Shenandoah Telecommunications Co · NASDAQ:SHEN

Shenandoah Telecommunications — Q4 2013 Earnings Presentation

40 slides from Shenandoah Telecommunications's earnings presentation, Feb 28, 2014

  1. Slide 1: 4Q 2013 Earnings Conference Call

    4Q 2013 Earnings Conference Call February 28, 2014

  2. Slide 2: Safe Harbor Statement

    Safe Harbor Statement This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, our business strategy, our prospects and our financial position. Th

  3. Slide 3: Use of Non-GAAP Financial Measures

    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 an

  4. Slide 4: Chris French, President and CEO

    Chris French President and CEO 4

  5. Slide 5: Q4'13 Highlights

    Q4’13 Highlights  Net Income Growth – Q4’13 v. Q4’12  Increased 36% to $6.7 million  Adjusted OIBDA increased 12% to $29.0 million  Revenue Growth  Revenue grew 4.0% over Q4’12 to $78.0 million  Customer Growth 12/31/12 12/31/13 Change Wireless 391,069 410,768 +19,699 Cable (RGUs) 114,891 120,

  6. Slide 6: 2013 Financial Highlights

    2013 Financial Highlights Revenue Adjusted OIBDA ($ millions) ($ millions) 6

  7. Slide 7: 2013 Financial Highlights

    2013 Financial Highlights Operating Income Net Income ($ millions) ($ millions) 60% 81% 7

  8. Slide 8: Wireless Highlights

    Wireless Highlights  Postpaid Growth PCS Customers (000s) Postpaid customers up 4% over last 12 months and 4Q’13 net adds up 50% over 4Q’12  Prepaid Growth Prepaid customers up nearly 7% over last 12 months  Operating Income Increase FY’13 improvement of $6.8* million, or 12.7%, over 2012  Adjus

  9. Slide 9: Cable Highlights

    Cable Highlights  Upgrades of 2010 acquisitions complete, 87% of all homes passed capable of 50 megabits/second  Operating revenues grew $1.1 million, or 5.7%, over Q4’12  2013 RGUs growth of 5,384, up 4.7% over year-end 2012  120,275 RGUs at 12/31/2013  Q4’13 Adjusted OIBDA $2.8 million, up 58

  10. Slide 10: Adele Skolits, VP of Finance and CFO

    Adele Skolits VP of Finance and CFO 10

  11. Slide 11: Adjusted EPS

    Adjusted EPS Adjusted EPS *See Appendix for reconciliation of Net income from continuing operations to Adjusted earnings per share from continuing operations. 11

  12. Slide 12: Profitability

    Profitability Adjusted OIBDA ($ thousands) For the Quarter Ended: For the Year Ended: 12/31/12 12/31/13 Change 12/31/12 12/31/13 Change Operating Income 9,297 12,437 3,140 34,658 55,407 20,749 Depreciation and Amortization 16,552 15,688 (864) 64,412 60,722 (3,690) Adjusted prepaid results (11,802) -

  13. Slide 13: Growth in Adjusted OIBDA ($ thousands)

    Growth in Adjusted OIBDA ($ thousands) Adjusted OIBDA Adjusted OIBDA 13

  14. Slide 14: Adjusted OIBDA by Segment ($ millions)

    Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Q4'12 Q4'13 Q4'12 Q4'13 Q4'12 Q4'13 Operating Income $ 22.1 $ 13.7 $ (15.3) $ (2.9) $ 3.3 $ 2.4 Depreciation and amortization 8.5 7.6 5.6 5.6 2.5 2.5 Adjusted prepaid results (11.8) - - - - - Plus non-cash goodwill impairment charge - -

  15. Slide 15: Wireless Segment – Change in Adjusted OIBDA Q4'13 vs. Q4'12

    Wireless Segment – Change in Adjusted OIBDA Q4’13 vs. Q4’12 ($ millions) 15

  16. Slide 16: Cable Segment – Change in Adjusted OIBDA Q4'13 vs. Q4'12

    Cable Segment – Change in Adjusted OIBDA Q4’13 vs. Q4’12 ($ millions) 16

  17. Slide 17: Earle MacKenzie, EVP and COO

    Earle MacKenzie EVP and COO 17

  18. Slide 18: Wireless Segment

    ~~ Wireless Segment ASHENTEL’

  19. Slide 19: Postpaid Customer Growth

    Postpaid Customer Growth PCS Postpaid Customers (000s) 19

  20. Slide 20: Postpaid Customer Additions

    Postpaid Customer Additions Annual Gross Additions - Postpaid  Record net adds of 6,054 in Q4 2013 versus 4,025 in Q4 2012  Q4 2013 churn of 1.69% down from 1.87% in Q4 2012  Shentel-controlled channels produced 48% of gross adds in Net Additions - Postpaid Q4 2013 and 49% in Q4 2012  2013 annua

  21. Slide 21: Total Revenue per Customer Up; Data Usage Increasing

    Total Revenue per Customer Up; Data Usage Increasing Gross Billed Revenue per Postpaid User – Data & Voice 1 1 – Before Service credits, bad debt, Sprint Nextel fees. 21

  22. Slide 22: PCS Revenues

    PCS Revenues Annual Gross Billed Revenues - Postpaid ($ millions) *Net service fee increased from 12% to 14% effective 8/1/2013 22

  23. Slide 23: PCS Prepaid Statistics

    PCS Prepaid Statistics Gross Additions (000s) Cumulative Customers (000s) *The loss of customers in Q2’13 related to more stringent governmental requirements for customers renewing their eligibility for the government subsidized Assurance program. 23

  24. Slide 24: PCS Prepaid Statistics

    PCS Prepaid Statistics Churn % Average Gross Billed Revenue 24

  25. Slide 25: Key Operational Results – Mobile Company

    Key Operational Results – Mobile Company Towers and Leases Mobile Tower Revenue ($ millions) Towers Non-affiliate Leases Non-affiliate Revenue Affiliate Revenue 225 9.2 9.5 9.9 8.5 4.3 7.4 3.2 3.3 3.0 150 2.7 6.0 6.2 5.5 5.6 75 4.7 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 For the Year End

  26. Slide 26: Cable Segment

    Cable Segment 26

  27. Slide 27: Cable - RGU Growth by Quarter

    Cable - RGU Growth by Quarter Customers 74,798 75,573 *74,557 75,324 75,585 RGU's/Customer 1.54 1.54 1.56 1.58 1.59 * College students disconnect during summer 27

  28. Slide 28: Increasing Average Monthly Cable Revenue

    Increasing Average Monthly Cable Revenue Average Monthly Revenue per RGU Average Monthly Revenue per Customer* *Average monthly revenue per video subscriber was $99.26 and $109.43 for Q4 2012 and Q4 2013, respectively. 28

  29. Slide 29: Key Operational Results – Cable

    Key Operational Results – Cable 12/31/2011 12/31/2012 12/31/2013 Homes Passed 182,156 184,533 186,565 Total Revenue Generating Units 111,881 114,891 120,275 Customer Relationships 75,348 74,798 75,585 RGUs per Customer Relationship 1.48 1.54 1.59 Video Revenue generating units 64,979 61,559 59,418 P

  30. Slide 30: Wireline Segment

    Wireline Segment 30

  31. Slide 31: Key Operational Results - Wireline

    Key Operational Results - Wireline Access lines (000s)  Access line loss of 1.1% in past 12 months  Broadband penetration in LEC area at 57.0%  Total connections at 12/31/13 of 34.7 thousand DSL Customers (000s) 31

  32. Slide 32: Wireline Statistics – Fiber Sales ($ millions)

    Wireline Statistics – Fiber Sales ($ millions) Fiber Lease Revenue New External Fiber Lease Contracts* * Amounts shown represent the total contract value. Contract Terms range from 36 to 120 months. 32

  33. Slide 33: Investing in the Future

    Investing in the Future Capex Spending ($ millions)  2014 Capex Spending:  24% Maintenance  24% Capacity  30% Network Expansion  22% Success-Based * Accounts payable at December 31, 2013 and 2012 included $7.6 million and $24.7 million associated with PCS Network Vision capital expenditures. 33

  34. Slide 34: Q&A

    Q&A 34

  35. Slide 35: Appendix

    Appendix ASHENTEL’

  36. Slide 36: Non-GAAP Financial Measure – Billed Revenue per Postpaid Subscriber

    Non-GAAP Financial Measure – Billed Revenue per Postpaid Subscriber Dollars in thousands (except subscribers and revenue per subscriber) 4Q 2012 4Q 2013 Gross billed revenue Wireless segment total operating revenues $ 47,045 $ 50,625 Equipment revenue (1,675) (1,360) Tower Lease Revenue (2,297) (2,5

  37. Slide 37: Postpaid PCS Customers Top Picks Q4 2013

    Postpaid PCS Customers Top Picks Q4 2013  Top Service Plans – 82% of  Top Devices – New Activations Gross Adds – All Channels * Unlimited, My Way 66% iPhone 37% Everything Data 1500 16% Samsung Galaxy S III 21% Samsung Galaxy S4 9% Smartphones made up 75% of the Postpaid base in Q4 2013, up from 6

  38. Slide 38: iPhone Statistics – Q4 2013

    iPhone Statistics – Q4 2013  37% of Q4 Gross Adds  43% of iPhones were sold or upgraded in Shentel- controlled channels  28.9% of 12/31/13 Postpaid customers had the iPhone, up from 17.9% at 12/31/12  iPhone Base – 12/31/2013  43% iPhone 4S  36% iPhone 5  21% iPhone 4 38

  39. Slide 39: Non-GAAP Financial Measure – Average Monthly Cable Revenue

    Non-GAAP Financial Measure – Average Monthly Cable Revenue Dollars in thousands (except subscribers and revenue per user) 4Q 2012 4Q 2013 Net Service Revenue $ 17,092 $ 17,955 Set-top box rentals 1,150 1,352 FUSC and pass-through fees 255 301 Video, Internet & Voice Revenue 18,497 19,608 Other misce

  40. Slide 40: Non-GAAP Financial Measure – Adjusted Earnings Per Share

    Non-GAAP Financial Measure – Adjusted Earnings Per Share in thousands, except per share amounts 2012 2013 Net income from continuing operations $ 16,603 $ 29,586 Adjustments: Adjusted prepaid results (6,137) - Goodwill impairment charge 10,952 - Loss (gain) on assets sales 441 784 Storm damage costs

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