![]() Company Presentation February 2013 Exhibit 99.2 |
![]() Use of Non-GAAP Financial Measures Included in this presentation are certain non-GAAP financial measures that are not determined in accordance with US generally accepted accounting principles. These financial performance measures are not indicative of cash provided or used by operating activities and exclude the effects of certain operating, capital and financing costs and may differ from comparable information provided by other companies, and they should not be considered in isolation, as an alternative to, or more meaningful than measures of financial performance determined in accordance with US generally accepted accounting principles. These financial performance measures are commonly used in the industry and are presented because Lumos Networks Corp. believes they provide relevant and useful information to investors. The Company utilizes these financial performance measures to assess its ability to meet future capital expenditure and working capital requirements, to incur indebtedness if necessary, and to fund continued growth. Lumos Networks Corp. uses these financial performance measures to evaluate the performance of its business, for budget planning purposes and as factors in its employee compensation programs. Included in this presentation are unaudited product group revenue slides that reflect management’s view of product revenues as they will be measured in 2013. The associated 2012 revenues are an unaudited reclassification of 2012 revenues that were prepared to allow the user to perform trending analyses on a go forward basis. Special Note Regarding Forward-Looking Statements Any statements contained in this presentation that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. The words “anticipates,” “believes,” “expects,” “intends,” “plans,” “estimates,” “targets,” “projects,” “should,” “may,” “will” and similar words and expressions are intended to identify forward-looking statements. Such forward-looking statements reflect, among other things, our current expectations, plans and strategies, and anticipated financial results, all of which are subject to known and unknown risks, uncertainties and factors that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements. Many of these risks are beyond our ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. We do not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise. Important factors with respect to any such forward-looking statements, including certain risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, include, but are not limited to: rapid development and intense competition in the telecommunications industry; our ability to achieve benefits from our separation from NTELOS Holdings Corp; our ability to offset expected revenue declines in our Competitive business from legacy voice products and in our RLEC business related to the recent regulatory developments and carriers grooming their networks; adverse economic conditions; operating and financial restrictions imposed by our senior credit facility; our cash and capital requirements; declining prices for our services; the potential to experience a high rate of customer turnover; federal and state regulatory fees, requirements and developments; our reliance on certain suppliers and vendors; and other unforeseen difficulties that may occur. These risks and uncertainties are not intended to represent a complete list of all risks and uncertainties inherent in our business, and should be read in conjunction with the more detailed cautionary statements and risk factors included in our SEC filings, including our Annual Reports filed on Forms 10-K. 1 |
![]() 2 Value creation for our customers enhances value for our shareholders. Lumos Networks provides next- generation communication solutions and personalized service to customers over an advanced fiber network 2 |
![]() 3 Diversified revenue stream served over a dense fiber network Key Events • Oct. 31, 2011 – Spin from NTELOS • 2012 New leadership team • 4Q12 YoY Overall Revenue Growth • Strategic Data > 52% of revenue • 2nd Quarter of Margin Expansion Customers and Markets • 1,500 Major business customers • Relationships with all major carriers Products • Enterprise Data – Metro E, Internet • Carrier Data - up to 10Gig+ • IP Services – Fiber BXL, Video, VoIP Network • 5,800 Long Haul Fiber Network miles • 370 FTTC (“Fiber to the Cell”) installations • Interconnection to all major data centers in region People • Diversified and experienced leadership team • 400 sales and support personnel deployed across the region • Deep technical expertise • Industry leading customer care 3 |
![]() Highlights Strong Management Team Experienced leadership team Diverse operational background: Telecom, Wireless and Technology Attractive Revenue Growth Opportunity Significant growth available in existing markets Edge out potential with unique network footprint Margin Expansion Increasing mix of high margin Strategic Data products Leverage existing infrastructure Efficient Capital Management Investments focused on Strategic Data initiatives Balanced Revenue Mix Enterprise and Carrier Disciplined success based capital approach Delight Customers Top Tier SLA standards In Market support teams 4 |
![]() Executive Management with Deep Industry Experience Tim Biltz Chief Executive Officer/Joined April 2012 20+ years of operating experience as Chairman of iPCS, COO of Spectrasite, COO of Vanguard Cellular Systems Harold Covert Chief Financial Officer/October 2011 30+ years of experience with technology and telecommunications companies as CFO of six publicly traded companies Joe McCourt Chief Revenue Officer/May 2012 25+ years of experience in wholesale and enterprise sales in TW Telecom, Level 3, Dukenet, Zayo Networks, and 1901 Group Joti Balanti Vice President of Marketing/January 2013 15+ years experience at AT&T Business Services, AboveNet, most recently as Director of Cloud Services at Zayo Craig Drinkhall Diego Anderson Vice President Product Mgmt and Engineering/February 2012 20+ years experience as Senior VP of Product Delivery and Emerging Opportunities at Level 3 Communications, Adelphia and TelCove Vice President of Operations/October 2011 20+ years of operational and technical experience with Sprint, NTELOS and Lumos 5 |
![]() 70% of internet access will come from mobile devices Increase in networked devices 2013- 2016 Enabling rapid growth in rich media Access to cloud services Exponential Growth in Data and Devices… Applications and devices generating constant streams of data Enterprises capturing and processing data : Customers Products Transactions Operations Digitization of records Increasing use of: Cloud and data center storage Back-up file protection and security Source: Industry reports, Wall Street Research Big Data Proliferation of Networked Devices “90% of the world’s data has been created in the last 2 years” Source: Mark Hurd, Oracle Open World 2012. 6 ($bn) 600 500 400 300 200 100 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 PC Smartphone Tablet Global Consumer Electronic Consumption |
![]() Source: Cisco VNI June 2012 Business IP traffic to grow 2.5-fold from 2011 to 2016 or CAGR of 20% Mix of Business Data from mobile devices increases from 4% to 19% Enterprise Cloud Spending grows 12.5X from 2011 to 2016 with 35-45% telecom Source: Oppenheimer & Co Estimates Source: Cisco VNI June 2012 7 20,000 15,000 10,000 5,000 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2016 Business and IP Traffic Mobile % Business Traffic 100% 80% 60% 40% 20% 0% …Driving Demand for Connectivity and Speed U.S. Business IP Traffic More Cloud, More Mobility |
![]() Next-generation network solutions Enterprise Data • Ethernet connectivity among multiple locations • Dedicated Internet connections • Speeds of 1.5M to 10 Gbps IP Services • IP-enabled products that combines voice and data services • Enables advanced features and dynamic bandwidth • Broadband XL high speed Internet over fiber over for 100M+ Carrier Data • IP-based Ethernet transport • Fiber connectivity to cell sites to support 4G growth • High-bandwidth transport (OC-X and wavelengths) 8 |
![]() 9 Enterprise Data enables networking and addresses future growth needs Attractive Available Markets Ethernet represents a disproportionate share of the overall telecom growth with overall growth 3-4% and TDM flat to declining Enterprise Ethernet Demand growth 45%+ annually Ethernet market has 50% at speeds of 100Mbps or below Fastest growth segment of Ethernet is 100Mbps+ with 24% looking for speeds at 1Gig + 9 Edge Out Markets Markets Current 2012 Future Current Share ~ 10% Source: Heavy Reading Study 2012, Oracle Openworld |
![]() 10 Customer Demand Drives Growth Education Customer Started with several data circuits - $11K monthly recurring charge (“MRC”) Expanded into IP based services – Bandwidth to data centers + IP voice MRC now $29K for $100K capital investment Regional Healthcare Provider Several small locations with leased voice access - $2K MRC Today 37 locations, most are on-net Buying voice and Metro E MRC of $57K with a $1.0M capital investment 10 |
![]() Transport opportunity greatly enhanced with edge out opportunities like Atlanta interconnection Carrier Today Provide transport across region Responded to RFP for cell sites across region Sites coming on line now New RFP for next wave of sites….. 1/3 as second tenant New Opportunity with Atlanta interconnection Diversity to I-95 national carrier routes High speed connections – 10Gig + Expands overall market for carriers Attractive Available Markets 11 2012 Future Edge Out Opportunity Current Markets |
![]() Fiber to the cell site: End-to-End Transport opportunity Approximately 5,000 sites within 10 miles of existing network Goal is reach 1,000 FTTC sites within a few years from 370 at YE12 and 148 at YE11 -- key driver is expansion of 4G/LTE roll out Long-term growth in bandwidth creates opportunity for significant ROI Average Capital Investment $75K-$100K per site Two Carrier Equivalent Annual EBITDA: $30K to $36K Payback: 2 to 3 years Three to Five Carrier Equivalent Annual EBITDA: $45K to $90K Payback: 1 to 2 years 12 Contracts of 5 to 10 years and multiple carriers per site drive long-term profitable revenue streams Illustrative Wireless Cell Site Economics |
![]() Fiber to the Cell (“FTTC”) Growth Well Ahead of Plan Maintain target of 1,000 FTTC sites within a few years Committed to maintaining 80/20 On-Net ratio within this segment Strategy to maximize FTTC footprint in market during 2012-2015 to capture exponential growth in broadband traffic 13 0 100 200 300 400 500 600 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 2013E FTTC Installations FTTC Sites |
![]() Positive On-Net Building Trends On-Net Lit Building Expansion Critical To Strategic Data Sales and reaching goal of 80% On-Net Edge-Out Strategy to Drive Continued Growth 14 0 200 400 600 800 1,000 1,200 1,400 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 On-Net Buildings On-Net Bldgs |
![]() Legacy Voice Revenue in Decline Requires Very Limited Continued Investment Cash Flows Assist Funding of growth initiatives within Strategic Data RLEC voice continuing moderate decline with strong cash generation Legacy Competitive Voice focus is shift to larger and higher margin customers, “gracefully” allow weaker accounts to churn off ($000) ($000) 15 Note: Revenue presented as reclassified, unaudited 5.0% 5.5% 6.0% 6.5% 7.0% 0 1,000 2,000 3,000 4,000 5,000 6,000 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 RLEC Voice RLEC voice RLEC Line Loss Competitive Voice 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 CLEC Voice Line Loss |
![]() Access Revenue: Managed Decline RLEC Access Reform Continues: Lower rates, long term transition funding continues to provide strong cash generation Competitive Access: Continuing moderate declines with good cash generation ($000) ($000) 16 Note: Revenue presented as reclassified, unaudited 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 RLEC Access 0 500 1,000 1,500 2,000 2,500 3,000 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 Competitive Access |
![]() Well positioned for the competitive environment Network Capability • Dense fiber with available or expandable capacity • Most complete fiber network in our markets • High quality ring based network Customer Relationship • Strategic partnership • Care and sales support in region • Technical support expertise and responsiveness Products • First to bring products to addressed markets • Top Tier SLAs • Competitive pricing 17 |
![]() 2011 2012 45% 37% 18% 53% 31% 16% Legacy Voice Legacy Voice Access Access Strategic Data Strategic Data 18 Business Transformation Accelerated Shift of Resources towards Strategic Data Strategic Data Revenue Mix Improves EBITDA Margins Enhanced sales organization Improve Mix of On-Net Revenue from 70% to 80% Keeping Costs Relatively Flat in 2013 vs 2012 > 75% 18 Long Term Target Legacy Voice Access Strategic Data |
![]() Income Statement: Moving in the Right Direction Quarterly Revenue EBITDA $M 4Q12: Continued Strong Momentum Strategic Data 55% of Total Revenue EBITDA Margin up Sequentially for Second Straight Quarter % Margin Data - % Rev $M 19 Note: Revenue presented as reclassified, unaudited $M % Margin Data - % Rev 35.0 30.0 25.0 20.0 15.0 10.0 5.0 - 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 60% 55% 50% 45% 40% 35% 30% 50.0% 45.0% 40.0% 35.0% 30.0% 29.0 27.0 25.0 23.0 21.0 19.0 17.0 15.0 47.8% 45.0% 43.4% 41.5% 42.9% 44.1% Legacy Voice and Access % Data Revenue Strategic Data EBITDA % Margin |
![]() 20 Disciplined approach to capital investment Guiding principles include: 75% of capital spend success-based Achievement of capital efficiency goals Focus on success based projects Compliance with liquidity goals Maintain current shareholder dividend Metric Target Near – Term Revenue Opportunity Capital ~75% Capital to Revenue Ratio ~3.0x EBITDA Payback ~36 – 48 Months Return on Investment (EBITDA After Tax) ~15% - 20% Capital as a % of Revenue ~30-35% 20 |
![]() ($mm) Cash -.0 $ - Restricted cash 5.3 Total Assets 513.2 Revolver ($60M) 3.5 Long-term debt ($310M) 308.7 Liquidity Overview 12/31/12 21 |
![]() 22 2013 Strategic Goals Leverage Dense Fiber Network to Drive Carrier/Enterprise Data Sales Overall Revenue Growth in 2013 Margin Expansion throughout 2013 Strategic Data Growth of 15-20% Successful Edge-Out Market Execution Maintain 75% ratio for success-based capital projects 22 |
![]() Financial Model % of revenue % of revenue % of revenue 2012 4Q12 1Q13 FY 2013 (Dollars in millions) Actual Actual Guidance Guidance Annual Long Term Outlook Revenue Strategic Data Revenue 108.8 29.0 30.0 123-125 + 15-20% 52.6% 55.0% 58% 59% Legacy Voice Revenue 64.4 15.4 14.0 55-56 -10-15% 31.1% 29.2% 27% 26% Access Revenue 33.7 8.3 30-31 -10-15% 16.3% 15.8% 15% 15% Total 206.9 52.7 52.0 208 - 212 + 5% EBITDA $ 88.9 23.2 94 - 97 NA % 43.0% 44.1% ~ 44% ~45-46% 47%+ Capital Expenditures % Success Based 75% 77% 75% 75% 75% Total 59.9 16.0 16.0 65-70 ~30-35% of revenue 23.0 23 Note: Revenue presented as reclassified, unaudited 8.0 |
![]() 2013 Financial Guidance 1 These estimates are based on management’s current expectations. These estimates are forward-looking and actual results may differ materially. Please see “Special Note from the Company Regarding Forward-Looking Statements" in the Lumos Networks Corp. fourth quarter 2012 earnings release dated February 28, 2013. 24 Business Outlook (as of February 28, 2013) (In millions) Operating Revenues 208 $ to 212 $ Adjusted EBITDA 94 $ to 97 $ Capital Expenditures 65 $ to 70 $ Reconciliation of Operating Income to Adjusted EBITDA Operating Income 44 $ to 46 $ Depreciation and amortization 40 to 41 Equity based compensation charges 8 Amortization of actuarial losses 2 Adjusted EBITDA 94 $ to 97 $ First Quarter 2013 2013 Annual 2013 Guidance approximately $52 approximately $16 approximately $23 approximately $11 approximately $10 approximately $23 approximately $2 1 1 |
![]() Reconciliation of Net Income Attributable to Lumos Networks Corp. to Operating Income ($ in millions) 25 2008 2009 2010 2011 2012 Net income (loss) attributable to Lumos Networks Corp. $23 $23 $21 ($44) $16 Net income attributable to noncontrolling interests - - - - - Net income (Loss) 23 23 21 (44) 16 Interest expense 1 1 6 12 12 Loss on interest rate derivatives - - - - 2 Income tax expense (benefit) 15 16 14 (4) 11 Other income, net - 1 - - - Operating Income (Loss) $39 $41 $41 ($36) 41 3/31/2011 6/30/2011 9/30/2011 12/31/2011 3/31/2012 6/30/2012 9/30/2012 12/31/2012 Net income (loss) attributable to Lumos Networks Corp. $5 $7 $6 ($62) $5 $3 $6 $2 Net income attributable to noncontrolling interests - - - - - - - - Net income (Loss) 5 7 6 (62) 5 3 6 2 Interest expense 3 3 3 3 3 3 3 3 Loss on interest rate derivatives - - - - - - - 1 Income tax expense (benefit) 4 4 4 (17) 3 3 4 1 Other income, net - - - - - - - - Operating Income (Loss) $12 $13 $13 ($75) $12 $9 $13 $7 Year Ended Three Months Ended |
![]() Adjusted EBITDA Reconciliation ($ in millions) 2008 2009 2010 2011 2012 Operating Income (Loss) $39 $41 $41 ($36) $41 Depreciation and Amortization 27 29 31 43 39 Equity Based Compensation 1 - 2 2 4 Asset Impairment Charge - - - 86 - Amortization of Actuarial Losses - - - - 2 Business Separation Charges - - - 2 - Acquisition Related Charges - - 3 - - Employee Separation Charges - - - - 2 Restructuring Charges - - - - 3 Gain on Settlements, net - - - - (2) Adjusted EBITDA $68 $71 $77 $97 $89 3/31/2011 6/30/2011 9/30/2011 12/31/2011 3/31/2012 6/30/2012 9/30/2012 12/31/2012 Operating Income (Loss) $12 $13 $13 ($75) $12 $9 $13 $7 Depreciation and Amortization 11 11 11 10 9 9 10 11 Equity Based Compensation 1 1 1 - 1 1 1 1 Asset Impairment Charge - - - 86 - - - - Amortization of Actuarial Losses - - - - - - - 1 Business Separation Charges - - - 2 - - - - Employee Separation Charges - - - - - 2 - - Restructuring Charges - - - - - - - 3 Gain on Settlements, net - - - - - - (2) - Adjusted EBITDA $24 $25 $25 $23 $22 $21 $22 $23 Year Ended Three Months Ended 26 |
![]() Thank You IR Contact: Will Davis 917-519-6994 davisw@lumosnet.com 27 |