USA Mobility Reports Second Quarter Operating Results; Board Declares Quarterly Dividend, Renews Stock Repurchase Plan

USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging, mobile voice and data and unified communications solutions, today announced operating results for the second quarter ended June 30, 2012. In addition, the Company’s Board of Directors declared a quarterly dividend of $0.125 per share, payable on September 7, 2012 to stockholders of record on August 17, 2012. The Board also authorized renewal of the Company’s previously suspended stock repurchase program.

Consolidated revenue for the second quarter was $56.0 million, compared to $56.7 million in the first quarter and $65.2 million in the second quarter of 2011. Revenue from the Company’s Wireless business (USA Mobility Wireless) was $42.8 million in the second quarter, compared to $44.3 million in the first quarter and $52.1 million in the second quarter of 2011. Second quarter revenue from the Software business (Amcom Software) was $13.2 million, compared to $12.5 million in the first quarter and $13.1 million in the year-earlier quarter.

Second quarter EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $18.4 million, or 32.9 percent of revenue, compared to $18.8 million, or 33.1 percent of revenue, in the first quarter and $21.5 million, or 32.9 percent of revenue, in the year-earlier quarter. Second quarter EBITDA included $16.8 million from Wireless and $1.6 million from Software, compared to $20.4 million and $1.1 million, respectively, in the second quarter of 2011.

Net income for the second quarter was $8.4 million, or $0.37 per fully diluted share, compared to $18.6 million, or $0.82 per fully diluted share, in the second quarter of 2011. Net income in the second quarter of 2011 benefited from the receipt of $7.5 million from the sale of certain narrow band PCS licenses and a reduction in income tax expense of $4.9 million related to a reduction in our deferred income tax asset valuation allowance, partially offset by purchase accounting adjustments of $2.6 million. Excluding these adjustments, net income for the second quarter of 2011 would have been $10.0 million, or $0.44 per fully diluted share.

Second quarter results included:

Wireless
  • Net unit losses improved to 34,000 in the second quarter from 51,000 in the first quarter and 49,000 in the second quarter of 2011. The quarterly rate of net unit loss improved to an 8-year low of 2.1 percent from 2.7 percent in the year-earlier quarter, while the annual rate of unit erosion also reached a new low of 11.0 percent versus 11.5 percent in the first quarter and 12.2 percent in the year-ago quarter. Units in service at June 30, 2012 totaled 1,583,000, compared to 1,779,000 a year earlier.
  • The quarterly rate of revenue erosion was 3.3 percent, compared to 4.9 percent in the first quarter and 0.8 percent in the second quarter of 2011, while the annual rate of revenue erosion was 17.9 percent versus 11.9 percent in the year-earlier quarter.
  • Total ARPU (average revenue per unit) was $8.45 in the second quarter, compared to $8.50 in the first quarter and $8.74 in the second quarter of 2011.
  • Second quarter EBITDA margin for Wireless was 39.2 percent, compared to 39.5 percent in the first quarter and 39.2 percent in the year-earlier quarter.

Software
  • Bookings for the second quarter were $15.1 million, compared to $12.4 million in the first quarter and $15.2 million in the year-earlier quarter.
  • The backlog was $25.4 million at June 30, 2012, compared to $23.7 million at March 31, 2012, and $20.5 million at June 30, 2011.
  • Second quarter Software revenue of $13.2 million included $6.5 million of maintenance revenue and $6.7 million of operations revenue, compared to $6.4 million and $6.1 million, respectively, of the $12.5 million in Software revenue for the prior quarter.
  • The renewal rate for maintenance in the second quarter was 98.8 percent.

Total Company
  • Consolidated operating expenses (excluding depreciation, amortization and accretion) totaled $37.5 million in the second quarter, with $26.0 million for Wireless and $11.5 million for Software, compared to $38.0 million in the first quarter, with $26.8 million for Wireless and $11.2 million for Software.
  • Capital expenses were $2.9 million, compared to $1.9 million in the second quarter of 2011.
  • Dividends paid to stockholders totaled $5.5 million for the second quarter.
  • On April 6, 2012, the Company repaid its outstanding debt balance of $3.3 million and once again became a debt-free company.
  • The Company’s cash balance was $41.0 million at June 30, 2012.
  • The number of full-time equivalent employees at June 30, 2012 totaled 686, including 411 for Wireless and 275 for Software, compared to a total of 685 at March 31, 2012.

Vincent D. Kelly, president and chief executive officer, said: “USA Mobility again reported excellent operating results for the quarter as both our Wireless and Software businesses made substantial progress. On the Wireless side, our quarterly and annual rates of subscriber erosion reached their best levels in nearly eight years as overall trends continued to improve. In addition, we exceeded all key performance goals for gross additions, unit churn, and ARPU. Our Software business also performed well during the quarter as bookings increased from the prior quarter and our backlog surpassed $25 million. Amcom also made important advances in its product and business development, including the acquisition in May of IMCO Technologies’ Critical Test Results Management solution, which allows hospitals to improve patient care and safety by expediting the delivery of critical test results to caregivers. At the same time, our combined business continued to reduce expenses, maintain strong operating margins, and generate sufficient cash flow to again return capital to stockholders in the form of dividend distributions.”

Kelly said Wireless sales and marketing efforts continued to focus on the core market segments of Healthcare, Government and Large Enterprise during the quarter. “These core segments represented approximately 91.0 percent of our direct subscriber base and 86.7 percent of our direct paging revenue at June 30 th, compared to 89.5 percent and 84.3 percent, respectively, a year earlier. Healthcare continued to be our largest and best performing market segment with the highest percentage of direct gross additions (83.3 percent) and the lowest rate of direct net unit loss (0.2 percent) as healthcare providers continue to benefit from the reliability and cost advantages of paging for their most critical messaging needs.”

With regard to Software results, Kelly said: “After a slower than expected first quarter, Amcom delivered an increase in quarter-over-quarter revenue in the second quarter and a growing backlog and sales pipeline at June 30 th. We booked most of our business in the North American healthcare market, including a large East Coast teaching hospital. However, we also gained further penetration of the hospitality segment with the addition of a major hotel group. Customers from multiple business segments continue to choose Amcom due to the breadth of our critical communications solutions, which range from call center management, clinical alerting middleware, critical smartphone communications and emergency notification.”

Kelly added: “As previously announced, we also made several important executive management changes during the quarter. Jim Boso was promoted to president of USA Mobility Wireless, while Kate Bolseth was named chief operating officer and Sean Collins executive vice president of selling and marketing at Amcom Software. All three executives have performed exceptionally well for us in the past and we expect them to continue to achieve further success going forward.”

Commenting on the Company’s revised quarterly dividend rate of $0.125 per share, a reduction from the previous rate of $0.25 per share, Kelly stated: “As noted on our fourth quarter earnings call earlier this year, the Board’s decision to revise the cash dividend rate was made for the principal purpose of preserving sufficient capital to allow us to make acquisitions in our Software business and create opportunities for long-term growth. Notwithstanding our excellent current results, we recognize that ongoing Wireless subscriber losses will continue to put pressure on future operating margins and cash flows. As a result, we believe the revised dividend rate will help preserve capital for long-term growth opportunities. We also believe it better reflects our projected cash flows over the next several years, strengthens the Company’s financial position while maintaining a significant yield on our common stock, and allows us to retain strategic capital as we continue to reposition the Company for the future.”

Kelly said the Board approved renewal of the Company’s stock repurchase plan, which was adopted in 2008 and suspended in March 2011 at the time of the Amcom acquisition. The plan, which extends through December 31, 2013, resets the repurchase authority to $25 million as of August 1, 2012. Since the buy back program began, the Company has repurchased 5.6 million shares of its common stock.

Shawn E. Endsley, chief financial officer, said the Company continued to reduce operating expenses in the second quarter. “Recurring operating expenses (excluding depreciation, amortization and accretion) for Wireless decreased 17.9 percent from the year-earlier quarter,” he noted, “and again exceeded the adjusted annual rate of Wireless revenue decline. In addition, Wireless revenue for the quarter remained strong, driven largely by a stable ARPU and improved unit churn.” Endsley said the Company repaid its outstanding $3.3 million debt balance on April 6, 2012, noting that “with the repayment USA Mobility is once again a debt-free company.”

Regarding financial guidance for 2012, Endsley said the Company is revising its prior guidance for consolidated results for the full year, with total revenues expected to range from $215 million to $227 million, operating expenses (excluding depreciation, amortization and accretion) to range from $154 million to $162 million, and capital expenses to range from $7.1 million to $9.5 million. “We have also revised our revenue guidance mix between Wireless and Software based on our outlook for each business. Accordingly, we now expect Wireless revenue to range from $162 million to $170 million, an increase from the prior guidance of $156 million to $166 million, and Software revenue to range from $53 million to $57 million, a reduction from the previous guidance of $58 million to $66 million. We have also adjusted the operating expense guidance for Wireless to a range of $106 million to $110 million, a reduction from the original range of $108 million to $112 million. Our Software operating expenses have been adjusted slightly to a range of $48 million to $52 million. Finally, we have slightly adjusted the capital expense range for our Software business to $0.1 million to $0.5 million from the previous range of $0.5 million to $1.0 million.”

* * * * * * * * *

USA Mobility plans to host a conference call for investors on its second quarter results at 10:00 a.m. Eastern Time on Tuesday, July 31, 2012. Dial-in numbers for the call are 719-234-0008 or 888-428-9496. The pass code for the call is 3467154. A replay of the call will be available from 1:00 p.m. ET on July 31 until 11:59 p.m. on Tuesday August 14. Replay numbers are 719-457-0820 or 888-203-1112. The pass code for the replay is 3467154.

* * * * * * * * *

About USA Mobility

USA Mobility, Inc., headquartered in Springfield, Virginia, is a comprehensive provider of reliable and affordable wireless communications solutions to the healthcare, government, large enterprise and emergency response sectors. In addition, through its Amcom Software subsidiary, it provides mission critical unified communications solutions for hospitals, contact centers, emergency management, mobile event notification and messaging. As a single-source provider, USA Mobility 's focus is on the business-to-business marketplace and supplying wireless connectivity solutions to organizations nationwide. The Company operates the largest one-way paging and advanced two-way paging networks in the United States. USA Mobility also offers mobile voice and data services through Sprint Nextel and T-Mobile, including BlackBerry® smartphones and GPS location applications. The Company's product offerings include customized wireless connectivity systems for the healthcare, government and other campus environments. USA Mobility also offers M2M (machine-to-machine) telemetry solutions for numerous applications that include asset tracking, utility meter reading and other remote device monitoring applications on a national scale. For further information, visit www.usamobility.com and www.amcomsoftware.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act: Statements contained herein or in prior press releases which are not historical fact, such as statements regarding USA Mobility’s future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause USA Mobility’s actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, declining demand for paging products and services, the ability to continue to reduce operating expenses, future capital needs, competitive pricing pressures, competition from both traditional paging services and other wireless communications services, government regulation, reliance upon third-party providers for certain equipment and services, as well as other risks described from time to time in periodic reports and registration statements filed with the Securities and Exchange Commission. Although USA Mobility believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. USA Mobility disclaims any intent or obligation to update any forward-looking statements.

Tables to Follow
USA MOBILITY, INC.
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (a), (b)
(In thousands, except share, per share amounts and ARPU)
                         
For the six months ended June 30,
2012 2011
Wireless     Software     Total Wireless     Software     Total
 
Revenue:
Paging service $ 82,423 $ - $ 82,423 $ 95,947 $ - $ 95,947
Cellular 563 - 563 1,883 - 1,883
Product and related sales (c) 3,456 25,648 29,104 5,149 17,879 23,028
Other   606         -         606     1,648         -         1,648  
Total revenue   87,048         25,648         112,696     104,627         17,879         122,506  
 
Operating expenses:
Cost of products sold (c) 329 9,703 10,032 1,834 7,674 9,508
Service, rental and maintenance (c) 23,498 4,697 28,195 30,027 2,625 32,652
Selling and marketing 6,020 5,552 11,572 7,779 3,733 11,512
General and administrative 22,934 2,729 25,663 27,591 1,817 29,408
Severance and restructuring 9 37 46 50 - 50
Depreciation, amortization and accretion   5,669         3,452         9,121     7,650         2,187         9,837  
Total operating expenses   58,459         26,170         84,629     74,931         18,036         92,967  
% of total revenue 67.2 % 102.0 % 75.1 % 71.6 % 100.9 % 75.9 %
                           
Operating income (loss)   28,589         (522 )       28,067     29,696         (157 )       29,539  
% of total revenue 32.8 % -2.0 % 24.9 % 28.4 % -0.9 % 24.1 %
 
Interest expense, net (254 ) - (254 ) (1,109 ) (9 ) (1,118 )
Other income (expense), net   393         (19 )       374     7,897         (77 )       7,820  
Income (loss) before income tax (expense) benefit 28,728 (541 ) 28,187 36,484 (243 ) 36,241
Income tax (expense) benefit   (11,491 )       212         (11,279 )   22,915         90         23,005  
Net income (loss) $ 17,237       $ (329 )     $ 16,908   $ 59,399       $ (153 )     $ 59,246  
 
Basic net income per common share $ 0.76   $ 2.68  
Diluted net income per common share $ 0.75   $ 2.64  
 
Basic weighted average common shares outstanding   22,118,470     22,075,185  
Diluted weighted average common shares outstanding   22,601,603     22,443,417  
 
 
Reconciliation of operating income (loss) to EBITDA (d):
Operating income (loss) $ 28,589 $ (522 ) $ 28,067 $ 29,696 $ (157 ) $ 29,539
Add back: depreciation, amortization and accretion   5,669         3,452         9,121     7,650         2,187         9,837  
EBITDA $ 34,258       $ 2,930       $ 37,188   $ 37,346       $ 2,030       $ 39,376  
% of total revenue 39.4 % 11.4 % 33.0 % 35.7 % 11.4 % 32.1 %
 
Key statistics:
Units in service 1,583 - 1,583 1,779 - 1,779
Average revenue per unit (ARPU) $ 8.45 $ - $ 8.45 $ 8.72 $ - $ 8.72
Bookings $ - $ 27,502 $ 27,502 $ - $ 18,485 $ 18,485
Backlog $ - $ 25,353 $ 25,353 $ - $ 20,478 $ 20,478
 
(a) Slight variations in totals are due to rounding.

(b) Includes consolidated results of operations of USA Mobility Wireless, Inc. ("Wireless") and Amcom Software, Inc. ("Software"). Software operations reflect financial results from March 3, 2011, the acquisition date.
(c) Wireless results reflect eliminations for intercompany revenue and expenses.

(d) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for analytical purposes only.
 
 
USA MOBILITY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(In thousands)
         
 
 
6/30/12 12/31/11
(Unaudited)
 
Assets
Current assets:
Cash and cash equivalents $ 40,968 $ 53,655
Accounts receivable, net 20,629 20,523
Prepaid expenses and other 3,995 4,338
Inventory 2,799 2,268
Escrow receivables 7,693 14,819
Deferred income tax assets, net   3,733       8,617
Total current assets 79,817 104,220
Property and equipment, net 21,262 22,421
Goodwill 132,561 130,968
Other intangible assets, net 37,116 38,757
Deferred income tax assets, net 45,756 51,600
Other assets   1,883       2,094
Total assets $ 318,395     $ 350,060
 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities $ 12,939 $ 12,394
Accrued compensation and benefits 13,101 12,854
Consideration payable 7,693 14,819
Customer deposits 1,938 1,806
Deferred revenue   14,546       14,693
Total current liabilities 50,217 56,566
Long-term debt, net of current portion - 28,250
Deferred revenue 511 581
Other long-term liabilities   8,641       12,223
Total liabilities   59,369       97,620
Commitments and contingencies
Stockholders' equity:
Preferred stock - -
Common stock 2 2
Additional paid-in capital 132,473 131,612
Retained earnings   126,551       120,826
Total stockholders' equity   259,026       252,440
Total liabilities and stockholders' equity $ 318,395     $ 350,060
 
(a) Slight variations in totals are due to rounding.
 
 
USA MOBILITY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a)
(Unaudited and in thousands)
         
 
For the six months ended

6/30/12

6/30/11
 
Cash flows from operating activities:
Net income $ 16,908 $ 59,246

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 9,121 9,837
Amortization of deferred financing costs 129 273
Deferred income tax expense (benefit) 10,728 (23,371 )
Amortization of stock based compensation 442 679
Provisions for doubtful accounts, service credits and other 780 490
Settlement of non-cash transaction taxes (243 ) 308
Gain on disposals of property and equipment (146 ) (37 )
Gain on disposals of narrow band PCS licenses - (7,500 )
Changes in assets and liabilities:
Accounts receivable (876 ) (1,600 )
Prepaid expenses, intangibles and other assets 161 1,669
Accounts payable and accrued liabilities (3,160 ) (8,935 )
Customer deposits and deferred revenue   (85 )       1,777  
Net cash provided by operating activities   33,759         32,836  
 
Cash flows from investing activities:
Purchases of property and equipment (4,439 ) (3,355 )
Proceeds from disposals of property and equipment 318 35
Proceeds from disposals of narrow band PCS licenses - 7,500
Acquisitions, net of cash acquired   (3,000 )       (134,217 )
Net cash used in investing activities   (7,121 )       (130,037 )
 
Cash flows from financing activities:
Issuance of debt - 24,044
Repayment of debt (28,250 ) (14,125 )
Deferred financing costs - (1,408 )
Cash dividends to stockholders   (11,075 )       (11,060 )
Net cash used in financing activities   (39,325 )       (2,549 )
 
 
Net decrease in cash and cash equivalents (12,687 ) (99,750 )
Cash and cash equivalents, beginning of period   53,655         129,220  
Cash and cash equivalents, end of period $ 40,968       $ 29,470  
 
Supplemental disclosure:
Interest paid $ 283       $ 685  
Income taxes paid $ 936       $ 817  
Non-cash financing activities $ -       $ 27,750  
 
(a) Slight variations in totals are due to rounding.
 
 
USA MOBILITY, INC.
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (a), (b)
(Unaudited and in thousands, except share, per share amounts and ARPU)
                         
For the three months ended June 30,
2012 2011
Wireless     Software     Total Wireless     Software     Total
 
Revenue:
Paging service $ 40,548 $ - $ 40,548 $ 47,319 $ - $ 47,319
Cellular 286 - 286 1,199 - 1,199
Product and related sales (c) 1,669 13,178 14,847 2,805 13,080 15,885
Other   280         -         280     768         -         768  
Total revenue   42,783         13,178         55,961     52,091         13,080         65,171  
 
Operating expenses:
Cost of products sold 156 5,060 5,216 1,171 5,907 7,078
Service, rental and maintenance (c) 11,464 2,428 13,892 14,211 1,976 16,187
Selling and marketing 2,972 2,947 5,919 3,946 2,642 6,588
General and administrative 11,426 1,068 12,494 12,351 1,489 13,840
Severance and restructuring - 24 24 17 - 17
Depreciation, amortization and accretion   2,854         1,752         4,606     3,618         1,680         5,298  
Total operating expenses   28,872         13,279         42,151     35,314         13,694         49,008  
% of total revenue 67.5 % 100.8 % 75.3 % 67.8 % 104.7 % 75.2 %
 
Operating income (loss) 13,911 (101 ) 13,810 16,777 (614 ) 16,163
% of total revenue 32.5 % -0.8 % 24.7 % 32.2 % -4.7 % 24.8 %
 
Interest expense, net (66 ) - (66 ) (862 ) - (862 )
Other income (expense), net   439         (3 )       436     7,692         (26 )       7,666  
Income (loss) before income tax (expense) benefit 14,284 (104 ) 14,180 23,607 (640 ) 22,967
Income tax (expense) benefit   (5,772 )       39         (5,733 )   (4,668 )       296         (4,372 )
Net income (loss) $ 8,512       $ (65 )     $ 8,447   $ 18,939       $ (344 )     $ 18,595  
 
Basic net income per common share $ 0.38   $ 0.84  
Diluted net income per common share $ 0.37   $ 0.82  
 
Basic weighted average common shares outstanding   22,130,397     22,086,848  
Diluted weighted average common shares outstanding   22,613,517     22,551,862  
 
 
Reconciliation of operating income (loss) to EBITDA (d):
Operating income (loss) $ 13,911 $ (101 ) $ 13,810 $ 16,777 $ (614 ) $ 16,163
Add back: depreciation, amortization and accretion   2,854         1,752         4,606     3,618         1,680         5,298  
EBITDA $ 16,765       $ 1,651       $ 18,416   $ 20,395       $ 1,066       $ 21,461  
% of total revenue 39.2 % 12.5 % 32.9 % 39.2 % 8.1 % 32.9 %
 
Key statistics:
Units in service 1,583 - 1,583 1,779 - 1,779
Average revenue per unit (ARPU) $ 8.45 $ - $ 8.45 $ 8.74 $ - $ 8.74
Bookings $ - $ 15,085 $ 15,085 $ - $ 15,158 $ 15,158
Backlog $ - $ 25,353 $ 25,353 $ - $ 20,478 $ 20,478
 
(a) Slight variations in totals are due to rounding.

(b) Includes consolidated results of operations of USA Mobility Wireless, Inc. ("Wireless") and Amcom Software, Inc. ("Software"). Software operations reflect financial results from March 3, 2011, the acquisition date.
(c) Wireless results reflect eliminations of intercompany revenue and expenses.

(d) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for analytical purposes only.
 
 
USA MOBILITY, INC.
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (a), (b)
(Unaudited and in thousands, except share, per share amounts and ARPU)
                         
 
For the three months ended

6/30/12

3/31/12

12/31/11

9/30/11

6/30/11

3/31/11
 
Revenues:
Paging service $ 40,548 $ 41,875 $ 43,249 $ 45,121 $ 47,319 $ 48,628
Cellular 286 277 414 315 1,199 684
Product and related sales 14,847 14,257 14,847 15,464 15,885 7,143
Other   280         326         421         570         768         880  
Total revenues   55,961         56,735         58,931         61,470         65,171         57,335  
 
Operating expenses:
Cost of products sold 5,216 4,816 5,430 5,951 7,078 2,430
Service, rental and maintenance 13,892 14,303 14,478 15,217 16,187 16,465
Selling and marketing 5,919 5,653 5,851 5,927 6,588 4,924
General and administrative 12,494 13,169 13,610 13,077 13,840 15,568
Severance and restructuring 24 22 1,215 28 17 33
Depreciation, amortization and accretion   4,606         4,515         4,417         5,080         5,298         4,539  
Total operating expenses   42,151         42,478         45,001         45,280         49,008         43,959  
% of total revenues 75.3 % 74.9 % 76.4 % 73.7 % 75.2 % 76.7 %
 
Operating income 13,810 14,257 13,930 16,190 16,163 13,376
% of total revenues 24.7 % 25.1 % 23.6 % 26.3 % 24.8 % 23.3 %
 
Interest expense, net (66 ) (188 ) (404 ) (732 ) (862 ) (256 )
Other income (expense), net   436         (62 )       131         (1 )       7,666         154  
Income before income tax (expense) benefit 14,180 14,007 13,657 15,457 22,967 13,274
Income tax (expense) benefit   (5,733 )       (5,545 )       5,289         (5,010 )       (4,372 )       27,377  
Net income $ 8,447       $ 8,462       $ 18,946       $ 10,447       $ 18,595       $ 40,651  
 
Basic net income per common share $ 0.38       $ 0.38       $ 0.86       $ 0.47       $ 0.84       $ 1.84  
Diluted net income per common share $ 0.37       $ 0.37       $ 0.84       $ 0.46       $ 0.82       $ 1.82  
 
Basic weighted average common shares outstanding   22,130,397         22,106,543         22,094,197         22,090,913         22,086,848         22,063,393  
Diluted weighted average common shares outstanding   22,613,517         22,589,483         22,577,312         22,573,064         22,551,862         22,333,399  
 
Reconciliation of operating income to EBITDA (c):
Operating income $ 13,810 $ 14,257 $ 13,930 $ 16,190 $ 16,163 $ 13,376
Add back: depreciation, amortization and accretion   4,606         4,515         4,417         5,080         5,298         4,539  
EBITDA $ 18,416       $ 18,772       $ 18,347       $ 21,270       $ 21,461       $ 17,915  
% of total revenues 32.9 % 33.1 % 31.1 % 34.6 % 32.9 % 31.2 %
 
Key statistics:
Units in service 1,583 1,617 1,668 1,721 1,779 1,828
Average revenue per unit (ARPU) $ 8.45 $ 8.50 $ 8.51 $ 8.59 $ 8.74 $ 8.72
Bookings $ 15,085 $ 12,417 $ 15,213 $ 14,188 $ 15,158 $ 3,327
Backlog $ 25,353 $ 23,747 $ 23,712 $ 21,313 $ 20,478 $ 18,869
 
(a) Slight variations in totals are due to rounding.
(b) Software operations reflect financial results from March 3, 2011, the acquisition date.

(c) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for analytical purposes only.
 
 
USA MOBILITY, INC.
CONSOLIDATED OPERATING EXPENSES
SUPPLEMENTAL INFORMATION (a), (b)
(Unaudited and in thousands)
                         
 
For the three months ended

6/30/12

3/31/12

12/31/11

9/30/11

6/30/11

3/31/11
 
Cost of products sold
Payroll and related $ 2,324 $ 2,368 $ 2,277 $ 2,537 $ 2,156 $ 677
Cost of sales 2,434 2,037 2,724 3,132 4,263 1,536
Other   458         411       429       282       659         217
Total cost of products sold   5,216         4,816       5,430       5,951       7,078         2,430
 
Service, rental and maintenance
Site rent 4,421 4,791 5,002 5,438 5,962 6,881
Telecommunications 2,346 2,312 2,598 2,732 2,880 3,102
Payroll and related 5,360 5,529 5,279 5,578 5,562 4,769
Stock based compensation 6 6 6 6 6 5
Other   1,759         1,665       1,593       1,463       1,777         1,708
Total service, rental and maintenance   13,892         14,303       14,478       15,217       16,187         16,465
 
Selling and marketing
Payroll and related 3,544 3,559 3,306 3,593 3,567 2,904
Commissions 1,343 1,253 1,539 1,443 1,948 1,414
Stock based compensation 18 16 16 16 16 17
Other   1,014         825       990       875       1,057         589
Total selling and marketing   5,919         5,653       5,851       5,927       6,588         4,924
 
General and administrative
Payroll and related 5,972 6,490 6,268 5,778 6,781 6,072
Stock based compensation (19 ) 415 415 392 432 203
Bad debt 270 234 363 346 (80 ) 416
Facility rent 868 806 942 1,041 1,035 823
Telecommunications 443 412 440 494 490 470
Outside services 2,458 2,447 2,079 2,496 2,533 5,228
Taxes, licenses and permits 1,426 1,501 1,445 1,327 2,190 1,332
Other   1,076         864       1,658       1,203       459         1,024
Total general and administrative   12,494         13,169       13,610       13,077       13,840         15,568
 
Severance and restructuring 24 22 1,215 28 17 33
Depreciation, amortization and accretion 4,606 4,515 4,417 5,080 5,298 4,539
                               
Operating expenses $ 42,151       $ 42,478     $ 45,001     $ 45,280     $ 49,008       $ 43,959
 
Capital expenditures $ 2,888 $ 1,551 $ 2,818 $ 1,779 $ 1,854 $ 1,501
 
(a) Slight variations in totals are due to rounding.
(b) Software operations have been included from March 3, 2011, the acquisition date.
 
 
USA MOBILITY, INC. (WIRELESS)
UNITS IN SERVICE ACTIVITY (a)
(Unaudited and in thousands)
                         
 
For the three months ended

6/30/12

3/31/12

12/31/11

9/30/11

6/30/11

3/31/11

Units in service
 
Beginning units in service
Direct one-way 1,423 1,465 1,510 1,559 1,599 1,645
Direct two-way 85       90       93       97       100       106  
Total direct 1,508       1,555       1,603       1,656       1,699       1,751  
Indirect one-way 60 63 68 71 75 68
Indirect two-way 49       50       50       52       54       70  
Total indirect 109       113       118       123       129       138  
Total beginning units in service 1,617       1,668       1,721       1,779       1,828       1,889  
 
Gross placements
Direct one-way 49 41 39 50 56 47
Direct two-way 4       3       4       5       5       3  
Total direct 53       44       43       55       61       50  
Indirect one-way 2 1 2 3 3 1
Indirect two-way -       -       -       -       2       -  
Total indirect 2       1       2       3       5       1  
Total gross placements 55       45       45       58       66       51  
 
Gross disconnects
Direct one-way (77 ) (83 ) (84 ) (99 ) (94 ) (93 )
Direct two-way (7 )     (8 )     (7 )     (9 )     (10 )     (9 )
Total direct (84 )     (91 )     (91 )     (108 )     (104 )     (102 )
Indirect one-way (4 ) (4 ) (7 ) (6 ) (10 ) 6
Indirect two-way (1 )     (1 )     -       (2 )     (1 )     (16 )
Total indirect (5 )     (5 )     (7 )     (8 )     (11 )     (10 )
Total gross disconnects (89 )     (96 )     (98 )     (116 )     (115 )     (112 )
 
Net (loss)/gain
Direct one-way (28 ) (42 ) (45 ) (49 ) (38 ) (46 )
Direct two-way (3 )     (5 )     (3 )     (4 )     (5 )     (6 )
Total direct (31 )     (47 )     (48 )     (53 )     (43 )     (52 )
Indirect one-way (2 ) (3 ) (5 ) (3 ) (7 ) 7
Indirect two-way (1 )     (1 )     -       (1 )     1       (16 )
Total indirect (3 )     (4 )     (5 )     (4 )     (6 )     (9 )
Total net change (34 )     (51 )     (53 )     (58 )     (49 )     (60 )
 
Ending units in service
Direct one-way 1,395 1,423 1,465 1,510 1,559 1,599
Direct two-way 82       85       90       93       97       100  
Total direct 1,477       1,508       1,555       1,603       1,656       1,699  
Indirect one-way 58 60 63 68 71 75
Indirect two-way 48       49       50       50       52       54  
Total indirect 106       109       113       118       123       129  
Total ending units in service 1,583       1,617       1,668       1,721       1,779       1,828  
 
(a) Slight variations in totals are due to rounding.
 
 
USA MOBILITY, INC. (WIRELESS)
AVERAGE REVENUE PER UNIT (ARPU) AND CHURN (a)
(Unaudited)
                         
 
For the three months ended

6/30/12

3/31/12

12/31/11

9/30/11

6/30/11

3/31/11
 

ARPU
Direct one-way $ 7.89 $ 7.91 $ 7.90 $ 7.97 $ 8.10 $ 8.05
Direct two-way   20.88         21.08         21.27         21.60         22.05         22.23  
Total direct 8.62 8.67 8.68 8.77 8.92 8.89
 
Indirect one-way 7.48 7.61 7.49 7.28 7.57 8.44
Indirect two-way   4.19         4.33         4.43         4.77         4.77         4.31  
Total indirect 5.97 6.14 6.16 6.22 6.40 6.49
 
Total one-way 7.88 7.90 7.89 7.94 8.08 8.07
Total two-way   14.69         15.00         15.29         15.71         16.04         15.41  
Total paging ARPU $ 8.45       $ 8.50       $ 8.51       $ 8.59       $ 8.74       $ 8.72  
 
 
 

Gross disconnect rate (b)
Direct one-way -5.4 % -5.7 % -5.6 % -6.4 % -6.0 % -5.7 %
Direct two-way   -8.5 %       -8.3 %       -7.7 %       -9.5 %       -9.3 %       -7.5 %
Total direct -5.6 % -5.8 % -5.7 % -6.5 % -6.2 % -5.8 %
 
Indirect one-way -6.6 % -7.0 % -9.8 % -8.1 % -8.1 % 11.9 %
Indirect two-way   -1.8 %       -1.7 %       -1.8 %       -3.1 %       -4.5 %       -26.4 %
Total indirect -4.4 % -4.7 % -6.4 % -6.0 % -6.6 % -8.1 %
 
Total one-way -5.4 % -5.8 % -5.8 % -6.4 % -6.1 % -5.0 %
Total two-way   -6.0 %       -5.9 %       -5.6 %       -7.3 %       -7.6 %       -15.2 %
Total paging gross disconnect rate   -5.5 %       -5.8 %       -5.7 %       -6.5 %       -6.2 %       -6.0 %
 
 
 

Net (loss)/gain rate (c)
Direct one-way -1.9 % -2.9 % -3.0 % -3.2 % -2.5 % -2.9 %
Direct two-way   -3.9 %       -4.9 %       -3.3 %       -4.1 %       -3.1 %       -3.6 %
Total direct -2.0 % -3.0 % -3.0 % -3.2 % -2.6 % -3.0 %
 
Indirect one-way -4.9 % -5.4 % -7.4 % -4.5 % -5.3 % 14.6 %
Indirect two-way   -1.2 %       -0.9 %       -1.0 %       -2.3 %       -3.0 %       -25.8 %
Total indirect -3.2 % -3.4 % -4.7 % -3.6 % -4.3 % -6.6 %
 
Total one-way -2.0 % -3.0 % -3.2 % -3.2 % -2.6 % -2.2 %
Total two-way   -2.9 %       -3.5 %       -2.5 %       -3.5 %       -3.1 %       -12.7 %
Total paging net loss rate   -2.1 %       -3.0 %       -3.1 %       -3.3 %       -2.7 %       -3.2 %
 
(a) Slight variations in totals are due to rounding.
(b) Gross disconnect rate is current period disconnected units divided by prior period ending units in service.
(c) Net (loss)/gain rate is net current period placements and disconnected units in service divided by prior periodending units in service.
 
 
USA MOBILITY, INC. (WIRELESS)
SUPPLEMENTAL INFORMATION BY MARKET SEGMENT (a)
(Unaudited)
                         
 
For the three months ended

6/30/12

3/31/12

12/31/11

9/30/11

6/30/11

3/31/11
 
Gross placement rate (b)
Healthcare 4.3 % 3.3 % 3.0 % 3.9 % 4.5 % 3.3 %
Government 1.8 % 1.3 % 1.6 % 2.6 % 2.1 % 1.9 %
Large enterprise 1.9 % 2.4 % 2.1 % 2.1 % 2.1 % 2.3 %
Other 2.0 %     2.2 %     2.8 %     1.9 %     2.0 %     2.5 %
Total direct 3.5 % 2.8 % 2.7 % 3.3 % 3.6 % 2.9 %
Total indirect 1.2 %     1.3 %     1.7 %     2.4 %     2.3 %     1.6 %
Total 3.4 %     2.7 %     2.6 %     3.3 %     3.5 %     2.8 %
 
Gross disconnect rate (b)
Healthcare -4.5 % -4.7 % -4.9 % -5.7 % -5.0 % -4.7 %
Government -7.0 % -7.7 % -7.4 % -8.3 % -8.7 % -7.6 %
Large enterprise -8.0 % -7.7 % -5.7 % -7.0 % -7.1 % -6.2 %
Other -8.7 %     -9.2 %     -8.7 %     -8.9 %     -9.0 %     -9.2 %
Total direct -5.6 % -5.8 % -5.7 % -6.5 % -6.2 % -5.8 %
Total indirect -4.4 %     -4.7 %     -6.4 %     -6.0 %     -6.6 %     -8.1 %
Total -5.5 %     -5.8 %     -5.7 %     -6.5 %     -6.2 %     -6.0 %
 
Net loss rate (b)
Healthcare -0.2 % -1.4 % -1.9 % -1.8 % -0.5 % -1.4 %
Government -5.2 % -6.4 % -5.8 % -5.7 % -6.6 % -5.7 %
Large enterprise -6.1 % -5.3 % -3.6 % -4.9 % -5.0 % -3.9 %
Other -6.8 %     -7.1 %     -5.9 %     -7.0 %     -6.9 %     -6.8 %
Total direct -2.0 % -3.0 % -3.0 % -3.2 % -2.6 % -3.0 %
Total indirect -3.2 %     -3.4 %     -4.7 %     -3.6 %     -4.3 %     -6.6 %
Total -2.1 %     -3.0 %     -3.1 %     -3.3 %     -2.7 %     -3.2 %
 
End of period units in service % of total (b)
Healthcare 64.9 % 63.6 % 62.6 % 61.7 % 60.9 % 59.5 %
Government 11.1 % 11.5 % 11.9 % 12.3 % 12.6 % 13.1 %
Large enterprise 8.9 % 9.3 % 9.5 % 9.6 % 9.8 % 10.0 %
Other 8.4 %     8.8 %     9.2 %     9.5 %     9.7 %     10.3 %
Total direct 93.3 % 93.2 % 93.2 % 93.1 % 93.0 % 92.9 %
Total indirect 6.7 %     6.8 %     6.8 %     6.9 %     7.0 %     7.1 %
Total 100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
 
(a) Slight variations in totals are due to rounding.

(b) Changes in the classification of units in service are reflected in the quarter when such changes are identified. Such changes are then appropriately reflected in calculating the gross placement, gross disconnect and net loss rates.
 
 
USA MOBILITY, INC. (WIRELESS)
SUPPLEMENTAL INFORMATION - DIRECT UNITS IN SERVICE AND
CELLULAR ACTIVATIONS (a)
(Unaudited)
                         
 
For the three months ended

6/30/12

3/31/12

12/31/11

9/30/11

6/30/11

3/31/11

 
Account size ending units in service (000's)
1 to 3 units 58 61 65 69 74 79
4 to 10 units 35 37 40 42 45 48
11 to 50 units 82 86 92 99 106 114
51 to 100 units 52 54 56 61 68 72
101 to 1,000 units 356 373 380 399 411 424
>1,000 units   894         897         922         933         952         962  
Total   1,477         1,508         1,555         1,603         1,656         1,699  
 
End of period units in service % of total direct
1 to 3 units 3.9 % 4.1 % 4.2 % 4.3 % 4.4 % 4.7 %
4 to 10 units 2.3 % 2.3 % 2.6 % 2.6 % 2.7 % 2.8 %
11 to 50 units 5.6 % 5.7 % 5.9 % 6.2 % 6.4 % 6.7 %
51 to 100 units 3.5 % 3.6 % 3.6 % 3.8 % 4.1 % 4.2 %
101 to 1,000 units 24.1 % 24.8 % 24.4 % 24.9 % 24.8 % 25.0 %
>1,000 units   60.6 %       59.5 %       59.3 %       58.2 %       57.6 %       56.6 %
Total   100.0 %       100.0 %       100.0 %       100.0 %       100.0 %       100.0 %
 
Account size net loss rate
1 to 3 units -5.7 % -6.2 % -5.7 % -5.9 % -6.3 % -6.2 %
4 to 10 units -6.2 % -6.2 % -6.6 % -6.4 % -6.8 % -6.2 %
11 to 50 units -4.1 % -7.1 % -7.3 % -6.4 % -6.5 % -7.7 %
51 to 100 units -2.4 % -3.9 % -8.4 % -10.4 % -5.4 % -5.7 %
101 to 1,000 units -4.7 % -1.7 % -4.7 % -2.9 % -3.3 % -2.7 %
>1,000 units   -0.3 %       -2.7 %       -1.1 %       -2.1 %       -1.0 %       -1.8 %
Total   -2.0 %       -3.0 %       -3.0 %       -3.2 %       -2.6 %       -3.0 %
 
Account size ARPU
1 to 3 units $ 15.49 $ 15.49 $ 15.46 $ 15.62 $ 15.74 $ 15.57
4 to 10 units 14.40 14.45 14.37 14.52 14.65 14.53
11 to 50 units 12.24 12.15 12.12 12.30 12.38 12.19
51 to 100 units 10.35 10.52 10.56 10.59 10.68 10.59
101 to 1,000 units 9.01 9.04 8.90 8.90 9.10 9.00
>1,000 units   7.34         7.35         7.37         7.42         7.49         7.47  
Total $ 8.62       $ 8.67       $ 8.68       $ 8.77       $ 8.92       $ 8.89  
 
 
Cellular:
Number of activations   1,052         1,070         1,476         1,236         4,370         2,191  
Revenue from cellular services (000's) $ 286       $ 277       $ 414       $ 315       $ 1,199       $ 684  
 
(a) Slight variations in totals are due to rounding.
 
 
USA MOBILITY, INC.
2012 FINANCIAL GUIDANCE
                         
  (In millions)
  Full Year Adjusted
  Guidance Range Guidance Range
From To From To
Revenues
Wireless $ 156.0 $ 166.0 $ 162.0 $ 170.0
Software   58.0   66.0   53.0   57.0
Combined $ 214.0 $ 232.0 $ 215.0 $ 227.0
 
Operating Expenses (a)
Wireless $ 112.0 $ 108.0 $ 110.0 $ 106.0
Software   51.5   48.5   52.0   48.0
Combined $ 163.5 $ 156.5 $ 162.0 $ 154.0
 
Capital Expenses
Wireless $ 9.0 $ 7.0 $ 9.0 $ 7.0
Software   1.0   0.5   0.5   0.1
Combined $ 10.0 $ 7.5 $ 9.5 $ 7.1
 
(a) Operating expenses exclude depreciation, amortization and accretion.

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