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NTELOS Holdings Corp. Reports First Quarter 2014 Results

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SOURCE NTELOS Holdings Corp.

-Ninth Consecutive Quarter of Positive Net Adds

-Total Subscribers increased 4% to 468,000 from 2013

-Retail Revenue up 5% to $81.4 million from 2013

WAYNESBORO, Va., May 7, 2014 /PRNewswire/ -- 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 first quarter ended March 31, 2014.

First Quarter 2014 Financial Highlights

  • Operating revenues increased 2% to $122.1 million for the first quarter 2014, compared to $119.3 million for the first quarter 2013;
  • Retail revenues, which include subscriber and equipment revenues, increased 5% to $81.4 million for the first quarter 2014, compared to $77.6 million for the first quarter 2013;
  • Wholesale and other revenues, derived primarily from the Company's Strategic Network Alliance with Sprint, were $40.7 million for the first quarter 2014, compared to $41.8 million for the first quarter 2013; and
  • Adjusted EBITDA was $33.9 million for the first quarter 2014, compared to $37.4 million for the first quarter 2013.

"The competitive atmosphere in the wireless industry showed no signs of tempering in the first quarter of 2014," said James A. Hyde, CEO of NTELOS Holdings Corp. "Against this challenging backdrop, nTelos has successfully adapted, positioning nControl as a compelling alternative to the restrictive plans offered by the national carriers. Our strategic shift to a shared plan offering, along with our focus on providing more freedom and flexibility, helped nTelos post our ninth consecutive quarter of positive subscriber growth. Based on the initial success of nControl, we plan to aggressively introduce additional features and options that will further enhance the offering."

Subscriber Highlights

Total Subscribers

  • Total subscribers were 468,000 as of March 31, 2014, compared to 451,000 for the same period of 2013;
  • Total subscriber gross additions for the first quarter 2014 were 45,400, compared to 48,500 for the same period of 2013; and
  • Total net subscriber additions for the first quarter 2014 were 3,400, compared to 11,400 for the same period of 2013.

Postpay Subscribers

  • Postpay subscriber gross additions for the first quarter 2014 were 20,200, compared to 20,200 for the first quarter 2013 and 28,700 for the fourth quarter 2013; 
  • Net postpay subscriber additions were 300 for the first quarter 2014, compared to 3,300 for the first quarter 2013 and 8,900 for the fourth quarter 2013;
  • Postpay churn for the first quarter 2014 was 2.2%, compared to 1.9% for the first quarter 2013;
  • ARPA increased 5% to $137.47 for the first quarter 2014, compared to $130.69 for the same period in 2013; and
  • As of March 31, 2014, total postpay subscribers were 306,800.

Prepay Subscribers

  • Prepay subscriber gross additions for the first quarter 2014 were 25,200, compared to 28,300 for the first quarter 2013 and 22,100 for the fourth quarter 2013;
  • Net prepay subscriber additions (losses) were 3,100 for the first quarter 2014, compared to 8,100 for the first quarter 2013 and (1,400) for the fourth quarter 2013;
  • Prepay churn for the first quarter 2014 was 4.6%, compared to 4.6% for the first quarter 2013; and
  • As of March 31, 2014, total prepay subscribers were 161,200.

Mr. Hyde concluded, "The wireless environment remains very dynamic.  In addition to launching new features that should further enhance our nControl plans, we will also continue to deploy LTE throughout our footprint to ensure all customers get the best possible network experience and access to high speed mobile broadband services.  We believe our focus on execution will allow us to drive value for all of our key stakeholders."

Net Income

Net income after net income attributable to noncontrolling interests was $1.3 million, or $0.06 per diluted share, for the first quarter 2014, compared to $5.5 million, or $0.25 per diluted share, for the first quarter 2013.

Declaration of Dividend

On May 1, 2014, 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 July 11, 2014 to stockholders of record on June 13, 2014.

Business Outlook

For the year ending December 31, 2014, the Company reiterates its full year 2014 Adjusted EBITDA guidance of between $140.0 million and $150.0 million and full year 2014 capital expenditures guidance of between $85.0 million and $95.0 million

Conference Call

The Company will host a conference call with investors and analysts to discuss its first quarter 2014 results this morning, May 7, 2014, at 10:00 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, 1-855-669-9858 in Canada or 1-412-317-0088 internationally and entering access code 10045052 beginning approximately one hour after the call and continuing until May 22, 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 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, provide liquidity for future growth and continue to fund dividends.  ARPA 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 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. 

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 468,000 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 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 Nextel in the western Virginia and West Virginia portions of its territories for all Sprint CDMA 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)




March 31, 2014


December 31, 2013

(In thousands)












ASSETS




Current Assets  





Cash

$                121,038


$                 88,441


Restricted cash

2,167


2,167


Accounts receivable, net

36,545


37,740


Inventories and supplies

15,663


23,962


Deferred income taxes

9,751


10,650


Prepaid expenses and other current assets

21,513


20,808




206,677


183,768







Securities and Investments

1,499


1,499







Property, Plant and Equipment, net 

322,331


319,376







Intangible Assets 





Goodwill

63,700


63,700


Radio spectrum licenses

131,834


131,834


Customer relationships and trademarks, net

6,232


6,985







Deferred Charges and Other Assets

11,628


9,089







Total Assets

$                743,901


$                716,251















LIABILITIES AND EQUITY  




Current Liabilities 





Current portion of long-term debt

$                   5,824


$                   5,410


Accounts payable

29,816


33,677


Dividends payable

9,096


9,034


Accrued expenses and other current liabilities

30,821


31,389




75,557


79,510







Long-Term Debt

523,036


484,956







Other Long-Term Liabilities

107,614


107,992







Equity 

37,694


43,793







Total Liabilities and Equity 

$                743,901


$                716,251

 

NTELOS Holdings Corp.


Condensed Consolidated Statements of Income

Three Months Ended



(Unaudited)

(In thousands, except per share amounts)

March 31, 2014

March 31, 2013





Operating Revenues  

$        122,082

$        119,345





Operating Expenses 




Cost of sales and services

47,324

44,535


Customer operations 

34,091

30,954


Corporate operations 

9,737

7,904


Depreciation and amortization     

19,067

18,456



110,219

101,849





Operating Income

11,863

17,496





Other Expense




Interest expense  

(7,959)

(7,361)


Other expense, net

(1,072)

(369)



(9,031)

(7,730)





Income (Loss) before Income Taxes

2,832

9,766





Income Taxes   

1,110

3,744

Net Income (Loss)

1,722

6,022





Net Income Attributable to Noncontrolling Interests

(436)

(529)





Net Income (Loss) Attributable to NTELOS Holdings Corp.

$            1,286

$           5,493









Earnings per Share Attributable to NTELOS Holdings Corp.:








Basic

$             0.06

$             0.26


Weighted average shares outstanding - basic 

21,081

20,960






Diluted

$             0.06

$             0.25


Weighted average shares outstanding - diluted

22,024

21,550





Cash Dividends Declared per Share - Common Stock

$             0.42

$             0.42

 

NTELOS Holdings Corp.




Reconciliation of Net Income Attributable to NTELOS Holdings Corp. to Adjusted EBITDA 

(In thousands)







 Three Months Ended 




March 31, 2014


March 31, 2013



Net income attributable to NTELOS Holdings Corp.

$                   1,286


$                   5,493



Net income attributable to noncontrolling interests 

436


529



Net income  

$                   1,722


$                   6,022









Interest expense 

7,959


7,361



Income taxes 

1,110


3,744



Other expense, net

1,072


369



Operating income

$                 11,863


$                 17,496









Depreciation and amortization     

19,067


18,456



Accretion of asset retirement obligations

315


143



Equity-based compensation

1,311


1,321



Other 1

1,367


-



Adjusted EBITDA

$                 33,923


$                 37,416








1

2014 includes $1.4 million charge related to certain employee separation expenses.





See Form 8-K filed with the SEC on March 18, 2014 for additional information.



 

NTELOS Holdings Corp.





Key Metrics








Quarter Ended:


3/31/2013

6/30/2013

9/30/2013

12/31/2013

3/31/2014

Subscribers








Beginning Subscribers


439,600

451,000

454,800

457,100

464,600


Postpay


297,400

299,700

298,700

298,000

306,700


Prepay


142,200

151,300

156,100

159,100

157,900










Gross Additions


48,500

40,100

44,500

50,800

45,400


Postpay


20,200

16,300

20,000

28,700

20,200


Prepay


28,300

23,800

24,500

22,100

25,200










Disconnections


37,100

36,300

42,200

43,300

42,000


Postpay


16,900

16,100

19,600

19,800

19,900


Prepay


20,200

20,200

22,600

23,500

22,100










Net Additions (Losses)


11,400

3,800

2,300

7,500

3,400


Postpay


3,300

200

400

8,900

300


Prepay


8,100

3,600

1,900

(1,400)

3,100










Ending Subscribers


451,000

454,800

457,100

464,600

468,000


Postpay


299,700

298,700

298,000

306,700

306,800


Prepay


151,300

156,100

159,100

157,900

161,200










Churn, net


2.8%

2.7%

3.1%

3.1%

3.0%


Postpay


1.9%

1.8%

2.2%

2.2%

2.2%


Prepay


4.6%

4.4%

4.8%

4.9%

4.6%

















Other Items
















ARPA STATISTICS








ARPA


$    130.69

$    133.34

$    136.90

$    136.88

$    137.47


Postpay Accounts 1


143,300

141,400

140,200

141,200

138,400


Postpay Subscribers per Account 1

2.1

2.1

2.1

2.2

2.2


















Licensed Population (millions)


7.9

7.9

7.9

8.0

8.0










Covered Population (millions)


6.0

6.0

6.0

6.0

6.0










Total Cell Sites


1,431

1,432

1,434

1,444

1,444










SNA Revenues (000's)


$    40,152

$    39,607

$    48,644

$    39,326

$    39,284


















1 End of Period







 


NTELOS Holdings Corp.





ARPA Reconciliation - Postpay

 Three Months Ended 


Average Monthly Revenue per Account (ARPA) 1 

 March 31, 2014 


 March 31, 2013 


(In thousands, except for accounts and ARPA)











Operating revenues

$               122,082


$               119,345


Less:  prepay service revenues

(16,960)


(15,684)


Less:  equipment revenues

(7,491)


(6,638)


Less:  wholesale and other adjustments

(40,018)


(40,918)


 Postpay service revenues 

$                 57,613


$                 56,105








Average number of postpay accounts

139,700


143,100


 Postpay ARPA   

$                 137.47


$                 130.69














1

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.

 

Investor Relations Contacts:

Jeffrey Goldberger / Rob Fink
KCSA Strategic Communications
P: 212-896-1249 / 212-896-1206
Email: jgoldberger@kcsa.com / rfink@kcsa.com

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