Attached files
| file | filename |
|---|---|
| EX-99.2 - EX-99.2 - Lumos Networks Corp. | d155297dex992.htm |
| 8-K - 8-K - Lumos Networks Corp. | d155297d8k.htm |
Exhibit 99.1
| Contact: | Will Davis | |
| Chief of Staff and Vice President of Investor Relations | ||
| Phone: 917-519-6994 | ||
| Email: davisw@lumosnet.com |
Lumos Networks Corp. Reports Fourth Quarter 2015 Results
Delivers 4Q15 Revenue of $51.9 million and Adjusted EBITDA of $24.6 million
Achieves 2015 Revenue and Adjusted EBITDA of $204.3 million and $92 million, respectively
Provides 2016 Revenue and Adjusted EBITDA guidance of $206 to $210 million and $93 to $96
million, respectively
WAYNESBORO, VA – March 7, 2016 – Lumos Networks Corp. (“Lumos Networks”, “Lumos” or the “Company”) (Nasdaq: LMOS), a leading fiber-based service provider in the Mid-Atlantic region, today announced its fourth quarter and full year 2015 financial results and provided 2016 financial guidance.
Total revenue in the fourth quarter of 2015 was $51.9 million, an increase of more than 2% from the prior year period. Total Adjusted EBITDA reached approximately $24.6 million, up more than 9% from the prior year period. Total Data revenue grew over 9% year-over-year to approximately $29.8 million and constituted nearly 58% of total revenue, up from 54% in the prior year period.
In the fourth quarter, total FTTC and Enterprise revenue reached over $19.8 million, up more than 21% year-over-year and constituted 66% of total Data revenue versus 60% in the prior year period. In the aggregate, Ethernet and other advanced fiber technologies accounted for 90-95% of revenue within these two product groups. The Company’s Enterprise revenue grew over 10% on a year-over-year basis for the second consecutive quarter.
“For the full year 2015, I am pleased to announce that Lumos Networks achieved $204.3 million in revenue, up more than 1% from 2014,” said Timothy G. Biltz, President and CEO of Lumos Networks. “Additionally, we reached Adjusted EBITDA of $92 million, up over 2% from 2014.”
Mr. Biltz continued, “We achieved more than $114 million in total Data revenue in 2015, up more than 7% year-over-year. This included FTTC revenue of more than $28 million, up nearly 43% year-over-year, and Enterprise revenue of nearly $46 million, up more than 8%. Collectively, our FTTC and Enterprise revenue surpassed $74 million, up more than 19% year-over-year, which places the Company amongst the leaders in the US fiber industry.”
“In 2016, we expect to further accelerate our transformation into a fiber bandwidth infrastructure provider,” said Mr. Biltz. “We expect to grow our overall revenue and Adjusted EBITDA for the second year in a row and introduce guidance for 2016 revenue of $206-$210 million and Adjusted EBITDA of $93-$96 million. This guidance assumes increased costs from several major projects, including our network expansion into the Richmond and Hampton Roads/Norfolk markets and business separation planning initiatives during the course of the year. The Company targets acceleration of our Data revenue growth rate from 7% in 2015 to 8-10% in 2016, as we continue to see strong bandwidth demand trends, solid sales productivity, robust Enterprise renewal activity and improving installation trends.”
The Company generated operating income of $10.1 million and $36.5 million for the three and twelve months ended December 31, 2015, respectively. Net income attributable to Lumos Networks Corp. was $2.7 million, or 12 cents per diluted share, for the fourth quarter of 2015 and $10.0 million, or 43 cents per diluted share, for the year ended December 31, 2015.
Fourth Quarter 2015 Highlights
| • | The Company ended 4Q15 with 1,099 unique FTTC sites, up 69 sequentially and an increase of 28% from the prior year. Additionally, Lumos ended the quarter with 1,440 total FTTC connections up nearly 25% from the prior year period. |
| • | In 2015, Lumos renewed Enterprise accounts totaling $726,000 in monthly recurring charges (“MRC”), up over 17% from the prior year. The total contract value (“TCV”) of renewed Enterprise contracts in 2015 was nearly $32 million, up over 19% from 2014. |
| • | By the end of the first quarter, the Company expects to have completed the vast majority of its 822-mile network expansion into the Richmond and Hampton Roads/Norfolk metro markets. To date, the Company has already sold annualized Enterprise revenue of $500,000 in the Norfolk/Hampton Roads markets. |
| • | In 2015, Lumos Networks added 785 organic route miles of fiber, nearly double the 408 miles added in 2014. Additionally, the Company added 255 Enterprise lit buildings in 2015, up over 90% from the 133 buildings added to the Lumos fiber network in 2014. |
Business Outlook
For the full year 2016, the Company provides 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, CEO, Johan Broekhuysen, CFO, and Will Davis, Chief of Staff and Vice President of Investor Relations 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 March 7, 2015.
The webcast may be accessed via the Internet at http://ir.lumosnetworks.com/ and the live call (“Lumos Networks Fourth 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 March 21, 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: 10081372
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 8,607 fiber route miles and more than 384,000 total fiber strand miles, Lumos Networks connects 1,099 unique Fiber to the Cell sites, 1,440 total FTTC connections, 34 data centers, including 7 company owned co-location facilities, 1,732 on-net buildings and over 2,800 total on-net locations. In 2015, Lumos Networks generated over $114 million in Data revenue and over $51 million in Adjusted EBITDA over our fiber network. Detailed information about Lumos Networks is available at www.lumosnetworks.com.
Non-GAAP Measures
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 and gain (loss) on interest rate swap derivatives. Adjusted EBITDA margin is calculated as the ratio of Adjusted EBITDA, as defined, to operating revenues.
Adjusted EBITDA is a non-GAAP financial performance measure. It 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: rapid development and intense competition 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 divest our legacy business on a timely basis; our ability to effectively allocate capital and implement our network expansion plans in a timely manner; 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 Income |
| • | Condensed Consolidated Statements of Cash Flows |
| • | Summary of Operating Results, Customer and Network Statistics |
| • | Reconciliation of Net Income Attributable to Lumos Networks Corp. to Adjusted EBITDA |
| • | Business Outlook |
Lumos Networks Corp.
Condensed Consolidated Balance Sheets
| December 31, 2015 | December 31, 2014 | |||||||
| (In thousands) | ||||||||
| ASSETS |
||||||||
| Current Assets |
||||||||
| Cash and cash equivalents |
$ | 13,267 | $ | 14,140 | ||||
| Marketable securities |
88,811 | 16,870 | ||||||
| Restricted cash 1 |
— | 4,208 | ||||||
| Accounts receivable, net |
20,796 | 22,925 | ||||||
| Other receivables |
852 | 2,113 | ||||||
| Income tax receivable |
568 | 172 | ||||||
| Prepaid expenses and other |
7,215 | 4,321 | ||||||
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| Total Current Assets |
131,509 | 64,749 | ||||||
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| Securities and investments |
1,180 | 914 | ||||||
| Property, plant and equipment, net |
498,944 | 429,451 | ||||||
| Other Assets |
||||||||
| Goodwill |
100,297 | 100,297 | ||||||
| Other intangibles, net |
11,078 | 15,884 | ||||||
| Deferred charges and other assets |
2,364 | 512 | ||||||
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| Total Other Assets |
113,739 | 116,693 | ||||||
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| Total Assets |
$ | 745,372 | $ | 611,807 | ||||
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| LIABILITIES AND EQUITY |
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| Current Liabilities |
||||||||
| Current portion of long-term debt |
$ | 10,400 | $ | 10,227 | ||||
| Accounts payable |
14,182 | 20,257 | ||||||
| Dividends payable |
— | 3,152 | ||||||
| Advance billings and customer deposits |
13,849 | 14,029 | ||||||
| Accrued compensation |
1,191 | 1,516 | ||||||
| Accrued operating taxes |
3,907 | 4,618 | ||||||
| Other accrued liabilities |
4,974 | 4,223 | ||||||
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| Total Current Liabilities |
48,503 | 58,022 | ||||||
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| Long-Term Liabilities |
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| Long-term debt, net of unamortized discount and debt issuance costs, excluding current portion |
456,300 | 357,950 | ||||||
| Retirement benefits |
17,029 | 18,257 | ||||||
| Deferred income taxes, net |
89,193 | 82,263 | ||||||
| Other long-term liabilities |
1,923 | 1,746 | ||||||
| Income tax payable |
93 | 110 | ||||||
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| Total Long-term Liabilities |
564,538 | 460,326 | ||||||
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| Stockholders’ Equity |
131,392 | 92,677 | ||||||
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| Noncontrolling Interests |
939 | 782 | ||||||
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| Total Equity |
132,331 | 93,459 | ||||||
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| Total Liabilities and Equity |
$ | 745,372 | $ | 611,807 | ||||
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| 1 | During 2010, the Company received a Federal stimulus award providing 50% funding to bring broadband services and infrastructure to Alleghany County, Virginia. The Company was required to deposit 100% of its grant ($8.1 million) into pledged accounts in advance of any reimbursements, to be drawn down ratably following reimbursement approvals. The project was completed and the grant has ended as of December 31, 2015. |
Lumos Networks Corp.
Condensed Consolidated Statements of Income
| Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||
| (In thousands, except per share amounts) |
2015 | 2014 | 2015 | 2014 | ||||||||||||
| Operating Revenues |
$ | 51,852 | $ | 50,685 | $ | 204,269 | $ | 201,456 | ||||||||
| Operating Expenses |
||||||||||||||||
| Network access costs |
9,754 | 9,714 | 39,310 | 40,868 | ||||||||||||
| Selling, general and administrative 1, 2 |
19,530 | 19,818 | 80,187 | 64,782 | ||||||||||||
| Depreciation and amortization |
12,415 | 12,071 | 47,527 | 45,212 | ||||||||||||
| Accretion of asset retirement obligations |
34 | 23 | 139 | 118 | ||||||||||||
| Restructuring charges |
1 | — | 638 | — | ||||||||||||
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| Total Operating Expenses |
41,734 | 41,626 | 167,801 | 150,980 | ||||||||||||
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| Operating Income |
10,118 | 9,059 | 36,468 | 50,476 | ||||||||||||
| Other Income (Expenses) |
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| Interest expense |
(6,896 | ) | (3,820 | ) | (19,918 | ) | (15,575 | ) | ||||||||
| Gain on interest rate swap derivatives |
220 | 97 | 665 | 492 | ||||||||||||
| Other income, net |
203 | 135 | 114 | 664 | ||||||||||||
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| Income Before Income Tax Expense |
3,645 | 5,471 | 17,329 | 36,057 | ||||||||||||
| Income Tax Expense |
925 | 2,007 | 7,146 | 14,409 | ||||||||||||
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| Net Income |
2,720 | 3,464 | 10,183 | 21,648 | ||||||||||||
| Net Income Attributable to Noncontrolling Interests |
(46 | ) | (51 | ) | (157 | ) | (120 | ) | ||||||||
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| Net Income Attributable to Lumos Networks Corp. |
$ | 2,674 | $ | 3,413 | $ | 10,026 | $ | 21,528 | ||||||||
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| Basic and Diluted Earnings per Common Share Attributable to Lumos Networks Corp. Stockholders: |
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| Earnings per share - basic |
$ | 0.12 | $ | 0.15 | $ | 0.44 | $ | 0.97 | ||||||||
| Earnings per share - diluted |
$ | 0.12 | $ | 0.15 | $ | 0.43 | $ | 0.95 | ||||||||
| Cash Dividends Declared per Share - Common Stock |
$ | — | $ | 0.14 | $ | — | $ | 0.56 | ||||||||
| 1 | Includes equity-based compensation expense related to all of the Company’s share-based awards and the Company’s 401(k) matching contributions of $1.6 million and $1.2 million for the three months ended December 31, 2015 and 2014, respectively, and $5.9 million and $4.3 million for the twelve months ended December 31, 2015 and 2014, respectively. |
| 2 | Selling, general and administrative expenses for the three and twelve months ended December 31, 2014 includes $0.6 million and $10.8 million, respectively, of curtailment gains related to the elimination of certain medical benefits under the Company’s postretirement plan. |
Lumos Networks Corp.
Condensed Consolidated Statements of Cash Flows
| Twelve Months Ended December 31, | ||||||||
| (In thousands) |
2015 | 2014 | ||||||
| Cash Flows from Operating Activities: |
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| Net income |
$ | 10,183 | $ | 21,648 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Depreciation |
42,721 | 36,025 | ||||||
| Amortization |
4,806 | 9,187 | ||||||
| Accretion of asset retirement obligations |
139 | 118 | ||||||
| Deferred income taxes |
6,767 | 14,477 | ||||||
| Gain on interest rate swap derivatives |
(665 | ) | (492 | ) | ||||
| Equity-based compensation expense |
5,881 | 4,340 | ||||||
| Amortization of debt issuance costs |
2,688 | 1,461 | ||||||
| Retirement benefits, net of cash contributions and distributions |
(314 | ) | (12,402 | ) | ||||
| Excess tax benefits from share-based compensation |
(165 | ) | — | |||||
| Other |
789 | 221 | ||||||
| Changes in operating assets and liabilities, net |
(6,085 | ) | 5,226 | |||||
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| Net Cash Provided by Operating Activities |
66,745 | 79,809 | ||||||
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| Cash Flows from Investing Activities: |
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| Purchases of property, plant and equipment |
(115,675 | ) | (84,100 | ) | ||||
| Broadband network expansion funded by stimulus grant |
(2,578 | ) | (878 | ) | ||||
| Purchases of available-for-sale marketable securities |
(114,478 | ) | (19,516 | ) | ||||
| Proceeds from sale or maturity of available-for-sale marketable securities |
42,200 | 40,679 | ||||||
| Change in restricted cash |
4,208 | 116 | ||||||
| Cash reimbursement received from broadband stimulus grant |
3,838 | 116 | ||||||
| Other |
— | 150 | ||||||
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| Net Cash Used in Investing Activities |
(182,485 | ) | (63,433 | ) | ||||
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| Cash Flows from Financing Activities: |
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| Proceeds from issuance of long-term debt |
28,000 | — | ||||||
| Proceeds from issuance of unsecured notes |
148,500 | — | ||||||
| Payment of financing costs |
(8,192 | ) | — | |||||
| Principal payments on senior secured term loans |
(47,960 | ) | (5,250 | ) | ||||
| Cash dividends paid on common stock |
(3,152 | ) | (12,456 | ) | ||||
| Principal payments under capital lease obligations |
(2,471 | ) | (1,468 | ) | ||||
| Proceeds from stock option exercises and employee stock purchase plan |
356 | 2,892 | ||||||
| Excess tax benefits from share-based compensation |
165 | — | ||||||
| Other |
(379 | ) | (68 | ) | ||||
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| Net Cash Provided by (Used in) Financing Activities |
114,867 | (16,350 | ) | |||||
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| (Decrease) increase in cash and cash equivalents |
(873 | ) | 26 | |||||
| Cash and cash equivalents: |
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| Beginning of Year |
14,140 | 14,114 | ||||||
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| End of Year |
$ | 13,267 | $ | 14,140 | ||||
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Lumos Networks Corp.
Operating Results, Customer and Network Statistics
| (Dollars in thousands) | Three months ended: | Twelve months ended: | ||||||||||||||||||||||||||
| December 31, 2015 |
September 30, 2015 |
June 30, 2015 |
March 31, 2015 |
December 31, 2014 |
December 31, 2015 |
December 31, 2014 |
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| Revenue, Gross Margin and Adjusted EBITDA |
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| Revenue |
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| Enterprise Data |
11,935 | 11,560 | 11,298 | 11,027 | 10,833 | 45,820 | 42,334 | |||||||||||||||||||||
| Transport |
10,005 | 9,507 | 10,036 | 10,473 | 10,962 | 40,021 | 44,373 | |||||||||||||||||||||
| FTTC |
7,892 | 7,556 | 6,755 | 6,267 | 5,515 | 28,470 | 19,935 | |||||||||||||||||||||
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| Total Data |
29,832 | 28,623 | 28,089 | 27,767 | 27,310 | 114,311 | 106,642 | |||||||||||||||||||||
| Residential and Small Business |
16,379 | 16,560 | 17,010 | 17,265 | 17,423 | 67,214 | 72,028 | |||||||||||||||||||||
| RLEC Access |
5,641 | 5,786 | 5,854 | 5,463 | 5,952 | 22,744 | 22,786 | |||||||||||||||||||||
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| Total Revenue |
51,852 | 50,969 | 50,953 | 50,495 | 50,685 | 204,269 | 201,456 | |||||||||||||||||||||
| Gross Margin |
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| Data |
85.0 | % | 84.2 | % | 85.5 | % | 86.9 | % | 85.5 | % | 85.4 | % | 85.0 | % | ||||||||||||||
| Residential and Small Business |
67.8 | % | 67.4 | % | 65.6 | % | 64.9 | % | 67.0 | % | 66.4 | % | 65.5 | % | ||||||||||||||
| Adjusted EBITDA1 |
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| Data |
14,221 | 12,395 | 12,492 | 12,367 | 12,629 | 51,475 | 51,725 | |||||||||||||||||||||
| Residential and Small Business |
5,556 | 5,045 | 5,327 | 5,627 | 4,623 | 21,555 | 19,900 | |||||||||||||||||||||
| RLEC Access |
4,774 | 4,834 | 4,848 | 4,517 | 4,621 | 18,973 | 18,239 | |||||||||||||||||||||
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| Adjusted EBITDA before Curtailment Gain |
24,551 | 22,274 | 22,667 | 22,511 | 21,873 | 92,003 | 89,864 | |||||||||||||||||||||
| Curtailment Gain2 |
— | — | — | — | 567 | — | 10,774 | |||||||||||||||||||||
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| Total Adjusted EBITDA |
24,551 | 22,274 | 22,667 | 22,511 | 22,440 | 92,003 | 100,638 | |||||||||||||||||||||
| Adjusted EBITDA Margin1 |
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| Data |
47.7 | % | 43.3 | % | 44.5 | % | 44.5 | % | 46.2 | % | 45.0 | % | 48.5 | % | ||||||||||||||
| Residential and Small Business |
33.9 | % | 30.5 | % | 31.3 | % | 32.6 | % | 26.5 | % | 32.1 | % | 27.6 | % | ||||||||||||||
| RLEC Access |
84.6 | % | 83.5 | % | 82.8 | % | 82.7 | % | 77.6 | % | 83.4 | % | 80.0 | % | ||||||||||||||
| Total Adjusted EBITDA Margin |
47.3 | % | 43.7 | % | 44.5 | % | 44.6 | % | 44.3 | % | 45.0 | % | 50.0 | % | ||||||||||||||
| Capital Expenditures |
35,557 | 24,769 | 26,125 | 29,224 | 19,949 | 115,675 | 84,100 | |||||||||||||||||||||
| Adjusted EBITDA less Capital Expenditures |
(11,006 | ) | (2,495 | ) | (3,458 | ) | (6,713 | ) | 2,491 | (23,672 | ) | 16,538 | ||||||||||||||||
| Fiber Network Statistics |
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| Fiber Route-Miles |
8,607 | 8,408 | 8,100 | 7,955 | 7,822 | 8,607 | 7,822 | |||||||||||||||||||||
| Fiber Miles3 |
384,094 | 378,581 | 369,238 | 363,189 | 354,118 | 384,094 | 354,118 | |||||||||||||||||||||
| Fiber Markets |
24 | 24 | 24 | 23 | 23 | 24 | 23 | |||||||||||||||||||||
| FTTC Unique Towers |
1,099 | 1,030 | 976 | 907 | 858 | 1,099 | 858 | |||||||||||||||||||||
| FTTC Total Connections |
1,440 | 1,363 | 1,307 | 1,236 | 1,153 | 1,440 | 1,153 | |||||||||||||||||||||
| On-Network Buildings |
1,732 | 1,642 | 1,574 | 1,530 | 1,477 | 1,732 | 1,477 | |||||||||||||||||||||
| Data Centers4 |
34 | 33 | 32 | 31 | 31 | 34 | 31 | |||||||||||||||||||||
| Mobile Switching Centers |
14 | 14 | 14 | 14 | 14 | 14 | 14 | |||||||||||||||||||||
| R&SB Statistics |
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| Competitive Voice Connections |
73,705 | 76,380 | 79,022 | 81,456 | 83,406 | 73,705 | 83,406 | |||||||||||||||||||||
| Video Subscribers |
5,904 | 5,760 | 5,516 | 5,472 | 5,352 | 5,904 | 5,352 | |||||||||||||||||||||
| Fiber-to-the-Premise Broadband Connections |
8,815 | 8,007 | 6,807 | 6,602 | 6,358 | 8,815 | 6,358 | |||||||||||||||||||||
| Premises Passed by Fiber5 |
19,400 | 19,170 | 18,983 | 18,142 | 17,461 | 19,400 | 17,461 | |||||||||||||||||||||
| RLEC Access Lines |
25,516 | 25,902 | 26,276 | 26,746 | 27,257 | 25,516 | 27,257 | |||||||||||||||||||||
| 1 | Adjusted EBITDA is a non-GAAP measure. See definition on page 2 of this earnings release. Adjusted EBITDA margin is calculated as the ratio of Adjusted EBITDA, as defined, to Total Revenue. |
| 2 | The Company recorded a gain totaling $10.8 million in 2014 related to the curtailment of medical benefits under the Company’s postretirement plan, which gain was not allocated to the operating segments. |
| 3 | Fiber miles are calculated as the fiber route miles multiplied by the number of fiber strands within each cable (represents an average of 45 fibers per route as of December 31, 2015). |
| 4 | Data centers reported include both commercial and private data centers and Company-owned facilities offering commercial data center services. |
| 5 | Includes residential and small business locations passed by fiber and available for service. Approximately 95% of the premises passed by fiber and available for service as of December 31, 2015 were residential. |
Lumos Networks Corp.
Reconciliation of Net Income Attributable to Lumos Networks Corp. to Adjusted EBITDA
| (Dollars in thousands) |
2015 | 2014 | ||||||
| For The Three Months Ended December 31, |
||||||||
| Net Income Attributable to Lumos Networks Corp. |
$ | 2,674 | $ | 3,413 | ||||
| Net Income Attributable to Noncontrolling Interests |
46 | 51 | ||||||
|
|
|
|
|
|||||
| Net Income |
2,720 | 3,464 | ||||||
| Income tax expense |
925 | 2,007 | ||||||
| Interest expense |
6,896 | 3,820 | ||||||
| Gain on interest rate swap derivatives |
(220 | ) | (97 | ) | ||||
| Other income, net |
(203 | ) | (135 | ) | ||||
|
|
|
|
|
|||||
| Operating Income |
10,118 | 9,059 | ||||||
| Depreciation and amortization and accretion of asset retirement obligations |
12,449 | 12,094 | ||||||
| Amortization of actuarial losses |
338 | 56 | ||||||
| Equity-based compensation |
1,645 | 1,231 | ||||||
| Restructuring charges |
1 | — | ||||||
|
|
|
|
|
|||||
| Adjusted EBITDA |
$ | 24,551 | $ | 22,440 | ||||
|
|
|
|
|
|||||
| Adjusted EBITDA Margin |
47.3 | % | 44.3 | % | ||||
| For The Twelve Months Ended December 31, |
||||||||
| Net Income Attributable to Lumos Networks Corp. |
$ | 10,026 | $ | 21,528 | ||||
| Net Income Attributable to Noncontrolling Interests |
157 | 120 | ||||||
|
|
|
|
|
|||||
| Net Income |
10,183 | 21,648 | ||||||
| Income tax expense |
7,146 | 14,409 | ||||||
| Interest expense |
19,918 | 15,575 | ||||||
| Gain on interest rate swap derivatives |
(665 | ) | (492 | ) | ||||
| Other income, net |
(114 | ) | (664 | ) | ||||
|
|
|
|
|
|||||
| Operating Income |
36,468 | 50,476 | ||||||
| Depreciation and amortization and accretion of asset retirement obligations |
47,666 | 45,330 | ||||||
| Amortization of actuarial losses |
1,350 | 248 | ||||||
| Equity-based compensation |
5,881 | 4,340 | ||||||
| Restructuring charges |
638 | — | ||||||
| Employee separation charges |
— | 244 | ||||||
|
|
|
|
|
|||||
| Adjusted EBITDA |
$ | 92,003 | $ | 100,638 | ||||
|
|
|
|
|
|||||
| Adjusted EBITDA Margin |
45.0 | % | 50.0 | % | ||||
Lumos Networks Corp.
Business Outlook 1 (as of March 7, 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 $30 | |
|
| ||
| Operating Income |
$30 to $33 | |
| Depreciation and amortization |
approximately $50 | |
| Equity-based compensation charges |
approximately $12 | |
| Amortization of actuarial losses |
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. year end 2015 earnings release dated March 7, 2016. |