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): March 20, 2017
Shenandoah Telecommunications Company
|
(Exact name of registrant as specified in its charter)
|
Virginia
|
0-9881
|
54-1162807
|
(State or other jurisdiction of incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
500 Shentel Way
P.O. Box 459
Edinburg, VA
|
|
22824
|
(Address of principal executive offices)
|
|
(Zip Code)
|
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):
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2-(b))
|
☐ |
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 March 20, 2017, Shenandoah Telecommunications Company held its fourth quarter 2016 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.
|
99.1 |
Fourth Quarter 2016 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)
|
|
|
|
|
|
|
|
March 20, 2017 |
/s/ Adele M. Skolits
|
|
|
|
Adele M. Skolits
|
|
|
|
Vice President - Finance and
|
|
|
|
Chief Financial Officer
|
|
|
|
(Duly Authorized Officer)
|
|
March 20, 2017 4Q 2016Earnings 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
Fourth Quarter 2016 Highlights (Q4’16 v. Q4’15) Net Loss in Q4’16Net loss of $0.2 million in Q4’16 compared to net income of $12.1 million in Q4’15Adjusted OIBDA Growth Increased 89.2% to $76.0 millionRevenue Growth Increased 78.2% to $155.6 millionCustomer Growth 12/31/15 12/31/16 ChangeWireless 455,352 958,700 +503,348Cable (RGUs) 125,512 132,465 +6,953
2016 Financial Highlights Revenue ($ millions) Adjusted OIBDA ($ millions)
Wireless Highlights PCS Customers (000s) Postpaid Growth Postpaid customers up 131.2% over last 12 monthsPrepaid GrowthPrepaid customers up 65.3% over last 12 monthsAdjusted OIBDA GrowthIncreased to $63.6 million, up 133% in Q4’16 vs Q4’15
Cable Highlights Revenue GrowthOperating revenues $28.3 million, growth of 10.0% over Q4’15Q4’16 Adjusted OIBDA $9.3 million, up 13.7% from Q4’15132,465 RGUs at Q4’16, up 5.5% over Q4’15 Cable Adjusted OIBDA (in millions) Cable RGUs
Fiber and Tower Highlights Wireline and Cable fiber lease revenues of $11.3 million, up 15.3% from Q4’15196 towers generated $1.6 million of OIBDA in Q4’16 *Fiber Lease Revenue (in millions) Mobile Tower OIBDA ($ thousands) *Includes both Affiliate and Non-affiliate revenues
Annual Dividend Paid Every Year Since 1960 Dividend payment per share
Adele SkolitsVP of Finance and CFO
Profitability Consolidated Results($ in millions, except per share amounts) 12/31/15 12/31/16 Change Operating Income $ 21.7 $ 12.2 (44)% Net Income (Loss) $ 12.1 $ (0.2) (102)% Earnings (Loss) Per Share: Basic Diluted $ 0.24$ 0.24 $ (0.00) $ (0.00) (102)%(102)% For the Quarter Ended:___
Profitability Adjusted OIBDA ($ millions) (1)- As former nTelos customers migrate to Sprint, Sprint retains certain postpaid fees and passes on certain prepaid costs that offset a portion of these savings, estimated at $1.5 million in Q4’16. (1)
Growth in Adjusted OIBDA ($ thousands) Adjusted OIBDA ($ thousands) CAGR of 19.6% since 2010 *See Appendix for reconciliation of net income to adjusted earnings per share.
Adjusted OIBDA by Segment ($ millions)
Wireless Segment – Change in Adjusted OIBDA Q4’16 vs. Q4’15 ($ millions) Postpaid Revenue Prepaid Revenue Waived Mgt Fee Travel Revenue Prepaid Acquisition Other Post HS Subs & Cust Acq Nat’l HS Subsidies & Commissi-ons Network Costs Total
Cable Segment – Change in Adjusted OIBDA Q4’16 vs. Q4’15 ($ millions)
Earle MacKenzieEVP and COO
Postpaid Subscriber Growth
Postpaid Customer Additions Net Additions - Postpaid Gross Additions - Postpaid Q4’16 Legacy area churn of 1.59%, up from 1.48% in Q4’15Combined Q4 2016 churn of 2.10% Postpaid Churn
Billed Revenue per Customer Stabilizing Gross Billed Service Revenue per Postpaid User – Data & Voice (1) 1 – Before Service credits, bad debt, Sprint fees.2 – Legacy markets only (2) (2)
PCS Prepaid Statistics Gross Additions (000s) Cumulative Customers (000s) In Q4’16, customers were dropped from the prepaid customer count as a result of reducing the period of time a customer can be inactive and be included in the customer count. (1) - (1) (1)
PCS Prepaid Statistics Churn % Average Gross Billed Revenue (1) – In Q4’16, customers were dropped from the prepaid customer count as a result of reducing the period of time a customer can be inactive and be included in the customer count. (1)
Status of Network Enhancements – nTelos Footprint 148 186 220 363 Enhancement # of cell sites
Network Statistics at 12/31/16 Cell Sites Legacy New CDMA Base Stations (sites) 566 901 nTelos 3G sites still requiring upgrade 0 110 Sites with 2nd LTE carrier 545 716 Sites with three carriers, including a 2nd carrier @ 1900 MHz 217 172 Sites with 2.5 GHz LTE 130 172 Traffic % LTE traffic 96% 81% Data usage increase (Q over Q) 12.6% 10.9% Avg LTE speeds (Mbps) 5.95 6.00 Avg data usage per subscriber (Gb) 6.6 5.9 Dropped call rate 0.34% 0.52% Blocked call rate 0.15% 0.24%
Cable - RGU Growth by Quarter Customers 72,734 77,090 76,471 77,393 77,366 RGU's/Customer 1.73 1.71 1.71 1.71 1.71 Includes acquisition of Colane Cable (1/1/2016)College students disconnect during summer (2) (1)
Increasing Average Monthly Cable Revenue Average Monthly Revenue per RGU Average Monthly Revenue per Customer* *Average monthly revenue per video subscriber was $156.57 and $171.47 for Q4 2015 and Q4 2016, respectively.
Key Operational Results – Cable (1)- Excludes cable operations in Shenandoah County, VA which are included in the Wireline segment. (2)- Wireline segment includes approximately 16k homes passed, 5.3k video customers, and 1.1k cable modem customers (2)
Key Operational Results - Wireline Access line loss of 8.9% in past 12 months as a result of no longer requiring access line to purchase internet serviceEffective Q4’15, subscribers were offered a cable modem internet option up to 101 Mbps5,264 video subscribers at 12/31/16 Access lines (000s) DSL & Cable Modem Customers (000s)
Wireline and Cable Fiber Sales ($ millions) Fiber Lease Revenue New External Fiber Lease Contracts* * Amounts represent the first 10 years of contract value. Contract Terms range from 36 to 120 months.
Investing in the Future Capex Spending ($ millions) 2017 Capex Budget:57% Upgrades and Expansion of nTelos network14% Network Maintenance10% Network Expansion10% Additional Network Capacity 9% Success-Based * Accounts payable at December 31, 2016, 2015 and 2014 included $14.4 million, $5.6 million and $6.5 million associated with capital expenditures.
Non-GAAP Financial Measures – Billed Revenue per Prepaid & Postpaid Subscriber Calculation of Billed revenue per subscriber = Gross billed revenue / Average subscribers / 3 months
Non-GAAP Financial Measure – Average Monthly Cable Revenue
Key Operational Results – Mobile Company Mobile Tower Revenue ($ millions) Towers and Leases