WAYNESBORO, Va.–(BUSINESS WIRE)–
Lumos Networks Corp. (“Lumos Networks”, “Lumos” or the “Company”) (LMOS), a leading fiber-based service provider in the Mid-Atlantic region, today announced its third quarter of 2016 results. Total revenue in the third quarter of 2016 was $51.8 million, an increase of nearly 2% from the prior year period. The Company generated operating income of $9.2 million for the three months ended September 30, 2016, up nearly 7% year-over-year. Net Income attributable to Lumos Networks Corp. was $1.0 million, or $0.04 per diluted share, for the third quarter of 2016, down from $1.3 million in the prior year period. Total Adjusted EBITDA was nearly $24.3 million, up nearly 9% from the prior year period.
“Lumos Networks executed well in three focus areas in the third quarter,” said Timothy G. Biltz, President and CEO of Lumos Networks. “First, we demonstrated strong operational performance in the quarter with 10% data revenue growth and total Adjusted EBITDA growth of nearly 9%. Our Enterprise data revenue growth accelerated from over 14% in the second quarter to over 17% in the third quarter, which we view to be a clear industry leading result.”
“Our combined FTTC and Enterprise businesses, which are approximately 95% tied to Ethernet and other advanced fiber products, grew nearly 20% year-over-year in the third quarter,” Mr. Biltz continued. “Adjusted EBITDA within our data business reached nearly $14.6 million in the quarter, up over 19% versus the year ago period.”
Mr. Biltz continued, “Given our continued solid execution year to date and the continued expected strong demand from our Carrier and Enterprise customers, we reiterate our 2016 annual guidance for revenue of $206 to $210 million and Adjusted EBITDA of $93 to $96 million.”
“Secondly, we completed our network separation analysis. Not only did we ascertain the feasibility of the separation of our regulated assets, we began physical separation of the network during the third quarter. We have hired UBS Investment Bank to pursue strategic alternatives for our regulated legacy assets and that process is well underway.”
“Lastly, we entered into an agreement to acquire Clarity Communications, a fiber bandwidth provider with a 730 fiber route mile network throughout the Southeast,” said Mr. Biltz. “We expect that all of the key sales personnel from Clarity will remain to form the core nucleus for our new North Carolina operations, which brings a significant level of expertise to our new government sales channel. We also expect to immediately begin cross-selling these new capabilities across our 9,200 Mid-Atlantic fiber route mile footprint.”
Business Outlook
For the full year 2016, the Company reiterates its financial guidance for revenue of $206 to $210 million, Adjusted EBITDA of $93 to $96 million and capital expenditures of $85 to $95 million.
Please see the schedules accompanying this release for additional financial guidance, including reconciliations of non-GAAP measures to GAAP results.
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, Chief Executive Officer, Johan Broekhuysen, Chief Financial Officer, and Will Davis, SVP of Marketing and Investor Relations, Chief of Staff to discuss today’s announcement and to review these financial and operational results and financial guidance will be held at 10:00 A.M. (ET) on November 9, 2016.
The webcast may be accessed via the Internet at http://ir.lumosnetworks.com/ and the live call (“Lumos Networks Third Quarter Earnings Conference Call”) may be accessed with the following numbers:
Domestic: 1-877-510-3772
International: 1-412-902-4135
Canada: 1-855-669-9657
The conference call will be archived and available for replay through November 24, 2016 and may be accessed with the following numbers:
Domestic: 1-877-344-7529
International: 1-412-317-0088
Canada: 1-855-669-9658
Replay pass codes: Conference ID: 10095208
The webcast will also be archived and the replay may be accessed at http://ir.lumosnetworks.com/.
About Lumos Networks
Lumos Networks is a leading fiber-based service provider in the Mid-Atlantic region serving Carrier, Enterprise and Data Center customers, offering end-to-end connectivity in 24 markets in Virginia, Pennsylvania, West Virginia, Maryland, Ohio and Kentucky. With a fiber network of 9,204 fiber route miles and 475,507 total fiber strand miles, Lumos Networks connects 1,297 unique Fiber to the Cell sites, 1,642 total FTTC connections, 36 data centers, including 7 company owned co-location facilities, 1,984 on-net buildings and approximately 3,300 total on-net locations. In 2015, Lumos Networks generated over $114 million in Data revenue over our fiber network. Detailed information about Lumos Networks is available at www.lumosnetworks.com.
Non-GAAP Measures
Contribution Margin is net income or loss attributable to Lumos Networks Corp. before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, net income attributable to noncontrolling interests, other (income) expenses, net, employee separation charges, restructuring charges, gain or loss on interest rate swap derivatives, corporate general and administrative expenses, including equity-based compensation, acquisition and separation related charges and amortization of actuarial gains or losses, and indirect operating expenses. Contribution Margin ratio is calculated as the ratio of Contribution Margin, as defined, to operating revenues.
Adjusted EBITDA is net income attributable to Lumos Networks Corp. before interest, income taxes, depreciation and amortization and accretion of asset retirement obligations, net income attributable to noncontrolling interests, other (income) expenses, net, equity-based compensation, amortization of actuarial losses, employee separation charges, restructuring charges, acquisition and separation related charges and gain (loss) on interest rate swap derivatives. Adjusted EBITDA margin is calculated as the ratio of Adjusted EBITDA, as defined, to operating revenues.
Contribution Margin, Contribution Margin Ratio, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial performance measures. They should not be considered in isolation or as an alternative to measures determined in accordance with GAAP. Please refer to the schedules herein and our SEC filings 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: our ability to complete the Clarity acquisition on a timely basis and the impact of the acquisition on our operations; rapid development and intense competition with resulting pricing pressure in the telecommunications and high speed data transport industry; our ability to grow our data business on an organic or inorganic basis in order to offset expected revenue declines in legacy voice and access products; our ability to obtain new carrier contracts or expand services under existing carrier contracts at competitive pricing levels to offset churn and achieve revenue growth from our carrier businesses; our ability to separate our legacy business on a timely basis; our ability to effectively allocate capital and timely implement network expansion plans necessary to accommodate organic growth initiatives; our ability to complete customer installations in a timely manner; adverse economic conditions; operating and financial restrictions imposed by our senior credit facility and our unsecured debt obligations; our cash and capital requirements; our ability to maintain and enhance our network; 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 Report filed on Form 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 Non-GAAP Financial Measures to GAAP Results
- Business Outlook
| Lumos Networks Corp. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| September 30, 2016 | December 31, 2015 | |||||||
| (In thousands) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 33,176 | $ | 13,267 | ||||
| Marketable securities | 38,790 | 88,811 | ||||||
| Accounts receivable, net | 24,306 | 20,796 | ||||||
| Other receivables | 1,606 | 852 | ||||||
| Income tax receivable | 447 | 568 | ||||||
| Prepaid expenses and other | 5,614 | 7,215 | ||||||
| Total Current Assets | 103,939 | 131,509 | ||||||
| Securities and investments | 1,501 | 1,180 | ||||||
| Property, plant and equipment, net | 532,055 | 498,944 | ||||||
| Other Assets | ||||||||
| Goodwill | 100,297 | 100,297 | ||||||
| Other intangibles, net | 9,147 | 11,078 | ||||||
| Deferred charges and other assets | 6,765 | 2,364 | ||||||
| Total Other Assets | 116,209 | 113,739 | ||||||
| Total Assets | $ | 753,704 | $ | 745,372 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current Liabilities | ||||||||
| Current portion of long-term debt | $ | 12,303 | $ | 10,400 | ||||
| Accounts payable | 9,292 | 14,182 | ||||||
| Advance billings and customer deposits | 14,231 | 13,849 | ||||||
| Accrued compensation | 1,602 | 1,191 | ||||||
| Accrued operating taxes | 5,143 | 3,907 | ||||||
| Other accrued liabilities | 4,642 | 4,974 | ||||||
| Total Current Liabilities | 47,213 | 48,503 | ||||||
| Long-Term Liabilities | ||||||||
| Long-term debt, net of unamortized discount and debt issuance costs, excluding current portion | 457,095 | 456,300 | ||||||
| Retirement benefits | 16,357 | 17,029 | ||||||
| Deferred income taxes, net | 91,129 | 89,193 | ||||||
| Other long-term liabilities | 2,104 | 2,016 | ||||||
| Total Long-term Liabilities | 566,685 | 564,538 | ||||||
| Stockholders’ Equity | 138,962 | 131,392 | ||||||
| Noncontrolling Interests | 844 | 939 | ||||||
| Total Equity | 139,806 | 132,331 | ||||||
| Total Liabilities and Equity | $ | 753,704 | $ | 745,372 | ||||
| Lumos Networks Corp. | |||||||||||||||||
| Condensed Consolidated Statements of Operations | Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| (In thousands, except per share amounts) | 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Operating Revenues | $ | 51,771 | $ | 50,969 | $ | 155,013 | $ | 152,417 | |||||||||
| Operating Expenses | |||||||||||||||||
| Cost of revenue, exclusive of depreciation and amortization | 9,657 | 10,546 | 29,948 | 31,682 | |||||||||||||
| Selling, general and administrative, exclusive of depreciation and amortization1 | 20,505 | 19,940 | 64,056 | 58,531 | |||||||||||||
| Depreciation and amortization | 12,739 | 11,803 | 37,028 | 35,112 | |||||||||||||
| Accretion of asset retirement obligations | 23 | 33 | 91 | 105 | |||||||||||||
| Restructuring charges2 | (384 | ) | – | 1,823 | 637 | ||||||||||||
| Total Operating Expenses | 42,540 | 42,322 | 132,946 | 126,067 | |||||||||||||
| Operating Income | 9,231 | 8,647 | 22,067 | 26,350 | |||||||||||||
| Other Income (Expenses) | |||||||||||||||||
| Interest expense | (7,164 | ) | (5,817 | ) | (21,165 | ) | (13,022 | ) | |||||||||
| Gain on interest rate swap derivatives | – | 198 | – | 445 | |||||||||||||
| Other income (expenses), net | 48 | 58 | 320 | (89 | ) | ||||||||||||
| Income Before Income Tax Expense | 2,115 | 3,086 | 1,222 | 13,684 | |||||||||||||
| Income Tax Expense | 1,046 | 1,774 | 1,712 | 6,221 | |||||||||||||
| Net Income (Loss) | 1,069 | 1,312 | (490 | ) | 7,463 | ||||||||||||
| Net Income Attributable to Noncontrolling Interests | (46 | ) | (33 | ) | (137 | ) | (111 | ) | |||||||||
| Net Income (Loss) Attributable to Lumos Networks Corp. | $ | 1,023 | $ | 1,279 | $ | (627 | ) | $ | 7,352 | ||||||||
| Basic and Diluted Earnings (Loss) per Common Share Attributable to Lumos Networks Corp. Stockholders: | |||||||||||||||||
| Basic and diluted earnings (loss) per share | $ | 0.04 | $ | 0.06 | $ | (0.03 | ) | $ | 0.32 | ||||||||
| 1 | Includes equity-based compensation expense related to all of the Company’s share-based awards, annual employee bonuses paid in the form of immediately vested shares and the Company’s 401(k) matching contributions of $1.7 million and $1.5 million for the three months ended September 30, 2016 and 2015, respectively, and $8.5 million and $4.2 million for the nine months ended September 30, 2016 and 2015, respectively. Also includes $0.7 million of acquisition and separation related costs for the three and nine months ended September 30, 2016. | |
| 2 | In January 2016, the Company commenced an employee reduction-in-force. Restructuring costs, consisting of employee severance and termination benefits, of $1.8 million were recognized during the nine months ended September 30, 2016. This amount is net of an adjustment of $0.4 million recorded in the three months ended September 30, 2016 to reduce previously accrued amounts for changes in estimated severance obligations. | |
| Lumos Networks Corp. | ||||||||
| Condensed Consolidated Statements of Cash Flows | Nine Months Ended September 30, | |||||||
| (In thousands) | 2016 | 2015 | ||||||
| Cash Flows from Operating Activities: | ||||||||
| Net (Loss) Income | $ | (490 | ) | $ | 7,463 | |||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||
| Depreciation | 35,097 | 31,035 | ||||||
| Amortization | 1,931 | 4,077 | ||||||
| Accretion of asset retirement obligations | 91 | 105 | ||||||
| Deferred income taxes | 1,374 | 5,802 | ||||||
| Gain on interest rate swap derivatives | – | (445 | ) | |||||
| Equity-based compensation expense | 8,477 | 4,236 | ||||||
| Amortization of debt issuance costs | 3,345 | 1,648 | ||||||
| Retirement benefits, net of cash contributions and distributions | 340 | (171 | ) | |||||
| Other | 649 | 206 | ||||||
| Changes in operating assets and liabilities, net | (5,027 | ) | (1,951 | ) | ||||
| Net Cash Provided by Operating Activities | 45,787 | 52,005 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Purchases of property, plant and equipment | (65,280 | ) | (80,118 | ) | ||||
| Broadband network expansion funded by stimulus grant | – | (2,578 | ) | |||||
| Purchases of available-for-sale marketable securities | (57,142 | ) | (74,088 | ) | ||||
| Proceeds from sale or maturity of available-for-sale marketable securities | 107,075 | 29,903 | ||||||
| Change in restricted cash | – | 3,838 | ||||||
| Cash reimbursement received from broadband stimulus grant | – | 3,838 | ||||||
| Net Cash Used in Investing Activities | (15,347 | ) | (119,205 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from issuance of senior secured term loan | – | 28,000 | ||||||
| Proceeds from issuance of unsecured notes, net of debt discount | – | 148,500 | ||||||
| Payment of financing costs | – | (8,192 | ) | |||||
| Principal payments on senior secured term loans | (6,024 | ) | (45,953 | ) | ||||
| Cash dividends paid on common stock | – | (3,152 | ) | |||||
| Principal payments under capital lease obligations | (2,551 | ) | (2,378 | ) | ||||
| Capital distribution to noncontrolling interests | (232 | ) | – | |||||
| Proceeds from stock option exercises and employee stock purchase plan | 630 | 293 | ||||||
| Repurchases of common stock to settle tax withholding obligations on employee stock awards | (2,354 | ) | (295 | ) | ||||
| Other | – | 28 | ||||||
| Net Cash (Used in) Provided by Financing Activities | (10,531 | ) | 116,851 | |||||
| Increase in cash and cash equivalents | 19,909 | 49,651 | ||||||
| Cash and cash equivalents: | ||||||||
| Beginning of Period | 13,267 | 14,140 | ||||||
| End of Period | $ | 33,176 | $ | 63,791 | ||||
| Lumos Networks Corp. | ||||||||||||||||||||||||
| Operating Results, Customer and Network Statistics | ||||||||||||||||||||||||
| (Dollars in thousands) | Three months ended: | Nine months ended: | ||||||||||||||||||||||
| September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||||
| Revenue, Gross Margin, Contribution Margin and Adjusted EBITDA | ||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Enterprise Data | $ | 13,549 | $ | 12,878 | $ | 12,001 | $ | 11,935 | $ | 11,560 | $ | 38,428 | $ | 33,885 | ||||||||||
| Transport | 8,499 | 8,902 | 9,099 | 10,005 | 9,507 | 26,500 | 30,016 | |||||||||||||||||
| FTTC | 9,325 | 9,176 | 8,529 | 7,892 | 7,556 | 27,030 | 20,578 | |||||||||||||||||
| Total Data | 31,373 | 30,956 | 29,629 | 29,832 | 28,623 | 91,958 | 84,479 | |||||||||||||||||
| Residential and Small Business | 15,863 | 16,149 | 15,828 | 16,379 | 16,560 | 47,840 | 50,835 | |||||||||||||||||
| RLEC Access | 4,535 | 5,343 | 5,337 | 5,641 | 5,786 | 15,215 | 17,103 | |||||||||||||||||
| Total Revenue | $ | 51,771 | $ | 52,448 | $ | 50,794 | $ | 51,852 | $ | 50,969 | $ | 155,013 | $ | 152,417 | ||||||||||
| Gross Margin1 | ||||||||||||||||||||||||
| Data | 85.5% | 85.3% | 84.6% | 84.2% | 83.7% | 85.1% | 84.7% | |||||||||||||||||
| Residential and Small Business | 67.7% | 65.8% | 64.3% | 64.5% | 64.4% | 66.0% | 63.2% | |||||||||||||||||
| Contribution Margin2 | ||||||||||||||||||||||||
| Data | $ | 24,822 | $ | 24,477 | $ | 23,390 | $ | 24,164 | $ | 22,500 | $ | 72,689 | $ | 67,073 | ||||||||||
| Residential and Small Business | 9,516 | 9,394 | 9,142 | 9,584 | 9,343 | 28,052 | 28,575 | |||||||||||||||||
| RLEC Access | 4,360 | 5,171 | 5,192 | 5,486 | 5,609 | 14,723 | 16,592 | |||||||||||||||||
| Total Contribution Margin | $ | 38,698 | $ | 39,042 | $ | 37,724 | $ | 39,234 | $ | 37,452 | $ | 115,464 | $ | 112,240 | ||||||||||
| Contribution Margin Ratio2 | ||||||||||||||||||||||||
| Data | 79.1% | 79.1% | 78.9% | 81.0% | 78.6% | 79.0% | 79.4% | |||||||||||||||||
| Residential and Small Business | 60.0% | 58.2% | 57.8% | 58.5% | 56.4% | 58.6% | 56.2% | |||||||||||||||||
| RLEC Access | 96.1% | 96.8% | 97.3% | 97.3% | 96.9% | 96.8% | 97.0% | |||||||||||||||||
| Total Contribution Margin Ratio | 74.7% | 74.4% | 74.3% | 75.7% | 73.5% | 74.5% | 73.6% | |||||||||||||||||
| Adjusted EBITDA2 | ||||||||||||||||||||||||
| Data | $ | 14,567 | $ | 13,826 | $ | 13,314 | $ | 14,303 | $ | 12,215 | $ | 41,707 | $ | 36,679 | ||||||||||
| Residential and Small Business | 5,723 | 5,339 | 5,149 | 5,341 | 5,020 | 16,211 | 15,822 | |||||||||||||||||
| RLEC Access | 3,970 | 4,611 | 4,652 | 4,907 | 5,039 | 13,233 | 14,951 | |||||||||||||||||
| Total Adjusted EBITDA | $ | 24,260 | $ | 23,776 | $ | 23,115 | $ | 24,551 | $ | 22,274 | $ | 71,151 | $ | 67,452 | ||||||||||
| Adjusted EBITDA Margin2 | ||||||||||||||||||||||||
| Data | 46.4% | 44.7% | 44.9% | 47.9% | 42.7% | 45.4% | 43.4% | |||||||||||||||||
| Residential and Small Business | 36.1% | 33.1% | 32.5% | 32.6% | 30.3% | 33.9% | 31.1% | |||||||||||||||||
| RLEC Access | 87.5% | 86.3% | 87.2% | 87.0% | 87.1% | 87.0% | 87.4% | |||||||||||||||||
| Total Adjusted EBITDA Margin | 46.9% | 45.3% | 45.5% | 47.3% | 43.7% | 45.9% | 44.3% | |||||||||||||||||
| Capital Expenditures | $ | 20,089 | $ | 23,185 | $ | 22,006 | $ | 35,557 | $ | 24,769 | $ | 65,280 | $ | 80,118 | ||||||||||
| Adjusted EBITDA less Capital Expenditures | $ | 4,171 | $ | 591 | $ | 1,109 | $ | (11,006) | $ | (2,495) | $ | 5,871 | $ | (12,666) | ||||||||||
| Lumos Networks Corp. | |||||||||||||
| Operating Results, Customer and Network Statistics (continued) | |||||||||||||
| Three months ended: | |||||||||||||
| September 30, 2016 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | |||||||||
| Fiber Network Statistics | |||||||||||||
| Fiber Route-Miles | 9,204 | 8,985 | 8,734 | 8,607 | 8,408 | ||||||||
| Fiber Miles3 | 475,507 | 436,451 | 401,109 | 384,094 | 378,581 | ||||||||
| Fiber Markets | 24 | 24 | 24 | 24 | 24 | ||||||||
| FTTC Unique Towers | 1,297 | 1,295 | 1,252 | 1,099 | 1,030 | ||||||||
| FTTC Total Connections | 1,642 | 1,636 | 1,592 | 1,440 | 1,363 | ||||||||
| On-Network Buildings | 1,984 | 1,922 | 1,812 | 1,732 | 1,642 | ||||||||
| Data Centers4 | 36 | 36 | 36 | 34 | 33 | ||||||||
| Mobile Switching Centers | 14 | 14 | 14 | 14 | 14 | ||||||||
| R&SB Statistics | |||||||||||||
| Competitive Voice Connections | 67,569 | 69,728 | 71,547 | 73,705 | 76,380 | ||||||||
| Video Subscribers | 5,841 | 5,817 | 5,840 | 5,904 | 5,760 | ||||||||
| Fiber-to-the-Premise Broadband Connections5 | 8,307 | 7,982 | 7,849 | 7,649 | 7,300 | ||||||||
| Premises Passed by Fiber6 | 19,591 | 19,453 | 19,495 | 19,421 | 19,186 | ||||||||
| RLEC Access Lines | 24,299 | 24,814 | 25,079 | 25,516 | 25,902 | ||||||||
| 1 | The Company had previously reported gross margin percentages that were calculated as the ratio of gross profit (total revenue less network access charges) to total revenue. Beginning in Q1 2016, the Company began reporting cost of revenue, which includes network access charges and certain other facilities rental costs and adjusted its measurement of gross margin to include these costs. Historical periods have been revised to be consistent with the current period presentation. | |
| 2 | Contribution Margin, Contribution Margin Ratio, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures. See definitions on page 3 of this earnings release. | |
| 3 | Fiber miles are calculated as the fiber route miles multiplied by the number of fiber strands within each cable (represents an average of 52 fibers per route as of September 30, 2016). | |
| 4 | Data centers reported include both commercial and private data centers and Company-owned facilities offering commercial data center services. | |
| 5 | During the first quarter of 2016, the Company revised its fiber-to-the-premise broadband connections as a result of enhanced system reporting capabilities. Historical fiber-to-the-premise broadband connections for prior quarters have been revised to reflect the updated information. | |
| 6 | Includes residential and small business locations passed by fiber and available for service. Approximately 93% of the premises passed by fiber and available for service as of September 30, 2016 were residential. | |
| Note: Certain prior period Adjusted EBITDA amounts have been reclassified to conform with the current year presentation. | ||
| Lumos Networks Corp. | ||||||||
| Reconciliation of Net Income (Loss) Attributable to Lumos Networks Corp. to Contribution Margin | ||||||||
| (Dollars in thousands) | 2016 | 2015 | ||||||
| For The Three Months Ended September 30, | ||||||||
| Net Income Attributable to Lumos Networks Corp. | $ | 1,023 | $ | 1,279 | ||||
| Net Income Attributable to Noncontrolling Interests | 46 | 33 | ||||||
| Net Income | 1,069 | 1,312 | ||||||
| Income tax expense | 1,046 | 1,774 | ||||||
| Interest expense | 7,164 | 5,817 | ||||||
| Gain on interest rate swap derivatives | – | (198) | ||||||
| Other income, net | (48) | (58) | ||||||
| Operating Income | 9,231 | 8,647 | ||||||
| Depreciation and amortization and accretion of asset retirement obligations | 12,762 | 11,836 | ||||||
| Restructuring charges | (384) | – | ||||||
| Indirect operating costs | 9,121 | 9,250 | ||||||
| Corporate general and administrative costs, including equity-based compensation and acquisition and separation related charges | 7,968 | 7,719 | ||||||
| Contribution Margin | $ | 38,698 | $ | 37,452 | ||||
| Contribution Margin Ratio | 74.7% | 73.5% | ||||||
| For The Nine Months Ended September 30, | ||||||||
| Net (Loss) Income Attributable to Lumos Networks Corp. | $ | (627) | $ | 7,352 | ||||
| Net Income Attributable to Noncontrolling Interests | 137 | 111 | ||||||
| Net (Loss) Income | (490) | 7,463 | ||||||
| Income tax expense | 1,712 | 6,221 | ||||||
| Interest expense | 21,165 | 13,022 | ||||||
| Gain on interest rate swap derivatives | – | (445) | ||||||
| Other (income) expenses, net | (320) | 89 | ||||||
| Operating Income | 22,067 | 26,350 | ||||||
| Depreciation and amortization and accretion of asset retirement obligations | 37,119 | 35,217 | ||||||
| Restructuring charges | 1,823 | 637 | ||||||
| Indirect operating costs | 26,657 | 27,109 | ||||||
| Corporate general and administrative costs, including equity-based compensation and acquisition and separation related charges | 27,798 | 22,927 | ||||||
| Contribution Margin | $ | 115,464 | $ | 112,240 | ||||
| Contribution Margin Ratio | 74.5% | 73.6% | ||||||
| Reconciliation of Net Income (Loss) Attributable to Lumos Networks Corp. to Adjusted EBITDA | ||||||||
| (Dollars in thousands) | 2016 | 2015 | ||||||
| For The Three Months Ended September 30, | ||||||||
| Net Income Attributable to Lumos Networks Corp. | $ | 1,023 | $ | 1,279 | ||||
| Net Income Attributable to Noncontrolling Interests | 46 | 33 | ||||||
| Net Income | 1,069 | 1,312 | ||||||
| Income tax expense | 1,046 | 1,774 | ||||||
| Interest expense | 7,164 | 5,817 | ||||||
| Gain on interest rate swap derivatives | – | (198) | ||||||
| Other income, net | (48) | (58) | ||||||
| Operating Income | 9,231 | 8,647 | ||||||
| Depreciation and amortization and accretion of asset retirement obligations | 12,762 | 11,836 | ||||||
| Amortization of actuarial losses | 338 | 337 | ||||||
| Equity-based compensation | 1,661 | 1,454 | ||||||
| Restructuring charges | (384) | – | ||||||
| Acquisition and separation related charges | 652 | – | ||||||
| Adjusted EBITDA | $ | 24,260 | $ | 22,274 | ||||
| Adjusted EBITDA Margin | 46.9% | 43.7% | ||||||
| For The Nine Months Ended September 30, | ||||||||
| Net (Loss) Income Attributable to Lumos Networks Corp. | $ | (627) | $ | 7,352 | ||||
| Net Income Attributable to Noncontrolling Interests | 137 | 111 | ||||||
| Net (Loss) Income | (490) | 7,463 | ||||||
| Income tax expense | 1,712 | 6,221 | ||||||
| Interest expense | 21,165 | 13,022 | ||||||
| Gain on interest rate swap derivatives | – | (445) | ||||||
| Other (income) expenses, net | (320) | 89 | ||||||
| Operating Income | 22,067 | 26,350 | ||||||
| Depreciation and amortization and accretion of asset retirement obligations | 37,119 | 35,217 | ||||||
| Amortization of actuarial losses | 1,013 | 1,012 | ||||||
| Equity-based compensation | 8,477 | 4,236 | ||||||
| Restructuring charges | 1,823 | 637 | ||||||
| Acquisition and separation related charges | 652 | – | ||||||
| Adjusted EBITDA | $ | 71,151 | $ | 67,452 | ||||
| Adjusted EBITDA Margin | 45.9% | 44.3% | ||||||
| Lumos Networks Corp. | ||||
| Business Outlook 1 (as of November 9, 2016) | ||||
| (In millions) | 2016 Annual Guidance 1 | |||
| Operating Revenues | $206 to $210 | |||
| Adjusted EBITDA | $93 to $96 | |||
| Capital Expenditures | $85 to $95 | |||
| Reconciliation of Net Income (Loss) to Adjusted EBITDA: | ||||
| Net (Loss) Income | $(2) to $1 | |||
| Income tax expense | approximately $2 | |||
| Interest expense | approximately $28 | |||
| Operating Income | $28 to $31 | |||
| Depreciation and amortization | approximately $50 | |||
| Equity-based compensation | approximately $11 | |||
| Amortization of actuarial losses | approximately $1 | |||
| Restructuring Charges | approximately $2 | |||
| Acquisition and separation related charges | approximately $1 | |||
| Adjusted EBITDA | $93 to $96 | |||
| 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 earnings release dated November 9, 2016. | |
View source version on businesswire.com:http://www.businesswire.com/news/home/20161109005521/en/
Lumos Networks Corp.
Will Davis, 917-519-6994
SVP of Marketing and Investor Relations
Chief of Staff
davisw@lumosnet.com
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