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Press Release -- February 28th, 2013
Source: nTelos
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NTELOS Holdings Corp. Reports Fourth Quarter and Year-End 2012 Operating Results

WAYNESBORO, Va.--(BUSINESS WIRE)--

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 fourth quarter and year ended December 31, 2012.

Fourth Quarter Highlights

  • Operating revenues for the fourth quarter 2012 increased 11% to $117.4 million, compared to $106.0 million for the same period in 2011;
  • Postpay net subscriber additions for the fourth quarter 2012 were 9,200, compared to a net loss of (1,900) for the same period in 2011;
  • Subscriber churn for the fourth quarter 2012 improved to 2.8%, compared to 3.4% for the same period in 2011; and
  • ARPU for the fourth quarter was $52.78, compared to $48.57 for the same period in 2011.

Full Year 2012 Highlights

  • Total net subscriber additions for 2012 were 25,100, compared to a loss of (17,900) for 2011;
  • Churn for 2012 improved to 2.9% from 3.5% in 2011, with postpay churn improving to 2.0% in 2012 from 2.4% in 2011; and
  • Data ARPU for 2012 rose to $20.00, up $4.14 from $15.86 in 2011, reflecting increased customer adoption of smartphones.

“During the fourth quarter, we experienced significant traction in our retail business, particularly with postpay, as we continued to execute on our strategy to attract and serve high-quality, value-conscious customers. A focus on improving our handset lineup drove substantial growth in smartphone penetration as well as significant gains in ARPU and net adds,” said James A. Hyde, CEO of NTELOS Holdings Corp. “During the quarter, we generated net ports of nearly 6,000, our sixth consecutive positive quarter. The fact that we continue to take market share when effectively 100 percent of the population in our footprint already has wireless service demonstrates the competiveness of our offering and the strength of our brand. Throughout 2012, we continued to deliver strong wholesale revenue, driven by growth in both voice and data usage on our network.”

Highlights from Operations

  • Operating revenues for the fourth quarter 2012 were $117.4 million, up 11% from the fourth quarter 2011. Operating revenues for the full year 2012 were $454.0 million, up 7% compared to the year 2011. The increase in operating revenues reflected an increase in both wholesale and retail revenues;
  • Retail revenues, which include subscriber and equipment revenue, increased 13% to $75.1 million for the fourth quarter 2012, compared to $66.3 million for the fourth quarter 2011. Retail revenues for the year 2012 were $285.1 million, compared to $278.1 million for the year 2011;
  • Wholesale and other revenue derived primarily from the Company’s Strategic Network Alliance with Sprint increased 7% to $42.2 million for the fourth quarter 2012, compared to $39.6 million for the fourth quarter 2011. Wholesale and Other revenues for the year 2012 were $168.9 million, a 17% increase over $144.5 million for the year 2011; and
  • Adjusted EBITDA was $33.0 million for the fourth quarter 2012, compared to $34.0 million for the fourth quarter 2011. Adjusted EBITDA was $134.7 million for year 2012, compared to $143.1 million for the year 2011.

Total Subscribers

  • Total subscribers were 439,600 as of December 31, 2012, compared to 414,500 as of December 31, 2011;
  • Total gross additions for the fourth quarter were 46,200, compared to 41,600 for the same period of 2011. Total net subscriber additions for the fourth quarter were 9,300, compared to a loss of (500) for the same period in 2011; and
  • Total gross additions for 2012 were 171,300 compared to 158,100 in 2011. Total net subscriber additions for 2012 were 25,100, compared to a loss of (17,900) for 2011.

Postpay Subscribers

  • Postpay subscriber gross additions for the fourth quarter 2012 were 25,100, compared to 20,700 in the fourth quarter 2011 and 22,000 in the third quarter 2012;
  • Net postpay subscriber additions were 9,200 for the fourth quarter 2012, compared to a loss of (1,900) in the fourth quarter 2011 and up significantly from a gain of 4,900 in the third quarter 2012;
  • Postpay churn for the fourth quarter 2012 was 1.8%, compared to 2.6% in the fourth quarter 2011; and
  • As of December 31, 2012, total postpay subscribers were 297,400.

Prepay Subscribers

  • Prepay subscriber gross additions for the fourth quarter 2012 were 21,100, compared to 20,900 in the fourth quarter 2012 and 20,400 in the third quarter 2012;
  • Net prepay subscriber additions were 100 for the fourth quarter 2012, compared to a gain of 1,400 in the fourth quarter 2011 and net additions of 600 in the third quarter 2012;
  • Prepay churn for the fourth quarter 2012 was 4.9%, compared to 5.4% in the fourth quarter 2011; and
  • As of December 31, 2012, total prepay subscribers were 142,200.

Mr. Hyde concluded, “In 2012, we delivered strong operating results across the board as our expanding customer base continued to respond positively to our improved distribution and handset selection as well as our relentless focus on savings, simplicity and service. While we anticipate that the wireless industry will remain very competitive in 2013, we will continue to invest in our business to drive growth and generate value for all stakeholders.”

Discontinued Operations

The Company completed the separation of its wireless and wireline operations with the spin-off of Lumos Networks Corp. (LMOS) on October 31, 2011. The wireline results are reflected as Discontinued Operations for all periods presented. As such, the reported operating results reflect the wireless operations of the Company, including certain expenses related to the business separation.

Net Income

Net income after net income attributable to noncontrolling interests was $18.4 million, or $0.86 per diluted share, for the year 2012 compared to a loss of ($23.7) million, or ($1.11) per diluted share, for the year 2011, which included losses of ($45.4) million, or ($2.13) per diluted share, related to discontinued operations.

Declaration of Dividend

On February 25, 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 April 12, 2013 to stockholders of record on March 14, 2013.

Business Outlook

For the year ending December 31, 2013, the Company expects full year 2013 Adjusted EBITDA to be between $135.0 million and $145.0 million. In addition, the Company expects its full year 2013 capital expenditures to be between $75.0 million and $85.0 million.

Conference Call

The Company will host a conference call with investors and analysts to discuss its fourth quarter 2012 results this morning, February 28, 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 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 and continuing until March 7, 2013. A replay will also be available via telephone by dialing 1-877-344-7529, 1-412-317-0088 internationally and entering access code 10024764 beginning approximately one hour after the call and continuing until March 7, 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 derivatives, net income attributable to noncontrolling interests, other expenses/income, equity-based compensation charges, acquisition related charges, net income from discontinued operations and costs related to the separation of the wireless and wireline operations.

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 over 439,000 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 Nextel in the Company’s western Virginia and West Virginia service area for all Sprint CDMA wireless customers. Additional information about the Company is available at www.ntelos.com or www.facebook.com/nteloswireless and www.twitter.com/ntelos_wireless.

SPECIAL NOTE FROM THE COMPANY REGARDING 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.
Consolidated Balance Sheets
December 31, 2012 December 31, 2011
(In thousands)
ASSETS
Current Assets
Cash $ 76,197 $ 59,950
Restricted cash - 199
Accounts receivable, net 51,301 36,292
Inventories and supplies 9,581 7,570
Deferred income taxes 4,297 4,668
Prepaid expenses and other current assets 17,695 14,445
159,071 123,124
Securities and Investments 1,499 1,403
Property, Plant and Equipment, net 303,103 288,368
Intangible Assets
Goodwill 63,700 63,700
Radio spectrum licenses 132,033 132,318
Customer relationships and trademarks, net 9,996 13,336
Deferred Charges and Other Assets 10,712 10,409
Total Assets $ 680,114 $ 632,658
LIABILITIES AND EQUITY
Current Liabilities
Current portion of long-term debt $ 5,429 $ 4,412
Accounts payable 23,445 18,118
Dividends payable - 8,902
Advance billings and customer deposits 12,085 10,003
Accrued expenses and other current liabilities 22,372 14,316
63,331 55,751
Long-Term Debt 488,650 453,997
Other Long-Term Liabilities 83,598 71,776
Equity 44,535 51,134
Total Liabilities and Equity $ 680,114 $ 632,658
NTELOS Holdings Corp.
Consolidated Statements of Operations Three Months Ended Twelve Months Ended
(Unaudited) (Audited)
(In thousands, except per share amounts) December 31, 2012 December 31, 2011 December 31, 2012 December 31, 2011
Operating Revenues $ 117,398 $ 105,996 $ 453,989 $ 422,629
Operating Expenses
Cost of sales and services 47,420 37,188 174,683 143,323
Customer operations 30,691 29,847 120,150 117,105
Corporate operations 7,848 7,942 32,756 32,864
Depreciation and amortization 17,440 17,589 63,258 63,083
103,399 92,566 390,847 356,375
Operating Income 13,999 13,430 63,142 66,254
Other Expense
Interest expense (6,651 ) (5,463 ) (22,944 ) (23,380 )
Other expense, net (7,038 ) (1,174 ) (7,194 ) (3,071 )
(13,689 ) (6,637 ) (30,138 ) (26,451 )
Income (Loss) from Continuing Operations before Income Taxes 310 6,793 33,004 39,803
Income Taxes (454 ) 2,071 12,676 16,363
Income (Loss) from Continuing Operations 764 4,722 20,328 23,440
Discontinued Operations, net - (64,812 ) - (45,386 )
Net Income (Loss) 764 (60,090 ) 20,328 (21,946 )
Net Income Attributable to Noncontrolling Interests (443 ) (447 ) (1,941 ) (1,769 )
Net Income (Loss) Attributable to NTELOS Holdings Corp. $ 321 $ (60,537 ) $ 18,387 $ (23,715 )
Earnings (Loss) per Share Attributable to NTELOS Holdings Corp.: 1
Basic
Continuing operations $ 0.02 $ 0.21 $ 0.88 $ 1.04
Discontinued operations - (3.12 ) - (2.18 )
Total $ 0.02 $ (2.91 ) $ 0.88 $ (1.14 )
Diluted
Continuing operations $ 0.02 $ 0.20 $ 0.86 $ 1.02
Discontinued operations - (3.06 ) - (2.13 )
Total $ 0.02 $ (2.86 ) $ 0.86 $ (1.11 )
Weighted average shares outstanding - basic 20,922 20,817 20,889 20,779
Weighted average shares outstanding - diluted 21,380 21,187 21,337 21,276
Cash Dividends Declared per Share - Common Stock $ 0.42 $ 0.42 $ 1.68 $ 2.10
1 All share and per share amounts presented in this press release and on the Company's Form 10-K for 2011 have been adjusted for the impact of the reverse stock split which occurred after market close on October 31, 2011 in connection with the separation of the Company's wireless and wireline operations.
NTELOS Holdings Corp.
Reconciliation of Net Income (Loss) Attributable to NTELOS Holdings Corp. to Adjusted EBITDA
(In thousands)
Three Months Ended Twelve Months Ended
December 31, 2012 December 31, 2011 December 31, 2012 December 31, 2011
Net income (loss) attributable to NTELOS Holdings Corp. $ 321 $ (60,537 ) $ 18,387 $ (23,715 )
Net income (loss) attributable to noncontrolling interests 443 447 1,941 1,769
Net income (loss) $ 764 $ (60,090 ) $ 20,328 $ (21,946 )
Discontinued operations, net - (64,812 ) - (45,386 )
Income (loss) from continuing operations $ 764 $ 4,722 $ 20,328 $ 23,440
Interest expense 6,651 5,463 22,944 23,380
Income taxes (454 ) 2,071 12,676 16,363
Other expense, net 7,038 1,174 7,194 3,071
Operating income $ 13,999 $ 13,430 $ 63,142 $ 66,254
Depreciation and amortization 17,440 17,589 63,258 63,083
Accretion of asset retirement obligations 174 156 637 658
Equity-based compensation 1,346 1,225 6,029 6,072
Business separation charges 1 56 1,608 1,660 6,997
Adjusted EBITDA $ 33,015 $ 34,008 $ 134,726 $ 143,064
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 Twelve Months Ended
Quarter Ended: 12/31/2011 3/31/2012 6/30/2012 9/30/2012 12/31/2012 12/31/2012 12/31/2011
Subscribers
Beginning Subscribers 415,000 414,500 421,300 424,800 430,300 414,500 432,400
Prepay 119,900 122,100 135,300 139,400 141,400 122,100 125,600
Postpay 295,100 292,400 286,000 285,400 288,900 292,400 306,800
Gross Additions 41,600 45,900 36,800 42,400 46,200 171,300 158,100
Prepay 20,900 28,900 20,000 20,400 21,100 90,400 85,100
Postpay 20,700 17,000 16,800 22,000 25,100 80,900 73,000
Disconnections 42,100 39,100 33,300 36,900 36,900 146,200 176,000
Prepay 19,500 17,300 17,200 19,800 21,000 75,300 90,500
Postpay 22,600 21,800 16,100 17,100 15,900 70,900 85,500
Net Additions (Losses) (500 ) 6,800 3,500 5,500 9,300 25,100 (17,900 )
Prepay 1,400 11,600 2,800 600 100 15,100 (5,400 )
Postpay (1,900 ) (4,800 ) 700 4,900 9,200 10,000 (12,500 )
Ending Subscribers 414,500 421,300 424,800 430,300 439,600 439,600 414,500
Prepay 122,100 135,300 139,400 141,400 142,200 142,200 122,100
Postpay 292,400 286,000 285,400 288,900 297,400 297,400 292,400
Churn, net 3.4 % 3.1 % 2.6 % 2.9 % 2.8 % 2.9 % 3.5 %
Prepay 5.4 % 4.5 % 4.2 % 4.7 % 4.9 % 4.6 % 6.1 %
Postpay 2.6 % 2.5 % 1.9 % 2.0 % 1.8 % 2.0 % 2.4 %
Other Items
ARPU $ 48.57 $ 49.08 $ 49.41 $ 50.93 $ 52.78 $ 50.57 $ 49.79
Prepay $ 33.01 $ 36.56 $ 34.89 $ 34.50 $ 35.41 $ 35.31 $ 33.76
Postpay $ 54.94 $ 54.63 $ 56.42 $ 58.97 $ 61.19 $ 57.82 $ 56.39
Data ARPU $ 17.36 $ 19.05 $ 19.65 $ 20.25 $ 21.03 $ 20.00 $ 15.86
Licensed Population (millions) 8.1 8.1 8.1 8.1 7.9 7.9 8.1
Covered Population (millions) 5.9 5.9 6.0 6.0 6.0 6.0 5.9
Total Cell Sites 1,353 1,365 1,378 1,396 1,429 1,429 1,353
Strategic Network Alliance Revenues (000's)
Total Voice $ 23,122 $ 23,533 $ 23,856 $ 24,655 $ 24,141 $ 96,185 $ 88,678
Total Data 14,780 16,347 16,536 16,971 16,606 66,460 48,332
Total $ 37,902 $ 39,880 $ 40,392 $ 41,626 $ 40,747 $ 162,645 $ 137,010
NTELOS Holdings Corp.
ARPU Reconciliation Three Months Ended Twelve Months Ended
Average Monthly Revenue per User (ARPU) 1 December 31, 2012 December 31, 2011 December 31, 2012 December 31, 2011
(In thousands, except for subscribers and ARPU)
Operating Revenues $ 117,398 $ 105,996 $ 453,989 $ 422,629
Less: Equipment revenue from sales to new customers (3,808 ) (2,877 ) (15,041 ) (9,091 )
Less: Equipment revenue from sales to existing customers (3,315 ) (3,642 ) (15,037 ) (17,793 )
Less: Wholesale, other and adjustments (41,488 ) (39,326 ) (165,765 ) (143,477 )
Gross subscriber revenue 68,787 60,151 258,146 252,268
Less: prepay subscriber revenue (14,823 ) (11,588 ) (56,330 ) (48,758 )
Less: adjustments to prepay subscriber revenue (237 ) (304 ) (1,706 ) (1,175 )
Gross postpay subscriber revenue $ 53,727 $ 48,259 $ 200,110 $ 202,335
Prepay subscriber revenue 14,823 11,588 56,330 48,758
Plus: adjustments to prepay subscriber revenue 237 304 1,706 1,175
Gross prepay subscriber revenue $ 15,060 $ 11,892 $ 58,036 $ 49,933
Average number of subscribers 434,457 412,851 425,377 422,256
Total ARPU $ 52.78 $ 48.57 $ 50.57 $ 49.79
Average number of postpay subscribers 292,668 292,775 288,428 298,992
Postpay ARPU $ 61.19 $ 54.94 $ 57.82 $ 56.39
Average number of prepay subscribers 141,789 120,076 136,949 123,264
Prepay ARPU $ 35.41 $ 33.01 $ 35.31 $ 33.76
Gross subscriber revenue 68,787 60,151 258,146 252,268
Less: voice and other feature revenue (41,379 ) (38,651 ) (156,032 ) (171,882 )
Data revenue $ 27,408 $ 21,500 $ 102,114 $ 80,386
Average number of subscribers 434,457 412,851 425,377 422,256
Total Data ARPU $ 21.03 $ 17.36 $ 20.00 $ 15.86
Gross postpay subscriber revenue 53,727 48,259 200,110 202,335
Less: postpay voice and other feature revenue (34,651 ) (33,224 ) (130,601 ) (144,114 )
Postpay data revenue $ 19,076 $ 15,035 $ 69,509 $ 58,221
Gross prepay subscriber revenue 15,060 11,892 58,036 49,933
Less: prepay voice and other feature revenue (6,728 ) (5,427 ) (25,431 ) (27,768 )
Prepay data revenue $ 8,332 $ 6,465 $ 32,605 $ 22,165
Average number of postpay subscribers 292,668 292,775 288,428 298,992
Postpay data ARPU $ 21.73 $ 17.12 $ 20.08 $ 16.23
Average number of prepay subscribers 141,789 120,076 136,949 123,264
Prepay data ARPU $ 19.59 $ 17.95 $ 19.84 $ 14.99
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.

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