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): July 31, 2015
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 July 31, 2015, Shenandoah Telecommunications Company held its second quarter 2015 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 |
Second Quarter 2015 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)
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July 31, 2015
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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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July 31, 2015 2Q 2015Earnings 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
Second Quarter 2015 Highlights Net Income Growth – Q2’15 v. Q2’14Increased 21.6% over Q2’14 to $10.5 millionAdjusted OIBDA increased 12.7% to $37.2 millionRevenue Growth Revenue grew 5.3% over Q2’14 to $85.7 millionCustomer Growth 6/30/14 6/30/15 ChangeWireless 415,849 441,923 +26,074Cable (RGUs) 116,221 123,390 +7,169
Wireless Highlights PCS Customers (000s) Postpaid Growth Postpaid customers up 6.8% over last 12 monthsPrepaid GrowthPrepaid customers up 5.3% over last 12 monthsOperating Income IncreaseImprovement of $1.7 million, or 9.7%
Cable Highlights Revenue GrowthOperating revenues $24.2 million, growth of 15.9% over Q2’14Q2’15 Adjusted OIBDA $5.7 million, up 46.0% from Q2’14123,390 RGUs at Q2’15, up 6.2% over Q2’14 Cable OIBDA (in millions) Cable RGUs
Other Highlights Wireline and Cable -Fiber lease revenues of $8.5 million, up 6.0% from Q2’14154 towers generated $1.6 million of OIBDA, down 3.9% over Q2’15 Mobile Tower OIBDA ($ thousands) *Includes both Affiliate and Non-affiliate revenues *Fiber Lease Revenue (in millions)
Adele SkolitsVP of Finance and CFO
Profitability Consolidated Results($ in thousands, except per share amounts) 6/30/14 6/30/15 Change Operating Income $ 15,793 $ 18,750 19% Net Income $ 8,615 $ 10,474 22% Earnings Per Share: Basic Diluted $ 0.36$ 0.35 $ 0.43 $ 0.43 19%23% For the Quarter Ended:___
Profitability Adjusted OIBDA ($ thousands)
Adjusted OIBDA by Segment ($ millions)
Wireless Segment – Change in Adjusted OIBDA Q2’15 vs. Q2’14 ($ millions)
Cable Segment – Change in Adjusted OIBDA Q2’15 vs. Q2’14 ($ millions)
Earle MacKenzieEVP and COO
Postpaid Customer Growth PCS Postpaid Customers (000s)
Postpaid Customer Additions Net Additions - Postpaid Gross Additions - Postpaid Net adds of 5,414 in Q2 2015 versus 2,648 in Q2 2014Shentel-controlled channels produced 36% of gross adds in Q2 2015 and 47% in Q2 2014Q2 2015 churn of 1.40%, down from 1.60% in Q2 2014 Postpaid Churn
Billed Revenue per Customer Down; Data Usage Increasing Gross Billed Service Revenue per Postpaid User – Data & Voice 1 1 – Before Service credits, bad debt, Sprint Nextel fees.
PCS Revenues Gross Billed Revenues - Postpaid ($ millions) *
PCS Prepaid Statistics Gross Additions (000s) Cumulative Customers (000s) *The losses of customers in Q2’14 and Q2’15 largely relate to more stringent governmental requirements for customers renewing their eligibility for the government subsidized Assurance program.
PCS Prepaid Statistics Churn % Average Gross Billed Revenue
Network Statistics at 6/30/15 546 Cell Sites94% have a second LTE carrier at 800 MHz166 sites have three carriers, including a second carrier at 1900 MHzTraffic 86% of data traffic is on LTE, with 34% on 800 MHzAverage speeds of approximately 5 MbpsData usage grew 11% in Q2’15Average customer uses approximately 4.0 GB per monthDropped calls - 0.6%Blocked calls - 0.3%
Cable - RGU Growth by Quarter Customers 69,889(1) 71,302 71,298 72,192 71,469(1) RGU's/Customer 1.66 1.69 1.71 1.72 1.73 College 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 $124.32 and $147.12 for Q2 2014 and Q2 2015, respectively.
Key Operational Results – Cable* *Excludes cable operations in Shenandoah County, VA which are included in the Wireline segment.
Key Operational Results - Wireline Access line loss of 1.0% in past 12 monthsBroadband penetration in LEC area at 59.5%Total connections at 6/30/15 of 34.5 thousand5,473 video subscribers at 6/30/15 Access lines (000s) DSL Customers (000s)
Wireline and Cable Fiber Sales ($ millions) *Amounts shown represent the total contract value. Contract Terms range from 36 to 120 months. New External Fiber Lease Contracts*
Investing in the Future Capex Spending ($ millions) * Accounts payable at December 31, 2013 and 2012 included $6.5 million and $24.7 million associated with PCS Network Vision capital expenditures. 2015 Capex Budget:33% Network Capacity30% Network Maintenance20% Network Expansion17% Success-Based
Non-GAAP Financial Measures – Billed Revenue per Prepaid & Postpaid Subscriber Calculation of Billed revenue per subscriber = Gross billed revenue / Average subscribers / 3 months
Postpaid PCS Customers Top Picks Q2 2015 Top Service Plans – 54% of Gross Adds Top Devices – New Activations – All Channels Family Unlimited, Talk/Text/Data 20% Unlimited, Talk/Text 11% $50 Unlimited Plan 10% Unlimited, My Way 7% Data Share, Unlimited Talk/Text 6% iPhone 36% Samsung Galaxy S 21% LG G PadLG G3 9%7% Smartphones made up 81% of the Postpaid base in Q2’15, up from 80% in Q1’15 and 77% in Q2’14.
iPhone Statistics – Q2’15 36% of Q2 Gross Adds31% of iPhones were sold or upgraded in Shentel-controlled channels37.3% of 6/30/15 Postpaid customers had the iPhone, up from 36.5% at 3/31/15 and 31.6% at 6/30/14.iPhone Base – 6/30/1543% iPhone 5, 5C & 5S40% iPhone 6, 6 Plus17% iPhone 4 & 4S
Non-GAAP Financial Measure – Average Monthly Cable Revenue
Key Operational Results – Mobile Company Mobile Tower Revenue ($ millions) Towers and Leases