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Press Release -- July 28th, 2014
Source: nTelos
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NTELOS Holdings Corp. Reports Second Quarter 2014 Results

-Renewed Agreement with Sprint extended to December 2022 -Ninth Consecutive Quarter of Positive Net Postpay Adds
Company Release - 07/28/2014 06:10

WAYNESBORO, Va., July 28, 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 second quarter ended June 30, 2014.

Second Quarter 2014 Highlights

  • Extended and amended Strategic Network Alliance ("SNA") with Sprint until December 2022;
  • Launched 4G LTE in Richmond and Norfolk metropolitan markets, providing coverage of 2.8 million POPs as of June 30, 2014;
  • Operating revenues were $117.8 million for the second quarter 2014; compared to $119.9 million for the second quarter 2013; and
  • Adjusted EBITDA was $34.4 million for the second quarter 2014, compared to $41.2 million for the second quarter 2013.

"The successful extension and expansion of our SNA with Sprint during the quarter marked a significant milestone for nTelos. We are pleased with this outcome as it paves the way for nTelos to build the most robust network in our footprint and to deliver an improved user experience to our retail and wholesale customers," said Michael A. Huber, Chairman of the Board of NTELOS Holdings Corp.

Subscriber Highlights

Total Subscribers

  • Total subscribers were 458,100 as of June 30, 2014, compared to 454,800 for the same period of 2013;
  • Total subscriber gross additions for the second quarter 2014 were 39,000, compared to 40,100 for the same period of 2013; and
  • Total net subscriber additions for the second quarter 2014 were 400, compared to 3,800 for the same period of 2013.

Postpay Subscribers

  • Postpay subscriber gross additions for the second quarter 2014 were 20,400, compared to 16,300 for the second quarter 2013 and 20,200 for the first quarter 2014;
  • Net postpay subscriber additions were 3,300 for the second quarter 2014, compared to 200 for the second quarter 2013 and 300 for the first quarter 2014;
  • Postpay churn for the second quarter 2014 was 1.8%, compared to 1.8% for the second quarter 2013;
  • ARPA increased 2.9% to $137.20 for the second quarter 2014, compared to $133.34 for the same period in 2013; and
  • As of June 30, 2014, total postpay subscribers were 308,200.

Prepay Subscribers

  • Prepay subscriber gross additions for the second quarter 2014 were 18,600, compared to 23,800 for the second quarter 2013 and 25,200 for the first quarter 2014;
  • Net prepay subscriber additions (losses) were (2,900) for the second quarter 2014, compared to 3,600 for the second quarter 2013 and 3,100 for the first quarter 2014;
  • Prepay churn for the second quarter 2014 was 4.5%, compared to 4.4% for the second quarter 2013; and
  • As of June 30, 2014, total prepay subscribers were 149,900.

"During the quarter, we delivered solid results in an increasingly competitive operating environment. We will continue to make strategic investments in the business to improve our operations and to drive increased shareholder value," said Stebbins B. Chandor, EVP & Chief Financial Officer of NTELOS Holdings Corp.

Net Income
Net income after net income attributable to noncontrolling interests was $0.5 million, or $0.02 per diluted share, for the first quarter 2014, compared to $9.4 million, or $0.43 per diluted share, for the second quarter 2013.

Business Outlook
For the year ending December 31, 2014, the Company reiterates its full year 2014 Adjusted EBITDA guidance of between $128.0 million and $135.0 million and full year 2014 capital expenditures guidance of between $110.0 million and $120.0 million.

Conference Call
The Company will host a conference call with investors and analysts to discuss its second quarter 2014 results this morning, July 28, 2014, at 8:00 a.m. ET. To participate, please dial 1-888-317-6002, 1-855-669-9657 in Canada and 1-412-317-1083 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 10049798 beginning approximately one hour after the call and continuing until August 12, 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, adjustments for impact of recognizing a portion of the billed SNA contract revenues on a straight line basis 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 and provide liquidity for future growth. ARPA provides management with useful information concerning the appeal of the Company's postpay 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.

During the quarter, the Company terminated approximately 2,100 postpay subscribers that repeatedly exceeded their terms and conditions relating to permitted usage. Additionally, the Company changed its business rules related to reporting of long-term, non-revenue producing prepay subscribers. This change resulted in approximately 8,200 prepay subscribers being excluded from our ending subscriber base. The impact of these Company-initiated terminations and change in business rules is reflected in the ending subscriber totals as of June 30, 2014 and is not reflected in our disconnections, net additions and churn calculations for the periods ended June 30, 2014.

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 458,100 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 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 Corporation in the western Virginia and West Virginia portions of its territories for all Sprint CDMA and LTE 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

Investor Relations Contacts:

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

NTELOS Holdings Corp.

Condensed Consolidated Balance Sheets

(Unaudited)

(Unaudited)

June 30, 2014

December 31, 2013

(In thousands)

ASSETS

Current Assets

Cash

$ 108,340

$ 88,441

Restricted cash

2,167

2,167

Accounts receivable, net

41,947

37,740

Inventories and supplies

15,501

23,962

Deferred income taxes

8,970

10,650

Prepaid expenses and other current assets

18,819

20,808

195,744

183,768

Securities and Investments

1,499

1,499

Property, Plant and Equipment, net

320,795

319,376

Intangible Assets

Goodwill

63,700

63,700

Radio spectrum licenses

131,838

131,834

Customer relationships and trademarks, net

5,479

6,985

Deferred Charges and Other Assets

11,117

9,089

Total Assets

$ 730,172

$ 716,251

LIABILITIES AND EQUITY

Current Liabilities

Current portion of long-term debt

$ 5,835

$ 5,410

Accounts payable

21,812

33,677

Dividends payable

9,104

9,034

Accrued expenses and other current liabilities

32,318

31,389

69,069

79,510

Long-Term Debt

521,978

484,956

Other Long-Term Liabilities

109,716

107,992

Equity

29,409

43,793

Total Liabilities and Equity

$ 730,172

$ 716,251

NTELOS Holdings Corp.

Condensed Consolidated Statements of Income

Three Months Ended

Six Months Ended

(Unaudited)

(Unaudited)

(In thousands, except per share amounts)

June 30, 2014

June 30, 2013

June 30, 2014

June 30, 2013

Operating Revenues

$ 117,795

$ 119,859

$ 239,877

$ 239,204

Operating Expenses

Cost of sales and services

47,439

42,567

94,763

87,102

Customer operations

31,329

29,977

65,420

60,931

Corporate operations

9,194

7,760

18,931

15,664

Depreciation and amortization

19,929

20,443

38,996

38,899

Gain on sale of intangible assets

-

(4,442)

-

(4,442)

107,891

96,305

218,110

198,154

Operating Income

9,904

23,554

21,767

41,050

Other Expense

Interest expense

(8,315)

(7,398)

(16,274)

(14,759)

Other income (expense), net

(92)

151

(1,164)

(218)

(8,407)

(7,247)

(17,438)

(14,977)

Income before Income Taxes

1,497

16,307

4,329

26,073

Income Taxes

640

6,380

1,750

10,124

Net Income

857

9,927

2,579

15,949

Net Income Attributable to Noncontrolling Interests

(373)

(541)

(809)

(1,070)

Net Income Attributable to NTELOS Holdings Corp.

$ 484

$ 9,386

$ 1,770

$ 14,879

Earnings per Share Attributable to NTELOS Holdings Corp.:

Basic

$ 0.02

$ 0.45

$ 0.08

$ 0.71

Weighted average shares outstanding - basic

21,099

21,027

21,090

20,962

Diluted

$ 0.02

$ 0.43

$ 0.08

$ 0.69

Weighted average shares outstanding - diluted

22,039

21,779

22,037

21,613

Cash Dividends Declared per Share - Common Stock

$ 0.42

$ 0.42

$ 0.84

$ 0.84

NTELOS Holdings Corp.

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

(In thousands)

Three Months Ended

Six Months Ended

June 30, 2014

June 30, 2013

June 30, 2014

June 30, 2013

Net income attributable to NTELOS Holdings Corp.

$ 484

$ 9,386

$ 1,770

$ 14,879

Net income attributable to noncontrolling interests

373

541

809

1,070

Net income

$ 857

$ 9,927

$ 2,579

$ 15,949

Interest expense

8,315

7,398

16,274

14,759

Income taxes

640

6,380

1,750

10,124

Other expense (income), net

92

(151)

1,164

218

Operating income

$ 9,904

$ 23,554

$ 21,767

$ 41,050

Depreciation and amortization

19,929

20,443

38,996

38,899

Gain on sale of intangible assets

-

(4,442)

-

(4,442)

Accretion of asset retirement obligations

331

173

646

316

Equity-based compensation

1,283

1,460

2,594

2,781

SNA straight-line adjustment 1

2,043

-

2,043

-

Other 2

874

-

2,241

-

Adjusted EBITDA

$ 34,364

$ 41,188

$ 68,287

$ 78,604

1

Adjustment for impact of recognizing a portion of the billed SNA contract revenues on a straight line basis.

2

Other includes legal and advisory fees related to new Sprint agreement and certain employee

separation charges.

NTELOS Holdings Corp.

Key Metrics

Six Months Ended

Quarter Ended:

6/30/2013

9/30/2013

12/31/2013

3/31/2014

6/30/2014

6/30/2013

6/30/2014

Subscribers

Beginning Subscribers

451,000

454,800

457,100

464,600

468,000

439,600

464,600

Postpay

299,700

298,700

298,000

306,700

306,800

297,400

306,700

Prepay

151,300

156,100

159,100

157,900

161,200

142,200

157,900

Gross Additions

40,100

44,500

50,800

45,400

39,000

88,600

84,400

Postpay

16,300

20,000

28,700

20,200

20,400

36,500

40,600

Prepay

23,800

24,500

22,100

25,200

18,600

52,100

43,800

Disconnections 1

36,300

42,200

43,300

42,000

38,600

73,400

80,600

Postpay

16,100

19,600

19,800

19,900

17,100

33,000

37,000

Prepay

20,200

22,600

23,500

22,100

21,500

40,400

43,600

Net Additions (Losses) 1

3,800

2,300

7,500

3,400

400

15,200

3,800

Postpay

200

400

8,900

300

3,300

3,500

3,600

Prepay

3,600

1,900

(1,400)

3,100

(2,900)

11,700

200

Ending Subscribers 1

454,800

457,100

464,600

468,000

458,100

454,800

458,100

Postpay

298,700

298,000

306,700

306,800

308,200

298,700

308,200

Prepay

156,100

159,100

157,900

161,200

149,900

156,100

149,900

Churn, net 1

2.7%

3.1%

3.1%

3.0%

2.8%

2.7%

2.9%

Postpay

1.8%

2.2%

2.2%

2.2%

1.8%

1.8%

2.0%

Prepay

4.4%

4.8%

4.9%

4.6%

4.5%

4.5%

4.6%

Other Items

ARPA Statistics

ARPA

$ 133.34

$ 136.90

$ 136.88

$ 137.47

$ 137.20

$ 132.01

$ 137.34

Ending Postpay Accounts

141,400

140,200

141,200

138,400

140,500

141,400

140,500

Postpay Subscribers per Account

2.1

2.1

2.2

2.2

2.2

2.1

2.2

Strategic Network Alliance Revenues (000's)2

Billed Revenue

$ 39,607

$ 48,644

$ 39,326

$ 39,284

$ 37,997

$ 79,759

$ 77,281

Straight-Line Adjustment

-

-

-

-

(2,043)

-

(2,043)

Spectrum Lease Consideration

-

-

-

-

822

-

822

SNA Revenues - As Reported

$ 39,607

$ 48,644

$ 39,326

$ 39,284

$ 36,776

$ 79,759

$ 76,060

Network Statistics

Licensed Population (millions)

7.9

7.9

8.0

8.0

8.0

7.9

8.0

Covered Population (millions)

6.0

6.0

6.0

6.0

6.0

6.0

6.0

Total Cell Sites

1,432

1,434

1,444

1,444

1,445

1,432

1,445

1

During the quarter, the Company terminated approximately 2,100 postpay subscribers that repeatedly exceeded their terms and conditions relating to permitted usage. Additionally, the Company changed its business rules related to reporting of long-term, non-revenue prepay subscribers. This change resulted in approximately 8,200 prepay subscribers being excluded from our ending subscriber base. The impact of these Company-initiated terminations and change in business rules is reflected in our ending subscriber totals as of June 30, 2014, and is not reflected in our disconnections, net additions and churn calculations for the periods ended June 30, 2014.

2

Effective 5/1/14, SNA Revenues include the impact of recognizing the fixed fee element of SNA contract revenues on a straightline basis, which is a reduction of billed revenue, and the non-cash consideration attributable to spectrum lease. We have recognized an equal charge for spectrum lease expense within cost of sales and services.

NTELOS Holdings Corp.

ARPA Reconciliation - Postpay

Three Months Ended

Six Months Ended

Average Monthly Revenue per Account (ARPA) 1

June 30, 2014

June 30, 2013

June 30, 2014

June 30, 2013

(In thousands, except for accounts and ARPA)

Operating revenues

$ 117,795

$ 119,859

$ 239,877

$ 239,204

Less: prepay service revenues

(16,206)

(16,182)

(33,166)

(31,866)

Less: equipment revenues

(6,560)

(5,499)

(14,051)

(12,137)

Less: wholesale and other adjustments

(37,900)

(41,179)

(77,918)

(82,097)

Postpay service revenues

$ 57,129

$ 56,999

$ 114,742

$ 113,104

Average number of postpay accounts

138,800

142,500

139,200

142,800

Postpay ARPA

$ 137.20

$ 133.34

$ 137.34

$ 132.01

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.

SOURCE NTELOS Holdings Corp.

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