Shenandoah Telecommunications Company Reports Significant Increase in Net Income to $6.7 Million for Third Quarter 2013; Earnings Per Share of $0.28
4G Upgrade On Track for Completion
Revenues Increase 6%
Consolidated Third Quarter Results
For the quarter ended
Total revenues were
President and CEO
Wireless Segment
Service revenues in the wireless segment increased 10.6% to
During the third quarter of 2013, net additions to postpaid subscribers were 1,370, down from 3,842 in the third quarter of 2012. Net additions to prepaid subscribers were 1,297 during third quarter 2013, compared to 5,384 in the third quarter of 2012.
Operating expenses in the Wireless segment decreased
Selling, general and administrative expenses decreased
Third quarter adjusted OIBDA in the wireless segment was
"As expected, the increased Sprint service fee that went into effect during the third quarter resulted in a reduction in net postpaid service revenue. Nonetheless, we saw an increase in postpaid revenue as we grew our customer base and realized the benefit of increased smartphone data fees," stated
Cable Segment
Service revenue in the cable segment increased
Revenue generating units totaled 118,805 at the end of the third quarter of 2013, an increase of 3.5% from
Adjusted OIBDA in the cable segment for third quarter 2013 was
Wireline Segment
Operating income for the wireline segment was essentially flat at
Other Information
Capital expenditures were
Cash and cash equivalents as of
"We are pleased to report strong third quarter performance and believe our solid balance sheet positions us well to grow our customer base and expand our capabilities and service offerings,"
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Audio webcast: www.shentel.com
About
This release contains forward-looking statements that are subject to various risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of unforeseen factors. A discussion of factors that may cause actual results to differ from management's projections, forecasts, estimates and expectations is available in the Company filings with the
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | ||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(in thousands) | ||
2013 |
2012 |
|
Cash and cash equivalents | $ 61,955 | $ 71,086 |
Other current assets | 50,015 | 45,349 |
Total current assets | 111,970 | 116,435 |
Investments | 8,976 | 8,214 |
Net property, plant and equipment | 395,456 | 365,474 |
Intangible assets, net | 71,673 | 74,942 |
Deferred charges and other assets, net | 9,424 | 5,675 |
Total assets | $ 597,499 | $ 570,740 |
Total current liabilities | 48,467 | 58,140 |
Long-term debt, less current maturities | 230,200 | 230,200 |
Total other liabilities | 83,945 | 74,552 |
Total shareholders' equity | 234,887 | 207,848 |
Total liabilities and shareholders' equity | $ 597,499 | $ 570,740 |
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | ||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND | ||||
COMPREHENSIVE INCOME | ||||
(in thousands, except per share amounts) | ||||
Three Months Ended | Nine Months Ended | |||
|
|
|||
2013 | 2012 | 2013 | 2012 | |
Operating revenues | $ 77,513 | $ 72,876 | $ 230,976 | $ 213,077 |
Cost of goods and services | 31,778 | 32,995 | 93,006 | 92,067 |
Selling, general, and administrative | 17,481 | 17,680 | 49,966 | 47,788 |
Depreciation and amortization | 14,992 | 16,794 | 45,034 | 47,860 |
Total operating expenses | 64,251 | 67,469 | 188,006 | 187,715 |
Operating income | 13,262 | 5,407 | 42,970 | 25,362 |
Other income (expense): | ||||
Interest expense | (2,050) | (2,323) | (6,270) | (5,641) |
Gain (loss) on investments, net | 348 | 212 | 526 | 815 |
Non-operating income, net | 377 | 169 | 1,356 | 616 |
Income from continuing operations before income taxes | 11,937 | 3,465 | 38,582 | 21,152 |
Income tax expense | 5,220 | 2,050 | 15,672 | 9,608 |
Net income from continuing operations | 6,717 | 1,415 | 22,910 | 11,544 |
Losses from discontinued operations | -- | (54) | -- | (157) |
Net income | $ 6,717 | $ 1,361 | $ 22,910 | $ 11,387 |
Basic and diluted income (loss) per share: | ||||
Net income from continuing operations | $ 0.28 | $ 0.06 | $ 0.95 | $ 0.48 |
Losses from discontinued operations | -- | -- | -- | (0.01) |
Net income | $ 0.28 | $ 0.06 | $ 0.95 | $ 0.47 |
Weighted average shares outstanding, basic | 24,010 | 23,875 | 23,993 | 23,858 |
Weighted average shares, diluted | 24,125 | 23,956 | 24,078 | 23,905 |
Non-GAAP Financial Measure
In managing our business and assessing our financial performance, management supplements the information provided by financial statement measures prepared in accordance with GAAP with adjusted OIBDA, which is considered a "non-GAAP financial measure" under
Adjusted OIBDA is defined by us as operating income (loss) before depreciation and amortization, adjusted to exclude the effects of: certain non-recurring transactions; impairment of assets; gains and losses on asset sales; and share based compensation expense. Adjusted OIBDA should not be construed as an alternative to operating income as determined in accordance with GAAP as a measure of operating performance.
In a capital-intensive industry such as telecommunications, management believes that adjusted OIBDA and the associated percentage margin calculations are meaningful measures of our operating performance. We use adjusted OIBDA as a supplemental performance measure because management believes it facilitates comparisons of our operating performance from period to period and comparisons of our operating performance to that of other companies by excluding potential differences caused by the age and book depreciation of fixed assets (affecting relative depreciation expenses) as well as the other items described above for which additional adjustments were made. In the future, management expects that the Company may again report adjusted OIBDA excluding these items and may incur expenses similar to these excluded items. Accordingly, the exclusion of these and other similar items from our non-GAAP presentation should not be interpreted as implying these items are non-recurring, infrequent or unusual.
While depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the current period allocation of costs associated with long-lived assets acquired or constructed in prior periods, and accordingly may obscure underlying operating trends for some purposes. By isolating the effects of these expenses and other items that vary from period to period without any correlation to our underlying performance, or that vary widely among similar companies, management believes adjusted OIBDA facilitates internal comparisons of our historical operating performance, which are used by management for business planning purposes, and also facilitates comparisons of our performance relative to that of our competitors. In addition, we believe that adjusted OIBDA and similar measures are widely used by investors and financial analysts as measures of our financial performance over time, and to compare our financial performance with that of other companies in our industry.
Adjusted OIBDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. These limitations include the following:
- it does not reflect capital expenditures;
- many of the assets being depreciated and amortized will have to be replaced in the future and adjusted OIBDA does not reflect cash requirements for such replacements;
- it does not reflect costs associated with share-based awards exchanged for employee services;
- it does not reflect interest expense necessary to service interest or principal payments on indebtedness;
- it does not reflect gains, losses or dividends on investments;
- it does not reflect expenses incurred for the payment of income taxes; and
- other companies, including companies in our industry, may calculate adjusted OIBDA differently than we do, limiting its usefulness as a comparative measure.
In light of these limitations, management considers adjusted OIBDA as a financial performance measure that supplements but does not replace the information reflected in our GAAP results.
The following table shows adjusted OIBDA for the three and nine months ended
Three Months Ended | Nine Months Ended | |||
(in thousands) |
|
|
||
2013 | 2012 | 2013 | 2012 | |
Adjusted OIBDA | $ 28,703 | $ 25,595 | $ 89,597 | $ 80,776 |
The following table reconciles adjusted OIBDA to operating income, which we consider to be the most directly comparable GAAP financial measure, for the three and nine months ended
Consolidated: | ||||
(in thousands) | Three Months Ended | Nine Months Ended | ||
|
|
|||
2013 | 2012 | 2013 | 2012 | |
Operating income | $ 13,262 | $ 5,407 | $ 42,970 | $ 25,362 |
Plus depreciation and amortization | 14,992 | 16,794 | 45,034 | 47,860 |
Adjusted prepaid results | -- | 2,408 | -- | 5,665 |
Plus (gain) loss on asset sales | 18 | 56 | 252 | 80 |
Plus share based compensation expense | 431 | 379 | 1,341 | 1,258 |
Plus storm expenses | -- | 551 | -- | 551 |
Adjusted OIBDA | $ 28,703 | $ 25,595 | $ 89,597 | $ 80,776 |
Adjusted prepaid results refers to the impact on the three and nine month periods of 2012 had Sprint calculated prepaid costs consistent with the adjustment received from Sprint in the fourth quarter of 2012, related to the previous nine quarters, and recorded in the fourth quarter of 2012.
The following tables reconcile adjusted OIBDA to operating income by major segment for the three and nine months ended
Wireless Segment: | ||||
(in thousands) | Three Months Ended | Nine Months Ended | ||
|
|
|||
2013 | 2012 | 2013 | 2012 | |
Operating income | $ 15,493 | $ 8,246 | $ 46,386 | $ 31,262 |
Plus depreciation and amortization | 6,799 | 8,643 | 20,608 | 23,153 |
Adjusted prepaid results | -- | 2,408 | -- | 5,665 |
Plus loss on asset sales | -- | -- | 100 | 4 |
Plus share based compensation expense | 123 | 110 | 385 | 365 |
Adjusted OIBDA | $ 22,415 | $ 19,407 | $ 67,479 | $ 60,449 |
Cable Segment: | ||||
(in thousands) | Three Months Ended | Nine Months Ended | ||
|
|
|||
2013 | 2012 | 2013 | 2012 | |
Operating loss | $ (4,680) | $ (5,627) | $ (11,689) | $(14,174) |
Plus depreciation and amortization | 5,682 | 5,908 | 17,094 | 17,963 |
Plus (gain) loss on asset sales | (35) | 27 | (26) | 6 |
Plus share based compensation expense | 187 | 160 | 585 | 531 |
Plus storm expenses | -- | 551 | -- | 551 |
Adjusted OIBDA | $ 1,154 | $ 1,019 | $ 5,964 | $ 4,877 |
Wireline Segment: | |||||
(in thousands) | Three Months Ended | Nine Months Ended | |||
|
|
||||
2013 | 2012 | 2013 | 2012 | ||
Operating income | $ 3,270 | $ 3,440 | $ 10,462 | $ 10,572 | |
Plus depreciation and amortization | 2,502 | 2,233 | 7,308 | 6,691 | |
Plus loss on asset sales | 53 | 28 | 177 | 69 | |
Plus share based compensation expense | 92 | 87 | 284 | 290 | |
Adjusted OIBDA | $ 5,917 | $ 5,788 | $ 18,231 | $ 17,622 |
CONTACT:Source:Shenandoah Telecommunications, Inc. Adele Skolits CFO and VP of Finance 540-984-5161 Adele.skolits@emp.shentel.com OrJohn Nesbett /Jennifer Belodeau Institutional Marketing Services (IMS) 203-972-9200 jnesbett@institutionalms.com
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