UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 31, 2014
Shenandoah Telecommunications Company
(Exact name of registrant as specified in its charter)
Virginia
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0-9881
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54-1162807
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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500 Shentel Way
P.O. Box 459
Edinburg, VA
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22824
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (540) 984-4141
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2-(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01 Regulation FD Disclosure.
The following information is furnished pursuant to Regulation FD: On October 31, 2014, Shenandoah Telecommunications Company held its third quarter 2014 earnings release conference call. The materials attached hereto as Exhibit 99.1 were utilized during the conference call. These materials are also available on the Company’s website.
These materials may contain forward-looking statements about Shenandoah Telecommunications 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 or similar words, or by discussions of strategy or risks and uncertainties. Shenandoah Telecommunications undertakes no obligation to revise or update such statements to reflect current events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.
Item 9.01 Financial Statements and Exhibits.
The following exhibit is furnished with this Current Report on Form 8-K.
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99.1 |
Third Quarter 2014 Earnings Release Conference Call Slides |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SHENANDOAH TELECOMMUNICATIONS COMPANY
(Registrant)
October 31, 2014
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/s/ Adele M. Skolits
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Adele M. Skolits
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Vice President - Finance and
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Chief Financial Officer
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(Duly Authorized Officer)
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October 31, 2014 3Q 2014 Earnings Conference Call Exhibit 99.1
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: Increasing competition in the communications industry; andA 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.
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.
Chris FrenchPresident and CEO
Q3’14 Highlights Net Income GrowthIncreased 19.1% over Q3’13 to $8.0 millionAdjusted OIBDA increased 15.9% to $33.3 millionRevenue Growth Revenue grew 6.1% over Q3’13 to $82.3 millionCustomer Growth 9/30/13 9/30/14 ChangeWireless 400,336 423,102 +22,766Cable (RGUs) 112,307 120,466 +8,159
Wireless Highlights PCS Customers (000s) Postpaid Growth Postpaid customers up 5.7% over last 12 monthsPrepaid GrowthPrepaid customers up 5.6% over last 12 monthsOperating Income IncreaseImprovement of $0.9 million, or 5.1%
Cable Highlights Revenue GrowthOperating revenues $21.0 million, growth of 9.7% over Q3’13Q3’14 Adjusted OIBDA $3.4 million, up 75.2% from Q3’13120,466 RGUs at 9/30/2014, up 7.3% over Q3’13 Cable OIBDA (in millions) Cable RGUs
Other Highlights Fiber Lease revenues $8.1 million, up 15.7% from Q3’13New external fiber lease contracts have more than doubledTowers generated $1.7 million of OIBDA, up 21.5% over Q3’14 Fiber Lease Revenue (in millions) Mobile Tower OIBDA ($ thousands) * The lower operating income in Q3’13 primarily resulted from a $0.3 million adjustment to reduce straight-line rent accruals at a small number of sites related to termination of Sprint’s iDEN leases.
Annual Dividend Paid Every Year Since 1960 Dividend payment per share
Adele SkolitsVP of Finance and CFO
Profitability Consolidated Results($ in thousands, except per share amounts) 9/30/13 9/30/14 Change Operating Income $ 13,262 $ 14,144 6.7% Net Income $ 6,717 $ 8,003 19.1% Earnings Per Share: Basic Diluted $ 0.28$ 0.28 $ 0.33 $ 0.33 17.9%17.9% For the Quarter Ended:___
Profitability Adjusted OIBDA ($ thousands)
Adjusted OIBDA by Segment ($ millions)
Wireless Segment – Change in Adjusted OIBDA Q3’14 vs. Q3’13 ($ millions)
Cable Segment – Change in Adjusted OIBDA Q3’14 vs. Q3’13 ($ millions)
Wireline Segment – Change in Adjusted OIBDA Q3’14 vs. Q3’13 ($ millions)
Earle MacKenzieEVP and COO
Postpaid Customer Growth PCS Postpaid Customers (000s)
Postpaid Customer Additions Gross Additions - Postpaid Net Additions - Postpaid Net adds of 5,303 in Q3 2014 versus 1,370 in Q3 2013Q3 2014 churn of 1.76% down from 1.80% in Q3 2013Shentel-controlled channels produced 49% of gross adds in Q3 2014 and 55% in Q3 2013
Total Revenue per Customer Up; Data Usage Increasing Gross Billed Revenue per Postpaid User – Data & Voice 1 1 – Before Service credits, bad debt, Sprint Nextel fees.
PCS Revenues Gross Billed Revenues - Postpaid ($ millions) * *Net service fee increased from 12% to 14% effective 8/1/2013
PCS Prepaid Statistics Gross Additions (000s) Cumulative Customers (000s) *The loss of customers in Q2’13 and Q2’14 related to more stringent governmental requirements for customers renewing their eligibility for the government subsidized Assurance program.
PCS Prepaid Statistics Churn % Average Gross Billed Revenue
Cable - RGU Growth by Quarter Customers 69,216 69,538 70,670 69,889(2) 71,302 RGU's/Customer 1.62 1.64 1.65 1.66 1.69 Prior periods revised to reflect transfer of Shenandoah County, VA video activities to WirelineCollege students disconnect during summer
Increasing Average Monthly Cable Revenue Average Monthly Revenue per RGU Average Monthly Revenue per Customer* *Average monthly revenue per video subscriber was $111.96 and $126.64 for Q3 2013 and Q3 2014, respectively.
Key Operational Results – Cable* *Excludes cable operations in Shenandoah County, VA which are included in the Wireline segment.
Key Operational Results - Wireline Access line loss of 2.3% in past 12 monthsBroadband penetration in LEC area at 58.4%Total connections at 9/30/14 of 34.4 thousand5,787 video subscribers at 9/30/14 Access lines (000s) DSL Customers (000s)
Wireline Statistics – Fiber Sales ($ 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 provide the service.
Investing in the Future Capex Spending ($ millions) * Accounts payable at December 31, 2013 and 2012 included $7.6 million and $24.7 million associated with PCS Network Vision capital expenditures. 2014 Capex Budget:24% Maintenance24% Capacity30% Network Expansion22% Success-Based2014 Revised Estimate:Cable slightly over budget due to set-top boxesVariances on Wireless and Wireline are a mix of projects under budget and projects delayed until FY’15
Non-GAAP Financial Measures – Billed Revenue per Postpaid & Prepaid Subscriber
Postpaid PCS Customers Top Picks Q3 2014 Top Service Plans – 77% of Gross Adds Top Devices – New Activations – All Channels Unlimited, My Way 32% 20GB Share Pack 15% 3G/4G Tablet 1GB 12% Sprint Framily 11% Everything Data 1500 7% iPhone 36% Samsung Galaxy S 19% Samsung Galaxy Tablet 19% Smartphones made up 78% of the Postpaid base in Q3’14, up from 77% in Q2’14 and 72% in Q2’13.
iPhone Statistics – Q3’14 36% of Q3 Gross Adds43% of iPhones were sold or upgraded in Shentel-controlled channels33.2% of 9/30/14 Postpaid customers had the iPhone, up from 31.6% at 6/30/14iPhone Base – 9/30/1454% iPhone 5, 5C & 5S42% iPhone 4 & 4S4% iPhone 6, 6 Plus
Non-GAAP Financial Measure – Average Monthly Cable Revenue
Key Operational Results – Mobile Company Mobile Tower Revenue ($ millions) Towers and Leases * The lower operating income in Q3’13 primarily resulted from a $0.3 million adjustment to reduce straight-line rent accruals at a small number of sites related to termination of Sprint’s iDEN leases.