Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Q4 2019 Earnings Presentation
37 slides from Shenandoah Telecommunications's earnings presentation, Feb 27, 2020
Slide 1: Q4 2019 Earnings Conference Call
Q4 2019 Earnings Conference Call February 27, 2020
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: 2019 Key Accomplishments
2019 Key Accomplishments a Completed major network upgrades in our cable footprint (DOCSIS 3.1) ----and in the south and west regions of our wireless footprint, including ----Parkersburg WV a Achieved record wireless postpaid gross adds and net adds a Launched our FTTH service Glo Fiber within a yea
Slide 5: 2019 Consolidated Results
2019 Consolidated Results Revenue (in millions) Adjusted OIBDA (in millions) 41.9% margin 41.2% margin Operating Income (in millions) Net Income Per Diluted Share $1.10 $0.93 5
Slide 6: Consolidated Normalized Free Cash Flow and Uses
Consolidated Normalized Free Cash Flow and Uses Normalized Free Cash Flow* (in millions) Uses of Normalized Free Cash Flow (in millions) $122.6 $122.5 7.9% *See appendix for calculation of normalized free cash flow. 6
Slide 7: Sprint Merger Options
Sprint Merger Options ▪ Contract options assuming Sprint / T-Mobile merger is closed • New T-Mobile may elect an option to purchase the operating assets of our PCS business for 90% of EBV (entire business value) • If T-Mobile declines purchase option, Shentel may elect an option to purchase the lega
Slide 8: Jim Volk, SVP of Finance and CFO
Jim Volk SVP of Finance and CFO 8
Slide 9: Segment Changes - 2019
Segment Changes - 2019 Prior Segments (in thousands) Wireless Cable Wireline Corp. & Elims Consolidated Service & other revenue $ 382,695 $ 132,262 $ 50,106 $ 565,063 Equipment Revenue 67,659 980 204 68,843 Total external revenue 450,354 133,242 50,310 — 633,906 Internal revenue 6,020 6,244 26,719 (
Slide 10: Fourth Quarter 2019 Consolidated Results
Fourth Quarter 2019 Consolidated Results Revenue (in millions) Adjusted OIBDA (in millions) 42.8% margin 39.4% margin Operating Income (in millions) Net Income Per Diluted Share $0.30 $0.27 10
Slide 11: Wireless Highlights - Fourth Quarter Results
Wireless Highlights - Fourth Quarter Results Revenue (in millions) Adjusted OIBDA (in millions) 48.1% 43.4% margin margin 11
Slide 12: Broadband Highlights - Fourth Quarter Results
Broadband Highlights - Fourth Quarter Results Revenue (in millions) Adjusted OIBDA (in millions) 8.2% 10.0% 42.2% 42.9% margin margin 12
Slide 13: Tower Highlights - Fourth Quarter Results
Tower Highlights - Fourth Quarter Results Revenue (in millions) Adjusted OIBDA (in millions) 61.8% 61.4% margin margin 13
Slide 14: Wireless Highlights - Full Year Results
Wireless Highlights - Full Year Results Revenue (in millions) Adjusted OIBDA (in millions) 47.3% 46.2% margin margin 14
Slide 15: Broadband Highlights - Full Year Results
Broadband Highlights - Full Year Results Revenue (in millions) Adjusted OIBDA (in millions) 5.9% 4.9% 43.7% 43.2% margin margin 15
Slide 16: Tower Highlights - Full Year Results
Tower Highlights - Full Year Results Revenue (in millions) Adjusted OIBDA (in millions) 61.0% 59.8% margin margin 16
Slide 17: Capitalization
Capitalization Total Debt & Liquidity (in millions) Debt Maturity (in millions) $172.5 $5.0 Effective 2.61x $448.5 Interest Rate Leverage Ratio $167.5 of 3.26% $34.1 $34.1 $37.8 $5.0 $5.0 $5.0 $29.1 $32.8 Net Leverage $29.1 $5.0 Ratio of 2.48 ▪ Refer to the Use of Non-GAAP Financial Measures for the
Slide 18: Dave Heimbach, EVP and COO
SC -—~ Dave Heimbach EVP and COO AXSHENTEL
Slide 19: Wireless - Postpaid Metrics
Wireless - Postpaid Metrics Subscribers Churn Gross Additions Net Additions ARPU * Phones Devices * Refer to the Appendix for a reconciliation of Wireless segment revenue to Postpaid ARPU. 19
Slide 20: Wireless - Prepaid Metrics
Wireless - Prepaid Metrics Subscribers Churn Gross Additions Net Additions ARPU * * Refer to the Appendix for a reconciliation of Wireless segment revenue to Prepaid ARPU. 20
Slide 21: Broadband - RGUs and Average Revenue
Broadband - RGUs and Average Revenue Revenue Generating Units (RGU) Average Monthly Revenue per Customer * Broadband Penetration Broadband Churn * Refer to the Appendix for a reconciliation of Broadband segment revenue to average revenue per customer relationship. 21
Slide 22: Tower - Metrics
Tower - Metrics Towers Tenants 22
Slide 23: Cable and Fiber Network
Cable and Fiber Network Target Planned Passings* Launch Harrisonburg 10,377 Active Staunton 10,202 Active Front Royal 5,018 1Q20 Winchester 9,407 1Q20 Salem 7,744 1H21 Lynchburg 9,824 1H21 Roanoke 24,742 1H21 Total 77,314 *Target passings defined as Single Family Households (SFU), residential Multip
Slide 24: Capital Expenditures
Capital Expenditures Capex Spending ($ in millions) $136 - $154 $3 - 6 $50 - $55 $40 - $45 $40 - $45 *Excludes CapEx for Glo Fiber and Fixed Wireless 24
Slide 25: Q&A
Q&A AXSHENTEL
Slide 26: Appendix
HENTEL' Appendix
Slide 27: 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 28: Adjusted OIBDA by Segment - Quarterly Results
Adjusted OIBDA by Segment - Quarterly Results Three Months Ended December 31, 2019 Corporate (in thousands) Wireless Broadband Tower & Other Consolidated Operating income (loss) $ 20,908 $ 9,371 $ 2,439 $ (9,838) $ 22,880 Depreciation 23,110 11,842 (113) 201 35,040 Amortization of intangible assets
Slide 29: Net Leverage Ratio
Net Leverage Ratio ($ in thousands) Q4'19 Total Debt $ 732,040 Cash 101,651 Total Debt less Cash 630,389 Adjusted OIBDA 63,459 x4 Adjusted OIBDA (last quarter annualized) $ 253,836 Net leverage ratio 2.48 29
Slide 30: Normalized Free Cash Flow & Free Cash Flow
Normalized Free Cash Flow & Free Cash Flow ($ in thousands) 2018 2019 Net Cash Provided by Operations $265,647 $259,145 Less: Capital Expenditures* (136,641) (119,954) Normalized Free Cash Flow 129,006 139,191 Glo Fiber & Fixed Wireless Capital Expenditures — (18,838) Free Cash Flow $129,006 $120,35
Slide 31: Wireless Average Revenue per User (ARPU)
Wireless Average Revenue per User (ARPU) ($ in thousands, except subscribers and revenue per subscriber amounts) Q4'18 Q4'19 Postpaid billings $ 97,005 $ 98,432 Adjustment for write-offs 5,861 5,372 Postpaid billings excluding write-offs $ 102,866 $ 103,804 Average postpaid subscribers* 787,937 831,
Slide 32: Broadband - Average Revenue Per Customer
Broadband - Average Revenue Per Customer ($ in thousands, except customer and per customer amounts) Q4'18 Q4'19 Cable Residential & SMB Revenue $ 31,676 $ 34,484 Average customer relationships 95,201 100,659 Average Revenue Per Customer** $ 110.91 $ 114.19 * Represents a quarterly average **Average
Slide 33: Broadband - Cable & Fiber Metrics
Broadband - Cable & Fiber Metrics As of December 31, 2018 2019 Homes passed 201,633 208,298 Total revenue generating units 163,535 169,098 Customer relationships 95,328 100,890 RGUs per customer relationship 1.72 1.68 Video Revenue generating units 58,672 53,673 Penetration 29.1% 25.8% Broadband Rev
Slide 34: Consolidated 2019 Quarterly Results
Consolidated 2019 Quarterly Results (in thousands) 1Q - 2Q - 3Q - 4Q - Full Year - Service & other revenue $ 143,231 $ 142,059 $ 138,832 $ 140,941 $ 565,063 Equipment Revenue 15,612 16,855 16,320 20,056 68,843 Total revenue 158,843 158,914 155,152 160,997 633,906 Cost of services 49,518 49,497 50,16
Slide 35: Wireless - 2019 Quarterly Segment Results
Wireless - 2019 Quarterly Segment Results (in thousands) 1Q - 2Q - 3Q - 4Q - Full Year - Service & other revenue $ 97,329 $ 94,571 $ 91,314 $ 92,517 $ 375,731 Equipment Revenue 15,291 16,548 15,975 19,845 67,659 Total revenue 112,620 111,119 107,289 112,362 443,390 Cost of services 32,532 32,668 33,
Slide 36: Broadband - 2019 Quarterly Segment Results
Broadband - 2019 Quarterly Segment Results (in thousands) 1Q - 2Q - 3Q - 4Q - Full Year - Service & other revenue $ 44,138 $ 45,737 $ 45,667 $ 46,826 $ 182,368 Equipment Revenue 321 307 345 211 1,184 Total external revenue 44,459 46,044 46,012 47,037 183,552 Internal revenue 2,422 2,506 2,669 2,795
Slide 37: Tower - 2019 Quarterly Segment Results
Tower - 2019 Quarterly Segment Results (in thousands) 1Q - 2Q - 3Q - 4Q - Full Year - Tower lease revenue $ 1,763 $ 1,751 $ 1,852 $ 1,598 $ 6,964 Internal revenue 1,270 1,270 1,290 2,190 6,020 Total revenue 3,033 3,021 3,142 3,788 12,984 Cost of services 945 891 956 1,102 3,894 SG&A 283 274 249 360
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