Shenandoah Telecommunications Co · NASDAQ:SHEN
Shenandoah Telecommunications — Q1 2018 Earnings Presentation
38 slides from Shenandoah Telecommunications's earnings presentation, May 3, 2018
Slide 1: 1Q 2018 Earnings Conference Call
1Q 2018 Earnings Conference Call May 3, 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: First Quarter 2018 Highlights
First Quarter 2018 Highlights ▪ Revenue ▪ $151.7 million in Q1'18 compared with $153.9 million in Q1'17 ▪ Includes a reduction of $4.1 million related to the adoption of Revenue Recognition, ASC Topic 606. ▪ Operating Income ▪ $14.3 million in Q1'18 compared with $10.7 million in Q1'17. ▪ Net Income
Slide 6: Wireless Highlights
Wireless Highlights ▪ Postpaid Customers PCS Customers (000s) Postpaid customers increased 774.9 717.2 8.0% over Q1'17 ▪ Prepaid Customers Prepaid customers increased 16.5% over Q1'17 250.2 214.8 ▪ Adjusted OIBDA Decreased by $3.8 million, down 3/31/18 3/31/17 6.3% in Q1'18 vs Q1'17 (1) Postpaid Pre
Slide 7: Cable Highlights
Cable Highlights ▪ Continued Growth Cable Adjusted OIBDA (in millions) $11.7 ▪ Operating revenues $31.7 million, growth of $9.3 9.3% over Q1'17 ▪ Q1'18 Adjusted OIBDA $11.7 million, up 26.2% from Q1'17 ▪ 133,439 RGUs at Q1'18, up 0.4% over Q1'17 Q1'18 Q1'17 Adjusted OIBDA Margin Shows Long Term Impr
Slide 8: Fiber and Tower Highlights
Fiber and Tower Highlights *Fiber Lease Revenue (in millions) Wireline Cable $12.2 ▪ Wireline and Cable fiber 1.7 $11.2 1.1 lease revenues of $12.2 million, up 8.9% from 10.5 10.1 Q1'17 Q1'18 Q1'17 ▪ 193 towers generated *Includes both Affiliate and Non-affiliate revenues $2.0 million of OIBDA in Mo
Slide 9: Jim Woodward, SVP of Finance and CFO
Jim Woodward SVP of Finance and CFO 9
Slide 10: Significant 2018 Events
Significant 2018 Events ▪ Revenue Recognition, ASC Topic 606 ▪ On January 1, 2018, the Company adopted Topic 606 using the modified retrospective method. ▪ Expansion ▪ Signed Expansion Agreement on Feb. 1, 2018 with Sprint to expand our wireless service area to include certain areas in Kentucky, Pen
Slide 11: Consolidated Results - Understanding the impact from ASC 606
Consolidated Results - Understanding the impact from ASC 606 Revenue Recognition Standard (adopted January 1, 2018) ($ in thousands, except per share amounts) Topic 606 Impact Prior to Changes in Equipment Deferred 3/31/2018 Adoption of Presentation Revenue (2) Costs (3) As reported Topic 606 (1) Se
Slide 12: Wireless Results - Understanding the impact from ASC 606
Wireless Results - Understanding the impact from ASC 606 Revenue Recognition Standard (adopted January 1, 2018) ($ in thousands) Topic 606 Impact - Wireless Prior to Changes in Equipment Deferred 3/31/2018 Adoption of Presentation Revenue (2) Costs (3) As reported Topic 606 (1) Service revenues and
Slide 13: Consolidated Quarterly Results
Consolidated Quarterly Results Consolidated Results ($ in millions, except per share amounts) Three Months Ended: 3/31/18 3/31/17 Change ($) Change (%) Operating Revenues $ 151.7 $ 153.9 $ (2.2) (1)% Operating Expenses $ 137.4 $ 143.2 $ (5.8) (4)% Operating Income $ 14.3 $ 10.7 $ 3.6 34 % Net Income
Slide 14: Adjusted OIBDA - Quarterly Results
Adjusted OIBDA - Quarterly Results Adjusted OIBDA ($ millions) For the Quarter Ended: 3/31/18 3/31/17 Change ($) Change (%) Operating income $ 14.3 $ 10.7 $ 3.6 34 % Deferral of costs due to Topic 606 (0.2) — (0.2) NA Plus depreciation and amortization 43.6 44.8 (1.2) (3)% Plus share based compensat
Slide 15: Quarterly Results Adjusted OIBDA by Segment
Quarterly Results Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Other Q1'18 Q1'17 Q1'18 Q1'17 Q1'18 Q1'17 Q1'18 Q1'17 Operating income $ 14.9 $ 9.1 $ 5.5 $ 3.1 $ 4.8 $ 5.1 $ (10.8) $ (6.7) Deferral of costs due to Topic 606 (0.4) — 0.1 — — — — — Plus depreciation and amortization 34
Slide 16: Wireless Segment – Change in Adjusted OIBDA
Wireless Segment – Change in Adjusted OIBDA Q1'18 vs. Q1'17 ($ millions) 61.4 57.6 53% Adj OIBDA Margin 52% Adj OIBDA Margin 1.7 (0.4) (0.9) (1.2) (1.5) (1.5) March 31, Prepaid Postpaid Prior Year National Prepaid Other March 31, 2017 Revenue Revenue nTelos Device Customer Expenses 2018 Adjusted Rev
Slide 17: Cable Segment – Change in Adjusted OIBDA
Cable Segment – Change in Adjusted OIBDA Q1'18 vs. Q1'17 ($ millions) 11.7 9.3 37% Adj OIBDA Margin 32% Adj OIBDA Margin 2.0 0.4 0.0 March 31, HSD Other Video March 31, 2017 Revenues Revenues Revenues 2018 17
Slide 18: Capitalization - As of March 31, 2018
Capitalization - As of March 31, 2018 ($ millions) Cash & Cash Equivalents Debt $900 $867 $824 $800 4.0%* 3.9%* $700 $600 $500 $400 $300 $200 $100 $49 $40 $0 Q1 2018 Q1 2017 *Effective interest rate. 18
Slide 19: Earle MacKenzie, EVP and COO
Earle MacKenzie EVP and COO 19
Slide 20: Wireless Network Expansion
Wireless Network Expansion Effective February 1,2018 20
Slide 21: Wireless - Subscriber Growth
Wireless - Subscriber Growth Postpaid Prepaid 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 ) ) ,3 (1 ) ,2 11 05 06 07 08 09 10 12 13 14 15 16 17 18 ,2 (1 (1 20 20 20 20 20 20 20 20 20 20 20 20 20 1' Q (1) Prepaid totals in 2015, 2016, and 2017 were adjusted to exclude Lifeline subscribers.
Slide 22: Wireless Subscriber Changes - Q1'18 - Year Over Year
Wireless Subscriber Changes - Q1'18 - Year Over Year Postpaid Prepaid 774.9 717.2 Thousands 250.2 214.8 38.3 19.1 15.7 6.0 13.7 0.3 March 31, 2017 Parkersburg Richmond Organic March 31, 2018 Subscriber Expansion Expansion Growth Subscriber Totals Area Area Totals 22
Slide 23: Wireless - Postpaid Subscribers
Wireless - Postpaid Subscribers Gross Additions - Postpaid Net Change - Postpaid 43,077 38,701 (79) (5,412) (1) Q1'18 (1) Q1'17 Q1'18 Q1'17 (1) Excludes subscribers acquired via the 2/1/2018 Sprint Expansion. 23
Slide 24: Wireless - Postpaid Statistics
Wireless - Postpaid Statistics Postpaid Churn Postpaid ARPU* 2.05% 1.89% $45.71 $45.57 $45.28 $44.46 $43.22 Q1'18 Q1'17 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 *ARPU represents Average Revenue Per Unit. See Appendix for reconciliation of Wireless segment operating revenues to Postpaid ARPU. 24
Slide 25: Wireless - Prepaid Subscribers
Wireless - Prepaid Subscribers Gross Additions - Prepaid Net Change - Prepaid 40,111 39,445 8,678 8,099 Q1'18 (1) Q1'17 Q1'18 (1) Q1'17 (1) Excludes subscribers acquired via the 2/1/2018 Sprint Expansion. 25
Slide 26: Wireless - Prepaid Statistics
Wireless - Prepaid Statistics Prepaid Churn Prepaid ARPU* 4.98% $40.07 $38.39 $37.65 4.42% $37.46 $36.73 Q1'18 Q1'17 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 *ARPU represents Average Revenue Per User. See Appendix for reconciliation of Wireless segment operating revenues to Prepaid ARPU. 26
Slide 27: Cable - RGU Growth by Quarter
Cable - RGU Growth by Quarter 132,846 132,287 133,240 133,086 133,439 125,000 49,384 48,248 47,379 46,613 45,555 100,000 ■ Video ■ Voice ■ High Speed Internet 75,000 22,419 22,555 22,743 21,647 22,092 50,000 61,815 61,947 63,442 63,918 65,141 25,000 0 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Customers 77,925 7
Slide 28: Cable - Average Revenue
Cable - Average Revenue Average Monthly Revenue per RGU Average Monthly Revenue per Customer $125.74 $73.72 $116.49 $68.21 Q1'18 Q1'17 Q1'18 Q1'17 28
Slide 29: Key Operational Results – Cable
Key Operational Results – Cable As of March 31, 2018 2017 Homes Passed (1) 184,975 184,819 Total Revenue Generating Units 133,439 132,846 Customer Relationships 78,397 77,925 RGUs per Customer Relationship 1.70 1.70 Video Revenue generating units 45,555 49,384 Penetration 24.6% 26.7% Digital video p
Slide 30: Wireline - Key Operational Results
Wireline - Key Operational Results Access lines (000s) ▪ Access line loss of 2.2% in past 12 months. 17.8 18.2 ▪ Effective Q4’15, subscribers were offered a cable modem Q1'18 Q1'17 internet option up to 150 Mbps DSL & Cable Modem Customers (000s) ▪ 4,912 video subscribers at DSL Cable Modem 3/31/18
Slide 31: Wireline and Cable Fiber Sales
Wireline and Cable Fiber Sales ($ millions) Fiber Lease Revenue New External Fiber Lease Contracts* Non-affiliate Revenue Affiliate Revenue Wireline Cable 12.2 6.7 11.2 7.2 6.4 3.8 5.8 1.9 5.5 3.9 4.8 3.4 Q1'18 Q1'17 Q1'18 Q1'17 * Estimated amounts represent the first 10 years of expected contract v
Slide 32: Capital Expenditures: Investing in the Future
Capital Expenditures Investing in the Future Capex Spending ($ millions) 2018 Capex Budget: Wireless Wireline Cable Other 52% Upgrades and Expansion of $183.1 Acquired Territories 7.1 $163.2 14% Network Maintenance 32.4 9.4 13% Success-Based $138.1 29.1 20.2 6.9 12% Network Capacity 27.1 22.4 • 9% N
Slide 33: Q&A
AXSHENTEL Q&A 33
Slide 34: Appendix
Appendix AXSHENTEL
Slide 35: Non-GAAP Financial Measures: Billed Revenue per Subscriber
Non-GAAP Financial Measures Billed Revenue per Prepaid & Postpaid Subscriber 1Q 2018 1Q 2017 Postpaid net billings $ 93,290 $ 92,989 Plus: Adjustment for write-offs 5,336 5,681 Gross billed revenue less write-offs - postpaid 98,626 98,670 Average postpaid subscribers 760,631 719,612 Billed revenue p
Slide 36: Wireless - Network Statistics at March 31, 2018
Wireless - Network Statistics at March 31, 2018 Wireless Network Statistics Cell sites CDMA Base Stations (sites) 1,742 Sites with 2nd LTE carrier 1,639 Sites with three carriers, including a 2nd 441 carrier @ 1900 MHz Sites with 2.5 GHz LTE 403 Traffic % LTE traffic 97.7% Data usage increase (Q ove
Slide 37: Cable - Non-GAAP Financial Measure Average Revenue
Cable - Non-GAAP Financial Measure Average Revenue Q1 2018 Q1 2017 Service Revenue $ 28,471 $ 26,411 Fiber, FUSC, Pass-through & Other 1,944 1,252 Internal Revenue (1,031) (567) Video, Internet & Voice Revenue 29,384 27,096 Other miscellaneous revenue 2,327 1,917 Total Operating Revenue $ 31,711 $ 2
Slide 38: 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 196 206 193 192 2.9 2.9 1.2 1.2 1.7 1.7 1Q'18 1Q'17 1Q'18 1Q'17 38
Shenandoah Telecommunications Company — Q1 2018 Earnings Presentation on 6ix