NTELOS HOLDINGS CORP. - FORM 8-K - EX-99.1

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8-K - FORM 8-K - NTELOS HOLDINGS CORP.	d575091d8k.htm
EX-99.2 - EX-99.2 - NTELOS HOLDINGS CORP.	d575091dex992.htm

EXHIBIT 99.1

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. Reports

Second Quarter 2013 Operating Results

–Quarterly Subscriber Revenue up 18% to $72.9 Million

–Quarterly Adjusted EBITDA of $41.2 Million

–Company Declares Quarterly Dividend of $0.42 per Share

WAYNESBORO, VA – July 30, 2013 – 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 second quarter ended June 30, 2013.

Second Quarter Highlights

•

Operating revenues for the second quarter 2013 increased 7.4% to $119.9 million, compared to $111.6 million for the same period in 2012;

•

Total net subscriber additions were 3,800 for the second quarter 2013, compared to 3,500 for the same period in 2012;

•

Postpay churn for the second quarter 2013 was 1.8%, compared to 1.9% for the same period in 2012; and

•

Postpay ARPU for the second quarter 2013 was $63.48, compared to $56.42 for the same period in 2012.

“During the second quarter of 2013, we continued to successfully execute against our strategy to grow our business,” said James A. Hyde, CEO of NTELOS Holdings Corp. “Retail revenues increased for the sixth straight quarter, driven by growth in our subscriber base and continued expansion of ARPU. At the same time, our wholesale revenues, primarily associated with Sprint, remained strong driven by continued data usage on our network.”

Highlights from Operations

•

Retail revenues, which include subscriber and equipment revenue, increased 12.6% to $78.4 million for the second quarter 2013, compared to $69.6 million for the second quarter 2012;

•

Wholesale and other revenue derived primarily from the Company’s Strategic Network Alliance with Sprint were $41.4 million for the second quarter 2013, compared to $41.9 million for the second quarter 2012; and

•

Adjusted EBITDA was $41.2 million for the second quarter 2013, compared to $34.0 million for the second quarter 2012.

Total Subscribers

•

Total subscribers were 454,800 as of June 30, 2013, compared to 424,800 for the same period of 2012;

•

Total subscriber gross additions for the second quarter were 40,100, compared to 36,800 for the same period of 2012; and

•

Total net subscriber additions for the second quarter were 3,800, compared to 3,500 for the same period of 2012.

Postpay Subscribers

•

Postpay subscriber gross additions for the second quarter 2013 were 16,300, compared to 16,800 for the second quarter 2012 and 20,200 for the first quarter 2013;

•

Net postpay subscriber additions were 200 for the second quarter 2013, compared to 700 for the second quarter 2012 and 3,300 for the first quarter 2013;

•

Postpay churn for the second quarter 2013 was 1.8%, compared to 1.9% for the second quarter 2012 and 1.9% for the first quarter of 2013; and

•

As of June 30, 2013, total postpay subscribers were 298,700.

Prepay Subscribers

•

Prepay subscriber gross additions for the second quarter 2013 were 23,800, compared to 20,000 for the second quarter 2012 and 28,300 for the first quarter 2013;

•

Net prepay subscriber additions were 3,600 for the second quarter 2013, compared to 2,800 for the second quarter 2012 and 8,100 for the first quarter 2013;

•

Prepay churn for the second quarter 2013 was 4.4%, compared to 4.2% for the second quarter 2012 and 4.6% for the first quarter of 2013; and

•

As of June 30, 2013, total prepay subscribers were 156,100.

Mr. Hyde concluded, “Looking ahead, we remain focused on improving our service offering, which includes expanding our network capabilities and further enhancing the customer experience. Our plan to roll out LTE in our first markets during the second half of 2013 remains on track. In addition, we are also exploring new and innovative ways to maximize the value of our network assets. For example, in May, we announced a pilot program with DISH Network to potentially provide fixed-mobile broadband services within portions of our footprint. Overall, we are excited about the growth prospects of both our retail and wholesale businesses and will continue to seek ways to maximize value for all key stakeholders.”

Net Income

Net income after net income attributable to noncontrolling interests was $9.4 million, or $0.43 per diluted share, for the second quarter 2013 compared to $5.6 million, or $0.26 per diluted share, for the second quarter 2012.

Declaration of Dividend

On July 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 October 11, 2013 to stockholders of record on September 13, 2013.

Business Outlook

For the year ending December 31, 2013, the Company updated its full year 2013 Adjusted EBITDA guidance to between $140.0 million and $145.0 million (previous range was $135.0 million and $145.0 million). In addition, the Company reiterates its full year 2013 capital expenditures guidance of between $75.0 million and $85.0 million.

Conference Call

The Company will host a conference call with investors and analysts to discuss its second quarter 2013 results this morning, July 30, 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 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 or 1-412-317-0088 internationally and entering access code 10031675 beginning approximately one hour after the call and continuing until August 15, 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 sale of assets and derivatives, net income attributable to noncontrolling interests, other expenses/income, equity-based compensation charges and acquisition related charges.

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. (NASDAQ: 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 455,000 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.

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.


Condensed Consolidated Balance Sheets	(Unaudited) June 30, 2013		(Unaudited) December 31, 2012
(In thousands)
ASSETS
Current Assets
Cash	$	98,239	$	76,197
Restricted cash		2,167		—
Accounts receivable, net		51,601		51,301
Inventories and supplies		9,316		9,581
Deferred income taxes		3,248		4,297
Prepaid expenses and other current assets		19,410		17,695

		183,981		159,071

Securities and Investments		1,499		1,499

Property, Plant and Equipment, net		308,677		303,103

Intangible Assets
Goodwill		63,700		63,700
Radio spectrum licenses		131,831		132,033
Customer relationships and trademarks, net		8,490		9,996

Deferred Charges and Other Assets		10,519		10,712

Total Assets	$	708,697	$	680,114

LIABILITIES AND EQUITY
Current Liabilities
Current portion of long-term debt	$	5,447	$	5,429
Accounts payable		24,423		23,445
Dividends payable		9,018		—
Accrued expenses and other current liabilities		50,416		34,457

		89,304		63,331

Long-Term Debt		487,044		488,650

Other Long-Term Liabilities		87,684		83,598

Equity		44,665		44,535

Total Liabilities and Equity	$	708,697	$	680,114

NTELOS Holdings Corp.


Condensed Consolidated Statements of Operations	Three Months Ended (Unaudited)						Six Months Ended (Unaudited)
(In thousands, except per share amounts)	June 30, 2013			June 30, 2012			June 30, 2013			June 30, 2012
Operating Revenues	$	119,859		$	111,585		$	239,204		$	222,125

Operating Expenses
Cost of sales and services		42,567			41,793			87,102			80,993
Customer operations		29,977			29,808			60,931			59,391
Corporate operations		7,760			8,310			15,664			16,309
Depreciation and amortization		20,443			15,101			38,899			30,008
Gain on sale of intangible assets		(4,442	)		—			(4,442	)		—

		96,305			95,012			198,154			186,701

Operating Income		23,554			16,573			41,050			35,424

Other Income (Expense)
Interest expense		(7,398	)		(5,433	)		(14,759	)		(10,861	)
Other income (expense), net		151			(44	)		(218	)		(106	)

		(7,247	)		(5,477	)		(14,977	)		(10,967	)

Income before Income Taxes		16,307			11,096			26,073			24,457

Income Taxes		6,380			4,609			10,124			9,989

Net Income		9,927			6,487			15,949			14,468
Net Income Attributable to Noncontrolling Interests		(541	)		(881	)		(1,070	)		(1,010	)

Net Income Attributable to NTELOS Holdings Corp.	$	9,386		$	5,606		$	14,879		$	13,458

Earnings per Share Attributable to NTELOS Holdings Corp.:
Basic	$	0.45		$	0.27		$	0.71		$	0.64

Weighted average shares outstanding - basic		21,027			20,887			20,962			20,868

Diluted	$	0.43		$	0.26		$	0.69		$	0.63

Weighted average shares outstanding - diluted		21,779			21,334			21,613			21,291

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, 2013			June 30, 2012		June 30, 2013			June 30, 2012
Net income attributable to NTELOS Holdings Corp.	$	9,386		$	5,606	$	14,879		$	13,458
Net income attributable to noncontrolling interests		541			881		1,070			1,010

Net income	$	9,927		$	6,487	$	15,949		$	14,468

Interest expense		7,398			5,433		14,759			10,861
Income taxes		6,380			4,609		10,124			9,989
Other expense, net		(151	)		44		218			106

Operating income	$	23,554		$	16,573	$	41,050		$	35,424

Depreciation and amortization		20,443			15,101		38,899			30,008
Gain on sale of intangible assets		(4,442	)		—		(4,442	)		—
Accretion of asset retirement obligations		173			151		316			300
Equity-based compensation		1,460			1,536		2,781			3,205
Business separation charges ¹		—			635		—			921

Adjusted EBITDA	$	41,188		$	33,996	$	78,604		$	69,858

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																Six Months Ended
Quarter Ended:	6/30/2012			9/30/2012			12/31/2012			3/31/2013			6/30/2013			6/30/2012			6/30/2013
Subscribers
Beginning Subscribers		421,300			424,800			430,300			439,600			451,000			414,500			439,600
Postpay		286,000			285,400			288,900			297,400			299,700			292,400			297,400
Prepay		135,300			139,400			141,400			142,200			151,300			122,100			142,200
Gross Additions		36,800			42,400			46,200			48,500			40,100			82,700			88,600
Postpay		16,800			22,000			25,100			20,200			16,300			33,800			36,500
Prepay		20,000			20,400			21,100			28,300			23,800			48,900			52,100
Disconnections		33,300			36,900			36,900			37,100			36,300			72,400			73,400
Postpay		16,100			17,100			15,900			16,900			16,100			37,900			33,000
Prepay		17,200			19,800			21,000			20,200			20,200			34,500			40,400
Net Additions (Losses)		3,500			5,500			9,300			11,400			3,800			10,300			15,200
Postpay		700			4,900			9,200			3,300			200			(4,100	)		3,500
Prepay		2,800			600			100			8,100			3,600			14,400			11,700
Ending Subscribers		424,800			430,300			439,600			451,000			454,800			424,800			454,800
Postpay		285,400			288,900			297,400			299,700			298,700			285,400			298,700
Prepay		139,400			141,400			142,200			151,300			156,100			139,400			156,100
Churn, net		2.6	%		2.9	%		2.8	%		2.8	%		2.7	%		2.9	%		2.7	%
Postpay		1.9	%		2.0	%		1.8	%		1.9	%		1.8	%		1.9	%		1.8	%
Prepay		4.2	%		4.7	%		4.9	%		4.6	%		4.4	%		4.3	%		4.5	%

Other Items
ARPU	$	49.41		$	50.93		$	52.78		$	53.87		$	53.82		$	49.25		$	53.84
Postpay	$	56.42		$	58.97		$	61.19		$	62.67		$	63.48		$	55.52		$	63.08
Prepay	$	34.89		$	34.50		$	35.41		$	35.85		$	35.04		$	35.70		$	35.43

Data ARPU	$	19.65		$	20.25		$	21.03		$	21.86		$	22.14		$	19.35		$	22.00

Licensed Population (millions)		8.1			8.1			7.9			7.9			7.9			8.1			7.9

Covered Population (millions)		6.0			6.0			6.0			6.0			6.0			6.0			6.0

Total Cell Sites		1,378			1,396			1,429			1,431			1,432			1,378			1,432

Strategic Network Alliance Revenues (000’s)
Total Voice	$	23,856		$	24,655		$	24,141		$	23,268		$	22,787		$	47,389		$	46,055
Total Data		16,536			16,971			16,606			16,884			16,820			32,883			33,704

Total	$	40,392		$	41,626		$	40,747		$	40,152		$	39,607		$	80,272		$	79,759

Gross Additions, Disconnections and Churn exclude customer returns within 14 calendar days. From 11/1/11 to 4/4/12, the customer return period was 30 calendar days.

NTELOS Holdings Corp.


ARPU Reconciliation	Three Months Ended						Six Months Ended
Average Monthly Revenue per User (ARPU) ¹	June 30, 2013			June 30, 2012			June 30, 2013			June 30, 2012
(In thousands, except for subscribers and ARPU)
Operating Revenues	$	119,859		$	111,585		$	239,204		$	222,125
Less: Equipment revenue from sales to new customers		(3,104	)		(4,026	)		(6,625	)		(7,900	)
Less: Equipment revenue from sales to existing customers		(2,395	)		(3,903	)		(5,512	)		(8,306	)
Less: Wholesale, other and adjustments		(41,179	)		(41,061	)		(82,097	)		(81,897	)

Gross subscriber revenue		73,181			62,595			144,970			124,022

Less: prepay subscriber revenue		(15,879	)		(14,001	)		(31,084	)		(27,404	)
Less: adjustments to prepay subscriber revenue		(303	)		(382	)		(782	)		(1,035	)

Gross postpay subscriber revenue	$	56,999		$	48,212		$	113,104		$	95,583

Prepay subscriber revenue		15,879			14,001			31,084			27,404
Plus: adjustments to prepay subscriber revenue		303			382			782			1,035

Gross prepay subscriber revenue	$	16,182		$	14,383		$	31,866		$	28,439

Average number of subscribers		453,262			422,247			448,753			419,721

Total ARPU	$	53.82		$	49.41		$	53.84		$	49.25

Average number of postpay subscribers		299,304			284,834			298,859			286,940

Postpay ARPU	$	63.48		$	56.42		$	63.08		$	55.52

Average number of prepay subscribers		153,958			137,413			149,894			132,781

Prepay ARPU	$	35.04		$	34.89		$	35.43		$	35.70

Gross subscriber revenue		73,181			62,595			144,970			124,022
Less: voice and other feature revenue		(43,078	)		(37,708	)		(85,736	)		(75,287	)

Data revenue	$	30,103		$	24,887		$	59,234		$	48,735

Average number of subscribers		453,262			422,247			448,753			419,721

Total Data ARPU	$	22.14		$	19.65		$	22.00		$	19.35

Gross postpay subscriber revenue		56,999			48,212			113,104			95,583
Less: postpay voice and other feature revenue		(36,170	)		(31,490	)		(72,122	)		(62,922	)

Postpay data revenue	$	20,829		$	16,722		$	40,982		$	32,661

Gross prepay subscriber revenue		16,182			14,383			31,866			28,439
Less: prepay voice and other feature revenue		(6,908	)		(6,218	)		(13,614	)		(12,365	)

Prepay data revenue	$	9,274		$	8,165		$	18,252		$	16,074

Average number of postpay subscribers		299,304			284,834			298,859			286,940

Postpay data ARPU	$	23.20		$	19.57		$	22.85		$	18.97

Average number of prepay subscribers		153,958			137,413			149,894			132,781

Prepay data ARPU	$	20.08		$	19.81		$	20.29		$	20.18

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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