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Press Release -- May 7th, 2014
Source: nTelos
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NTELOS Holdings Corp. Reports First Quarter 2014 Results

-Ninth Consecutive Quarter of Positive Net Adds  -Total Subscribers increased 4% to 468,000 from 2013  -Retail Revenue up 5% to $81.4 million from 2013
Company Release - 05/07/2014 06:00

WAYNESBORO, Va., May 7, 2014 /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 and financial results for its first quarter ended March 31, 2014.

First Quarter 2014 Financial Highlights

  • Operating revenues increased 2% to $122.1 million for the first quarter 2014, compared to $119.3 million for the first quarter 2013;
  • Retail revenues, which include subscriber and equipment revenues, increased 5% to $81.4 million for the first quarter 2014, compared to $77.6 million for the first quarter 2013;
  • Wholesale and other revenues, derived primarily from the Company's Strategic Network Alliance with Sprint, were $40.7 million for the first quarter 2014, compared to $41.8 million for the first quarter 2013; and
  • Adjusted EBITDA was $33.9 million for the first quarter 2014, compared to $37.4 million for the first quarter 2013.

"The competitive atmosphere in the wireless industry showed no signs of tempering in the first quarter of 2014," said James A. Hyde, CEO of NTELOS Holdings Corp. "Against this challenging backdrop, nTelos has successfully adapted, positioning nControl as a compelling alternative to the restrictive plans offered by the national carriers. Our strategic shift to a shared plan offering, along with our focus on providing more freedom and flexibility, helped nTelos post our ninth consecutive quarter of positive subscriber growth. Based on the initial success of nControl, we plan to aggressively introduce additional features and options that will further enhance the offering."

Subscriber Highlights

Total Subscribers

  • Total subscribers were 468,000 as of March 31, 2014, compared to 451,000 for the same period of 2013;
  • Total subscriber gross additions for the first quarter 2014 were 45,400, compared to 48,500 for the same period of 2013; and
  • Total net subscriber additions for the first quarter 2014 were 3,400, compared to 11,400 for the same period of 2013.

Postpay Subscribers

  • Postpay subscriber gross additions for the first quarter 2014 were 20,200, compared to 20,200 for the first quarter 2013 and 28,700 for the fourth quarter 2013;
  • Net postpay subscriber additions were 300 for the first quarter 2014, compared to 3,300 for the first quarter 2013 and 8,900 for the fourth quarter 2013;
  • Postpay churn for the first quarter 2014 was 2.2%, compared to 1.9% for the first quarter 2013;
  • ARPA increased 5% to $137.47 for the first quarter 2014, compared to $130.69 for the same period in 2013; and
  • As of March 31, 2014, total postpay subscribers were 306,800.

Prepay Subscribers

  • Prepay subscriber gross additions for the first quarter 2014 were 25,200, compared to 28,300 for the first quarter 2013 and 22,100 for the fourth quarter 2013;
  • Net prepay subscriber additions (losses) were 3,100 for the first quarter 2014, compared to 8,100 for the first quarter 2013 and (1,400) for the fourth quarter 2013;
  • Prepay churn for the first quarter 2014 was 4.6%, compared to 4.6% for the first quarter 2013; and
  • As of March 31, 2014, total prepay subscribers were 161,200.

Mr. Hyde concluded, "The wireless environment remains very dynamic.  In addition to launching new features that should further enhance our nControl plans, we will also continue to deploy LTE throughout our footprint to ensure all customers get the best possible network experience and access to high speed mobile broadband services.  We believe our focus on execution will allow us to drive value for all of our key stakeholders."

Net Income

Net income after net income attributable to noncontrolling interests was $1.3 million, or $0.06 per diluted share, for the first quarter 2014, compared to $5.5 million, or $0.25 per diluted share, for the first quarter 2013.

Declaration of Dividend

On May 1, 2014, 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 July 11, 2014 to stockholders of record on June 13, 2014.

Business Outlook

For the year ending December 31, 2014, the Company reiterates its full year 2014 Adjusted EBITDA guidance of between $140.0 million and $150.0 million and full year 2014 capital expenditures guidance of between $85.0 million and $95.0 million.

Conference Call

The Company will host a conference call with investors and analysts to discuss its first quarter 2014 results this morning, May 7, 2014, at 10:00 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, 1-855-669-9858 in Canada or 1-412-317-0088 internationally and entering access code 10045052 beginning approximately one hour after the call and continuing until May 22, 2014.

Non-GAAP Measures

Adjusted EBITDA is defined as net income attributable to NTELOS Holdings Corp. before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, gain/loss on sale of assets and derivatives, net income attributable to noncontrolling interests, other expenses/income, equity-based compensation charges, separation charges, secondary offering costs, net loss from discontinued operations and acquisition related charges.

ARPA, or average monthly revenue per account, is computed by dividing service revenues per period by the average number of accounts during that period.  Please see the footnotes in the exhibits for a complete definition of this measure.

Adjusted EBITDA is a key metric used by investors to determine if the Company is generating sufficient cash flows to continue to produce shareholder value, provide liquidity for future growth and continue to fund dividends.  ARPA 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 ARPA are non-GAAP financial performance measures.  They should not be considered in isolation or as an alternative to measures determined in accordance with accounting principles generally accepted in the United States of America ("GAAP").  Please refer to the exhibits and materials posted on the Company's website for a reconciliation of these non-GAAP financial performance measures to the most comparable measures reported in accordance with GAAP and for a discussion of the presentation, comparability and use of such financial performance measures.

About NTELOS

NTELOS Holdings Corp. (NTLS), operating through its subsidiaries as "nTelos Wireless," is headquartered in Waynesboro, VA, and provides high-speed, dependable nationwide voice and data coverage for approximately 468,000 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 8.0 million residents, of which its wireless network covers approximately 6.0 million residents. The Company is also the exclusive wholesale provider of network services to Sprint Nextel in the western Virginia and West Virginia portions of its territories 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:

  • Condensed Consolidated Balance Sheets
  • Condensed Consolidated Statements of Income
  • Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Adjusted EBITDA
  • Key Metrics
  • ARPA Reconciliation – Postpay
NTELOS Holdings Corp.
Condensed Consolidated Balance Sheets (Unaudited) (Unaudited)
March 31, 2014 December 31, 2013
(In thousands)
ASSETS
Current Assets  
Cash $                121,038 $                 88,441
Restricted cash 2,167 2,167
Accounts receivable, net 36,545 37,740
Inventories and supplies 15,663 23,962
Deferred income taxes 9,751 10,650
Prepaid expenses and other current assets 21,513 20,808
206,677 183,768
Securities and Investments 1,499 1,499
Property, Plant and Equipment, net  322,331 319,376
Intangible Assets 
Goodwill 63,700 63,700
Radio spectrum licenses 131,834 131,834
Customer relationships and trademarks, net 6,232 6,985
Deferred Charges and Other Assets 11,628 9,089
Total Assets $                743,901 $                716,251
LIABILITIES AND EQUITY  
Current Liabilities 
Current portion of long-term debt $                   5,824 $                   5,410
Accounts payable 29,816 33,677
Dividends payable 9,096 9,034
Accrued expenses and other current liabilities 30,821 31,389
75,557 79,510
Long-Term Debt 523,036 484,956
Other Long-Term Liabilities 107,614 107,992
Equity  37,694 43,793
Total Liabilities and Equity  $                743,901 $                716,251
NTELOS Holdings Corp.
Condensed Consolidated Statements of Income Three Months Ended
(Unaudited)
(In thousands, except per share amounts) March 31, 2014 March 31, 2013
Operating Revenues   $        122,082 $        119,345
Operating Expenses 
Cost of sales and services 47,324 44,535
Customer operations 34,091 30,954
Corporate operations 9,737 7,904
Depreciation and amortization 19,067 18,456
110,219 101,849
Operating Income 11,863 17,496
Other Expense
Interest expense (7,959) (7,361)
Other expense, net (1,072) (369)
(9,031) (7,730)
Income (Loss) before Income Taxes 2,832 9,766
Income Taxes    1,110 3,744
Net Income (Loss) 1,722 6,022
Net Income Attributable to Noncontrolling Interests (436) (529)
Net Income (Loss) Attributable to NTELOS Holdings Corp. $            1,286 $           5,493
Earnings per Share Attributable to NTELOS Holdings Corp.:
Basic $             0.06 $             0.26
Weighted average shares outstanding - basic 21,081 20,960
Diluted $             0.06 $             0.25
Weighted average shares outstanding - diluted 22,024 21,550
Cash Dividends Declared per Share - Common Stock $             0.42 $             0.42
NTELOS Holdings Corp.
Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Adjusted EBITDA 
(In thousands)
 Three Months Ended 
March 31, 2014 March 31, 2013
Net income attributable to NTELOS Holdings Corp. $                   1,286 $                   5,493
Net income attributable to noncontrolling interests 436 529
Net income   $                   1,722 $                   6,022
Interest expense 7,959 7,361
Income taxes 1,110 3,744
Other expense, net 1,072 369
Operating income $                 11,863 $                 17,496
Depreciation and amortization 19,067 18,456
Accretion of asset retirement obligations 315 143
Equity-based compensation 1,311 1,321
Other 1 1,367 -
Adjusted EBITDA $                 33,923 $                 37,416
1 2014 includes $1.4 million charge related to certain employee separation expenses.
See Form 8-K filed with the SEC on March 18, 2014 for additional information.
NTELOS Holdings Corp.
Key Metrics
Quarter Ended: 3/31/2013 6/30/2013 9/30/2013 12/31/2013 3/31/2014
Subscribers
Beginning Subscribers 439,600 451,000 454,800 457,100 464,600
Postpay 297,400 299,700 298,700 298,000 306,700
Prepay 142,200 151,300 156,100 159,100 157,900
Gross Additions 48,500 40,100 44,500 50,800 45,400
Postpay 20,200 16,300 20,000 28,700 20,200
Prepay 28,300 23,800 24,500 22,100 25,200
Disconnections 37,100 36,300 42,200 43,300 42,000
Postpay 16,900 16,100 19,600 19,800 19,900
Prepay 20,200 20,200 22,600 23,500 22,100
Net Additions (Losses) 11,400 3,800 2,300 7,500 3,400
Postpay 3,300 200 400 8,900 300
Prepay 8,100 3,600 1,900 (1,400) 3,100
Ending Subscribers 451,000 454,800 457,100 464,600 468,000
Postpay 299,700 298,700 298,000 306,700 306,800
Prepay 151,300 156,100 159,100 157,900 161,200
Churn, net 2.8% 2.7% 3.1% 3.1% 3.0%
Postpay 1.9% 1.8% 2.2% 2.2% 2.2%
Prepay 4.6% 4.4% 4.8% 4.9% 4.6%
Other Items
ARPA STATISTICS
ARPA $    130.69 $    133.34 $    136.90 $    136.88 $    137.47
Postpay Accounts 1 143,300 141,400 140,200 141,200 138,400
Postpay Subscribers per Account 1 2.1 2.1 2.1 2.2 2.2
Licensed Population (millions) 7.9 7.9 7.9 8.0 8.0
Covered Population (millions) 6.0 6.0 6.0 6.0 6.0
Total Cell Sites 1,431 1,432 1,434 1,444 1,444
SNA Revenues (000's) $    40,152 $    39,607 $    48,644 $    39,326 $    39,284
1 End of Period
NTELOS Holdings Corp.
ARPA Reconciliation - Postpay  Three Months Ended 
Average Monthly Revenue per Account (ARPA) 1   March 31, 2014   March 31, 2013 
(In thousands, except for accounts and ARPA)
Operating revenues $               122,082 $               119,345
Less:  prepay service revenues (16,960) (15,684)
Less:  equipment revenues (7,491) (6,638)
Less:  wholesale and other adjustments (40,018) (40,918)
 Postpay service revenues $                 57,613 $                 56,105
Average number of postpay accounts 139,700 143,100
 Postpay ARPA $                 137.47 $                 130.69
1 Average monthly revenue per account (ARPA) is computed by dividing postpay service revenues per period by the average number of postpay accounts during that period. ARPA as defined may not be similar to ARPA measures of other companies, is not a measurement under GAAP and should be considered in addition to, but not as a substitute for, the information contained in the Company's consolidated statements of operations. The Company closely monitors the effects of new rate plans and service offerings on ARPA in order to determine their effectiveness.  ARPA provides management useful information concerning the appeal of NTELOS rate plans and service offerings and the Company's performance in attracting and retaining high-value customers.

Investor Relations Contacts:

Jeffrey Goldberger / Rob Fink
KCSA Strategic Communications
P: 212-896-1249 / 212-896-1206
Email: jgoldberger@kcsa.com / rfink@kcsa.com

SOURCE NTELOS Holdings Corp.

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