Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Q2 2019 Earnings Presentation
32 slides from Shenandoah Telecommunications's earnings presentation, Aug 6, 2019
Slide 1: Q2 2019 Earnings Conference Call
Q2 2019 Earnings Conference Call August 6, 2019
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 our business strategy, our prospects and our financial position. These statements can be
Slide 3: Chris French, President and CEO
Chris French President and CEO 3
Slide 4: Key Developments
Key Developments ▪ Sprint & T-Mobile Pending Merger Update ▪ Second Quarter 2019 Highlights ▪ Appointed Jim Volk as Chief Financial Officer 4
Slide 5: Jim Volk, SVP of Finance and CFO
Jim Volk SVP of Finance and CFO 5
Slide 6: Second Quarter 2019 Consolidated Results
Second Quarter 2019 Consolidated Results ▪ Revenue ▪ $158.9 million in Q2'19 compared with $156.5 million in Q2'18 Adjusted OIBDA ▪ $67.0 million, representing a 42.1% Adjusted OIBDA margin, in Q2'19 compared with $63.7 million and 40.7% in Q2'18 ▪ Operating Income ▪ $24.0 million in Q2'19 compared
Slide 7: Wireless Highlights
Wireless Highlights Operating Revenue (in millions) Adjusted OIBDA (in millions) $53.8 $54.2 $114.8 $114.1 $0.4 $0.3 $2.9 $2.9 Service Q2'18 Q2'19 $15.8 $16.5 Equipment Tower Adjusted OIBDA Margin lease Other 50% 48% 49% 48% 45% 47% $95.7 $94.4 Q2'18 Q2'19 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 7
Slide 8: Wireless Segment – Change in Adjusted OIBDA
Wireless Segment – Change in Adjusted OIBDA Q2'19 vs. Q2'18 (millions) $0.5 $0.7 $0.9 $1.8 $54.2 $53.8 $0.3 $(0.1) $(3.0) $(0.7) 46.9% 47.5% Adjusted Adjusted OIBDA OIBDA Margin Margin Revenue Impact Expense Impact $(0.6) $1.0 Q2'18 Subscriber Equipment Roaming Travel Other Cost of Transactional Oth
Slide 9: Cable Highlights
Cable Highlights Operating Revenue (in millions) Adjusted OIBDA (in millions) $13.3 $12.3 $34.7 $32.1 Q2'18 Q2'19 Adjusted OIBDA Margin 38% 37% 38% 38% 36% 36% Q2'18 Q2'19 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 9
Slide 10: Cable Segment – Change in Adjusted OIBDA
Cable Segment – Change in Adjusted OIBDA Q2'19 vs. Q2'18 (millions) $0.6 $1.0 $1.0 $(0.8) $0.1 $13.3 $12.3 $(0.9) Revenue Impact Expense Impact 38.5% 38.2% $2.6 $(1.6) Adjusted Adjusted OIBDA OIBDA Margin Margin Q2'18 Big Sandy Broadband Other FTTH Maintenance Other Q2'19 Revenue Upgrades & Revenue
Slide 11: Wireline Highlights
Wireline Highlights Operating Revenue (in millions) Adjusted OIBDA (in millions) $8.5 $19.1 $19.5 $8.0 Q2'18 Q2'19 Adjusted OIBDA Margin 44% 44% 41% 42% 42% 36% Q2'18 Q2'19 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 11
Slide 12: Capitalization
Capitalization Total Liquidity & Debt (in millions) Debt Maturity (in millions) $458.1 Cash & Cash Equivalents Available Revolving Line of Credit Total Debt $760.5 $178.0 $5.0 Effective 2.61x $458.1 Interest Rate Leverage Ratio of 3.79% $37.8 $34.1 $34.1 $5.0 $5.0 $5.0 $173.0 $13.4 $173.1 $2.5 $32.8
Slide 13: Dave Heimbach, EVP and COO
XG Dave Heimbach EVP and COO AXSHENTEL
Slide 14: Wireless - Postpaid Metrics
Wireless - Postpaid Metrics Subscribers Churn 780,658 811,719 1.67% 1.74% Q2'18 Q2'19 Q2'18 Q2'19 Gross Additions / Net Change ARPU* $43.52 $42.50 52,799 44,629 5,797 10,767 Q2'18 Q2'19 Net Adds Gross Adds Q2'18 Q2'19 * Refer to the Appendix for a trend of Postpaid ARPU for the last five quarters. a
Slide 15: Wireless - Prepaid Metrics
Wireless - Prepaid Metrics Subscribers Churn 269,039 252,054 4.25% 3.97% Q2'18 Q2'19 Q2'18 Q2'19 Gross Additions / Net Change ARPU * Net Adds Gross Adds $37.11 $37.70 33,840 33,753 1,863 1,819 Q2'18 Q2'19 Q2'18 Q2'19 * Refer to the Appendix for a trend of Postpaid ARPU for the last five quarters. an
Slide 16: Cable - RGUs and Average Revenue
Cable - RGUs and Average Revenue Revenue Generating Units (RGU) Average Monthly Revenue per RGU * 133,148 138,572 $74.75 $76.71 42,874 44,800 Voice 71,893 Broadband 65,466 Video 22,882 23,805 Q2'18 Q2'19 Q2'18 Q2'19 Broadband Penetration Average Monthly Revenue per Customer * $126.12 $127.41 37.9% 3
Slide 17: Fiber to the Home ("FTTH") Initiative
Fiber to the Home ("FTTH") Initiative ▪ FTTH "Edge Out" strategy to leverage existing robust fiber network and commercial customer base to target certain residential areas in three initial markets totaling approximately 40k incremental Homes Passed. Homes Passed Market Launch Date 17.3K Harrisonburg
Slide 18: Fixed Wireless Strategy
Fixed Wireless Strategy ▪ Acquired 2.5 GHz spectrum for $17M enables fixed wireless broadband deployment to over 1M POPs in rural areas out of reach of cable or fiber providers. ▪ Will deploy carrier grade 5G ready LTE standard technology. 18
Slide 19: Capital Expenditures - Investing in the Future
Capital Expenditures - Investing in the Future Capex Spending (in millions) $173 $170 $20 $10 $146 $21 $5 $137 $32 FTTH -$22M $8 $23 Fixed Wireless - $20M $16 Cable - $33M $35 $27 $75 $123 $83 $86 $64 2016 Actual 2017 Actual 2018 Actual 2019 Budget Wireless Cable Wireline Other 19
Slide 20: Q&A
AXSHENTEL Q&A 20
Slide 21: 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 U.S. generally accepted accounting principles. These financial performance measures are not indicative of cash provided or used by operating activities
Slide 22: Q2'19 Adjusted OIBDA by Segment - Quarterly Results
Q2'19 Adjusted OIBDA by Segment - Quarterly Results Three Months Ended June 30, 2019 (in thousands) Wireless Cable Wireline Other Consolidated Operating income $ 22,024 $ 6,786 $ 5,094 $ (9,884) $ 24,020 Depreciation and amortization 32,219 6,555 3,447 132 42,353 OIBDA 54,243 13,341 8,541 (9,752) 66
Slide 23: Q1'19 Adjusted OIBDA by Segment - Quarterly Results
Q1'19 Adjusted OIBDA by Segment - Quarterly Results Three Months Ended March 31, 2019 (in thousands) Wireless Cable Wireline Other Consolidated Operating income $ 25,337 $ 5,703 $ 4,346 $ (10,599) $ 24,787 Depreciation and amortization 31,050 6,458 3,533 138 41,179 OIBDA 56,387 12,161 7,879 (10,461)
Slide 24: Q4'18 Adjusted OIBDA by Segment - Quarterly Results
Q4'18 Adjusted OIBDA by Segment - Quarterly Results Three Months Ended December 31, 2018 (in thousands) Wireless Cable Wireline Other Consolidated Operating income $ 25,977 $ 6,311 $ 3,178 $ (8,472) $ 26,994 Depreciation and amortization 31,668 6,339 3,604 162 41,773 OIBDA 57,645 12,650 6,782 (8,310
Slide 25: Q3'18 Adjusted OIBDA by Segment - Quarterly Results
Q3'18 Adjusted OIBDA by Segment - Quarterly Results Three Months Ended September 30, 2018 (in thousands) Wireless Cable Wireline Other Consolidated Operating income $ 27,352 $ 5,834 $ 5,122 $ (9,979) $ 28,329 Depreciation and amortization 30,363 6,102 3,435 128 40,028 OIBDA 57,715 11,936 8,557 (9,85
Slide 26: Q2'18 Adjusted OIBDA by Segment - Quarterly Results
Q2'18 Adjusted OIBDA by Segment - Quarterly Results Three Months Ended June 30, 2018 (in thousands) Wireless Cable Wireline Other Consolidated Operating income $ 22,251 $ 6,083 $ 4,793 $ (11,958) $ 21,169 Depreciation and amortization 31,565 6,179 3,240 133 41,117 OIBDA 53,816 12,262 8,033 (11,825)
Slide 27: Q1'18 Adjusted OIBDA by Segment - Quarterly Results
Q1'18 Adjusted OIBDA by Segment - Quarterly Results Three Months Ended March 31, 2018 (in thousands) Wireless Cable Wireline Other Consolidated Operating income $ 17,267 $ 5,527 $ 4,772 $ (10,812) $ 16,754 Depreciation and amortization 33,925 6,024 3,394 144 43,487 OIBDA 51,192 11,551 8,166 (10,668)
Slide 28: Net Leverage Ratio
Net Leverage Ratio ($ in thousands) Q2'19 Total Debt $ 760,459 Cash* $ 50,000 Total Debt less Cash $ 710,459 LTM EBITDA per Credit Facility Agreement** $ 315,519 Net leverage ratio 2.25 * Cash is limited to $50.0 million for purposes of this calculation under the terms of the credit facility agreeme
Slide 29: Appendix
Appendix AXSHENTEL
Slide 30: Wireless Average Revenue per User (ARPU)
Wireless Average Revenue per User (ARPU) ($ in thousands, except subscribers and revenue per subscriber amounts) Q2'18 Q2'19 Postpaid billings $ 96,127 $ 97,779 Adjustment for write-offs 5,087 4,795 Postpaid billings excluding write-offs $ 101,214 $ 102,574 Average postpaid subscribers* 775,186 804,
Slide 31: Cable - Average Revenue
Cable - Average Revenue ($ in thousands, except subscriber and per subscriber amounts) Q2'18 Q2'19 Service revenue $ 28,748 $ 30,716 Fiber, FUSC, pass-through and other 2,014 2,528 Internal revenue (1,097) (1,481) Video, broadband and voice revenue 29,665 31,763 Other miscellaneous revenue 2,446 2,9
Slide 32: Cable - Metrics
Cable - Metrics As of June 30, 2018 2019 Homes passed 185,016 189,762 Total revenue generating units 133,148 138,572 Customer relationships 78,256 83,521 RGUs per customer relationship 1.70 1.66 Video Revenue generating units 44,800 42,874 Penetration 24.2% 22.6% Digital video penetration 76.9% 90.3
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