Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Q4 2017 Earnings Presentation
37 slides from Shenandoah Telecommunications's earnings presentation, Mar 15, 2018
Slide 1: 4Q 2017 Earnings Conference Call
4Q 2017 Earnings Conference Call March 15, 2018
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: Full Year 2017 Highlights
Full Year 2017 Highlights ▪ Revenue Increased 14.3% to $612.0 million compared with 2016. ▪ Operating Income Increased 106.5% to $46.5 million compared with 2016. ▪ Net Income $66.4 million in 2017 compared to a net loss of $0.9 million in 2016. ▪ Includes a one-time non-cash tax benefit of $53.4 mi
Slide 6: Fourth Quarter 2017 Highlights
Fourth Quarter 2017 Highlights ▪ Revenue Decreased 2.5% to $151.6 million compared with Q4'16. ▪ Operating Income Increased 48.4% to $18.1 million compared with Q4'16. ▪ Net Income in Q4'17 Net Income of $60.6 million in Q4'17 compared to a net loss of $0.2 million in Q4'16. Includes the one-time no
Slide 7: Dividend payment per share
Annual Dividend Paid Every Year Since 1960 $0.30 $0.26 $0.25 Total Dividends Paid per Share Dividend payment per share (Adjusted for stock splits) $0.20 $0.15 $0.10 $0.05 $0.00 l 19 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 7 19 19 19 19 19 19 19 19 19 19
Slide 8: Wireless Highlights
Wireless Highlights ▪ Postpaid Subscribers PCS Subscribers (000s) Postpaid subscribers increased 736.6 722.6 1.9% over Q4'16 ▪ Prepaid Subscribers Prepaid subscribers increased 9.3% over Q4'16 225.8 206.7 ▪ Adjusted OIBDA Decreased by $7.0 million, down 12/31/17 12/31/16 11.0% in Q4'17 vs Q4'16 (1)
Slide 9: Cable Highlights
Cable Highlights Continued Growth Cable Adjusted OIBDA (in millions) ▪ Operating revenues $30.5 million, growth of 7.7% over Q4'16 $11.3 $9.3 ▪ Q4'17 Adjusted OIBDA $11.3 million, up 21.3% from Q4'16 ▪ 133,086 RGU's at Q4'17, up 0.5% over Q4'16 Q4'17 Q4'16 Cable Adjusted OIBDA Margin* Shows Long Ter
Slide 10: Fiber and Tower Highlights
Fiber and Tower Highlights *Fiber Lease Revenue (in millions) ▪ Wireline and Cable fiber Wireline Cable lease revenues of $13.2 $13.2 million, up 16.7% from 1.7 $11.3 1.1 Q4'16 11.5 10.2 ▪ 192 towers generated $1.9 million of Adjusted Q4'17 Q4'16 OIBDA in Q4'17, an *Includes both Affiliate and Non-a
Slide 11: Jim Woodward, SVP of Finance and CFO
Jim Woodward SVP of Finance and CFO 11
Slide 12: Consolidated Quarterly Results
Consolidated Quarterly Results Consolidated Results ($ in millions, except per share amounts) Three Months Ended: 12/31/17 12/31/16 Change ($) Change (%) Operating Revenues $ 151.6 $ 155.6 $ (4.0) (2.6)% Operating Income 18.1 12.2 5.9 48.4 % Net Income (1) $ 60.6 $ (0.2) $ 60.8 30,400 % Earnings Per
Slide 13: Adjusted OIBDA - Quarterly Results
Adjusted OIBDA - Quarterly Results Adjusted OIBDA ($ millions) For the Quarter Ended: 12/31/2017 12/31/2016 Change ($) Change (%) Operating income $ 18.1 $ 12.2 5.9 48 % Plus Depreciation and amortization 43.3 46.7 (3.4) (7)% Plus (Gain) loss on asset sales — 0.1 (0.1) (100)% Plus Share based compen
Slide 14: Quarterly Results Adjusted OIBDA by Segment
Quarterly Results Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Other Q4'17 Q4'16 Q4'17 Q4'16 Q4'17 Q4'16 Q4'17 Q4'16 Operating income $ 11.9 $ 5.3 $ 5.4 $ 3.0 $ 5.4 $ 5.5 $ (4.6) $ (1.6) Plus Depreciation and amortization 33.9 37.6 5.9 6.1 3.3 2.9 0.2 0.1 Plus (Gain) loss on asset
Slide 15: Wireless Segment – Change in Adjusted OIBDA Q4'17 vs. Q4'16
Wireless Segment – Change in Adjusted OIBDA Q4'17 vs. Q4'16 ($ millions) 4.0 $2.1 2.0 0.0 $(0.8) -2.0 $(1.6) $(2.5) -4.0 $(4.2) -6.0 $(7.0) -8.0 Increase - Decrease - Decrease - Increase - Decrease - Total Prepaid Equipment One-Time Prepaid Postpaid Revenue Revenue Adjustments* Acquisition Revenue E
Slide 16: Cable Segment – Change in Adjusted OIBDA Q4'17 vs. Q4'16
Cable Segment – Change in Adjusted OIBDA Q4'17 vs. Q4'16 ($ millions) $2.0 2.0 $1.6 1.5 1.0 $0.7 0.5 $0.1 0.0 $(0.2) $(0.2) -0.5 Increase - Increase - Decrease - Increase - Decrease - Total HSD Revenues Voice, Network & SG&A Costs Video Revenues Equipment and Other COGS Other Revenues 16
Slide 17: Earle MacKenzie, EVP and COO
Earle MacKenzie EVP and COO 17
Slide 18: Wireless - Subscriber Growth
Wireless - Subscriber Growth Postpaid Prepaid 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 ) ) , 2) (1 (1 (1 11 04 05 06 07 08 09 10 12 13 14 15 16 17 20 20 20 20 20 20 20 20 20 20 20 20 20 20 (1) Prepaid totals in 2015, 2016, and 2017 were adjusted to exclude Lifeline subscribers. (2) Incl
Slide 19: Wireless - Postpaid Subscribers
Wireless - Postpaid Subscribers Gross Additions - Postpaid Net Change - Postpaid New Service Area (1) Legacy Service Area New Service Area (1) Legacy Service Area 51,442 47,988 8,643 3,777 21,937 3,838 22,520 7,014 4,805 29,505 (3,237) 25,468 Q4'17 Q4'16 Q4'17 Q4'16 (1) - New Service Area represents
Slide 20: Wireless - Postpaid Statistics
Wireless - Postpaid Statistics Postpaid Churn Postpaid ARPU* Combined Service Area Legacy Service Area $47.13 $45.71 $45.57 $45.28 2.10% 2.19% $44.46 2.05% 2.00% 1.95% 1.79% 1.59% 1.66% 1.56% 1.51% Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 *ARPU represents Average Revenue Per Unit.
Slide 21: Wireless - Prepaid Statistics
Wireless - Prepaid Statistics Gross Additions (000s) Cumulative Customers (000s) Gross Additions Net Additions/Losses 39.4 35.1 222.0 224.6 225.8 36.7 37.7 35.2 206.7 214.8 8.1 7.3 2.6 1.2 (38.3) Q4'16 (1) Q1'17 Q2'17 Q3'17 Q4'17 Q4'16 (1) Q1'17 Q2'17 Q3'17 Q4'17 (1) Prepaid subscribers reported in
Slide 22: Wireless - Prepaid Statistics
Wireless - Prepaid Statistics Prepaid Churn Prepaid ARPU* Combined Service Area $38.23 $38.39 $37.65 $37.46 Legacy Service Area $33.00 6.27% 4.98% 5.25% 5.05% 4.89% 4.78% 4.83% 5.04% 4.80% 4.65% (1) (1) Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 (1) Prepaid subscribers reported in t
Slide 23: Wireless - Status of Network Enhancements
Wireless - Status of Network Enhancements Acquired nTelos Service Area Enhancement # of cell sites Decommission Overlapping Sites 107 Add 800 Mhz 186 3G to 4G 363 New Coverage Sites 220 0% 20% 40% 60% 80% 100% ■ Completed ■ Expected Completion in 2018 23
Slide 24: Cable - RGU Growth by Quarter
Cable - RGU Growth by Quarter 132,465 132,846 132,287 133,240 133,086 125,000 50,618 49,384 48,248 47,379 46,613 100,000 ■ Video ■ Voice ■ High Speed Internet 75,000 21,647 22,092 22,419 22,555 21,352 50,000 60,495 61,815 61,947 63,442 63,918 25,000 0 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Customers 77,366 7
Slide 25: Cable - Average Revenue
Cable - Average Revenue Average Yearly Revenue per RGU Average Yearly Revenue per Customer $119.76 $113.05 $70.07 $66.06 Q4'17 Q4'16 Q4'17 Q4'16 25
Slide 26: Cable - Key Operational Results
Cable - Key Operational Results As of December 31, 2017 2016 Homes Passed (1) 184,910 184,710 Total Revenue Generating Units 133,086 132,465 Customer Relationships 77,828 77,366 RGUs per Customer Relationship 1.71 1.71 Video Revenue generating units 46,613 50,618 Penetration 25.2% 27.4% Digital vide
Slide 27: Wireline - Key Operational Results
Wireline - Key Operational Results Access lines (000s) ▪ Access line loss of 2.8% as a 18.4 17.9 result of no longer requiring an access line to purchase internet service. ▪ Effective Q4’15, subscribers Q4'17 Q4'16 were offered a cable modem internet option up to 101 DSL & Cable Modem Customers (000
Slide 28: Wireline and Cable Fiber Sales
Wireline and Cable Fiber Sales ($ millions) Fiber Lease Revenue New External Fiber Lease Contracts* Non-affiliate Revenue Affiliate Revenue Wireline Cable 27.1 52.3 30.1 11.5 23.9 22.0 42.6 8.0 23.9 10.0 35.6 19.2 15.6 15.9 22.2 12.0 18.7 16.4 2015 2016 2017 2015 2016 2017 * Estimated amounts repres
Slide 29: Capital Expenditures Investing in the Future
Capital Expenditures Investing in the Future Capex Spending ($ millions) 2018 Capex Budget: Wireless Wireline Cable Other $183.1 52% Upgrades and Expansion of 7.1 Acquired Territories $163.2 32.4 9.4 14% Network Maintenance $138.1 20.2 6.9 29.1 13% Success-Based 27.1 22.4 12% Network Capacity 20.2 9
Slide 30: Recent Developments Expansion
Recent Developments Expansion Signed Expansion Agreement on Feb. 1, 2018 with Sprint to expand our wireless service area to include certain areas in Kentucky, Pennsylvania, Tennessee, Virginia and West Virginia, effectively adding 1.1 million POPs. Expansion Includes: ▪ 38 thousand Postpaid Subscrib
Slide 31: Wireless Network Expansion
Wireless Network Expansion Effective February 1,2018 31
Slide 32: Q&A
AXSHENTEL Q&A 32
Slide 33: Appendix
Appendix SHENTEL
Slide 34: Non-GAAP Financial Measures Billed Revenue per Prepaid & Postpaid Subscriber
Non-GAAP Financial Measures Billed Revenue per Prepaid & Postpaid Subscriber Gross billed revenue Q4'17 Q4 2016 Wireless segment total operating revenues $ 111,522 $ 117,822 Equipment revenue (1,800) (2,903) Tower lease revenue (2,928) (2,808) Gross billed revenue – prepaid (25,203) (23,101) Sprint
Slide 35: Wireless - Network Statistics at December 31, 2017
Wireless - Network Statistics at December 31, 2017 Wireless Network Statistics Cell sites Legacy New(1) CDMA Base Stations (sites) 572 1,051 nd Sites with 2 LTE carrier 555 989 Sites with three carriers, including a 2nd 182 268 carrier @ 1900 MHz Sites with 2.5 GHz LTE 162 207 Traffic % LTE traffic
Slide 36: Cable - Non-GAAP Financial Measure Average Revenue
Cable - Non-GAAP Financial Measure Average Revenue Q4'17 Q4'16 Net Service Revenue $ 25,452 $ 23,718 Set-top box rentals 2,079 2,122 FUSC and pass-through fees 456 414 Video, Internet & Voice Revenue 27,987 26,254 Other miscellaneous revenue 2,510 2,067 Total Operating Revenue $ 30,497 $ 28,321 Aver
Slide 37: Wireless - Tower Statistics
Wireless - Tower Statistics Towers and Leases Mobile Tower Revenue ($ millions) Towers Non-affiliate Leases Non-affiliate Revenue Affiliate Revenue 192 192 196 202 2.9 2.7 1.2 1.1 1.7 1.6 Q4'17 Q4'16 Q4'17 Q4'16 37
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