Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Q3 2019 Earnings Presentation
27 slides from Shenandoah Telecommunications's earnings presentation, Oct 31, 2019
Slide 1: Q3 2019 Earnings Conference Call
Q3 2019 Earnings Conference Call October 31, 2019
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: Consolidated Free Cash Flow and Uses
Consolidated Free Cash Flow and Uses Free Cash Flow (in millions) Uses of Free Cash Flow (in millions) $99.9 $96.5 $46.4 $74.0 $86.4 $44.7 Q3'18 Q3'19 YTD Period Ending $52.0 Annual Dividend / Share $16.7 $10.0 Q3'18 Q3'19 7.4% YTD Period Ending Acquisitions $0.29 $0.27 FCC Spectrum Licenses Debt Re
Slide 5: Jim Volk, SVP of Finance and CFO
Jim Volk SVP of Finance and CFO 5
Slide 6: Third Quarter 2019 Consolidated Results
Third Quarter 2019 Consolidated Results Operating Revenue (in millions) Adjusted OIBDA (in millions) $158.7 $69.5 $155.2 $62.8 43.8% margin 40.5% margin Q3'18 Q3'19 Q3'18 Q3'19 Operating Income (in millions) Net Income Per Share $28.3 $0.31 $0.29 $25.4 Q3'18 Q3'19 Q3'18 Q3'19 6
Slide 7: Wireless Highlights
Wireless Highlights Operating Revenue (in millions) Adjusted OIBDA (in millions) $57.7 $50.9 $116.1 $110.4 49.7% $15.7 margin 46.1% $16.0 margin Service Q3'18 Q3'19 Equipment Tower Towers - Revenue & OIBDA (in millions) lease $96.3 $91.1 Other $3.0 $3.1 $1.7 $1.9 Q3'18 Q3'19 Q3'18 Q3'19 Revenue Adju
Slide 8: Cable Highlights
Cable Highlights Operating Revenue (in millions) Adjusted OIBDA (in millions) $12.5 $35.1 $11.9 $32.2 $4.0 $3.4 37.1% 35.7% margin margin Q3'18 Q3'19 $30.8 $28.6 Glo Fiber Operating Expenses $0.8 Q3'18 Q3'19 Residential & SMB Equipment $— Enterprise & Other Q3'18 Q3'19 8
Slide 9: Wireline Highlights
Wireline Highlights Operating Revenue (in millions) Adjusted OIBDA (in millions) $19.6 $8.6 $19.1 $8.0 $5.6 $6.1 $2.6 $3.1 43.6% margin 41.8% margin $11.4 $9.9 Q3'18 Q3'19 RLEC Cable - Residential & SMB Fiber - Enterprise & Other Q3'18 Q3'19 9
Slide 10: Capitalization
Capitalization Total Liquidity & Debt (in millions) Debt Maturity (in millions) Cash & Cash Equivalents Available Revolving Line of Credit $172.5 $5.0 Total Debt $740.6 Effective 2.61x $448.5 Interest Rate Leverage Ratio of 3.63% $167.5 $34.1 $34.1 $37.8 $172.4 $5.0 Net Leverage $5.0 $5.0 $75.0 Rati
Slide 11: Dave Heimbach, EVP and COO
XG Dave Heimbach EVP and COO AXSHENTEL
Slide 12: Wireless - Postpaid Metrics
Wireless - Postpaid Metrics Subscribers Churn 1.99% 823,417 1.84% 785,537 Q3'18 Q3'19 Q3'18 Q3'19 Gross Additions Net Additions ARPU* 60,477 11,698 48,111 14,160 $43.55 $41.88 8,147 5,815 4,879 39,964 46,317 1,756 5,883 3,123 Q3'18 Q3'19 Q3'18 Q3'19 Q3'18 Q3'19 Phones IoT * Refer to the Appendix for
Slide 13: Wireless - Prepaid Metrics
Wireless - Prepaid Metrics Subscribers Churn 271,551 255,462 4.62% 4.38% Q3'18 Q3'19 Q3'18 Q3'19 Gross Additions / Net Change ARPU * 3,408 2,512 $38.11 Gross Adds $37.51 38,486 38,014 Net Adds Q3'18 Q3'19 Q3'18 Q3'19 * Refer to the Appendix for a trend of Postpaid ARPU for the last five quarters. an
Slide 14: Cable - RGUs and Average Revenue
Cable - RGUs and Average Revenue Revenue Generating Units (RGU) Average Monthly Revenue per RGU * 146,517 150,191 $65.46 $68.50 53,717 49,963 Voice Broadband 69,028 76,158 Video 23,772 24,070 Q3'18 Q3'19 Q3'18 Q3'19 Broadband Penetration Average Monthly Revenue per Customer * $123.16 40.1% $120.99 3
Slide 15: Cable and Fiber Network
Cable and Fiber Network j PA Le Morgantowr J Saler oh, —' Bridgeport a 5 Parkersburg jarisburg Culpeper Harrisonburg Vamnoabo ghanlottesville Waynesboro VA Van Lear, KY ‘Amherst Dillwyn Map Key: Shentel Fiber Routes —S= Cable Market Coverage = Launched FTTH Market @ Planned FTTH Market e@ AXSHENTEL
Slide 16: Capital Expenditures - Investing in the Future
Capital Expenditures - Investing in the Future Capex Spending (in millions) $153 $10 $21 FTTH -$22M Fixed Wireless - $3M * $107 $5 Cable - $33M $92 $12 $58 $6 $22 $30 $13 $60 $64 $51 2018 YTD 2019 YTD 2019 Guidance Wireless Cable Wireline Other *Spectrum disbursements shown separately on cash flow s
Slide 17: Q&A
AXSHENTEL Q&A 17
Slide 18: Appendix
Appendix AXSHENTEL
Slide 19: 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 20: Adjusted OIBDA by Segment - Quarterly Results
Adjusted OIBDA by Segment - Quarterly Results Three Months Ended September 30, 2019 (in thousands) Wireless Cable Wireline Other Consolidated Operating income $ 23,731 $ 6,296 $ 4,927 $ (9,595) $ 25,359 Depreciation and amortization 27,200 6,226 3,077 123 36,626 OIBDA 50,931 12,522 8,004 (9,472) 61,
Slide 21: Net Leverage Ratio
Net Leverage Ratio ($ in thousands) Q3'19 Total Debt $ 740,570 Cash 97,415 Total Debt less Cash 643,155 Adjusted OIBDA 62,836 x4 Adjusted OIBDA (last quarter annualized) $ 251,344 Net leverage ratio 2.56 21
Slide 22: Free Cash Flow
Free Cash Flow ($ in thousands) 2018 Q3 YTD 2019 Q3 YTD Net Cash Provided by Operations $188,800 $193,459 Less: Capital Expenditures (92,309) (107,038) Free Cash Flow $96,491 $86,421 % of Revenue 20.6% 18.3% Free cash flow is a non-GAAP financial measure that, when viewed with our GAAP results, prov
Slide 23: Wireless Average Revenue per User (ARPU)
Wireless Average Revenue per User (ARPU) ($ in thousands, except subscribers and revenue per subscriber amounts) Q3'18 Q3'19 Postpaid billings $ 96,813 $ 96,417 Adjustment for write-offs 5,581 6,389 Postpaid billings excluding write-offs $ 102,394 $ 102,806 Average postpaid subscribers* 783,734 818,
Slide 24: Cable - Change in RGU counting methodology
Cable - Change in RGU counting methodology Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Video RGUs former methodology 45,555 44,800 44,093 43,600 44,119 42,874 41,331 Bulk adjustment 10,221 9,628 9,624 9,486 9,567 9,154 8,632 RGUs revised methodology 55,776 54,428 53,717 53,086 53,686 52,
Slide 25: Cable - Average Revenue
Cable - Average Revenue ($ in thousands, except subscriber and per subscriber amounts) Q3'18 Q3'19 Service revenue: Residential & SMB $ 28,578 $ 30,829 Average Subscribers* Revenue generating units (RGUs) 145,516 150,022 Average customer relationships 78,732 83,441 Average Revenue Per User (ARPU)**
Slide 26: Cable - Metrics
Cable - Metrics As of September 30, 2018 2019 Homes passed 185,119 189,762 Total revenue generating units 146,517 150,191 Customer relationships 79,426 84,759 RGUs per customer relationship 1.84 1.77 Video Revenue generating units 53,717 49,963 Penetration 29.0% 26.3% Digital video penetration 77.8%
Slide 27: Wireline - Change in RGU counting methodology
Wireline - Change in RGU counting methodology Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Video RGUs former methodology 4,912 4,850 4,796 4,742 4,656 4,520 4,438 Bulk adjustment 830 815 817 844 860 667 614 Cable RGUs revised methodology 5,742 5,665 5,613 5,586 5,516 5,187 5,052 Broadband
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