PRESS RELEASE


 

Media Contact
Will Davis
Senior Vice President of Marketing and Investor Relations
Chief of Staff
(917) 519-6994
davisw@lumosnet.com

 

For immediate release

Wednesday, August 6, 2014
Lumos Networks Corp. Reports Second Quarter 2014 Financial Results
WAYNESBORO, Va. -- (BUSINESS WIRE) -- Lumos Networks Corp. (“Lumos Networks” or the “Company”) (Nasdaq: LMOS), a fiber-based service provider of data, voice and IP-based telecommunication services in the Mid-Atlantic region, today announced financial results for the second quarter of 2014.
 
Total revenue for the second quarter of 2014 was $50.2 million, compared to $52.3 million for the second quarter of 2013 and $50.1 million in the first quarter of 2014. Total Adjusted EBITDA in the second quarter of 2014 was $22.7 million, compared to $24.6 million in the second quarter of 2013 and $22.6 million in the first quarter of 2014.
 
Total Data segment revenue in the second quarter of 2014 was $26.7 million, up over 2% sequentially, and constituted over 53% of total revenue versus 49% in the prior year period. Total Adjusted EBITDA for the Data segment reached $13.4 million in the second quarter of 2014, and Adjusted EBITDA margin for the Data segment was 50.2% in the second quarter, up from 48.7% in the first quarter.
 
Lumos Networks President and CEO Timothy G. Biltz said, “I am satisfied that Lumos Networks delivered results in the second quarter that slightly exceeded our internal targets and maintained its annual 2014 guidance for revenue and Adjusted EBITDA of $200 million and $90 million, respectively. Our FTTC operations continued its strong performance, growing 8.5% sequentially and surpassing $5 million in quarterly revenues. We see a strong pipeline for both FTTC sales and installations for the rest of 2014.”
 
Mr. Biltz continued, “While Transport revenue grew slightly quarter on quarter, we continue to believe Transport revenue will decline in the range of 8-10% in 2014 due to the churn of TDM circuits as carriers groom their networks. Our Enterprise revenue dipped slightly sequentially due to previously disclosed churn events, but our goal is for accelerated growth in 2015 due to the following initiatives: new customer renewal and retention programs, increased reach of our Carrier End User distribution channels, and the connection to more commercial data centers.”
 
“My focus remains on continuing to aggressively invest in the fiber infrastructure and personnel necessary to support long-term fiber contracts in key growth areas like Fiber to the Cell, Data Center Connectivity, Carrier End User and Edge-Out markets like Richmond, Virginia,” Mr. Biltz said. “Our primary mission is building our fiber revenue backlog through 2014 in order to accelerate our Data revenue growth in 2015.”
 
“To that end,” Mr. Biltz finished, “Lumos Networks made significant progress in expanding its fiber network in the second quarter, adding over 80 route miles, substantially completing the build of a critical long-haul route in Virginia between Richmond and Charlottesville, connecting a Peak 10 data center in Richmond, connecting 33 on-net buildings and connecting 40 additional FTTC sites.”
 
Highlights
 
The Company ended the second quarter of 2014 with 673 Fiber to the Cell (“FTTC”) sites connected, up 40 sequentially, which represents a year-over-year increase in total FTTC sites of approximately 45%. Lumos Networks reiterates its guidance of reaching 825 FTTC sites by year end 2014 and reiterates its target of selling 500 to 700 unique and second FTTC circuits during 2014. Lumos Networks maintains its target for 1,500 FTTC sites within the next few years.
Lumos Networks reiterates its target for connected commercial data centers of 20 by year end 2014. During the quarter, Lumos Networks connected to Peak 10 in Richmond, Virginia, its fourteenth connected commercial data center with several more in the short-term pipeline. As Enterprise bandwidth traffic moves increasingly into the Cloud, the Company believes that this segment will constitute an increasingly large percentage of total Enterprise revenue.
The Company added approximately 80 fiber route miles in the second quarter of 2014, all of which were constructed and owned by Lumos Networks, and had a fiber network totaling approximately 7,550 route miles at the end of the quarter. Additionally, the Company added 33 on-net buildings in the quarter to reach 1,420.
Project Ark, an 850-mile MEF certified Carrier Ethernet MPLS/IP network overlay designed primarily for FTTC traffic, which will allow up to 1 terabyte of total bandwidth traffic, is on track for completion in 3Q14. The Company continues to expect to begin migrating fiber bandwidth traffic onto the Ark in 4Q14.
As of the end of the second quarter of 2014, the Company’s 110-mile fiber market in Richmond, Virginia had annualized Enterprise and Transport sales bookings of approximately $4.2 million.
On July 29, 2014, the Board of Directors of Lumos Networks declared a dividend on its common stock in the amount of $0.14 per share to be paid on October 9, 2014 to stockholders of record on September 11, 2014.
Business Outlook
 
For the full year 2014, the Company maintains its financial guidance for revenue of approximately $200 million and Adjusted EBITDA of approximately $90 million.
 
Please see the schedules accompanying this release for additional financial guidance, including reconciliations of non-GAAP measures to GAAP results.
 
Statements made are based on management’s current expectations. These statements are forward-looking and actual results may differ materially. Please see “Special Note from the Company Regarding Forward-Looking Statements.”
 
Conference Call
 
A conference call and simultaneous webcast, hosted by Timothy G. Biltz, CEO, Johan Broekhuysen, Interim CFO, and Will Davis, Vice President of Investor Relations and Chief of Staff, to review these financial and operational results and financial guidance will be held at 9:30 A.M. (ET) on August 7, 2014.
 
The webcast may be accessed via the Internet at http://ir.lumosnetworks.com/ and the live call (“Lumos Networks Second Quarter Earnings Conference Call”) may be accessed with the following numbers:
 
Domestic: 1-877-510-3772
International: 1-412-902-4135
Canada: 1-855-669-9657
 
The conference call will be archived and available for replay through August 28, 2014 and may be accessed with the following numbers:
 
Domestic: 1-877-344-7529
International: 1-412-317-0088
Canada: 1-855-669-9658
Replay pass codes: Conference ID: 10050045
 
The webcast will also be archived and the replay may be accessed at http://ir.lumosnetworks.com/.

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 44 markets in Virginia, West Virginia, North Carolina, Pennsylvania, Maryland, Ohio, Kentucky, South Carolina, and Georgia. With a fiber network of more than 20,000 fiber route miles and over 1 million total fiber strand miles, Lumos Networks connects over 4,500 unique Fiber to the Cell sites, almost 1,700 total FTTC connections, over 4,500 on-net buildings and more than 9,000 total on-net locations. The Company also connects 44 total data centers, including three data centers acquired from DC74 (now named Lumos Data Centers), 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.

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Lumos Networks provides fiber internet, voice, and IP connectivity over a dense fiber-based network serving enterprise and carrier customers in areas around and including Roanoake, VA, Richmond, VA, Daleville, VA, Waynesboro, VA, Hampton Roads, VA, Virginia Beach, VA, Lynchburg, VA, Charleston, WV, Huntington, WV, Beckley, WV, Parkersburg, WV, Clarksburg, WV, Morgantown, WV, Wheeling, WV, Pittsburgh, PA, Harrisburg, PA, Altoona, PA, Hagerstown, MD, and Washington, D.C.