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Section 1: 8-K (8-K)

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): November 8, 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 November 8, 2017, Lumos Networks Corp. (the “Company”) issued a press release announcing its results of operations and financial condition for the three and nine months ended September 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 November 8, 2017

 

2


EXHIBIT INDEX

 

Exhibit No.

  

Description

99.1    Press release issued by Lumos Networks Corp. dated November 8, 2017

 

3


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: November 8, 2017

 

LUMOS NETWORKS CORP.
By:   /s/ Johan G. Broekhuysen
 

Johan G. Broekhuysen

Executive Vice President, Chief Financial Officer and Chief Accounting Officer

 

4

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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 Third Quarter 2017 Results

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

FCC Approval Received for EQT Transaction

Third Quarter 2017 Highlights:

 

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

 

    $55.6 million in total revenue, up over 7% year-over-year

 

    Operating income of over $7.6 million compared to $9.2 million in the prior year period

 

    Net loss of nearly $0.5 million or $0.02 loss per diluted share

 

    $24.4 million in Adjusted EBITDA, up slightly from the prior year period

 

    Total 3Q17 Data revenue of nearly $36 million, up nearly 15% year-over-year

 

    Total combined FTTC and Enterprise revenue of nearly $27.9 million, up nearly 22% year-over-year

 

    Combined FTTC/Enterprise constituted approximately 77% of total Data revenue compared to 73% in the prior year period

 

    Added 59 enterprise lit buildings in the third quarter to reach 2,230 total lit buildings, up over 12% year-over-year

WAYNESBORO, VA – November 8, 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 third quarter of 2017.

Total revenue for the third quarter of 2017 was $55.6 million, up over 7% from the prior year period. The Company generated operating income of $7.6 million for the three months ended September 30, 2017, down from $9.2 million in the prior year period.

Net loss attributable to Lumos Networks Corp. was slightly less than $0.5 million, or $0.02 loss per diluted share, for the third quarter of 2017, compared to net income of approximately $1.0 million, or $0.04 earnings per diluted share, in the prior year period. Total Adjusted EBITDA for the third quarter was $24.4 million, up slightly from the prior year period.

On February 18, 2017, the Company 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. The Company today also announced that FCC approval has been received for the transaction and expects the transaction to close before the end of November 2017.

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 11,028 fiber route miles and 517,244 total fiber strand miles, Lumos Networks connects 1,310 unique Fiber to the Cell sites, 1,684 total FTTC connections, 2,230 on-net buildings and over 3,500 total on-net locations. The Company also connects 44 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 or loss 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, transaction 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 or loss attributable to noncontrolling interests, other (income) expenses, net, equity-based compensation, amortization of actuarial losses, restructuring charges, transaction 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 satisfying closing conditions; 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 the Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 and our Annual Report filed 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)

   September 30, 2017      December 31, 2016  

ASSETS

     

Current Assets

     

Cash and cash equivalents

   $ 43,582      $ 33,575  

Marketable securities

     —          38,081  

Accounts receivable, net

     22,424        22,609  

Other receivables

     559        753  

Income tax receivable

     30        459  

Prepaid expenses and other

     6,804        5,028  
  

 

 

    

 

 

 

Total Current Assets

     73,399        100,505  
  

 

 

    

 

 

 

Securities and investments

     1,643        1,479  

Property, plant and equipment, net

     534,940        536,288  

Other Assets

     

Goodwill

     125,667        100,297  

Other intangibles, net

     18,092        8,503  

Deferred charges and other assets

     5,273        6,300  
  

 

 

    

 

 

 

Total Other Assets

     149,032        115,100  
  

 

 

    

 

 

 

Total Assets

   $ 759,014      $ 753,372  
  

 

 

    

 

 

 

LIABILITIES AND EQUITY

     

Current Liabilities

     

Current portion of long-term debt

   $ 73,825      $ 13,530  

Accounts payable

     7,076        8,607  

Advance billings and customer deposits

     14,275        14,140  

Accrued compensation

     1,665        1,491  

Accrued operating taxes

     5,999        4,518  

Other accrued liabilities

     10,034        5,000  
  

 

 

    

 

 

 

Total Current Liabilities

     112,874        47,286  
  

 

 

    

 

 

 

Long-Term Liabilities

     

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

     388,027        454,885  

Retirement benefits

     15,227        16,029  

Deferred income taxes, net

     93,624        96,988  

Other long-term liabilities

     8,468        2,124  
  

 

 

    

 

 

 

Total Long-term Liabilities

     505,346        570,026  
  

 

 

    

 

 

 

Stockholders’ Equity

     139,869        135,174  
  

 

 

    

 

 

 

Noncontrolling Interests

     925        886  
  

 

 

    

 

 

 

Total Equity

     140,794        136,060  
  

 

 

    

 

 

 

Total Liabilities and Equity

   $ 759,014      $ 753,372  
  

 

 

    

 

 

 


Lumos Networks Corp.

Condensed Consolidated Statements of Operations

 

     Three months ended September 30,     Nine months ended September 30,  

(In thousands, except per share amounts)

   2017     2016     2017     2016  

Operating Revenues

   $ 55,610     $ 51,771     $ 166,892     $ 155,013  

Operating Expenses

        

Cost of revenue, exclusive of depreciation and amortization

     10,042       9,657       30,978       29,948  

Selling, general and administrative, exclusive of depreciation and amortization1

     23,369       20,505       76,394       64,056  

Depreciation and amortization

     14,456       12,739       43,640       37,028  

Accretion of asset retirement obligations

     27       23       76       91  

Restructuring charges

     —         (384     34       1,823  

Change in fair value of contingent consideration obligations

     100       —         700       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Operating Expenses

     47,994       42,540       151,822       132,946  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income

     7,616       9,231       15,070       22,067  

Other Income (Expenses)

        

Interest expense

     (7,771     (7,164     (22,756     (21,165

Other income, net

     8       48       647       320  
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) Income Before Income Taxes

     (147     2,115       (7,039     1,222  

Income Tax Expense (Benefit)

     335       1,046       (1,838     1,712  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (Loss) Income

     (482     1,069       (5,201     (490

Net Loss (Income) Attributable to Noncontrolling Interests

     29       (46     (39     (137
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (Loss) Income Attributable to Lumos Networks Corp.

   $ (453   $ 1,023     $ (5,240   $ (627
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic and diluted (loss) earnings per share

   $ (0.02   $ 0.04     $ (0.23   $ (0.03

 

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 $1.7 million for the three months ended September 30, 2017 and 2016, respectively, and $9.2 million and $8.5 million for the nine months ended September 30, 2017 and 2016, respectively. Also includes $0.7 million and $4.1 million of transaction related charges for the three and nine months ended September 30, 2017, respectively.


Lumos Networks Corp.

Condensed Consolidated Statements of Cash Flows

 

     Nine Months Ended September 30,  

(In thousands)

   2017     2016  

Cash Flows from Operating Activities:

    

Net Loss

   $ (5,201   $ (490

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

    

Depreciation

     40,099       35,097  

Amortization

     3,541       1,931  

Accretion of asset retirement obligations

     76       91  

Change in fair value of contingent consideration obligations

     700       —    

Deferred income taxes

     (1,838     1,374  

Equity-based compensation expense

     9,152       8,477  

Amortization of debt issuance costs

     3,586       3,345  

Retirement benefits, net of cash contributions and distributions

     175       340  

Other

     347       649  

Changes in operating assets and liabilities, net

     3,696       (5,027
  

 

 

   

 

 

 

Net Cash Provided by Operating Activities

     54,333       45,787  
  

 

 

   

 

 

 

Cash Flows from Investing Activities:

    

Purchases of property, plant and equipment

     (36,947     (65,280

Acquisition of Clarity Communications, LLC, net of cash acquired

     (9,961     —    

Acquisition of DC74, LLC, net of cash acquired

     (23,528     —    

Purchases of available-for-sale marketable securities

     (4,000     (57,142

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

     42,096       107,075  
  

 

 

   

 

 

 

Net Cash Used in Investing Activities

     (32,340     (15,347
  

 

 

   

 

 

 

Cash Flows from Financing Activities:

    

Principal payments on senior secured term loans

     (9,774     (6,024

Principal payments under capital lease obligations

     (377     (2,551

Capital distribution to noncontrolling interests

     —         (232

Proceeds from stock option exercises and employee stock purchase plan

     1,057       630  

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

     (2,892     (2,354
  

 

 

   

 

 

 

Net Cash Used in Financing Activities

     (11,986     (10,531
  

 

 

   

 

 

 

Increase in cash and cash equivalents

     10,007       19,909  

Cash and cash equivalents:

    

Beginning of Period

     33,575       13,267  
  

 

 

   

 

 

 

End of Period

   $ 43,582     $ 33,176  
  

 

 

   

 

 

 


Lumos Networks Corp.

Operating Results, Customer and Network Statistics

 

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

Revenue, Gross Margin, Contribution Margin and Adjusted EBITDA

 

Revenue

             

Enterprise Data

  $ 18,111     $ 17,604     $ 16,473     $ 13,911     $ 13,549     $ 52,188     $ 38,428  

Transport

    8,135       8,221       8,454       8,106       8,499       24,810       26,500  

FTTC

    9,752       9,709       9,660       9,629       9,325       29,121       27,030  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Data

    35,998       35,534       34,587       31,646       31,373       106,119       91,958  

Residential and Small Business

    14,632       15,490       15,205       15,488       15,863       45,327       47,840  

RLEC Access

    4,980       5,342       5,124       4,752       4,535       15,446       15,215  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenue

  $ 55,610     $ 56,366     $ 54,916     $ 51,886     $ 51,771     $ 166,892     $ 155,013  

Gross Margin

             

Data

    84.5     84.2     84.2     86.6     85.5     84.3     85.1

Residential and Small Business

    69.4     68.5     67.3     69.1     67.7     68.4     66.0

Contribution Margin1

             

Data

  $ 27,982     $ 27,586     $ 26,968     $ 25,517     $ 24,822     $ 82,536     $ 72,689  

Residential and Small Business

    9,061       9,466       9,128       9,554       9,516       27,655       28,052  

RLEC Access

    4,825       5,179       4,970       4,591       4,360       14,974       14,723  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Contribution Margin

  $ 41,868     $ 42,231     $ 41,066     $ 39,662     $ 38,698     $ 125,165     $ 115,464  

Contribution Margin Ratio1

             

Data

    77.7     77.6     78.0     80.6     79.1     77.8     79.0

Residential and Small Business

    61.9     61.1     60.0     61.7     60.0     61.0     58.6

RLEC Access

    96.9     96.9     97.0     96.6     96.1     96.9     96.8

Total Contribution Margin Ratio

    75.3     74.9     74.8     76.4     74.7     75.0     74.5

Adjusted EBITDA1

             

Data

  $ 14,913     $ 15,105     $ 14,307     $ 14,311     $ 14,567     $ 44,325     $ 41,707  

Residential and Small Business

    5,150       5,660       5,121       5,506       5,723       15,931       16,211  

RLEC Access

    4,309       4,707       4,463       4,122       3,970       13,479       13,233  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Adjusted EBITDA

  $ 24,372     $ 25,472     $ 23,891     $ 23,939     $ 24,260     $ 73,735     $ 71,151  

Adjusted EBITDA Margin1

             

Data

    41.4     42.5     41.4     45.2     46.4     41.8     45.4

Residential and Small Business

    35.2     36.5     33.7     35.6     36.1     35.1     33.9

RLEC Access

    86.5     88.1     87.1     86.7     87.5     87.3     87.0

Total Adjusted EBITDA Margin

    43.8     45.2     43.5     46.1     46.9     44.2     45.9

Capital Expenditures

  $ 12,750     $ 11,100     $ 13,097     $ 18,747     $ 20,089     $ 36,947     $ 65,280  

Adjusted EBITDA less Capital Expenditures

  $ 11,622     $ 14,372     $ 10,794     $ 5,192     $ 4,171     $ 36,788     $ 5,871  


Lumos Networks Corp.

Operating Results, Customer and Network Statistics (continued)

 

 

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

Fiber Network Statistics

              

Fiber Route-Miles

     11,028        10,983        10,907        10,112        9,204  

Fiber Miles2

     517,244        515,362        503,616        491,276        475,507  

Fiber Markets

     26        26        26        25        24  

FTTC Unique Towers

     1,310        1,307        1,306        1,304        1,297  

FTTC Total Connections

     1,684        1,672        1,663        1,659        1,642  

On-Network Buildings

     2,230        2,171        2,125        2,031        1,984  

Data Centers3

     44        43        43        36        36  

Mobile Switching Centers

     16        16        15        15        14  

R&SB Statistics

              

Competitive Voice Connections5

     58,089        61,186        62,972        65,285        68,084  

Video Subscribers

     5,454        5,601        5,723        5,851        5,841  

Fiber-to-the-Premise Broadband Connections

     9,485        9,415        9,330        8,972        8,307  

Premises Passed by Fiber4

     20,171        20,119        19,983        19,783        19,591  

RLEC Access Lines5

     21,501        22,071        22,483        22,991        23,381  

 

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 September 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 September 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 (Loss) Income Attributable to Lumos Networks Corp. to Contribution Margin

 

(Dollars in thousands)

   2017     2016  

For The Three Months Ended September 30,

    

Net (Loss) Income Attributable to Lumos Networks Corp.

   $ (453   $ 1,023  

Net (Loss) Income Attributable to Noncontrolling Interests

     (29     46  
  

 

 

   

 

 

 

Net (Loss) Income

     (482     1,069  

Income tax expense

     335       1,046  

Interest expense

     7,771       7,164  

Other income, net

     (8     (48
  

 

 

   

 

 

 

Operating income

     7,616       9,231  

Depreciation and amortization and accretion of asset retirement obligations

     14,483       12,762  

Restructuring charges

     —         (384

Change in fair value of contingent consideration obligations

     100       —    

Indirect operating costs

     10,239       9,121  

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

     9,430       7,968  
  

 

 

   

 

 

 

Contribution Margin

   $ 41,868     $ 38,698  
  

 

 

   

 

 

 

Contribution Margin Ratio

     75.3     74.7

For The Nine Months Ended September 30,

    

Net Loss Attributable to Lumos Networks Corp.

   $ (5,240   $ (627

Net Income Attributable to Noncontrolling Interests

     39       137  
  

 

 

   

 

 

 

Net Loss

     (5,201     (490

Income tax (benefit) expense

     (1,838     1,712  

Interest expense

     22,756       21,165  

Other income, net

     (647     (320
  

 

 

   

 

 

 

Operating Income

     15,070       22,067  

Depreciation and amortization and accretion of asset retirement obligations

     43,716       37,119  

Restructuring charges

     34       1,823  

Change in fair value of contingent consideration obligations

     700       —    

Indirect operating costs

     31,184       26,657  

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

     34,461       27,798  
  

 

 

   

 

 

 

Contribution Margin

   $ 125,165     $ 115,464  
  

 

 

   

 

 

 

Contribution Margin Ratio

     75.0     74.5

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

    

(Dollars in thousands)

   2017     2016  

For The Three Months Ended September 30,

    

Net (Loss) Income Attributable to Lumos Networks Corp.

   $ (453   $ 1,023  

Net (Loss) Income Attributable to Noncontrolling Interests

     (29     46  
  

 

 

   

 

 

 

Net (Loss) Income

     (482     1,069  

Income tax expense

     335       1,046  

Interest expense

     7,771       7,164  

Other income, net

     (8     (48
  

 

 

   

 

 

 

Operating income

     7,616       9,231  

Depreciation and amortization and accretion of asset retirement obligations

     14,483       12,762  

Amortization of actuarial losses

     326       338  

Equity-based compensation

     1,156       1,661  

Restructuring charges

     —         (384

Transaction related charges

     691       652  

Change in fair value of contingent consideration obligations

     100       —    
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 24,372     $ 24,260  
  

 

 

   

 

 

 


Lumos Networks Corp.

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

 

(Dollars in thousands)

   2017     2016  

Adjusted EBITDA Margin

     43.8     46.9

For The Nine Months Ended September 30,

    

Net Loss Attributable to Lumos Networks Corp.

   $ (5,240   $ (627

Net Income Attributable to Noncontrolling Interests

     39       137  
  

 

 

   

 

 

 

Net Loss

     (5,201     (490

Income tax (benefit) expense

     (1,838     1,712  

Interest expense

     22,756       21,165  

Other income, net

     (647     (320
  

 

 

   

 

 

 

Operating Income

     15,070       22,067  

Depreciation and amortization and accretion of asset retirement obligations

     43,716       37,119  

Amortization of actuarial losses

     977       1,013  

Equity-based compensation

     9,152       8,477  

Restructuring charges

     34       1,823  

Transaction related charges

     4,086       652  

Change in fair value of contingent consideration obligations

     700       —    
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 73,735     $ 71,151  
  

 

 

   

 

 

 

Adjusted EBITDA Margin

     44.2     45.9
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