PRESS RELEASE July 30, 2012, 4:55 p.m. EDT USA Mobility Reports Second Quarter Operating Results; Board Declares Quarterly Dividend, Renews Stock Repurchase Plan Wireless Trends Show Significant Improvement; Software Revenue, Bookings and Backlog Advance; Operating Expenses Reduced; Debt RepaidSPRINGFIELD, Va., Jul 30, 2012 (BUSINESS WIRE) — USA Mobility, Inc. USMO +0.74% , a leading provider of wireless messaging, mobile voice and data and unified communications solutions, today announced operating results for the second quarter ended June 30, 2012. In addition, the Company's Board of Directors declared a quarterly dividend of $0.125 per share, payable on September 7, 2012 to stockholders of record on August 17, 2012. The Board also authorized renewal of the Company's previously suspended stock repurchase program. Consolidated revenue for the second quarter was $56.0 million, compared to $56.7 million in the first quarter and $65.2 million in the second quarter of 2011. Revenue from the Company's Wireless business (USA Mobility Wireless) was $42.8 million in the second quarter, compared to $44.3 million in the first quarter and $52.1 million in the second quarter of 2011. Second quarter revenue from the Software business (Amcom Software) was $13.2 million, compared to $12.5 million in the first quarter and $13.1 million in the year-earlier quarter. Second quarter EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $18.4 million, or 32.9 percent of revenue, compared to $18.8 million, or 33.1 percent of revenue, in the first quarter and $21.5 million, or 32.9 percent of revenue, in the year-earlier quarter. Second quarter EBITDA included $16.8 million from Wireless and $1.6 million from Software, compared to $20.4 million and $1.1 million, respectively, in the second quarter of 2011. Net income for the second quarter was $8.4 million, or $0.37 per fully diluted share, compared to $18.6 million, or $0.82 per fully diluted share, in the second quarter of 2011. Net income in the second quarter of 2011 benefited from the receipt of $7.5 million from the sale of certain narrow band PCS licenses and a reduction in income tax expense of $4.9 million related to a reduction in our deferred income tax asset valuation allowance, partially offset by purchase accounting adjustments of $2.6 million. Excluding these adjustments, net income for the second quarter of 2011 would have been $10.0 million, or $0.44 per fully diluted share. Second quarter results included: Wireless - Net unit losses improved to 34,000 in the second quarter from 51,000 in the first quarter and 49,000 in the second quarter of 2011. The quarterly rate of net unit loss improved to an 8-year low of 2.1 percent from 2.7 percent in the year-earlier quarter, while the annual rate of unit erosion also reached a new low of 11.0 percent versus 11.5 percent in the first quarter and 12.2 percent in the year-ago quarter. Units in service at June 30, 2012 totaled 1,583,000, compared to 1,779,000 a year earlier.
- The quarterly rate of revenue erosion was 3.3 percent, compared to 4.9 percent in the first quarter and 0.8 percent in the second quarter of 2011, while the annual rate of revenue erosion was 17.9 percent versus 11.9 percent in the year-earlier quarter.
- Total ARPU (average revenue per unit) was $8.45 in the second quarter, compared to $8.50 in the first quarter and $8.74 in the second quarter of 2011.
- Second quarter EBITDA margin for Wireless was 39.2 percent, compared to 39.5 percent in the first quarter and 39.2 percent in the year-earlier quarter.
Software - Bookings for the second quarter were $15.1 million, compared to $12.4 million in the first quarter and $15.2 million in the year-earlier quarter.
- The backlog was $25.4 million at June 30, 2012, compared to $23.7 million at March 31, 2012, and $20.5 million at June 30, 2011.
- Second quarter Software revenue of $13.2 million included $6.5 million of maintenance revenue and $6.7 million of operations revenue, compared to $6.4 million and $6.1 million, respectively, of the $12.5 million in Software revenue for the prior quarter.
- The renewal rate for maintenance in the second quarter was 98.8 percent.
Total Company - Consolidated operating expenses (excluding depreciation, amortization and accretion) totaled $37.5 million in the second quarter, with $26.0 million for Wireless and $11.5 million for Software, compared to $38.0 million in the first quarter, with $26.8 million for Wireless and $11.2 million for Software.
- Capital expenses were $2.9 million, compared to $1.9 million in the second quarter of 2011.
- Dividends paid to stockholders totaled $5.5 million for the second quarter.
- On April 6, 2012, the Company repaid its outstanding debt balance of $3.3 million and once again became a debt-free company.
- The Company's cash balance was $41.0 million at June 30, 2012.
- The number of full-time equivalent employees at June 30, 2012 totaled 686, including 411 for Wireless and 275 for Software, compared to a total of 685 at March 31, 2012.
Vincent D. Kelly, president and chief executive officer, said: "USA Mobility again reported excellent operating results for the quarter as both our Wireless and Software businesses made substantial progress. On the Wireless side, our quarterly and annual rates of subscriber erosion reached their best levels in nearly eight years as overall trends continued to improve. In addition, we exceeded all key performance goals for gross additions, unit churn, and ARPU. Our Software business also performed well during the quarter as bookings increased from the prior quarter and our backlog surpassed $25 million. Amcom also made important advances in its product and business development, including the acquisition in May of IMCO Technologies' Critical Test Results Management solution, which allows hospitals to improve patient care and safety by expediting the delivery of critical test results to caregivers. At the same time, our combined business continued to reduce expenses, maintain strong operating margins, and generate sufficient cash flow to again return capital to stockholders in the form of dividend distributions." Kelly said Wireless sales and marketing efforts continued to focus on the core market segments of Healthcare, Government and Large Enterprise during the quarter. "These core segments represented approximately 91.0 percent of our direct subscriber base and 86.7 percent of our direct paging revenue at June 30th, compared to 89.5 percent and 84.3 percent, respectively, a year earlier. Healthcare continued to be our largest and best performing market segment with the highest percentage of direct gross additions (83.3 percent) and the lowest rate of direct net unit loss (0.2 percent) as healthcare providers continue to benefit from the reliability and cost advantages of paging for their most critical messaging needs." With regard to Software results, Kelly said: "After a slower than expected first quarter, Amcom delivered an increase in quarter-over-quarter revenue in the second quarter and a growing backlog and sales pipeline at June 30th. We booked most of our business in the North American healthcare market, including a large East Coast teaching hospital. However, we also gained further penetration of the hospitality segment with the addition of a major hotel group. Customers from multiple business segments continue to choose Amcom due to the breadth of our critical communications solutions, which range from call center management, clinical alerting middleware, critical smartphone communications and emergency notification." Kelly added: "As previously announced, we also made several important executive management changes during the quarter. Jim Boso was promoted to president of USA Mobility Wireless, while Kate Bolseth was named chief operating officer and Sean Collins executive vice president of selling and marketing at Amcom Software. All three executives have performed exceptionally well for us in the past and we expect them to continue to achieve further success going forward." Commenting on the Company's revised quarterly dividend rate of $0.125 per share, a reduction from the previous rate of $0.25 per share, Kelly stated: "As noted on our fourth quarter earnings call earlier this year, the Board's decision to revise the cash dividend rate was made for the principal purpose of preserving sufficient capital to allow us to make acquisitions in our Software business and create opportunities for long-term growth. Notwithstanding our excellent current results, we recognize that ongoing Wireless subscriber losses will continue to put pressure on future operating margins and cash flows. As a result, we believe the revised dividend rate will help preserve capital for long-term growth opportunities. We also believe it better reflects our projected cash flows over the next several years, strengthens the Company's financial position while maintaining a significant yield on our common stock, and allows us to retain strategic capital as we continue to reposition the Company for the future." Kelly said the Board approved renewal of the Company's stock repurchase plan, which was adopted in 2008 and suspended in March 2011 at the time of the Amcom acquisition. The plan, which extends through December 31, 2013, resets the repurchase authority to $25 million as of August 1, 2012. Since the buy back program began, the Company has repurchased 5.6 million shares of its common stock. Shawn E. Endsley, chief financial officer, said the Company continued to reduce operating expenses in the second quarter. "Recurring operating expenses (excluding depreciation, amortization and accretion) for Wireless decreased 17.9 percent from the year-earlier quarter," he noted, "and again exceeded the adjusted annual rate of Wireless revenue decline. In addition, Wireless revenue for the quarter remained strong, driven largely by a stable ARPU and improved unit churn." Endsley said the Company repaid its outstanding $3.3 million debt balance on April 6, 2012, noting that "with the repayment USA Mobility is once again a debt-free company." Regarding financial guidance for 2012, Endsley said the Company is revising its prior guidance for consolidated results for the full year, with total revenues expected to range from $215 million to $227 million, operating expenses (excluding depreciation, amortization and accretion) to range from $154 million to $162 million, and capital expenses to range from $7.1 million to $9.5 million. "We have also revised our revenue guidance mix between Wireless and Software based on our outlook for each business. Accordingly, we now expect Wireless revenue to range from $162 million to $170 million, an increase from the prior guidance of $156 million to $166 million, and Software revenue to range from $53 million to $57 million, a reduction from the previous guidance of $58 million to $66 million. We have also adjusted the operating expense guidance for Wireless to a range of $106 million to $110 million, a reduction from the original range of $108 million to $112 million. Our Software operating expenses have been adjusted slightly to a range of $48 million to $52 million. Finally, we have slightly adjusted the capital expense range for our Software business to $0.1 million to $0.5 million from the previous range of $0.5 million to $1.0 million." * * * * * * * * * USA Mobility plans to host a conference call for investors on its second quarter results at 10:00 a.m. Eastern Time on Tuesday, July 31, 2012. Dial-in numbers for the call are 719-234-0008 or 888-428-9496. The pass code for the call is 3467154. A replay of the call will be available from 1:00 p.m. ET on July 31 until 11:59 p.m. on Tuesday August 14. Replay numbers are 719-457-0820 or 888-203-1112. The pass code for the replay is 3467154. * * * * * * * * * About USA Mobility USA Mobility, Inc., headquartered in Springfield, Virginia, is a comprehensive provider of reliable and affordable wireless communications solutions to the healthcare, government, large enterprise and emergency response sectors. In addition, through its Amcom Software subsidiary, it provides mission critical unified communications solutions for hospitals, contact centers, emergency management, mobile event notification and messaging. As a single-source provider, USA Mobility's focus is on the business-to-business marketplace and supplying wireless connectivity solutions to organizations nationwide. The Company operates the largest one-way paging and advanced two-way paging networks in the United States. USA Mobility also offers mobile voice and data services through Sprint Nextel and T-Mobile, including BlackBerry(R) smartphones and GPS location applications. The Company's product offerings include customized wireless connectivity systems for the healthcare, government and other campus environments. USA Mobility also offers M2M (machine-to-machine) telemetry solutions for numerous applications that include asset tracking, utility meter reading and other remote device monitoring applications on a national scale. For further information, visit www.usamobility.com and www.amcomsoftware.com . Safe Harbor Statement under the Private Securities Litigation Reform Act: Statements contained herein or in prior press releases which are not historical fact, such as statements regarding USA Mobility's future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause USA Mobility's actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, declining demand for paging products and services, the ability to continue to reduce operating expenses, future capital needs, competitive pricing pressures, competition from both traditional paging services and other wireless communications services, government regulation, reliance upon third-party providers for certain equipment and services, as well as other risks described from time to time in periodic reports and registration statements filed with the Securities and Exchange Commission. Although USA Mobility believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. USA Mobility disclaims any intent or obligation to update any forward-looking statements. Tables to Follow [at source] |