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NTELOS Holdings Corp. Reports Third Quarter 2007 Operating ResultsRevenues of $126.9 million, up 14% from Third Quarter 2006
WAYNESBORO, Va., Nov. 1 /PRNewswire-FirstCall/ -- NTELOS Holdings Corp. (NASDAQ: NTLS) , a leading provider of wireless and wireline communications services (branded as NTELOS) in Virginia and West Virginia, today announced operating results for its third quarter of 2007. Operating revenues for third quarter 2007 were $126.9 million; Operating income for the quarter was $24.1 million and net income for the third quarter 2007 was $7.6 million, or $0.18 per share. Operating revenues for the first nine months of 2007 were $372.5 million; Operating income and net income for the first nine months of 2007 were $81.5 million and $28.1 million, respectively. Highlights for the quarter include:
-- Operating revenues of $126.9 million, up 14% from third quarter 2006
-- Adjusted EBITDA of $52.3 million, up $9.3 million, or 22%, from third
quarter 2006
-- Wireless adjusted EBITDA of $37.2 million, up 36% from third quarter
2006
"Our third quarter continued the positive performance trends of the first half of the year in both customer growth and financial performance," said James S. Quarforth, the Company's Chief Executive Officer. "Net wireless subscriber additions were again strong with postpay net additions more than three times those from third quarter 2006. Adjusted EBITDA for the first nine months of 2007 is up 20% from the first nine months of 2006. These results have generated a strong cash position and we are pleased to increase the cash dividends paid to our stockholders." **Teleconference** Friday, November 2, 2007 10:30 A.M. (ET) Domestic Dial in number: 800-215-2540 International Dial in number: 913-312-0709 Confirmation Code: 4099005 Audio webcast: http://ir.ntelos.com/ Recent Developments Declaration and Increase of Cash Dividend: On October 25, 2007, the Board of Directors of NTELOS Holdings Corp. declared a quarterly cash dividend on its common stock in the amount of $0.21 per share to be paid on January 10, 2008 to stockholders of record on December 20, 2007. This amount represents an increase of 40% from the previous quarterly cash dividend of $0.15 per share. Any decision to declare future dividends will be made each quarter at the discretion of the Board of Directors and will depend on, among other things, the Company's results of operations, cash requirements, investment opportunities, financial condition, contractual restrictions and other factors that the Board of Directors may deem relevant. Quadrangle Purchase of NTELOS Common Stock: Quadrangle Capital Partners II LP, a private equity fund affiliated with Quadrangle Group LLC, agreed to acquire, subject to regulatory approvals, all of the shares of NTELOS common stock owned by Citigroup Venture Capital Equity Partners, a private equity fund managed by an affiliate of Court Square Capital Partners, and certain affiliated limited partnerships. With this acquisition, private equity funds affiliated with Quadrangle Group LLC will own approximately 27% of NTELOS's outstanding common stock. To date, approximately 90% of these shares have been acquired by Quadrangle with the remaining shares, subject to regulatory approval, expected to transfer by year-end. Introduction of IPTV Video Product: On September 27, 2007, the Company introduced NTELOS Video in selected neighborhoods within the Company's Rural Local Exchange Carrier (RLEC) service areas. The product provides an alternative to cable and satellite TV, offering video entertainment services with more than 200 all-digital channels and 18 high-definition channels. It is delivered via fiber to the home which allows NTELOS to deliver video, local and long distance telephone services plus Internet access at speeds up to 20 megabits per second. Operating Highlights Operating revenues for third quarter 2007 were $126.9 million, a 14% increase over third quarter 2006 operating revenues of $111.2 million and 2% over operating revenues of $124.0 million in second quarter 2007. Operating revenues for the first nine months of 2007 were $372.5 million, 14% over operating revenues for the same period last year of $326.2 million. Wireless operating revenues for third quarter of 2007 were $96.2 million compared to $81.2 million for the same period in 2006, an increase of 18%. Wireless subscribers were 396,420 at the end of third quarter 2007, an 11% increase from 357,424 at the end of third quarter 2006. This growth, combined with a 6% increase in average revenue per handset/unit, or ARPU (a non-GAAP measure), from third quarter 2006 to third quarter 2007 resulted in an 18% increase in subscriber revenues between these periods. Wholesale revenues were $24.3 million for third quarter 2007 compared to $19.3 million for the same quarter last year, an increase of 26%. Wholesale revenues were primarily derived from the strategic network alliance agreement with Sprint Nextel, amended July 1, 2007, which totaled $24.0 million and $19.1 million for these respective periods. Wireless operating revenues for the first nine months of 2007 were $281.2 million, a $42.8 million or 18% increase over the first nine months of 2006. Wireline operating revenues were $30.6 million for the third quarter of 2007, a 3% increase over third quarter 2006 of $29.8 million. RLEC operating revenues were $15.3 million in the third quarter of 2007 compared to $15.7 million in third quarter 2006, a decrease of 3% due to a favorable revenue adjustment in third quarter 2006 related to the safety net settlement pursuant to FCC Order 06-112 and the rate reset (decrease) on interstate access revenues effective July 1, 2007. In the Competitive Wireline segment, which consists of Competitive Local Exchange Carrier (CLEC), Internet Service Provider (ISP) and network operations, operating revenues grew 9%, from $14.1 million in the third quarter of 2006 to $15.3 million in the third quarter 2007. Revenues from Competitive Wireline strategic products, including local service, broadband, integrated access, transport and Metro Ethernet, grew $1.4 million, or 13%, for third quarter 2007 compared to third quarter 2006, partially offset by the loss of dial-up internet revenues and a reduction in carrier access revenues. For the first nine months of 2007, wireline operating revenues were $90.7 million, a 4% increase over the same period last year. Adjusted EBITDA (a non-GAAP measure) for third quarter 2007 was $52.3 million, with a margin of 41%. This amount represents an increase of 22% over third quarter 2006 adjusted EBITDA of $43.0 million. Adjusted EBITDA for the first nine months of 2007 and 2006 was $153.4 million and $128.2 million, respectively, an increase of 20%. Wireless adjusted EBITDA was $37.2 million for the third quarter of 2007, compared to $27.4 million for third quarter 2006, an increase of 36%. The adjusted EBITDA margin for wireless increased to 38.7% for third quarter 2007 from 33.7% in third quarter 2006. Wireless adjusted EBITDA for the first nine months of 2007 was $108.1 million, a $25.0 million or 30% increase over the first nine months of 2006. Wireline adjusted EBITDA was $16.4 million for the third quarter of 2007 compared to $16.7 million for the third quarter 2006. Wireline adjusted EBITDA margin for the third quarter 2007 was 54%. For the first nine months of 2007, wireline adjusted EBITDA was $48.7 million compared to $48.6 million for the same period last year.
Business Segment Highlights
Wireless
-- Gross customer additions for the third quarters of 2007 and 2006 were
40,788 and 42,156, respectively. Gross customer additions of higher-
value, under-contract, postpay subscribers were 21,231 in the third
quarter of 2007, the highest postpay sales quarter in 2007. Net
subscriber additions for the first nine months of 2007 were 29,223,
with 5,225 added in the third quarter. Net additions for higher-value
postpay subscribers in third quarter 2007 were 94% of total net
additions at 4,924, more than three times the 1,612 net postpay
additions for third quarter 2006. At September 30, 2007, postpay
subscribers represented 72% of total subscribers. Monthly blended
subscriber churn reflected typical third quarter seasonality at 3.0%
for third quarter 2007, down from 3.3% for third quarter 2006. Postpay
monthly subscriber churn remained below 2.0% for the quarter at 1.9%,
down from 2.4% for third quarter 2006.
-- ARPU (a non-GAAP measure) for third quarter 2007 was $56.37, 6% higher
than ARPU for third quarter 2006 of $53.30. Postpay ARPU increased
$2.45 from third quarter 2006 to $57.65, a 4% increase. The increase
was attributable to continued growth in data services and data
packages. Total data ARPU increased from $2.72 in third quarter 2006
and $4.24 in second quarter 2007 to $4.66 in third quarter 2007.
-- Cost per Gross Addition (CPGA - a non-GAAP measure), was $348 in third
quarter 2007 compared to $340 in third quarter 2006. For the first
nine months of 2007, CPGA averaged $347, compared to the average of the
first nine months of 2006 of $358. Cash Cost per Handset/Unit (CCPU -
a non-GAAP measure), was $33.72 for third quarter 2007, up from $32.25
in the same quarter last year primarily due to increased customer
retention costs. Total network cell sites were 1,011 at September 30,
2007 compared to 946 at September 30, 2006, an increase of 65 or 7%.
Wireline
-- RLEC: Access lines at the end of third quarter 2007 were 44,224,
compared to 45,677 at the end of third quarter 2006, a 3% decrease.
This line loss is reflective of residential wireless substitution,
second-line losses and PBX displacement of Centrex lines. RLEC
operating revenues for third quarter 2007 were down 3%, or
approximately $0.5 million from third quarter 2006, primarily as a
result of the favorable safety net settlement in third quarter 2006 and
the July 1, 2007 interstate access revenue rate reset. RLEC adjusted
EBITDA for third quarter 2007 was $11.0 million compared to $12.0
million for third quarter 2006 reflecting the decrease in revenue and
increased access expenses. RLEC adjusted EBITDA for the first nine
months of 2007 was $33.4 million compared to $34.7 million for the same
period in 2006.
-- Competitive Wireline: CLEC business local access lines at the end of
third quarter 2007 were 48,615, a 5% increase over the end of third
quarter 2006 at 46,224. Operating revenues for CLEC business local
access lines were essentially flat over these periods reflecting the
customer growth offset by downward pricing driven by competition.
Revenue decline resulting from dial-up Internet subscriber losses was
approximately $0.3 million for third quarter 2007 compared to third
quarter 2006. Revenues from wireline strategic products, however,
increased approximately $1.4 million, or 13%, to $11.8 million in third
quarter 2007 from $10.4 million in third quarter 2006, due to customer
growth. Broadband growth in the RLEC footprint continues to be
especially strong, with customer penetration increasing to 35.7% at
September 30, 2007 from 26.0% at September 30, 2006. Adjusted EBITDA
for the Competitive Wireline segment increased 16%, to $5.4 million in
the third quarter 2007 from $4.6 million in the third quarter 2006.
Competitive Wireline adjusted EBITDA for the first nine months of 2007
was $15.3 million, $1.4 million or 10% over the $13.9 million for the
same period in 2006.
Quarforth concluded, "Our performance during the first nine months of 2007 was marked by significant and steady growth in customers, operating revenues and adjusted EBITDA. We have again updated our guidance to reflect these performance trends." Business Outlook The following statements 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". The Company updates its previously provided guidance for 2007 for consolidated revenues to be between $497 million and $501 million and 2007 adjusted EBITDA to be between $199 million and $203 million. Please see the Business Outlook exhibit with this press release for additional guidance detail. Non-GAAP Measures Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, capital restructuring fees, gain of sale of assets, advisory termination fees, other expenses, minority interests, reorganization items, non-cash compensation charges and secondary offering costs. ARPU, or average monthly revenues per handset/unit in service, is computed by dividing service revenues per period by the weighted average number of handsets in service during that period. Please see footnotes in exhibits for a complete definition of this measure. CPGA, or cost per gross addition, is computed by adding the income statement component of merchandise cost of sales, which is included in cost of wireless sales expense, and sales and marketing, which is included in customer operations expense and reducing that amount by the equipment revenues from sales to new customers, which is included in wireless communications revenues. The net result of these components is then divided by the gross subscriber additions during the period. Please see footnotes in exhibits for a complete definition of this measure. CCPU, or cash cost per handset/unit, is computed by adding the income statement components of cost of sales, maintenance and support, corporate operations and customer operations, less equipment revenue and costs incurred to acquire new subscribers. The net result of these components is then divided by average subscribers for the period. In addition to the Company's subscriber costs, CCPU includes the costs of other carriers' subscribers roaming on the NTELOS network. Non-cash operating expenses such as depreciation, amortization and non-cash compensation are excluded from the calculation. Please see footnotes in exhibits for a complete definition of this measure. Adjusted EBITDA, ARPU, CPGA and CCPU 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 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. is an integrated communications provider with headquarters in Waynesboro, VA. NTELOS provides products and services to customers in Virginia, West Virginia, Kentucky, Ohio, Tennessee, Maryland and North Carolina, including wireless phone service, local and long distance telephone services, IPTV-based video services, and data services for internet access and wide area networking. Detailed information about NTELOS is available at www.ntelos.com. 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: leverage; operating and financial restrictions imposed by our senior credit facilities; our cash requirements; rapid development and intense competition in the telecommunications industry; increased competition in our markets; declining prices for our services; changes or advances in technology; the potential to experience a high rate of customer turnover; our dependence on our affiliation with Sprint Nextel ("Sprint"); a potential increase in the roaming rates we pay; wireless handset subsidy costs; the potential for our largest competitors and Sprint to build networks in our markets; the potential loss of our licenses; federal and state regulatory developments; loss of our cell sites; the rates of penetration in the wireless telecommunications industry; our capital requirements; governmental fees and surcharges; our reliance on certain suppliers and vendors; the potential for system failures or unauthorized use of our network; the potential for security breaches of our physical facilities; the potential loss of our senior management and inability to hire additional personnel; the trading market for our common stock; the potential influence over us by our largest stockholder, Quadrangle; our ability to pay dividends; provisions in our charter documents and Delaware law; expenses of being a public company; the requirement to comply with Section 404 of the Sarbanes-Oxley Act; and other unforeseen difficulties that may occur. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ significantly from management's expectations, 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 Reports on Forms 10-K.
Exhibits:
-- Condensed Consolidated Balance Sheets
-- Condensed Consolidated Statements of Operations
-- Summary of Operating Results
-- Reconciliation of Net Income (Loss) to Operating Income
-- Reconciliation of Operating Income (Loss) to Adjusted EBITDA
-- Customer Summary
-- Wireless Customer Detail
-- Wireless Key Performance Indicators (KPI)
-- Business Outlook for the Year 2007
NTELOS Holdings Corp.
Condensed Consolidated Balance Sheets (unaudited)
(dollars in thousands)
September 30, December 31,
2007 2006
ASSETS
Current Assets
Cash and cash equivalents $74,612 $44,180
Accounts receivable, net 45,358 38,396
Inventories and supplies 4,887 5,471
Other receivables and deposits 3,397 3,777
Prepaid expenses and other 7,318 6,562
135,572 98,386
Interest rate swap 1,226 3,874
Securities and investments 466 294
Property, plant and equipment 542,493 489,811
Less accumulated depreciation 167,233 113,039
375,260 376,772
Other Assets
Goodwill 144,074 151,976
Franchise rights 32,000 32,000
Other intangibles, net 88,727 99,379
Radio spectrum licenses in service 114,102 114,102
Radio spectrum licenses not in service 18,295 18,250
Other radio spectrum licenses 1,346 1,344
Deferred charges 4,567 4,470
403,111 421,521
Total Assets $915,635 $900,847
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $6,818 $13,152
Accounts payable 25,069 25,209
Dividends payable 6,307 -
Advance billings and customer deposits 17,526 16,709
Accrued payroll 10,519 10,021
Accrued interest 294 305
Deferred revenue 650 683
Income tax payable 1,182 -
Accrued operating taxes 3,898 3,584
Other accrued liabilities 3,112 3,749
75,375 73,412
Long-Term Liabilities
Long-term debt 608,836 613,371
Other long-term liabilities 57,978 61,842
666,814 675,213
Minority Interests 422 457
Stockholders' Equity 173,024 151,765
Total Liabilities and
Stockholders' Equity $915,635 $900,847
NTELOS Holdings Corp.
Condensed Consolidated Statements Three months Nine months
of Operations (unaudited) ended: ended:
(in thousands, except for Sept. 30, Sept. 30, Sept. 30, Sept. 30,
per share data) 2007 2006 2007 2006
Operating Revenues
Wireless communications $96,152 $81,233 $281,237 $238,396
Wireline communications 30,601 29,788 90,692 87,216
Other communications services 178 203 547 618
126,931 111,224 372,476 326,230
Operating Expenses (1)
Cost of wireless sales (exclusive
of items shown separately below) 19,374 17,748 57,092 50,511
Maintenance and support (inclusive
of non-cash compensation expense
of $102 and $298 for the three
and nine months ended September
30, 2007, respectively, and $74
and $996 for the three and nine
months ended September 30, 2006,
respectively) 20,598 19,655 62,148 57,765
Customer operations (inclusive of
non-cash compensation expense of
$155 and $457 for the three and
nine months ended September 30,
2007, respectively, and $116 and
$1,310 for the three and nine
months ended September 30, 2006,
respectively) 27,221 25,033 79,081 73,937
Corporate operations (inclusive of
non-cash compensation expense of
$837 and $2,454 for the three and
nine months ended September 30,
2007, respectively, and $735 and
$9,999 for the three and nine
months ended September 30, 2006,
respectively) 8,503 6,708 24,511 28,172
Depreciation and amortization(2) 26,863 21,769 67,541 63,761
Accretion of asset retirement
obligations 230 237 622 664
Termination of advisory agreements - - - 12,941
102,789 91,150 290,995 287,751
Operating Income 24,142 20,074 81,481 38,479
Other Income (Expenses)
Interest expense (11,020) (10,994) (32,721) (48,889)
(Loss) gain on interest rate swap
agreement (1,265) (2,800) (2,648) 143
Other income 839 542 2,340 4,260
12,696 6,822 48,452 (6,007)
Income tax expense 5,180 3,071 20,360 7,308
7,516 3,751 28,092 (13,315)
Minority interests in losses
(earnings) of subsidiaries 35 (7) 39 (25)
Net Income (Loss) 7,551 3,744 28,131 (13,340)
Dividend distribution preference on
Class B Shares - - - (30,000)
Income (Loss) applicable to common
shares $7,551 $3,744 $28,131 $(43,340)
Basic and Diluted Earnings (Loss)
per Common Share:
Income (loss) per share - basic $0.18 $0.09 $0.68 $(1.12)
Income (loss) per share - diluted $0.18 $0.09 $0.67 $(1.12)
Average shares outstanding -
basic(3) 41,630 41,109 41,428 38,581
Average shares outstanding -
diluted(3) 42,361 42,109 42,117 38,581
(1) Includes non-cash compensation charge related to capital stock and
options to purchase capital stock of $1.1 million and $3.2 million for
the three and nine months ended September 30, 2007, respectively, and
$0.9 million and $12.3 million for the three and nine months ended
September 30, 2006, respectively. Also includes $0.5 million of fees
in the first quarter of 2006 paid under advisory agreements with CVC
Management LLC and Quadrangle Advisors LLC whereby they provided
advisory and other services to the Company. These advisory agreements
were terminated in February 2006 for a termination fee of $12.9
million. See NTELOS Holdings Corp. Form 10-K for the year ended
December 31, 2006 for further details.
(2) Depreciation expense for the period August 1, 2007 to September 30,
2007 includes $6.3 million of accelerated depreciation related to
3G-1xRTT equipment scheduled to be replaced or redeployed in
connection with the EVDO upgrade.
(3) Earnings (Loss) per share and average weighted shares outstanding have
been adjusted for all periods in 2006 to reflect the conversion of
Class A and Class L common shares to Class B common shares as of the
initial public offering based on a 2.15 conversion ratio. All Class B
common shares were converted to common shares by December 31, 2006.
NTELOS Holdings Corp.
Summary of Operating Results
(dollars in thousands) Three Months Ended: Nine Months Ended:
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2006 2007 2006 2007
Operating Revenues
Wireless PCS Operations $81,233 $96,152 $238,396 $281,237
Subscriber Revenues 56,500 66,687 165,951 192,794
Wholesale/Roaming Revenues,
net 19,346 24,339 56,808 71,590
Equipment Revenues 5,162 4,755 14,993 16,016
Other Revenues 225 371 644 837
Wireline Operations
RLEC 15,711 15,264 45,274 46,103
Competitive Wireline 14,077 15,337 41,942 44,589
Wireline Total 29,788 30,601 87,216 90,692
Other 203 178 618 547
$111,224 $126,931 $326,230 $372,476
Operating Expenses
(before depreciation &
amortization, accretion of asset
retirement obligations, asset
write-down and impairment charges,
gain on sale of assets,
termination of advisory
agreements, non-cash compensation
and secondary offering costs,
a non-GAAP Measure)
Wireless PCS Operations $53,831 $58,921 $155,329 $173,150
Cost of Sales - Equipment 7,013 6,504 20,999 21,415
Cost of Sales - Access & Other 10,735 12,869 29,512 35,677
Maintenance and Support 10,629 11,061 30,563 33,429
Customer Operations 21,078 22,942 61,271 66,663
Corporate Operations 4,376 5,545 12,984 15,966
Wireline Operations
RLEC 3,663 4,247 10,621 12,680
Competitive Wireline 9,461 9,972 28,045 29,334
Wireline Total 13,124 14,219 38,666 42,014
Other(1) 1,264 1,458 4,085 3,889
$68,219 $74,598 $198,080 $219,053
Adjusted EBITDA (a non-GAAP
Measure)(2)
Wireless PCS Operations $27,402 $37,231 $83,067 $108,087
Wireline Operations
RLEC 12,048 11,017 34,653 33,423
Competitive Wireline 4,616 5,365 13,897 15,255
Wireline Total 16,664 16,382 48,550 48,678
Other(1) (1,061) (1,280) (3,467) (3,342)
$43,005 $52,333 $128,150 $153,423
Capital Expenditures
Wireless PCS Operations $16,762 $9,514 $45,580 $31,470
Wireline Operations
RLEC 1,847 2,236 7,295 6,741
Competitive Wireline 3,878 2,831 9,395 11,576
Wireline Total 5,725 5,067 16,690 18,317
Other 1,033 2,459 4,364 5,512
$23,520 $17,040 $66,634 $55,299
Adjusted EBITDA less Capital
Expenditures
Wireless PCS Operations $10,640 $27,717 $37,487 $76,617
Wireline Operations
RLEC 10,201 8,781 27,358 26,682
Competitive Wireline 738 2,534 4,502 3,679
Wireline Total 10,939 11,315 31,860 30,361
Other (2,094) (3,739) (7,831) (8,854)
$19,485 $35,293 $61,516 $98,124
(1) Other Operations expense includes $0.5 million in first quarter 2006
of fees paid under advisory agreements with CVC Management LLC and
Quadrangle Advisors LLC whereby they provided advisory and other
services to the Company for an annual advisory fee of $2.0 million.
These advisory agreements were terminated in February 2006 for a
termination fee of $12.9 million. See NTELOS Holdings Corp. Form 10-K
for the year ended December 31, 2006 for further details.
(2) Please see earnings release schedules available on the Company's
website or NTELOS Holdings Corp. SEC filings for reconciliations of
adjusted EBITDA to operating income and to net income.
NTELOS Holdings Corp.
Reconciliation of Net Income (Loss) to Operating Income
(dollars in thousands)
Three Months Ended: Nine Months Ended:
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2006 2007 2006 2007
Net income (loss) $3,744 $7,551 $(13,340) $28,131
Interest expense 10,994 11,020 48,889 32,721
(Gain) loss on interest rate swap
agreement 2,800 1,265 (143) 2,648
Income taxes 3,071 5,180 7,308 20,360
Minority interest 7 (35) 25 (39)
Other income (542) (839) (4,260) (2,340)
Operating income $20,074 $24,142 $38,479 $81,481
Wireless $12,246 $16,957 $38,463 $60,003
Wireline 10,000 9,577 29,003 28,665
Other (2,172) (2,392) (28,987) (7,187)
Operating income $20,074 $24,142 $38,479 $81,481
NTELOS Holding Corp.
Reconciliation of Operating Income (Loss) to Adjusted EBITDA
(dollars in thousands) 2006
Wireless Competitive
PCS RLEC Wireline Other Total
For The Three Months Ended
September 30
Operating Income $12,246 $8,470 $1,530 $(2,172) $20,074
Depreciation and
amortization 14,933 3,575 3,078 183 21,769
Sub-total: EBITDA 27,179 12,045 4,608 (1,989) 41,843
Accretion of asset
retirement obligations 223 3 8 3 237
Secondary offering costs - - - - -
Non-cash compensation
- A shares - - - 925 925
Adjusted EBITDA $27,402 $12,048 $4,616 $(1,061) $43,005
Adjusted EBITDA Margin 33.7% 76.7% 32.8% N/M 38.7%
For The Nine Months Ended
September 30
Operating Income $38,463 $23,846 $5,157 $(28,987) $38,479
Depreciation and
amortization 43,989 10,797 8,710 265 63,761
Sub-total: EBITDA 82,452 34,643 13,867 (28,722) 102,240
Accretion of asset
retirement obligations 615 10 30 9 664
Advisory Fees - - - 12,941 12,941
Secondary offering costs - - - - -
Non-cash compensation
- A shares - - - 12,305 12,305
Adjusted EBITDA $83,067 $34,653 $13,897 $(3,467) $128,150
Adjusted EBITDA Margin 34.8% 76.5% 33.1% N/M 39.3%
2007
Wireless Competitive
PCS RLEC Wireline Other Total
For The Three Months Ended
September 30
Operating Income $16,957 $7,484 $2,093 $(2,392) $24,142
Depreciation and
amortization 20,065 3,528 3,258 12 26,863
Sub-total: EBITDA 37,022 11,012 5,351 (2,380) 51,005
Accretion of asset
retirement obligations 209 5 14 2 230
Secondary offering costs - - - 4 4
Non-cash compensation
- A shares - - - 1,094 1,094
Adjusted EBITDA $37,231 $11,017 $5,365 $(1,280) $52,333
Adjusted EBITDA Margin 38.7% 72.2% 35.0% N/M 41.2%
For The Nine Months Ended
September 30
Operating Income $60,003 $22,860 $5,805 $(7,187) $81,481
Depreciation and
amortization 47,522 10,550 9,409 60 67,541
Sub-total: EBITDA 107,525 33,410 15,214 (7,127) 149,022
Accretion of asset
retirement obligations 562 13 41 6 622
Advisory Fees - - - - -
Secondary offering costs - - - 570 570
Non-cash compensation
- A shares - - - 3,209 3,209
Adjusted EBITDA $108,087 $33,423 $15,255 $(3,342) $153,423
Adjusted EBITDA Margin 38.4% 72.5% 34.2% N/M 41.2%
NTELOS Holdings Corp.
Customer Summary Table
Quarter Ended: 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07
Wireless Subscribers 357,424 367,197 383,143 391,195 396,420
RLEC Access Lines 45,677 45,281 45,054 44,697 44,224
CLEC Access Lines(1) 46,224 46,781 47,381 48,095 48,615
RLEC Broadband Customers(2) 8,390 9,000 9,833 10,571 11,194
Total Broadband Connections(2) 16,373 17,177 18,066 18,784 19,510
Dial-Up Internet Subscribers 28,913 27,628 26,322 24,795 23,048
Long Distance Subscribers 44,263 45,237 46,531 47,929 48,260
(1) Includes customer Primary Rate Interface (PRI) line equivalents at 23
lines per PRI. Excludes intercompany PRI lines.
(2) Includes DSL, dedicated Internet access, wireless broadband, broadband
over fiber, metro Ethernet, ATM and frame relay. All revenues from
broadband products, including RLEC broadband, are recorded in the
operating revenues of the Competitive Wireline segment.
NTELOS Holdings Corp.
Wireless Customer Detail
Quarter Ended: 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07
Total Wireless Subscribers
Beginning Subscribers 350,168 357,424 367,197 383,143 391,195
Prepay 89,368 94,771 98,846 109,689 110,506
Postpay 260,800 262,653 268,351 273,454 280,689
Gross Additions 42,156 44,591 47,579 38,937 40,788
Prepay 21,890 22,116 27,476 18,277 19,557
Postpay 20,266 22,475 20,103 20,660 21,231
Disconnections 34,900 34,818 31,633 30,885 35,563
Prepay 16,246 17,797 16,315 17,164 19,256
Postpay 18,654 17,021 15,318 13,721 16,307
Net Additions 7,256 9,773 15,946 8,052 5,225
Prepay 5,644 4,319 11,161 1,113 301
Postpay 1,612 5,454 4,785 6,939 4,924
Ending Subscribers 357,424 367,197 383,143 391,195 396,420
Prepay 94,771 98,846 109,689 110,506 110,285
Postpay 262,653 268,351 273,454 280,689 286,135
NTELOS Holdings Corp.
Wireless Key Performance Indicators Three Months Nine Months
Ended: Ended:
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2006 2007 2006 2007
Average Subscribers
(weighted monthly) 354,562 393,779 346,804 385,180
Gross Subscriber Revenues($000) $56,693 $66,587 $167,206 $194,097
Revenue Accruals & Deferrals (140) 151 (1,227) (1,168)
Eliminations & Other Adjustments (53) (51) (28) (135)
Net Subscriber Revenues ($000) $56,500 $66,687 $165,951 $192,794
Average Monthly Revenue per
Handset/Unit (ARPU) (1) $53.30 $56.37 $53.57 $55.99
Average Monthly Revenue per Postpay
Handset/Unit (ARPU) (1) $55.20 $57.65 $54.87 $56.52
Average Monthly Data Revenue per
Handset/Unit (ARPU) (1) $2.72 $4.66 $2.65 $4.12
Average Monthly Data Revenue per
Postpay Handset/Unit (ARPU) (1) $3.17 $5.40 $3.04 $4.75
Cost of Acquisition per Gross
Addition (CPGA) (2) $340 $348 $358 $347
Monthly Cash Cost per Handset/Unit
(CCPU) (3) $32.25 $33.72 $31.20 $32.53
Strategic Network Alliance Revenues
($000)
Home Voice $10,517 $13,053 $30,726 $37,625
Travel Voice 5,492 4,254 17,314 14,559
Total Voice 16,009 17,307 48,040 52,184
Home Data NA 2,584 NA NA
Travel Data NA 2,398 NA NA
Total Data 3,078 4,982 8,033 16,798
Revenue Minimum Adjustment - 1,756 - 1,756
Total $19,087 $24,045 $56,073 $70,738
Monthly Postpay Subscriber Churn 2.4% 1.9% 2.3% 1.8%
Monthly Blended Subscriber Churn 3.3% 3.0% 3.2% 2.8%
Total Cell Sites (Period Ending) 946 1,011 946 1,011
Cell Sites under the Strategic
Network Alliance Agreement (Period
Ending; Sub-set of Total Cell Sites
above) 568 603 568 603
(1) Average monthly revenues per handset/unit in service, or ARPU, is an
industry metric that measures service revenues per period divided by
the weighted average number of handsets in service 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 statement 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.
(2) CPGA is cost per gross addition and summarizes the average cost to
acquire new customers during the period. CPGA is a non-GAAP financial
measure that is computed by adding the income statement component of
merchandise cost of sales, which is included in cost of wireless sales
expense, and sales and marketing, which is included in customer
operations expense and reduces that amount by the equipment revenues
from sales to new customers, which is included in wireless
communications revenues. The net result of these components is then
divided by the gross subscriber additions during the period. NTELOS
believes CPGA is a useful measure used to compare the Company's
average cost to acquire a new subscriber to that of other wireless
communications providers, although other wireless communications
providers may include or exclude certain items from their calculations
which may make the comparison less meaningful. The inclusion of
merchandise cost of sales net of the equipment revenues from sales to
new customers is critical to the understanding of how much it costs
the Company to acquire a new subscriber.
(3) CCPU is cash cost per handset/unit and represents the average cost to
provide wireless service and support per subscriber. CCPU is a non-
GAAP financial measure computed by adding the income statement
components of cost of sales, maintenance and support, corporate
operations and customer operations for wireless operations, less
wireless equipment revenue and costs incurred to acquire new
subscribers. The net result is then divided by average subscribers for
the period. In addition to the Company's subscriber costs, CCPU
includes the costs of other carriers' subscribers roaming on the
NTELOS network. Non-cash operating expenses such as depreciation,
amortization and non-cash compensation are excluded. NTELOS believes
CCPU is a useful measure to compare the Company's average costs to
that of other providers, although others may include or exclude
certain items from their calculations which may make the comparison
less meaningful. The Company believes CCPU is useful to evaluate
effectiveness in managing cash costs associated with providing
services. CCPU should be considered in addition to, but not as a
substitute for, information contained in the Company's statement of
operations.
NTELOS Holdings Corp.
Business Outlook for the Year 2007 (1) (as of November 1, 2007)
(Dollars in millions, except for metrics)
Twelve Months 2007
Operating Revenues - Guidance
Wireless $376.0 to $379.0
Wireline 120.0 to 121.0
Other 1.0 1.0
$497.0 to $501.0
Reconciliation of Net Income to
Adjusted EBITDA - Guidance
Net Income $27.0 to $32.0
Interest expense 45.0 to 44.0
Interest rate swap change in value(2) 3.5 to 3.0
Income tax expense(3) 20.0 to 23.0
Other income (2.5) to (3.0)
Operating Income 93.0 to 99.0
Depreciation and amortization 100.0 to 98.0
Accretion of asset retirement obligations 1.0 1.0
Secondary offering costs 0.6 0.6
Non-cash compensation charges 4.4 4.4
Adjusted EBITDA $199.0 to $203.0
Wireless $140.0 to $142.5
Wireline 64.0 to 65.0
Other (5.0) to (4.5)
Adjusted EBITDA $199.0 to $203.0
Capital Expenditures
Wireless $77 to $75
Wireline 24 to 23
Other 7 7
Total Capital Expenditures $108 to $105
Wireless Metrics
Net subscriber additions Approximately 38,000
Blended ARPU Approximately $55.75
Postpay Churn Approximately 1.8%
Blended Churn Approximately 2.9%
Cost per Gross Acquisition (CPGA) $355 to $365
Cash Cost per Handset/Unit (CCPU) Approximately $33
Wireline Metrics
RLEC Line Loss 3% to 4%
Competitive Wireline revenue growth 5% to 7%
(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''.
(2) The deferred asset for interest rate swap amounted to $3.9 million and
$1.2 million at December 31, 2006 and September 30, 2007,
respectively. This interest rate swap is scheduled to mature in
February 2008.
(3) Current cash income tax is expected to be between $13 million and $15
million, reflecting the benefit of available tax NOLs and excess tax
depreciation and amortization from capital expenditures in recent
years and planned levels for 2007.
NTLSG
Website: http://ir.ntelos.com/Website: http://www.ntelos.com/ |
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