Shenandoah Telecommunications Co · NASDAQ:SHEN

Shenandoah Telecommunications — Q3 2015 Earnings Presentation

36 slides from Shenandoah Telecommunications's earnings presentation, Oct 30, 2015

  1. Slide 1: 3Q 2015 Earnings Conference Call

    3Q 2015 Earnings Conference Call October 30, 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: Third Quarter 2015 Highlights

    Third Quarter 2015 Highlights  Net Income  $8.0 million at Q3’15 is flat to Q3’14  Q3’15 includes $1.3 million of acquisition expenses and a $1.6 million depreciation adjustment, net of income taxes  Adjusted OIBDA increased 10.7% to $36.8 million  Revenue Growth  Revenue grew 3.6% over Q3’14

  6. Slide 6: Wireless Highlights

    Wireless Highlights  Postpaid Growth PCS Customers (000s) Postpaid customers up 7.3% over last 12 months  Prepaid Growth Prepaid customers up 3.6% over last 12 months  Operating Income Increase Improvement of $945 thousand, or 6.7% 6

  7. Slide 7: Cable Highlights

    Cable Highlights Cable OIBDA (in millions)  Revenue Growth  Operating revenues $24.4 million, growth of 16.2% over Q3’14  Q3’15 Adjusted OIBDA $5.5 million, up 62.0% from Q3’14  125,182 RGUs at Q3’15, up 3.9% over Q3’14 Adjusted OIBDA Margin Shows Long Term Cable RGUs Improvement 23% 18% 15% 10%

  8. Slide 8: Other Highlights

    Other Highlights *Fiber Lease Revenue (in millions) Wireline Cable $9.3 $8.2 $0.6 $0.5 $8.7  Wireline and Cable - $7.7 Fiber lease revenues of $9.3 million, up 13.8% from Q3’14 Q3'14 Q3'15  154 towers generated *Includes both Affiliate and Non-affiliate revenues $1.7 million of OIBDA Mobile Tower

  9. Slide 9: NTELOS Transaction Status

    NTELOS Transaction Status  Retail Syndication of the credit facilities oversubscribed without any change in terms  Regulatory Approvals  Early termination of Hart-Scott-Rodino review  All state regulatory approvals received  FCC transfer application is expected to go on public notice soon  Int

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

    Adele Skolits VP of Finance and CFO 10

  11. Slide 11: Profitability

    Profitability Consolidated Results ($ in thousands, except per share amounts) For the Quarter Ended:___ 9/30/14 9/30/15 Change Operating Income $ 14,144 $ 15,089 6.7% Net Income $ 8,003 $ 7,996 (0.1%) Earnings Per Share: Basic $ 0.33 $ 0.33 -- Diluted $ 0.33 $ 0.33 -- 11

  12. Slide 12: Profitability: Adjusted OIBDA

    Profitability Adjusted OIBDA ($ thousands) For the Quarter Ended: 9/30/14 9/30/15 Change Operating Income 14,144 15,089 7% Depreciation and Amortization 16,731 19,118 14% Share Based Compensation 325 469 44% (Gain)/Loss on Asset Disposals 2,053 (1) N.M. nTelos acquisition related expenses - 2,129 N.

  13. Slide 13: Adjusted OIBDA by Segment ($ millions)

    Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Q3'14 Q3'15 Q3'14 Q3'15 Q3'14 Q3'15 Operating Income $ 17.3 $ 17.4 $ (4.1) $ (0.6) $ 4.4 $ 4.0 Depreciation and amortization 7.9 9.6 5.9 5.9 2.9 3.4 Plus (gain) loss on asset sales - 0.1 1.5 - 0.5 - Share based compensation 0.1 0.1 0.1 0

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

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

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

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

  16. Slide 16: Earle MacKenzie, EVP and COO

    Earle MacKenzie EVP and COO 16

  17. Slide 17: Postpaid Customer Growth

    Postpaid Customer Growth PCS Postpaid Customers (000s) 17

  18. Slide 18: Postpaid Customer Additions

    Postpaid Customer Additions Gross Additions - Postpaid  Net adds of 7,035 in Q3 2015 versus 5,303 in Q3 2014  Shentel-controlled channels produced 35% of gross adds in Q3 2015 and 49% in Q3 2014  Q3 2015 churn of 1.40%, down from 1.76% in Q3 2014 Net Additions - Postpaid Postpaid Churn 18

  19. Slide 19: 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 $63.95 $57.39 $35.18 $34.53 $28.77 $22.86 Q3'14 Q3'15 1 – Before Service credits, bad debt, Sprint Nextel fees. 19

  20. Slide 20: PCS Revenues

    PCS Revenues Gross Billed Revenues - Postpaid ($ millions) * 20

  21. Slide 21: 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. 21

  22. Slide 22: PCS Prepaid Statistics

    PCS Prepaid Statistics Churn % Average Gross Billed Revenue 22

  23. Slide 23: Network Statistics at 9/30/15

    Network Statistics at 9/30/15  548 Cell Sites  93% have a second LTE carrier at 800 MHz  187 sites have three carriers, including a second carrier at 1900 MHz  Traffic  89% of data traffic is on LTE, with 33% on 800 MHz  Data usage grew 11% in Q3’15  Average speeds of approximately 4 Mbps  A

  24. Slide 24: Cable - RGU Growth by Quarter

    Cable - RGU Growth by Quarter Customers 71,302 71,298 72,192 71,4691 72,237 RGU's/Customer 1.69 1.71 1.72 1.73 1.73 1. College students disconnect during summer 24

  25. Slide 25: 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 $126.64 and $150.04 for Q3 2014 and Q3 2015, respectively. 25

  26. Slide 26: Key Operational Results – Cable

    Key Operational Results – Cable* Q3 2014 Q3 2015 Homes Passed 171,382 172,388 Total Revenue Generating Units 120,466 125,182 Customer Relationships 71,302 72,237 RGUs per Customer Relationship 1.69 1.73 Video Revenue generating units 52,347 50,839 Penetration 30.5% 29.5% Digital video penetration 64

  27. Slide 27: Key Operational Results - Wireline

    Key Operational Results - Wireline Access lines (000s)  Access line loss of 0.7% in past 12 months  Broadband penetration in LEC area at 59.4%  Total connections at 9/30/15 of 34.4 thousand DSL Customers (000s)  5,375 video subscribers at 9/30/15  Effective Q4’15, subscribers will have addition

  28. Slide 28: Wireline and Cable Fiber Sales

    Wireline and Cable Fiber Sales ($ millions) New External Fiber Lease Contracts* *Amounts shown represent the total contract value. Contract Terms range from 36 to 120 months. 28

  29. Slide 29: 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  2015 Revised Estimate:  Cable: $2.1MM under budget for success-based spending and maintenance line items  Other: $1.4MM under budg

  30. Slide 30: Q&A

    ASHENTEL’ Q&A 30

  31. Slide 31: Appendix

    Appendix ASHENTEL’

  32. Slide 32: Non-GAAP Financial Measures – Billed Revenue per Subscriber

    Non-GAAP Financial Measures – Billed Revenue per Prepaid & Postpaid Subscriber Dollars in thousands (except subscribers and revenue per subscriber) 3Q 2014 3Q 2015 Gross billed revenue Wireless segment total operating revenues $ 52,195 $ 51,636 Equipment revenue (1,573) (1,104) Tower lease revenue (

  33. Slide 33: Postpaid PCS Customers Top Picks Q3 2015

    Postpaid PCS Customers Top Picks Q3 2015  Top Service Plans – 53% of  Top Devices – New Activations Gross Adds – All Channels Family Unlimited, iPhone 39% Talk/Text/Data 21% Samsung Galaxy S 16% Unlimited, Talk/Text 18% LG G Pad 9% 40GB Data Share Pack 7% LG G3 4% 10GB Data Share Pack 7% LG G4 3%

  34. Slide 34: iPhone Statistics – Q3’15

    iPhone Statistics – Q3’15  39% of Q3 Gross Adds  30% of iPhones were sold or upgraded in Shentel- controlled channels  38.3% of 9/30/15 Postpaid customers had the iPhone, up from 37.3% at 6/30/15 and 33.2% at 9/30/14.  iPhone Base – 9/30/15  50% iPhone 6, 6S, 6 Plus  37% iPhone 5, 5C & 5S  13

  35. Slide 35: 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 2014 Q3 2015 Net Service Revenue $ 17,603 $ 20,493 Set-top box rentals 1,772 1,952 FUSC and pass-through fees 346 391 Video, Internet & Voice Revenue 19,721 22,836 Other misce

  36. Slide 36: 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 2.5 2.6 197 203 1.1 1.1 154 154 1.4 1.5 3Q'14 3Q'15 3Q'14 3Q'15 (in thousands) Q3'14 Q3'15 Operating Income $1,380 $1,547 Deprec. and Amort

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