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| 8-K - SHENANDOAH TELECOMMUNICATIONS COMPANY 8-K 05-04-2012 - SHENANDOAH TELECOMMUNICATIONS CO/VA/ | form8k.htm |
1Q 2012 Earnings Conference Call
May 4, 2012
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
2012 Financial Highlights
Net Income
(in millions)
Net Income from Continuing Operations
(in millions)
q Revenue Growth- Revenues
grew by $8.4 million
grew by $8.4 million
q Depreciation and
Amortization Expense-
$2.0 million due to acceleration of
Wireless network asset
depreciation ahead of Network
Vision upgrades
Amortization Expense-
$2.0 million due to acceleration of
Wireless network asset
depreciation ahead of Network
Vision upgrades
q Adjusted OBIDA Growth-
Increase of $3.6 million over 1Q
2011
Increase of $3.6 million over 1Q
2011
6
1Q’12 Highlights
q Revenue Growth
Revenue grew 13.9% over 1Q’11 to $68.8 million.
q Customer Growth
7
Wireless Highlights
PCS Customers (000s)
q Steady Postpaid growth
Postpaid customers up 5.4%
in the last year
Postpaid customers up 5.4%
in the last year
q Rapid Prepaid Growth
Q1’12 net additions of 7,285;
114k prepaid subs at 03/31
Q1’12 net additions of 7,285;
114k prepaid subs at 03/31
q Prepaid Churn improves
Q1’12 churn of 3.65%
compared to 4.50% for Q1’11
Q1’12 churn of 3.65%
compared to 4.50% for Q1’11
qEarnings Improve
Q1’12 operating income up by
$0.5 million over Q1’11
Q1’12 operating income up by
$0.5 million over Q1’11
8
Cable Highlights
q Cable Upgrades
u Markets acquired in mid-2010 are approximately 90%
complete
complete
u Remainder scheduled for 2012
q RGU Growth
u Total RGU growth of 1.7% in Q1’12
u 139,599 RGUs at 3/31/2012
9
Adele Skolits
CFO and VP of Finance
10
Profitability
Adjusted OIBDA ($ thousands)
11
Adjusted OIBDA by Segment
12
Wireless Segment - Change in Adjusted
OIBDA Q1’12 vs. Q1’11
OIBDA Q1’12 vs. Q1’11
13
Cable Segment - Change in Adjusted
OIBDA Q1’12 vs. Q1’11
OIBDA Q1’12 vs. Q1’11
14
Earle MacKenzie
EVP and COO
15
Key Operational Results - Wireless
PCS Postpaid Customers (000s)
16
Key Operational Results - Wireless
Gross Additions - Postpaid
Net Additions - Postpaid
n Q1 2012 net adds of 2,064
versus 3,016 Q1 2011 net
adds
versus 3,016 Q1 2011 net
adds
n Q1 2012 churn of 1.86%
similar to Q4 2011, increased
from 1.76% in Q1 2011
similar to Q4 2011, increased
from 1.76% in Q1 2011
n Shentel-controlled channels
produced 50% of gross adds
in Q1 2012 and 55% of
gross adds in Q1 2011
produced 50% of gross adds
in Q1 2012 and 55% of
gross adds in Q1 2011
17
Key Operational Results - PCS
Gross Billed Revenue per Postpaid User - Data & Voice 1
1 - Before Service credits, bad debt, Sprint Nextel fees.
18
PCS Revenues
Gross Billed Revenues - Postpaid ($ millions)
$39.7
$45.3
19
Postpaid PCS Customers Top Picks Q1 2012
n Smartphones made up 57% of
the Postpaid base in Q1 2012,
up from 53% in Q4 2011 and
39% in Q1 2011
the Postpaid base in Q1 2012,
up from 53% in Q4 2011 and
39% in Q1 2011
n Top Service Plans - 75% of
Gross Adds
Gross Adds
u Everything Data Family
1500 - 49%
1500 - 49%
u Everything 450 - 18%
u Business Advantage Talk
200 - 5%
200 - 5%
u Everything Messaging
Family 1500 - 3%
Family 1500 - 3%
n Top Devices - New Activations -
All Channels
All Channels
u iPhone 20%
u Kyocera DuraMax 11%
u Samsung Epic 3D/4G 7%
u HTC Evo 3D 7%
u Sanyo Vero 4%
20
iPhone Statistics - Q1’12
n 20% of Q1 Gross Adds
n 51% of iPhones were sold or upgraded in Shentel-
controlled channels
controlled channels
n 6.8% of 3/31/2012 Postpaid customers had the
iPhone, up from 3.6% at 12/31/11
iPhone, up from 3.6% at 12/31/11
u 60% iPhone 4S
u 40% iPhone 4
21
PCS Prepaid Statistics
Gross Additions (000s)
Cumulative Customers (000s)
22
PCS Prepaid Statistics
Churn %
Average Gross Billed Revenue
23
Cable - RGU Growth by Quarter
Customers 74,657 73,930 75,131 75,348 76,130
RGU's/Customer 1.75 1.77 1.81 1.82 1.83
24
Cable Statistics
Average Monthly Revenue per RGU
Average Monthly Revenue per Customer
25
Key Operational Results - Cable
Note: Video homes passed includes 16K homes located in Shenandoah County, VA, where internet and
voice services are provided by the Wireline segment.
voice services are provided by the Wireline segment.
26
Key Operational Results - Wireline
n Modest access line loss of
3% in past 12 months
3% in past 12 months
n Continued broadband
penetration in LEC area to
55%
penetration in LEC area to
55%
n 3% growth in DSL
customers since 03/31/11,
partially offsetting access
line losses, resulting in
total connections of 35.3
thousand
customers since 03/31/11,
partially offsetting access
line losses, resulting in
total connections of 35.3
thousand
Internet Customers (000s)
27
Investing in the Future
n All remaining systems in West
Virginia and Maryland to have
upgrades completed in 2012
Virginia and Maryland to have
upgrades completed in 2012
n Upgrade of Jet Network is
approximately 90% complete
approximately 90% complete
n Network Vision expected to
drive $60M of spend in 2012
drive $60M of spend in 2012
Capex Spending
28
Q&A
29
Appendix
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Non-GAAP Financial Measure - Billed Revenue per Postpaid Subscriber