![]() Company Presentation May 2013 Exhibit 99.2 |
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![]() 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 • 2012 New leadership team • 4/30/13: $425m Credit Facility Completed • 1Q13 Strategic Data Revenue ~ 57% Total Revs • 3 rd Straight Quarter of Margin Expansion • 1Q13 Adjusted EBITDA Margin of 47% 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 • 405 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, with 128 related to sales, customer care, sales engineers & sales marketing • 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 Balani 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 “90% of the world’s data has been created in the last 2 years” in the last 2 years” Source: Mark Hurd, Oracle Open World 2012. Source: Mark Hurd, Oracle Open World 2012. – 100 200 300 400 500 600 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ($bn) Global Consumer Electronic Consumption PC Smartphone Tablet 6 |
![]() …Driving Demand for Connectivity and Speed Source: Cisco VNI June 2012 U.S. Business IP Traffic More Cloud, More Mobility 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 |
![]() 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 Current Share ~ 10% 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 + Source: Heavy Reading Study 2012, Oracle Openworld 9 |
![]() 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….. many 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 |
![]() Fiber to the cell site: End-to-End Transport opportunity Approximately 5,000 sites within 10 miles of existing network Goal is to reach 1,000 FTTC sites within a few years from 405 at 1Q13, 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 Illustrative Wireless Cell Site Economics Average Capital Investment $75K-$100K per site Two Carrier Equivalent Annual EBITDA: ~$25K Payback: 3 to 4 years Three to Four Carrier Equivalent Annual EBITDA: $35K to $50K Payback: 2 to 3 years Contracts of 5 to 10 years and multiple carriers per site drive long-term profitable revenue streams 12 |
![]() Fiber to the Cell (“FTTC”) Growth In-Line 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 |
![]() Positive On-Net Building Trends 30% Growth in On-Net Buildings in Last 6 Quarters On-Net Building Expansion Helps Drive Strategic Data and Goal of 80% On-Net Revenue Edge-Out Strategy (Richmond, Western Pa) to Drive Continued Growth 14 |
![]() 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 15 Note: Prior period revenue amounts have been reclassified to conform with the current year presentation. |
![]() 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 16 Note: Prior period revenue amounts have been reclassified to conform with the current year presentation. |
![]() 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 |
![]() 18 Business Transformation Accelerated Shift of Resources towards Strategic Data Enhanced sales organization Improving Mix of On-Net Revenue towards Goal of 80% Keeping Costs Relatively Flat in 2013 vs 2012 18 Note: Prior period revenue amounts have been reclassified to conform with the current year presentation. |
![]() Income Statement: Moving in the Right Direction 1Q13: Strong Execution Continues Strategic Data ~57% of Total Revenue in 1Q13 EBITDA Margin up Sequentially for Third Straight Quarter 19 Note: Prior period revenue amounts have been reclassified to conform with the current year presentation. |
![]() 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 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 20 |
![]() 21 2013 Strategic Goals Leverage Dense Fiber Network to Drive Carrier/Enterprise Data Sales Overall Revenue Growth in 2013 Complete New Debt Facility Quarterly Margin Expansion throughout 2013 Strategic Data Growth of 15-20% Successful Edge-Out Market Execution Maintain 75% ratio for success-based capital projects Improve Financial Transparency with Product Segment Reporting 21 |
![]() Financial Model % of revenue % of revenue % of revenue 2012 1Q13 2Q13 FY 2013 (Dollars in millions) Actual Actual Guidance Guidance Annual Long Term Outlook Revenue Strategic Data Revenue 108.8 29.7 30.0 123-125 + 15-20% 52.6% 56.5% 58% 59% Legacy Voice Revenue 64.4 14.9 14.0 55-56 -10-15% 31.1% 28.3% 27% 26% Access Revenue 33.7 8.0 30-31 -10-15% 16.3% 15.2% 15% 15% Total 206.9 52.5 52.0 208 - 212 + 5% EBITDA $ 88.9 24.7 94 - 97 NA % 43.0% 47.0% ~ 46% ~45-46% 47%+ Capital Expenditures % Success Based 75% 75% 75% 75% 75% Total 59.9 15.0 16.0 65-70 ~30-35% of revenue 8.0 24.0 22 Note: Prior period revenue amounts have been reclassified to conform with the current year presentation. |
![]() 2013 Financial Guidance 23 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. first quarter 2013 earnings release dated May 3, 2013. Lumos Networks Corp. Business Outlook 1 (as of May 3, 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 $ Second Quarter 2013 2013 Annual 2013 Guidance 1 approximately $52 approximately $16 approximately $24 approximately $12 approximately $10 approximately $24 approximately $2 |
![]() Reconciliation of Net Income Attributable to Lumos Networks Corp. to Operating Income ($ in millions) 24 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 3/31/2013 Net income (loss) attributable to Lumos Networks Corp. $5 $7 $6 ($62) $5 $3 $6 $2 $6 Net income attributable to noncontrolling interests - - - - - - - - - Net income (loss) 5 7 6 (62) 5 3 6 2 6 Interest expense 3 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 4 Other income, net - - - - - - - - 1 Operating Income (Loss) $12 $13 $13 ($75) $12 $9 $13 $7 $14 Year Ended Three Months Ended |
![]() Adjusted EBITDA Reconciliation ($ in millions) 25 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 3/31/2013 Operating Income (Loss) $12 $13 $13 ($75) $12 $9 $13 $7 $14 Depreciation and Amortization 11 11 11 10 9 9 10 11 10 Equity Based Compensation 1 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 $25 Year Ended Three Months Ended |
![]() Thank You IR Contact: Will Davis 917-519-6994 davisw@lumosnet.com 26 |