In addition, the Company’s Board of Directors declared a regular quarterly cash distribution of $0.25 per share. The cash distribution will be paid on December 10, 2009 to stockholders of record on November 17, 2009. The Company expects the entire distribution to be paid as a return of capital.
Total revenue for the third quarter was $69.5 million, compared to $75.1 million in the second quarter and $88.4 million in the third quarter of 2008. Operating income in the third quarter was $15.0 million, compared to $14.5 million in the year-earlier quarter. EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) increased to $25.7 million from $25.5 million in the third quarter of 2008.
Net income for the third quarter was $9.2 million, or $0.40 per fully diluted share, compared to net income of $2.4 million, or $0.09 per fully diluted share, in the year-earlier quarter.
Third quarter results included:
- Operating expenses (excluding depreciation, amortization and accretion) totaled $43.8 million, compared to $51.2 million in the second quarter and $62.8 million in the third quarter of 2008.
- EBITDA margin (or EBITDA as a percentage of revenue) was 37.0 percent, compared to 31.9 percent in the second quarter and 28.9 percent in the year-earlier quarter.
- Total paging ARPU (average revenue per unit) was $8.89, compared to $8.96 in the second quarter and $8.69 in the third quarter of 2008.
- The quarterly rate of revenue erosion increased to 7.5 percent from 5.7 percent in the second quarter and 4.0 percent in the third quarter of 2008. The annual rate of revenue erosion was 21.3 percent, compared to 18.4 percent in the second quarter and 16.2 percent in the year-earlier quarter.
- Net unit loss in the third quarter was 152,000, compared to 158,000 in the second quarter and 174,000 in the third quarter of 2008. At September 30, 2009, total units in service were 2,297,000, compared to 2,449,000 at June 30, 2009.
- The quarterly rate of net unit loss was 6.2 percent, compared to 6.0 percent in the second quarter and 5.5 percent in the third quarter of 2008. The annual rate of subscriber loss was 23.5 percent, compared to 22.9 percent in the second quarter and 17.1 percent in the year-earlier quarter.
- Capital expenses were $1.8 million versus $4.4 million in the second quarter.
- The Company’s cash balance at September 30, 2009 was $95.7 million.
“We reported another solid performance in the third quarter despite a continued high rate of unit loss,” said Vincent D. Kelly, president and chief executive officer. “Operating results met or exceeded the majority of our targeted objectives and were consistent with our previously stated financial guidance. Cash flow margins remained high, operating expenses were reduced to their lowest level in many years, and we continued to provide cost effective and reliable wireless communications services to customers on a profitable basis.” Kelly said the slow economy and continuing high unemployment nationwide contributed to higher than expected subscriber cancellations. “Still,” he added, “we saw encouraging signs in our Healthcare segment – which now comprises more than 50 percent of our customer base – with the addition of numerous hospital and medical-related accounts.”
Kelly said the Company again returned capital to stockholders in the third quarter in the form of cash distributions, consistent with its goal of producing sufficient free cash flow to return capital to stockholders. “Generating $23.6 million in cash from operations in the quarter allowed us to pay a regular quarterly cash distribution of $0.25 per share on September 10, 2009, representing a return of capital to stockholders of approximately $5.7 million. With the third quarter distribution, we have returned $316.7 million to stockholders since 2005.”
The Company continued to reduce operating expenses during the third quarter through ongoing cost control measures. Thomas L. Schilling, chief operating officer and chief financial officer, said: “We made excellent progress in the third quarter reducing expenses throughout the organization. Moreover, we continued to reduce operating expenses faster than the rate of revenue erosion as expenses (excluding depreciation, amortization and accretion) declined 30.3 percent from the year-earlier quarter while revenue declined 21.3 percent. In addition, third quarter operating expenses as a percentage of revenue improved to 63.0 percent, the lowest level in many years.” Schilling said lower operating expenses also helped keep the Company’s cash flow margins near all-time highs. However, he cautioned, “Our ability to sustain operating margins at these levels going forward will become increasingly difficult given current subscriber and revenue trends.”
Commenting on the Company’s financial expectations for the balance of the year, Schilling said, “Based on our performance through September 30 th , we are maintaining our financial guidance for 2009 of revenue between $286 million to $291 million, operating expenses (excluding depreciation, amortization and accretion) between $194 million to $197 million, and capital expenses between $16 million to $18 million.
About USA Mobility
USA Mobility, Inc., headquartered in Alexandria, Virginia, is a comprehensive provider of reliable and affordable wireless communications solutions to the healthcare , government , large enterprise and emergency response sectors. As a single-source provider, USA Mobility ‘ s focus is on the business-to-business marketplace and supplying wireless connectivity solutions to a majority of the Fortune 1000 companies. The Company operates the largest one-way paging and advanced two-way paging networks in the United States. In addition, USA Mobility offers mobile voice and data services through Sprint Nextel , including BlackBerry® 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 .