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

Wireless Subscriber and Revenue Trends Continue to Improve; Software Solutions Launched, Application Development Advances; Operating Expenses Reduced; Outstanding Debt Repaid

Amcom Acquires Critical Test Results Management Solution from IMCO Technologies

SPRINGFIELD, Va.--(BUSINESS WIRE)--May. 3, 2012-- 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 first quarter ended March 31, 2012. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per share, payable on June 22, 2012 to stockholders of record on May 18, 2012.

Consolidated revenue for the first quarter was $56.7 million, compared to $58.9 million in the fourth quarter and $57.3 million in the first quarter of 2011. Revenue from the Company’s Wireless business (USA Mobility Wireless) was $44.3 million in the first quarter, compared to $46.5 million in the fourth quarter and $52.5 million in the first quarter of 2011. Revenue from the Software business (Amcom Software) was $12.5 million, compared to revenue of $4.8 million in the first quarter of 2011. USA Mobility acquired Amcom on March 3, 2011. As a result, reported results for the Software business for the first quarter of 2011 included only the 29-day period from March 3, 2011 to March 31, 2011. In addition, Software maintenance revenue in the prior year’s first quarter was reduced by $0.9 million for purchase accounting adjustments. Accordingly, on a pro forma basis, reflecting Amcom results for the full quarter and excluding purchase accounting adjustments, Software revenue for the first quarter of 2011 was $13.1 million and consolidated revenue was $65.6 million.

First quarter EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $18.8 million, or 33.1 percent of revenue, compared to $17.9 million, or 31.2 percent of revenue, in the year-earlier quarter. On a pro forma basis, excluding purchase accounting adjustments and one-time acquisition related expenses, EBITDA in the year-earlier quarter was $21.7 million, or 33.0 percent of revenue. First quarter EBITDA included $17.5 million from Wireless and $1.3 million from Software. EBITDA from Wireless of $17.5 million compared to $17.1 million in the prior quarter and $17.0 million in the year-earlier quarter.

Net income for the first quarter was $8.5 million, or $0.37 per fully diluted share, compared to $40.7 million, or $1.82 per fully diluted share, in the first quarter of 2011. Net income for the year-earlier quarter reflected 29 days of the Software business as well as the purchase accounting adjustment to Software maintenance revenue and one-time acquisition related expenses. In addition, the acquisition resulted in a $32.4 million reduction in the deferred income tax asset valuation allowance and a corresponding reduction in income tax expense. Excluding the purchase accounting adjustment to software maintenance revenue, the one-time acquisition related expenses and the reduction in the deferred income tax asset valuation allowance, net income for the first quarter of 2011 would have been $10.9 million, or $0.49 per fully diluted share.

First quarter results included:

Wireless

  • Net unit losses improved to 51,000 in the first quarter from 53,000 in the fourth quarter and 60,000 in the first quarter of 2011, while the quarterly rate of unit erosion improved to 3.0 percent from 3.2 percent in the year-earlier quarter. The annual rate of subscriber erosion improved to 11.5 percent in the first quarter, compared to 11.7 percent in the fourth quarter and 12.9 percent in the year-ago quarter, and was the lowest annual unit loss rate in more than seven years. Units in service at March 31, 2012 totaled 1,617,000, compared to 1,828,000 a year earlier.
  • The quarterly rate of revenue erosion was 4.9 percent, compared to 4.1 percent in the fourth quarter and 3.9 percent in the first quarter of 2011, while the annual rate of revenue erosion improved to 15.7 percent from 16.3 percent in the year-earlier quarter. In 2012, we transferred most of the Wireless systems sales revenue to our Software business. Excluding systems sales revenue in the first quarter of 2011 of $0.6 million, the quarterly rate of revenue erosion would have improved to 3.6 percent and the annual rate of revenue erosion would have improved to 14.8 percent.
  • Total ARPU (average revenue per unit) was $8.50 in the first quarter, compared to $8.51 in the fourth quarter and $8.72 in the first quarter of 2011.
  • First quarter EBITDA margin for Wireless was 39.5 percent, compared to 36.7 percent in the fourth quarter and 32.3 percent in the year-earlier quarter. Excluding severance expenses, EBITDA margin would have been 39.3 percent in the fourth quarter of 2011 and excluding the one-time acquisition related expenses EBITDA margin would have been 37.8 percent in the first quarter of 2011.

Software

  • Bookings for the first quarter were $12.4 million, compared to $15.2 million in the fourth quarter and pro forma bookings in the first quarter of 2011 of $13.7 million. Historically, the first quarter is the lowest quarter for bookings and revenue.
  • The backlog was $23.7 million at March 31, 2012, a slight increase from the fourth quarter, and compared to $18.9 million a year earlier.
  • Of the $12.5 million in Software revenue for the first quarter, $6.4 million was maintenance revenue and $6.1 million was operations revenue, compared to $5.1 million and $7.3 million, respectively, of the $12.4 million in Software revenue for the prior quarter (which included $1.0 million of purchase accounting adjustment to software maintenance revenue).
  • The renewal rate for maintenance in the first quarter was 99.6 percent.

Total Company

  • Consolidated operating expenses (excluding depreciation, amortization and accretion) totaled $38.0 million in the first quarter, with $26.8 million for Wireless and $11.2 million for Software, compared to $40.6 million in the fourth quarter, with $29.5 million for Wireless and $11.1 million for Software.
  • Capital expenses were $1.6 million, compared to $1.5 million in the first quarter of 2011.
  • Dividends paid to stockholders totaled $5.5 million for the first quarter.
  • The Company’s outstanding debt balance at March 31, 2012 was $3.3 million, at an interest rate of 3.63 percent, and the cash balance was $37.5 million. On April 6, 2012, the Company repaid the remaining debt balance of $3.3 million.
  • The number of full-time equivalent employees at March 31, 2012 totaled 685, including 420 for Wireless and 265 for Software, compared to a total of 683 at December 31, 2011.

Vincent D. Kelly, president and chief executive officer, said: “USA Mobility continued to make excellent progress during the first quarter, consistent with the financial guidance we provided earlier this year. Our Wireless business met or exceeded all key performance goals for gross additions, churn, and ARPU. Further, our overall Wireless trends continued to improve and our results have come in well ahead of plan. We were especially pleased to see further improvement in the annual rates of subscriber and revenue erosion. Our Software business also made substantial progress in the quarter. Although bookings fell below expectations due to lag-time in the software sales cycle on new customer accounts, we increased our backlog and made significant advances in Amcom’s product and business development initiatives. This includes Amcom’s acquisition on May 2nd 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, for the combined business we 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 the Company’s Wireless sales and marketing efforts continued to focus on its core market segments of Healthcare, Government and Large Enterprise during the first quarter. “These core segments represented approximately 90.6 percent of our direct subscriber base and 86.1 percent of our direct paging revenue at the end of the first quarter, compared to 88.9 percent and 83.8 percent, respectively, a year earlier. Healthcare continued to be our best performing market segment with the highest percentage of direct gross additions (77.9%) and the lowest rate of direct net unit loss (1.4%) as healthcare providers continue to benefit from the reliability and cost advantages of paging for their most critical messaging needs.”

Commenting on the Software business, Christopher D. Heim, president of Amcom, said: “Despite slower than expected bookings, we delivered an increase in quarter-over-quarter revenue and a growing backlog and sales pipeline at March 31st. During the quarter our sales team brought in solid orders from multiple business segments, including Healthcare, Government, Large Enterprise and Hospitality, with continued demand for call center management, clinical alerting middleware, critical smartphone communications and emergency notification. While sales activity remained strongest in North America, we also completed sales in Asia and the Middle East. In addition,” Heim noted, “our sales and marketing teams launched two new solutions for the Healthcare market during the quarter, including Amcom Care Connect, which enhances patient care by helping busy doctors coordinate and execute phone conversations, and Amcom Duty Hours Tracking, which helps teaching hospitals stay compliant with accreditation guidelines on how many hours their residents can work.”

Heim said Amcom acquired the Critical Test Results Management solution from IMCO Technologies for approximately $3.0 million in cash, providing USA Mobility’s Software business extensive expertise in the effective communication of critical test results management. “It also gives us another communication software solution to improve and enhance communications in clinical settings. Many of our 900 hospital customers have previously requested this specific type of solution, so we’re very pleased to be able to integrate this capability with their existing infrastructures to enhance patient safety and care.”

Shawn E. Endsley, chief financial officer, said the Company continued to reduce operating expenses in the first quarter. “Recurring operating expenses (excluding depreciation, amortization and accretion) for Wireless decreased 18.0 percent from the year-earlier quarter,” he noted, “and again exceeded the annual rate of Wireless revenue decline. Also, Wireless revenue for the quarter remained strong, driven largely by a stable ARPU and improved unit churn.” Endsley said the Company reduced its outstanding debt balance to $3.3 million at March 31st and repaid the $3.3 million balance on April 6, 2012. “Our acquisition of Amcom on March 3, 2011 was funded in part through a $51.9 million credit facility. With repayment of that debt, USA Mobility is once again a debt-free company.”

Regarding financial guidance for 2012, Endsley said the Company is reiterating its prior guidance for the full year, with total revenues expected to range from $214 million to $232 million, operating expenses (excluding depreciation, amortization and accretion) to range from $156.5 million to $163.5 million, and capital expenses to range from $7.5 million to $10 million.

* * * * * * * * *

USA Mobility plans to host a conference call for investors on its first quarter results at 10:00 a.m. Eastern Time on Friday, May 4, 2012. Dial-in numbers for the call are 719-325-2199 or 888-634-7543. The pass code for the call is 3944122. A replay of the call will be available from 1:00 p.m. ET on May 4 until 11:59 p.m. on Friday, May 18. Replay numbers are 719-457-0820 or 888-203-1112. The pass code for the replay is 3944122.

In addition, the Company will host a meeting for financial analysts from 9:30 a.m. to 10:30 a.m. on Wednesday, May 16, 2012 in Alexandria, Virginia immediately following its Annual Meeting of Stockholders. The Annual Meeting of Stockholders is scheduled to begin at 9:00 a.m. The Analysts Meeting and Annual Meeting will be held at The Westin Alexandria, 400 Courthouse Square, Bell Room, Alexandria, Virginia. Financial analysts planning to attend the Analysts Meeting should RSVP to stacy.sloan@usamobility.com or call 703-269-6950.

* * * * * * * * *

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® 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

                           
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 March 31,
2012 2011
Wireless     Software     Total Wireless     Software     Total
 
Revenue:
Paging service $ 41,875 $ - $ 41,875 $ 48,628 $ - $ 48,628
Cellular 277 - 277 684 - 684
Product and related sales (c) 1,787 12,470 14,257 2,344 4,799 7,143
Other   326         -         326     880         -         880  
Total revenue   44,265         12,470         56,735     52,536         4,799         57,335  
 
Operating expenses:
Cost of products sold 173 4,643 4,816 663 1,767 2,430
Service, rental and maintenance (c) 12,034 2,269 14,303 15,816 649 16,465
Selling and marketing 3,048 2,605 5,653 3,833 1,091 4,924
General and administrative 11,508 1,661 13,169 15,240 328 15,568
Severance and restructuring 9 13 22 33 - 33
Depreciation, amortization and accretion   2,815         1,700         4,515     4,032         507         4,539  
Total operating expenses   29,587         12,891         42,478     39,617         4,342         43,959  
% of total revenue 66.8 % 103.4 % 74.9 % 75.4 % 90.5 % 76.7 %
 
Operating income (loss) 14,678 (421 ) 14,257 12,919 457 13,376
% of total revenue 33.2 % -3.4 % 25.1 % 24.6 % 9.5 % 23.3 %
 
Interest expense, net (188 ) - (188 ) (247 ) (9 ) (256 )
Other (expense) income, net   (46 )       (16 )       (62 )   205         (51 )       154  
Income (loss) before income tax (expense) benefit 14,444 (437 ) 14,007 12,877 397 13,274
Income tax (expense) benefit   (5,718 )       173         (5,545 )   27,583         (206 )       27,377  
Net income (loss) $ 8,726       $ (264 )     $ 8,462   $ 40,460       $ 191       $ 40,651  
 
Basic net income per common share $ 0.38   $ 1.84  
Diluted net income per common share $ 0.37   $ 1.82  
 
Basic weighted average common shares outstanding   22,106,543     22,063,393  
Diluted weighted average common shares outstanding   22,589,483     22,333,399  
 
 
Reconciliation of operating income (loss) to EBITDA (d):
Operating income (loss) $ 14,678 $ (421 ) $ 14,257 $ 12,919 $ 457 $ 13,376
Add back: depreciation, amortization and accretion   2,815         1,700         4,515     4,032         507         4,539  
EBITDA $ 17,493       $ 1,279       $ 18,772   $ 16,951       $ 964       $ 17,915  
% of total revenue 39.5 % 10.3 % 33.1 % 32.3 % 20.1 % 31.2 %
 
Key statistics:
Units in service 1,617 - 1,617 1,828 - 1,828
Average revenue per unit (ARPU) $ 8.50 $ - $ 8.50 $ 8.72 $ - $ 8.72
Bookings $ - $ 12,417 $ 12,417 $ - $ 3,327 $ 3,327
Backlog $ - $ 23,747 $ 23,747 $ - $ 18,869 $ 18,869
 
(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 BALANCE SHEETS (a)
(In thousands)
         
 
 
3/31/12 12/31/11
(Unaudited)
 
Assets
Current assets:
Cash and cash equivalents $ 37,518 $ 53,655
Accounts receivable, net 19,753 20,523
Prepaid expenses and other 3,933 4,338
Inventory 2,575 2,268
Escrow receivables 7,418 14,819
Deferred income tax assets, net   4,436         8,617
Total current assets 75,633 104,220
Property and equipment, net 21,092 22,421
Goodwill 130,968 130,968
Other intangible assets, net 37,211 38,757
Deferred income tax assets, net 50,394 51,600
Other assets   2,004         2,094
Total assets $ 317,302       $ 350,060
 
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt $ 3,250 $ -
Accounts payable and accrued liabilities 12,462 12,394
Accrued compensation and benefits 8,878 12,854
Consideration payable 7,418 14,819
Customer deposits 1,899 1,806
Deferred revenue   14,489         14,693
Total current liabilities 48,396 56,566
Long-term debt, net of current portion - 28,250
Deferred revenue 521 581
Other long-term liabilities   12,277         12,223
Total liabilities   61,194         97,620
Commitments and contingencies
Stockholders' equity:
Preferred stock - -
Common stock 2 2
Additional paid-in capital 132,471 131,612
Retained earnings   123,635         120,826
Total stockholders' equity   256,108         252,440
Total liabilities and stockholders' equity $ 317,302       $ 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 three months ended
3/31/12 3/31/11
 
Cash flows from operating activities:
Net income $ 8,462 $ 40,651
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation, amortization and accretion 4,515 4,539
Amortization of deferred financing costs 65 45
Deferred income tax expense (benefit) 5,387 (27,929 )
Amortization of stock based compensation 437 225
Provisions for doubtful accounts, service credits and other 411 700
Settlement of non-cash transaction taxes (123 ) (119 )
Loss/(Gain) on disposals of property and equipment 162 (13 )
Changes in assets and liabilities:
Accounts receivable 358 (49 )
Prepaid expenses, intangibles and other assets 118 (154 )
Accounts payable and accrued liabilities (3,680 ) (5,046 )
Customer deposits and deferred revenue   (171 )         (161 )
Net cash provided by operating activities   15,941           12,689  
 
Cash flows from investing activities:
Purchases of property and equipment (1,551 ) (1,494 )
Proceeds from disposals of property and equipment 8 11
Acquisitions, net of cash acquired   -           (134,217 )
Net cash used in investing activities   (1,543 )         (135,700 )
 
Cash flows from financing activities:
Issuance of debt - 24,044
Repayment of debt (25,000 ) -
Deferred financing costs - (1,339 )
Cash dividends to stockholders   (5,535 )         (5,531 )
Net cash (used in) provided by financing activities   (30,535 )         17,174  
 
 
Net decrease in cash and cash equivalents (16,137 ) (105,837 )
Cash and cash equivalents, beginning of period   53,655           129,220  
Cash and cash equivalents, end of period $ 37,518         $ 23,383  
 
Supplemental disclosure:
Interest paid $ 220         $ 263  
Income taxes paid $ 224         $ -  
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
3/31/12 12/31/11 9/30/11 6/30/11 3/31/11
 
Revenues:
Paging service $ 41,875 $ 43,249 $ 45,121 $ 47,319 $ 48,628
Cellular 277 414 315 1,199 684
Product and related sales 14,257 14,847 15,464 15,885 7,143
Other   326         421         570         768         880  
Total revenues   56,735         58,931         61,470         65,171         57,335  
 
Operating expenses:
Cost of products sold 4,816 5,430 5,951 7,078 2,430
Service, rental and maintenance 14,303 14,478 15,217 16,187 16,465
Selling and marketing 5,653 5,851 5,927 6,588 4,924
General and administrative 13,169 13,610 13,077 13,840 15,568
Severance and restructuring 22 1,215 28 17 33
Depreciation, amortization and accretion   4,515         4,417         5,080         5,298         4,539  
Total operating expenses   42,478         45,001         45,280         49,008         43,959  
% of total revenues 74.9 % 76.4 % 73.7 % 75.2 % 76.7 %
 
Operating income 14,257 13,930 16,190 16,163 13,376
% of total revenues 25.1 % 23.6 % 26.3 % 24.8 % 23.3 %
 
Interest expense, net (188 ) (404 ) (732 ) (862 ) (256 )
Other (expense) income, net   (62 )       131         (1 )       7,666         154  
Income before income tax (expense) benefit 14,007 13,657 15,457 22,967 13,274
Income tax (expense) benefit   (5,545 )       5,289         (5,010 )       (4,372 )       27,377  
Net income $ 8,462       $ 18,946       $ 10,447       $ 18,595       $ 40,651  
 
Basic net income per common share $ 0.38       $ 0.86       $ 0.47       $ 0.84       $ 1.84  
Diluted net income per common share $ 0.37       $ 0.84       $ 0.46       $ 0.82       $ 1.82  
 
Basic weighted average common shares outstanding   22,106,543         22,094,197         22,090,913         22,086,848         22,063,393  
Diluted weighted average common shares outstanding   22,589,483         22,577,312         22,573,064         22,551,862         22,333,399  
 
Reconciliation of operating income to EBITDA (c):
Operating income $ 14,257 $ 13,930 $ 16,190 $ 16,163 $ 13,376
Add back: depreciation, amortization and accretion   4,515         4,417         5,080         5,298         4,539  
EBITDA $ 18,772       $ 18,347       $ 21,270       $ 21,461       $ 17,915  
% of total revenues 33.1 % 31.1 % 34.6 % 32.9 % 31.2 %
 
Key statistics:
Units in service 1,617 1,668 1,721 1,779 1,828
Average revenue per unit (ARPU) $ 8.50 $ 8.51 $ 8.59 $ 8.74 $ 8.72
Bookings $ 12,417 $ 15,213 $ 14,188 $ 15,158 $ 3,327
Backlog $ 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
3/31/12 12/31/11 9/30/11 6/30/11 3/31/11
 
Cost of products sold
Payroll and related $ 2,368 $ 2,277 $ 2,537 $ 2,156 $ 677
Cost of sales 2,037 2,724 3,132 4,263 1,536
Other   411       429       282       659         217
Total cost of products sold   4,816       5,430       5,951       7,078         2,430
 
Service, rental and maintenance
Site rent 4,791 5,002 5,438 5,962 6,881
Telecommunications 2,312 2,598 2,732 2,880 3,102
Payroll and related 5,529 5,279 5,578 5,562 4,769
Stock based compensation 6 6 6 6 5
Other   1,665       1,593       1,463       1,777         1,708
Total service, rental and maintenance   14,303       14,478       15,217       16,187         16,465
 
Selling and marketing
Payroll and related 3,559 3,306 3,593 3,567 2,904
Commissions 1,253 1,539 1,443 1,948 1,414
Stock based compensation 16 16 16 16 17
Other   825       990       875       1,057         589
Total selling and marketing   5,653       5,851       5,927       6,588         4,924
 
General and administrative
Payroll and related 6,490 6,268 5,778 6,781 6,072
Stock based compensation 415 415 392 432 203
Bad debt 234 363 346 (80 ) 416
Facility rent 806 942 1,041 1,035 823
Telecommunications 412 440 494 490 470
Outside services 2,447 2,079 2,496 2,533 5,228
Taxes, licenses and permits 1,501 1,445 1,327 2,190 1,332
Other   864       1,658       1,203       459         1,024
Total general and administrative   13,169       13,610       13,077       13,840         15,568
 
Severance and restructuring 22 1,215 28 17 33
Depreciation, amortization and accretion 4,515 4,417 5,080 5,298 4,539
                         
Operating expenses $ 42,478     $ 45,001     $ 45,280     $ 49,008       $ 43,959
 
Capital expenditures $ 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
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 1,465 1,510 1,559 1,599 1,645
Direct two-way 90       93       97       100       106  
Total direct 1,555       1,603       1,656       1,699       1,751  
Indirect one-way 63 68 71 75 68
Indirect two-way 50       50       52       54       70  
Total indirect 113       118       123       129       138  
Total beginning units in service 1,668       1,721       1,779       1,828       1,889  
 
Gross placements
Direct one-way 41 39 50 56 47
Direct two-way 3       4       5       5       3  
Total direct 44       43       55       61       50  
Indirect one-way 1 2 3 3 1
Indirect two-way -       -       -       2       -  
Total indirect 1       2       3       5       1  
Total gross placements 45       45       58       66       51  
 
Gross disconnects
Direct one-way (83 ) (84 ) (99 ) (94 ) (93 )
Direct two-way (8 )     (7 )     (9 )     (10 )     (9 )
Total direct (91 )     (91 )     (108 )     (104 )     (102 )
Indirect one-way (4 ) (7 ) (6 ) (10 ) 6
Indirect two-way (1 )     -       (2 )     (1 )     (16 )
Total indirect (5 )     (7 )     (8 )     (11 )     (10 )
Total gross disconnects (96 )     (98 )     (116 )     (115 )     (112 )
 
Net (loss)/gain
Direct one-way (42 ) (45 ) (49 ) (38 ) (46 )
Direct two-way (5 )     (3 )     (4 )     (5 )     (6 )
Total direct (47 )     (48 )     (53 )     (43 )     (52 )
Indirect one-way (3 ) (5 ) (3 ) (7 ) 7
Indirect two-way (1 )     -       (1 )     1       (16 )
Total indirect (4 )     (5 )     (4 )     (6 )     (9 )
Total net change (51 )     (53 )     (58 )     (49 )     (60 )
 
Ending units in service
Direct one-way 1,423 1,465 1,510 1,559 1,599
Direct two-way 85       90       93       97       100  
Total direct 1,508       1,555       1,603       1,656       1,699  
Indirect one-way 60 63 68 71 75
Indirect two-way 49       50       50       52       54  
Total indirect 109       113       118       123       129  
Total ending units in service 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
3/31/12 12/31/11 9/30/11 6/30/11 3/31/11
 

ARPU

Direct one-way $ 7.91 $ 7.90 $ 7.97 $ 8.10 $ 8.05
Direct two-way   21.08         21.27         21.60         22.05         22.23  
Total direct 8.67 8.68 8.77 8.92 8.89
 
Indirect one-way 7.61 7.49 7.28 7.57 8.44
Indirect two-way   4.33         4.43         4.77         4.77         4.31  
Total indirect 6.14 6.16 6.22 6.40 6.49
 
Total one-way 7.90 7.89 7.94 8.08 8.07
Total two-way   15.00         15.29         15.71         16.04         15.41  
Total paging ARPU $ 8.50       $ 8.51       $ 8.59       $ 8.74       $ 8.72  
 
 
 

Gross disconnect rate (b)

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

Net (loss)/gain rate (c)

Direct one-way -2.9 % -3.0 % -3.2 % -2.5 % -2.9 %
Direct two-way   -4.9 %       -3.3 %       -4.1 %       -3.1 %       -3.6 %
Total direct -3.0 % -3.0 % -3.2 % -2.6 % -3.0 %
 
Indirect one-way -5.4 % -7.4 % -4.5 % -5.3 % 14.6 %
Indirect two-way   -0.9 %       -1.0 %       -2.3 %       -3.0 %       -25.8 %
Total indirect -3.4 % -4.7 % -3.6 % -4.3 % -6.6 %
 
Total one-way -3.0 % -3.2 % -3.2 % -2.6 % -2.2 %
Total two-way   -3.5 %       -2.5 %       -3.5 %       -3.1 %       -12.7 %
Total paging net loss rate   -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
3/31/12 12/31/11 9/30/11 6/30/11 3/31/11
 
Gross placement rate (b)
Healthcare 3.3 % 3.0 % 3.9 % 4.5 % 3.3 %
Government 1.3 % 1.6 % 2.6 % 2.1 % 1.9 %
Large enterprise 2.4 % 2.1 % 2.1 % 2.1 % 2.3 %
Other 2.2 %     2.8 %     1.9 %     2.0 %     2.5 %
Total direct 2.8 % 2.7 % 3.3 % 3.6 % 2.9 %
Total indirect 1.3 %     1.7 %     2.4 %     2.3 %     1.6 %
Total 2.7 %     2.6 %     3.3 %     3.5 %     2.8 %
 
Gross disconnect rate (b)
Healthcare -4.7 % -4.9 % -5.7 % -5.0 % -4.7 %
Government -7.7 % -7.4 % -8.3 % -8.7 % -7.6 %
Large enterprise -7.7 % -5.7 % -7.0 % -7.1 % -6.2 %
Other -9.2 %     -8.7 %     -8.9 %     -9.0 %     -9.2 %
Total direct -5.8 % -5.7 % -6.5 % -6.2 % -5.8 %
Total indirect -4.7 %     -6.4 %     -6.0 %     -6.6 %     -8.1 %
Total -5.8 %     -5.7 %     -6.5 %     -6.2 %     -6.0 %
 
Net (loss)/gain rate (b)
Healthcare -1.4 % -1.9 % -1.8 % -0.5 % -1.4 %
Government -6.4 % -5.8 % -5.7 % -6.6 % -5.7 %
Large enterprise -5.3 % -3.6 % -4.9 % -5.0 % -3.9 %
Other -7.1 %     -5.9 %     -7.0 %     -6.9 %     -6.8 %
Total direct -3.0 % -3.0 % -3.2 % -2.6 % -3.0 %
Total indirect -3.4 %     -4.7 %     -3.6 %     -4.3 %     -6.6 %
Total -3.0 %     -3.1 %     -3.3 %     -2.7 %     -3.2 %
 
End of period units in service % of total (b)
Healthcare 63.6 % 62.6 % 61.7 % 60.9 % 59.5 %
Government 11.5 % 11.9 % 12.3 % 12.6 % 13.1 %
Large enterprise 9.3 % 9.5 % 9.6 % 9.8 % 10.0 %
Other 8.8 %     9.2 %     9.5 %     9.7 %     10.3 %
Total direct 93.2 % 93.2 % 93.1 % 93.0 % 92.9 %
Total indirect 6.8 %     6.8 %     6.9 %     7.0 %     7.1 %
Total 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)/gain rates.

                   
USA MOBILITY, INC. (WIRELESS)
SUPPLEMENTAL INFORMATION - DIRECT UNITS IN SERVICE AND CELLULAR
ACTIVATIONS (a)
(Unaudited)
 
 
For the three months ended
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 61 65 69 74 79
4 to 10 units 37 40 42 45 48
11 to 50 units 86 92 99 106 114
51 to 100 units 54 56 61 68 72
101 to 1,000 units 373 380 399 411 424
>1,000 units   897         922         933         952         962  
Total   1,508         1,555         1,603         1,656         1,699  
 
End of period units in service % of total direct
1 to 3 units 4.1 % 4.2 % 4.3 % 4.4 % 4.7 %
4 to 10 units 2.3 % 2.6 % 2.6 % 2.7 % 2.8 %
11 to 50 units 5.7 % 5.9 % 6.2 % 6.4 % 6.7 %
51 to 100 units 3.6 % 3.6 % 3.8 % 4.1 % 4.2 %
101 to 1,000 units 24.8 % 24.4 % 24.9 % 24.8 % 25.0 %
>1,000 units   59.5 %       59.3 %       58.2 %       57.6 %       56.6 %
Total   100.0 %       100.0 %       100.0 %       100.0 %       100.0 %
 
Account size net loss rate
1 to 3 units -6.2 % -5.7 % -5.9 % -6.3 % -6.2 %
4 to 10 units -6.2 % -6.6 % -6.4 % -6.8 % -6.2 %
11 to 50 units -7.1 % -7.3 % -6.4 % -6.5 % -7.7 %
51 to 100 units -3.9 % -8.4 % -10.4 % -5.4 % -5.7 %
101 to 1,000 units -1.7 % -4.7 % -2.9 % -3.3 % -2.7 %
>1,000 units   -2.7 %       -1.1 %       -2.1 %       -1.0 %       -1.8 %
Total   -3.0 %       -3.0 %       -3.2 %       -2.6 %       -3.0 %
 
Account size ARPU
1 to 3 units $ 15.49 $ 15.46 $ 15.62 $ 15.74 $ 15.57
4 to 10 units 14.45 14.37 14.52 14.65 14.53
11 to 50 units 12.15 12.12 12.30 12.38 12.19
51 to 100 units 10.52 10.56 10.59 10.68 10.59
101 to 1,000 units 9.04 8.90 8.90 9.10 9.00
>1,000 units   7.35         7.37         7.42         7.49         7.47  
Total $ 8.67       $ 8.68       $ 8.77       $ 8.92       $ 8.89  
 
 
Cellular:
Number of activations   1,070         1,476         1,236         4,370         2,191  
Revenue from cellular services (000's) $ 277       $ 414       $ 315       $ 1,199       $ 684  
 
(a) Slight variations in totals are due to rounding.
           
USA MOBILITY, INC.
2012 FINANCIAL GUIDANCE
 
(In millions)
Full Year
Guidance Range
From To
Revenues
Wireless $ 156.0 $ 166.0
Software   58.0   66.0
Combined $ 214.0 $ 232.0
 
Operating Expenses (a)
Wireless $ 112.0 $ 108.0
Software   51.5   48.5
Combined $ 163.5 $ 156.5
 
Capital Expenses
Wireless $ 9.0 $ 7.0
Software   1.0   0.5
Combined $ 10.0 $ 7.5
 
(a) Operating expenses exclude depreciation, amortization and accretion.

Source: USA Mobility, Inc.

USA Mobility, Inc.
Bob Lougee, 800-611-8488
bob.lougee@usamobility.com