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Lumos Networks Corp. Reports Third Quarter 2011 Operating Results

Stocks in this article: LMOS

Lumos Networks Corp. (“Lumos Networks,” Nasdaq: LMOS), a fiber-based service provider of voice, data and IP-based telecommunication services in the Mid-Atlantic region, today announced operating results for its third quarter of 2011. Lumos Networks was separated from NTELOS Holdings Corp. (“NTELOS”) through a spin-off effective after the close of business on October 31, 2011.

“We are delighted to become an independent publicly traded company,” said James A. Hyde, chief executive officer of Lumos Networks. “It is a truly exciting time for our business. Opportunities in newly acquired markets, the recent expansion of our fiber network and continued growth in demand for high-speed data services combine with the separation to position us well for the future.”

Highlights for third quarter 2011 include:

  • Metro E and IP-based services were expanded into six new market areas in third quarter 2011, facilitated by the systems integration of acquired markets. For the year, these services have been expanded into 29 new markets in West Virginia, Pennsylvania and Maryland.
  • Consolidated adjusted EBITDA (a non-GAAP measure) for third quarter 2011 was $24.6 million.
  • Enterprise data revenues were up 9% (pro forma for acquisition), over third quarter 2010; on-net buildings increased by 46 during the quarter, totaling 949 at September 30, 2011.
  • Wholesale data revenues were up 16% (pro forma for acquisition), over third quarter 2010, and up 5% over the previous quarter. Construction was completed to 23 new cell sites during the quarter bringing the total to 132, with an additional 82 sites ordered.

Recent Developments

Funding of Credit Facility: Concurrent with the separation, Lumos Networks received funding of $340 million under a new $370 million senior credit facility consisting of a $60 million senior secured five-year revolving credit facility (the “Revolver”), of which $30 million was drawn; a $110 million senior secured five-year amortizing Term Loan A and a $200 million senior secured six-year amortizing Term Loan B. The proceeds were used to fund a working capital cash reserve at Lumos Networks and approximately $315 million was distributed to NTELOS to pay off intercompany debt owed and to fund a mandatory repayment on NTELOS Inc.'s credit facility. Pricing of the Lumos Networks credit facility was LIBOR plus 3.25% for the Revolver and the Term Loan A and LIBOR plus 3.50% for the Term Loan B, with no LIBOR floor.

Declaration of Dividend: On November 4, 2011, the Board of Directors of Lumos Networks Corp. declared the company’s first quarterly cash dividend on its common stock in the amount of $0.14 per share to be paid on January 12, 2012 to stockholders of record on December 16, 2011.

Chief Financial Officer Appointed: Harold L. “Hal” Covert joined Lumos Networks in September as executive vice president and chief financial officer. Mr. Covert’s career includes over 27 years of experience serving as chief financial officer for public and private technology companies.

Operating Highlights

Total operating revenues for the third quarter 2011 were $51.6 million compared to $35.6 million for third quarter 2010 and total adjusted EBITDA was $24.6 million for the third quarter 2011, compared to $19.4 million in third quarter 2010, each reflecting the results of FiberNet, which was acquired December 1, 2010.

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