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Leap Reports Nearly 30 Percent Year-Over-Year Improvements in Second Quarter Adjusted OIBDA and Service Revenues
Posted by: gurufocus (IP Logged)
Date: August 6, 2009 09:33PM
Press Release: Leap Reports Nearly 30 Percent Year-Over-Year Improvements in Second Quarter Adjusted OIBDA and Service Revenues
SAN DIEGO--(BUSINESS WIRE)--Leap Wireless International, Inc. (NASDAQ: LEAP), a leading provider of innovative and value-driven wireless communications services, today reported financial and operational results for the quarter ended June 30, 2009. Service revenues for the second quarter increased 30 percent over the prior year quarter to $541.6 million. The Company reported adjusted operating income before depreciation and amortization (OIBDA) of $137.8 million for the second quarter of 2009, an increase of approximately $31.1 million, or 29 percent, over the prior year period. Adjusted OIBDA for the Company’s existing business was $191.5 million, an increase of approximately $37 million, or 24 percent, over the prior year period. Operating income for the second quarter of 2009 was $26.3 million, compared to operating income of $14.5 million for the second quarter of 2008, an increase of $11.8 million, or approximately 81 percent.
The Company reported approximately 203,000 net customer additions, an increase of 19 percent from the second quarter of 2008. Second quarter customer additions included approximately 184,000 net voice additions in the Company’s expansion markets (those markets that launched service after December 31, 2007); a net loss of approximately 25,000 voice customers in the Company’s existing markets (those markets in operation prior to December 31, 2007); and approximately 44,000 net broadband additions. Churn for the quarter was 4.4 percent.
“The Company delivered solid financial performance in the second quarter and for the first half of the year. We believe this solid performance reflects our ability to execute on our long-term strategy. The rapid transformations taking place within the wireless industry have not changed our positive long-term view, but will have an impact on our performance for the balance of 2009, and the outlook for the Company has been revised appropriately. Our superior products, state-of-the-art 3G network, broad and diverse distribution channels and value leadership supported by our industry-leading cost structure provide us with a long-term competitive advantage to attract and retain customers in the wireless marketplace,” said Doug Hutcheson, Leap\'s president and chief executive officer.
“The Company is pleased with the progress we are making to strengthen and expand our business position,” continued Hutcheson. “The Company launched the Baltimore-Washington, D.C. market in late June, successfully completing the build-out of markets covering approximately 36 million covered POPs in the first phase of our AWS expansion. We have continued to develop our Cricket Broadband service, and an increasing number of customers are subscribing to the service. In addition, the Company has recently announced enhanced service plans, added features and expanded coverage plans, and we expect to selectively expand into new and existing national retail channels prior to the holiday buying season. We believe that all of these actions will strengthen the Company’s position in today’s increasingly competitive environment.”
(1) For a reconciliation of non-GAAP financial measures, please refer to the section entitled “Definition of Terms and Reconciliation of Non-GAAP Financial Measures” included at the end of this release. Information relating to population and potential customers (POPs) is based on population estimates provided by Claritas Inc. for the relevant year.
(2) The term “existing markets” in this release refers to the Company’s markets in service on December 31, 2007, and the term “expansion markets” refers to the Company’s markets which launched service after December 31, 2007. The term “existing business” refers to the Company’s business operations in existing markets, excluding any effects of the Company’s Cricket Broadband service.
(3) The Company recognizes a gross customer addition for each Cricket Wireless, Cricket Broadband and Cricket PAYGo™ line of service activated by a customer.
(4) Results for net customer additions and churn for the three and six months ended June 30, 2008 exclude customers acquired from Hargray Communications Group in markets in South Carolina and Georgia in April 2008.
Discussion of Financial and Operational Results for the Quarter
Other Key Operational Highlights
“We believe that the second quarter results reflect the fundamental strength of our business and underlying cost structure,” said Walter Berger, Leap’s executive vice president and chief financial officer. “The benefits of our growing scale are evident in the 29 percent year-over-year increase in adjusted OIBDA and 44 percent adjusted OIBDA margins delivered by our existing business. As we look ahead, we have updated our business outlook to reflect the investments we intend to make to meet challenges to our business. In support of these actions, we also expect to launch additional productivity and process improvement initiatives beginning in the second half of 2009 that we believe will help capture incremental opportunities and cost efficiencies we have identified and accelerate the benefits of scale we are experiencing as our business grows. We believe that our strong balance sheet, growing cash flows and disciplined focus on cost management strongly position us to meet the challenges facing our business and put us at the forefront in an industry where a low cost structure and strong liquidity are significant competitive advantages.”
Updated Business Outlook
The Company has updated its business outlook for fiscal years 2009 and 2010 to reflect its current expectations for customer growth and financial results as a result of recently emerging challenges in the competitive environment, actions the Company is taking to increase the number of customers using its Cricket services, and the evolving challenges our customers face in the economic environment.
The following forward-looking statements are based on management\'s current plans and its review of current operating, financial and competitive information and projections regarding the Company’s future performance, which are dynamic and subject to change. These forward-looking statements are qualified in that regard and speak only of management\'s views as of the date of this release. The Company does not undertake any obligation to publicly update or revise these forward-looking projections, whether as a result of new information, future events or otherwise. Actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with the Company’s business. Factors that could cause actual results to differ from these forward-looking statements are described later in this release.
Conference Call Information
As previously announced, Leap management will host a conference call with live webcast at 5:00 p.m. EDT / 2:00 p.m. PDT today to discuss these results. Other forward-looking and material information may also be discussed during this call.
To listen live via telephone, dial 1-866-713-8307 (domestic) or 1-617-597-5307 (international) and enter passcode number 39653317. If listening via telephone, the accompanying presentation slides may be accessed by visiting :b5a9:http://investor.leapwireless.com:/b5a9:. Listeners should navigate to the webcast and choose the \'Live Phone\' option to view the slides in conjunction with the live conference call. Individuals dialing into the live call are encouraged to call in 15 minutes prior to the start time in order to register and be placed into the call.
To listen live via webcast and view accompanying presentation slides, visit :b5a9:http://investor.leapwireless.com:/b5a9:. Please choose the \'webcast\' option to view the slides in conjunction with the webcast.
An online replay and downloadable MP3 of the event will be available on the Company’s website shortly after the live call and will be accessible for a limited period of time. A telephonic replay will be available two hours after the call’s completion and can be accessed by dialing 1-888-286-8010 (domestic) or 1-617-801-6888 (international) and entering conference ID number 43795985.
Leap provides innovative, high-value wireless services to a fast-growing, young and ethnically diverse customer base. With the value of unlimited wireless services as the foundation of its business, Leap pioneered its Cricket® service. The Company and its joint ventures operate in 34 states and the District of Columbia and hold licenses in 35 of the top 50 U.S. markets. Through its affordable, flat-rate service plans, Cricket offers customers a choice of unlimited voice, text, high-speed data and mobile Web services. Headquartered in San Diego, Calif., Leap is traded on the NASDAQ Global Select Market under the ticker symbol “LEAP.” For more information, please visit www.leapwireless.com.
Notes Regarding Non-GAAP Financial Measures
Information presented in this press release and in the attached financial tables includes financial information prepared in accordance with generally accepted accounting principles in the U.S., or GAAP, as well as non-GAAP financial measures. Generally, a non-GAAP financial measure, within the meaning of Item 10 of Regulation S-K promulgated by the Securities and Exchange Commission (SEC), is a numerical measure of a company’s financial performance or cash flows that (a) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, which are included in the most directly comparable measure calculated and presented in accordance with GAAP in the consolidated balance sheets, consolidated statements of operations or consolidated statements of cash flows; or (b) includes amounts, or is subject to adjustments that have the effect of including amounts, which are excluded from the most directly comparable measure so calculated and presented. As described more fully in the notes to the attached financial tables, management supplements the information provided by financial statement measures with several customer-focused performance metrics that are widely used in the telecommunications industry. Adjusted OIBDA, Existing Business Adjusted OIBDA, CPGA, and CCU are non-GAAP financial measures. Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. Reconciliations of non-GAAP financial measures used in this release to the most directly comparable GAAP financial measures can be found in the section entitled “Definition of Terms and Reconciliation of Non-GAAP Financial Measures” included toward the end of this release.
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect management’s current expectations based on currently available operating, financial and competitive information, but are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those anticipated in or implied by the forward-looking statements. Our forward-looking statements include our discussions in “Updated Business Outlook” for fiscal years 2009 and 2010 and future years and our expectations regarding future growth, spending, results of operations and customer penetration, and are generally identified with words such as “believe,” “expect,” “intend,” “plan,” “could,” “may” and similar expressions. Risks, uncertainties and assumptions that could affect our forward-looking statements include, among other things:
All forward-looking statements included in this news release should be considered in the context of these risks. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors and prospective investors are cautioned not to place undue reliance on our forward-looking statements.
Leap is a U.S. registered trademark and the Leap logo is a trademark of Leap. Cricket, Jump, the Cricket “K” and Flex Bucket are U.S. registered trademarks of Cricket. In addition, the following are trademarks or service marks of Cricket: BridgePay, Cricket By Week, Cricket Choice, Cricket Connect, Cricket Nation and Cricket Wireless Internet Service. All other trademarks are the property of their respective owners.