Shenandoah Telecommunications Co · NASDAQ:SHEN

Shenandoah Telecommunications — Q4 2014 Earnings Presentation

44 slides from Shenandoah Telecommunications's earnings presentation, Feb 27, 2015

  1. Slide 1: 4Q 2014 Earnings Conference Call

    4Q 2014 Earnings Conference Call February 27, 2015

  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: Q4'14 Highlights

    Q4’14 Highlights  Net Income Growth  Increased 29.6% over Q4’13 to $8.6 million  Adjusted OIBDA increased 17.8% to $34.2 million  Revenue Growth  Revenue grew 6.2% over Q4’13 to $82.8 million  Customer Growth 12/31/13 12/31/14 Change Wireless 410,768 433,029 +22,261 Cable (RGUs) 113,840 121,71

  6. Slide 6: 2014 Financial Highlights

    2014 Financial Highlights Revenue Adjusted OIBDA ($ millions) ($ millions) 6

  7. Slide 7: 2014 Financial Highlights

    2014 Financial Highlights Operating Income Net Income ($ millions) ($ millions) 7

  8. Slide 8: Wireless Highlights

    Wireless Highlights  Postpaid Growth PCS Customers (000s) Postpaid customers up 5.2% over last 12 months  Prepaid Growth Prepaid customers up 5.9% over last 12 months  Operating Income Increase FY’14 Improvement of $5.7 million, or 9.0% 8

  9. Slide 9: Cable Highlights

    Cable Highlights Cable OIBDA (in millions)  Revenue Growth  Operating revenues $22.2 million, growth of 14.1% over Q4’13  Q4’14 Adjusted OIBDA $4.3 million, up 21.9% from Q4’13 Cable RGUs  121,716 RGUs at 12/31/2014, up 6.9% over Q4’13 9

  10. Slide 10: Other Highlights

    Other Highlights *Fiber Lease Revenue (in millions) $8.4 $7.1  Wireline and Cable - Fiber lease revenues of $8.4 million, up 18.6% from Q4’13 Q4'13 Q4'14 *Includes both Affiliate and Non-affiliate revenues Mobile Tower OIBDA ($ thousands)  154 towers generated (in thousands) Q4'13 Q4'14 $1.8 milli

  11. Slide 11: Dividend payment per share

    Annual Dividend Paid Every Year Since 1960 $0.50 $0.47 $0.45 $0.40 $0.35 Dividend payment per share Total Dividends Paid per Share $0.30 (Adjusted for stock splits) $0.25 $0.20 $0.15 $0.10 $0.05 $0.00 11

  12. Slide 12: Adele Skolits, VP of Finance and CFO

    Adele Skolits VP of Finance and CFO 12

  13. Slide 13: Adjusted EPS

    Adjusted EPS Adjusted EPS 15.2% 13.0% *See Appendix for reconciliation of net income to adjusted earnings per share. 13

  14. Slide 14: Profitability

    Profitability Adjusted OIBDA ($ thousands) For the Quarter Ended: For the Year Ended: 12/31/13 12/31/14 Change 12/31/13 12/31/14 Change Operating Income 12,436 16,326 3,890 55,407 61,943 6,536 Depreciation and Amortization 15,688 17,176 1,488 60,722 65,890 5,168 Share Based Compensation 343 408 65 1

  15. Slide 15: Growth in Adjusted OIBDA ($ thousands)

    Growth in Adjusted OIBDA ($ thousands) Adjusted OIBDA ($ thousands) 15

  16. Slide 16: Adjusted OIBDA by Segment ($ millions)

    Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Q4'13 Q4'14 Q4'13 Q4'14 Q4'13 Q4'14 Operating Income $ 14.9 $ 18.2 $ (1.8) $ (1.9) $ 2.9 $ 3.2 Depreciation and amortization 7.6 7.9 5.2 6.1 2.9 3.0 Plus (gain) loss on asset sales 0.5 0.2 (0.1) (0.1) - - Share based compensation 0.1 0.1

  17. Slide 17: Wireless Segment – Change in Adjusted OIBDA

    Wireless Segment – Change in Adjusted OIBDA Q4’14 vs. Q4’13 ($ millions) 17

  18. Slide 18: Cable Segment – Change in Adjusted OIBDA

    Cable Segment – Change in Adjusted OIBDA Q4’14 vs. Q4’13 ($ millions) 18

  19. Slide 19: Wireline Segment – Change in Adjusted OIBDA

    Wireline Segment – Change in Adjusted OIBDA Q4’14 vs. Q4’13 ($ millions) 19

  20. Slide 20: Earle MacKenzie, EVP and COO

    Earle MacKenzie EVP and COO 20

  21. Slide 21: Wireless Segment

    ~~ Wireless Segment ASHENTEL’

  22. Slide 22: Postpaid Customer Growth

    Postpaid Customer Growth PCS Postpaid Customers (000s) 22

  23. Slide 23: Postpaid Customer Additions

    Postpaid Customer Additions Postpaid Additions – Q4  Net adds of 4,891 in Q4 2014 versus 6,054 in Q4 2013  Q4 2014 churn of 1.92% up from 1.69% in Q4 2013 Postpaid Additions – Year-to-Date  Shentel-controlled channels produced 34% of gross adds in Q4 2014 and 48% in Q4 2013  2014 annual churn of

  24. Slide 24: Billed Revenue per Customer Down; Data Usage Increasing

    Billed Revenue per Customer Down; Data Usage Increasing Gross Billed Service Revenue per Postpaid User – Data & Voice 1 Voice Data $64.47 $62.74 $32.87 $35.84 $31.60 $26.90 Q4'13 Q4'14 1 – Before Service credits, bad debt, Sprint Nextel fees. 24

  25. Slide 25: PCS Revenues

    PCS Revenues Annual Gross Billed Revenues - Postpaid ($ millions) * *Net service fee increased from 12% to 14% effective 8/1/2013 25

  26. Slide 26: PCS Prepaid Statistics

    PCS Prepaid Statistics Gross Additions (000s) Cumulative Customers (000s) *The loss of customers in Q2’14 related to more stringent governmental requirements for customers renewing their eligibility for the government subsidized Assurance program. 26

  27. Slide 27: PCS Prepaid Statistics

    PCS Prepaid Statistics Churn % Average Gross Billed Revenue 27

  28. Slide 28: Network Statistics

    Network Statistics  538 Cell Sites  94% have a second LTE carrier at 800 MHz  120 sites have three carriers, including a second carrier at 1900 MHz  Traffic  77% of data traffic is on LTE, with 40% on 800 MHz  Data usage grew more than 2x in 2014  LTE traffic grew more than 3x in 2014  Avera

  29. Slide 29: Cable Segment

    Cable Segment 29

  30. Slide 30: Cable - RGU Growth by Quarter

    Cable - RGU Growth by Quarter Customers 69,538 70,670 69,889(2) 71,302 71,298 RGU's/Customer 1.64 1.65 1.66 1.69 1.71 1. Prior periods revised to reflect transfer of Shenandoah County, VA video activities to Wireline 2. College students disconnect during summer 30

  31. Slide 31: 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 $114.55 and $132.22 for Q4 2013 and Q4 2014, respectively. 31

  32. Slide 32: Key Operational Results – Cable

    Key Operational Results – Cable* 12/31/2012 12/31/2013 12/31/2014 Homes Passed 168,475 170,470 171,589 Total Revenue Generating Units 108,083 113,840 121,716 Customer Relationships 68,385 69,538 71,298 RGUs per Customer Relationship 1.58 1.64 1.71 Video Revenue generating units 54,840 53,076 52,095

  33. Slide 33: Wireline Segment

    ~~ Wireline Segment ASHENTEL’

  34. Slide 34: Key Operational Results - Wireline

    Key Operational Results - Wireline Access lines (000s)  Access line loss of 2.2% in past 12 months  Broadband penetration in LEC area at 59.0%  Total connections at 12/31/14 of 34.3 thousand DSL Customers (000s)  5,692 video subscribers at 12/31/14 34

  35. Slide 35: Wireline and Cable Fiber Sales ($ millions)

    Wireline and Cable 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. Revenues may be booked either in the Wireline or Cable segment depending on which assets are used to pro

  36. Slide 36: Investing in the Future

    Investing in the Future Capex Spending ($ millions)  2015 Capex Budget:  33% Network Capacity  30% Network Maintenance  20% Network Expansion  17% Success-Based * Accounts payable at December 31, 2013 and 2012 included $6.5 million and $24.7 million associated with PCS Network Vision capital ex

  37. Slide 37: Q&A

    ASHENTEL’ Q&A 37

  38. Slide 38: Appendix

    Appendix ASHENTEL’

  39. Slide 39: Non-GAAP Financial Measures – Billed Revenue per Prepaid & Postpaid Subscriber

    Non-GAAP Financial Measures – Billed Revenue per Prepaid & Postpaid Subscriber Dollars in thousands (except subscribers and revenue per subscriber) 4Q 2013 4Q 2014 Gross billed revenue Wireless segment total operating revenues $ 50,625 $ 52,407 Equipment revenue (1,360) (1,653) Tower lease revenue (

  40. Slide 40: Postpaid PCS Customers Top Picks Q4 2014

    Postpaid PCS Customers Top Picks Q4 2014  Top Service Plans – 72% of  Top Devices – New Activations Gross Adds – All Channels 20GB Share Pack 22% iPhone 43% Unlimited, My Way 18% Samsung Galaxy S 19% Unlimited, Talk/Text 12% Samsung Galaxy Tablet 9% Sprint Simply Unlimited 12% Everything Data 1500

  41. Slide 41: iPhone Statistics – Q4'14

    iPhone Statistics – Q4’14  43% of Q4 Gross Adds  27% of iPhones were sold or upgraded in Shentel- controlled channels  35.1% of 12/31/14 Postpaid customers had the iPhone, up from 33.2% at 9/30/14 and 28.9% at 12/31/13.  iPhone Base – 12/31/14  51% iPhone 5, 5C & 5S  29% iPhone 4 & 4S  20% iP

  42. Slide 42: 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) Q4 2013 Q4 2014 Net Service Revenue $ 16,755 $ 18,549 Set-top box rentals 1,282 1,816 FUSC and pass-through fees 296 359 Video, Internet & Voice Revenue 18,333 20,724 Other misce

  43. Slide 43: Key Operational Results – Mobile Company

    Key Operational Results – Mobile Company Towers and Leases Mobile Tower Revenue ($ millions) Non-affiliate Revenue Affiliate Revenue Towers Non-affiliate Leases 9.9 10.2 225 9.2 9.5 8.5 4.3 4.4 3.2 3.3 3.0 150 6.0 6.2 5.8 5.5 5.6 75 0 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 For the Year En

  44. Slide 44: Non-GAAP Financial Measure – Adjusted Earnings Per Share

    Non-GAAP Financial Measure – Adjusted Earnings Per Share in thousands, ex cept per share am ounts 2013 2014 Net income $ 29,586 $ 33,883 Adjustments: Plus: Loss on asset disposals 784 2,054 Less tax effect (315) (812) Net adjustment 469 1,242 Adjusted net income $ 30,055 $ 35,125 Weighted average di

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