Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Q2 2017 Earnings Presentation
34 slides from Shenandoah Telecommunications's earnings presentation, Aug 2, 2017
Slide 1: 2Q 2017 Earnings Conference Call
2Q 2017 Earnings Conference Call August 2, 2017
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
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
Slide 4: Chris French, President and CEO
Chris French President and CEO 4
Slide 5: Second Quarter 2017 Highlights
Second Quarter 2017 Highlights Net Loss in Q2’17 Net loss of $80 thousand in Q2’17 compared to a net loss of $7.0 million in Q2’16 Adjusted OIBDA Growth Increased 24.2% to $69.4 million over Q2’16 Revenue Growth Increased 17.6% to $153.3 million over Q2’16 Customer Change 3/31/17 6/30/
Slide 6: Wireless Highlights
Wireless Highlights Postpaid Growth PCS Customers (000s) Postpaid customers up 2.2% over last 3 months Prepaid Customers Prepaid customers up 1.3% over last 3 months Adjusted OIBDA Growth Increased to $58.2 million, up 29.4% in Q2’17 vs Q2’16 6
Slide 7: Cable Highlights
Cable Highlights Revenue Growth Cable Adjusted OIBDA (in millions) Operating revenues $29.6 million, growth of 12.0% over Q2’16 Q2’17 Adjusted OIBDA $9.9 million, up 35.6% from Q2’16 132,287 RGUs at Q2’17, up 1.1% over Q2’16 Cable RGUs 7
Slide 8: Fiber and Tower Highlights
Fiber and Tower Highlights *Fiber Lease Revenue (in millions) Wireline Cable $11.7 $10.3 1.2 0.7 Wireline and Cable fiber 10.5 9.6 lease revenues of $11.7 million, up 12.7% from Q2’16 Q2'16 Q2'17 195 towers generated *Includes both Affiliate and Non-affiliate revenues $1.8 million of OIBDA in Mo
Slide 9: Adele Skolits, VP of Finance and CFO
Adele Skolits VP of Finance and CFO 9
Slide 10: Profitability
Profitability Consolidated Results ($ in millions, except per share amounts) For the Quarter Ended:___ 6/30/16 6/30/17 Operating Income $ (6.2) $ 8.3 Net Income $ (7.0) $ (0.1) Earnings Per Share: Basic $ (0.14) $ (0.0) Diluted $ (0.14) $ (0.0) 10
Slide 11: Profitability: Adjusted OIBDA
Profitability Adjusted OIBDA ($ millions) For the Quarter Ended: 6/30/16 6/30/17 Change ($) Change (%) Operating income (6.2) 8.3 14.5 234% Depreciation and amortization 32.4 44.9 12.5 39% Share based compensation 1.0 0.8 (0.2) -20% Straight line adjustment to reduce management fee waiver 3.0 4.4 1.
Slide 12: Adjusted OIBDA by Segment
Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Q2'16 Q2'17 Q2'16 Q2'17 Q2'16 Q2'17 Operating income $ 7.3 $ 6.4 $ 1.2 $ 3.7 $ 5.2 $ 5.4 Depreciation and amortization 23.5 35.6 5.8 6.1 2.9 3.2 Plus (gain) loss on asset sales - - - (0.1) 0.1 - Share based compensation 0.3 0.4 0.3 0.2 0
Slide 13: Wireless Segment – Change in Adjusted OIBDA Q2'17 vs. Q2'16
Wireless Segment – Change in Adjusted OIBDA Q2’17 vs. Q2’16 ($ millions) (1) (1) Postpaid Prepaid Waived Mgt Travel Other & Prepaid Prepaid Network Total Revenue Revenue Fee Revenue Postpaid Costs Acquisition Costs Acquisition Costs Costs (1) Postpaid Revenue and Prepaid Revenue exclude the effect o
Slide 14: Cable Segment – Change in Adjusted OIBDA Q2'17 vs. Q2'16
Cable Segment – Change in Adjusted OIBDA Q2’17 vs. Q2’16 ($ millions) 14
Slide 15: Earle MacKenzie, EVP and COO
Earle MacKenzie EVP and COO 15
Slide 16: Subscriber Growth
Subscriber Growth (1) Includes approximately 19,000 postpaid and 6,000 prepaid customers acquired from Sprint on 4/6/17 16
Slide 17: Postpaid Customer Additions
Postpaid Customer Additions Gross Additions - Postpaid Net Change - Postpaid (1) (1) (2) (2) (1) New Service Area includes the nTelos acquisition and the Expansion Area acquired on 4/6/17. Charts exclude the approximately 19,000 postpaid subscribers obtained from Sprint. (2) Q2’16 results include a
Slide 18: PCS Postpaid Statistics
PCS Postpaid Statistics Gross Billed Revenue Less Credits Postpaid Churn and Discounts per Postpaid User 18
Slide 19: PCS Prepaid Statistics
PCS Prepaid Statistics Gross Additions (000s) Cumulative Customers (000s) (2) (2) (1) ‐ In Q4’16, approximately 24,000 customers were dropped from the prepaid customer count as a result of reducing the period of time a customer can be inactive and be included in the customer count. (2) ‐ In Q2’17, a
Slide 20: PCS Prepaid Statistics
PCS Prepaid Statistics Churn % Average Gross Billed Revenue (2) (1) – In Q4’16, customers were dropped from the prepaid customer count as a result of reducing the period of time a customer can be inactive and be included in the customer count. The churn calculation excludes the impact from this one‐
Slide 21: Status of Network Enhancements – nTelos Footprint
Status of Network Enhancements – nTelos Footprint Enhancement # of cell sites Decommission Overlapping Sites 100 Add 800 Mhz 186 3G to 4G 363 Coverage Sites 220 0% 20% 40% 60% 80% 100% Completed Expected Completion in 2017 Expected Completion in 2018 21
Slide 22: nTelos Area Distribution
nTelos Area Distribution Estimated May 6, 2017 Q2 2017 YE 2017 Company Owned Stores 41 (1) 31 29 Agent Postpaid Stores 55 69 79 Nationals – Postpaid 29 32 32 Total Postpaid Stores 125 132 140 Agent Boost Stores 33 64 83 Nationals - Boost 50 56 56 Total Boost Stores 83 120 139 $2m of local advertisin
Slide 23: Cable - RGU Growth by Quarter
Cable - RGU Growth by Quarter (1) (1) Customers 76,471 77,393 77,366 77,925 77,305 RGU's/Customer 1.71 1.71 1.71 1.70 1.71 (1) College students disconnect during summer 23
Slide 24: 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 $158.71 and $188.45 for Q2 2016 and Q2 2017, respectively. 24
Slide 25: Key Operational Results – Cable
Key Operational Results – Cable (2) Q2 2016 Q2 2017 Homes Passed (1) 184,627 184,834 Total Revenue Generating Units 130,871 132,287 Customer Relationships 76,471 77,305 RGUs per Customer Relationship 1.71 1.71 Video Revenue generating units 51,549 48,248 Penetration 27.9% 26.1% Digital video penetra
Slide 26: Key Operational Results - Wireline
Key Operational Results - Wireline Access lines (000s) Access line loss of 5.8% in past 12 months as a result of no longer requiring access line to purchase internet service Effective Q4’15, subscribers were offered a cable modem DSL & Cable Modem Customers (000s) internet option up to 101 Mbps
Slide 27: Wireline and Cable Fiber Sales
Wireline and Cable Fiber Sales ($ millions) Fiber Lease Revenue New External Fiber Lease Contracts* * Amounts represent the first 10 years of contract value. Contract Terms range from 36 to 120 months. 27
Slide 28: Investing in the Future
Investing in the Future Capex Spending ($ millions) 2017 Capex Budget: 57% Upgrades and Expansion of nTelos network 14% Network Maintenance 10% Network Expansion 10% Additional Network Capacity 9% Success-Based * Accounts payable at December 31, 2016, 2015 and 2014 included $14.4 million,
Slide 29: Q&A
AXSHENTEL Q&A 29
Slide 30: Appendix
AXSHENTEL Appendix 30
Slide 31: Non-GAAP Financial Measures – Billed Revenue per Prepaid & Postpaid Subscriber
Non-GAAP Financial Measures – Billed Revenue per Prepaid & Postpaid Subscriber Gross billed revenue 2Q 2016 2Q 2017 Wireless segment total operating revenues $ 94,294 $ 114,133 Equipment revenue (2,777) (2,779) Tower lease revenue (2,812) (2,861) Gross billed revenue – prepaid (20,504) (26,058) Spri
Slide 32: Network Statistics at 6/30/17
Network Statistics at 6/30/17 Cell Sites Legacy New (1) CDMA Base Stations (sites) 568 973 nTelos 3G sites still requiring upgrade 0 34 Sites with 2nd LTE carrier 550 869 Sites with three carriers, including a 2nd 209 195 carrier @ 1900 MHz Sites with 2.5 GHz LTE 141 178 Traffic % LTE traffic 96.7%
Slide 33: Non-GAAP Financial Measure – Average Monthly Cable Revenue
Non-GAAP Financial Measure – Average Monthly Cable Revenue Q2 2016 Q2 2017 Net Service Revenue $ 22,258 $ 25,145 Set-top box rentals 2,119 2,080 FUSC and pass-through fees 426 435 Video, Internet & Voice Revenue 24,803 27,660 Other miscellaneous revenue 1,559 1,904 Total Operating Revenue 26,362 29,
Slide 34: Key Operational Results – Mobile Company
Key Operational Results – Mobile Company Towers and Leases Mobile Tower Revenue ($ millions) (in thousands) Q2'16 Q2'17 Operating Income $1,121 $1,320 Deprec. and Amort. 472 471 Loss on Asset Disposals 22 - Share Based Compensation 13 6 Adjusted OIBDA $1,628 $1,797 34
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