Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Q2 2018 Earnings Presentation
34 slides from Shenandoah Telecommunications's earnings presentation, Aug 7, 2018
Slide 1: Q2 2018 Earnings Conference Call
Q2 2018 Earnings Conference Call August 7, 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: Second Quarter 2018 Highlights
Second Quarter 2018 Highlights ▪ Revenue ▪ $154.0 million in Q2'18 compared with $153.3 million in Q2'17. ▪ Includes a reduction of $4.0 million related to the adoption of Revenue Recognition, ASC 606. ▪ Operating Income ▪ $18.7 million in Q2'18 compared with $8.3 million in Q2'17. ▪ Net Income ▪ $7
Slide 6: Wireless Highlights
Wireless Highlights ▪ Continued Growth Wireless PCS Customers ▪ 780,658 Postpaid customers Q2'18, up 6.6% over Q2'17 732,664 780,658 ▪ 252,054 Prepaid customers Q2'18, up 13.5% over Q2'17 222,038 252,054 ▪ Operating revenues increased $2.2 million, or 2.0%, excluding the impact of the adoption of AS
Slide 7: Cable Highlights
Cable Highlights ▪ Continued Growth Cable Adjusted OIBDA (in millions) $12.3 ▪ Operating revenues $32.1 million, growth of 8.6% over Q2'17 $9.9 ▪ Adjusted OIBDA $12.3 million, up 23.7% over Q2'17 Adjusted OIBDA Margin 38% Q2'17 Q2'18 34% 29% 25% Cable RGUs 18% 132,287 133,148 15% 2013 2014 2015 2016
Slide 8: Wireline Highlights
Wireline Highlights ▪ Continued Profitability Wireline Adjusted OIBDA (in millions) ▪ Operating revenues $19.1 million, down 2.4% from Q2'17 $8.6 $8.0 ▪ Adjusted OIBDA $8.0 million, down 7.4% from Q2'17 ▪ 14,694 Broadband Customers at Q2'18, up 0.6% over Q2'17 Adjusted OIBDA Margin Q2'17 Q2'18 Wirel
Slide 9: Fiber and Tower Highlights
Fiber and Tower Highlights *Fiber Lease Revenue (in millions) ▪ Cable and Wireline fiber Wireline Cable lease revenues of $11.9 $11.7 $11.9 1.2 1.8 million, up 1.7% over 10.5 Q2'17 10.1 Q2'17 Q2'18 *Includes affiliate/intercompany revenue. ▪ 193 towers generated Mobile Tower Revenue (in millions) $2
Slide 10: Jim Woodward, SVP of Finance and CFO
Jim Woodward SVP of Finance and CFO 10
Slide 11: Consolidated Quarterly Results
Consolidated Quarterly Results Consolidated Results ($ in thousands, except per share amounts) Three Months Ended: 6/30/18 6/30/17 Change ($) Change (%) Operating Revenues $ 154,030 $ 153,258 $ 772 0.5 % Operating Expenses $ 135,332 $ 145,006 $ (9,674) (6.7)% Operating Income $ 18,698 $ 8,252 $ 10,4
Slide 12: Adjusted OIBDA by Segment - Quarterly Results
Adjusted OIBDA by Segment - Quarterly Results Adjusted OIBDA by Segment ($ millions) Three Months Ended June 30, 2018 (in thousands) Wireless Cable Wireline Other Consolidated Operating Income $ 19,780 $ 6,083 $ 4,793 $ (11,958) $ 18,698 Impact of ASC topic 606 (924) 4 (25) — (945) Depreciation and
Slide 13: Wireless Segment – Change in Adjusted OIBDA Q2'18 vs. Q2'17
Wireless Segment – Change in Adjusted OIBDA Q2'18 vs. Q2'17 ($ millions) $3.4 $0.3 $1.8 $60.1 $(2.5) $58.2 $(1.1) 52% 53% Adj Adj OIBDA Revenue Impact Expense Impact OIBDA Margin $2.7 million $(0.8) million Margin June 30, Postpaid Prepaid Device Sales Commissions Prepaid June 30, 2017 Revenue Reven
Slide 14: Cable Segment – Change in Adjusted OIBDA Q2'18 vs. Q2'17
Cable Segment – Change in Adjusted OIBDA Q2'18 vs. Q2'17 ($ millions) $0.7 $12.3 $1.9 $(0.2) $9.9 34% 38% Adj OIBDA Adj OIBDA Margin Margin June 30, Internet Fiber Revenue - Video June 30, 2017 Service Affiliate and Margin 2018 Revenue Non-Affiliate 14
Slide 15: Wireline Segment – Change in Adjusted OIBDA Q2'18 vs. Q2'17
Wireline Segment – Change in Adjusted OIBDA Q2'18 vs. Q2'17 ($ millions) $0.4 $8.6 $8.0 $(1.0) 44% 42% Adj OIBDA Adj OIBDA Margin Margin June 30, 2017 Enterprise Repricing of June 30, 2018 Revenue Affiliate Circuits & Other 15
Slide 16: Capitalization - As of June 30, 2018
Capitalization - As of June 30, 2018 ($ millions) Cash & Cash Equivalents Debt $900 $844.0 $799.9 $800 4.06%* 3.90%* $700 $600 $500 2.91** 2.89** $400 $300 $200 $100 $60.0 $65.6 $0 Q2 2017 Q2 2018 *Effective interest rate. ** Leverage Ratio 16
Slide 17: Dave Heimbach, EVP and COO
XG Dave Heimbach EVP and COO AXSHENTEL
Slide 18: Wireless - Subscriber Growth
Wireless - Subscriber Growth Postpaid Prepaid 1,200,000 1,000,000 252,054 225,822 206,672 800,000 780,658 722,562 736,597 600,000 400,000 145,162 129,855 287,867 312,512 200,000 0 14 15 16 17 D YT 20 20 20 20 ) ) (1 ,2 ) 18 (1 ,3 (1 ) 2' (4 Q (1) Prepaid totals in 2015, 2016, and 2017 were adjusted
Slide 19: Wireless Subscriber Changes - Q2'18 - Year Over Year
Wireless Subscriber Changes - Q2'18 - Year Over Year Postpaid Prepaid 732.7 780.7 252.1 Thousands 222.0 38.3 15.7 9.7 14.4 June 30, 2017 Richmond Organic June 30, 2018 Subscriber Expansion Growth Subscriber Totals Area Totals 19
Slide 20: Wireless - Postpaid Subscribers
Wireless - Postpaid Subscribers Gross Additions - Postpaid Net Change - Postpaid 44,629 40,408 15,514 5,797 Q2'17 Q2'18 Q2'17 * Q2'18 *Includes acquisition of 19.1k for the Parkersburg Expansion Area 20
Slide 21: Wireless - Postpaid Statistics
Wireless - Postpaid Statistics Postpaid Churn Postpaid ARPU* $45.57 $45.28 $44.57 $43.22 $43.52 2.00% 1.67% Q2'17 Q2'18 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 *ARPU represents Average Revenue Per Unit. See Appendix for reconciliation of Wireless segment operating revenues to Postpaid ARPU. 21
Slide 22: Wireless - Prepaid Subscribers
Wireless - Prepaid Subscribers Gross Additions - Prepaid Net Change - Prepaid 7,267 35,103 33,840 1,863 Q2'17 Q2'18 Q2'17 * Q2'18 *Includes acquisition of 4.5k for the Parkersburg Expansion Area 22
Slide 23: Wireless - Prepaid Statistics
Wireless - Prepaid Statistics Prepaid Churn Prepaid ARPU* 4.92% $38.39 $37.65 $37.46 $36.73 $37.11 4.25% Q2'17 Q2'18 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 *ARPU represents Average Revenue Per User. See Appendix for reconciliation of Wireless segment operating revenues to Prepaid ARPU. 23
Slide 24: Cable - RGUs and Average Revenue
Cable - RGUs and Average Revenue ▪ Continued Growth Average Monthly Revenue per Customer * ▪ Significant improvements in Average monthly $126.12 $118.61 revenue per RGU primarily due to broadband. ▪ 78,256 customers up 1.2% over Q2'17. Revenue Generating Units (RGU) 132,287 133,148 Q2'17 Q2'18 125,0
Slide 25: Cable - Key Operational Results
Cable - Key Operational Results As of June 30, 2018 2017 Homes Passed 185,016 184,834 Total Revenue Generating Units 133,148 132,287 Customer Relationships 78,256 77,305 RGUs per Customer Relationship 1.70 1.71 Video Revenue generating units 44,800 48,248 Penetration 24.2% 26.1% Digital video penetr
Slide 26: Wireline - Key Operational Results
Wireline - Key Operational Results Access lines (000s) ▪ Access line loss of 5.9% in past 12 months. 18.1 17.0 ▪ 4,850 video subscribers at June 30, 2018. Q2'17 Q2'18 DSL & Cable Modem Customers (000s) DSL Cable Modem 14.6 14.7 1.4 3.1 13.2 11.6 Q2'17 Q2'18 26
Slide 27: Wireline and Cable - Fiber Sales
Wireline and Cable - Fiber Sales ($ millions) Fiber Lease Revenue Non-affiliate Revenue Affiliate Revenue $11.7 $11.9 6.7 6.4 5.5 5.0 Q2'17 Q2'18 27
Slide 28: Capital Expenditures: Investing in the Future
Capital Expenditures Investing in the Future Capex Spending ($ millions) 2018 Capex Budget: Wireless Cable Wireline Other 52% Upgrades and Expansion of Acquired Territories $173 $163 14% Network Maintenance $20 $9 $146 13% Success-Based $5 $22 $32 $23 12% Network Capacity $29 • 9% Network Expansion
Slide 29: Q&A
AXSHENTEL Q&A 29
Slide 30: Appendix
Appendix AXSHENTEL
Slide 31: Wireless Network Expansion
Wireless Network Expansion Effective February 1,2018 31
Slide 32: Average Monthly Billed Revenue per Subscriber - Postpaid and Prepaid
Average Monthly Billed Revenue per Subscriber - Postpaid and Prepaid ($ in thousands, except subscribers and revenue per subscriber amounts) Q2'18 Q2'17 Postpaid billings $ 96,127 $ 93,722 Adjustment for write-offs 5,087 5,773 Postpaid billings excluding write-offs $ 101,214 $ 99,495 Average postpai
Slide 33: Wireless - Network Statistics at June 30, 2018
Wireless - Network Statistics at June 30, 2018 Wireless Network Statistics Cell sites CDMA Base Stations (sites) 1,770 Sites with 2nd LTE carrier 1,143 Sites with three carriers, including a 2nd carrier @ 1900 MHz 522 Sites with 2.5 GHz LTE 408 Traffic % LTE traffic 97.80% Data usage increase (Q ove
Slide 34: Cable - Non-GAAP Financial Measure Average Revenue
Cable - Non-GAAP Financial Measure Average Revenue ($ in thousands, except subscriber and per subscriber amounts) Q2'18 Q2'17 Service Revenue $ 27,100 $ 25,145 Fiber, FUSC, Pass-through & Other 2,106 2,080 Internal Revenue 460 435 Video, Internet & Voice Revenue 29,666 27,660 Other miscellaneous rev
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