 | |||||||
| (In thousands) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 2 | $ | 10,547 | ||||
| Restricted cash 1 | 6,750 | 7,554 | ||||||
| Accounts receivable, net | 22,609 | 23,555 | ||||||
| Other receivables | 3,357 | 2,390 | ||||||
| Prepaid expenses and other | 3,095 | 2,278 | ||||||
| Total Current Assets | 35,813 | 46,324 | ||||||
| Securities and investments | 382 | 128 | ||||||
| Property, plant and equipment, net | 325,098 | 299,958 | ||||||
| Other Assets | ||||||||
| Goodwill | 100,297 | 100,297 | ||||||
| Other intangibles, net | 37,679 | 45,696 | ||||||
| Deferred charges and other assets | 5,167 | 6,197 | ||||||
| Total Other Assets | 143,143 | 152,190 | ||||||
| Total Assets | $ | 504,436 | $ | 498,600 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current Liabilities | ||||||||
| Current portion of long term debt | $ | 6,781 | $ | 2,679 | ||||
| Accounts payable | 12,217 | 12,432 | ||||||
| Dividends payable | 3,006 | 2,980 | ||||||
| Advance billings and customer deposits | 13,210 | 12,623 | ||||||
| Accrued compensation | 1,958 | 2,832 | ||||||
| Accrued operating taxes | 4,384 | 2,624 | ||||||
| Other accrued liabilities | 4,039 | 3,262 | ||||||
| Total Current Liabilities | 45,595 | 39,432 | ||||||
| Long-Term Liabilities | ||||||||
| Long-term debt | 307,597 | 323,897 | ||||||
| Retirement benefits | 35,066 | 35,728 | ||||||
| Deferred Income taxes | 50,685 | 41,204 | ||||||
| Other long-term liabilities | 2,574 | 5,028 | ||||||
| Income tax payable | 645 | 484 | ||||||
| Total Long-term Liabilities | 396,567 | 406,341 | ||||||
| Stockholders’ Equity | 61,750 | 52,383 | ||||||
| Noncontrolling Interests | 524 | 444 | ||||||
| Total Equity | 62,274 | 52,827 | ||||||
| Total Liabilities and Equity | $ | 504,436 | $ | 498,600 | ||||
| 1 | During 2010, the Company received a Federal stimulus award providing 50% funding to bring broadband services and infrastructure to Alleghany County, Virginia. The Company was required to deposit 100% of its grant ($8.1 million) into pledged accounts in advance of any reimbursements, to be drawn down ratably following reimbursement approvals. | |
| Lumos Networks Corp. | |||||||||||||||||
| Condensed Consolidated Statements of Operations | Three months ended: | Nine months ended: | |||||||||||||||
| (In thousands, except per share amounts) | September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2011 | |||||||||||||
| Operating Revenues | $ | 51,977 | $ | 51,601 | $ | 154,192 | $ | 156,307 | |||||||||
| Operating Expenses 1 | |||||||||||||||||
| Cost of sales and services (exclusive of items shown separately below) | 20,180 | 19,479 | 59,919 | 58,901 | |||||||||||||
| Customer operations | 5,885 | 4,661 | 16,446 | 14,778 | |||||||||||||
| Corporate operations 2,3 | 5,216 | 3,588 | 18,447 | 10,908 | |||||||||||||
| Depreciation and amortization | 9,650 | 10,904 | 27,673 | 32,903 | |||||||||||||
| Accretion of asset retirement obligations | 32 | 30 | 93 | 86 | |||||||||||||
| Gain on settlements, net4 | (2,335 | ) | – | (2,335 | ) | – | |||||||||||
| Total Operating Expenses, net | 38,628 | 38,662 | 120,243 | 117,576 | |||||||||||||
| Operating Income | 13,349 | 12,939 | 33,949 | 38,731 | |||||||||||||
| Other Income (Expenses) | |||||||||||||||||
| Interest expense | (3,064 | ) | (2,559 | ) | (8,980 | ) | (8,840 | ) | |||||||||
| Loss on interest rate derivatives | (263 | ) | – | (555 | ) | – | |||||||||||
| Other income, net | 24 | 66 | 55 | 73 | |||||||||||||
| Income Before Income Tax Expense | 10,046 | 10,446 | 24,469 | 29,964 | |||||||||||||
| Income Tax Expense | 3,589 | 4,249 | 9,985 | 12,144 | |||||||||||||
| Net Income | 6,457 | 6,197 | 14,484 | 17,820 | |||||||||||||
| Net Income Attributable to Noncontrolling Interests | (115 | ) | (2 | ) | (80 | ) | (87 | ) | |||||||||
| Net Income Attributable to Lumos Networks Corp. | $ | 6,342 | $ | 6,195 | $ | 14,404 | $ | 17,733 | |||||||||
| Basic and Diluted Earnings per Common Share Attributable to Lumos Networks Corp. Stockholders: | |||||||||||||||||
| Income per share – basic | $ | 0.30 | $ | 0.69 | |||||||||||||
| Income per share – diluted | $ | 0.30 | $ | 0.67 | |||||||||||||
| Weighted average shares outstanding – basic | 20,992 | 20,928 | |||||||||||||||
| Weighted average shares outstanding – diluted | 21,471 | 21,374 | |||||||||||||||
| Cash Dividends Declared per Share – Common Stock | $ | 0.14 | $ | 0.42 | |||||||||||||
| 1 | Includes equity based compensation charges related to all of the Company’s share-based awards and the Company’s 401(k) matching contributions of $1.1 million and $0.8 million for the three months ended September 30, 2012 and 2011, respectively, and $2.9 million and $2.1 million for the nine months ended September 30, 2012 and 2011, respectively. | |
| 2 | Includes retirement plan costs, including amortization of actuarial losses. During the three and nine months ended September 30, 2011, these costs were allocated to the former wireline companies (now Lumos Networks). The amount of that allocation representing amortization of actuarial losses was not material. | |
| 3 | In the second quarter of 2012, the Company recorded charges of $2.0 million related to the recognition of employee separation benefits which were provided for in the separation agreement of an executive officer who left the Company in April 2012. | |
| 4 | The Company recognized a net pre-tax gain of approximately $2.3 million in the third quarter of 2012 in connection with the settlement of outstanding matters related to a prior acquisition and the settlement of an outstanding lawsuit. | |
| Lumos Networks Corp. | ||||||||
| Condensed Consolidated Statements of Cash Flows | Nine months ended: | |||||||
| (In thousands) | September 30, 2012 | September 30, 2011 | ||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 14,484 | $ | 17,820 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 19,323 | 21,046 | ||||||
| Amortization | 8,350 | 11,857 | ||||||
| Accretion of asset retirement obligations | 93 | 86 | ||||||
| Deferred income taxes | 9,122 | 7,938 | ||||||
| Loss on interest rate swap derivatives | 555 | – | ||||||
| Equity-based compensation expense | 2,887 | 2,146 | ||||||
| Amortization of loan origination costs | 606 | – | ||||||
| Gain on settlement | (3,035 | ) | – | |||||
| Retirement benefits and other | 2,774 | (2,593 | ) | |||||
| Changes in assets and liabilities from operations: | ||||||||
| Decrease in accounts receivable | 897 | 403 | ||||||
| Increase in other current assets | (1,758 | ) | (187 | ) | ||||
| Changes in income taxes | 137 | (31 | ) | |||||
| Increase (decrease) in accounts payable | 254 | (1,453 | ) | |||||
| Increase in other current liabilities | 2,167 | 1,617 | ||||||
| Retirement benefit contributions and distributions | (2,654 | ) | – | |||||
| Net cash provided by operating activities | 54,202 | 58,649 | ||||||
| Cash flows from investing activities | ||||||||
| Purchases of property, plant and equipment | (43,925 | ) | (48,814 | ) | ||||
| Return of investment in restricted cash | 804 | – | ||||||
| Cash reimbursement received from government grant | 804 | – | ||||||
| Purchase of tradename asset | (333 | ) | – | |||||
| Other | (868 | ) | (1,293 | ) | ||||
| Net cash used in investing activities | (43,518 | ) | (50,107 | ) | ||||
| Cash flows from financing activities | ||||||||
| Borrowings from NTELOS Inc. net | – | 6,401 | ||||||
| Repayments on senior secured term loans | (1,500 | ) | – | |||||
| Repayments on revolving credit facility, net | (10,283 | ) | – | |||||
| Cash dividends paid on common stock | (8,945 | ) | – | |||||
| Dividends paid to NTELOS Inc. | – | (14,145 | ) | |||||
| Payments under capital lease obligations | (604 | ) | (839 | ) | ||||
| Other | 103 | – | ||||||
| Net cash used in financing activities | (21,229 | ) | (8,583 | ) | ||||
| Decrease in cash | (10,545 | ) | (41 | ) | ||||
| Cash: | ||||||||
| Beginning of period | 10,547 | 489 | ||||||
| End of period | $ | 2 | $ | 448 | ||||
| Lumos Networks Corp. | ||||||||||||||||||||||||
| Operating Results, Customer and Network Statistics | ||||||||||||||||||||||||
| (Dollars in thousands) | Three months ended: | Nine months ended: | ||||||||||||||||||||||
| September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | September 30, 2011 | September 30, 2012 | September 30, 2011 | ||||||||||||||||||
| Competitive Revenue and Adjusted EBITDA | ||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Enterprise Data | 9,448 | 9,040 | 8,666 | 8,438 | 8,449 | 27,154 | 24,694 | |||||||||||||||||
| Carrier Data | 11,955 | 11,196 | 10,937 | 10,506 | 9,573 | 34,088 | 27,143 | |||||||||||||||||
| IP Services | 4,718 | 4,684 | 4,587 | 4,515 | 4,364 | 13,989 | 12,886 | |||||||||||||||||
| Total Strategic Data | 26,121 | 24,920 | 24,190 | 23,459 | 22,386 | 75,231 | 64,723 | |||||||||||||||||
| Legacy Voice | 11,244 | 11,509 | 12,010 | 12,825 | 13,375 | 34,763 | 41,589 | |||||||||||||||||
| Network Access | 2,413 | 2,540 | 2,715 | 2,758 | 2,733 | 7,668 | 9,044 | |||||||||||||||||
| Total Revenue | 39,778 | 38,969 | 38,915 | 39,042 | 38,494 | 117,662 | 115,356 | |||||||||||||||||
| Adjusted EBITDA1 | 14,440 | 14,078 | 14,548 | 15,034 | 15,730 | 43,066 | 45,678 | |||||||||||||||||
| Adjusted EBITDA % | 36.3 | % | 36.1 | % | 37.4 | % | 38.5 | % | 40.9 | % | 36.6 | % | 39.6 | % | ||||||||||
| RLEC Revenue and Adjusted EBITDA | ||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Legacy Voice | 4,874 | 4,710 | 4,756 | 4,937 | 4,940 | 14,340 | 15,102 | |||||||||||||||||
| Network Access | 7,325 | 7,125 | 7,740 | 7,129 | 8,167 | 22,190 | 25,849 | |||||||||||||||||
| Total Revenue | 12,199 | 11,835 | 12,496 | 12,066 | 13,107 | 36,530 | 40,951 | |||||||||||||||||
| Adjusted EBITDA1 | 7,841 | 7,028 | 7,743 | 7,970 | 8,917 | 22,612 | 28,258 | |||||||||||||||||
| Adjusted EBITDA % | 64.3 | % | 59.4 | % | 62.0 | % | 66.1 | % | 68.0 | % | 61.9 | % | 69.0 | % | ||||||||||
| Consolidated | ||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Strategic Data | 26,121 | 24,920 | 24,190 | 23,459 | 22,386 | 75,231 | 64,723 | |||||||||||||||||
| Legacy Voice | 16,118 | 16,219 | 16,766 | 17,762 | 18,315 | 49,103 | 56,691 | |||||||||||||||||
| Network Access | 9,738 | 9,665 | 10,455 | 9,887 | 10,900 | 29,858 | 34,893 | |||||||||||||||||
| Total Revenue | 51,977 | 50,804 | 51,411 | 51,108 | 51,601 | 154,192 | 156,307 | |||||||||||||||||
| Adjusted EBITDA1 | 22,281 | 21,106 | 22,291 | 23,004 | 24,647 | 65,678 | 73,936 | |||||||||||||||||
| Adjusted EBITDA % | 42.9 | % | 41.5 | % | 43.4 | % | 45.0 | % | 47.8 | % | 42.6 | % | 47.3 | % | ||||||||||
| Capital Expenditures | 14,937 | 11,619 | 17,369 | 12,722 | 15,013 | 43,925 | 48,814 | |||||||||||||||||
| Adjusted EBITDA less Capital Expenditures | 7,344 | 9,487 | 4,922 | 10,282 | 9,634 | 21,753 | 25,122 | |||||||||||||||||
| Customer and Network Statistics | ||||||||||||||||||||||||
| Customer Statistics | ||||||||||||||||||||||||
| Competitive voice connections2 | 112,709 | 114,930 | 117,965 | 122,046 | 125,500 | 112,709 | 125,500 | |||||||||||||||||
| RLEC Broadband Customers3 | 15,199 | 15,258 | 15,100 | 14,916 | 14,947 | 15,199 | 14,947 | |||||||||||||||||
| Total Broadband Connections3 | 40,401 | 37,361 | 35,974 | 35,707 | 34,747 | 40,401 | 34,747 | |||||||||||||||||
| Video Subscribers | 4,390 | 4,192 | 4,019 | 3,734 | 3,439 | 4,390 | 3,439 | |||||||||||||||||
| Network Statistics | ||||||||||||||||||||||||
| On-Network Buildings 4 | 1,150 | 1,091 | 1,066 | 1,051 | 949 | 1,150 | 949 | |||||||||||||||||
| Fiber-Fed Cell Sites 4 | 261 | 178 | 155 | 148 | 132 | 261 | 132 | |||||||||||||||||
| RLEC Total Access Lines | 31,708 | 32,272 | 32,676 | 33,193 | 33,840 | 31,708 | 33,840 | |||||||||||||||||
| 1 | Adjusted EBITDA is a non-GAAP measure. See definition on page 2 of this earnings release. | |
| 2 | Includes customer Primary Rate Interface (PRI) line equivalents at 23 lines per PRI. Excludes intercompany PRI lines. | |
| 3 | Includes customers or customer equivalents for DSL, dedicated Internet access, wireless portable broadband, broadband over fiber and metro Ethernet. All revenues from broadband products, including RLEC broadband, are recorded in the operating revenues of the Competitive segment. | |
| 4 | Includes statistics for legacy markets only, excluding FiberNet, through September 30, 2011. | |
| Note: Certain amounts have been reclassified to agree with current year presentation. | ||
| Lumos Networks Corp. | |||||||||||||||||
| Reconciliation of Net Income Attributable to Lumos Networks Corp. to Operating Income | |||||||||||||||||
| (In thousands) | |||||||||||||||||
| Three months ended: | Nine months ended: | ||||||||||||||||
| September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2011 | ||||||||||||||
| Net income attributable to Lumos Networks Corp. | $ | 6,342 | $ | 6,195 | $ | 14,404 | $ | 17,733 | |||||||||
| Net income attributable to noncontrolling interests | 115 | 2 | 80 | 87 | |||||||||||||
| Net income | 6,457 | 6,197 | 14,484 | 17,820 | |||||||||||||
| Interest expense | 3,064 | 2,559 | 8,980 | 8,840 | |||||||||||||
| Loss on interest rate derivatives | 263 | – | 555 | – | |||||||||||||
| Income tax expense | 3,589 | 4,249 | 9,985 | 12,144 | |||||||||||||
| Other income, net | (24 | ) | (66 | ) | (55 | ) | (73 | ) | |||||||||
| Operating income | $ | 13,349 | $ | 12,939 | $ | 33,949 | $ | 38,731 | |||||||||
| Competitive | 8,183 | 7,870 | 20,829 | 21,937 | |||||||||||||
| RLEC | 5,166 | 5,069 | 13,120 | 16,794 | |||||||||||||
| Operating income | $ | 13,349 | $ | 12,939 | $ | 33,949 | $ | 38,731 | |||||||||
| Lumos Networks Corp. | |||||||||||||||||||||||||
| Reconciliation of Operating Income to Adjusted EBITDA | |||||||||||||||||||||||||
| (Dollars in thousands) | 2012 | 2011 | |||||||||||||||||||||||
| Competitive | RLEC | Total | Competitive | RLEC | Total | ||||||||||||||||||||
| For The Three Months Ended September 30 | |||||||||||||||||||||||||
| Operating Income | $ | 8,183 | $ | 5,166 | $ | 13,349 | $ | 7,870 | $ | 5,069 | $ | 12,939 | |||||||||||||
| Depreciation and amortization and accretion of asset retirement obligations | 6,828 | 2,854 | 9,682 | 7,398 | 3,536 | 10,934 | |||||||||||||||||||
| Sub-total: | 15,011 | 8,020 | 23,031 | 15,268 | 8,605 | 23,873 | |||||||||||||||||||
| Amortization of actuarial losses | 335 | 111 | 446 | – | – | – | |||||||||||||||||||
| Equity based compensation | 814 | 285 | 1,099 | 472 | 312 | 784 | |||||||||||||||||||
| Acquisition related charges 1 | – | – | – | (10 | ) | – | (10 | ) | |||||||||||||||||
| Employee separation charges2 | 30 | 10 | 40 | – | – | – | |||||||||||||||||||
| Gain on settlements, net3 | (1,750 | ) | (585 | ) | (2,335 | ) | – | – | – | ||||||||||||||||
| Adjusted EBITDA | $ | 14,440 | $ | 7,841 | $ | 22,281 | $ | 15,730 | $ | 8,917 | $ | 24,647 | |||||||||||||
| Adjusted EBITDA Margin | 36.3 | % | 64.3 | % | 42.9 | % | 40.9 | % | 68.0 | % | 47.8 | % | |||||||||||||
| For The Nine Months Ended September 30 | |||||||||||||||||||||||||
| Operating Income | $ | 20,829 | $ | 13,120 | $ | 33,949 | $ | 21,937 | $ | 16,794 | $ | 38,731 | |||||||||||||
| Depreciation and amortization and accretion of asset retirement obligations | 19,293 | 8,473 | 27,766 | 22,383 | 10,606 | 32,989 | |||||||||||||||||||
| Sub-total: | 40,122 | 21,593 | 61,715 | 44,320 | 27,400 | 71,720 | |||||||||||||||||||
| Amortization of actuarial losses | 1,002 | 334 | 1,336 | – | – | – | |||||||||||||||||||
| Equity based compensation | 2,136 | 751 | 2,887 | 1,288 | 858 | 2,146 | |||||||||||||||||||
| Acquisition related charges 1 | – | – | – | 70 | – | 70 | |||||||||||||||||||
| Employee separation charges2 | 1,556 | 519 | 2,075 | – | – | – | |||||||||||||||||||
| Gain on settlements, net3 | (1,750 | ) | (585 | ) | (2,335 | ) | – | – | – | ||||||||||||||||
| Adjusted EBITDA | $ | 43,066 | $ | 22,612 | $ | 65,678 | $ | 45,678 | $ | 28,258 | $ | 73,936 | |||||||||||||
| Adjusted EBITDA Margin | 36.6 | % | 61.9 | % | 42.6 | % | 39.6 | % | 69.0 | % | 47.3 | % | |||||||||||||
| 1 | Acquisition related charges related to the acquisition of FiberNet that closed on December 1, 2010. | |
| 2 | In the second quarter of 2012, the Company recorded charges of $2.0 million related to the recognition of employee separation benefits which were provided for in the separation agreement of an executive officer who left the Company in April 2012. | |
| 3 | The Company recognized a net pre-tax gain of approximately $2.3 million in the third quarter of 2012 in connection with the settlement of outstanding matters related to a prior acquisition and the settlement of an outstanding lawsuit. | |
| Lumos Networks Corp. | |||||||||||||||||||||
| Business Outlook 1 (as of November 1, 2012) | |||||||||||||||||||||
| (In millions) | 2012 Guidance 1 | ||||||||||||||||||||
| Fourth Quarter 2012 | 2012 Annual | ||||||||||||||||||||
| Operating Revenues | Approximately | $ | 52 | Approximately | $ | 206 | |||||||||||||||
| Adjusted EBITDA | Approximately | $ | 22 | Approximately | $ | 88 | |||||||||||||||
| Capital Expenditures | Approximately | $ | 60 | ||||||||||||||||||
| Reconciliation of Operating Income to Adjusted EBITDA | |||||||||||||||||||||
| Operating Income | Approximately | $ | 10 | Approximately | $ | 44 | |||||||||||||||
| Depreciation and amortization | 9 | 38 | |||||||||||||||||||
| Equity based compensation charges | 3 | 4 | |||||||||||||||||||
| Amortization of actuarial losses | – | 2 | |||||||||||||||||||
| Adjusted EBITDA | Approximately | $ | 22 | Approximately | $ | 88 | |||||||||||||||
| Lumos Networks Corp. | |||||||||||||||||||||
| Projected Cash Flows for the Year 2012 1 | |||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||
| Adjusted EBITDA | $ | 88 | |||||||||||||||||||
| Less: Capital expenditures | (60 | ) | |||||||||||||||||||
| 28 | |||||||||||||||||||||
| Less: | |||||||||||||||||||||
| Cash interest, net of interest income | (12 | ) | |||||||||||||||||||
| Cash taxes | (2 | ) | |||||||||||||||||||
| Cash flows, net, before dividends and debt payments | 14 | ||||||||||||||||||||
| Less: | |||||||||||||||||||||
| Cash dividends: $0.14 per share per quarter 2 | (12 | ) | |||||||||||||||||||
| Scheduled 2012 debt payments | (3 | ) | |||||||||||||||||||
| Plus: | |||||||||||||||||||||
| Other, net 3 | 1 | ||||||||||||||||||||
| Projected Cash Flows, net 4 | $ | – | |||||||||||||||||||
| 1 | These estimates are based on management’s current expectations. These estimates are forward-looking and actual results may differ materially. Please see “Special Note from the Company Regarding Forward-Looking Statements” in the Lumos Networks Corp. third quarter 2012 earnings release dated November 1, 2012. | |
| 2 | Represents the most recent cash dividend paid, annualized. Dividend payments are reviewed quarterly by the board of directors and are subject to change. | |
| 3 | Includes cash reimbursements received from Federal stimulus awards, which provide 50% funding to bring broadband services and infrastructure to Alleghany County, Virginia partially offset by one-time severance benefits, which were provided for in the employment agreement of an executive officer, and a one-time net cash outflow related to the settlement of an outstanding lawsuit and the settlement of all outstanding matters related to a prior acquisition. | |
| 4 | Before discretionary payments to the credit facility Revolver loan and changes to working capital. |
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