Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Q2 2020 Earnings Presentation
34 slides from Shenandoah Telecommunications's earnings presentation, Jul 30, 2020
Slide 1: Q2 2020 Earnings Conference Call
Q2 2020 Earnings Conference Call July 30, 2020
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: Record Broadband Results
Record Broadband Results Broadband RGU Net Additions 9,039 7,020 6,445 6,028 4,919 4,762 3,011 2016 2017 2018 2019 2020 YTD Prior Years 2020 Q1 2020 Q2 4
Slide 5: Consolidated Normalized Free Cash Flow and Uses
Consolidated Normalized Free Cash Flow and Uses (in millions) Normalized Free Cash Flow* 2020 Normalized Free Cash Flow* by Segment 62.6% $86.7 $4.6 $82.1 $4.5 $50.5 $(13.7) Wireless Broadband Tower Corporate 2019 YTD 2020 YTD *See appendix for calculation of normalized free cash flow. 5
Slide 6: Managing Through Change
Managing Through Change • Covid-19 • Phased re-opening of the economies in our markets began in June • Stay-at-Home directives by local governments still recommended • Drove strong Broadband and soft Wireless postpaid retail demand • Incurred approximately $4 million in Covid-19 related charges and
Slide 7: Sprint/T-Mobile Merger Options
Sprint/T-Mobile Merger Options 4/1/2020 4 Sprint / T-Mobile merger closed 4 Network Technology, Brand, and Combination Conversion Notice received 4/1/2020 - 4 Negotiation period ended 6/30/2020 7/1/2020 - 4 New T-Mobile may elect an option to purchase the operating assets of our PCS 8/31/2020 __ bus
Slide 8: Jim Volk, SVP of Finance and CFO
Jim Volk SVP of Finance and CFO 8
Slide 9: Sprint/T-Mobile Affiliate Developments
Sprint/T-Mobile Affiliate Developments • Travel dispute resolved through binding arbitration during June 2020 • Travel fee reset to $18 million per year for the period 2019 – 2021 • Sprint adopted the T-Mobile credit and collection policies for Sprint branded customers including those in the Shentel
Slide 10: Second Quarter Consolidated Results
Second Quarter Consolidated Results Revenue (in millions) Adjusted OIBDA (in millions) 6.7% $169.5 $80.9 $158.9 20.7% $67.0 42.1% 47.7% margin margin Q2'19 Q2'20 Q2'19 Q2'20 10
Slide 11: Second Quarter Consolidated Results
Second Quarter Consolidated Results Operating Income (in millions) Net Income Per Diluted Share $43.0 $0.58 79.2% 123.1% $24.0 $0.26 Q2'19 Q2'20 Q2'19 Q2'20 11
Slide 12: Wireless Highlights - Second Quarter Results
Wireless Highlights - Second Quarter Results Revenue (in millions) Adjusted OIBDA (in millions) $67.7 $119.7 7.8% $111.1 $9.6 29.2% $16.5 $24.4 $52.4 $5.0 $13.6 $12.4 Postpaid Prepaid 56.5% margin Travel & 47.1% Other margin Equipment $76.0 $73.3 Q2'19 Q2'20 Q2'19 Q2'20 12
Slide 13: Broadband Highlights - Second Quarter Results
Broadband Highlights - Second Quarter Results Revenue (in millions) Adjusted OIBDA (in millions) $21.9 3.3% $50.1 8.5% $48.6 $1.9 $2.3 $20.0 $4.8 $6.0 $7.6 $6.7 Cable residential & SMB Fiber enterprise & wholesale 45.1% 39.9% margin margin RLEC $35.8 Other & $33.6 Equipment Q2'19 Q2'20 Q2'19 Q2'20 1
Slide 14: Tower Highlights - Second Quarter Results
Tower Highlights - Second Quarter Results Revenue (in millions) Adjusted OIBDA (in millions) $2.7 $4.3 46.1% 41.0% $1.9 $3.0 61.3% 63.5% margin margin Q2'19 Q2'20 Q2'19 Q2'20 14
Slide 15: Capitalization
Capitalization Total Debt & Liquidity (in millions) Debt Maturity (in millions) $715.0 Effective $172.5 Interest Rate $5.0 of 2.51% $218.7 2.61x $448.5 Net Leverage Leverage Ratio $75.0 $167.5 Ratio of 2.22 $143.7 $34.1 $37.8 Total Debt Total Liquidity $5.0 $5.0 $17.1 $3.7 $29.1 $32.8 $14.6 $5.0 Cas
Slide 16: Dave Heimbach, EVP and COO
XG Dave Heimbach EVP and COO AXSHENTEL
Slide 17: COVID-19 Status
COVID-19 Status • Wireless • Temporarily closed Sprint retail stores slowly re-opened with all stores open by July • Postpaid gross adds declined 28% from 2Q19 to 2Q20 • Postpaid voluntary churn declined 23% from 2Q19 to 2Q20 • Sprint Keep America Connected pledge maintained through 2Q20 • Sprint re
Slide 18: COVID-19 Status
COVID-19 Status • Broadband • Prepaid broadband service introduced for Covid-19 relief contributed 954 RGUs • Covid-19 introduced minimum broadband bandwidth speeds of 50 Mbps and data allowances of 250 GBs were drivers in year over year lower churn of 83 bps • Estimate 700 internet disconnects defe
Slide 19: Wireless - Postpaid Metrics
Wireless - Postpaid Metrics Subscribers Churn 811,719 4.3% 846,428 84,820 111,400 2.88% 2.63% 1.62% 726,899 735,028 1.38% Q2'19 Q2'20 Q2'19 Q2'20 Phones Devices Phones Devices Gross Additions Net Additions ARPU* 52,799 $42.28 $40.60 10,767 12,851 37,832 6,698 11,265 4,069 2,624 39,948 26,567 (3,967)
Slide 20: Wireless - Prepaid Metrics
Wireless - Prepaid Metrics Subscribers Churn 289,449 7.6% 269,039 3.97% 3.38% Q2'19 Q2'20 Q2'19 Q2'20 Gross Additions Net Additions ARPU * $37.70 10,353 $36.25 39,083 33,753 1,819 Q2'19 Q2'20 Q2'19 Q2'20 Q2'19 Q2'20 * Refer to the Appendix for a reconciliation of Wireless segment revenue to Prepaid
Slide 21: Broadband - Incumbent Cable Metrics
Broadband - Incumbent Cable Metrics Revenue Generating Units (RGU) Average Monthly Revenue per Customer * 176,146 $125.74 $121.38 167,476 5.2% 52,738 57,215 Voice 79,507 91,364 Broadband Video 30,754 32,044 Q2'19 Q2'20 Q2'19 Q2'20 Broadband Penetration Broadband Churn 2.15% 44.1% 38.5% 1.32% Q2'19 Q
Slide 22: Broadband - Glo Fiber Metrics
Broadband - Glo Fiber Metrics Revenue Generating Units (RGU) Product Attach Rates 1,954 StreamTV Phone 415 Voice 33% 31% 682 1,331 Broadband 18% 16% 149 Video 453 80 208 Q1'20 Q2'20 Q1'20 Q2'20 Broadband Penetration Homes Passed 13,173 10.1% 8.5% 5,347 Q1'20 Q2'20 Q1'20 Q2'20 22
Slide 23: Cable and Fiber Network
Cable and Fiber Network Target Planned Passings* Launch Harrisonburg 10,981 Active Staunton 9,903 Active Front Royal 4,969 Active Winchester 9,954 Active Salem 7,463 1H21 Lynchburg 16,039 1H21 Roanoke 28,208 1H21 Total 87,517 *Target passings defined as Single Family Households (SFU), residential Mu
Slide 24: Tower - Metrics
Tower - Metrics Towers and Small Cells Tenants Towers Small Cells Intercompany External 228 413 217 8 9.5% 377 207 200 220 206 177 Q2'19 Q2'20 Q2'19 Q2'20 24
Slide 25: Capital Expenditures
Capital Expenditures Capex Spending ($ in millions) $125 - $148 $3 - 6 $50 - $55 $79 $2 $67 $1 $31 $20 $45 - $50 $31 $44 $25 - $35 $14 YTD 2019 YTD 2020 2020 Guidance Wireless Broadband* Glo Fiber & Fixed Wireless Tower Other *Excludes CapEx for Glo Fiber and Fixed Wireless 25
Slide 26: Q&A
AXSHENTEL Q&A 26
Slide 27: Appendix
Appendix AXSHENTEL
Slide 28: 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 29: Adjusted OIBDA by Segment - Quarterly Results
Adjusted OIBDA by Segment - Quarterly Results Three Months Ended June 30, 2020 Corporate & (in thousands) Wireless Broadband Tower Eliminations Consolidated Operating income (loss) $ 43,872 $ 8,767 $ 2,229 $ (11,866) $ 43,002 Depreciation 19,545 11,078 477 (310) 30,790 Amortization of intangible ass
Slide 30: Net Leverage Ratio
Net Leverage Ratio ($ in thousands) Q2'20 Total Debt $ 714,979 Cash 143,712 Total Debt less Cash 571,267 Adjusted OIBDA 80,935 Less: Normalization of Travel Revenue (16,500) Adjusted OIBDA less out of period travel revenue 64,435 x4 Last quarter annualized $ 257,740 Net leverage ratio 2.22 Our trave
Slide 31: Normalized Free Cash Flow and Free Cash Flow
Normalized Free Cash Flow and Free Cash Flow Six Months Ended June 30, 2020 2019 (in thousands) Wireless Broadband Tower Corporate Consolidated Consolidated Net Cash Provided by Operations $ 100,436 $ 35,478 $ 5,511 $ (12,486) $ 128,939 $ 129,632 Less: Capital Expenditures* (13,738) (30,864) (1,049)
Slide 32: Wireless Average Revenue per User (ARPU)
Wireless Average Revenue per User (ARPU) ($ in thousands, except subscribers and revenue per subscriber amounts) Q2'19 Q2'20 Postpaid billings $ 102,053 $ 102,879 Average postpaid subscribers* 804,506 844,706 Average monthly billed revenue per postpaid subscriber** $ 42.28 $ 40.60 Prepaid billings $
Slide 33: Broadband - Average Revenue Per Customer
Broadband - Average Revenue Per Customer ($ in thousands, except customer and per customer amounts) Q2'19 Q2'20 Incumbent Cable Residential & SMB Revenue $ 33,581 $ 35,674 Average customer relationships* 89,023 98,396 Average Revenue Per Customer** $ 125.74 $ 121.38 * Represents a quarterly average
Slide 34: Broadband - Cable & Fiber Metrics
Broadband - Cable & Fiber Metrics As of June 30, 2019 2020 Homes passed 206,262 220,442 Total revenue generating units 167,476 178,100 Customer relationships 88,860 101,816 RGUs per customer relationship 1.88 1.75 Video Revenue generating units 57,215 53,153 Penetration 27.7% 24.1% Broadband Revenue
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