Form 8-K Lumos Networks Corp. For: Mar 04

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): March 4, 2015 

 

Lumos Networks  Corp.

(Exact Name of Registrant as Specified in Charter)

 

 

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))

 

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Item 2.02Results of Operations and Financial Condition.

On March 4, 2015, Lumos Networks Corp. issued a press release announcing its results of operations and financial condition for the three and twelve months ended December 31, 2014.  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 7.01Regulation FD Disclosure.

A copy of the materials that Lumos Networks Corp. will present in connection with upcoming presentations to investors is furnished as Exhibit 99.2 to this Current Report on Form 8-K.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.2, 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 liabilities 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. The information in this Report will not be deemed as an admission as to the materiality of any information required to be disclosed solely to satisfy the requirements of Regulation FD.

Item 8.01Other Events.

On March 4, 2015, the Company’s Board of Directors suspended the Company’s quarterly dividend in favor of allocating capital to growth opportunities.

Item 9.01Financial Statements and Exhibits.

 

(d)Exhibits

 

 

 

 

 

 

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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:  March 4, 2015

 

 

 

 

 

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Exhibit Index

 

Exhibit No.Description

 

99.1Press release issued by Lumos Networks Corp. dated March 4, 2015

99.2Company Presentation – Fourth Quarter 2014 Update

 

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Exhibit 99.1

 

Contact:Will Davis

Vice President of Investor Relations and Chief of Staff 
Phone: (c) 917-519-6994
Email: [email protected]

 

 

Lumos Networks Corp. Reports Fourth Quarter and Annual 2014 Financial Results

Delivers 2014 Revenue of $201.5 Million and Adjusted EBITDA of $100.6 Million, which includes a $10.8 Million Benefit Plan Curtailment Gain

Provides 2015 Revenue and Adjusted EBITDA Guidance of Approximately $202 Million and $92 Million

Achieves 2014 Fiber to the Cell (“FTTC”) Revenue of Nearly $20 Million, 858 Unique FTTC Sites at YE 2014

Targeting 2015 Data Revenue of $116 Million, up 9% Year-over-Year

Targets total FTTC Installed Connections of 1,700 by YE 2015

Expects 6% Enterprise Revenue growth in 2015

Board of Directors Approves Suspension of Quarterly Dividend

 

WAYNESBORO, VA – March 4, 2015  – Lumos Networks Corp. (“Lumos Networks”, “Lumos” 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 fourth quarter of 2014 and full-year 2014.

Total revenue in 2014 was $201.5 million down 3% from 2014.  Total Adjusted EBITDA in 2014 was $89.9 million, excluding a one-time, non-cash gain of $10.8 million related to a reduction in our liability for certain postretirement medical benefits (the “OPEBs gain”), versus $96.3 million in 2013, or down 7%.   In the fourth quarter of 2014, total revenue was $50.7 million and total Adjusted EBITDA was $21.9 million, excluding an OPEBs gain of $0.6 million.      

 

Total Data segment revenue in the fourth quarter of 2014 was $27.3 million, up approximately 3% sequentially, and constituted 54% of total revenue as compared to 53% in the prior year period.  The Company posted over 16% sequential growth in Fiber to the Cell (“FTTC”) site revenue to $5.5 million and Enterprise revenue grew 3% sequentially and over 2% from the prior year.

 

“I am pleased to announce that Lumos Networks achieved its 2014 targets of approximately $200 million in revenue and $90 million in Adjusted EBITDA.   We  also hit our targets for 2014 FTTC revenue and surpassed our target for unique FTTC sites,“ said Lumos Networks President and CEO Timothy G. Biltz.  “But even more importantly, our 2015 financial guidance demonstrates our expectations for continued solid execution of the Lumos strategy.   In 2015, we expect that revenue and Adjusted EBITDA will grow, and we expect that our data segment revenue will grow approximately 9% to $116 million.”   

 

The Company remains focused on building valuable, dense fiber infrastructure underpinned by long-term Ethernet, MPLS and wavelength contracts.  In 2014, the Company increased its FTTC connections by 375, added 250 unique FTTC connections, added 408 route miles of fiber, connected to an incremental 133 lit buildings and 7 data centers.      

 

“We expect to accelerate these fiber investments in 2015 as we install our $1.3 million backlog of monthly recurring revenue of high-value data products and complete our investment on Project Ark, our all-IP network overlay focused on FTTC traffic,” Mr. Biltz continued, “We expect to end 2015 with 1,700 FTTC connections, an increase of nearly 550, which would represent around $35 million in annualized FTTC revenue, once installed.  Additionally, we are accelerating the completion of our previously announced 665 fiber route mile network expansion in Richmond, Hampton Roads, Petersburg and Norfolk, Virginia to the first half of 2016 from our original plan of the second half of 2016.   To this end, we expect total capital expenditures to be approximately $112 million in 2015.”         

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Highlights

Business Outlook

For the full year 2015, the Company initiates financial guidance for revenue of approximately $202 million, Adjusted EBITDA of approximately $92 million and capital expenditures of approximately $112 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, 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 8:30 A.M. (ET) on March 5, 2015.  

The webcast may be accessed via the Internet at http://ir.lumosnetworks.com/ and the live call (“Lumos Networks Fourth 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 March 20, 2015 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: 10060806

The webcast will also be archived and the replay may be accessed at http://ir.lumosnetworks.com/.

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About Lumos Networks

Lumos Networks is a fiber-based provider in the Mid-Atlantic region serving Carrier and Enterprise customers offering end to end connectivity in 23 markets in Virginia, Pennsylvania, West Virginia, Maryland, Ohio and Kentucky. With a fiber network of 7,822 fiber route miles, Lumos Networks connects to 858 Fiber to the Cell sites, 31 data centers and 1,477 on-net buildings. In 2014, Lumos Networks generated over $106 million in Data Revenue over its fiber network.  Detailed information about Lumos Networks is available at www.lumosnetworks.com.     

Non-GAAP Measures

Adjusted EBITDA is defined as net income attributable to Lumos Networks before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, net income or loss attributable to noncontrolling interests, other income or expenses, equity-based compensation charges, acquisition-related charges, amortization of actuarial losses on retirement plans, employee separation charges, restructuring-related charges, gain or loss on settlements and gain or loss on interest rate swap derivatives.  Adjusted EBITDA margin is calculated as the ratio of Adjusted EBITDA, as defined, to operating revenues.

Adjusted EBITDA is a non-GAAP financial performance measure.  It 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: rapid development and intense competition in the telecommunications and high speed data transport industry; our ability to offset expected revenue declines in legacy voice and access products related to the recent regulatory actions, wireless substitution, technology changes and other factors; our ability to effectively allocate capital and implement  our “edge-out” expansion plans in a timely manner; our ability to complete customer installations in a timely manner; adverse economic conditions; operating and financial restrictions imposed by our senior credit facility; our cash and capital requirements; declining prices for our services; 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 Annual Report filed on Form 10-K.

Exhibits:

 

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