Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Q3 2018 Earnings Presentation
31 slides from Shenandoah Telecommunications's earnings presentation, Nov 6, 2018
Slide 1: Q3 2018 Earnings Conference Call
Q3 2018 Earnings Conference Call November 6, 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: Third Quarter 2018 Highlights
Third Quarter 2018 Highlights ▪ Revenue ▪ $158.7 million in Q3'18 compared with $151.8 million in Q3'17. ▪ Q3'18 includes a $4.5 million negative impact related to Topic 606. ▪ Operating Income ▪ $28.3 million in Q3'18 compared with $9.5 million in Q3'17. ▪ Net Income ▪ $15.5 million in Q3'18 compar
Slide 6: Wireless Highlights
Wireless Highlights ▪ Continued Growth Wireless PCS Customers ▪ 785,537 Postpaid customers Q3'18, up 7.9% over Q3'17 727,954 785,537 ▪ 255,462 Prepaid customers Q3'18, up 13.7% over Q3'17 224,609 255,462 ▪ $116.1 million of Wireless service revenue in Q3 '18 compared to $112.5 million in Q3 '17. Q3'
Slide 7: Cable Highlights
Cable Highlights ▪ Continued Growth Cable RGUs ▪ Operating revenue $32.2 million, up 7.0% over Q3'17 133,240 134,450 ▪ Adjusted OIBDA $11.8 million, up 18.0% over Q3'17 Adjusted OIBDA Margin 37% Q3'17 Q3'18 34% 29% QTD Cable Adjusted OIBDA (in millions) 25% $11.8 18% $10.0 15% 2013 2014 2015 2016 20
Slide 8: Wireline Highlights
Wireline Highlights ▪ Continued Profitability Wireline Statistics ▪ Operating revenue $19.6 million, down 1.2% from Q3'17 14,605 14,734 15,000 ▪ Adjusted OIBDA $8.5 million, up 0.8% from Q3'17 12,000 9,107 9,107 9,000 ▪ 14,734 Broadband Customers at Q3'18, up 0.9% over 6,000 5,110 4,796 Q3'17 3,000
Slide 9: Jim Woodward, SVP of Finance and CFO
Jim Woodward SVP of Finance and CFO 9
Slide 10: Consolidated Quarterly Results
Consolidated Quarterly Results Consolidated Results ($ in thousands, except per share amounts) Three Months Ended: 9/30/18 9/30/17 Change ($) Change (%) Operating revenue $ 158,731 $ 151,782 $ 6,949 4.6 % Operating expenses $ 130,402 $ 142,307 $ (11,905) (8.4)% Operating income (loss) $ 28,329 $ 9,4
Slide 11: Adjusted OIBDA by Segment - Quarterly Results
Adjusted OIBDA by Segment - Quarterly Results Adjusted OIBDA by Segment 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 Impact of ASC topic 606 (4,868) (172) (77) — (5,117) Depreciation and a
Slide 12: Wireless Segment – Change in Adjusted OIBDA Q3'18 vs. Q3'17
Wireless Segment – Change in Adjusted OIBDA Q3'18 vs. Q3'17 (millions) $0.6 $62.6 $2.4 $5.4 $54.2 48.2% 53.9% Adj Adj OIBDA OIBDA Margin Margin Revenue Impact Expense Impact $7.8 $0.6 Q3'17 Prepaid Postpaid Sales & Q3'18 Revenue and Revenue Marketing, Wholesale Wages & Benefits ▪ Adjusted OIBDA grow
Slide 13: Cable Segment – Change in Adjusted OIBDA Q3'18 vs. Q3'17
Cable Segment – Change in Adjusted OIBDA Q3'18 vs. Q3'17 (millions) $0.4 $1.8 $11.8 $(0.4) $10.0 33.1% 36.6% Adj OIBDA Adj OIBDA Margin Margin Q3'17 Broadband All Video Q3'18 Service Other Retransmission Revenue Costs ▪ Adjusted OIBDA growth of 18.0% to $11.8 million for the quarter ended September
Slide 14: Wireline Segment – Change in Adjusted OIBDA Q3'18 vs. Q3'17
Wireline Segment – Change in Adjusted OIBDA Q3'18 vs. Q3'17 (millions) $0.2 $1.5 $8.5 $8.4 $(1.6) 42.4% 43.2% Adj OIBDA Adj OIBDA Margin Margin Q3'17 Regulatory Enterprise Maintenance Q3'18 Refund Revenue Costs & Repricing (NECA) of Affiliate Circuits 14
Slide 15: Capitalization - Q3'18 vs. Q3'17
Capitalization - Q3'18 vs. Q3'17 (millions) $900 $833.0 $800 $778.8 $700 $600 4.07% 4.11% Eff. Int. Rate Eff. Int Rate $500 $400 2.93x 2.61x Leverage Ratio Leverage Ratio $300 $200 $100 $75.5 $75.2 $0 Q3'17 Q3'18 Cash & Cash Equivalents Debt 15
Slide 16: Dave Heimbach, EVP and COO
XG Dave Heimbach EVP and COO AXSHENTEL
Slide 17: Wireless Subscriber Changes - Q3'18 Year Over Year
Wireless Subscriber Changes - Q3'18 Year Over Year (in thousands) 1,041.0 952.6 255.5 224.6 785.5 728.0 54.0 34.4 15.7 15.2 38.3 19.2 September 30, Richmond Organic September 30, 2017 Expansion Growth 2018 Area Postpaid Prepaid 17
Slide 18: Wireless - Postpaid Metrics
Wireless - Postpaid Metrics ▪ Net additions grew 203.6% from net losses in Q3'17 impacted by the migration of former nTelos QTD Churn* subscribers to Sprint. 2.19% ▪ Churn improved 35 basis points over Q3'17. 1.84% ▪ ARPU was impacted by promotional and discount activity. QTD Gross Additions / Net C
Slide 19: Wireless - Prepaid Metrics
Wireless - Prepaid Metrics ▪ Net additions up 32.6% over Q3'17. QTD Churn ▪ Churn improved 63 basis points over Q3'17. 5.25% 4.62% ▪ Continued growth for ARPU. QTD Gross Additions / Net Change Q3'17 Q3'18 QTD ARPU* 37,653 38,486 $36.14 $37.51 2,571 3,408 Q3'17 Q3'18 Net Change Gross Adds Q3'17 Q3'18
Slide 20: Cable - RGUs and Average Revenue
Cable - RGUs and Average Revenue ▪ Continued Growth Average Monthly Revenue per RGU * ▪ Growth in average monthly revenue per RGU primarily due to broadband. $73.64 $69.70 ▪ 3,300+ customers upgraded their speeds in Q3 '18. ▪ Broadband penetration increased from 34.3% to 36.2%. Revenue Generating Un
Slide 21: Cable - Map
Cable - Map 53% of homes passed are capable of DOCSIS 3.1 21
Slide 22: Fiber and Tower Highlights
Fiber and Tower Highlights ▪ Cable and Wireline non-affiliate fiber lease revenue is up 5.7% from Q3'17 QTD Fiber Lease Revenue ▪ 193 towers generated $2.9 million of $12.5 $11.7 Tower revenue in Q3'18, consistent with 7.2 6.1 Q3'17. QTD Mobile Tower Revenue (in millions) 5.3 5.6 $2.9 $2.9 1.2 1.3 Q
Slide 23: Capital Expenditures - Investing in the Future
Capital Expenditures - Investing in the Future Capex Spending ($ millions) ▪ 2018 Capex Budget Estimates * 52% Upgrades and Expansion of $173 Acquired Territories $20 $146 $150 $8 * * 14% Network Maintenance $5 $32 $23 $20 * 13% Success-Based $27 $35 * 12% Network Capacity $70 $3 * 9% Network Expans
Slide 24: Q&A
AXSHENTEL Q&A 24
Slide 25: Appendix
Appendix AXSHENTEL
Slide 26: Wireless Network Expansion
Wireless Network Expansion Effective February 1,2018 New Expansion Markets • 1.1 million Market POPs • 0.6 million Covered POPs • 0.2 million optional expansion POPs • 54 thousand total subscribers • 105 CDMA base stations (sites) 26
Slide 27: Average Monthly Billed Revenue per Subscriber - Postpaid and Prepaid
Average Monthly Billed Revenue per Subscriber - Postpaid and Prepaid ($ in thousands, except subscribers and revenue per subscriber amounts) Q3'18 Q3'17 Postpaid billings $ 96,813 $ 94,013 Adjustment for write-offs 5,273 5,407 Postpaid billings excluding write-offs $ 102,086 $ 99,420 Average postpai
Slide 28: Wireless - Network Statistics at September 30, 2018
Wireless - Network Statistics at September 30, 2018 Wireless Network Statistics Cell sites Sites with 2nd LTE carrier 1,153 Sites with three carriers, including a 2nd carrier @ 1900 MHz 526 Sites with 2.5 GHz LTE 414 Sites with LTE 1,788 % of sites with LTE capabilities 98.9% Traffic % LTE traffic 9
Slide 29: Cable - Non-GAAP Financial Measure Average Revenue
Cable - Non-GAAP Financial Measure Average Revenue ($ in thousands, except subscriber and per subscriber amounts) Q3'18 Q3'17 Service revenue $ 26,955 $ 25,246 Fiber, FUSC, pass-through, and other 2,113 2,074 Internal revenue 451 430 Video, broadband and voice revenue 29,519 27,750 Other miscellaneo
Slide 30: Wireless - ARPU Trend
Wireless - ARPU Trend Postpaid ARPU* Prepaid ARPU* $45.54 $44.57 $43.22 $43.52 $43.42 $37.46 $36.73 $37.11 $37.51 $36.14 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 *ARPU represents Average Revenue Per Unit. See Appendix for reconciliation of Wireless segment operating revenue to Pos
Slide 31: Cable - Metrics
Cable - Metrics As of September 30, 2018 2017 Homes passed 185,119 184,881 Total revenue generating units 134,450 133,240 Customer relationships 79,426 77,953 RGUs per customer relationship 1.69 1.71 Video Revenue generating units 44,093 47,379 Penetration 23.8% 25.6% Digital video penetration 77.8%
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