NTELOS Holdings Corp. Reports Second Quarter 2008 Operating Results
WAYNESBORO, Va.--(BUSINESS WIRE)--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 second quarter of 2008.
Operating revenues for second quarter 2008 were $131.0 million; Operating income for the quarter was $30.0 million and net income for second quarter 2008 was $19.3 million, or $0.46 per share, inclusive of a $9.5 million pre-tax ($5.8 million after tax) gain recorded for the favorable change in market value of the Company’s interest rate swap agreement. Operating revenues for the first six months of 2008 were $263.3 million; Operating income and net income for the first six months of 2008 were $56.2 million and $27.8 million, respectively.
Highlights for the quarter include:
- EV-DO Rev. A launched in five markets – 282 cell sites
- Consolidated adjusted EBITDA (a non-GAAP measure) of $57.8 million, up $6.7 million from second quarter 2007
- Raising 2008 adjusted EBITDA guidance to a range of $224 million to $228 million, increases of $8 million and $7 million, respectively, from previous guidance
- Consolidated adjusted EBITDA margin of 44%
- Wireless adjusted EBITDA of $41.4 million, up from $36.0 million for second quarter 2007
- Activation of 51 new cells sites (47 of which are in the wholesale service area); Includes new coverage in the Virginia markets of Covington, Clifton Forge and Tazewell and in Lewisburg, West Virginia
“We are pleased to be ahead of schedule with our EV-DO network upgrade and early results are that take rates and usage will significantly exceed those of 1X,” said James S. Quarforth, the Company’s Chief Executive Officer. “Our second quarter financial performance was quite strong with consolidated adjusted EBITDA up 13% from second quarter last year and up 12% for the first half of 2008. The outstanding performance for the first half of 2008 combined with the new revenue potential from EV-DO-based services provides exciting prospects for the remainder of 2008.”
Recent Developments
EV-DO Upgrade Progress: The Company officially launched mobile broadband services using the EV-DO Rev. A platform in five markets throughout the second quarter of 2008. The markets include Huntington/Ashland and Charleston in West Virginia and the Charlottesville, Staunton/Waynesboro and Lynchburg markets in Virginia. In addition to the upgrade of 282 cell sites in these markets, the Company completed installations of both new switches required for the Company’s network-wide EV-DO Rev. A upgrade.
Total incremental capital expenditures for the EV-DO upgrade remain estimated at approximately $65 million, as previously disclosed, with approximately $25 million incurred in 2007 and $38 million expected to be incurred in 2008.
Declaration of Dividend: On August 5, 2008 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 October 10, 2008 to stockholders of record on September 19, 2008.
Operating Highlights
Operating revenues for second quarter 2008 were $131.0 million, a 6% increase over second quarter 2007 operating revenues of $124.0 million. Operating revenues for the first six months of 2008 were $263.3 million, 7% over operating revenues for the same period last year of $245.5 million.
Wireless operating revenues for second quarter of 2008 were $100.2 million compared to $93.5 million for the same period in 2007, an increase of 7%. The Company entered into a new agreement with more favorable terms to provide handset insurance to wireless subscribers, beginning April 1, 2008. Due to the differences in the terms of this new arrangement, revenues for handset insurance are no longer reported on a gross basis, but on a net basis instead. For second quarter 2008, the impact of this change resulted in a reduction to wireless revenues and expenses of approximately $2.4 million. For second quarter 2007, the proforma impact of this change would have resulted in a reduction to wireless revenues and expenses of approximately $2.7 million, and a proforma wireless revenue growth of 10% year-over-year. Wireless operating revenues for the first six months of 2008 were $202.1 million, a $17.0 million or 9% increase over the first half of 2007, or an 11% increase proforma for the change in handset insurance revenue reporting discussed above.
Wireless subscribers were 425,880 at the end of second quarter 2008, a 9% increase from 391,195 at the end of second quarter 2007. This growth resulted in an 8% increase in subscriber revenues between these periods. Wholesale revenues were $25.0 million for second quarter 2008 compared to $24.3 million for the same quarter last year, an increase of 3%. Wholesale revenues were primarily derived from the strategic network alliance agreement with Sprint Nextel, which totaled $24.2 million, reflecting for the first time quarterly revenues exceeding the $8.0 million monthly revenue minimums defined by the agreement.
Wireline operating revenues were $30.7 million for the second quarter of 2008, a 1% increase over second quarter 2007 revenues of $30.3 million. Rural Local Exchange Carrier (RLEC) operating revenues were $14.9 million in the second quarter of 2008 compared to $15.5 million in second quarter 2007. In the Competitive Wireline segment, which consists of Competitive Local Exchange Carrier (CLEC), Internet Service Provider (ISP) and network operations, operating revenues grew 6% from $14.8 million to $15.8 million from second quarter 2007 to second quarter 2008. Revenues from Competitive Wireline strategic products, including local service, broadband, integrated access, transport and Metro Ethernet, grew $1.6 million, or 14%, from the second quarter 2007 to the second quarter 2008. For the first six months of 2008, wireline operating revenues were $60.9 million, a 1% increase over the same period last year.
Adjusted EBITDA for second quarter 2008 was $57.8 million, with a margin of 44%. This amount represents an increase of 13% over second quarter 2007 adjusted EBITDA of $51.1 million. Adjusted EBITDA for the first six month periods of 2008 and 2007 was $113.3 million and $101.1 million, respectively, an increase of 12%.
Wireless adjusted EBITDA was $41.4 million for the second quarter of 2008, compared to $36.0 million for second quarter 2007, an increase of 15%. The adjusted EBITDA margin for wireless was 41%, an increase over the 39% margin for both the second quarter of 2007 and the first quarter of 2008, despite initial incremental operating costs from the EV-DO upgrade. Wireless adjusted EBITDA for the first six months of 2008 was $81.4 million, a $10.5 million or 15% increase over the first half of 2007.
Wireline adjusted EBITDA was $17.4 million for the second quarter of 2008 compared to $16.1 million for the second quarter 2007, an increase of 8%. Wireline adjusted EBITDA margin for the second quarter 2008 was 57%. For the first six months of 2008, wireline adjusted EBITDA was $34.5 million, a 7% increase over the same period last year.
Business Segment Highlights
Wireless
| -- | Gross customer additions for the second quarters of 2008 and 2007 were 36,559 and 38,937, respectively. Gross customer additions of higher-value, under-contract, postpay subscribers were 18,659 in the second quarter of 2008, totaling 36,026 year-to-date. Net subscriber additions for the first six months of 2008 were 19,085, with 4,615 added in the second quarter. Net additions of higher-value postpay subscribers represented 90% of the total net additions for second quarter 2008, at 4,171. At June 30, 2008, postpay subscribers represented 70% of total subscribers. Monthly blended subscriber churn continued improvement, finishing second quarter 2008 at 2.5%, a 15 basis point improvement from second quarter 2007. Postpay monthly subscriber churn was 1.6% for second quarter 2008, a slight improvement from the previous lowest level achieved in second quarter last year. | |
| ARPU (a non-GAAP measure) for second quarter 2008 was $54.58 compared to $56.11 for second quarter 2007. Second quarter 2007 ARPU, proforma for the change in reporting of handset insurance revenues, would have been $53.78. Postpay ARPU was $56.19 and $56.80 for second quarters 2008 and 2007. Second quarter 2007 postpay ARPU, proforma for the change in reporting of handset insurance revenues, would have been $54.53. Postpay ARPU continued to be driven by postpay data ARPU, which increased $2.07, from $5.00 in second quarter 2007 to $7.07 in second quarter 2008. | ||
| Cost per Gross Addition (CPGA - a non-GAAP measure), was $375 in second quarter 2008 compared to $387 in second quarter 2007. For the first six months of 2008, CPGA averaged $337, compared to the average of the first six months of 2007 of $346. Cash Cost per Handset/Unit (CCPU-a non-GAAP measure), as was the case with wireless revenues, was also impacted by the handset insurance changes. CCPU for second quarter 2008 was $31.34 compared to $32.63 for second quarter 2007 ($30.30 on a proforma basis). | ||
| Total network cell sites were 1,082 at June 30, 2008 compared to 999 at June 30, 2007. |
Wireline
| -- |
RLEC: Access lines at the end of second quarter 2008 were 42,777, compared to 44,697 at the end of second quarter 2007, a 4% decrease. This line loss is reflective of residential wireless substitution, cable competition (which commenced in late May 2008 in one of the three RLEC markets) and loss of second lines. These line losses and lower interstate access rates effective July 1, 2007 resulted in RLEC operating revenues for second quarter 2008 of $14.9 million, a 3% decrease from second quarter 2007. RLEC adjusted EBITDA for second quarter 2008 was $11.0 million compared to $11.1 million for second quarter 2007. RLEC adjusted EBITDA for the first six months of 2008 was $21.6 million compared to $22.4 million for the same period in 2007. |
|
| -- |
Competitive Wireline: CLEC business local access lines at the end of second quarter 2008 were 49,555, a 3% increase over the end of second quarter 2007 at 48,095. Operating revenues for CLEC business local access lines increased 2% over these periods, reflecting the customer growth partially offset by downward pricing driven by competition. Revenues from wireline strategic products, however, increased approximately $1.6 million, or 14%, to $13.0 million in second quarter 2008 from $11.3 million in second quarter 2007, due to customer growth. Broadband growth in the RLEC footprint continues to be especially strong, with a year-over-year gain of 2,130, increasing customer penetration from 33.4% at June 30, 2007 to 41.7% at June 30, 2008. Adjusted EBITDA for the Competitive Wireline segment increased 26%, to $6.4 million in the second quarter 2008 from $5.1 million in the second quarter 2007. Adjusted EBITDA margin was 40% for second quarter 2008, compared to 34% for the same period last year. Competitive Wireline adjusted EBITDA for the first six months of 2008 was $12.8 million, $2.9 million or 30% over the $9.9 million for the same period in 2007. |
Quarforth concluded, “Our financial performance during the first six months of 2008 was quite strong with adjusted EBITDA up 12% over the first half of 2007. We remain focused on our EV-DO network upgrade and are excited about the new revenue opportunities wireless broadband products present. Given the strength of our second quarter, we have updated our 2008 guidance to reflect these performance trends, raising our adjusted EBITDA estimates.”
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 is increasing its 2008 guidance for consolidated adjusted EBITDA to now be between $224 million and $228 million, from the range of $216 million to $221 million previously provided. Please see the Business Outlook exhibit with this press release for additional guidance updates and detail.
Non-GAAP Measures
Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, gain on sale of assets, advisory termination fees, other income, minority interests, non-cash compensation charges, voluntary early retirement charges and secondary offering costs.
ARPU, or average monthly revenues per subscriber/unit with service, is computed by dividing service revenues per period by the weighted average number of subscribers with 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 sales and services, 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 operating 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 subscriber/unit, is computed by adding wireless maintenance and support, wireless access, roaming and cost of services, all of which are included within the income statement component cost of sales and services, wireless corporate operations and customer operations (excluding sales and marketing), 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 for patent and other intellectual property right infringement claims; 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; 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 filed on Forms 10-K.
Exhibits:
- Condensed Consolidated Balance Sheets
- Condensed Consolidated Statements of Operations
- Reconciliation of Net Income to Operating Income
- Reconciliation of Operating Income to Adjusted EBITDA
- Business Outlook for the Year 2008
Additional Exhibits include:
- Summary of Operating Results
- Customer Summary
- Wireless Customer Detail
- Wireless Key Performance Indicators (KPI)
- Wireless KPI Reconciliations (ARPU, CPGA and CCPU)
These exhibits are available in the Company’s 8-K filing with the SEC or on the Company’s Investor Relations website.
| NTELOS Holdings Corp. | ||||||
| Condensed Consolidated Balance Sheets | ||||||
| (dollars in thousands) | ||||||
| June 30, 2008 | December 31, 2007 | |||||
| ASSETS | ||||||
| Current Assets | ||||||
| Cash and cash equivalents | $ | 82,165 | $ | 53,467 | ||
| Accounts receivable, net | 45,999 | 45,543 | ||||
| Inventories and supplies | 5,065 | 7,693 | ||||
| Other receivables | 3,481 | 4,184 | ||||
| Income tax receivable | - | 11,753 | ||||
| Prepaid expenses and other | 8,927 | 7,944 | ||||
| 145,637 | 130,584 | |||||
| Securities and investments | 7,290 | 870 | ||||
| Property, plant and equipment, net | 412,096 | 402,904 | ||||
| Other Assets | ||||||
| Goodwill | 118,694 | 127,637 | ||||
| Franchise rights | 32,000 | 32,000 | ||||
| Other intangibles, net | 79,848 | 85,901 | ||||
| Radio spectrum licenses in service | 114,131 | 114,180 | ||||
| Radio spectrum licenses not in service | 19,661 | 19,641 | ||||
| Deferred charges and other assets | 4,044 | 4,771 | ||||
| 368,378 | 384,130 | |||||
| Total Assets | $ | 933,401 | $ | 918,488 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current Liabilities | ||||||
| Current portion of long-term debt | $ | 6,739 | $ | 6,751 | ||
| Accounts payable | 35,273 | 31,525 | ||||
| Dividends payable | 8,853 | 8,833 | ||||
| Advance billings and customer deposits | 18,735 | 17,809 | ||||
| Accrued payroll | 6,092 | 12,929 | ||||
| Accrued interest | 2,798 | 70 | ||||
| Income tax payable | 2,836 | - | ||||
| Accrued operating taxes | 3,809 | 3,067 | ||||
| Other accrued liabilities | 3,988 | 3,836 | ||||
| 89,123 | 84,820 | |||||
| Long-Term Liabilities | ||||||
| Long-term debt | 604,345 | 607,455 | ||||
| Other long-term liabilities | 56,154 | 54,445 | ||||
| 660,499 | 661,900 | |||||
| Minority Interests | 460 | 428 | ||||
| Stockholders' Equity | 183,319 | 171,340 | ||||
| Total Liabilities and Stockholders' Equity | $ | 933,401 | $ | 918,488 | ||
| NTELOS Holdings Corp. | ||||||||||||||||
| Condensed Consolidated Statements of Operations | Three months ended: | Six months ended: | ||||||||||||||
| (in thousands, except for per share amounts) | June 30, 2008 | June 30, 2007 | June 30, 2008 | June 30, 2007 | ||||||||||||
| Operating Revenues | $ | 131,015 | $ | 123,970 | $ | 263,264 | $ | 245,545 | ||||||||
| Operating Expenses 1 | ||||||||||||||||
| Cost of sales and services (exclusive of items shown separately below) | 39,960 | 39,921 | 82,817 | 79,268 | ||||||||||||
| Customer operations | 26,322 | 26,242 | 52,949 | 51,860 | ||||||||||||
| Corporate operations 3 | 8,624 | 7,865 | 17,003 | 16,008 | ||||||||||||
| Depreciation and amortization 2 | 25,812 | 20,579 | 53,826 | 40,678 | ||||||||||||
| Accretion of asset retirement obligations | 268 | 217 | 496 | 392 | ||||||||||||
| 100,986 | 94,824 | 207,091 | 188,206 | |||||||||||||
| Operating Income | 30,029 | 29,146 | 56,173 | 57,339 | ||||||||||||
| Other Income (Expenses) | ||||||||||||||||
| Interest expense | (8,040 | ) | (10,671 | ) | (16,855 | ) | (21,701 | ) | ||||||||
| Gain (loss) on interest rate swap agreement | 9,478 | (455 | ) | 6,299 | (1,383 | ) | ||||||||||
| Other income | 383 | 759 | 827 | 1,501 | ||||||||||||
| 31,850 | 18,779 | 46,444 | 35,756 | |||||||||||||
| Income Tax Expense | 12,565 | 7,958 | 18,620 | 15,180 | ||||||||||||
| 19,285 | 10,821 | 27,824 | 20,576 | |||||||||||||
| Minority Interests in Losses (Earnings) of Subsidiaries | (14 | ) | - | (31 | ) | 4 | ||||||||||
| Net Income | $ | 19,271 | $ | 10,821 | $ | 27,793 | $ | 20,580 | ||||||||
| Basic and Diluted Earnings per Common Share: | ||||||||||||||||
| Income per share - basic | $ | 0.46 | $ | 0.26 | $ | 0.66 | $ | 0.50 | ||||||||
| Income per share - diluted | $ | 0.46 | $ | 0.26 | $ | 0.66 | $ | 0.49 | ||||||||
| Weighted average shares outstanding - basic | 41,960 | 41,464 | 41,815 | 41,325 | ||||||||||||
| Weighted average shares outstanding - diluted | 42,291 | 42,171 | 42,262 | 41,998 | ||||||||||||
| Cash Dividends Declared per Share - Common Stock | $ | 0.21 | $ | - | $ | 0.42 | $ | 0.15 | ||||||||
| 1 | Includes non-cash compensation charge related to capital stock and options to purchase capital stock of $0.7 million and $1.9 million for the three months and six months ended June 30, 2008, respectively, and $1.1 million and $2.1 million for the three months and six months ended June 30, 2007, respectively. | |
| 2 | Depreciation expense for the three and six months ended June 30, 2008 includes $5.6 million and $13.5 million, respectively, of accelerated depreciation related to 3G-1xRTT equipment scheduled to be replaced or redeployed in connection with the EV-DO upgrade. | |
| 3 | In the second quarter of 2008, the Company recorded $1.0 million of voluntary early retirement charges, comprised primarily of $0.9 million of pension expense related to a pension enhancement pursuant to the voluntary early retirement plan accepted by certain employees of the wireline segments. |
| NTELOS Holdings Corp. | ||||||||||||||||||
| Reconciliation of Net Income to Operating Income | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||
| Three months ended: | Six months ended: | |||||||||||||||||
| June 30, 2007 | June 30, 2008 | June 30, 2007 | June 30, 2008 | |||||||||||||||
| Net income | $ | 10,821 | $ | 19,271 | $ | 20,580 | $ | 27,793 | ||||||||||
| Interest expense | 10,671 | 8,040 | 21,701 | 16,855 | ||||||||||||||
| (Gain) loss on interest rate swap agreement | 455 | (9,478 | ) | 1,383 | (6,299 | ) | ||||||||||||
| Income taxes | 7,958 | 12,565 | 15,180 | 18,620 | ||||||||||||||
| Minority interest | - | 14 | (4 | ) | 31 | |||||||||||||
| Other income | (759 | ) | (383 | ) | (1,501 | ) | (827 | ) | ||||||||||
| Operating income | $ | 29,146 | $ | 30,029 | $ | 57,339 | $ | 56,173 | ||||||||||
| Wireless | $ | 21,902 | $ | 22,096 | $ | 43,046 | $ | 40,584 | ||||||||||
| Wireline | 9,461 | 9,726 | 19,088 | 19,982 | ||||||||||||||
| Other | (2,217 | ) | (1,793 | ) | (4,795 | ) | (4,393 | ) | ||||||||||
| Operating income | $ | 29,146 | $ | 30,029 | $ | 57,339 | $ | 56,173 | ||||||||||
| NTELOS Holding Corp. | |||||||||||||||||||||||||||||||||||||||
| Reconciliation of Operating Income to Adjusted EBITDA | |||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2007 | 2008 | |||||||||||||||||||||||||||||||||||||
| Wireless | Competitive | Wireless | Competitive | ||||||||||||||||||||||||||||||||||||
| PCS | RLEC | Wireline | Other | Total | PCS | RLEC | Wireline | Other | Total | ||||||||||||||||||||||||||||||
| For The Three Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||
| Operating Income | $ | 21,902 | $ | 7,571 | $ | 1,890 | $ | (2,217 | ) | $ | 29,146 | $ | 22,096 | $ | 6,823 | $ | 2,903 | $ | (1,793 | ) | $ | 30,029 | |||||||||||||||||
| Depreciation and amortization | 13,897 | 3,519 | 3,146 | 17 | 20,579 | 19,101 | 3,616 | 3,077 | 18 | 25,812 | |||||||||||||||||||||||||||||
| Sub-total: | 35,799 | 11,090 | 5,036 | (2,200 | ) | 49,725 | 41,197 | 10,439 | 5,980 | (1,775 | ) | 55,841 | |||||||||||||||||||||||||||
| Accretion of asset retirement obligations | 196 | 4 | 15 | 2 | 217 | 245 | 6 | 15 | 2 | 268 | |||||||||||||||||||||||||||||
| Secondary offering costs | - | - | - | 66 | 66 | - | - | - | - | - | |||||||||||||||||||||||||||||
| Non-cash compensation | - | - | - | 1,096 | 1,096 | - | - | - | 713 | 713 | |||||||||||||||||||||||||||||
| Voluntary early retirement plan 1 | - | - | - | - | - | - | 593 | 382 | - | 975 | |||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 35,995 | $ | 11,094 | $ | 5,051 | $ | (1,036 | ) | $ | 51,104 | $ | 41,442 | $ | 11,038 | $ | 6,377 | $ | (1,060 | ) | $ | 57,797 | |||||||||||||||||
| Adjusted EBITDA Margin | 38.5 | % | 71.8 | % | 34.0 | % | NM | 41.2 | % | 41.4 | % | 74.0 | % | 40.4 | % | NM | 44.1 | % | |||||||||||||||||||||
| For The Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||
| Operating Income | $ | 43,046 | $ | 15,376 | $ | 3,712 | $ | (4,795 | ) | $ | 57,339 | $ | 40,584 | $ | 13,844 | $ | 6,138 | $ | (4,393 | ) | $ | 56,173 | |||||||||||||||||
| Depreciation and amortization | 27,457 | 7,022 | 6,151 | 48 | 40,678 | 40,329 | 7,177 | 6,280 | 40 | 53,826 | |||||||||||||||||||||||||||||
| Sub-total: | 70,503 | 22,398 | 9,863 | (4,747 | ) | 98,017 | 80,913 | 21,021 | 12,418 | (4,353 | ) | 109,999 | |||||||||||||||||||||||||||
| Accretion of asset retirement obligations | 353 | 8 | 27 | 4 | 392 | 453 | 9 | 29 | 5 | 496 | |||||||||||||||||||||||||||||
| Secondary offering costs | - | - | - | 566 | 566 | - | - | - | - | - | |||||||||||||||||||||||||||||
| Non-cash compensation | - | - | - | 2,115 | 2,115 | - | - | - | 1,873 | 1,873 | |||||||||||||||||||||||||||||
| Voluntary early retirement plan 1 | - | - | - | - | - | - | 593 | 382 | - | 975 | |||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 70,856 | $ | 22,406 | $ | 9,890 | $ | (2,062 | ) | $ | 101,090 | $ | 81,366 | $ | 21,623 | $ | 12,829 | $ | (2,475 | ) | $ | 113,343 | |||||||||||||||||
| Adjusted EBITDA Margin | 38.3 | % | 72.7 | % | 33.8 | % | NM | 41.2 | % | 40.3 | % | 73.7 | % | 40.7 | % | NM | 43.1 | % | |||||||||||||||||||||
| 1 | In the second quarter of 2008, the Company recorded $1.0 million of voluntary early retirement charges, comprised primarily of $0.9 million of pension expense related to a pension enhancement pursuant to the voluntary early retirement plan accepted by certain employees of the wireline segments. | |
| NTELOS Holdings Corp. | ||||||||||
| Business Outlook for the Year 2008 1 (as of August 7, 2008) | Twelve Months 2008 | |||||||||
| (Dollars in millions, except for metrics) | ||||||||||
| Operating Revenues - Guidance | ||||||||||
| Wireless 2 | $ | 409.0 | to | $ | 415.0 | |||||
| Wireline | 121.0 | to | 124.0 | |||||||
| Other | 1.0 | 1.0 | ||||||||
| $ | 531.0 | to | $ | 540.0 | ||||||
| Reconciliation of Net Income to Adjusted EBITDA - Guidance | ||||||||||
| Net Income | $ | 49.0 | to | $ | 55.0 | |||||
| Interest expense, net 3 | 31.0 | to | 28.5 | |||||||
| Income tax expense 4 | 33.0 | to | 36.0 | |||||||
| Other income | (1.0 | ) | to | (1.5 | ) | |||||
| Operating Income | 112.0 | to | 118.0 | |||||||
| Depreciation and amortization | 107.0 | to | 105.0 | |||||||
| Accretion of asset retirement obligations | 1.0 | 1.0 | ||||||||
| Voluntary Early Retirement Plan | 1.0 | 1.0 | ||||||||
| Non-cash compensation charges | 3.0 | 3.0 | ||||||||
| Adjusted EBITDA | $ | 224.0 | to | $ | 228.0 | |||||
| Wireless | $ | 163.0 | to | $ | 165.0 | |||||
| Wireline | 66.0 | to | 68.0 | |||||||
| Other | (5.0 | ) | (5.0 | ) | ||||||
| Adjusted EBITDA | $ | 224.0 | to | $ | 228.0 | |||||
| Capital Expenditures | ||||||||||
| Wireless | $ | 90 | to | $ | 88 | |||||
| Wireline | 33 | to | 32 | |||||||
| Other | 10 | 10 | ||||||||
| Total Capital Expenditures | $ | 133 | to | $ | 130 | |||||
| Wireless Metrics | ||||||||||
| Net subscriber additions | Greater than 30,000 | |||||||||
| Blended ARPU 2 | Greater than $55 | |||||||||
| Post pay Churn | Approximately 1.8% | |||||||||
| Blended Churn | Approximately 2.8% | |||||||||
| Cost per Gross Acquisition (CPGA) | $ | 355 | to | $ | 365 | |||||
| Cash Cost per Handset/Unit (CCPU) 2 | $ | 32 | to | $ | 33 | |||||
| Wireline Metrics | ||||||||||
| RLEC Line Loss |
4% to 6% |
|||||||||
| Competitive Wireline revenue growth | Approximately 6% | |||||||||
| 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 Company has entered into a new agreement with more favorable terms to provide handset insurance to wireless subscribers, beginning April 1, 2008. Due to the differences in the terms of this new arrangement, revenues for handset insurance will no longer be reported on a gross basis, but on a net basis instead. Please see footnote 4 of the "Wireless KPI" exhibit for more details. | |
| 3 | Cash payments for interest expense for 2008 are expected to be approximately $33 million. | |
| 4 | Current cash income tax is expected to be between $15 million and $17 million, reflecting the benefit of bonus depreciation provided for by the recently enacted economic stimulus package HR 5140. |
