Shenandoah Telecommunications Co · NASDAQ:SHEN

Shenandoah Telecommunications — Q2 2014 Earnings Presentation

38 slides from Shenandoah Telecommunications's earnings presentation, Aug 1, 2014

  1. Slide 1: 2Q 2014 Earnings Conference Call

    2Q 2014 Earnings Conference Call August 1, 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: Q2'14 Highlights

    Q2’14 Highlights  Net Income Growth – Q2’14 v. Q2’13  Increased 9.9% to $8.6 million  Adjusted OIBDA increased 5.7% to $33.0 million  Revenue Growth  Revenue grew 5.1% over Q2’13 to $81.4 million  Customer Growth 6/30/13 6/30/14 Change Wireless 397,669 415,849 +18,180 Cable (RGUs) 109,490 116,

  6. Slide 6: Wireless Highlights

    Wireless Highlights  Postpaid Growth PCS Customers (000s) Postpaid customers up 4.3% over last 12 months  Prepaid Growth Prepaid customers up 5.2% over last 12 months  Operating Revenue Increase Improvement of $2.0 million, or 4.0% 6

  7. Slide 7: Cable Highlights

    Cable Highlights Cable RGUs  Revenue Growth  Operating revenues $20.8 million, growth of 11.2% over Q2’13  Q2’14 Adjusted OIBDA $3.9 million, up 20.1% from Q2’13 Cable OIBDA (in millions)  116,221 RGUs at 6/30/2014, up 6.1% over Q2’13 7

  8. Slide 8: Network Upgrades Helping to Drive Performance

    Network Upgrades Helping to Drive Performance  New and existing wireless customers benefiting from state- of-the-art 4G LTE network  $115 million project completed late 2013  Cable customers benefiting from improved video services, high-speed data and voice services  Upgrades completed in 2013 

  9. Slide 9: Adele Skolits, VP of Finance and CFO

    Adele Skolits VP of Finance and CFO 9

  10. Slide 10: Profitability

    Profitability Consolidated Results ($ in thousands, except per share amounts) For the Quarter Ended:___ 6/30/13 6/30/14 Change Operating Income $ 14,500 $ 15,793 8.9% Net Income $ 7,842 $ 8,615 9.9% Earnings Per Share: Basic $ 0.33 $ 0.36 9.1% Diluted $ 0.33 $ 0.35 6.1% 10

  11. Slide 11: Profitability: Adjusted OIBDA

    Profitability Adjusted OIBDA ($ thousands) For the Quarter Ended: 6/30/13 6/30/14 Change Operating Income 14,500 15,793 1,293 Depreciation and Amortization 16,071 16,595 524 Share Based Compensation 537 532 (5) (Gain)/Loss on Asset Sales/Disposals 152 123 (29) Adjusted OIBDA 31,260 33,043 1,783 11

  12. Slide 12: Adjusted OIBDA by Segment ($ millions)

    Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Q2'13 Q2'14 Q2'13 Q2'14 Q2'13 Q2'14 Operating Income $ 16.1 $ 17.6 $ (2.5) $ (2.1) $ 4.0 $ 3.8 Depreciation and amortization 7.8 8.1 5.5 5.8 2.8 2.6 Plus (gain) loss on asset sales - - 0.1 - 0.1 - Share based compensation 0.1 0.1 0.2 0.2

  13. Slide 13: Wireless Segment – Change in Adjusted OIBDA

    Wireless Segment – Change in Adjusted OIBDA Q2’14 vs. Q2’13 ($ millions) 13

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

    Cable Segment – Change in Adjusted OIBDA Q2’14 vs. Q2’13 ($ millions) 14

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

    Wireline Segment – Change in Adjusted OIBDA Q2’14 vs. Q2’13 ($ millions) 15

  16. Slide 16: Earle MacKenzie, EVP and COO

    Earle MacKenzie EVP and COO 16

  17. Slide 17: Wireless Segment

    ~~ Wireless Segment ASHENTEL’

  18. Slide 18: Postpaid Customer Growth

    Postpaid Customer Growth PCS Postpaid Customers (000s) 18

  19. Slide 19: Postpaid Customer Additions

    Postpaid Customer Additions Gross Additions - Postpaid  Net adds of 2,648 in Q2 2014 versus 2,340 in Q2 2013  Q2 2014 churn of 1.60% down from 1.62% in Q2 2013 Net Additions - Postpaid  Shentel-controlled channels produced 47% of gross adds in Q2 2014 and 44% in Q2 2013 19

  20. Slide 20: 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 $62.76 $64.79 $31.29 $34.57 $31.47 $30.22 Q2'13 Q2'14 1 – Before Service credits, bad debt, Sprint Nextel fees. 20

  21. Slide 21: PCS Revenues

    PCS Revenues Annual Gross Billed Revenues - Postpaid ($ millions) * *Net service fee increased from 12% to 14% effective 8/1/2013 21

  22. Slide 22: 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. 22

  23. Slide 23: PCS Prepaid Statistics

    PCS Prepaid Statistics Churn % Average Gross Billed Revenue 23

  24. Slide 24: Cable Segment

    Cable Segment 24

  25. Slide 25: Cable - RGU Growth by Quarter

    Cable - RGU Growth by Quarter Customers 68,322(2) 69,216 69,538 70,670 69,889(2) RGU's/Customer 1.60 1.62 1.64 1.65 1.66 1. Prior periods revised to reflect transfer of Shenandoah County, VA video activities to Wireline 2. College students disconnect during summer 25

  26. Slide 26: 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 $109.66 and $124.32 for Q2 2013 and Q2 2014, respectively. 26

  27. Slide 27: Key Operational Results – Cable

    Key Operational Results – Cable Q2 2013 Q2 2014 Homes Passed 168,523 171,147 Total Revenue Generating Units 109,490 116,221 Customer Relationships 68,322 69,889 RGUs per Customer Relationship 1.60 1.66 Video Revenue generating units 53,395 51,699 Penetration 31.7% 30.2% Digital video penetration 40.

  28. Slide 28: Wireline Segment

    ~~ Wireline Segment ASHENTEL’

  29. Slide 29: Key Operational Results - Wireline

    Key Operational Results - Wireline Access lines (000s)  Access line loss of 2.8% in past 12 months  Broadband penetration in LEC area at 58.2%  Total connections at 6/30/14 of 34.5 thousand DSL Customers (000s)  5,904 video subscribers at 6/30/14 29

  30. Slide 30: 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

  31. Slide 31: 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. 31

  32. Slide 32: Q&A

    ASHENTEL’ Q&A 32

  33. Slide 33: Appendix

    Appendix ASHENTEL’

  34. Slide 34: 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) 2Q 2013 2Q 2014 Gross billed revenue Wireless segment total operating revenues $ 49,766 $ 51,774 Equipment revenue (1,270) (1,306) Tower lease revenue (

  35. Slide 35: Postpaid PCS Customers Top Picks Q2 2014

    Postpaid PCS Customers Top Picks Q2 2014  Top Service Plans – 84% of  Top Devices – New Activations Gross Adds – All Channels Unlimited, My Way 38% iPhone 32% * Sprint Framily 23% Samsung Galaxy S 22% 3G/4G Tablet 1GB 14% Samsung Galaxy Tablet 20% Everything Data 1500 9% Smartphones made up 77% of

  36. Slide 36: iPhone Statistics – Q2'14

    iPhone Statistics – Q2’14  33% of Q2 Gross Adds  47% of iPhones were sold or upgraded in Shentel- controlled channels  31.6% of 6/30/14 Postpaid customers had the iPhone, up from 30.3% at 3/31/14  iPhone Base – 6/30/14  51% iPhone 4 & 4S  49% iPhone 5, 5C & 5S 36

  37. Slide 37: 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) Q2 2013 Q2 2014 Net Service Revenue $ 16,325 $ 17,417 Set-top box rentals 1,165 1,752 FUSC and pass-through fees 277 338 Video, Internet & Voice Revenue 17,767 19,507 Other misce

  38. Slide 38: 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 219 2.7 2.6 195 1.1 1.1 151 154 1.6 1.5 Q2'13 Q2'14 Q2'13 Q2'14 (in thousands) Q2'13 Q2'14 Operating Income $939 * $1,324 Depreciation and

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