Lumos Networks Corp. Reports First Quarter 2013 Financial Results In-Line Quarterly Operating Results Confirms 2013 Revenue and Adjusted EBITDA Guidance Completes $425 Million Debt Refinancing Cash Dividend of $0.14 per Share Declared Business Wire WAYNESBORO, Va. -- May 03, 2013 Lumos Networks Corp. (“Lumos Networks” or “the Company”) (Nasdaq: LMOS), a fiber-based service provider of data, voice and IP-based telecommunication services in the Mid-Atlantic region, today announced financial results for its first quarter of 2013. Total revenue for the first quarter of 2013 was $52.5 million, compared to $51.4 million for the first quarter of 2012 and $52.7 million in the fourth quarter of 2012. Total Adjusted EBITDA was $24.7 million for the first quarter of 2013, compared to $22.3 million in the first quarter of 2012 and to $23.2 million in the fourth quarter of 2012. “Our operational momentum and execution continued in the first quarter as our Strategic Data revenue grew approximately 15% year over year and represented nearly 57% of total revenues, up from 50% in the year ago period,” said Tim Biltz, CEO and President of Lumos Networks. “Additionally, I am pleased to announce that on April 30, 2013, we completed our $425 million debt re-financing. I am confident that we will now have the capital ‘runway’ needed to finance continued expansion of our dense fiber network to meet our customer’s demands for fiber-based bandwidth for our key target customers in our Enterprise and Carrier data segments.” “In the first quarter, our Adjusted EBITDA margin reached 47%, which is nearly 3 percentage points higher than the prior quarter and clearly demonstrates the impact of increased focus on Strategic Data and expense control,” Mr. Biltz continued. “Our adjusted EBITDA grew 11% from the prior year period which is a significant milestone for Lumos Networks.” Highlights *During the quarter, the Company completed 35 fiber to the cell (“FTTC”) installations, reaching a total of 405 as of March 31^st. Lumos Networks anticipates that the number of new FTTC installations will grow sequentially in the second quarter and maintains its target of 550-600 total FTTC installations by the end of 2013. The mid-point of this guidance implies approximately 55% year over year growth in total FTTC installations in 2013. *On April 30^th, Lumos Networks completed its $425 million debt refinancing, which bolstered our balance sheet with approximately $52 million in cash, lowered our blended interest rate and increased our leverage ratio. We believe this new credit facility significantly increases our financial flexibility to handle our capital needs over the next few years. Please see our SEC filing and corresponding press release from April 30^th for further details. *In the first quarter of 2013, the Company allocated 75% of its total capital expenditures for success-based strategic data revenue projects and maintains its target of 75% for 2013. *As a part of our “edge-out” fiber network expansion strategy, Lumos Networks recently signed contracts with two core Enterprise customers and three carrier customers in the Richmond market. We expect the Richmond market to “go live” in the third quarter of 2013. *On May 1, 2013, the Board of Directors of Lumos Networks declared a dividend on its common stock in the amount of $0.14 per share to be paid on July 11, 2013 to stockholders of record on June 13, 2013. Business Outlook In the second quarter of 2013, the Company expects revenue to be approximately $52 million and adjusted EBITDA approximately $24 million. For the full year 2013, the Company re-iterates its prior guidance for revenue to be in the range of $208 to $212 million and adjusted EBITDA in the range of $94 to $97 million. Please see the schedules accompanying this release for additional financial guidance, including projected 2013 cash flows and reconciliations of non-GAAP measures to GAAP results. Statements made 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.” Conference Call A conference call and simultaneous webcast, hosted by Timothy G. Biltz, CEO, Harold L. Covert, CFO, and Will Davis, Director of Investor Relations, to review these financial and operational results and financial guidance will be held at 8:30 A.M. (ET) on May 3, 2013. The webcast may be accessed via the Internet at http://ir.lumosnetworks.com/ and the live call (“Lumos Networks First Quarter 2013 Earnings Conference Call”) may be accessed with the following numbers: Domestic: 1-888-317-6016 International: 1-412-317-6016 Canada: 1-855-669-9657 The conference call will be archived and available for replay through May 13, 2013 before 9:00 A.M. (ET) and may be accessed with the following numbers: Domestic: 1-877-344-7529 International: 1-412-317-0088 Replay pass codes: Conference ID: 10027848 The webcast will also be archived and the replay may be accessed at http://ir.lumosnetworks.com/. About Lumos Networks Lumos Networks is a fiber-based service provider in the Mid-Atlantic region serving carrier, business and residential customers over a dense fiber network offering data, voice and IP services. With headquarters in Waynesboro, VA, Lumos Networks serves Virginia, West Virginia and portions of Pennsylvania, Kentucky, Ohio, and Maryland over a fiber network of approximately 5,800 long haul miles. Detailed information about Lumos Networks is available at www.lumosnetworks.com. Non-GAAP Measures Adjusted EBITDA is defined as net income attributable to Lumos Networks before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, net income attributable to noncontrolling interests, other expenses/income, equity based compensation charges, acquisition related charges, amortization of actuarial losses on retirement plans, employee separation charges, restructuring related charges, gain or loss on settlements and gain or loss on interest rate derivatives. Adjusted EBITDA margin is calculated as the ratio of Adjusted EBITDA, as defined, to operating revenues. Adjusted EBITDA is a non-GAAP financial performance measure. It should not be considered in isolation or as an alternative to measures determined in accordance with GAAP. Please refer to the schedules herein and our SEC filings 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. 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: rapid development and intense competition in the telecommunications industry; our ability to achieve benefits from our separation from NTELOS Holdings Corp in 2011; our ability to offset expected revenue declines in legacy voice and access products related to the recent regulatory developments and carriers grooming their networks; adverse economic conditions; operating and financial restrictions imposed by our senior credit facility; our cash and capital requirements; declining prices for our services; the potential to experience a high rate of customer turnover; federal and state regulatory fees, requirements and developments; our reliance on certain suppliers and vendors; and other unforeseen difficulties that may occur. These risks and uncertainties 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 Income *Condensed Consolidated Statements of Cash Flows *Summary of Operating Results, Customer and Network Statistics *Reconciliation of Net Income Attributable to Lumos Networks Corp. to Operating Income *Reconciliation of Operating Income to Adjusted EBITDA *Business Outlook Lumos Networks Corp. Condensed Consolidated Balance Sheets March 31, 2013 December 31, 2012 (In thousands) ASSETS Current Assets Cash $ 2 $ 2 Restricted cash ^1 5,303 5,303 Accounts receivable, net 23,499 22,676 Other receivables 1,992 2,400 Income tax receivable 463 954 Prepaid expenses and other 4,652 5,136 Deferred income taxes 4,752 3,357 Total Current Assets 40,663 39,828 Securities and investments 425 462 Property, plant and equipment, net 340,506 336,589 Other Assets Goodwill 100,297 100,297 Other intangibles, net 32,439 34,895 Deferred charges and other assets 4,263 4,448 Total Other Assets 136,999 139,640 Total Assets $ 518,593 $ 516,519 LIABILITIES AND EQUITY Current Liabilities Current portion of long-term debt $ 2,630 $ 7,900 Accounts payable 10,496 17,453 Dividends payable 3,058 3,013 Advance billings and customer deposits 13,471 13,527 Accrued compensation 1,754 1,742 Accrued operating taxes 4,381 3,838 Other accrued liabilities 5,495 6,284 Total Current Liabilities 41,285 53,757 Long-Term Liabilities Long-term debt 309,568 304,325 Retirement benefits 30,024 30,413 Deferred income taxes 64,518 59,313 Other long-term liabilities 3,330 3,500 Income tax payable 665 609 Total Long-term Liabilities 408,105 398,160 Stockholders' Equity 68,582 64,050 Noncontrolling Interests 621 552 Total Equity 69,203 64,602 Total Liabilities and Equity $ 518,593 $ 516,519 During 2010, the Company received a Federal stimulus award providing 50% funding to bring broadband services and infrastructure to Alleghany ^1 County, Virginia. The Company was required to deposit 100% of its grant ($8.1 million) into pledged accounts in advance of any reimbursements, to be drawn down ratably following reimbursement approvals. Lumos Networks Corp. Condensed Consolidated Statements of Three months ended March 31, Income (In thousands, except per share amounts) 2013 2012 Operating Revenues $ 52,534 $ 51,412 Operating Expenses Network access costs 11,154 11,764 Selling, general and administrative ^1 18,020 18,813 Depreciation and amortization 9,563 9,220 Accretion of asset retirement obligations 31 30 Restructuring charges 40 - Total Operating Expenses 38,808 39,827 Operating Income 13,726 11,585 Other Income (Expenses) Interest expense (3,128 ) (2,987 ) Gain on interest rate derivatives 187 146 Other income, net 25 8 Income Before Income Tax Expense 10,810 8,752 Income Tax Expense 4,332 3,443 Net Income 6,478 5,309 Net Income Attributable to Noncontrolling (69 ) (22 ) Interests Net Income Attributable to Lumos Networks $ 6,409 $ 5,287 Corp. Basic and Diluted Earnings per Common Share Attributable to Lumos Networks Corp. Stockholders: Earnings per share - basic $ 0.30 $ 0.25 Earnings per share - diluted $ 0.30 $ 0.25 Weighted average shares outstanding - 21,186 20,850 basic Weighted average shares outstanding - 21,693 21,237 diluted Cash Dividends Declared per Share - Common $ 0.14 $ 0.14 Stock Includes equity-based compensation charges related to all of the ^1 Company’s share-based awards and the Company’s 401(k) matching contributions of $1.0 million for each of the three months ended March 31, 2013 and 2012. Lumos Networks Corp. Condensed Consolidated Statements of Cash Flows Three Months Ended March 31, (In thousands) 2013 2012 Cash flows from operating activities Net income $ 6,478 $ 5,309 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 7,107 6,439 Amortization 2,456 2,781 Accretion of asset retirement obligations 31 30 Deferred income taxes 3,768 3,267 Gain on interest rate derivatives (187 ) (146 ) Equity-based compensation expense 1,025 1,011 Amortization of loan origination costs 208 199 Retirement benefits, net of contributions and (80 ) (1,382 ) distributions Excess tax benefits from share-based (78 ) - compensation Other (20 ) (90 ) Changes in operating assets and liabilities, (2,131 ) 1,809 net Net cash provided by operating activities 18,577 19,227 Cash flows from investing activities Purchases of property, plant and equipment (15,032 ) (17,369 ) Broadband network expansion funded by stimulus (31 ) (511 ) grant Change in restricted cash - 332 Cash reimbursement received from broadband - 332 stimulus grant Other - (27 ) Net cash used in investing activities (15,063 ) (17,243 ) Cash flows from financing activities Principal payments on senior secured term loans (1,875 ) (500 ) Borrowings from revolving credit facility 3,000 2,066 Principal payments on revolving credit facility (1,523 ) (11,000 ) Cash dividends paid on common stock (3,013 ) (2,965 ) Principal payments under capital lease (113 ) (172 ) obligations Proceeds from stock option exercises and 20 36 employee stock purchase plan Excess tax benefits from share-based 78 - compensation Other (88 ) 6 Net cash used in financing activities (3,514 ) (12,529 ) Decrease in cash - (10,545 ) Cash: Beginning of period 2 10,547 End of period $ 2 $ 2 Lumos Networks Corp. Operating Results, Customer and Network Statistics (Dollars in Three months ended: thousands) March 31, December September June 30, March 2013 31, 2012 30, 2012 2012 31, 2012 Revenue and Adjusted EBITDA Revenue Enterprise Data 9,935 9,906 9,662 9,214 8,848 Carrier Data 14,945 14,363 13,001 12,669 12,474 IP Services 4,781 4,730 4,689 4,648 4,549 Total Strategic Data 29,661 28,999 27,352 26,531 25,871 Legacy Voice 14,884 15,399 16,074 16,186 16,744 Access 7,989 8,281 8,551 8,086 8,797 Total Revenue 52,534 52,679 51,977 50,803 51,412 Adjusted EBITDA^1 Strategic Data 13,723 13,629 12,581 12,330 12,097 Legacy Voice 4,988 3,835 3,808 3,401 4,063 Access 5,984 5,747 5,892 5,375 6,131 Total Adjusted EBITDA 24,695 23,211 22,281 21,106 22,291 Adjusted EBITDA 47.0% 44.1% 42.9% 41.5% 43.4% Margin^1 Capital Expenditures 15,032 15,956 14,937 11,619 17,369 Adjusted EBITDA less 9,663 7,255 7,344 9,487 4,922 Capital Expenditures Customer and Network Statistics Customer Statistics Competitive voice 105,695 110,261 112,709 114,930 117,965 connections ^2 RLEC Broadband 15,232 15,181 15,199 15,258 15,100 Customers ^3 Total Broadband 42,110 39,950 40,401 37,361 35,974 Connections ^3 Video Subscribers 4,666 4,549 4,390 4,192 4,019 Network Statistics On-Network Buildings 1,235 1,196 1,150 1,091 1,066 ^4 Fiber to the Cell 405 370 261 178 155 Sites ^4 RLEC Total Access 30,643 31,203 31,708 32,272 32,676 Lines Adjusted EBITDA is a non-GAAP measure. See definition on page 2 of this ^1 earnings release. Adjusted EBITDA margin is calculated as the ratio of Adjusted EBITDA, as defined, to Total Revenue. ^2 Includes customer Primary Rate Interface (PRI) line equivalents at 23 lines per PRI. Excludes intercompany PRI lines. Includes customers or customer equivalents for DSL, dedicated Internet ^3 access, wireless portable broadband, broadband over fiber and metro Ethernet. All revenues from broadband products are recorded in the operating revenues of our strategic data segment. ^4 Includes statistics for legacy markets only, excluding FiberNet, through March 31, 2013. Note: Certain prior period revenue amounts have been reclassified to conform with the current year presentation. Lumos Networks Corp. Reconciliation of Net Income Attributable to Lumos Networks Corp. to Operating Income (In thousands) Three months ended March 31, 2013 2012 Net income attributable to Lumos Networks $ 6,409 $ 5,287 Corp. Net income attributable to noncontrolling 69 22 interests Net income 6,478 5,309 Interest expense 3,128 2,987 Gain on interest rate derivatives (187 ) (146 ) Income tax expense 4,332 3,443 Other income, net (25 ) (8 ) Operating income $ 13,726 $ 11,585 Lumos Networks Corp. Reconciliation of Operating Income to Adjusted EBITDA (Dollars in thousands) For The Three Months Ended March 31 Operating Income $ 13,726 $ 11,585 Depreciation and amortization and accretion of asset 9,594 9,250 retirement obligations Sub-total: 23,320 20,835 Amortization of actuarial losses 310 445 Equity based compensation 1,025 1,011 Restructuring charges 40 - Adjusted EBITDA $ 24,695 $ 22,291 Adjusted EBITDA Margin 47.0 % 43.4 % Lumos Networks Corp. Business Outlook ^1 (as of May 3, 2013) (In millions) 2013 Guidance ^1 Second Quarter 2013 2013 Annual Operating Revenues approximately $52 $ 208 to $ 212 Adjusted EBITDA approximately $24 $ 94 to $ 97 Capital Expenditures approximately $16 $ 65 to $ 70 Reconciliation of Operating Income to Adjusted EBITDA Operating Income approximately $12 $ 44 to $ 46 Depreciation and amortization approximately $10 $ 40 to $ 41 Equity based compensation charges approximately $2 $ 8 Amortization of actuarial losses $ 2 Adjusted EBITDA approximately $24 $ 94 to $ 97 These estimates are based on management’s current expectations. These estimates are forward-looking and actual results may differ materially. ^1 Please see “Special Note from the Company Regarding Forward-Looking Statements" in the Lumos Networks Corp. first quarter 2013 earnings release dated May 3, 2013. Contact: Lumos Networks Corp. Will Davis Director of Investor Relations (o) 540-946-6930 (c) 917-519-6994 email@example.com
Lumos Networks Corp. Reports First Quarter 2013 Financial Results
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