Shenandoah Telecommunications Co · NASDAQ:SHEN

Shenandoah Telecommunications — Q3 2016 Earnings Presentation

32 slides from Shenandoah Telecommunications's earnings presentation, Nov 7, 2016

  1. Slide 1: 3Q 2016 Earnings Conference Call

    3Q 2016 Earnings Conference Call November 7, 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: Third Quarter 2016 Highlights (Q3'16 v. Q3'15)

    Third Quarter 2016 Highlights (Q3’16 v. Q3’15)  Adjusted OIBDA Growth  Increased 100.4% to $73.7 million  Revenue Growth  Increased 84.1% to $156.8 million  Net Loss in Q3’16  Net loss of $7.6 million in Q3’16 compared to net income of $8.0 million in Q3’15  Customer Growth 9/30/15 9/30/16 Ch

  6. Slide 6: Wireless Highlights

    Wireless Highlights  Postpaid Growth PCS Customers (000s) Postpaid customers up 136.8% over last 12 months  Prepaid Growth Prepaid customers up 89.8% over last 12 months  Adjusted OIBDA Growth Increase of $35.3 million, or 130%  Continuing OIBDA Increased to $53.0 million 6

  7. Slide 7: Cable Highlights

    Cable Highlights Cable OIBDA (in millions)  Revenue Growth  Operating revenues $27.6 million, growth of 12.9% over Q3’15  Q3’16 Adjusted OIBDA $8.2 million, up 50.5% from Q3’15  132,430 RGUs at Q3’16, up 6.4% over Q3’15 Adjusted OIBDA Margin Shows Long Term Improvement 30% Cable RGUs 27% 28% 25%

  8. Slide 8: Fiber and Tower Highlights

    Fiber and Tower Highlights *Fiber Lease Revenue (in millions) Wireline Cable $10.9 $9.3 1.1 0.6  Wireline and Cable fiber 8.7 9.8 lease revenues of $10.9 million, up 17.6% from Q3’15 Q3'15 Q3'16  181 towers generated *Includes both Affiliate and Non-affiliate revenues $1.8 million of OIBDA Mobile

  9. Slide 9: Adele Skolits, VP of Finance and CFO

    Adele Skolits VP of Finance and CFO 9

  10. Slide 10: Profitability: Consolidated Results

    Profitability Consolidated Results ($ in millions, except per share amounts) For the Quarter Ended:___ 9/30/15 9/30/16 Change Operating Income $ 15.1 $ (3.9) (126)% Net Income (Loss) $ 8.0 $ (7.6) (195)% Earnings (Loss) Per Share: Basic $ 0.17 $ (0.16) (194)% Diluted $ 0.16 $ (0.16) (200)% 10

  11. Slide 11: Profitability: Adjusted OIBDA

    Profitability Adjusted OIBDA ($ millions) For the Quarter Ended: 9/30/15 9/30/16 Change ($) Change (%) Operating income $ 15.1 $ (3.9) $ (19.0) -126% Depreciation and amortization 19.1 46.8 27.7 145% Share based compensation 0.5 0.5 - 0% Straight line adjustment to reduce management fee waiver - 4.6

  12. Slide 12: Adjusted OIBDA by Segment ($ millions)

    Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Q3'15 Q3'16 Q3'15 Q3'16 Q3'15 Q3'16 Operating income $ 17.4 $ (5.4) $ (0.6) $ 2.3 $ 4.0 $ 4.8 Depreciation and amortization 9.6 38.0 6.0 5.9 3.4 2.8 Plus (gain) loss on asset sales 0.1 - (0.1) (0.1) - - Share based compensation 0.1 0.3 0

  13. Slide 13: Wireless Segment – Change in Adjusted OIBDA Q3'16 vs. Q3'15

    Wireless Segment – Change in Adjusted OIBDA Q3’16 vs. Q3’15 ($ millions) Postpaid Prepaid Waived Travel Other Prepaid Other Nat’l HS Network Total Revenue Revenue Mgt Fee Revenue Expense Acquisition Post HS Subsidies Costs Subs & & Cust Acq Commissi- ons 13

  14. Slide 14: Cable Segment – Change in Adjusted OIBDA Q3'16 vs. Q3'15

    Cable Segment – Change in Adjusted OIBDA Q3’16 vs. Q3’15 ($ millions) 14

  15. Slide 15: Earle MacKenzie, EVP and COO

    Earle MacKenzie EVP and COO 15

  16. Slide 16: Postpaid Customer Additions

    Postpaid Customer Additions Gross Additions - Postpaid  Q3’16 Legacy area churn of 1.55%, up from 1.40% in Q3’15  New service area churn was 2.37% in Q3’16  Combined Q3 2016 churn of 2.01% Net Additions - Postpaid Postpaid Churn (1) (1) - Q2’16 rate has been normalized to reflect a full quarter o

  17. Slide 17: Billed Revenue per Customer Down

    Billed Revenue per Customer Down Gross Billed Service Revenue per Postpaid User – Data & Voice (1) Voice Data $57.39 $50.95 $34.53 $32.57 $22.86 $18.38 (2) Q3'15 Q3'16 1 – Before Service credits, bad debt, Sprint fees. 2 – Legacy markets only 17

  18. Slide 18: PCS Prepaid Statistics

    PCS Prepaid Statistics Gross Additions (000s) Cumulative Customers (000s) 18

  19. Slide 19: PCS Prepaid Statistics

    PCS Prepaid Statistics Churn % Average Gross Billed Revenue (1) (1) - Q2’16 rate has been normalized to reflect a full quarter of churn for the new market. 19

  20. Slide 20: Network Enhancements – nTelos Footprint

    Network Enhancements – nTelos Footprint Decommission 148 Overlap Sites Add 800 MHz 186 3G to 4G 363 New Coverage 220 Sites 0% 20% 40% 60% 80% 100% Completed In Progress Expected Completion 2017 Expected Completion 2018 20

  21. Slide 21: Network Statistics at 9/30/16

    Network Statistics at 9/30/16 Cell Sites Legacy New Total PCS Sites 557 868 nTelos 3G sites still requiring upgrade 0 198 Sites with 2nd LTE carrier 531 570 Sites with three carriers, including a 2nd 205 139 carrier @ 1900 MHz Sites with 2.5 GHz LTE 92 171 Traffic % LTE traffic 95% 83% Data usage in

  22. Slide 22: Cable - RGU Growth by Quarter

    Cable - RGU Growth by Quarter (2) (1) Customers 72,237 72,734 77,090 76,471 77,393 RGU's/Customer 1.72 1.73 1.71 1.71 1.71 1. College students disconnect during summer 2. Includes acquisition of Colane Cable (1/1/2016) 22

  23. Slide 23: 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 $150.04 and $165.64 for Q3 2015 and Q3 2016, respectively. 23

  24. Slide 24: Key Operational Results – Cable

    Key Operational Results – Cable Q3 2015 Q3 2016 Homes Passed (1) 172,388 184,698 (2) Total Revenue Generating Units 124,522 132,430 Customer Relationships 72,237 77,393 RGUs per Customer Relationship 1.72 1.71 Video Revenue generating units 50,839 51,379 Penetration 29.5% 27.8% Digital video penetra

  25. Slide 25: Key Operational Results - Wireline

    Key Operational Results - Wireline Access lines (000s)  Access line loss of 13.2% in past 12 months as a result of no longer requiring access line to purchase internet service  Effective Q4’15, subscribers were offered a cable modem DSL & Cable Modem Customers (000s) internet option up to 101 Mbps

  26. Slide 26: Wireline and Cable Fiber Sales ($ millions)

    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. 26

  27. Slide 27: Investing in the Future

    Investing in the Future Capex Spending ($ millions)  2016 Capex Spending:  56% Upgrades and Expansion of nTelos network  15% Network Expansion  14% Additional Network Capacity  8% Network Maintenance  7% Success-Based 27

  28. Slide 28: Q&A

    ASHENTEL’ Q&A 28

  29. Slide 29: Appendix

    Appendix ASHENTEL’

  30. Slide 30: 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) 3Q 2015 3Q 2016 Gross billed revenue Wireless segment total operating revenues $ 51,636 $ 120,119 Equipment revenue (1,104) (3,539) Tower lease revenue

  31. Slide 31: 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) Q3 2015 Q3 2016 Net Service Revenue $ 20,493 $ 23,073 Set-top box rentals 1,952 2,118 FUSC and pass-through fees 391 395 Video, Internet & Voice Revenue 22,836 25,586 Other misce

  32. Slide 32: 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 2.6 2.8 203 181 186 1.2 1.1 154 1.5 1.6 3Q'15 3Q'16 3Q'15 3Q'16 (in thousands) Q3'15 Q3'16 Operating Income $1,547 $1,274 Deprec. and Amort

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