Shenandoah Telecommunications Co · NASDAQ:SHEN

Shenandoah Telecommunications — Q2 2016 Earnings Presentation

33 slides from Shenandoah Telecommunications's earnings presentation, Aug 5, 2016

  1. Slide 1: 2Q 2016 Earnings Conference Call

    2Q 2016 Earnings Conference Call August 5, 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: Second Quarter 2016 Highlights

    Second Quarter 2016 Highlights (Q2’16 v. Q2’15)  Adjusted OIBDA Growth  Increased 48.5% to $55.9 million  Revenue Growth  Increased 52.1% to $130.3 million  Net Loss in Q2’16  Net loss of $7.0 million in Q2’16 compared to net income of $10.5 million in Q2’15  Customer Growth 6/30/15 6/30/16 C

  6. Slide 6: Wireless Highlights

    Wireless Highlights  Postpaid Growth PCS Customers (000s) Postpaid customers up 142.0% over last 12 months  Prepaid Growth Prepaid customers up 98.9% over last 12 months  Adjusted OIBDA Growth Increase of $17.0 million, or 61% 6

  7. Slide 7: Cable Highlights

    Cable Highlights Cable OIBDA (in millions)  Revenue Growth  Operating revenues $26.4 million, growth of 9.3% over Q2’15  Q2’16 Adjusted OIBDA $7.3 million, up 28% from Q2’15  130,871 RGUs at Q2’16, up 6.7% over Q2’15 Adjusted OIBDA Margin Shows Long Term Improvement 27% Cable RGUs 25% 18% 15% 10

  8. Slide 8: Fiber and Tower Highlights

    Fiber and Tower Highlights *Fiber Lease Revenue (in millions) Wireline Cable $10.3 $0.7 $8.5 $9.6  Wireline and Cable - $0.6 $7.9 Fiber lease revenues of $10.3 million, up 22.2% from Q2’15 Q2'15 Q2'16  177 towers generated *Includes both Affiliate and Non-affiliate revenues $1.6 million of OIBDA M

  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 thousands, except per share amounts) For the Quarter Ended:___ 6/30/15 6/30/16 Change Operating Income $ 18,750 $ (6,150) (133)% Net Income $ 10,474 $ (6,995) (167)% Earnings (Loss) Per Share: Basic $ 0.22 $ (0.14) (164)% Diluted $ 0.21 $ (0.14) (167)% 10

  11. Slide 11: Profitability: Adjusted OIBDA

    Profitability Adjusted OIBDA ($ thousands) For the Quarter Ended: 6/30/15 6/30/16 Change ($) Change (%) Operating income 18,750 (6,150) (24,900) -133% Depreciation and amortization 17,663 32,415 14,752 84% Share based compensation 608 959 351 58% (Gain)/Loss on asset disposals 218 (48) (266) N.M. St

  12. Slide 12: Adjusted OIBDA by Segment

    Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Q2'15 Q2'16 Q2'15 Q2'16 Q2'15 Q2'16 Operating income $ 19.3 $ 7.3 $ (0.4) $ 1.2 $ 4.0 $ 5.2 Depreciation and amortization 8.6 23.5 5.8 5.8 3.1 2.9 Plus (gain) loss on asset sales - (0.1) 0.1 - 0.1 0.1 Share based compensation 0.1 0.3 0.2

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

    Wireless Segment – Change in Adjusted OIBDA Q2’16 vs. Q2’15 ($ 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

    Cable Segment – Change in Adjusted OIBDA Q2’16 vs. Q2’15 ($ millions) 14

  15. Slide 15: Wireline Segment – Change in Adjusted OIBDA

    Wireline Segment – Change in Adjusted OIBDA Q2’16 vs. Q2’15 ($ millions) 15

  16. Slide 16: Earle MacKenzie, EVP and COO

    Earle MacKenzie EVP and COO 16

  17. Slide 17: Customer Impact in Q2'16

    Customer Impact in Q2’16 For the Quarter Ended 6/30/2016 Postpaid Prepaid Customers at 3/31/2016 1 313,178 142,539 nTelos customers acquired 5/6/2016 218,064 63,332 Sprint customers in nTelos footprint at 5/6/2016 186,380 91,612 Net additions/(losses) - Legacy service area 3,504 (522) Net losses - N

  18. Slide 18: Postpaid Customer Additions

    Postpaid Customer Additions  Acquired 404,444 subscribers through Gross Additions - Postpaid nTelos acquisition  Q2’16 Legacy area churn of 1.39%, down from 1.40% in Q2’15  New service area churn was 1.79% in Q2’16  Combined Q2 2016 churn of 1.56%, up from 1.40% in Q2 2015 Net Additions - Postpa

  19. Slide 19: 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 $58.98 $52.15 $35.13 $32.76 $23.85 $19.39 Q2'15 Q2'16 1 – Before Service credits, bad debt, Sprint fees. 19

  20. Slide 20: PCS Prepaid Statistics

    PCS Prepaid Statistics Gross Additions (000s) Cumulative Customers (000s) 20

  21. Slide 21: PCS Prepaid Statistics

    PCS Prepaid Statistics Churn % Average Gross Billed Revenue 21

  22. Slide 22: Network Statistics at 6/30/16

    Network Statistics at 6/30/16 Cell Sites Legacy New Total PCS Sites 557 868 Sites still requiring upgrade 0 299 Sites with 2nd LTE carrier 527 416 Sites with three carriers, including a 2nd 195 98 carrier @ 1900 MHz Sites with 2.5 GHz LTE 69 154 Traffic % LTE traffic 94% 76% Data usage increase (Q o

  23. Slide 23: Cable - RGU Growth by Quarter

    Cable - RGU Growth by Quarter (1) (2) (1) Customers 71,469 72,237 72,734 77,090 76,471 RGU's/Customer 1.72 1.72 1.73 1.71 1.71 1. College students disconnect during summer 2. Includes acquisition of Colane Cable (1/1/2016) 23

  24. Slide 24: 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 $147.12 and $158.71 for Q2 2015 and Q2 2016, respectively. 24

  25. Slide 25: Key Operational Results – Cable

    Key Operational Results – Cable Q2 2015 Q2 2016 Homes Passed 172,144 184,627 (1) Total Revenue Generating Units 122,708 130,871 Customer Relationships 71,469 76,471 RGUs per Customer Relationship 1.72 1.71 Video Revenue generating units 50,892 51,549 Penetration 29.6% 27.9% Digital video penetration

  26. Slide 26: Key Operational Results - Wireline

    Key Operational Results - Wireline Access lines (000s)  Access line loss of 11% 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 

  27. Slide 27: 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. 27

  28. Slide 28: 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 28

  29. Slide 29: Q&A

    ASHENTEL’ Q&A 29

  30. Slide 30: Appendix

    Appendix ASHENTEL’

  31. Slide 31: 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) 2Q 2015 2Q 2016 Gross billed revenue Wireless segment total operating revenues $ 52,702 $ 94,294 Equipment revenue (1,286) (2,777) Tower lease revenue (

  32. Slide 32: 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) Q2 2015 Q2 2016 Net Service Revenue $ 20,280 $ 22,258 Set-top box rentals 1,963 2,119 FUSC and pass-through fees 410 426 Video, Internet & Voice Revenue 22,653 24,803 Other misce

  33. Slide 33: 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 202 211 2.7 2.7 177 1.1 1.1 154 1.6 1.6 2Q'15 2Q'16 2Q'15 2Q'16 (in thousands) Q2'15 Q2'16 Operating Income $1,201 $1,121 Deprec. and Amort

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