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| 8-K - SHENANDOAH TELECOMMUNICATIONS COMPANY 8-K 11-7-2011 - SHENANDOAH TELECOMMUNICATIONS CO/VA/ | form8k.htm |
3Q 2011 Earnings Conference Call
November 7, 2011
Exhibit 99.1
2
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. These statements can be identified by the use of forward-looking
terminology such as “believes,” “estimates,” “expects,” “intends,” “may,” “will,”
“should,” “could,” or “anticipates” or the negative or other variation of these similar
words, or by discussions of strategy or risks and uncertainties. These statements are
based on current expectations of future events. If underlying assumptions prove
inaccurate or unknown risks or uncertainties materialize, actual results could vary
materially from the Company’s expectations and projections. Important factors that
could cause actual results to differ materially from such forward-looking statements
include, without limitation, risks related to the following:
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. These statements can be identified by the use of forward-looking
terminology such as “believes,” “estimates,” “expects,” “intends,” “may,” “will,”
“should,” “could,” or “anticipates” or the negative or other variation of these similar
words, or by discussions of strategy or risks and uncertainties. These statements are
based on current expectations of future events. If underlying assumptions prove
inaccurate or unknown risks or uncertainties materialize, actual results could vary
materially from the Company’s expectations and projections. Important factors that
could cause actual results to differ materially from such forward-looking statements
include, without limitation, risks related to the following:
qIncreasing competition in the communications industry; and
qA complex and uncertain regulatory environment.
A further list and description of these risks, uncertainties and other factors can be found
in the Company’s SEC filings which are available online at www.sec.gov,
www.shentel.com or on request from the Company. The Company does not undertake
to update any forward-looking statements as a result of new information or future
events or developments.
in the Company’s SEC filings which are available online at www.sec.gov,
www.shentel.com or on request from the Company. The Company does not undertake
to update any forward-looking statements as a result of new information or future
events or developments.
3
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 and exclude the effects of certain operating, capital and financing costs and
may differ from comparable information provided by other companies, and they should
not be considered in isolation, as an alternative to, or more meaningful than measures
of financial performance determined in accordance with US generally accepted
accounting principles. These financial performance measures are commonly used in the
industry and are presented because Shentel believes they provide relevant and useful
information to investors. Shentel utilizes these financial performance measures to
assess its ability to meet future capital expenditure and working capital requirements, to
incur indebtedness if necessary, return investment to shareholders and to fund
continued growth. Shentel also uses these financial performance measures to evaluate
the performance of its businesses and for budget planning purposes.
determined in accordance with US generally accepted accounting principles. These
financial performance measures are not indicative of cash provided or used by operating
activities and exclude the effects of certain operating, capital and financing costs and
may differ from comparable information provided by other companies, and they should
not be considered in isolation, as an alternative to, or more meaningful than measures
of financial performance determined in accordance with US generally accepted
accounting principles. These financial performance measures are commonly used in the
industry and are presented because Shentel believes they provide relevant and useful
information to investors. Shentel utilizes these financial performance measures to
assess its ability to meet future capital expenditure and working capital requirements, to
incur indebtedness if necessary, return investment to shareholders and to fund
continued growth. Shentel also uses these financial performance measures to evaluate
the performance of its businesses and for budget planning purposes.
4
Chris French
CEO and President
5
Wireless Highlights
PCS Customers (000s)
q Prepaid Rapid Growth
Q3’11 net additions of 6,940
and 98,272 prepaid subs at
9/30
Q3’11 net additions of 6,940
and 98,272 prepaid subs at
9/30
q Steady Postpaid growth
Postpaid customers up 6% in
the last year
Postpaid customers up 6% in
the last year
q Postpaid Churn improves
Q3’11 churn of 1.85%
compared to 1.88% for Q3’10
Q3’11 churn of 1.85%
compared to 1.88% for Q3’10
q Earnings Improve
Q3’11 operating income up by
$3.7 million over Q3’10
Q3’11 operating income up by
$3.7 million over Q3’10
6
Cable Highlights
q Growth
u Total Cable RGUs 136 thousand at end of Q3 2011, up
4,745 in Q3
4,745 in Q3
q Triple Play
u Gains in all services including video, high-speed
Internet, and voice services
Internet, and voice services
q Cable Upgrades
u Former JetBroadband markets are approximately 25%
complete
complete
7
2011 Financial Highlights
q Revenue Growth- Revenues
grew by $9.4 million
grew by $9.4 million
q Depreciation and
Amortization Expense-
Increased $1.6 million, after tax,
due to investments in cable and
wireless networks
Amortization Expense-
Increased $1.6 million, after tax,
due to investments in cable and
wireless networks
q Adjusted OBIDA Growth-
Increase of $1.1 million over 3Q
2011
Increase of $1.1 million over 3Q
2011
Net Income
(in millions)
Net Income from Continuing Operations
(in millions)
(in millions)
8
Adele Skolits
CFO and VP of Finance
9
Profitability
Adjusted OIBDA ($ thousands)
10
Adjusted OIBDA by Segment
11
Wireless Segment - Change in Adjusted
OIBDA Q3’10 vs. Q3’11
OIBDA Q3’10 vs. Q3’11
12
PCS Prepaid Statistics - Total Net Contribution
13
Cable Segment - Change in Adjusted
OIBDA Q3’10 vs. Q3’11
OIBDA Q3’10 vs. Q3’11
14
Wireline Segment - Change in Adjusted
OIBDA Q3’10 vs. Q3’11
OIBDA Q3’10 vs. Q3’11
15
Earle MacKenzie
EVP and COO
16
Key Operational Results - Wireless
PCS Postpaid Customers (000s)
17
Key Operational Results - Wireless
Gross Additions - Postpaid
Net Additions - Postpaid
n Q3 2011 net adds of 2,686
versus 3,175 Q2 2010 net
adds
versus 3,175 Q2 2010 net
adds
n Q3 2011 churn of 1.8%
improved from 1.9% in Q3
2010
improved from 1.9% in Q3
2010
n Shentel-controlled
channels produced 50% of
gross adds in Q3 2011 and
53% of gross adds in Q3
2010
channels produced 50% of
gross adds in Q3 2011 and
53% of gross adds in Q3
2010
18
Key Operational Results - PCS
Gross Billed Revenue per Postpaid User - Data & Voice 1
1 - Before Service credits, bad debt, Sprint Nextel fees.
19
PCS Revenues
Gross Billed Revenues - Postpaid ($ millions)
$38.1
$41.8
20
Postpaid PCS Customers Top Picks Q3 2011
n Top Service Plans - 76% of
Gross Adds
Gross Adds
u Everything Data Family
1500 - 53%
1500 - 53%
u Everything 450 - 18%
u Everything Messaging
Family 1500 - 5%
Family 1500 - 5%
n Top Devices - New Activations
- All Channels
- All Channels
u HTC EVO 4G 22%
u LG Optimus S 14%
u LG Rumor Touch 7%
u HTC EVO Shift 4G 6%
u Sanyo Vero 5%
n Q3 2011 smartphones made
up 48% of base, up from
43.5% in Q2 2011
up 48% of base, up from
43.5% in Q2 2011
21
PCS Prepaid Statistics
Gross Additions (000s)
Cumulative Customers (000s)
9/30/11 98.3
6/30/11 91.3
3/31/11 80.2
12/31/10 67.0
9/30/10 56.2
7/1/10 50.0
22
PCS Prepaid Statistics
Churn %
Average Gross Billed Revenue
23
RGU Growth by Quarter - Cable
Customers
70,430 74,178 74,657 73,930 75,131
RGU's/Customer 1.70 1.73 1.75 1.77 1.81
24
Key Operational Results - Cable
Note: Video homes passed includes 16K homes located in Shenandoah County, VA, where internet and
voice services are not available from the cable company.
voice services are not available from the cable company.
25
Key Operational Results - Wireline
n Modest access line loss
of 2% in past 12 months
of 2% in past 12 months
n Continued broadband
penetration in LEC area
to 53%
penetration in LEC area
to 53%
n 4% growth in DSL
customers since 9/30/10,
partially offsetting access
line losses, resulting in
total connections of 35.5
thousand
customers since 9/30/10,
partially offsetting access
line losses, resulting in
total connections of 35.5
thousand
Access lines (000s)
Internet Customers (000s)
26
Investing in the Future
n Increased planned Wireless
spending for 2011 EVDO
growth. Increased capacity
approximately 50%
spending for 2011 EVDO
growth. Increased capacity
approximately 50%
n Upgrade of Jet Network is
approximately 25% complete
approximately 25% complete
n 52% of Virginia systems and
48% of WV systems upgrades
projected to be completed in
2011
48% of WV systems upgrades
projected to be completed in
2011
n All remaining systems in
Virginia, West Virginia and
Maryland to have upgrades
completed in 2012
Virginia, West Virginia and
Maryland to have upgrades
completed in 2012
Capex Spending
27
Q&A
28
Appendix
29
Non-GAAP Financial Measure - Billed Revenue per Postpaid Subscriber