Shenandoah Telecommunications Co · NASDAQ:SHEN

Shenandoah Telecommunications — Q1 2014 Earnings Presentation

37 slides from Shenandoah Telecommunications's earnings presentation, May 2, 2014

  1. Slide 1: 1Q 2014 Earnings Conference Call

    1Q 2014 Earnings Conference Call May 2, 2014

  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: Q1'14 Highlights

    Q1’14 Highlights  Net Income Growth – Q1’14 v. Q1’13  Increased 3.2% to $8.6 million  Adjusted OIBDA increased 7% to $31.7 million  Revenue Growth  Revenue grew 6% over Q1’13 to $80.5 million  Customer Growth 3/31/13 3/31/14 Change Wireless 398,361 413,562 +15,201 Cable (RGUs) 109,854 116,592

  6. Slide 6: Wireless Highlights

    Wireless Highlights  Postpaid Growth PCS Customers (000s) Postpaid customers up 4.2% over last 12 months  Prepaid Growth Prepaid customers up 3.1% over last 12 months  Operating Revenue Increase Improvement of $2.9 million, or 6.1% 6

  7. Slide 7: Cable Highlights

    Cable Highlights  Revenue Growth  Operating revenues grew 10.6% over Q1’13  Q1’14 Adjusted OIBDA $3.8 million, up 27% from Q1’13  116,592 RGUs at 3/31/2014, up 6.1% over Q1’13 7

  8. Slide 8: Network Upgrades Helping to Drive Performance

    Network Upgrades Helping to Drive Performance  Wireless customers benefiting from 4G LTE network  $115 million project completed late 2013  Cable customers benefiting from improved video, voice and high-speed data services  Upgrades completed in 2013  “Net promoter score” up dramatically from 2

  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 thousands, except per share amounts) For the Quarter Ended:__ 3/31/13 3/31/14 Operating Income $ 15,209 15,680 Net Income $ 8,351 $ 8,616 Basic and Diluted Earnings Per Share $ 0.35 $ 0.36 10

  11. Slide 11: Profitability: Adjusted OIBDA

    Profitability Adjusted OIBDA ($ thousands) For the Quarter Ended: 3/31/13 3/31/14 Change Operating Income 15,209 15,680 471 Depreciation and Amortization 13,972 15,387 1,415 Share Based Compensation 372 1,028 656 (Gain)/Loss on Asset Sales/Disposals 82 (366) (448) Adjusted OIBDA 29,635 31,729 2,094

  12. Slide 12: Adjusted OIBDA by Segment

    Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Q1'13 Q1'14 Q1'13 Q1'14 Q1'13 Q1'14 Operating Income $ 16.7 $ 16.8 $ (2.3) $ (2.0) $ 3.8 $ 4.4 Depreciation and amortization 6.0 7.2 5.2 5.4 2.7 2.7 Plus (gain) loss on asset sales 0.1 (0.3) (0.1) 0.0 0.1 0.0 Share based compensation 0.1

  13. Slide 13: Wireless Segment – Change in Adjusted OIBDA

    Wireless Segment – Change in Adjusted OIBDA Q1’14 vs. Q1’13 ($ millions) 13

  14. Slide 14: Cable Segment – Change in Adjusted OIBDA

    Cable Segment – Change in Adjusted OIBDA Q1’14 vs. Q1’13 ($ millions) 14

  15. Slide 15: Earle MacKenzie, EVP and COO

    Earle MacKenzie EVP and COO 15

  16. Slide 16: Wireless Segment

    ~~ Wireless Segment ASHENTEL’

  17. Slide 17: Postpaid Customer Growth

    Postpaid Customer Growth PCS Postpaid Customers (000s) 17

  18. Slide 18: Postpaid Customer Additions

    Postpaid Customer Additions Gross Additions - Postpaid  Net adds of 1,304 in Q1 2014 versus 1,065 in Q1 2013  Q1 2014 churn of 1.73% down from 1.87% in Q1 2013 Net Additions - Postpaid  Shentel-controlled channels produced 55% of gross adds in Q1 2014 and 45% in Q1 2013 18

  19. Slide 19: Total Revenue per Customer Up; Data Usage Increasing

    Total Revenue per Customer Up; Data Usage Increasing Gross Billed Revenue per Postpaid User – Data & Voice 1 Voice Data $62.87 $64.93 $31.06 $33.57 $31.81 $31.36 Q1'13 Q1'14 1 – Before Service credits, bad debt, Sprint Nextel fees. 19

  20. Slide 20: PCS Revenues

    PCS Revenues Annual Gross Billed Revenues - Postpaid ($ millions) * *Net service fee increased from 12% to 14% effective 8/1/2013 20

  21. Slide 21: PCS Prepaid Statistics

    PCS Prepaid Statistics Gross Additions (000s) Cumulative Customers (000s) *The loss of customers in Q2’13 related to more stringent governmental requirements for customers renewing their eligibility for the government subsidized Assurance program. 21

  22. Slide 22: PCS Prepaid Statistics

    PCS Prepaid Statistics Churn % Average Gross Billed Revenue 22

  23. Slide 23: Cable Segment

    Cable Segment 23

  24. Slide 24: Cable - RGU Growth by Quarter

    Cable - RGU Growth by Quarter Customers 69,237 *68,322 69,216 69,538 70,670 RGU's/Customer 1.59 1.60 1.62 1.64 1.65 1. Prior periods revised to reflect transfer of Shenandoah County, VA video activities to Wireline 2. College students disconnect during summer 24

  25. Slide 25: 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 $107.00 and $122.59 for Q1 2013 and Q1 2014, respectively. 25

  26. Slide 26: Key Operational Results – Cable

    Key Operational Results – Cable Q1 2013 Q1 2014 Homes Passed 169,035 170,711 Total Revenue Generating Units 109,854 116,592 Customer Relationships 69,237 70,670 RGUs per Customer Relationship 1.59 1.65 Video Revenue generating units 54,624 52,725 Penetration 32.3% 30.9% Digital video penetration 39.

  27. Slide 27: Wireline Segment

    Wireline Segment 27

  28. Slide 28: Key Operational Results - Wireline

    Key Operational Results - Wireline Access lines (000s)  Access line loss of 1.5% in past 12 months  Broadband penetration in LEC area at 57.9%  Total connections at 3/31/14 of 34.7 thousand DSL Customers (000s)  Over 6,000 video subscribers at 3/31/14 28

  29. Slide 29: Wireline Statistics – Fiber Sales

    Wireline Statistics – Fiber Sales ($ millions) Fiber Lease Revenue New External Fiber Lease Contracts* * Amounts shown represent the total contract value. Contract Terms range from 36 to 120 months. Revenues may be booked either in the Wireline or Cable segment depending on which assets are used to

  30. Slide 30: Investing in the Future

    Investing in the Future Capex Spending ($ millions)  2014 Capex Spending:  24% Maintenance  24% Capacity  30% Network Expansion  22% Success-Based * Accounts payable at December 31, 2013 and 2012 included $7.6 million and $24.7 million associated with PCS Network Vision capital expenditures. 30

  31. Slide 31: Q&A

    Q&A 31

  32. Slide 32: Appendix

    Appendix ASHENTEL’

  33. Slide 33: Non-GAAP Financial Measure – Billed Revenue per Postpaid Subscriber

    Non-GAAP Financial Measure – Billed Revenue per Postpaid Subscriber Dollars in thousands (except subscribers and revenue per subscriber) 1Q 2013 1Q 2014 Gross billed revenue Wireless segment total operating revenues $ 48,157 $ 51,079 Equipment revenue (1,331) (1,197) Tower Lease Revenue (2,562) (2,5

  34. Slide 34: Postpaid PCS Customers Top Picks Q1 2014

    Postpaid PCS Customers Top Picks Q1 2014  Top Service Plans – 80% of  Top Devices – New Activations Gross Adds – All Channels * Unlimited, My Way 67% iPhone 26% Everything Data 1500 13% Samsung Galaxy S4 21% Samsung Galaxy S III 15% Smartphones made up 77% of the Postpaid base in Q1 2014, up from

  35. Slide 35: iPhone Statistics – Q1'14

    iPhone Statistics – Q1’14  26% of Q1 Gross Adds  44% of iPhones were sold or upgraded in Shentel- controlled channels  30.3% of 3/31/14 Postpaid customers had the iPhone, up from 28.9% at 12/31/13  iPhone Base – 3/31/14  58% iPhone 4 & 4S  42% iPhone 5, 5C & 5S 35

  36. Slide 36: Non-GAAP Financial Measure – Average Monthly Cable Revenue

    Non-GAAP Financial Measure – Average Monthly Cable Revenue Dollars in thousands (except subscribers and revenue per user) Q1 2013 Q1 2014 Net Service Revenue $ 16,163 $ 17,423 Set-top box rentals 1,098 1,641 FUSC and pass-through fees 268 320 Video, Internet & Voice Revenue 17,529 19,384 Other misce

  37. Slide 37: Key Operational Results – Mobile Company

    Key Operational Results – Mobile Company Towers and Leases Mobile Tower Revenue ($ millions) Towers Non-affiliate Leases Non-affiliate Revenue Affiliate Revenue 218 2.6 2.6 206 1.1 1.1 151 153 1.6 1.5 Q1'13 Q1'14 Q1'13 Q1'14 (in thousands) Q1'13 Q1'14 Operating Income $1,288 $1,395 Depreciation and

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