Shenandoah Telecommunications Co · NASDAQ:SHEN

Shenandoah Telecommunications — Q3 2017 Earnings Presentation

33 slides from Shenandoah Telecommunications's earnings presentation, Nov 2, 2017

  1. Slide 1: 3Q 2017 Earnings Conference Call

    3Q 2017 Earnings Conference Call November 2, 2017

  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 2017 Highlights

    Third Quarter 2017 Highlights  Net Income in Q3'17  Net Income of $3.5 million in Q3'17 compared to a net loss of $7.6 million in Q3'16  Adjusted OIBDA  Decreased 9.3% to $66.9 million over Q3'16  Revenue  Decreased 3.2% to $151.8 million over Q3'16  Customer Change 9/30/16 9/30/17 Change Wir

  6. Slide 6: Wireless Highlights

    Wireless Highlights  Postpaid Customers PCS Customers (000s) Postpaid customers increased 1.3% over Q3'16  Prepaid Customers Prepaid customers decreased 8.3% over Q3'16  Adjusted OIBDA Decreased by $8.3 million, down 13.3% in Q3'17 vs Q3'16 (1) (2) (1) Prepaid subscribers reported in the Septembe

  7. Slide 7: Cable Highlights

    Cable Highlights  Revenue Growth Cable Adjusted OIBDA (in millions)  Operating revenues $30.1 million, growth of 9.2% over Q3'16  Q3'17 Adjusted OIBDA $10.0 million, up 21.1% from Q3'16  133,240 RGUs at Q3'17, up 0.6% over Q3'16 Cable RGUs 7

  8. Slide 8: Fiber and Tower Highlights

    Fiber and Tower Highlights *Fiber Lease Revenue (in millions)  Wireline and Cable fiber lease revenues of $12.3 million, up 12.8% from Q3'16  201 towers generated *Includes both Affiliate and Non-affiliate revenues $1.9 million of OIBDA in Mobile Tower OIBDA ($ thousands) Q3'17, an increase of (in

  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 millions, except per share amounts) For the Quarter Ended: 9/30/16 9/30/17 Operating Income $ (3.9) $ 9.5 Net Income $ (7.6) $ 3.5 Earnings (Loss) Per Share: Basic $ (0.16) $ 0.07 Diluted $ (0.16) $ 0.07 10

  11. Slide 11: Profitability: Adjusted OIBDA

    Profitability Adjusted OIBDA ($ millions) For the Quarter Ended: 9/30/2016 9/30/2017 Change ($) Change (%) Operating income (3.9) 9.5 13.4 344% Depreciation and amortization 46.8 42.6 (4.2) (9)% (Gain) loss on asset sales (0.1) 0.2 (0.3) (300)% Share based compensation 0.5 0.6 0.1 20% Straight line

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

    Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Q3'16 Q3'17 Q3'16 Q3'17 Q3'16 Q3'17 Operating income $ (5.4) $ 6.7 $ 2.3 $ 3.6 $ 4.8 $ 5.1 Depreciation and amortization 38.0 32.9 5.9 6.2 2.8 3.2 Plus (gain) loss on asset sales — 0.2 — — — — Share based compensation 0.2 0.3 0.1 0.2 — 0

  13. Slide 13: Wireless Segment – Change in Adjusted OIBDA Q3'17 vs. Q3'16

    Wireless Segment – Change in Adjusted OIBDA Q3'17 vs. Q3'16 ($ millions) (1) (1) (1) Postpaid Revenue and Prepaid Revenue exclude the effect of allocating the management fee waiver. 13

  14. Slide 14: Cable Segment – Change in Adjusted OIBDA Q3'17 vs. Q3'16

    Cable Segment – Change in Adjusted OIBDA Q3'17 vs. Q3'16 ($ millions) 14

  15. Slide 15: Earle MacKenzie, EVP and COO

    Earle MacKenzie EVP and COO 15

  16. Slide 16: Subscriber Growth

    Subscriber Growth (1) Prepaid totals in 2015, 2016, and Q3’17 were adjusted to exclude Lifeline subscribers consistent with Sprint‘s reporting policy. (2) Includes approximately 19,000 postpaid and 6,000 prepaid customers acquired from Sprint on 4/6/17 16

  17. Slide 17: Postpaid Customer Additions

    Postpaid Customer Additions Gross Additions - Postpaid Net Change - Postpaid 1,222 (4,710) 17

  18. Slide 18: PCS Postpaid Statistics

    PCS Postpaid Statistics Postpaid Churn Postpaid ARPU* *See Appendix for reconciliation of Wireless segment operating revenues to Postpaid ARPU. 18

  19. Slide 19: PCS Prepaid Statistics

    PCS Prepaid Statistics Gross Additions (000s) Cumulative Customers (000s) 39.4 37.7 2.8 2.6 (1) (1) Results have been adjusted for all periods presented to exclude Lifeline subscribers consistent with Sprint’s policy. (1) - In Q4’16, approximately 24,000 customers were dropped from the prepaid custo

  20. Slide 20: PCS Prepaid Statistics

    PCS Prepaid Statistics Prepaid Churn Prepaid ARPU* (1) (1,2) (2) Results have been adjusted for all periods presented to exclude Lifeline subscribers consistent with Sprint’s policy. (1) – In Q4’16, 24k customers were adjusted from the prepaid customer count as a result of reducing the period of tim

  21. Slide 21: Status of Network Enhancements – nTelos Footprint

    Status of Network Enhancements – nTelos Footprint Enhancement # of cell sites 107 186 363 220 ■ Completed ■ Expected Completion in 2017 ■ Expected Completion in 2018 21

  22. Slide 22: Cable - RGU Growth by Quarter

    Cable - RGU Growth by Quarter ■ Video ■ Voice ■ High Speed Internet (1) Customers 77,393 77,366 77,925 77,305 77,953 RGU's/Customer 1.71 1.71 1.70 1.71 1.71 (1) College students disconnect during summer 22

  23. Slide 23: Increasing Average Monthly Cable Revenue

    Increasing Average Monthly Cable Revenue Average Monthly Revenue per RGU Average Monthly Revenue per Customer 23

  24. Slide 24: Key Operational Results – Cable

    Key Operational Results – Cable (2) Q3 2016 Q3 2017 Homes Passed (1) 184,698 184,881 Total Revenue Generating Units 132,430 133,240 Customer Relationships 77,393 77,953 RGUs per Customer Relationship 1.71 1.71 Video Revenue generating units 51,379 47,379 Penetration 27.8% 25.6% Digital video penetra

  25. Slide 25: Key Operational Results - Wireline

    Key Operational Results - Wireline Access lines (000s)  Access line loss of 3.9% 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

  26. Slide 26: Wireline and Cable Fiber Sales ($ millions)

    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. 26

  27. Slide 27: Investing in the Future

    Investing in the Future Capex Spending ($ millions) 2017 Capex Budget: 55% Upgrades and Expansion of nTelos network 14% Success-Based 12% Network Maintenance 10% Additional Network Capacity 9% Network Expansion Budget * Accounts payable at December 31, 2016, 2015 and 2014 included $14.4 million, $5.

  28. Slide 28: Q&A

    ASHENTEL’ Q&A 28

  29. Slide 29: Appendix

    ASHENTEL’ Appendix 29

  30. Slide 30: Non-GAAP Financial Measures – Billed Revenue per Prepaid & Postpaid Subscriber

    Non-GAAP Financial Measures – Billed Revenue per Prepaid & Postpaid Subscriber Gross billed revenue 3Q 2016 3Q 2017 Wireless segment total operating revenues $ 120,119 $ 112,505 Equipment revenue (3,539) (1,742) Tower lease revenue (2,909) (2,933) Gross billed revenue – prepaid (24,323) (24,155) Spr

  31. Slide 31: Network Statistics at 9/30/17

    Network Statistics at 9/30/17 Cell sites Legacy New(1) CDMA Base Stations (sites) 571 973 Sites with 2nd LTE carrier 554 910 Sites with three carriers, including a 2nd 198 205 carrier @ 1900 MHz Sites with 2.5 GHz LTE 158 204 Traffic % LTE traffic 96.9% 93.6% Data usage increase (Q over Q) 5.8% 8.0%

  32. Slide 32: Non-GAAP Financial Measure – Average Monthly Cable Revenue

    Non-GAAP Financial Measure – Average Monthly Cable Revenue Q3 2016 Q3 2017 Net Service Revenue $ 23,073 $ 25,246 Set-top box rentals 2,118 2,074 FUSC and pass-through fees 395 430 Video, Internet & Voice Revenue 25,586 27,750 Other miscellaneous revenue 1,980 2,339 Total Operating Revenue $ 27,566 $

  33. Slide 33: Key Operational Results – Mobile Company

    Key Operational Results – Mobile Company Towers and Leases Mobile Tower Revenue ($ millions) (in thousands) Q3'16 Q3'17 Operating Income $ 1,274 $ 1,439 Deprec. and Amort. 475 470 Back Office Acq. Expense — — Share Based Compensation 9 5 Adjusted OIBDA $ 1,758 $ 1,914 33

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