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Section 1: 8-K (FORM 8-K)

Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 7, 2017

 

 

Lumos Networks Corp.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   001-35180   80-0697274

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

One Lumos Plaza, P.O. Box 1068, Waynesboro, Virginia 22980

(Address of Principal Executive Offices) (Zip Code)

(540) 946-2000

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On August 7, 2017, Lumos Networks Corp. (the “Company”) issued a press release announcing its results of operations and financial condition for the three and six months ended June 30, 2017. A copy of the press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01 Financial Statements and Exhibits.

 

  (d) Exhibits

 

Exhibit
No.

  

Description

99.1    Press release issued by Lumos Networks Corp. dated August 7, 2017

 

2


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 7, 2017

 

LUMOS NETWORKS CORP.
By:  

/s/ Johan G. Broekhuysen

 

Johan G. Broekhuysen

Executive Vice President, Chief Financial Officer and Chief Accounting Officer

 

3


EXHIBIT INDEX

 

Exhibit
No.

  

Description

99.1    Press release issued by Lumos Networks Corp. dated August 7, 2017

 

4

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

EX-99.1

Exhibit 99.1

 

Contact:    Will Davis
   SVP of Marketing and Investor Relations
   Chief of Staff
   Phone: 917-519-6994
   Email: davisw@lumosnet.com

Lumos Networks Corp. Reports Second Quarter 2017 Results

On a YoY Basis, Total Revenue up over 7%, Data Revenue up nearly 15%

Second Quarter 2017 Highlights:

 

    Year-over-year growth in consolidated revenues and Adjusted EBITDA

 

    $56.4 million in total revenue, up over 7% year-over-year

 

    Operating income of over $9.0 million compared to $9.7 million in the prior year period

 

    Net income of $0.5 million or $0.02 per diluted share

 

    $25.5 million in Adjusted EBITDA, up over 7% from the prior year period

 

    Total 2Q17 Data revenue of $35.5 million, up nearly 15% year-over-year

 

    Total combined FTTC and Enterprise revenue of over $27.3 million, up over 23% year-over-year

 

    Combined FTTC/Enterprise constituted approximately 77% of total Data revenue compared to 71% in the prior year period

 

    Added 46 enterprise lit buildings in the second quarter to reach 2,171 total lit buildings, up 13% year-over-year

WAYNESBORO, VA – August 7, 2017 – Lumos Networks Corp. (“Lumos Networks”, “Lumos” or the “Company”) (Nasdaq: LMOS), a leading fiber-based service provider in the Mid-Atlantic region, today announced its results for the second quarter of 2017.

Total revenue for the second quarter of 2017 was $56.4 million, up over 7% from the prior year period. The Company generated operating income of $9.0 million for the three months ended June 30, 2017, down from $9.7 million in the prior year period.    Net income attributable to Lumos Networks Corp. was $0.5 million, or $0.02 per diluted share, for the second quarter of 2017, compared to net income of approximately $1.2 million, or $0.05 per diluted share in the prior year period. Total Adjusted EBITDA for the second quarter was $25.5 million, up over 7% from the prior year period.

On February 18, 2017, the Company announced that it had entered into a definitive agreement to be acquired by EQT Infrastructure for $18.00 per share in an all-cash transaction, resulting in an enterprise value of approximately $950 million.    Shareholder approval of the transaction was received on May 24, 2017.

The Company is awaiting approvals from one additional state and from the FCC and now expects the transaction to close in the next 90 days.

About Lumos Networks

Lumos Networks is a leading fiber-based service provider in the Mid-Atlantic region serving Carrier, Enterprise and Data Center customers, offering end-to-end connectivity in 26 markets in Virginia, West Virginia, North Carolina, Pennsylvania, Maryland, Ohio and Kentucky. With a fiber network of 10,983 fiber route miles and 515,362 total fiber strand miles, Lumos Networks connects 1,307 unique Fiber to the Cell sites, 1,672 total FTTC connections, 2,171 on-net buildings and approximately 3,500 total on-net locations. The Company also connects 43 total data centers, including five data centers acquired from DC74, two acquired from Clarity Communications and seven company owned co-location facilities. In 2016, Lumos Networks generated over $123 million in Data revenue over our fiber network. Detailed information about Lumos Networks is available at www.lumosnetworks.com.


Non-GAAP Measures

Contribution Margin is net income or loss attributable to Lumos Networks Corp. before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, net income attributable to noncontrolling interests, other (income) expenses, net, restructuring charges, changes in the fair value of contingent consideration obligations, corporate general and administrative expenses, including equity-based compensation, acquisition and merger related charges, and amortization of actuarial gains or losses, and indirect operating expenses. Contribution Margin ratio is calculated as the ratio of Contribution Margin, as defined, to operating revenues.

Adjusted EBITDA is net income or loss attributable to Lumos Networks Corp. before interest, income taxes, depreciation and amortization and accretion of asset retirement obligations, net income attributable to noncontrolling interests, other (income) expenses, net, equity-based compensation, amortization of actuarial losses, restructuring charges, acquisition and merger related charges and changes in fair value of contingent consideration obligations. Adjusted EBITDA margin is calculated as the ratio of Adjusted EBITDA, as defined, to operating revenues.

Contribution Margin, Contribution Margin Ratio, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial performance measures. They 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: the successful closing of the announced EQT Merger, including obtaining the requisite regulatory and governmental approvals and satisfying other closing conditions; the risk that required governmental and regulatory approvals may delay the Merger or result in the imposition of conditions that could cause the parties to abandon the Merger or materially impact the financial benefits of the Merger; the timing to consummate the proposed Merger; any disruption from the proposed Merger making it more difficult to maintain relationships with customers, employees or suppliers; the diversion of management time on Merger-related issues; the Merger may involve unexpected costs, liabilities or delays; the outcome of any legal proceedings related to the Merger, the failure by EQT Infrastructure to obtain the necessary financing arrangement set forth in commitment letters received in connection with the Merger; the impact of our previous acquisitions of Clarity and DC74 on our operations; rapid development and intense competition with resulting pricing pressure in the telecommunications and high speed data transport industry; our ability to grow our data business on an organic or inorganic basis in order to offset expected revenue declines in legacy voice and access products; our ability to obtain new carrier contracts or expand services under existing carrier contracts at competitive pricing levels to offset churn and achieve revenue growth from our carrier businesses; our ability to separate our legacy business on a timely basis; our ability to effectively allocate capital and timely implement network expansion plans necessary to accommodate organic growth initiatives; our ability to complete customer installations in a timely manner; adverse economic conditions; operating and financial restrictions imposed by our senior credit facility and our unsecured debt obligations; our cash and capital requirements; our ability to maintain and enhance our network; 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 and our Annual Report on Form 10-K for the year ended December 31, 2016.


Exhibits:

 

    Condensed Consolidated Balance Sheets

 

    Condensed Consolidated Statements of Operations

 

    Condensed Consolidated Statements of Cash Flows

 

    Summary of Operating Results, Customer and Network Statistics

 

    Reconciliation of Non-GAAP Financial Measures to GAAP Results


Lumos Networks Corp.    

 

Condensed Consolidated Balance Sheets    

 

(In thousands)

   June 30, 2017      December 31, 2016  

ASSETS

     

Current Assets

     

Cash and cash equivalents

   $ 34,769      $ 33,575  

Marketable securities

     4,500        38,081  

Accounts receivable, net

     23,337        22,609  

Other receivables

     366        753  

Income tax receivable

     313        459  

Prepaid expenses and other

     7,471        5,028  
  

 

 

    

 

 

 

Total Current Assets

     70,756        100,505  
  

 

 

    

 

 

 

Securities and investments

     1,585        1,479  

Property, plant and equipment, net

     535,789        536,288  

Other Assets

     

Goodwill

     125,667        100,297  

Other intangibles, net

     19,317        8,503  

Deferred charges and other assets

     5,843        6,300  
  

 

 

    

 

 

 

Total Other Assets

     150,827        115,100  
  

 

 

    

 

 

 

Total Assets

   $ 758,957      $ 753,372  
  

 

 

    

 

 

 

LIABILITIES AND EQUITY

     

Current Liabilities

     

Current portion of long-term debt

   $ 13,521      $ 13,530  

Accounts payable

     7,448        8,607  

Advance billings and customer deposits

     14,524        14,140  

Accrued compensation

     1,482        1,491  

Accrued operating taxes

     5,980        4,518  

Other accrued liabilities

     9,245        5,000  
  

 

 

    

 

 

 

Total Current Liabilities

     52,200        47,286  
  

 

 

    

 

 

 

Long-Term Liabilities

     

Long-term debt, net of unamortized discount and debt issuance costs, excluding current portion

     450,496        454,885  

Retirement benefits

     15,489        16,029  

Deferred income taxes, net

     93,163        96,988  

Other long-term liabilities

     7,529        2,124  
  

 

 

    

 

 

 

Total Long-term Liabilities

     566,677        570,026  
  

 

 

    

 

 

 

Stockholders’ Equity

     139,126        135,174  
  

 

 

    

 

 

 

Noncontrolling Interests

     954        886  
  

 

 

    

 

 

 

Total Equity

     140,080        136,060  
  

 

 

    

 

 

 

Total Liabilities and Equity

   $ 758,957      $ 753,372  
  

 

 

    

 

 

 


Lumos Networks Corp.

 

Condensed Consolidated Statements of Operations

 

 

     Three months ended June 30,     Six months ended June 30,  

(In thousands, except per share amounts)

   2017     2016     2017     2016  

Operating Revenues

   $ 56,366     $ 52,448     $ 111,282     $ 103,242  

Operating Expenses

        

Cost of revenue, exclusive of depreciation and amortization

     10,517       10,079       20,936       20,291  

Selling, general and administrative, exclusive of depreciation and amortization1

     22,357       20,216       53,025       43,551  

Depreciation and amortization

     14,192       12,398       29,184       24,289  

Accretion of asset retirement obligations

     24       34       49       68  

Restructuring charges

     34       —         34       2,207  

Change in fair value of contingent consideration obligations

     200       —         600       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Operating Expenses

     47,324       42,727       103,828       90,406  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income

     9,042       9,721       7,454       12,836  

Other Income (Expenses)

        

Interest expense

     (7,592     (7,012     (14,985     (14,001

Other income, net

     16       98       639       272  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (Loss) Before Income Tax

     1,466       2,807       (6,892     (893

Income Tax Expense (Benefit)

     901       1,527       (2,173     666  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income (Loss)

     565       1,280       (4,719     (1,559

Net Income Attributable to Noncontrolling Interests

     (35     (36     (68     (91
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income (Loss) Attributable to Lumos Networks Corp.

   $ 530     $ 1,244     $ (4,787   $ (1,650
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and Diluted Earnings (Loss) per Common Share Attributable to Lumos Networks Corp. Stockholders:

        

Basic and diluted earnings (loss) per share

   $ 0.02     $ 0.05     $ (0.21   $ (0.07

 

1  Includes equity-based compensation expense related to all of the Company’s share-based awards, annual employee bonuses paid in the form of immediately vested shares and the Company’s 401(k) matching contributions. Equity-based compensation totaled $1.2 million and $1.3 million for the three months ended June 30, 2017 and 2016, respectively, and $8.0 million and $6.8 million for the six months ended June 30, 2017 and 2016, respectively. Also includes $0.5 million and $3.4 million of acquisition and merger related costs for the three and six months ended June 30, 2017, respectively.


Lumos Networks Corp.

 

Condensed Consolidated Statements of Cash Flows

 

 

     Six Months Ended June 30,  

(In thousands)

   2017     2016  

Cash Flows from Operating Activities:

    

Net Loss

   $ (4,719   $ (1,559

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

Depreciation

     26,868       23,001  

Amortization

     2,316       1,288  

Accretion of asset retirement obligations

     49       68  

Change in fair value of contingent consideration obligations

     600       —    

Deferred income taxes

     (2,172     447  

Equity-based compensation expense

     7,996       6,816  

Amortization of debt issuance costs

     2,371       2,212  

Retirement benefits, net of cash contributions and distributions

     111       218  

Other

     208       877  

Changes in operating assets and liabilities, net

     103       (687
  

 

 

   

 

 

 

Net Cash Provided by Operating Activities

     33,731       32,681  
  

 

 

   

 

 

 

Cash Flows from Investing Activities:

    

Purchases of property, plant and equipment

     (24,197     (45,191

Purchase of Clarity

     (9,961     —    

Purchase of DC74

     (23,528     —    

Purchases of available-for-sale marketable securities

     (4,000     (18,344

Proceeds from sale or maturity of available-for-sale marketable securities

     37,596       74,764  
  

 

 

   

 

 

 

Net Cash (Used in) Provided by Investing Activities

     (24,090     11,229  
  

 

 

   

 

 

 

Cash Flows from Financing Activities:

    

Principal payments on senior secured term loans

     (6,517     (4,015

Principal payments under capital lease obligations

     (254     (2,397

Proceeds from stock option exercises and employee stock purchase plan

     1,031       530  

Repurchases of common stock to settle tax withholding obligations on employee stock awards

     (2,707     (2,311
  

 

 

   

 

 

 

Net Cash Used in Financing Activities

     (8,447     (8,193
  

 

 

   

 

 

 

Increase in cash and cash equivalents

     1,194       35,717  

Cash and cash equivalents:

    

Beginning of Year

     33,575       13,267  
  

 

 

   

 

 

 

End of Year

   $ 34,769     $ 48,984  
  

 

 

   

 

 

 


Lumos Networks Corp.

 

Operating Results, Customer and Network Statistics

 

 

(Dollars in thousands)   Three months ended:     Six Months Ended:  
    June 30, 2017     March 31, 2017     December 31, 2016     September 30, 2016     June 30, 2016     June 30, 2017     June 30, 2016  

Revenue, Gross Margin, Contribution Margin and Adjusted EBITDA

             

Revenue

             

Enterprise Data

  $ 17,604     $ 16,473     $ 13,911     $ 13,549     $ 12,878     $ 34,077     $ 24,879  

Transport

    8,221       8,454       8,106       8,499       8,902       16,675       18,001  

FTTC

    9,709       9,660       9,629       9,325       9,176       19,369       17,705  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Data

    35,534       34,587       31,646       31,373       30,956       70,121       60,585  

Residential and Small Business

    15,490       15,205       15,488       15,863       16,149       30,695       31,977  

RLEC Access

    5,342       5,124       4,752       4,535       5,343       10,466       10,680  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenue

  $ 56,366     $ 54,916     $ 51,886     $ 51,771     $ 52,448     $ 111,282     $ 103,242  

Gross Margin

             

Data

    84.2     84.2     86.6     85.5     85.3     84.2     84.9

Residential and Small Business

    68.5     67.3     69.1     67.7     65.8     67.9     65.1

Contribution Margin1

             

Data

  $ 27,586     $ 26,968     $ 25,517     $ 24,822     $ 24,477     $ 54,554     $ 47,867  

Residential and Small Business

    9,466       9,128       9,554       9,516       9,394       18,594       18,536  

RLEC Access

    5,179       4,970       4,591       4,360       5,171       10,149       10,363  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Contribution Margin

  $ 42,231     $ 41,066     $ 39,662     $ 38,698     $ 39,042     $ 83,297     $ 76,766  

Contribution Margin Ratio1

             

Data

    77.6     78.0     80.6     79.1     79.1     77.8     79.0

Residential and Small Business

    61.1     60.0     61.7     60.0     58.2     60.6     58.0

RLEC Access

    96.9     97.0     96.6     96.1     96.8     97.0     97.0

Total Contribution Margin Ratio

    74.9     74.8     76.4     74.7     74.4     74.9     74.4

Adjusted EBITDA1

             

Data

  $ 15,105     $ 14,307     $ 14,311     $ 14,567     $ 13,826     $ 29,412     $ 27,140  

Residential and Small Business

    5,660       5,121       5,506       5,723       5,339       10,781       10,488  

RLEC Access

    4,707       4,463       4,122       3,970       4,611       9,170       9,263  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Adjusted EBITDA

  $ 25,472     $ 23,891     $ 23,939     $ 24,260     $ 23,776     $ 49,363     $ 46,891  

Adjusted EBITDA Margin1

             

Data

    42.5     41.4     45.2     46.4     44.7     41.9     44.8

Residential and Small Business

    36.5     33.7     35.6     36.1     33.1     35.1     32.8

RLEC Access

    88.1     87.1     86.7     87.5     86.3     87.6     86.7

Total Adjusted EBITDA Margin

    45.2     43.5     46.1     46.9     45.3     44.4     45.4

Capital Expenditures

  $ 11,100     $ 13,097     $ 18,747     $ 20,089     $ 23,185     $ 24,197     $ 45,191  

Adjusted EBITDA less Capital Expenditures

  $ 14,372     $ 10,794     $ 5,192     $ 4,171     $ 591     $ 25,166     $ 1,700  


Lumos Networks Corp.    

 

Operating Results, Customer and Network Statistics (continued)    

 

     Three months ended:  
     June 30, 2017      March 31, 2017      December 31, 2016      September 30, 2016      June 30, 2016  

Fiber Network Statistics

              

Fiber Route-Miles

     10,983        10,907        10,112        9,204        8,985  

Fiber Miles2

     515,362        503,616        491,276        475,507        436,451  

Fiber Markets

     26        26        25        24        24  

FTTC Unique Towers

     1,307        1,306        1,304        1,297        1,295  

FTTC Total Connections

     1,672        1,663        1,659        1,642        1,636  

On-Network Buildings

     2,171        2,125        2,031        1,984        1,922  

Data Centers3

     43        43        36        36        36  

Mobile Switching Centers

     16        15        15        14        14  

R&SB Statistics

              

Competitive Voice Connections5

     61,186        62,972        65,285        68,084        69,903  

Video Subscribers

     5,601        5,723        5,851        5,841        5,817  

Fiber-to-the-Premise Broadband Connections

     9,415        9,330        8,972        8,307        7,982  

Premises Passed by Fiber4

     20,119        19,983        19,783        19,591        19,453  

RLEC Access Lines5

     22,071        22,483        22,991        23,381        23,695  

 

1 Contribution Margin, Contribution Margin Ratio, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures. See definitions on page 2 of this earnings release.
2 Fiber miles are calculated as the fiber route miles multiplied by the number of fiber strands within each cable (represents an average of 47 fibers per route as of June 30, 2017).
3 Data centers reported include both commercial and private data centers and Company-owned facilities offering commercial data center services.
4 Includes residential and small business locations passed by fiber and available for service. Approximately 92% of the premises passed by fiber and available for service as of June 30, 2017 were residential.
5 During the fourth quarter of 2016, the Company revised its competitive and RLEC voice connections as a result of enhanced system reporting capabilities. Historical voice connections for prior quarters have been revised to reflect the updated information.

 

Note:     Certain prior period Adjusted EBITDA amounts have been reclassified to conform with the current year presentation.


Lumos Networks Corp.

 

Reconciliation of Net Income (Loss) Attributable to Lumos Networks Corp. to Contribution Margin

 

(Dollars in thousands)

   2017     2016  

For The Three Months Ended June 30,

    

Net Income Attributable to Lumos Networks Corp.

   $ 530     $ 1,244  

Net Income Attributable to Noncontrolling Interests

     35       36  
  

 

 

   

 

 

 

Net Income

     565       1,280  

Income tax expense

     901       1,527  

Interest expense

     7,592       7,012  

Other income, net

     (16     (98
  

 

 

   

 

 

 

Operating income

     9,042       9,721  

Depreciation and amortization and accretion of asset retirement obligations

     14,216       12,432  

Restructuring charges

     34       —    

Change in fair value of contingent consideration obligations

     200       —    

Indirect operating costs

     10,475       8,939  

Corporate general and administrative costs, including equity-based compensation and acquisition and merger related charges

     8,264       7,950  
  

 

 

   

 

 

 

Contribution Margin

   $ 42,231     $ 39,042  
  

 

 

   

 

 

 

Contribution Margin Ratio

     74.9     74.4
  

 

 

   

 

 

 

For The Six Months Ended June 30,

    

Net Loss Attributable to Lumos Networks Corp.

   $ (4,787   $ (1,650

Net Income Attributable to Noncontrolling Interests

     68       91  
  

 

 

   

 

 

 

Net Loss

     (4,719     (1,559

Income tax (benefit) expense

     (2,173     666  

Interest expense

     14,985       14,001  

Other income, net

     (639     (272
  

 

 

   

 

 

 

Operating Income

     7,454       12,836  

Depreciation and amortization and accretion of asset retirement obligations

     29,233       24,357  

Restructuring charges

     34       2,207  

Change in fair value of contingent consideration obligations

     600       —    

Indirect operating costs

     20,945       17,536  

Corporate general and administrative costs, including equity-based compensation and acquisition and merger related charges

     25,031       19,830  
  

 

 

   

 

 

 

Contribution Margin

   $ 83,297     $ 76,766  
  

 

 

   

 

 

 

Contribution Margin Ratio

     74.9     74.4

Reconciliation of Net Income (Loss) Attributable to Lumos Networks Corp. to Adjusted EBITDA

 

 

(Dollars in thousands)

   2017     2016  

For The Three Months Ended June 30,

    

Net Income Attributable to Lumos Networks Corp.

   $ 530     $ 1,244  

Net Income Attributable to Noncontrolling Interests

     35       36  
  

 

 

   

 

 

 

Net Income

     565       1,280  

Income tax expense

     901       1,527  

Interest expense

     7,592       7,012  

Other income, net

     (16     (98
  

 

 

   

 

 

 

Operating income

     9,042       9,721  

Depreciation and amortization and accretion of asset retirement obligations

     14,216       12,432  

Amortization of actuarial losses

     325       337  

Equity-based compensation

     1,202       1,286  

Restructuring charges

     34       —    

Acquisition and merger related charges

     453       —    

Change in fair value of contingent consideration obligations

     200       —    
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 25,472     $ 23,776  
  

 

 

   

 

 

 

Adjusted EBITDA Margin

     45.2     45.3

For The Six Months Ended June 30,

    

Net Loss Attributable to Lumos Networks Corp.

   $ (4,787   $ (1,650

Net Income Attributable to Noncontrolling Interests

     68       91  
  

 

 

   

 

 

 

Net Loss

     (4,719     (1,559

Income tax (benefit) expense

     (2,173     666  

Interest expense

     14,985       14,001  

Other income, net

     (639     (272
  

 

 

   

 

 

 

Operating Income

     7,454       12,836  

Depreciation and amortization and accretion of asset retirement obligations

     29,233       24,357  

Amortization of actuarial losses

     651       675  

Equity-based compensation

     7,996       6,816  

Restructuring charges

     34       2,207  

Acquisition and merger related charges

     3,395       —    

Change in fair value of contingent consideration obligations

     600       —    
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 49,363     $ 46,891  
  

 

 

   

 

 

 

Adjusted EBITDA Margin

     44.4     45.4
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