NTELOS Holdings Corp. Reports Third Quarter 2014 Results

-Tenth Consecutive Quarter of Positive Net Postpay Adds

-Launched Equipment Installment Plan in August 2014

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Oct 31, 2014, 06:00 ET

WAYNESBORO, Va., Oct. 31, 2014 /PRNewswire/ -- NTELOS Holdings Corp. (the "Company,"NASDAQ: NTLS), a leading regional provider of nationwide wireless voice and data communications announced today operating and financial results for its third quarter ended September 30, 2014.

Third Quarter 2014 Operational Update

Expanded 4G LTE network to cover 3.2 million of 6.0 million total covered POPs in footprint as of September 30, 2014;
Successfully introduced Equipment Installment Plan ("EIP") on August 15, 2014 with program gaining increasing popularity;
Operating revenues were $119.6 million for the third quarter 2014; compared to $130.9 million (or $121.9 million when excluding the one-time Strategic Network Alliance ("SNA") settlement) for the third quarter 2013, reflecting an increase in retail revenues and wholesale revenues consistent with our expectations following the May 2014 signing of the Sprint SNA amendment; and
Adjusted EBITDA was $32.8 million for the third quarter 2014, compared to $45.6 million (or $36.0 million when excluding the one-time impact from the SNA settlement) for the third quarter 2013.

"In what continues to be a challenging competitive environment, nTelos is focused on executing on our partnership with Sprint and strengthening our retail sales operations. The launch of our EIP midway through the third quarter helped us achieve our tenth consecutive quarter of positive net postpay adds and our thirteenth consecutive quarter of positive total net ports," said Michael A. Huber, Chairman of the Board of NTELOS Holdings Corp. "We are also working diligently to improve our processes, drive additional operational efficiencies and optimize our retail offerings. Overall, we remain optimistic that nTelos is on track to execute our strategic objectives."

Subscriber Update

Total Subscribers

Total subscribers were 457,200 as of September 30, 2014, compared to 457,100 for the same period of 2013;
Total subscriber gross additions for the third quarter 2014 were 41,400, compared to 44,500 for the same period of 2013; and
Total net subscriber additions (losses) for the third quarter 2014 were (900), compared to 2,300 for the same period of 2013.

Postpay Subscribers

Postpay subscriber gross additions for the third quarter 2014 were 20,800, compared to 20,000 for the third quarter 2013 and 20,400 for the second quarter 2014;
Net postpay subscriber additions were 1,900 for the third quarter 2014, compared to 400 for the third quarter 2013 and 3,300 for the second quarter 2014;
Postpay churn for the third quarter 2014 was 2.0%, compared to 2.2%, for the third quarter 2013;
ARPA was $134.18 for the third quarter 2014, compared to $136.91 for the same period in 2013; and
As of September 30, 2014, total postpay subscribers were 310,200.

Prepay Subscribers

Prepay subscriber gross additions for the third quarter 2014 were 20,600, compared to 24,500 for the third quarter 2013 and 18,600 for the second quarter 2014;
Net prepay subscriber additions (losses) were (2,800) for the third quarter 2014, compared to 1,900 for the third quarter 2013 and (2,900) for the second quarter 2014;
Prepay churn for the third quarter 2014 was 5.3%, compared to 4.8% for the third quarter 2013; and
As of September 30, 2014, total prepay subscribers were 147,000.

Net Income

Net income after net income attributable to noncontrolling interests was $0.8 million, or $0.04 per diluted share, for the third quarter 2014, compared to $10.6 million, or $0.48 per diluted share, for the third quarter 2013.

Business Outlook

For the year ending December 31, 2014, the Company is narrowing its full year 2014 Adjusted EBITDA guidance to between $128.0 million and $132.0 million and lowering its full year 2014 capital expenditures guidance to be approximately $105.0 million.

Conference Call

The Company will host a conference call with investors and analysts to discuss its third quarter 2014 results this morning, October 31, 2014, at 10:00 a.m. ET. To participate, please dial 1-888-317-6002, 1-855-669-9657 in Canada and 1-412-317-1083 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, 1-855-669-9658 in Canada or 1-412-317-0088 internationally and entering access code 10049798 beginning approximately one hour after the call and continuing until November 14, 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, adjustments for impact of recognizing a portion of the billed SNA contract revenues on a straight line basis 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 and provide liquidity for future growth. ARPA provides management with useful information concerning the appeal of the Company's postpay 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 457,200 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 Corporation in the western Virginia and West Virginia portions of its territories for all Sprint CDMA and LTE 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)
(In thousands)	September 30, 2014		December 31, 2013
ASSETS
Current Assets
Cash	$	105,788	$	88,441
Restricted cash	2,167		2,167
Accounts receivable, net	38,737		37,741
Inventories and supplies	19,655		23,962
Deferred income taxes	8,522		10,650
Prepaid expenses	11,951		15,891
Other current assets	935		4,916
	187,755		183,768
Securities and Investments	1,522		1,499
Property, Plant and Equipment, net	335,637		319,376
Intangible Assets
Goodwill	63,700		63,700
Radio spectrum licenses	131,825		131,834
Customer relationships and trademarks, net	5,282		6,985
Deferred Charges and Other Assets	11,539		9,089
Total Assets	$	737,260	$	716,251
LIABILITIES AND EQUITY
Current Liabilities
Current portion of long-term debt	$	5,835	$	5,410
Accounts payable	30,537		24,748
Dividends payable	—		9,034
Accrued expenses and other current liabilities	39,943		40,399
	76,315		79,591
Long-Term Debt	520,779		484,956
Other Long-Term Liabilities	110,242		107,911
Equity	29,924		43,793
Total Liabilities and Equity	$	737,260	$	716,251

NTELOS Holdings Corp.

Condensed Consolidated Statements of Income

	Three Months Ended September 30,				Nine Months Ended September 30,
	(Unaudited)				(Unaudited)
(In thousands, except per share amounts)	2014		2013		2014		2013
Operating Revenues	$	119,638	$	130,912	$	359,515	$	370,116
Operating Expenses
Cost of sales and services	56,881		49,580		159,963		141,020
Customer operations	25,381		26,502		78,383		78,321
Corporate operations	8,580		10,850		31,610		31,294
Depreciation and amortization	18,473		16,559		57,469		55,458
Gain on sale of intangible assets	—		—		—		(4,442)
	109,315		103,491		327,425		301,651
Operating Income	10,323		27,421		32,090		68,465
Other Expense
Interest expense	(8,371)		(7,480)		(24,644)		(22,232)
Other expense, net	(29)		(430)		(1,194)		(649)
	(8,400)		(7,910)		(25,838)		(22,881)
Income before Income Taxes	1,923		19,511		6,252		45,584
Income Taxes	767		8,340		2,517		18,464
Net Income	1,156		11,171		3,735		27,120
Net Income Attributable to Noncontrolling Interests	(352)		(588)		(1,161)		(1,658)
Net Income Attributable to NTELOS Holdings Corp.	$	804	$	10,583	$	2,574	$	25,462
Earnings per Share Attributable to NTELOS Holdings Corp.:
Basic	$	0.04	$	0.50	$	0.12	$	1.21
Weighted average shares outstanding - basic	21,119		21,047		21,100		20,987
Diluted	$	0.04	$	0.48	$	0.12	$	1.17
Weighted average shares outstanding - diluted	21,894		21,910		21,706		21,708
Cash Dividends Declared per Share - Common Stock	$	—	$	0.42	$	0.84	$	1.26

NTELOS Holdings Corp.

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

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2014		2013		2014		2013
Net income attributable to NTELOS Holdings Corp.	$	804	$	10,583	$	2,574	$	25,462
Net income attributable to noncontrolling interests	352		588		1,161		1,658
Net income	$	1,156	$	11,171	$	3,735	$	27,120
Interest expense	8,371		7,480		24,644		22,232
Income taxes	767		8,340		2,517		18,464
Other expense, net	29		430		1,194		649
Operating income	10,323		27,421		32,090		68,465
Depreciation and amortization	18,473		16,559		57,469		55,458
Gain on sale of intangible assets	—		—		—		(4,442)
Accretion of asset retirement obligations	280		135		926		451
Equity-based compensation	(403)		1,442		2,191		4,223
SNA straight-line adjustment ¹	3,065		—		5,108		—
Other ²	1,040		1		3,279		—
Adjusted EBITDA	$	32,778	$	45,558	$	101,063	$	124,155


¹		Adjustment for impact of recognizing a portion of the billed SNA contract revenues on a straight line basis.

Other includes legal and advisory fees related to Amended and Restated Sprint agreement and certain employee separation charges.

NTELOS Holdings Corp.

Key Metrics

																	Nine Months Ended
	Quarter Ended:	9/30/2013			12/31/2013			3/31/2014			6/30/2014			9/30/2014			9/30/2013			9/30/2014
Subscribers
Beginning Subscribers		454,800			457,100			464,600			468,000			458,100			439,600			464,600
	Postpay	298,700			298,000			306,700			306,800			308,200			297,400			306,700
	Prepay	156,100			159,100			157,900			161,200			149,900			142,200			157,900
Gross Additions		44,500			50,800			45,400			39,000			41,400			133,100			125,800
	Postpay	20,000			28,700			20,200			20,400			20,800			56,500			61,400
	Prepay	24,500			22,100			25,200			18,600			20,600			76,600			64,400
Disconnections¹		42,200			43,300			42,000			38,600			42,300			115,600			122,900
	Postpay	19,600			19,800			19,900			17,100			18,900			52,600			55,900
	Prepay	22,600			23,500			22,100			21,500			23,400			63,000			67,000
Net Additions (Losses)¹		2,300			7,500			3,400			400			(900)			17,500			2,900
	Postpay	400			8,900			300			3,300			1,900			3,900			5,500
	Prepay	1,900			(1,400)			3,100			(2,900)			(2,800)			13,600			(2,600)
Ending Subscribers ¹		457,100			464,600			468,000			458,100			457,200			457,100			457,200
	Postpay	298,000			306,700			306,800			308,200			310,200			298,000			310,200
	Prepay	159,100			157,900			161,200			149,900			147,000			159,100			147,000
Churn, net ¹		3.1		%	3.1		%	3.0		%	2.8		%	3.1		%	2.8		%	2.9		%
	Postpay	2.2		%	2.2		%	2.2		%	1.8		%	2.0		%	2.0		%	2.0		%
	Prepay	4.8		%	4.9		%	4.6		%	4.5		%	5.3		%	4.6		%	4.8		%
Other Items
ARPA Statistics
ARPA		$	136.91		$	136.89		$	137.47		$	137.20		$	134.18		$	133.64		$	136.27
Ending Postpay Accounts		140,200			141,200			138,400			140,500			142,100			140,200			142,100
Postpay Subscribers per Account		2.1			2.2			2.2			2.2			2.2			2.1			2.2
Strategic Network Alliance Revenues (000's) ²
Billed Revenue		$	48,644		$	39,326		$	39,284		$	37,997		$	38,144		$	128,403		$	115,425
Straight-Line Adjustment		—			—			—			(2,043)			(3,065)						(5,108)
Spectrum Lease Consideration		—			—			—			822			1,234						2,056
SNA Revenues - As Reported		$	48,644		$	39,326		$	39,284		$	36,776		$	36,313		$	128,403		$	112,373
Network Statistics
Licensed Population (millions)		7.9			8.0			8.0			8.0			8.0			7.9			8.0
Covered Population (millions)		6.0			6.0			6.0			6.0			6.0			6.0			6.0
Total Cell Sites		1,434			1,444			1,444			1,445			1,446			1,434			1,446


¹	During the second quarter, the Company terminated approximately 2,100 postpay subscribers that repeatedly exceeded their terms and conditions relating to permitted usage. Additionally, the Company changed its business rules related to reporting of long-term, non-revenue prepay subscribers. This change resulted in approximately 8,200 prepay subscribers being excluded from our ending subscriber base. The impact of these Company-initiated terminations and change in business rules is reflected in our ending subscriber totals as of June 30, 2014, and is not reflected in our disconnections, net additions and churn calculations for the periods ended June 30, 2014.

Effective 5/1/14, SNA Revenues include the impact of recognizing the fixed fee element of SNA contract revenues on a straightline basis, which is a reduction of billed revenue, and the non-cash consideration attributable to spectrum leases. We have recognized an equal charge for spectrum lease expense within cost of sales and services.

NTELOS Holdings Corp.

ARPA Reconciliation – Postpay
Average Monthly Revenue per Account (ARPA) ¹

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except for accounts and ARPA)	2014		2013		2014		2013
Operating revenues	$	119,638	$	130,912	$	359,515	$	370,116
Less: prepay service revenues	(15,521)		(16,478)		(48,687)		(48,344)
Less: equipment revenues	(9,802)		(6,540)		(23,853)		(18,673)
Less: wholesale and other adjustments	(37,231)		(50,142)		(115,149)		(132,229)
Postpay service revenues	$	57,084	$	57,752	$	171,826	$	170,870
Average number of postpay accounts	141,800		140,600		140,100		142,100
Postpay ARPA	$	134.18	$	136.91	$	136.27	$	133.64

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: [email protected] / [email protected]

SOURCE NTELOS Holdings Corp.