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USA Mobility Reports Third Quarter Operating Results; Board Declares Regular Quarterly Dividend

USA Mobility, Inc. (Nasdaq: USMO), a leading provider of wireless messaging, mobile voice and data and unified communications solutions, today announced operating results for the third quarter ended September 30, 2012. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on December 7, 2012 to stockholders of record on November 16, 2012.

Consolidated revenue for the third quarter was $55.1 million, compared to $56.0 million in the second quarter and $61.5 million in the third quarter of 2011. Revenue from the Company’s Wireless business (USA Mobility Wireless) was $41.4 million in the third quarter, compared to $42.8 million in the second quarter and $48.5 million in the third quarter of 2011. Third quarter revenue from the Software business (Amcom Software) was $13.7 million, compared to $13.2 million in the second quarter and $12.9 million in the year-earlier quarter.

Third quarter EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $17.8 million, or 32.2 percent of revenue, compared to $18.4 million, or 32.9 percent of revenue, in the second quarter and $21.3 million, or 34.6 percent of revenue, in the year-earlier quarter. Third quarter EBITDA included $16.3 million from Wireless and $1.5 million from Software, compared to $19.9 million and $1.3 million, respectively, in the third quarter of 2011. Excluding purchase accounting adjustments, EBITDA for the third quarter of 2011 would have been $22.8 million, or 36.2 percent of revenue.

Net income for the third quarter was $8.0 million, or $0.36 per fully diluted share, compared to $10.4 million, or $0.46 per fully diluted share, in the third quarter of 2011. Excluding purchase accounting adjustments, net income for the third quarter of 2011 would have been $11.6 million, or $0.51 per fully diluted share.

Third quarter results included:

Wireless

  • Net unit losses totaled 37,000 in the third quarter, compared to 58,000 in the third quarter of 2011. The quarterly rate of net unit loss was 2.3 percent, compared to 3.3 percent in the year-earlier quarter, while the annual rate of unit erosion reached a record low of 10.2 percent versus 11.0 percent in the second quarter and 11.7 percent in the year-ago quarter. Units in service at September 30, 2012 totaled 1,546,000 compared to 1,721,000 a year earlier.
  • The quarterly rate of revenue erosion improved to 3.1 percent from 3.3 percent in the second quarter and 6.8 percent in the third quarter of 2011, while the annual rate of revenue erosion was 14.6 percent versus 17.9 percent in the second quarter and 14.4 percent in the year-earlier quarter.
  • Total ARPU (average revenue per unit) was $8.36 in the third quarter, compared to $8.45 in the second quarter and $8.59 in the third quarter of 2011.
  • Third quarter EBITDA margin for Wireless was 39.3 percent, compared to 39.2 percent in the second quarter and 41.1 percent in the year-earlier quarter.

Software

  • Bookings for the third quarter increased to a record $15.7 million from $15.1 million in the second quarter and $14.2 million in the year-earlier quarter.
  • The backlog was $26.4 million at September 30, 2012, compared to $25.4 million at June 30, 2012, and $21.3 million at September 30, 2011.
  • Third quarter Software revenue of $13.7 million included $6.6 million of maintenance revenue and $7.1 million of operations revenue, compared to $6.5 million and $6.7 million, respectively, of the $13.2 million in Software revenue for the prior quarter.
  • The renewal rate for maintenance in the third quarter was 97.6 percent.

Total Company

  • Consolidated operating expenses (excluding depreciation, amortization and accretion) totaled $37.3 million in the third quarter, with $25.1 million for Wireless and $12.2 million for Software, compared to $37.5 million in the second quarter, with $26.0 million for Wireless and $11.5 million for Software.
  • Capital expenses were $2.7 million, compared to $1.8 million in the third quarter of 2011.
  • Dividends paid to stockholders totaled $2.8 million for the third quarter.
  • The Company’s cash balance was $49.5 million at September 30, 2012.
  • The number of full-time equivalent employees at September 30, 2012 totaled 676, including 396 for Wireless and 280 for Software, compared to a total of 686 at June 30, 2012, including 411 for Wireless and 275 for Software.

Vincent D. Kelly, president and chief executive officer, said: “Both our Wireless and Software businesses again made excellent progress during the quarter. On the Wireless side, quarterly rates of subscriber and revenue erosion continued to improve while our annual rate of unit loss reached its best level in eight years. We also exceeded our key performance goals for gross additions and ARPU. Our Software business also turned in an outstanding quarter as revenue and bookings increased from the prior quarter and our backlog surpassed $26 million to reach an all-time high. Along with continued growth of its U.S.-based operations, Amcom also expanded internationally with the addition of new accounts in Australia and opening of a Middle East regional office in Dubai. 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 and stock repurchases.”

Kelly said the Wireless business continued to expand account relationships in the Healthcare industry, its largest market segment, during the quarter. “Healthcare represented 70.6 percent of our direct subscriber base and 65.1 percent of direct paging revenue at September 30th, compared to 66.3 percent and 60.7 percent, respectively, a year earlier. Healthcare also continued to be our best performing market segment with the highest percentage of direct gross additions (79.2 percent) and the lowest rate of direct net unit loss (0.9 percent),” Kelly noted, “as healthcare providers continue to benefit from the reliability and cost advantages of paging for their most critical messaging needs.”

Commenting on Software results, Kelly said: “Amcom delivered a quarter-over-quarter increase in revenue in the third quarter, along with record bookings and a growing backlog and sales pipeline at September 30th. Although we closed much of our business in the North American healthcare market, we made considerable inroads in the Middle East, including the sale of a full suite of healthcare solutions to a major hospital in the Gulf Region. We also had strong sales among public safety organizations as a record number of military and municipal 911 emergency response centers chose Amcom’s dispatch solution. Indeed, we are seeing an increasing number of customers from multiple business segments select 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 recently made several key management changes at our software subsidiary. Colin Balmforth joined Amcom as president in September and Lynn Danko was named chief financial officer in mid-October. Along with the promotions in July of Kate Bolseth to chief operating officer and Sean Collins to executive vice president of sales, Amcom now has an exceptionally strong management team in place to successfully pursue our worldwide business goals.”

Kelly said USA Mobility repurchased 434,982 shares of its common stock during the quarter for approximately $4.9 million (excluding commissions) after renewal of the Company’s stock repurchase program in July. The plan, which extends through December 31, 2013, had been suspended since March 2011 when the Company acquired Amcom. Since the buy back program began in 2008, the Company has repurchased approximately 6.0 million shares of its common stock for approximately $56.6 million at an average price of $9.45 per share.

Shawn E. Endsley, chief financial officer, said the Company continued to reduce operating expenses in the third quarter, principally in its Wireless business. “Operating expenses (excluding depreciation, amortization and accretion) for Wireless decreased 12.1 percent from the year-earlier quarter. In addition, the Wireless business continued to generate solid revenues during the quarter driven largely by a stable ARPU and improved unit churn.” Endsley also noted that the Company’s balance sheet remained strong with a cash balance of $49.5 million at September 30th and no outstanding debt.

With respect to financial guidance for 2012, Endsley said the Company is maintaining 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.

* * * * * * * * *

USA Mobility plans to host a conference call for investors on its third quarter results at 10:00 a.m. Eastern Time on Friday, November 2, 2012. Dial-in numbers for the call are 719-325-2452 or 888-430-8705. The pass code for the call is 6474706. A replay of the call will be available from 1:00 p.m. ET on November 2 until 11:59 p.m. on Friday November 16. Replay numbers are 719-457-0820 or 888-203-1112. The pass code for the replay is 6474706.

* * * * * * * * *

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 software subsidiary, Amcom Software, Inc., USA Mobility provides mission critical unified communications solutions nationally and internationally for hospitals, contact centers, and other customers that require emergency management, mobile event notification and messaging services. As a single-source provider, the Company’s wireless subsidiary, USA Mobility Wireless, focuses on the business-to-business marketplace and supplying wireless connectivity solutions to organizations nationwide. USA Mobility Wireless operates the largest one-way paging and advanced two-way paging networks in the United States. It also offers mobile voice and data services through Sprint Nextel and T-Mobile, including BlackBerry® smartphones and GPS location applications. Product offerings include customized wireless connectivity systems for the healthcare, government and other campus environments. USA Mobility Wireless 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

 
USA MOBILITY, INC.
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (a), (b)
(In thousands, except share, per share amounts and ARPU)
           
For the nine months ended September 30,
2012 2011
Wireless   Software   Total Wireless   Software   Total
 
Revenue:
Paging service $ 121,658 $ - $ 121,658 $ 141,068 $ - $ 141,068
Cellular 877 - 877 2,198 - 2,198
Product and related sales (c) 5,101 39,324 44,425 7,684 30,808 38,492
Other   852       -       852     2,218       -       2,218  
Total revenue   128,488       39,324       167,812     153,168       30,808       183,976  
 
Operating expenses:
Cost of products sold (c) 516 14,621 15,137 2,257 13,202 15,459
Service, rental and maintenance (c) 34,737 7,189 41,926 43,221 4,648 47,869
Selling and marketing 8,794 8,821 17,615 11,191 6,248 17,439
General and administrative 33,869 4,260 38,129 39,141 3,344 42,485
Severance and restructuring 9 37 46 78 - 78
Depreciation, amortization and accretion   8,613       5,232       13,845     11,057       3,861       14,918  
Total operating expenses   86,538       40,160       126,698     106,945       31,303       138,248  
% of total revenue 67.4 % 102.1 % 75.5 % 69.8 % 101.6 % 75.1 %
                   
Operating income (loss)   41,950       (836 )     41,114     46,223       (495 )     45,728  
% of total revenue 32.6 % -2.1 % 24.5 % 30.2 % -1.6 % 24.9 %
 
Interest expense, net (318 ) - (318 ) (1,841 ) (9 ) (1,850 )
Other income (expense), net   461       (35 )     426     7,904       (84 )     7,820  
Income (loss) before income tax (expense) benefit 42,093 (871 ) 41,222 52,286 (588 ) 51,698
Income tax (expense) benefit   (16,584 )     319       (16,265 )   17,905       90       17,995  
Net income (loss) $ 25,509     $ (552 )   $ 24,957   $ 70,191     $ (498 )   $ 69,693  
 
Basic net income per common share $ 1.13   $ 3.16  
Diluted net income per common share $ 1.11   $ 3.10  
 
Basic weighted average common shares outstanding   22,069,785     22,080,485  
Diluted weighted average common shares outstanding   22,534,127     22,487,374  
 
 
Reconciliation of operating income (loss) to EBITDA (d):
Operating income (loss) $ 41,950 $ (836 ) $ 41,114 $ 46,223 $ (495 ) $ 45,728
Add back: depreciation, amortization and accretion   8,613       5,232       13,845     11,057       3,861       14,918  
EBITDA $ 50,563     $ 4,396     $ 54,959   $ 57,280     $ 3,366     $ 60,646  
% of total revenue 39.4 % 11.2 % 32.8 % 37.4 % 10.9 % 33.0 %
 
Key statistics:
Units in service 1,546 - 1,546 1,721 - 1,721
Average revenue per unit (ARPU) $ 8.41 $ - $ 8.41 $ 8.68 $ - $ 8.68
Bookings $ - $ 43,173 $ 43,173 $ - $ 32,673 $ 32,673
Backlog $ - $ 26,448 $ 26,448 $ - $ 21,313 $ 21,313
 
(a) Slight variations in totals are due to rounding.
(b) Includes consolidated results of operations of USA Mobility Wireless, Inc. ("Wireless") and Amcom Software, Inc. ("Software"). Software operations reflect financial results from March 3, 2011, the acquisition date.
(c) Wireless results reflect eliminations for intercompany revenue and expenses.
(d) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for analytical purposes only.
 
USA MOBILITY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(In thousands)
   
 
 

9/30/12

12/31/11

(Unaudited)
 
Assets
Current assets:
Cash and cash equivalents 49,545 $ 53,655
Accounts receivable, net 21,356 20,523
Prepaid expenses and other 4,244 4,338
Inventory 3,222 2,268
Escrow receivables 275 14,819
Deferred income tax assets, net   5,062     8,617
Total current assets 83,704 104,220
Property and equipment, net 20,777 22,421
Goodwill 132,781 130,968
Other intangible assets, net 35,346 38,757
Deferred income tax assets, net 39,916 51,600
Other assets   1,812     2,094
Total assets $ 314,336   $ 350,060
 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities $ 12,916 $ 12,394
Accrued compensation and benefits 13,195 12,854
Consideration payable 275 14,819
Customer deposits 1,475 1,806
Deferred revenue   16,369     14,693
Total current liabilities 44,230 56,566

Long-term debt

- 28,250
Deferred revenue 471 581
Other long-term liabilities   9,809     12,223
Total liabilities   54,510     97,620
Commitments and contingencies
Stockholders' equity:
Preferred stock - -
Common stock 2 2
Additional paid-in capital 128,028 131,612
Retained earnings   131,796     120,826
Total stockholders' equity   259,826     252,440
Total liabilities and stockholders' equity $ 314,336   $ 350,060
 
(a) Slight variations in totals are due to rounding.
 
 
USA MOBILITY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a)
(Unaudited and in thousands)
   
 
For the nine months ended

9/30/12

9/30/11

 
Cash flows from operating activities:
Net income $ 24,957 $ 69,693

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

Depreciation, amortization and accretion 13,845 14,918
Amortization of deferred financing costs 194 521
Deferred income tax expense (benefit) 15,239 (19,072 )
Amortization of stock based compensation 902 1,093
Provisions for doubtful accounts, service credits and other 1,239 989
(Adjustments)/Settlement of transaction taxes (366 ) 243
(Gain)/Loss on disposals of property and equipment (159 ) 118
Gain on disposals of narrow band PCS licenses - (7,500 )
Changes in assets and liabilities:
Accounts receivable (2,062 ) (518 )
Prepaid expenses, intangibles and other assets (531 ) 6,752
Accounts payable and accrued liabilities (1,788 ) (9,988 )
Customer deposits and deferred revenue   1,235       3,578  
Net cash provided by operating activities   52,705       60,827  
 
Cash flows from investing activities:
Purchases of property and equipment (7,135 ) (5,134 )
Proceeds from disposals of property and equipment 332 45
Proceeds from disposals of narrow band PCS licenses - 7,500
Acquisitions, net of cash acquired   (3,000 )     (134,217 )
Net cash used in investing activities   (9,803 )     (131,806 )
 
Cash flows from financing activities:
Issuance of debt - 24,044
Repayment of debt (28,250 ) (23,697 )
Deferred financing costs - (1,408 )
Cash dividends to stockholders (13,829 ) (16,591 )
Purchase of common stock   (4,933 )     -  
Net cash used in financing activities   (47,012 )     (17,652 )
 
 
Net decrease in cash and cash equivalents (4,110 ) (88,631 )
Cash and cash equivalents, beginning of period   53,655       129,220  
Cash and cash equivalents, end of period $ 49,545     $ 40,589  
 
Supplemental disclosure:
Interest paid $ 285     $ 1,198  
Income taxes paid $ 1,376     $ 1,658  
Non-cash financing activities $ -     $ 27,750  
 
(a) Slight variations in totals are due to rounding.
 
 
USA MOBILITY, INC.
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (a), (b)
(Unaudited and in thousands, except share, per share amounts and ARPU)
           
For the three months ended September 30,
2012 2011
Wireless   Software   Total Wireless   Software   Total
 
Revenue:
Paging service $ 39,235 $ - $ 39,235 $ 45,121 $ - $ 45,121
Cellular 314 - 314 315 - 315
Product and related sales (c) 1,645 13,676 15,321 2,535 12,929 15,464
Other   246       -       246     570       -       570  
Total revenue   41,440       13,676       55,116     48,541       12,929       61,470  
 
Operating expenses:
Cost of products sold 187 4,918 5,105 423 5,528 5,951
Service, rental and maintenance (c) 11,239 2,492 13,731 13,194 2,023 15,217
Selling and marketing 2,774 3,269 6,043 3,412 2,515 5,927
General and administrative 10,935 1,531 12,466 11,550 1,527 13,077
Severance and restructuring - - - 28 - 28
Depreciation, amortization and accretion   2,944       1,780       4,724     3,407       1,673       5,080  
Total operating expenses   28,079       13,990       42,069     32,014       13,266       45,280  
% of total revenue 67.8 % 102.3 % 76.3 % 66.0 % 102.6 % 73.7 %
 
Operating income (loss) 13,361 (314 ) 13,047 16,527 (337 ) 16,190
% of total revenue 32.2 % -2.3 % 23.7 % 34.0 % -2.6 % 26.3 %
 
Interest expense, net (64 ) - (64 ) (732 ) - (732 )
Other income (expense), net   68       (16 )     52     7       (8 )     (1 )
Income (loss) before income tax (expense) benefit 13,365 (330 ) 13,035 15,802 (345 ) 15,457
Income tax (expense) benefit   (5,093 )     106       (4,987 )   (5,010 )     -       (5,010 )
Net income (loss) $ 8,272     $ (224 )   $ 8,048   $ 10,792     $ (345 )   $ 10,447  
 
Basic net income per common share $ 0.37   $ 0.47  
Diluted net income per common share $ 0.36   $ 0.46  
 
Basic weighted average common shares outstanding   21,973,473     22,090,913  
Diluted weighted average common shares outstanding   22,399,934     22,573,064  
 
 
Reconciliation of operating income (loss) to EBITDA (d):
Operating income (loss) $ 13,361 $ (314 ) $ 13,047 $ 16,527 $ (337 ) $ 16,190
Add back: depreciation, amortization and accretion   2,944       1,780       4,724     3,407       1,673       5,080  
EBITDA $ 16,305     $ 1,466     $ 17,771   $ 19,934     $ 1,336     $ 21,270  
% of total revenue 39.3 % 10.7 % 32.2 % 41.1 % 10.3 % 34.6 %
 
Key statistics:
Units in service 1,546 - 1,546 1,721 - 1,721
Average revenue per unit (ARPU) $ 8.36 $ - $ 8.36 $ 8.59 $ - $ 8.59
Bookings $ - $ 15,670 $ 15,670 $ - $ 14,188 $ 14,188
Backlog $ - $ 26,448 $ 26,448 $ - $ 21,313 $ 21,313
 
(a) Slight variations in totals are due to rounding.
(b) Includes consolidated results of operations of USA Mobility Wireless, Inc. ("Wireless") and Amcom Software, Inc. ("Software"). Software operations reflect financial results from March 3, 2011, the acquisition date.
(c) Wireless results reflect eliminations of intercompany revenue and expenses.
(d) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for analytical purposes only.
 
 
USA MOBILITY, INC.
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS (a), (b)
(Unaudited and in thousands, except share, per share amounts and ARPU)
             
 
For the three months ended

9/30/12

6/30/12

3/31/12

12/31/11

9/30/11

6/30/11

3/31/11

 
Revenues:
Paging service $ 39,235 $ 40,548 $ 41,875 $ 43,249 $ 45,121 $ 47,319 $ 48,628
Cellular 314 286 277 414 315 1,199 684
Product and related sales 15,321 14,847 14,257 14,847 15,464 15,885 7,143
Other   246       280       326       421       570       768       880  
Total revenues   55,116       55,961       56,735       58,931       61,470       65,171       57,335  
 
Operating expenses:
Cost of products sold 5,105 5,216 4,816 5,430 5,951 7,078 2,430
Service, rental and maintenance 13,731 13,892 14,303 14,478 15,217 16,187 16,465
Selling and marketing 6,043 5,919 5,653 5,851 5,927 6,588 4,924
General and administrative 12,466 12,494 13,169 13,610 13,077 13,840 15,568
Severance and restructuring - 24 22 1,215 28 17 33
Depreciation, amortization and accretion   4,724       4,606       4,515       4,417       5,080       5,298       4,539  
Total operating expenses   42,069       42,151       42,478       45,001       45,280       49,008       43,959  
% of total revenues 76.3 % 75.3 % 74.9 % 76.4 % 73.7 % 75.2 % 76.7 %
 
Operating income 13,047 13,810 14,257 13,930 16,190 16,163 13,376
% of total revenues 23.7 % 24.7 % 25.1 % 23.6 % 26.3 % 24.8 % 23.3 %
 
Interest expense, net (64 ) (66 ) (188 ) (404 ) (732 ) (862 ) (256 )
Other income (expense), net   52       436       (62 )     131       (1 )     7,666       154  
Income before income tax (expense) benefit 13,035 14,180 14,007 13,657 15,457 22,967 13,274
Income tax (expense) benefit   (4,987 )     (5,733 )     (5,545 )     5,289       (5,010 )     (4,372 )     27,377  
Net income $ 8,048     $ 8,447     $ 8,462     $ 18,946     $ 10,447     $ 18,595     $ 40,651  
 
Basic net income per common share $ 0.37     $ 0.38     $ 0.38     $ 0.86     $ 0.47     $ 0.84     $ 1.84  
Diluted net income per common share $ 0.36     $ 0.37     $ 0.37     $ 0.84     $ 0.46     $ 0.82     $ 1.82  
 
Basic weighted average common shares outstanding   21,973,473       22,130,397       22,106,543       22,094,197       22,090,913       22,086,848       22,063,393  
Diluted weighted average common shares outstanding   22,399,934       22,613,517       22,589,483       22,577,312       22,573,064       22,551,862       22,333,399  
 
Reconciliation of operating income to EBITDA (c):
Operating income $ 13,047 $ 13,810 $ 14,257 $ 13,930 $ 16,190 $ 16,163 $ 13,376
Add back: depreciation, amortization and accretion   4,724       4,606       4,515       4,417       5,080       5,298       4,539  
EBITDA $ 17,771     $ 18,416     $ 18,772     $ 18,347     $ 21,270     $ 21,461     $ 17,915  
% of total revenues 32.2 % 32.9 % 33.1 % 31.1 % 34.6 % 32.9 % 31.2 %
 
Key statistics:
Units in service 1,546 1,583 1,617 1,668 1,721 1,779 1,828
Average revenue per unit (ARPU) $ 8.36 $ 8.45 $ 8.50 $ 8.51 $ 8.59 $ 8.74 $ 8.72
Bookings $ 15,670 $ 15,085 $ 12,417 $ 15,213 $ 14,188 $ 15,158 $ 3,327
Backlog $ 26,448 $ 25,353 $ 23,747 $ 23,712 $ 21,313 $ 20,478 $ 18,869
 
(a) Slight variations in totals are due to rounding.
(b) Software operations reflect financial results from March 3, 2011, the acquisition date.
(c) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for analytical purposes only.
 
 
USA MOBILITY, INC.
CONSOLIDATED OPERATING EXPENSES
SUPPLEMENTAL INFORMATION (a), (b)
(Unaudited and in thousands)
             
 
For the three months ended

9/30/12

6/30/12

3/31/12

12/31/11

9/30/11

6/30/11

3/31/11

 
Cost of products sold
Payroll and related $ 2,427 $ 2,324 $ 2,368 $ 2,277 $ 2,537 $ 2,156 $ 677
Cost of sales 2,195 2,434 2,037 2,724 3,132 4,263 1,536
Other   483     458       411     429     282     659       217
Total cost of products sold   5,105     5,216       4,816     5,430     5,951     7,078       2,430
 
Service, rental and maintenance
Site rent 4,326 4,421 4,791 5,002 5,438 5,962 6,881
Telecommunications 2,257 2,346 2,312 2,598 2,732 2,880 3,102
Payroll and related 5,309 5,360 5,529 5,279 5,578 5,562 4,769
Stock based compensation 6 6 6 6 6 6 5
Other   1,833     1,759       1,665     1,593     1,463     1,777       1,708
Total service, rental and maintenance   13,731     13,892       14,303     14,478     15,217     16,187       16,465
 
Selling and marketing
Payroll and related 3,504 3,544 3,559 3,306 3,593 3,567 2,904
Commissions 1,335 1,343 1,253 1,539 1,443 1,948 1,414
Stock based compensation 19 18 16 16 16 16 17
Other   1,185     1,014       825     990     875     1,057       589
Total selling and marketing   6,043     5,919       5,653     5,851     5,927     6,588       4,924
 
General and administrative
Payroll and related 5,851 5,972 6,490 6,268 5,778 6,781 6,072
Stock based compensation 435 (19 ) 415 415 392 432 203
Bad debt 275 270 234 363 346 (80 ) 416
Facility rent 903 868 806 942 1,041 1,035 823
Telecommunications 390 443 412 440 494 490 470
Outside services 2,353 2,458 2,447 2,079 2,496 2,533 5,228
Taxes, licenses and permits 1,249 1,426 1,501 1,445 1,327 2,190 1,332
Other   1,010     1,076       864     1,658     1,203     459       1,024
Total general and administrative   12,466     12,494       13,169     13,610     13,077     13,840       15,568
 
Severance and restructuring - 24 22 1,215 28 17 33
Depreciation, amortization and accretion 4,724 4,606 4,515 4,417 5,080 5,298 4,539
                         
Operating expenses $ 42,069   $ 42,151     $ 42,478   $ 45,001   $ 45,280   $ 49,008     $ 43,959
 
Capital expenditures $ 2,696 $ 2,888 $ 1,551 $ 2,818 $ 1,779 $ 1,854 $ 1,501
 
(a) Slight variations in totals are due to rounding.
(b) Software operations have been included from March 3, 2011, the acquisition date.
 
 
USA MOBILITY, INC. (WIRELESS)
UNITS IN SERVICE ACTIVITY (a)
(Unaudited and in thousands)
             
 
For the three months ended

9/30/12

6/30/12

3/31/12

12/31/11

9/30/11

6/30/11

3/31/11

Units in service

 
Beginning units in service
Direct one-way 1,395 1,423 1,465 1,510 1,559 1,599 1,645
Direct two-way 82     85     90     93     97     100     106  
Total direct 1,477     1,508     1,555     1,603     1,656     1,699     1,751  
Indirect one-way 58 60 63 68 71 75 68
Indirect two-way 48     49     50     50     52     54     70  
Total indirect 106     109     113     118     123     129     138  
Total beginning units in service 1,583     1,617     1,668     1,721     1,779     1,828     1,889  
 
Gross placements
Direct one-way 45 49 41 39 50 56 47
Direct two-way 3     4     3     4     5     5     3  
Total direct 48     53     44     43     55     61     50  
Indirect one-way 1 2 1 2 3 3 1
Indirect two-way -     -     -     -     -     2     -  
Total indirect 1     2     1     2     3     5     1  
Total gross placements 49     55     45     45     58     66     51  
 
Gross disconnects
Direct one-way (74 ) (77 ) (83 ) (84 ) (99 ) (94 ) (93 )
Direct two-way (6 )   (7 )   (8 )   (7 )   (9 )   (10 )   (9 )
Total direct (80 )   (84 )   (91 )   (91 )   (108 )   (104 )   (102 )
Indirect one-way (4 ) (4 ) (4 ) (7 ) (6 ) (10 ) 6
Indirect two-way (2 )   (1 )   (1 )   -     (2 )   (1 )   (16 )
Total indirect (6 )   (5 )   (5 )   (7 )   (8 )   (11 )   (10 )
Total gross disconnects (86 )   (89 )   (96 )   (98 )   (116 )   (115 )   (112 )
 
Net (loss)/gain
Direct one-way (29 ) (28 ) (42 ) (45 ) (49 ) (38 ) (46 )
Direct two-way (3 )   (3 )   (5 )   (3 )   (4 )   (5 )   (6 )
Total direct (32 )   (31 )   (47 )   (48 )   (53 )   (43 )   (52 )
Indirect one-way (3 ) (2 ) (3 ) (5 ) (3 ) (7 ) 7
Indirect two-way (2 )   (1 )   (1 )   -     (1 )   1     (16 )
Total indirect (5 )   (3 )   (4 )   (5 )   (4 )   (6 )   (9 )
Total net change (37 )   (34 )   (51 )   (53 )   (58 )   (49 )   (60 )
 
Ending units in service
Direct one-way 1,366 1,395 1,423 1,465 1,510 1,559 1,599
Direct two-way 79     82     85     90     93     97     100  
Total direct 1,445     1,477     1,508     1,555     1,603     1,656     1,699  
Indirect one-way 55 58 60 63 68 71 75
Indirect two-way 46     48     49     50     50     52     54  
Total indirect 101     106     109     113     118     123     129  
Total ending units in service 1,546     1,583     1,617     1,668     1,721     1,779     1,828  
 
(a) Slight variations in totals are due to rounding.
 
 
USA MOBILITY, INC. (WIRELESS)
AVERAGE REVENUE PER UNIT (ARPU) AND CHURN (a)
(Unaudited)
             
 
For the three months ended

9/30/12

6/30/12

3/31/12

12/31/11

9/30/11

6/30/11

3/31/11

 

ARPU

Direct one-way $ 7.84 $ 7.89 $ 7.91 $ 7.90 $ 7.97 $ 8.10 $ 8.05
Direct two-way   20.55       20.88       21.08       21.27       21.60       22.05       22.23  
Total direct 8.54 8.62 8.67 8.68 8.77 8.92 8.89
 
Indirect one-way 7.25 7.48 7.61 7.49 7.28 7.57 8.44
Indirect two-way   4.08       4.19       4.33       4.43       4.77       4.77       4.31  
Total indirect 5.77 5.97 6.14 6.16 6.22 6.40 6.49
 
Total one-way 7.82 7.88 7.90 7.89 7.94 8.08 8.07
Total two-way   14.36       14.69       15.00       15.29       15.71       16.04       15.41  
Total paging ARPU $ 8.36     $ 8.45     $ 8.50     $ 8.51     $ 8.59     $ 8.74     $ 8.72  
 
 
 

Gross disconnect rate (b)

Direct one-way -5.3 % -5.4 % -5.7 % -5.6 % -6.4 % -6.0 % -5.7 %
Direct two-way   -7.7 %     -8.5 %     -8.3 %     -7.7 %     -9.5 %     -9.3 %     -7.5 %
Total direct -5.5 % -5.6 % -5.8 % -5.7 % -6.5 % -6.2 % -5.8 %
 
Indirect one-way -7.6 % -6.6 % -7.0 % -9.8 % -8.1 % -8.1 % 11.9 %
Indirect two-way   -3.1 %     -1.8 %     -1.7 %     -1.8 %     -3.1 %     -4.5 %     -26.4 %
Total indirect -5.5 % -4.4 % -4.7 % -6.4 % -6.0 % -6.6 % -8.1 %
 
Total one-way -5.4 % -5.4 % -5.8 % -5.8 % -6.4 % -6.1 % -5.0 %
Total two-way   -6.0 %     -6.0 %     -5.9 %     -5.6 %     -7.3 %     -7.6 %     -15.2 %
Total paging gross disconnect rate   -5.5 %     -5.5 %     -5.8 %     -5.7 %     -6.5 %     -6.2 %     -6.0 %
 
 
 

Net (loss)/gain rate (c)

Direct one-way -2.1 % -1.9 % -2.9 % -3.0 % -3.2 % -2.5 % -2.9 %
Direct two-way   -4.0 %     -3.9 %     -4.9 %     -3.3 %     -4.1 %     -3.1 %     -3.6 %
Total direct -2.2 % -2.0 % -3.0 % -3.0 % -3.2 % -2.6 % -3.0 %
 
Indirect one-way -5.6 % -4.9 % -5.4 % -7.4 % -4.5 % -5.3 % 14.6 %
Indirect two-way   -2.5 %     -1.2 %     -0.9 %     -1.0 %     -2.3 %     -3.0 %     -25.8 %
Total indirect -4.2 % -3.2 % -3.4 % -4.7 % -3.6 % -4.3 % -6.6 %
 
Total one-way -2.2 % -2.0 % -3.0 % -3.2 % -3.2 % -2.6 % -2.2 %
Total two-way   -3.5 %     -2.9 %     -3.5 %     -2.5 %     -3.5 %     -3.1 %     -12.7 %
Total paging net loss rate   -2.3 %     -2.1 %     -3.0 %     -3.1 %     -3.3 %     -2.7 %     -3.2 %
 
(a) Slight variations in totals are due to rounding.
(b) Gross disconnect rate is current period disconnected units divided by prior period ending units in service.
(c) Net (loss)/gain rate is net current period placements and disconnected units in service divided by prior period ending units in service.
 
 
USA MOBILITY, INC. (WIRELESS)
SUPPLEMENTAL INFORMATION BY MARKET SEGMENT (a)
(Unaudited)
             
 
For the three months ended

9/30/12

6/30/12

3/31/12

12/31/11

9/30/11

6/30/11

3/31/11

 
Gross placement rate (b)
Healthcare 3.7% 4.3% 3.3% 3.0% 3.9% 4.5% 3.3%
Government 2.5% 1.8% 1.3% 1.6% 2.6% 2.1% 1.9%
Large enterprise 2.0% 1.9% 2.4% 2.1% 2.1% 2.1% 2.3%
Other 2.1%   2.0%   2.2%   2.8%   1.9%   2.0%   2.5%
Total direct 3.2% 3.5% 2.8% 2.7% 3.3% 3.6% 2.9%
Total indirect 1.3%   1.2%   1.3%   1.7%   2.4%   2.3%   1.6%
Total 3.1%   3.4%   2.7%   2.6%   3.3%   3.5%   2.8%
 
Gross disconnect rate (b)
Healthcare -4.5% -4.5% -4.7% -4.9% -5.7% -5.0% -4.7%
Government -6.8% -7.0% -7.7% -7.4% -8.3% -8.7% -7.6%
Large enterprise -7.3% -8.0% -7.7% -5.7% -7.0% -7.1% -6.2%
Other -8.1%   -8.7%   -9.2%   -8.7%   -8.9%   -9.0%   -9.2%
Total direct -5.4% -5.6% -5.8% -5.7% -6.5% -6.2% -5.8%
Total indirect -5.5%   -4.4%   -4.7%   -6.4%   -6.0%   -6.6%   -8.1%
Total -5.4%   -5.5%   -5.8%   -5.7%   -6.5%   -6.2%   -6.0%
 
Net loss rate (b)
Healthcare -0.9% -0.2% -1.4% -1.9% -1.8% -0.5% -1.4%
Government -4.3% -5.2% -6.4% -5.8% -5.7% -6.6% -5.7%
Large enterprise -5.3% -6.1% -5.3% -3.6% -4.9% -5.0% -3.9%
Other -5.9%   -6.8%   -7.1%   -5.9%   -7.0%   -6.9%   -6.8%
Total direct -2.2% -2.0% -3.0% -3.0% -3.2% -2.6% -3.0%
Total indirect -4.2%   -3.2%   -3.4%   -4.7%   -3.6%   -4.3%   -6.6%
Total -2.3%   -2.1%   -3.0%   -3.1%   -3.3%   -2.7%   -3.2%
 
End of period units in service % of total (b)
Healthcare 65.9% 64.9% 63.6% 62.6% 61.7% 60.9% 59.5%
Government 10.8% 11.1% 11.5% 11.9% 12.3% 12.6% 13.1%
Large enterprise 8.6% 8.9% 9.3% 9.5% 9.6% 9.8% 10.0%
Other 8.1%   8.4%   8.8%   9.2%   9.5%   9.7%   10.3%
Total direct 93.4% 93.3% 93.2% 93.2% 93.1% 93.0% 92.9%
Total indirect 6.6%   6.7%   6.8%   6.8%   6.9%   7.0%   7.1%
Total 100.0%   100.0%   100.0%   100.0%   100.0%   100.0%   100.0%
 
(a) Slight variations in totals are due to rounding.

(b) Changes in the classification of units in service are reflected in the quarter when such changes are identified. Such changes are then appropriately reflected in calculating the gross placement, gross disconnect and net loss rates.

 
 
USA MOBILITY, INC. (WIRELESS)
SUPPLEMENTAL INFORMATION - DIRECT UNITS IN SERVICE AND
CELLULAR ACTIVATIONS (a)
(Unaudited)
             
 
For the three months ended

9/30/12

6/30/12

3/31/12

12/31/11

9/30/11

6/30/11

3/31/11

 
Account size ending units in service (000's)
1 to 3 units 55 58 61 65 69 74 79
4 to 10 units 33 35 37 40 42 45 48
11 to 50 units 78 82 86 92 99 106 114
51 to 100 units 50 52 54 56 61 68 72
101 to 1,000 units 343 356 373 380 399 411 424
>1,000 units   886   894   897   922   933   952   962
Total   1,445   1,477   1,508   1,555   1,603   1,656   1,699
 
End of period units in service % of total direct
1 to 3 units 3.8% 3.9% 4.1% 4.2% 4.3% 4.4% 4.7%
4 to 10 units 2.3% 2.3% 2.3% 2.6% 2.6% 2.7% 2.8%
11 to 50 units 5.4% 5.6% 5.7% 5.9% 6.2% 6.4% 6.7%
51 to 100 units 3.5% 3.5% 3.6% 3.6% 3.8% 4.1% 4.2%
101 to 1,000 units 23.7% 24.1% 24.8% 24.4% 24.9% 24.8% 25.0%
>1,000 units   61.3%   60.6%   59.5%   59.3%   58.2%   57.6%   56.6%
Total   100.0%   100.0%   100.0%   100.0%   100.0%   100.0%   100.0%
 
Account size net loss rate
1 to 3 units -5.3% -5.7% -6.2% -5.7% -5.9% -6.3% -6.2%
4 to 10 units -4.8% -6.2% -6.2% -6.6% -6.4% -6.8% -6.2%
11 to 50 units -4.8% -4.1% -7.1% -7.3% -6.4% -6.5% -7.7%
51 to 100 units -3.9% -2.4% -3.9% -8.4% -10.4% -5.4% -5.7%
101 to 1,000 units -3.8% -4.7% -1.7% -4.7% -2.9% -3.3% -2.7%
>1,000 units   -1.0%   -0.3%   -2.7%   -1.1%   -2.1%   -1.0%   -1.8%
Total   -2.2%   -2.0%   -3.0%   -3.0%   -3.2%   -2.6%   -3.0%
 
Account size ARPU
1 to 3 units $ 15.43 $ 15.49 $ 15.49 $ 15.46 $ 15.62 $ 15.74 $ 15.57
4 to 10 units 14.42 14.40 14.45 14.37 14.52 14.65 14.53
11 to 50 units 12.11 12.24 12.15 12.12 12.30 12.38 12.19
51 to 100 units 10.48 10.35 10.52 10.56 10.59 10.68 10.59
101 to 1,000 units 8.97 9.01 9.04 8.90 8.90 9.10 9.00
>1,000 units   7.28   7.34   7.35   7.37   7.42   7.49   7.47
Total $ 8.54 $ 8.62 $ 8.67 $ 8.68 $ 8.77 $ 8.92 $ 8.89
 
 
Cellular:
Number of activations   948   1,052   1,070   1,476   1,236   4,370   2,191
Revenue from cellular services (000's) $ 314 $ 286 $ 277 $ 414 $ 315 $ 1,199 $ 684
 
(a) Slight variations in totals are due to rounding.
 
USA MOBILITY, INC.
2012 FINANCIAL GUIDANCE
       
  (In millions)
       
  Guidance Range
From To
Revenues
Wireless $ 162.0 $ 170.0
Software   53.0   57.0
Combined $ 215.0 $ 227.0
 
Operating Expenses (a)
Wireless $ 110.0 $ 106.0
Software   52.0   48.0
Combined $ 162.0 $ 154.0
 
Capital Expenses
Wireless $ 9.0 $ 7.0
Software   0.5   0.1
Combined $ 9.5 $ 7.1
 
(a) Operating expenses exclude depreciation, amortization and accretion.

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