WAYNESBORO, Va., March 1 /PRNewswire-FirstCall/ -- NTELOS Holdings Corp. , a leading provider of wireless and wireline communications services (branded as NTELOS) in Virginia and West Virginia, today announced operating results for its fourth quarter and year of 2006.
Operating revenues for fourth quarter 2006 were $113.8 million. Net income for the same period was $6.2 million. For purposes of this discussion and to provide comparable period financial results, 2006 for the Company is compared to the combined 2005 results of the Company and NTELOS Inc.
Highlights for the fourth quarter and the year 2006 include:
- Adjusted EBITDA (a non-GAAP measure) was $44.3 million for the quarter,
$172.5 million for the year 2006
- Adjusted EBITDA less capital expenditures of $85.9 million for the year
2006, an increase of 49% over 2005
- Wireless net subscriber additions up 35% over previous quarter
- 38 new wireless cell sites placed in service in the fourth quarter
(27 in strategic network alliance footprint)
- Wireless adjusted EBITDA of $29.0 million for the quarter, a 31%
increase from fourth quarter 2005
- Wireless wholesale revenues of $20.9 million for the quarter, up 24%
from fourth quarter 2005
"Our operating performance in the fourth quarter continued the positive trends of previous quarters resulting in 2006 being an outstanding year for NTELOS," said James S. Quarforth, the Company's Chief Executive Officer. "Our adjusted EBITDA exceeded $172 million for the year, up 18% over 2005, and cash generation was strong with adjusted EBITDA less capital expenditures topping $85 million for 2006 -- a 49% increase over 2005."
Recent Developments
The Company plans to launch a proposed amendment to the credit facility of NTELOS Inc., a wholly-owned subsidiary, primarily to modify the restricted payments covenant of the credit agreement which affects the Company's ability to pay dividends and repurchase common stock. This proposed amendment would provide flexibility to make certain restricted payments, including a regular quarterly dividend if the Board of Directors were to so determine in the future. No assurances can be given that this amendment will be obtained.
Operating Highlights
Operating revenues for fourth quarter 2006 were $113.8 million, a 12% increase over fourth quarter 2005 operating revenues of $102.1 million. Operating revenues for the year 2006 were $440.1 million, 12% over operating revenues for 2005 of $392.2 million.
Wireless operating revenues for fourth quarter of 2006 were $83.9 million compared to $73.1 million for the same period in 2005, an increase of 15%. Wireless subscribers were 367,197 at year-end 2006, a 9% increase from 336,306 at the end of 2005 and a 3% increase from 357,424 at the end of third quarter 2006. This subscriber growth, combined with increased Average monthly Revenue Per Handset/Unit (ARPU), resulted in an increase of 11% in subscriber revenues year-over-year. Wholesale revenues were $20.9 million for fourth quarter 2006 compared to $16.9 million for the same quarter last year, an increase of 24%. Wholesale revenues were primarily derived from the strategic network alliance agreement with Sprint Nextel, which totaled $20.7 million and $16.6 million for these respective periods.
Wireless operating revenues for the year 2006 were $322.3 million, a $42.0 million, or 15%, increase over 2005. For 2006, wholesale revenues derived from the strategic network alliance agreement with Sprint Nextel totaled $76.7 million compared to $61.7 million for 2005, an increase of 24%.
Wireline operating revenues were $29.7 million for the fourth quarter of 2006, a 4% increase over fourth quarter 2005 of $28.7 million. Rural Local Exchange Carrier (RLEC) operating revenues were $15.5 million in the fourth quarter of 2006 compared to $15.0 million in fourth quarter 2005, an increase of 4%. Growth in access revenues, primarily driven by increased minutes of use, was partially offset by revenue reductions from local access line losses. In the competitive wireline segment, operating revenues were $14.2 million for the fourth quarter 2006, up 3% from $13.7 million in the fourth quarter 2005. Revenues from Competitive Wireline strategic products, including broadband, integrated access, transport and Metro Ethernet, grew $1.0 million, or 10%, for fourth quarter 2006 compared to fourth quarter 2005, offsetting the loss of dial-up internet revenues and a reduction in carrier access revenues. For the year 2006, wireline operating revenues were $116.9 million, a $5.9 million, or 5% increase over 2005.
Adjusted EBITDA (a non-GAAP measure) for fourth quarter 2006 was $44.3 million, with a margin of 39%. This amount represents an increase of 21% over fourth quarter 2005 adjusted EBITDA of $36.5 million. Adjusted EBITDA for the years 2006 and 2005 was $172.5 million and $146.8 million, respectively, an increase of 18%. Adjusted EBITDA less capital expenditures was $85.9 million for the year 2006, a 49% increase from $57.6 million for 2005.
Wireless adjusted EBITDA was $29.0 million for the fourth quarter of 2006, compared to $22.2 million for fourth quarter 2005, an increase of 31%. The adjusted EBITDA margin was 35% for fourth quarter 2006 compared to 30% for fourth quarter 2005. Wireless adjusted EBITDA for the year 2006 was $112.0 million, a $22.3 million or 25%, increase over the $89.7 million for 2005.
Wireline adjusted EBITDA was $16.5 million for the fourth quarter of 2006, a 3% increase over the $16.0 million for the fourth quarter 2005. Wireline adjusted EBITDA margin was 56% for the quarter. For the year 2006, wireline adjusted EBITDA was $65.0 million, a 5% increase over the $61.8 million for 2005. Wireline adjusted EBITDA margin for the year 2006 was 56%, unchanged from 2005.
Business Segment Highlights
Wireless
- Gross customer additions for the fourth quarters of 2006 and 2005 were
44,591 and 43,187, respectively. Gross customer additions of higher-
value, under-contract, postpay subscribers were 22,475 in the fourth
quarter of 2006, totaling 82,143 for the year. Net subscriber additions
for 2006 were 30,891, with 9,773 added in the fourth quarter. These
fourth quarter net additions represent a 35% increase over the 7,256 net
additions in third quarter 2006 and an 18% increase over the 8,271 net
additions in fourth quarter 2005. At year-end 2006, postpay subscribers
represented 73% of total subscribers and approximately 83% of these
subscribers were under contract with an average contract term of 15
months remaining, reflecting the increased number of national rate
plans, with longer average contract terms, in the product mix.
ARPU (a non-GAAP measure) for fourth quarter 2006 was $53.64, up from
$52.75 in the fourth quarter of 2005 and $53.30 in the third quarter of
2006. ARPU for the year 2006 was $53.59, up 2% from $52.51 for the year
2005. The increase was attributable to continued growth in data
services and data packages and higher monthly access revenues due to
growth in higher-priced unlimited and National plans. Total data ARPU
for the year 2006 was $2.71 compared to $1.84 for 2005. Postpay data
ARPU for 2006 was $3.12 compared to $2.22 for the year 2005.
Cost per Gross Addition (CPGA -- a non-GAAP measure) in the fourth
quarter, a historically high quarter for the wireless industry, was
$354, up from $340 in the previous quarter but well below the $385 for
fourth quarter 2005. For the year 2006, CPGA improved to $357, down
from $368 for the year 2005. Cash Cost per Handset/Unit (CCPU -- a non-
GAAP measure), was $31.40 for fourth quarter 2006, down from $32.25 in
the previous quarter. For the year 2006, CCPU was $31.25, compared to
$30.07 for 2005. The increase is due to roaming costs related to
increased roaming usage under the newer national rate plans, retention
costs and operating costs associated with new cell sites. Total network
cell sites were 984 at year-end 2006 compared to 946 at September 30,
2006 and 897 at year-end 2005. Of the 87 cell sites added in 2006, 61
were within the strategic network alliance footprint.
Wireline
- RLEC: Access lines at the end of fourth quarter 2006 were 45,281,
compared to 46,810 at year-end 2005, a 3% decrease. This line loss is
reflective of wireless substitution, a reduction in Centrex and second
lines and network grooming to reduce internal Internet service provider
lines. Despite these line losses, RLEC operating revenues for fourth
quarter 2006 were 4%, or approximately $0.5 million, higher than fourth
quarter 2005 primarily due to an increase in access revenues related to
the increase in minutes of use. RLEC adjusted EBITDA for fourth
quarter 2006 was $12.0 million compared to $11.3 million for fourth
quarter 2005, an increase of $0.7 million or 6%. RLEC adjusted EBITDA
for the year 2006 was $46.6 million, $3.8 million, or 9%, over the
$42.8 million for 2005.
- Competitive Wireline: Competitive Local Exchange Carrier (CLEC)
business local access lines at the end of 2006 were 46,781, a 4%
increase over the 44,948 lines at year-end 2005. Operating revenues
for CLEC business local access lines increased 2% year-over-year
reflecting the customer growth partially offset by downward pricing
driven by discounts associated with bundled multiple-product packages.
Dial-up Internet subscribers declined from 33,078 to 27,628 from year-
end 2005 and 2006, respectively. Revenue decline resulting from these
subscriber losses was approximately $1.8 million year-over-year.
Revenues from wireline strategic products, however, increased
approximately $1.0 million, or 10%, to $10.7 million in fourth quarter
2006 from $9.7 million in fourth quarter 2005, due to customer growth.
Strategic product revenue growth for the year 2006 was 11%, increasing
from $37.2 million in 2005 to $41.2 million in 2006. Broadband growth
in the RLEC footprint continues to be especially strong, with customer
penetration increasing to 28% at year-end 2006 from 21% at year-end
2005.
Quarforth concluded, "Our performance for 2006 was marked by significant growth in operating revenues, adjusted EBITDA and cash generation. For the past several years, we have seen a nice lift in adjusted EBITDA in the first quarter, driven by wireless subscribers added late in the fourth quarter. Our net additions and overall performance in the fourth quarter 2006 position us well for 2007."
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 reaffirms its guidance for 2007 which was issued in a press release on January 30, 2007. In this press release, 2007 consolidated revenues were projected to be between $472.0 million and $481.0 million and 2007 adjusted EBITDA to be between $186.0 million and $191.0 million. Please see the release for additional financial and operating metric guidance.
Note
Wireline revenues were previously reported net of certain long distance network expenses in the Competitive segment. These expenses totaled $0.5 million for each quarter of 2005 and $0.6 million for each quarter of 2006 and have been reclassified to the maintenance and support caption in operating expenses for all periods presented.
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 on sale of assets, advisory termination fees, other income and expenses, minority interests, reorganization items and non- cash compensation charges.
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 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, and data services for Internet access and wide area networking. Detailed information about NTELOS is available at http://www.ntelos.com/.
SPECIAL NOTE FROM THE COMPANY REGARDING 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. 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 control over us by our two largest stockholders, CVC and Quadrangle; provisions in our charter documents and Delaware law; expenses of becoming 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 Table
- Wireless Customer Detail
- Wireless Key Performance Indicators (KPI)
NTELOS Holdings Corp.
Condensed Consolidated Balance Sheets(1)
(dollars in thousands)
December 31, 2006 December 31, 2005
ASSETS
Current Assets
Cash and cash equivalents $44,180 $28,134
Accounts receivable, net 38,396 37,691
Inventories and supplies 5,471 3,419
Other receivables and deposits 3,777 3,817
Prepaid expenses and other 6,562 5,593
98,386 78,654
Interest rate swap 3,874 4,120
Securities and investments 294 3,042
Property, plant and equipment 489,811 408,117
Less accumulated depreciation 113,039 47,975
376,772 360,142
Other Assets
Goodwill 151,976 162,395
Franchise rights 32,000 32,000
Other intangibles, net 99,379 113,580
Radio spectrum licenses in service 114,102 114,051
Radio spectrum licenses not in service 18,250 15,581
Other radio spectrum licenses 1,344 1,344
Deferred charges 4,470 10,934
421,521 449,885
Total Assets $900,847 $895,843
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $13,152 $4,513
Current portion of retirement benefits 945 -
Accounts payable 25,209 30,628
Advance billings and customer deposits 16,709 16,112
Accrued payroll 10,021 11,164
Accrued interest 305 161
Deferred revenue 683 933
Accrued taxes 3,584 3,138
Other accrued liabilities 2,804 4,613
73,412 71,262
Long-Term Liabilities
Long-term debt 613,371 754,871
Other long-term liabilities 61,842 68,183
675,213 823,054
Minority Interests 457 429
Stockholders' Equity 151,765 1,098
Total Liabilities and
Stockholders' Equity $900,847 $895,843
(1) Please see NTELOS Holdings Corp. Form 10-K for the year ended
December 31, 2005 for details related to the formation of NTELOS
Holdings Corp. and a new accounting basis that was established for
the Company's assets and liabilities as of the May 2, 2005 merger.
NTELOS Holdings Corp.(1)
Condensed Consolidated Statements of Operations(2)
January 14,
2005
Year (inception)
Three months ended: ended: to
(in thousands, except for Dec. 31, Dec. 31, Dec. 31, Dec. 31,
per share data) 2006 2005 2006 2005
Operating Revenues
Wireless communications $83,933 $73,149 $322,329 $190,477
Wireline communications 29,709 28,701 116,925 74,813
Other communications services 204 223 822 569
113,846 102,073 440,076 265,859
Operating Expenses(3)
Cost of wireless sales (exclusive
of items shown separately below) 17,902 14,357 68,413 38,582
Maintenance and support (inclusive
of non-cash compensation expense
of $91 and $1,087 for the three
and twelve months ended December
31, 2006, respectively; and $305
for the three months ended
December 31, 2005 and for the
period January 14, 2005 to
December 31, 2005) 20,252 18,450 78,016 46,821
Customer operations (inclusive of
non-cash compensation expense of
$138 and $1,448 for the three and
twelve months ended December 31,
2006, respectively; and $389 for
the three months ended December
31, 2005 and the period January
14, 2005 to December 31, 2005) 26,061 26,166 99,998 63,330
Corporate operations (inclusive of
non-cash compensation expense of
$703 and $10,702 for the three
and twelve months ended December
31, 2006, respectively; and
$1,517 and $3,036 for the three
months ended December 31, 2005
and for the period January 14,
2005 to December 31, 2005,
respectively) 6,225 8,766 34,398 22,434
Depreciation and amortization 21,160 21,954 84,921 59,103
Accretion of asset retirement
obligations 152 173 816 489
Capital restructuring charges - 4 - 183
Termination of advisory agreements - - 12,941 -
91,752 89,870 379,503 230,942
Operating Income 22,094 12,203 60,573 34,917
Other Income (Expenses)
Equity share of net loss from
NTELOS Inc. - - - (1,213)
Interest expense(4,5) (10,961) (15,728) (59,850) (34,338)
(Loss) gain on interest rate swap
agreement (389) 1,297 (246) 4,780
Gain on sale of assets - - 1,723 -
Other income 296 1,239 2,833 1,595
11,040 (989) 5,033 5,741
Income tax expense 4,882 472 12,190 4,591
6,158 (1,461) (7,157) 1,150
Minority interests in earnings of
subsidiaries (3) (9) (28) (52)
Net Income (Loss) 6,155 (1,470) (7,185) 1,098
Distribution preference on Class B
shares - - 30,000 -
Income (Loss) applicable to common
shares $6,155 $(1,470) $(37,185) $1,098
Basic and Diluted Earnings (Loss)
per Common Share:
Earnings (Loss) per share - Basic $0.15 $(0.06) $(0.95) $0.05
Earnings (Loss) per share - Diluted $0.15 $(0.06) $(0.95) $0.05
Average Shares Outstanding
- Basic(6) 41,160 24,416 39,231 20,646
Average Shares Outstanding
- Diluted(6) 42,170 24,416 39,231 22,434
Note: Wireline revenues were previously reported net of certain long
distance network expenses in the Competitive segment. These expenses
totaled $0.5 million for each quarter of 2005 and $0.6 million for each
quarter of 2006 and have been reclassified to the maintenance and
support caption in operating expenses for all periods presented.
(1) Please see NTELOS Holdings Corp. Form 10-K for the year ended December
31, 2005 for details related to the formation of NTELOS Holdings Corp.
and a new accounting basis that was established for the Company's
assets and liabilities as of the May 2, 2005 merger.
(2) On February 24, 2005, NTELOS Holdings Corp. purchased 24.9% of NTELOS
Inc.'s common stock and warrants to buy common stock. From February
24, 2005 to May 1, 2005, the Company accounted for the results of
NTELOS Inc. under the equity method of accounting. NTELOS Holdings
Corp. had no operating activities prior to its acquisition of NTELOS
Inc. on May 2, 2005.
(3) Includes a $0.9 million and $13.2 million non-cash compensation
expense related to capital stock and options to purchase capital stock
for the three and twelve months ended December 31, 2006, respectively.
Also includes $0.3 million, $0.5 million and $0.5 million of fees in
the second, third and fourth quarters of 2005, respectively and $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 in connection
with the initial public offering for a termination fee of $12.9
million that was paid out of the offering proceeds. See NTELOS
Holdings Corp. Form 10-K for the year ended December 31, 2006 for
further details.
(4) Includes approximately $5.3 million of interest expense for the year
ended December 31, 2006 for interest on the $135 million floating rate
senior notes issued October 17, 2005. These notes were paid off on
April 15, 2006 from the proceeds of the initial public offering.
Unamortized portions of the debt issuance costs and the original issue
discounts of approximately $5.1 million and $1.3 million were written
off in second quarter 2006 in connection with the repayment of these
notes.
(5) Includes a prepayment penalty of $2.25 million on the second lien
credit facility that was retired on June 1, 2006 from borrowings under
the new Amended and Restated Credit Agreement. See NTELOS Holdings
Corp. Form 8-K dated June 1, 2006 for further details.
(6) Earnings (Loss) per share and average weighted shares outstanding have
been adjusted for all periods 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 had been converted to common shares by December 31, 2006.
NTELOS Holdings Corp.
Summary of Operating Results
(dollars in thousands) Three Months Ended: Year Ended:
Dec 31, Dec 31, Dec 31, Dec 31,
2005 2006 2005(1) 2006
Operating Revenues
Wireless PCS Operations $73,149 $83,933 $280,303 $322,329
Subscriber Revenues 51,785 57,612 200,779 223,563
Wholesale/Roaming
Revenues, net 16,883 20,939 62,651 77,747
Equipment Revenues 4,287 5,150 16,133 20,143
Other Revenues 194 232 740 876
Wireline Operations(3)
RLEC 14,962 15,493 56,986 60,767
Competitive Wireline 13,739 14,216 54,017 56,158
Wireline Total 28,701 29,709 111,003 116,925
Other Operations 223 204 912 822
$102,073 $113,846 $392,218 $440,076
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, operational and capital
restructuring charges and non-cash compensation, a non-GAAP Measure)
Wireless PCS Operations $50,972 $54,958 $190,595 $210,287
Cost of Sales - Equipment 6,367 7,081 25,598 28,080
Cost of Sales - Access &
Other 7,990 10,821 31,686 40,333
Maintenance and Support 9,663 11,021 36,162 41,584
Customer Operations 22,056 22,109 78,020 83,380
Corporate Operations 4,896 3,926 19,129 16,910
Wireline Operations(3)
RLEC 3,673 3,534 14,147 14,155
Competitive Wireline 9,038 9,678 35,053 37,723
Wireline Total 12,711 13,212 49,200 51,878
Other Operations(2) 1,843 1,338 5,638 5,423
$65,526 $69,508 $245,433 $267,588
Adjusted EBITDA (a non-GAAP Measure)(4)
Wireless PCS Operations $22,177 $28,975 $89,708 $112,042
Wireline Operations
RLEC 11,289 11,959 42,839 46,612
Competitive Wireline 4,701 4,538 18,964 18,435
Wireline Total 15,990 16,497 61,803 65,047
Other Operations(2) (1,620) (1,134) (4,726) (4,601)
$36,547 $44,338 $146,785 $172,488
Capital Expenditures
Wireless PCS Operations $16,542 $13,829 $56,091 $59,409
Wireline Operations
RLEC 3,780 1,567 8,164 8,862
Competitive Wireline 5,972 2,708 16,688 12,103
Wireline Total 9,752 4,275 24,852 20,965
Other Operations 2,370 1,869 8,229 6,233
$28,664 $19,973 $89,172 $86,607
Adjusted EBITDA less Capital Expenditures
Wireless PCS Operations $5,635 $15,146 $33,617 $52,633
Wireline Operations
RLEC 7,509 10,392 34,675 37,750
Competitive Wireline (1,271) 1,830 2,276 6,332
Wireline Total 6,238 12,222 36,951 44,082
Other Operations (3,990) (3,003) (12,955) (10,834)
$7,883 $24,365 $57,613 $85,881
(1) For purposes of this discussion and to provide comparable period
financial results, results of NTELOS Inc. from January 1, 2005 to
May 1, 2005 have been combined with NTELOS Holdings Corp. results from
May 2, 2005 to December 31, 2005. NTELOS Holdings Corp. had no
operating activities prior to its acquisition of NTELOS Inc. on May 2,
2005.
(2) Other Operations expense includes fees paid under advisory agreements
with CVC Management LLC and Quadrangle Advisors LLC whereby they
provide advisory and other services to the Company for an annual
advisory fee of $2.0 million. The Company recognized $0.3 million,
$0.5 million and $0.5 million of advisory fees in the second, third
and fourth quarters of 2005, respectively and $0.5 million for first
quarter 2006. 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.
(3) Wireline revenues were previously reported net of certain long
distance network expenses in the Competitive segment. These expenses
totaled $0.5 million for each quarter of 2005 and $0.6 million for
each quarter of 2006 and have been reclassified to the maintenance and
support caption in operating expenses for all periods presented.
(4) 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: Year Ended:
Dec. 31 Dec. 31, Dec. 31, Dec. 31,
2005 2006 2005(1,2) 2006
Net income (loss) $(1,470) $6,155 $593 $(7,185)
Interest expense 15,728 10,961 45,177 59,850
Gain (loss) on interest rate
swap agreement (1,297) 389 (4,120) 246
Income taxes 472 4,882 12,741 12,190
Minority Interest 9 3 39 28
Other Income (1,239) (296) (1,864) (4,556)
Reorganization items, net - - - -
Operating Income $12,203 $22,094 $52,566 $60,573
Wireless $7,712 $14,336 $32,288 $52,799
RLEC 7,228 8,397 27,845 32,243
Competitive Wireline 1,662 1,441 8,630 6,598
Other (4,399) (2,080) (16,197) (31,067)
Operating Income $12,203 $22,094 $52,566 $60,573
(1) For purposes of this discussion and to provide comparable period
financial results, results of NTELOS Inc. from January 1, 2005 to
May 1, 2005 have been combined with NTELOS Holdings Corp. results from
May 2, 2005 to December 31, 2005. NTELOS Holdings Corp. had no
operating activities prior to its acquisition of NTELOS Inc. on May 2,
2005.
(2) Net income (loss) excludes the Company's equity share of net loss from
NTELOS Inc. for the period from January 14, 2005 (inception) to May 1,
2005 of ($1.2) million.
NTELOS Holding Corp.
Reconciliation of Operating Income (Loss) to Adjusted EBITDA(1)
(dollars in thousands)
2005
Wireless Competitive
PCS RLEC Wireline Other Total
For The Three Months Ended
December 31
Operating Income $7,712 $7,228 $1,662 ($4,399) $12,203
Depreciation and
amortization 14,309 4,058 3,028 559 21,954
Sub-total: EBITDA 22,021 11,286 4,690 (3,840) 34,157
Accretion of asset
retirement obligations 156 3 11 3 173
Capital restructuring
charges - - - 4 4
Non-cash compensation -
A shares - - - 2,213 2,213
Adjusted EBITDA $22,177 $11,289 $4,701 ($1,620) $36,547
Adjusted EBITDA Margin 30.3% 75.5% 34.2% 35.8%
For The Twelve Months Ended
December 31
Operating Income $32,288 $27,845 $8,630 ($16,197) $52,566
Depreciation and
amortization 56,723 14,981 10,291 907 82,902
Sub-total: EBITDA 89,011 42,826 18,921 (15,290) 135,468
Accretion of asset
retirement obligations 697 13 43 (12) 741
Termination of advisory
agreements - - - - -
Capital restructuring
charges - - - 15,587 15,587
Gain on sale of asset - - - (8,742) (8,742)
Non-cash compensation -
A shares - - - 3,731 3,731
Adjusted EBITDA $89,708 $42,839 $18,964 ($4,726) $146,785
Adjusted EBITDA Margin 27.8% 70.5% 33.8% 33.4%
2006
Wireless Competitive
PCS RLEC Wireline Other Total
For The Three Months Ended
December 31
Operating Income $14,336 $8,397 $1,441 ($2,080) $22,094
Depreciation and
amortization 14,464 3,559 3,090 47 21,160
Sub-total: EBITDA 28,800 11,956 4,531 (2,033) 43,254
Accretion of asset
retirement obligations 175 3 7 (33) 152
Capital restructuring
charges - - - - -
Non-cash compensation -
A shares - - - 932 932
Adjusted EBITDA $28,975 $11,959 $4,538 ($1,134) $44,338
Adjusted EBITDA Margin 34.5% 77.2% 31.9% 38.9%
For The Twelve Months Ended
December 31
Operating Income $52,799 $32,243 $6,598 ($31,067) $60,573
Depreciation and
amortization 58,453 14,356 11,800 312 84,921
Sub-total: EBITDA 111,252 46,599 18,398 (30,755) 145,494
Accretion of asset
retirement obligations 790 13 37 (24) 816
Termination of advisory
agreements - - - 12,941 12,941
Capital restructuring
charges - - - - -
Gain on sale of asset - - - - -
Non-cash compensation -
A shares - - - 13,237 13,237
Adjusted EBITDA $112,042 $46,612 $18,435 ($4,601) $172,488
Adjusted EBITDA Margin 34.8% 76.7% 32.8% 39.2%
(1) For purposes of this discussion and to provide comparable period
financial results, results of NTELOS Inc. from January 1, 2005 to
May 1, 2005 have been combined with NTELOS Holdings Corp. results from
May 2, 2005 to December 31, 2005. NTELOS Holdings Corp. had no
operating activities prior to its acquisition of NTELOS Inc. on May 2,
2005.
NTELOS Holdings Corp.
Customer Summary Table
Quarter Ended: 12/31/2005 03/31/2006 06/30/2006 09/30/2006 12/31/2006
Wireless
Subscribers 336,306 343,879 350,168 357,424 367,197
RLEC Access Lines 46,810 46,492 46,013 45,677 45,281
CLEC Access Lines(1) 44,948 45,296 45,885 46,224 46,781
Broadband
Connections(2) 14,047 15,018 15,616 16,373 17,177
Dial-Up Internet
Subscribers 33,078 31,707 30,242 28,913 27,628
Long Distance
Subscribers 40,263 41,971 43,168 44,263 45,237
(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.
NTELOS Holdings Corp.
Wireless Customer Detail
Quarter Ended: 12/31/2005 03/31/2006 06/30/2006 09/30/2006 12/31/2006
Total Wireless Subscribers
Beginning
Subscribers 328,035 336,306 343,879 350,168 357,424
Prepay 79,728 80,023 86,179 89,368 94,771
Postpay 248,307 256,283 257,700 260,800 262,653
Gross Additions 43,187 40,285 37,343 42,156 44,591
Prepay 16,396 20,536 17,690 21,890 22,116
Postpay 26,791 19,749 19,653 20,266 22,475
Disconnections 34,916 32,712 31,054 34,900 34,818
Prepay 16,012 14,244 14,295 16,246 17,797
Postpay 18,904 18,468 16,759 18,654 17,021
Net Additions 8,271 7,573 6,289 7,256 9,773
Prepay 384 6,292 3,395 5,644 4,319
Postpay 7,887 1,281 2,894 1,612 5,454
Ending
Subscribers 336,306 343,879 350,168 357,424 367,197
Prepay 80,023 86,179 89,368 94,771 98,846
Postpay 256,283 257,700 260,800 262,653 268,351
NTELOS Holdings Corp.
Wireless Key Performance Indicators
Three Months Ended: Year Ended:
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2006 2005 2006
Average Subscribers
(weighted monthly) 330,106 360,526 321,719 350,235
Gross Subscriber Revenues ($000) $52,238 $58,012 $202,712 $225,218
Revenue Accruals & Deferrals (428) (348) (1,818) (1,575)
Eliminations & Other Adjustments (25) (52) (115) (80)
Net Subscriber Revenues ($000) $51,785 $57,612 $200,779 $223,563
Average Monthly Revenue per
Handset/Unit (ARPU)(1) $52.75 $53.64 $52.51 $53.59
Average Monthly Revenue per Postpay
Handset/Unit (ARPU)(1) $54.47 $54.76 $54.42 $54.84
Average Monthly Data Revenue per
Handset/Unit (ARPU)(1) $2.22 $2.89 $1.84 $2.71
Average Monthly Data Revenue per
Postpay Handset/Unit (ARPU)(1) $2.62 $3.36 $2.22 $3.12
Cost of Acquisition per Gross
Addition (CPGA)(2) $385 $354 $368 $357
Monthly Cash Cost per Handset/Unit
(CCPU)(3) $30.36 $31.40 $30.07 $31.25
Strategic Network Alliance
Revenues ($000) $16,646 $20,657 $61,653 $76,730
Home Voice Revenue 9,285 10,980 34,242 41,672
Travel Voice 5,849 5,704 22,199 23,041
Data Revenue 1,512 3,973 5,212 12,017
Monthly Postpay Subscriber Churn 2.5% 2.2% 2.3% 2.3%
Monthly Blended Subscriber Churn 3.5% 3.2% 3.2% 3.2%
Total Cell Sites (Period Ending) 897 984 897 984
Cell Sites under the Strategic
Network Alliance Agreement (Period
Ending; Sub-set of Total Cell Sites
above) 534 595 534 595
(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 that is 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 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
wireless providers, although other providers may include or exclude
certain items from their calculations which may make the comparison
less meaningful. The Company believes CCPU is useful to evaluate
NTELOS' effectiveness in managing cash costs associated with providing
services to customers. CCPU should be considered in addition to, but
not as a substitute for, information contained in the Company's
statement of operations.
**Teleconference**
March 2, 2007 10:30 A.M. (ET)
Domestic Dial in number: 800-565-5442
International Dial in number: 913-312-1298
Confirmation Code: 1844227
Audio webcast: http://ir.ntelos.com/
