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Virgin Mobile USA announces upbeat second quarter results
Posted: 10-Aug-2009 [Source: Virgin Mobile USA]

[Virgin Mobile USA beats market estimates reporting a higher profit for the second quarter.]

Warren, NJ -- Virgin Mobile USA, Inc. (NYSE:VM - News), a leading national provider of wireless communications services, today reported its financial and operational results for the three and six months ended June 30, 2009.

Second quarter 2009 highlights:

-- Net service revenue of $290.0 million compared to $293.8 million in the second quarter of 2008

-- Adjusted EBITDA of $43.9 million compared to $32.3 million in the second quarter of 2008, up 36%; Adjusted EBITDA excluding transition and restructuring expenses was $45.0 million compared to $33.4 million in the second quarter of 2008, up 35%(1)

-- Net income of $21.8 million compared to net income of $5.5 million in the second quarter of 2008, up 296%

-- Earnings per diluted share of $0.23 compared to $0.07 in the second quarter of 2008, up 229% year over year; Adjusted earnings per diluted share of $0.27(1); compared to earnings per diluted share of $0.08(1) in the second quarter of 2008, up 238%

First half 2009 highlights:

-- Net service revenue of $608.1 million compared to $600.8 million in the first half of 2008

-- Adjusted EBITDA of $93.4 million compared to $61.0 million in the first half of 2008, up 53%; Adjusted EBITDA excluding transition and restructuring expenses was $97.6 million compared to $62.1 million in the first half of 2008, up 57%(1)

-- Net income of $40.9 million compared to net income of $10.3 million in the first half of 2008, up 299%

-- Earnings per diluted share of $0.42 compared to $0.16 in the first half of 2008, up 163% year over year; Adjusted earnings per diluted share of $0.51 compared to $0.17 in the first half of 2008, up 200%(1)

-- Free cash flow of $29.0 million compared to $29.2 million in the first half of 2008

(1) Excludes transition and restructuring expenses related to the acquisition of Helio, the outsourcing of IT services to IBM and workforce reductions totaling $1.2 million and $4.2 million for the three and six months ended June 30, 2009, respectively and $1.1 million for the three and six months ended June 30, 2008. Adjusted earnings per share also excludes the amortization of intangibles associated with the acquisition of Helio. Adjustments to earnings per share are net of noncontrolling interest and taxes.

"Our financial results in the first half of the year have exceeded our expectations," said Dan Schulman, Chief Executive Officer, Virgin Mobile USA. "We grew Adjusted EBITDA excluding transition and restructuring expenses by 57% to $98 million in the first half of 2009, producing Free cash flow of more than $29 million. We continue to exceed our financial expectations and remain confident in our guidance for Adjusted EBITDA and Free cash flow for the full year 2009."

"Our stated strategy is to focus on growing our highly profitable hybrid customer base. We made strong progress against this goal in the second quarter. Hybrid gross adds grew from 55% of total gross adds in Q1 to 63% in Q2, resulting in 20% year over year growth in total hybrid gross customer additions in the first half of 2009," continued Schulman. "The growth of our hybrid customers, who have more than 15x the lifetime value of our average pay-by-the-minute customers, has been supported by the launch of our new service plans throughout the second quarter. Our new $49.99 Unlimited offer has been particularly successful, representing 21% of all gross adds in May and June. We expect continued hybrid growth with the plans now fully deployed into retail in Q3.

"Supporting this strategic customer focus is the sale of higher-priced handsets, which are associated with higher data usage, better churn, and significantly higher lifetime value. Our sales of handsets priced at $50 and above leapt to 25% of total sales from 15% in just one quarter, reflecting the success of our strategy and our commitment to high quality growth."

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