Shenandoah Telecommunications Co · NASDAQ:SHEN

Shenandoah Telecommunications — Q4 2015 Earnings Presentation

40 slides from Shenandoah Telecommunications's earnings presentation, Feb 26, 2016

  1. Slide 1: 4Q 2015 Earnings Conference Call

    4Q 2015 Earnings Conference Call February 26, 2016

  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: Fourth Quarter 2015 Highlights

    Fourth Quarter 2015 Highlights  Net Income Growth  Increased 40% over Q4’14 to $12.1 million  Adjusted OIBDA increased 17.5% to $40.1 million  Revenue Growth  Revenue grew 5.4 % over Q4’14 to $87.3 million  Customer Growth 12/31/14 12/31/15 Change Wireless 433,029 455,352 +22,323 Cable (RGUs)

  6. Slide 6: 2015 Financial Highlights

    2015 Financial Highlights Revenue Adjusted OIBDA ($ millions) ($ millions) 6

  7. Slide 7: 2015 Financial Highlights

    2015 Financial Highlights Operating Income Net Income ($ millions) ($ millions) 7

  8. Slide 8: Wireless Highlights

    Wireless Highlights  Postpaid Growth PCS Customers (000s) Postpaid customers up 8.6% over last 12 months  Prepaid Decline Prepaid customers down 1.6% over last 12 months  Operating Income Increase FY’15 Improvement of $5.1 million, or 7.4% 8

  9. Slide 9: Cable Highlights

    Cable Highlights Cable OIBDA (in millions)  Revenue Growth  Operating revenues $25.7 million, growth of 15.8% over Q4’14  Q4’15 Adjusted OIBDA $8.2 million, up 90.4% from Q4’14  126,071 RGUs at Q4’15, up 3.6% over Q4’14 Adjusted OIBDA Margin Shows Long Term Cable RGUs Improvement 25% 18% 15% 10%

  10. Slide 10: Other Highlights

    Other Highlights *Fiber Lease Revenue (in millions) Wireline Cable $9.8 $8.4 $0.7 $0.5 $9.1  Wireline and Cable - $7.9 Fiber lease revenues of $9.8 million, up 17.0% from Q4’14 Q4'14 Q4'15  158 towers generated *Includes both Affiliate and Non-affiliate revenues $1.8 million of OIBDA Mobile Tower

  11. Slide 11: Annual Dividend Paid Every Year Since 1960

    Annual Dividend Paid Every Year Since 1960 $0.25 $0.24 $0.20 Dividend payment per share Total Dividends Paid per Share $0.15 (Adjusted for stock splits) $0.10 $0.05 $0.00 11

  12. Slide 12: Adele Skolits, VP of Finance and CFO

    Adele Skolits VP of Finance and CFO 12

  13. Slide 13: Profitability

    Profitability Consolidated Results ($ in thousands, except per share amounts) For the Quarter Ended:___ 12/31/14 12/31/15 Change Operating Income $ 16,326 $ 21,721 33.0% Net Income $ 8,649 $ 12,108 40.0% Earnings Per Share: Basic $ 0.18 $ 0.24 33.3% Diluted $ 0.18 $ 0.24 33.3% 13

  14. Slide 14: Profitability: Adjusted OIBDA

    Profitability Adjusted OIBDA ($ thousands) For the Quarter Ended: For the Year Ended: 12/31/14 12/31/15 Change 12/31/14 12/31/15 Change Operating Income 16,326 21,721 5,395 61,943 74,086 12,143 Depreciation and Amortization 17,176 17,583 407 65,890 70,702 4,812 Share Based Compensation 408 437 29 2,

  15. Slide 15: Growth in Adjusted OIBDA

    Growth in Adjusted OIBDA ($ thousands) Adjusted OIBDA ($ thousands) *See Appendix for reconciliation of net income to adjusted earnings per share. 15

  16. Slide 16: Adjusted OIBDA by Segment

    Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Q4'14 Q4'15 Q4'14 Q4'15 Q4'14 Q4'15 Operating Income $ 18.2 $ 18.9 $ (1.9) $ 2.2 $ 3.2 $ 4.6 Depreciation and amortization 7.9 8.3 6.1 5.8 3.0 3.3 Plus (gain) loss on asset sales 0.2 - (0.1) 0.1 - 0.1 Share based compensation 0.1 0.1 0.2

  17. Slide 17: Wireless Segment – Change in Adjusted OIBDA

    Wireless Segment – Change in Adjusted OIBDA Q4’15 vs. Q4’14 ($ millions) 17

  18. Slide 18: Cable Segment – Change in Adjusted OIBDA

    Cable Segment – Change in Adjusted OIBDA Q4’15 vs. Q4’14 ($ millions) 18

  19. Slide 19: Wireline Segment – Change in Adjusted OIBDA

    Wireline Segment – Change in Adjusted OIBDA Q4’15 vs. Q4’14 ($ millions) 19

  20. Slide 20: Earle MacKenzie, EVP and COO

    Earle MacKenzie EVP and COO 20

  21. Slide 21: Postpaid Customer Growth

    Postpaid Customer Growth PCS Postpaid Customers (000s) 21

  22. Slide 22: Postpaid Customer Additions

    Postpaid Customer Additions Postpaid Additions – Q4  Net adds of 8,985 in Q4 2015 versus 4,891 in Q4 2014  Shentel-controlled channels produced 32% of gross adds in Q4 2015 and 34% in Q4 2014  Q4 2015 churn of 1.48%, down from 1.92% in Q4 2014 Postpaid Additions – Year-to-Date Postpaid Churn 22

  23. Slide 23: Billed Revenue per Customer Down; Data Usage Increasing

    Billed Revenue per Customer Down; Data Usage Increasing Gross Billed Service Revenue per Postpaid User – Data & Voice 1 Voice Data $62.74 $56.49 $35.84 $34.50 $26.90 $21.99 Q4'14 Q4'15 1 – Before Service credits, bad debt, Sprint fees. 23

  24. Slide 24: PCS Revenues

    PCS Revenues Gross Billed Revenues - Postpaid ($ millions) * 24

  25. Slide 25: PCS Prepaid Statistics

    PCS Prepaid Statistics Gross Additions (000s) Cumulative Customers (000s) 25

  26. Slide 26: PCS Prepaid Statistics

    PCS Prepaid Statistics Churn % Average Gross Billed Revenue 26

  27. Slide 27: Network Statistics at 12/31/15

    Network Statistics at 12/31/15  552 Cell Sites  93% have a second LTE carrier at 800 MHz  189 sites have three carriers, including a second carrier at 1900 MHz  Traffic  91% of data traffic is on LTE, with 34% on 800 MHz  Data usage grew 13% in Q4’15  Average speeds of approximately 4 Mbps 

  28. Slide 28: Cable - RGU Growth by Quarter

    Cable - RGU Growth by Quarter Customers 71,298 72,192 71,4691 72,237 72,734 RGU's/Customer 1.71 1.72 1.73 1.73 1.73 1. College students disconnect during summer 28

  29. Slide 29: 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 $132.22 and $156.57 for Q4 2014 and Q4 2015, respectively. 29

  30. Slide 30: Key Operational Results – Cable

    Key Operational Results – Cable* 12/31/2013 12/31/2014 12/31/2015 Homes Passed 170,470 171,589 172,538 Total Revenue Generating Units 113,840 121,716 126,071 Customer Relationships 69,538 71,298 72,734 RGUs per Customer Relationship 1.64 1.71 1.73 Video Revenue generating units 53,076 52,095 50,215

  31. Slide 31: Key Operational Results - Wireline

    Key Operational Results - Wireline Access lines (000s)  Access line loss of 6.3% in past 12 months  Broadband penetration in LEC area at 64.6%  Total connections at 12/31/15 of 33.3 thousand DSL Customers (000s)  5,356 video subscribers at 12/31/15  Effective Q4’15, subscribers were offered add

  32. Slide 32: Wireline and Cable Fiber Sales

    Wireline and Cable 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. 32

  33. Slide 33: Investing in the Future

    Investing in the Future Capex Spending ($ millions)  2016 Capex Spending:  56% Upgrades and Expansion of nTelos network  17% Network Expansion  11% Additional Network Capacity  10% Network Maintenance  6% Success-Based 33

  34. Slide 34: Q&A

    ASHENTEL’ Q&A 34

  35. Slide 35: Appendix

    Appendix ASHENTEL’

  36. Slide 36: Non-GAAP Financial Measures – Billed Revenue per Prepaid & Postpaid Subscriber

    Non-GAAP Financial Measures – Billed Revenue per Prepaid & Postpaid Subscriber Dollars in thousands (except subscribers and revenue per subscriber) 4Q 2014 4Q 2015 Gross billed revenue Wireless segment total operating revenues $ 52,407 $ 51,954 Equipment revenue (1,653) (1,305) Tower lease revenue (

  37. Slide 37: Postpaid PCS Customers Top Picks Q4 2015

    Postpaid PCS Customers Top Picks Q4 2015  Top Service Plans – 37% of  Top Devices – New Activations Gross Adds – All Channels Unlimited 11% iPhone 46% Tablet Plan (1GB/100MB) 10% Samsung Galaxy S 16% High Speed Data Share 10% LG G Pad 6% (40GB/1GB) LG Note 4% Everything Data Share 1500 6% LG G4 3%

  38. Slide 38: iPhone Statistics – Q4'15

    iPhone Statistics – Q4’15  46% of Q4 Gross Adds  28% of iPhones were sold or upgraded in Shentel- controlled channels  39.9% of 12/31/15 Postpaid customers had the iPhone, up from 38.3% at 9/30/15 and 35.1% at 12/31/14.  iPhone Base – 12/31/15  64% iPhone 6, 6S, 6 Plus, 6S Plus  28% iPhone 5,

  39. Slide 39: 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) Q4 2014 Q4 2015 Net Service Revenue $ 18,549 $ 21,334 Set-top box rentals 1,816 2,041 FUSC and pass-through fees 359 398 Video, Internet & Voice Revenue 20,724 23,773 Other misce

  40. Slide 40: 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 225 10.2 10.5 9.2 9.5 9.9 4.4 4.4 3.3 4.3 3.2 150 6.0 6.2 5.8 6.1 5.6 75 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 For the Year E

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