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

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8-K - 8-K - NTELOS HOLDINGS CORP.	d766266d8k.htm
EX-99.2 - EX-99.2 - NTELOS HOLDINGS CORP.	d766266dex992.htm
EX-99.3 - EX-99.3 - NTELOS HOLDINGS CORP.	d766266dex993.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 2014 Results

–Renewed Agreement with Sprint extended to December 2022

–Ninth Consecutive Quarter of Positive Net Postpay Adds

WAYNESBORO, Va. – July 28, 2014 – 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

NTELOS Holdings Corp.

Condensed Consolidated Balance Sheets


	(Unaudited)		(Unaudited)
(In thousands)	June 30, 2014		December 31, 2013
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


	Three Months Ended					Six Months Ended
(In thousands)	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

Disconnections¹			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 Subscribers¹			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

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.

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

Average Monthly Revenue per Account (ARPA) ¹


	Three Months Ended						Six Months Ended
(In thousands, except for accounts and ARPA)	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
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

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.

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