Shenandoah Telecommunications Co · NASDAQ:SHEN

Shenandoah Telecommunications — Q3 2014 Earnings Presentation

39 slides from Shenandoah Telecommunications's earnings presentation, Oct 31, 2014

  1. Slide 1: 3Q 2014 Earnings Conference Call

    3Q 2014 Earnings Conference Call October 31, 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: Q3'14 Highlights

    Q3’14 Highlights  Net Income Growth  Increased 19.1% over Q3’13 to $8.0 million  Adjusted OIBDA increased 15.9% to $33.3 million  Revenue Growth  Revenue grew 6.1% over Q3’13 to $82.3 million  Customer Growth 9/30/13 9/30/14 Change Wireless 400,336 423,102 +22,766 Cable (RGUs) 112,307 120,466

  6. Slide 6: Wireless Highlights

    Wireless Highlights  Postpaid Growth PCS Customers (000s) Postpaid customers up 5.7% over last 12 months  Prepaid Growth Prepaid customers up 5.6% over last 12 months  Operating Income Increase Improvement of $0.9 million, or 5.1% 6

  7. Slide 7: Cable Highlights

    Cable Highlights Cable OIBDA (in millions)  Revenue Growth  Operating revenues $21.0 million, growth of 9.7% over Q3’13  Q3’14 Adjusted OIBDA $3.4 million, up 75.2% from Q3’13 Cable RGUs  120,466 RGUs at 9/30/2014, up 7.3% over Q3’13 7

  8. Slide 8: Other Highlights

    Other Highlights Fiber Lease Revenue (in millions)  Fiber Lease revenues $8.1 $8.1 million, up 15.7% $7.0 from Q3’13  New external fiber lease contracts have more than doubled Q3'13 Q3'14  Towers generated $1.7 Mobile Tower OIBDA ($ thousands) million of OIBDA, up (in thousands) Q3'13 Q3'14 21.5%

  9. Slide 9: 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 9

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

    Adele Skolits VP of Finance and CFO 10

  11. Slide 11: Profitability: Consolidated Results

    Profitability Consolidated Results ($ in thousands, except per share amounts) For the Quarter Ended:___ 9/30/13 9/30/14 Change Operating Income $ 13,262 $ 14,144 6.7% Net Income $ 6,717 $ 8,003 19.1% Earnings Per Share: Basic $ 0.28 $ 0.33 17.9% Diluted $ 0.28 $ 0.33 17.9% 11

  12. Slide 12: Profitability: Adjusted OIBDA

    Profitability Adjusted OIBDA ($ thousands) For the Quarter Ended: 9/30/13 9/30/14 Change Operating Income 13,262 14,144 882 Depreciation and Amortization 14,992 16,731 1,739 Share Based Compensation 431 325 (106) (Gain)/Loss on Asset Sales/Disposals 18 2,053 2,035 Adjusted OIBDA 28,703 33,253 4,550

  13. Slide 13: Adjusted OIBDA by Segment

    Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Q3'13 Q3'14 Q3'13 Q3'14 Q3'13 Q3'14 Operating Income $ 16.5 $ 17.3 $ (3.5) $ (4.1) $ 3.5 $ 4.4 Depreciation and amortization 6.8 7.9 5.3 5.9 2.9 2.9 Plus (gain) loss on asset sales - - (0.1) 1.5 - 0.5 Share based compensation 0.1 0.1 0.2

  14. Slide 14: Wireless Segment – Change in Adjusted OIBDA

    Wireless Segment – Change in Adjusted OIBDA Q3’14 vs. Q3’13 ($ millions) 14

  15. Slide 15: Cable Segment – Change in Adjusted OIBDA

    Cable Segment – Change in Adjusted OIBDA Q3’14 vs. Q3’13 ($ millions) 15

  16. Slide 16: Wireline Segment – Change in Adjusted OIBDA

    Wireline Segment – Change in Adjusted OIBDA Q3’14 vs. Q3’13 ($ 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 Gross Additions - Postpaid  Net adds of 5,303 in Q3 2014 versus 1,370 in Q3 2013  Q3 2014 churn of 1.76% down from 1.80% in Q3 2013 Net Additions - Postpaid  Shentel-controlled channels produced 49% of gross adds in Q3 2014 and 55% in Q3 2013 20

  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 Voice Data $63.82 $63.95 $32.15 $35.18 $31.67 $28.77 Q3'13 Q3'14 1 – Before Service credits, bad debt, Sprint Nextel fees. 21

  22. Slide 22: PCS Revenues

    PCS Revenues 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 and Q2’14 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: Cable Segment

    Cable Segment 25

  26. Slide 26: Cable - RGU Growth by Quarter

    Cable - RGU Growth by Quarter Customers 69,216 69,538 70,670 69,889(2) 71,302 RGU's/Customer 1.62 1.64 1.65 1.66 1.69 1. Prior periods revised to reflect transfer of Shenandoah County, VA video activities to Wireline 2. College students disconnect during summer 26

  27. Slide 27: 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 $111.96 and $126.64 for Q3 2013 and Q3 2014, respectively. 27

  28. Slide 28: Key Operational Results – Cable

    Key Operational Results – Cable* Q3 2013 Q3 2014 Homes Passed 168,746 171,382 Total Revenue Generating Units 112,307 120,466 Customer Relationships 69,216 71,302 RGUs per Customer Relationship 1.62 1.69 Video Revenue generating units 53,386 52,347 Penetration 31.6% 30.5% Digital video penetration 48

  29. Slide 29: Wireline Segment

    ~~ Wireline Segment ASHENTEL’

  30. Slide 30: Key Operational Results - Wireline

    Key Operational Results - Wireline Access lines (000s)  Access line loss of 2.3% in past 12 months  Broadband penetration in LEC area at 58.4%  Total connections at 9/30/14 of 34.4 thousand DSL Customers (000s)  5,787 video subscribers at 9/30/14 30

  31. Slide 31: Wireline Statistics – Fiber Sales

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

  32. Slide 32: Investing in the Future

    Investing in the Future Capex Spending ($ millions)  2014 Capex Budget:  24% Maintenance  24% Capacity  30% Network Expansion  22% Success-Based  2014 Revised Estimate:  Cable slightly over budget due to set-top boxes  Variances on Wireless and Wireline are a mix of projects under budget and

  33. Slide 33: Q&A

    ASHENTEL’ Q&A 33

  34. Slide 34: Appendix

    Appendix ASHENTEL’

  35. Slide 35: Non-GAAP Financial Measures – Billed Revenue per Postpaid & Prepaid Subscriber

    Non-GAAP Financial Measures – Billed Revenue per Postpaid & Prepaid Subscriber Dollars in thousands (except subscribers and revenue per subscriber) 3Q 2013 3Q 2014 Gross billed revenue Wireless segment total operating revenues $ 49,578 $ 52,195 Equipment revenue (1,257) (1,573) Tower lease revenue (

  36. Slide 36: Postpaid PCS Customers Top Picks Q3 2014

    Postpaid PCS Customers Top Picks Q3 2014  Top Service Plans – 77% of  Top Devices – New Activations Gross Adds – All Channels Unlimited, My Way 32% iPhone 36% 20GB Share Pack 15% Samsung Galaxy S 19% 3G/4G Tablet 1GB 12% Samsung Galaxy Tablet 19% Sprint Framily 11% Everything Data 1500 7% Smartpho

  37. Slide 37: iPhone Statistics – Q3'14

    iPhone Statistics – Q3’14  36% of Q3 Gross Adds  43% of iPhones were sold or upgraded in Shentel- controlled channels  33.2% of 9/30/14 Postpaid customers had the iPhone, up from 31.6% at 6/30/14  iPhone Base – 9/30/14  54% iPhone 5, 5C & 5S  42% iPhone 4 & 4S  4% iPhone 6, 6 Plus 37

  38. Slide 38: 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) Q3 2013 Q3 2014 Net Service Revenue $ 16,415 $ 17,603 Set-top box rentals 1,212 1,772 FUSC and pass-through fees 280 346 Video, Internet & Voice Revenue 17,907 19,721 Other misce

  39. Slide 39: 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 221 2.6 197 2.5 1.1 1.1 153 154 1.5 1.4 Q3'13 Q3'14 Q3'13 Q3'14 (in thousands) Q3'13 Q3'14 Operating Income $1,070 * $1,380 Depreciation an

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