NTS Announces Third Quarter Results; Fiber Business Grows 28.2%

NTS, Inc. (NYSE MKT:NTS)(TASE:NTS) (“NTS” or the “Company”) announces results for the three and nine months ended September 30, 2013.

Revenues

Revenues from the Company’s Fiber-To-The-Premises (“FTTP”) business grew 28.2% to $6.1 million in the third quarter ended September 30, 2013, as compared to $4.8 million for the same period in 2012. FTTP revenues represented 41.2% of consolidated revenues for the third quarter of 2013, as compared to 31.9% of consolidated revenues for the third quarter of 2012.

Consolidated revenues for the quarter ended September 30, 2013 were $14.8 million, down slightly when compared to consolidated revenues of $14.9 million in the quarter ended September 30, 2012.

For the first nine months of 2013, revenues from the Company’s FTTP business grew 28.1% to $17.1 million from $13.3 million in the first nine months of 2012. Consolidated revenues for the nine months ended September 30, 2013 were $44.9 million, essentially flat as compared to consolidated revenues for the nine months ended September 30, 2012.

Customer Expansion

The Company’s total number of FTTP customers as of September 30, 2013 was 11,409, a 25% increase compared to 9,104 FTTP customers as of September 30, 2012. The increase in the Company’s customer base is a result of its expansion into additional communities and increased penetration.

Average Revenue Per User for all of the Company’s fiber markets is approximately $402 per month for business customers and approximately $100 per month for residential customers.

The FTTP network build out is primarily financed by $99.9 million in funds from the Federal Broadband Stimulus Program, of which 45.9% is in the form of grants and 54.1% is in the form of low cost long-term loans.

New Market Progress

During the third quarter of 2013, NTS began connecting customers in Ponchatoula, Louisiana as it continued to make progress on the construction of its FTTP network in southern Louisiana. Upon completion of the Louisiana fiber build out, in addition to Ponchatoula, the network is expected to include residential and business customers in the communities of Hammond, Natalbany, Tickfaw, Independence and Amite, adding approximately 11,500 FTTP passings. Additionally, NTS continued its sales and marketing efforts in Abilene, Texas where the Company has established a “metro build” targeting more than 1,000 business customers.

Adjusted EBITDAS

During the second quarter the Company provided a computation of Adjusted EBITDAS that excludes the effects of a) the write-off of $519,435 of assets acquired during various acquisitions in which management had determined they would not be able to obtain successful resolution, and b) a significantly higher than usual bad debt expense of $1,028,538. The Company believes that analysts and investors will want to understand the effect of the bad debt expense and the write-off on this non-GAAP measure; hence the Company provides the computation for clarity and ease-of-use.

EBITDAS for the third quarter of 2013 was $3.7 million, a 20.3% increase over EBITDAS of $3.1 million in the same quarter last year. EBITDAS margin in the quarter ended September 30, 2013 was 25.1% compared to EBITDAS margin of 20.7% for the quarter ended September 30, 2012. This is mainly attributable to the increase in higher margin FTTP revenues.

For the nine months ended September 30, 2013 the Company reported Adjusted EBITDAS of $10.8 million, an increase of 24.7% compared to EBITDAS of $8.6 million in the first nine months of 2012. Adjusted EBITDAS margin for the first nine months of 2013 was 24% compared to EBITDAS margin of 19.3% in the same prior year period.

Net Income

For the quarter ended September 30, 2013, the Company reported a net loss of $328 thousand or a loss of $0.01 per basic and diluted share, assuming 41,571,167 shares outstanding compared to a net loss of $32 thousand or less than $0.01 per basic and diluted share, assuming 41,186,596 shares outstanding for the quarter ended September 30, 2012.

For the quarter ended September 30, 2013, NTS recorded a net financing expense of $1.9 million compared to a net financing expense of $1.3 million for the quarter ended September 30, 2012. The increase in the financial expenses was related to increased debt incurred to finance the Company’s FTTP expansion into new markets and the valuation of the U.S. Dollar to the New Israeli Shekel.

For the nine months ended September 30, 2013, NTS reported a net loss of $1.1 million or a loss of $0.03 per basic and diluted share, assuming 41,316,192 shares outstanding compared to a net loss of $297 thousand or $0.01 per basic and diluted share, assuming 41,186,596 shares outstanding for the nine months ended September 30, 2012.

Mr. Guy Nissenson, Chairman, President and CEO of NTS commented, “Subsequent to the close of the third quarter we announced that we had entered into a definitive merger agreement with affiliates of private equity firm Tower Three Partners. This is good news for the Company, our shareholders and our customers and is a testament to the hard work of all of our employees during the past five years as we’ve established our fiber network in select markets in Texas and Louisiana.”

About NTS

NTS is a provider of high speed broadband services, including internet access, digital cable TV programming and local and long distance telephone service to residential and business customers in northern Texas and southeastern Louisiana. NTS' Fiber-To-The-Premise (FTTP) network provides one of the fastest internet connections available. For the Company's website, please visit: www.ntscom.com.

In addition to disclosing financial measures prepared in accordance with Accounting Principles Generally Accepted in the US (GAAP), this press release and the accompanying tables contain the following non-GAAP financial measures: non-GAAP EBITDAS (non-GAAP earnings before interest, taxes, depreciation, amortization and stock-based compensation, other expenses, acquisition costs and non-recurring loss) and adjusted EBITDAS. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

There are a number of limitations related to the use of non-GAAP EBITDAS and adjusted EBITDAS. First, these non-GAAP financial measures exclude depreciation and amortization expenses that are recurring and significant non-recurring expenses. Depreciation and amortization have been, and will continue to be for the foreseeable future, a significant recurring expense with an impact upon our company notwithstanding the lack of immediate impact upon cash. Second, there is no assurance the components of the costs that we exclude in our calculation of non-GAAP operating loss do not differ from the components that our peer companies exclude when they report their results of operations. Third, there is no assurance we will avoid further non-recurring costs associated with other balance sheet items. Our management compensates for these limitations by providing specific reconciliation of GAAP amounts to these non-GAAP financial EBITDAS and evaluating these non-GAAP financial measures together with their most directly comparable financial measures calculated in accordance with GAAP. Readers should note the chart at the end of this release which sets forth how we calculate the non-GAAP EBITDAS and adjusted EBITDAS.

This press release contains forward-looking statements. The words or phrases "would be," "will allow," "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements." NTS' financial and operational results reflected above should not be construed by any means as representative of the current or future value of its common stock. All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the Company's plans, beliefs, estimates and expectations. These statements are based on current estimates and projections, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include issues related to: rapidly changing technology and evolving standards in the industries in which the Company and its subsidiaries operate; the ability to obtain sufficient funding to continue operations, maintain adequate cash flow, profitably exploit new business, license and sign new agreements; the unpredictable nature of consumer preferences; and other factors set forth in the Company's most recently filed annual report and registration statement. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risks and uncertainties described in other documents that the Company files from time to time with the U.S. Securities and Exchange Commission.

NTS, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
   
Three months ended Nine months ended
September 30, September 30,
2013   2012 2013   2012
Revenues
Services on Fiber-To-The-Premise network $ 6,095,658 $ 4,755,779 $ 17,094,428 $ 13,341,551
Leased local loop services and other   8,710,044   10,170,267   27,833,694   31,592,883
Total Revenues   14,805,702   14,926,046   44,928,122   44,934,434
 
Expenses

Cost of services (excluding depreciation andamortization shown below)
6,085,114 6,734,583 19,456,379 20,677,513
Selling, general and administrative 5,121,467 5,165,190 16,509,564 15,738,473
Depreciation and amortization 2,078,396 1,813,006 5,426,366 4,799,447
Financing expenses, net 1,930,333 1,324,054 4,793,306 3,884,990
Other expenses, net   205,031   69,701   638,704   447,577
Total Expenses   15,420,341   15,106,534   46,824,319   45,548,000
 
Loss before taxes (614,639 ) (180,488 ) (1,896,197 ) (613,566 )
 
Income tax benefit   286,367   148,913   770,175   315,735
 
Net loss $ (328,272 ) $ (31,575 ) $ (1,126,022 ) $ (297,831 )
 
Basic and diluted loss per share $ (0.01 ) $ (0.00 )* $ (0.03 ) $ (0.01 )
 

Basic and diluted weighted average number of sharesoutstanding
  41,571,167   41,186,596   41,316,192   41,186,596
 

* Represents amount less than $0.01.

Reconciliation of EBITDAS and Adjusted EBITDAS to Net loss applicable to

common stockholders as it is presented on the Condensed Consolidated

Statements of Operations for NTS, Inc.
   
Three months ended Nine months ended
September 30, September 30,
2013   2012 2013   2012
 
 
Net loss $ (328,272 ) $ (31,575 ) $ (1,126,022 ) $ (297,831 )
 
 
Write-off of assets acquired during various acquisitions - - 519,435 -
Extraordinary bad debt expense - - 1,028,538 -
Depreciation and amortization 2,078,396 1,813,006 5,426,366 4,799,447

Compensation in connection with the issuance of warrantsand options
118,824 64,389 291,126 143,535
Financing expenses , net 1,930,333 1,324,054 4,793,306 3,884,990
Other expenses , net 205,031 69,701 638,704 447,577
Income tax benefit   (286,367 )   (148,913 )   (770,175 )   (315,735 )
 
EBITDAS (Adjusted) $ 3,717,945 $ 3,090,662 $ 10,801,278 $ 8,661,983

Copyright Business Wire 2010

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