Shenandoah Telecommunications Co · NASDAQ:SHEN

Shenandoah Telecommunications — Q4 2016 Earnings Presentation

37 slides from Shenandoah Telecommunications's earnings presentation, Mar 20, 2017

  1. Slide 1: 4Q 2016 Earnings Conference Call

    4Q 2016 Earnings Conference Call March 20, 2017

  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: Fourth Quarter 2016 Highlights

    Fourth Quarter 2016 Highlights (Q4’16 v. Q4’15)  Net Loss in Q4’16  Net loss of $0.2 million in Q4’16 compared to net income of $12.1 million in Q4’15  Adjusted OIBDA Growth  Increased 89.2% to $76.0 million  Revenue Growth  Increased 78.2% to $155.6 million  Customer Growth 12/31/15 12/31/16

  6. Slide 6: 2016 Financial Highlights

    2016 Financial Highlights Revenue Adjusted OIBDA ($ millions) ($ millions) 6

  7. Slide 7: Wireless Highlights

    Wireless Highlights  Postpaid Growth PCS Customers (000s) Postpaid customers up 131.2% over last 12 months  Prepaid Growth Prepaid customers up 65.3% over last 12 months  Adjusted OIBDA Growth Increased to $63.6 million, up 133% in Q4’16 vs Q4’15 7

  8. Slide 8: Cable Highlights

    Cable Highlights  Revenue Growth Cable Adjusted OIBDA (in millions)  Operating revenues $28.3 million, growth of 10.0% over Q4’15  Q4’16 Adjusted OIBDA $9.3 million, up 13.7% from Q4’15  132,465 RGUs at Q4’16, up 5.5% over Q4’15 Adjusted OIBDA Margin Shows Long Term Improvement 29% Cable RGUs 25

  9. Slide 9: Fiber and Tower Highlights

    Fiber and Tower Highlights *Fiber Lease Revenue (in millions) Wireline Cable $11.3 $9.8 1.1 0.7 10.2  Wireline and Cable fiber 9.1 lease revenues of $11.3 million, up 15.3% from Q4’15 Q4'15 Q4'16  196 towers generated *Includes both Affiliate and Non-affiliate revenues $1.6 million of OIBDA in Mob

  10. Slide 10: Dividend payment per share

    Annual Dividend Paid Every Year Since 1960 $0.25 $0.25 $0.20 Dividend payment per share Total Dividends Paid per Share (Adjusted for stock splits) $0.15 $0.10 $0.05 $0.00 10

  11. Slide 11: Adele Skolits, VP of Finance and CFO

    Adele Skolits VP of Finance and CFO 11

  12. Slide 12: Profitability: Consolidated Results

    Profitability Consolidated Results ($ in millions, except per share amounts) For the Quarter Ended:___ 12/31/15 12/31/16 Change Operating Income $ 21.7 $ 12.2 (44)% Net Income (Loss) $ 12.1 $ (0.2) (102)% Earnings (Loss) Per Share: Basic $ 0.24 $ (0.00) (102)% Diluted $ 0.24 $ (0.00) (102)% 12

  13. Slide 13: Profitability: Adjusted OIBDA

    Profitability Adjusted OIBDA ($ millions) For the Quarter Ended: For the Year Ended: 12/31/15 12/31/16 Change ($) 12/31/15 12/31/16 Change ($) Operating income $ 21.7 $ 12.2 $ (9.5) $ 74.1 $ 22.5 $ (51.6) Depreciation and amortization 17.6 46.7 29.1 70.7 143.7 73.0 Share based compensation 0.4 0.5 0

  14. Slide 14: Growth in Adjusted OIBDA

    Growth in Adjusted OIBDA ($ thousands) Adjusted OIBDA ($ thousands) *See Appendix for reconciliation of net income to adjusted earnings per share. 14

  15. Slide 15: Adjusted OIBDA by Segment

    Adjusted OIBDA by Segment ($ millions) Wireless Cable Wireline Q4'15 Q4'16 Q4'15 Q4'16 Q4'15 Q4'16 Operating income $ 18.9 $ 5.3 $ 2.2 $ 3.0 $ 4.6 $ 5.5 Depreciation and amortization 8.3 37.6 5.8 6.1 3.3 2.9 Plus (gain) loss on asset sales - - 0.1 0.1 0.1 (0.1) Share based compensation 0.1 0.3 0.1 0

  16. Slide 16: Wireless Segment – Change in Adjusted OIBDA

    Wireless Segment – Change in Adjusted OIBDA Q4’16 vs. Q4’15 ($ millions) Postpaid Prepaid Waived Travel Prepaid Other Nat’l HS Network Total Revenue Revenue Mgt Fee Revenue Acquisition Post HS Subsidies Costs Subs & & Cust Acq Commissi- ons 16

  17. Slide 17: Cable Segment – Change in Adjusted OIBDA

    Cable Segment – Change in Adjusted OIBDA Q4’16 vs. Q4’15 ($ millions) 17

  18. Slide 18: Earle MacKenzie, EVP and COO

    Earle MacKenzie EVP and COO 18

  19. Slide 19: Postpaid Subscriber Growth

    Postpaid Subscriber Growth 19

  20. Slide 20: Postpaid Customer Additions

    Postpaid Customer Additions Gross Additions - Postpaid  Q4’16 Legacy area churn of 1.59%, up from 1.48% in Q4’15  Combined Q4 2016 churn of 2.10% Net Additions - Postpaid Postpaid Churn 20

  21. Slide 21: Billed Revenue per Customer Stabilizing

    Billed Revenue per Customer Stabilizing Gross Billed Service Revenue per Postpaid User – Data & Voice (1) Voice Data $56.42 $55.15 $52.15 $50.95 $51.24 $34.46 $34.21 $32.76 $32.57 $33.27 $21.96 $20.94 $19.39 $18.38 $17.97 Q4'15 (2) Q1'16(2) Q2'16 Q3'16 Q4'16 1 – Before Service credits, bad debt, Spr

  22. Slide 22: PCS Prepaid Statistics

    PCS Prepaid Statistics Gross Additions (000s) Cumulative Customers (000s) (1) (1) (1) - In Q4’16, customers were dropped from the prepaid customer count as a result of reducing the period of time a customer can be inactive and be included in the customer count. 22

  23. Slide 23: PCS Prepaid Statistics

    PCS Prepaid Statistics Churn % Average Gross Billed Revenue (1) (1) – In Q4’16, customers were dropped from the prepaid customer count as a result of reducing the period of time a customer can be inactive and be included in the customer count. 23

  24. Slide 24: Status of Network Enhancements – nTelos Footprint

    Status of Network Enhancements – nTelos Footprint Enhancement # of cell sites Decommission 148 Overlap Sites Add 800 MHz 186 3G to 4G 363 New Coverage 220 Sites 0% 20% 40% 60% 80% 100% Completed Expected completion 2017 Expected Completion 2018 24

  25. Slide 25: Network Statistics at 12/31/16

    Network Statistics at 12/31/16 Cell Sites Legacy New CDMA Base Stations (sites) 566 901 nTelos 3G sites still requiring upgrade 0 110 Sites with 2nd LTE carrier 545 716 Sites with three carriers, including a 2nd 217 172 carrier @ 1900 MHz Sites with 2.5 GHz LTE 130 172 Traffic % LTE traffic 96% 81%

  26. Slide 26: Cable - RGU Growth by Quarter

    Cable - RGU Growth by Quarter (1) (2) Customers 72,734 77,090 76,471 77,393 77,366 RGU's/Customer 1.73 1.71 1.71 1.71 1.71 1. Includes acquisition of Colane Cable (1/1/2016) 2. College students disconnect during summer 26

  27. Slide 27: 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 $156.57 and $171.47 for Q4 2015 and Q4 2016, respectively. 27

  28. Slide 28: Key Operational Results – Cable

    Key Operational Results – Cable Q4 2015 Q4 2016 Homes Passed (1) 172,538 184,710 (2) Total Revenue Generating Units 125,512 132,465 Customer Relationships 72,734 77,366 RGUs per Customer Relationship 1.73 1.71 Video Revenue generating units 50,215 50,618 Penetration 29.1% 27.4% Digital video penetra

  29. Slide 29: Key Operational Results - Wireline

    Key Operational Results - Wireline Access lines (000s)  Access line loss of 8.9% 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

  30. Slide 30: Wireline and Cable Fiber Sales

    Wireline and Cable Fiber Sales ($ millions) Fiber Lease Revenue New External Fiber Lease Contracts* * Amounts represent the first 10 years of contract value. Contract Terms range from 36 to 120 months. 30

  31. Slide 31: Investing in the Future

    Investing in the Future Capex Spending ($ millions)  2017 Capex Budget:  57% Upgrades and Expansion of nTelos network  14% Network Maintenance  10% Network Expansion  10% Additional Network Capacity  9% Success-Based * Accounts payable at December 31, 2016, 2015 and 2014 included $14.4 million

  32. Slide 32: Parkersburg Expansion

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  33. Slide 33: Q&A

    ASHENTEL’ Q&A 33

  34. Slide 34: Appendix

    Appendix ASHENTEL’

  35. Slide 35: 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) 4Q 2015 4Q 2016 Gross billed revenue Wireless segment total operating revenues $ 51,954 $ 117,822 Equipment revenue (1,305) (2,903) Tower lease revenue

  36. Slide 36: 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) Q4 2015 Q4 2016 Net Service Revenue $ 21,334 $ 23,718 Set-top box rentals 2,041 2,122 FUSC and pass-through fees 398 414 Video, Internet & Voice Revenue 23,773 26,254 Other misce

  37. Slide 37: 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 2.7 2.8 202 196 202 1.1 1.2 158 1.6 1.6 4Q'15 4Q'16 4Q'15 4Q'16 (in thousands) Q4'15 Q4'16 Operating Income $1,405 $1,257 Deprec. and Amort

Shenandoah Telecommunications Company — Q4 2016 Earnings Presentation on 6ix