Shenandoah Telecommunications Co · NASDAQ:SHEN

Shenandoah Telecommunications — Q1 2015 Earnings Presentation

35 slides from Shenandoah Telecommunications's earnings presentation, May 4, 2015

  1. Slide 1: 1Q 2015 Earnings Conference Call

    1Q 2015 Earnings Conference Call May 4, 2015

  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: First Quarter 2015 Highlights

    First Quarter 2015 Highlights  Net Income Growth – Q1’15 v. Q1’14  Increased 19.4% over Q1’14 to $10.3 million  Adjusted OIBDA increased 12.5% to $35.7 million  Revenue Growth  Revenue grew 4.8% over Q1’14 to $84.3 million  Customer Growth 3/31/14 3/31/15 Change Wireless 413,562 438,861 +25,29

  6. Slide 6: Wireless Highlights

    Wireless Highlights  Postpaid Growth PCS Customers (000s) Postpaid customers up 5.8% over last 12 months  Prepaid Growth Prepaid customers up 6.7% over last 12 months  Operating Income Increase Improvement of $2.6 million, or 15.7% 6

  7. Slide 7: Cable Highlights

    Cable Highlights Cable OIBDA (in millions)  Revenue Growth  Operating revenues $23.3 million, growth of 13.8% over Q1’14  Q1’15 Adjusted OIBDA $5.1 million, up 33.0% from Q1’14  124,015 RGUs at Q1’15, up 6.4% over Q1’14 Adjusted OIBDA Margin Shows Long Term Improvement 18% Cable RGUs 15% 10% 4%

  8. Slide 8: Other Highlights

    Other Highlights *Fiber Lease Revenue (in millions) $8.1 $8.0  Wireline and Cable - Fiber lease revenues of $8.0 million, down 1.0% from Q1’14 Q1'14 Q1'15 *Includes both Affiliate and Non-affiliate revenues  154 towers generated Mobile Tower OIBDA ($ thousands) $1.7 million of OIBDA, (in thousands

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

    Adele Skolits VP of Finance and CFO 9

  10. Slide 10: Profitability

    Profitability Consolidated Results ($ in thousands, except per share amounts) For the Quarter Ended:___ 3/31/14 3/31/15 Change Operating Income $ 15,680 $ 18,526 18% Net Income $ 8,616 $ 10,286 19% Earnings Per Share: Basic $ 0.36 $ 0.43 19% Diluted $ 0.36 $ 0.42 17% 10

  11. Slide 11: Profitability

    Profitability Adjusted OIBDA ($ thousands) For the Quarter Ended: 3/31/14 3/31/15 Change Operating Income 15,680 18,526 18% Depreciation and Amortization 15,387 16,337 6% Share Based Compensation 1,028 825 -20% (Gain)/Loss on Asset Disposals (366) 11 N.M. Adjusted OIBDA 31,729 35,699 13% 11

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

    Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Q1'14 Q1'15 Q1'14 Q1'15 Q1'14 Q1'15 Operating Income $ 16.8 $ 19.4 $ (2.0) $ (0.7) $ 4.3 $ 3.8 Depreciation and amortization 7.2 7.8 5.4 5.5 2.7 2.9 Plus (gain) loss on asset sales (0.3) 0.1 - - - - Share based compensation 0.2 0.2 0.4 0

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

    Wireless Segment – Change in Adjusted OIBDA Q1’15 vs. Q1’14 ($ millions) 13

  14. Slide 14: Cable Segment – Change in Adjusted OIBDA

    Cable Segment – Change in Adjusted OIBDA Q1’15 vs. Q1’14 ($ millions) 14

  15. Slide 15: Earle MacKenzie, EVP and COO

    Earle MacKenzie EVP and COO 15

  16. Slide 16: Postpaid Customer Growth

    Postpaid Customer Growth PCS Postpaid Customers (000s) 16

  17. Slide 17: Postpaid Customer Additions

    Postpaid Customer Additions Gross Additions - Postpaid  Net adds of 3,211 in Q1 2015 versus 1,304 in Q1 2014  Q1 2015 churn of 1.60%, down from 1.73% in Q1 2014 Net Additions - Postpaid  Shentel-controlled channels produced 39% of gross adds in Q1 2015 and 55% in Q1 2014 17

  18. Slide 18: 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 $64.93 $61.06 $33.57 $35.58 $31.36 $25.48 Q1'14 Q1'15 1 – Before Service credits, bad debt, Sprint Nextel fees. 18

  19. Slide 19: PCS Revenues

    PCS Revenues Gross Billed Revenues - Postpaid ($ millions) * 19

  20. Slide 20: PCS Prepaid Statistics

    PCS Prepaid Statistics Gross Additions (000s) Cumulative Customers (000s) *The loss of customers in Q2’14 related to more stringent governmental requirements for customers renewing their eligibility for the government subsidized Assurance program. 20

  21. Slide 21: PCS Prepaid Statistics

    PCS Prepaid Statistics Churn % Average Gross Billed Revenue 21

  22. Slide 22: Network Statistics at 3/31/15

    Network Statistics at 3/31/15  542 Cell Sites  95% have a second LTE carrier at 800 MHz  126 sites have three carriers, including a second carrier at 1900 MHz  Traffic  84% of data traffic is on LTE, with 35% on 800 MHz  Data usage grew 15% in Q1’15  Average speeds of approximately 5 Mbps  A

  23. Slide 23: Cable - RGU Growth by Quarter

    Cable - RGU Growth by Quarter Customers 70,670 69,889(1) 71,302 71,298 72,192 RGU's/Customer 1.65 1.66 1.69 1.71 1.72 1. College students disconnect during summer 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 $122.59 and $141.46 for Q1 2014 and Q1 2015, respectively. 24

  25. Slide 25: Key Operational Results – Cable

    Key Operational Results – Cable* Q1 2014 Q1 2015 Homes Passed 170,711 172,022 Total Revenue Generating Units 116,592 124,015 Customer Relationships 70,670 72,192 RGUs per Customer Relationship 1.65 1.72 Video Revenue generating units 52,725 51,708 Penetration 30.9% 30.1% Digital video penetration 57

  26. Slide 26: Key Operational Results - Wireline

    Key Operational Results - Wireline Access lines (000s)  Access line loss of 1.3% in past 12 months  Broadband penetration in LEC area at 59.2%  Total connections at 3/31/15 of 34.5 thousand DSL Customers (000s)  5,599 video subscribers at 3/31/15 26

  27. Slide 27: 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. Revenues may be booked either in the Wireline or Cable segment depending on which assets are used to pro

  28. Slide 28: Investing in the Future

    Investing in the Future Capex Spending ($ millions)  2015 Capex Budget:  33% Network Capacity  30% Network Maintenance  20% Network Expansion  17% Success-Based * Accounts payable at December 31, 2013 and 2012 included $6.5 million and $24.7 million associated with PCS Network Vision capital ex

  29. Slide 29: Q&A

    AXSHENTEL Q&A 29

  30. Slide 30: Appendix

    AXSHENTEL Appendix 30

  31. Slide 31: Non-GAAP Financial Measures – Billed Revenue per Subscriber

    Non-GAAP Financial Measures – Billed Revenue per Prepaid & Postpaid Subscriber Dollars in thousands (except subscribers and revenue per subscriber) 1Q 2014 1Q 2015 Gross billed revenue Wireless segment total operating revenues $ 51,079 $ 52,509 Equipment revenue (1,197) (1,481) Tower lease revenue (

  32. Slide 32: Postpaid PCS Customers Top Picks Q1 2015

    Postpaid PCS Customers Top Picks Q1 2015  Top Service Plans – 53% of  Top Devices – New Activations Gross Adds – All Channels Family Unlimited, 14% Talk/Text/Data iPhone 41% Unlimited, My Way 11% Samsung Galaxy S 15% Unlimited, Talk/Text 11% Samsung Galaxy Tablet 11% 20GB Share Pack 9% $50 Unlimit

  33. Slide 33: iPhone Statistics – Q1'15

    iPhone Statistics – Q1’15  41% of Q1 Gross Adds  31% of iPhones were sold or upgraded in Shentel- controlled channels  36.5% of 3/31/15 Postpaid customers had the iPhone, up from 35.1% at 12/31/14 and 30.3% at 3/31/14.  iPhone Base – 3/31/15  47% iPhone 5, 5C & 5S  31% iPhone 6, 6 Plus  22% i

  34. Slide 34: 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) Q1 2014 Q1 2015 Net Service Revenue $ 17,423 $ 19,672 Set-top box rentals 1,641 1,911 FUSC and pass-through fees 320 395 Video, Internet & Voice Revenue 19,384 21,978 Other misce

  35. Slide 35: 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 206 199 2.6 2.6 1.1 1.1 153 154 1.5 1.5 1Q'14 1Q'15 1Q'14 1Q'15 (in thousands) Q1'14 Q1'15 Operating Income $1,395 $1,234 Depreciation and

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