UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM
_________________
CURRENT REPORT
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of the Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 2.02. Results of Operations and Financial Condition.
On August 6, 2019, Shenandoah Telecommunications Company (the “Company”) issued a press release announcing its financial position as of June 30, 2019, results of operations for the three and six months ended June 30, 2019, and other related information. The Company also posted supplemental earnings presentation materials on the investor section of the Company’s website at www.Shentel.com. A copy of the press release is furnished as Exhibit 99.1 and is incorporated herein by reference.
These materials may contain forward-looking statements about Shenandoah Telecommunications Company 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 Company 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.
(d) Exhibits
The following exhibit is furnished with this Current Report on Form 8-K.
99.1* Second Quarter 2019 Earnings Press Release
* Furnished herewith
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 hereunto duly authorized.
| SHENANDOAH TELECOMMUNICATIONS COMPANY | ||
| Date: August 6, 2019 | By: | /s/ James J. Volk |
| James J. Volk | ||
| Senior Vice President - Chief Financial Officer | ||
| (Principal Financial Officer) | ||
EXHIBIT 99.1
Shenandoah Telecommunications Company Reports Second Quarter 2019 Results
EDINBURG, Va., Aug. 06, 2019 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel”) (NASDAQ: SHEN) announced solid second quarter results.
Second Quarter 2019 Highlights
· Consolidated operating revenue grew 1.5% to $158.9 million.
· Consolidated Adjusted OIBDA(1) grew 5.2% to $67.0 million with growth in all segments.
· Consolidated operating income grew 13.5% to $24.0 million.
· Diluted earnings per share grew 36.4% to $0.26 per share compared with $0.19 per share in second quarter 2018.
· Wireless postpaid net additions of 10,767.
"Our second quarter results demonstrate continued strength of our high quality networks and operations highlighted by growth in Adjusted OIBDA across all of our business segments," said President and CEO Christopher E. French. "Shentel continued to achieve growth in both our postpaid and prepaid wireless customer base, as we capitalized on the investments we've made in our network to solidify our leadership role providing the highest reliability and broadest coverage in the markets we serve. Our Cable segment benefited from the successful integration of Big Sandy Broadband ("Big Sandy"), the DOCSIS 3.1 upgrade and new pricing introduced earlier in the year that led to bandwidth speed upgrades and growing customer ARPU. We continue to leverage our strong balance sheet and cash flow generation to make targeted investments to position the Company for strong growth for the next several years."
Please refer to our Second Quarter 2019 Earnings Presentation Supplement available at https://investor.shentel.com/ for additional information, including matters that will be referenced during the Company’s conference call. Included in this release are certain non-GAAP financial measures that are not determined in accordance with U.S. generally accepted accounting principles. Please refer to additional information for non-GAAP measures provided herein.
Consolidated Second Quarter 2019 Results
- Operating revenue in the second quarter of 2019 was $158.9 million, representing an increase of 1.5% from $156.5 million in the second quarter of 2018 driven by growth in the Cable and Wireline segments.
- Operating expenses for the second quarter of 2019 were $134.9 million, representing a decrease of 0.3% from $135.3 million in the second quarter of 2018. The decrease was primarily due to a decline in selling, general and administrative expenses in our Wireless and Other segments.
- Operating income for the second quarter 2019 was $24.0 million, representing an increase of 13.5% from $21.2 million in the second quarter of 2018.
- Adjusted OIBDA(1) in the second quarter of 2019 was $67.0 million, representing an increase of 5.2% from $63.7 million in the second quarter of 2018. The increase was driven by revenue growth in Cable and Wireline and lower transactional tax and professional fee expenses in the Wireless and Other segments.
- Net income in the second quarter of 2019 was $13.2 million, representing an increase of 36.6% from $9.6 million in the second quarter of 2018.
Wireless
- Shentel's network served 811,719 wireless postpaid subscribers at June 30, 2019, an increase of 4.0% compared with 780,658 subscribers as of June 30, 2018. Second quarter 2019 postpaid churn was 1.74%. At June 30, 2019, tablets and data devices represented 10.4% of the postpaid base.
- Shentel's network served 269,039 wireless prepaid subscribers at June 30, 2019, an increase of 6.7% compared with 252,054 subscribers as of June 30, 2018. Second quarter 2019 prepaid churn was 3.97%, representing an improvement of 28 basis points compared with the prior year.
- Wireless operating revenue decreased 0.5% to $114.1 million for the second quarter of 2019 from $114.8 million in the second quarter of 2018. Travel revenue declined $3.0 million during the second quarter of 2019 due to the suspension by Sprint of travel revenue payments. The travel revenue decline was substantially offset by increases in subscriber service revenue of $0.9 million, in equipment revenue of $0.7 million, and in roaming revenue of $0.5 million.
- Under our Sprint affiliate agreement, Shentel and Sprint compensate one another when subscribers use the other company's network. This has been reflected in a net monthly payment of $1.5 million from Sprint to Shentel for the period beginning at the closing of the Ntelos transaction in 2016 through April of 2019. Sprint suspended the monthly payments beginning in May 2019 pending agreement on new travel fees. Under our affiliate agreement with Sprint, the travel fees are to be reset for a three year period. Although we have been working with Sprint to establish the new fees, we have not reached an agreement and have begun the escalation process as outlined in our affiliate agreement. We expect to resolve the new travel fees in the third quarter 2019.
- Wireless operating expenses in the second quarter of 2019 were $92.1 million, representing a decrease of 0.4% from $92.5 million in the second quarter of 2018. This decrease was primarily due to a $1.8 million decline in selling, general and administrative expenses due to reductions in transactional tax expenses, partially offset by increases of $0.7 million in cost of goods sold and $0.7 million in depreciation expense.
- Wireless operating income in the second quarter of 2019 was $22.0 million, compared to $22.3 million for the second quarter of 2018.
- Wireless Adjusted OIBDA(1) in the second quarter of 2019 was $54.2 million, compared to $53.8 million for the second quarter of 2018.
Cable
- Total Revenue Generating Units ("RGUs") as of June 30, 2019 were 138,572, representing an increase of 4.1% and includes the addition of approximately 4,800 RGUs obtained through the Big Sandy acquisition that occurred in the first quarter of 2019.
- Cable operating revenue for the second quarter of 2019 was $34.7 million, representing an increase of 8.0% from $32.1 million in the second quarter of 2018. The increase was primarily attributable to a full quarter of Big Sandy results and growth in average revenue per customer ("ARPU") as broadband customers upgraded to higher-speed data access packages and an increase in video rates.
- Cable operating expenses in the second quarter of 2019 were $27.9 million, representing an increase of 7.2% from $26.0 million for the second quarter of 2018. The increase was primarily due to higher repair and maintenance expense associated with maintaining our growing network and an increase in business development expenses aimed at expanding our product portfolio.
- Cable operating income for the second quarter of 2019 was $6.8 million, representing an increase of 11.6% from $6.1 million for the second quarter of 2018.
- Cable Adjusted OIBDA for the second quarter of 2019 was $13.3 million, representing an increase of 8.8% from $12.3 million for the second quarter of 2018.
Wireline
- Wireline operating revenue for the second quarter of 2019 was $19.5 million, representing an increase of 2.2% from $19.1 million in the second quarter of 2018. The increase in operating revenue was primarily attributable to the timing of receiving regulatory support funds.
- Wireline operating expenses in the second quarter of 2019 were $14.4 million, consistent with operating expenses in the second quarter of 2018.
- Wireline operating income for the second quarter of 2019 was $5.1 million, representing an increase of 6.3% from $4.8 million in the second quarter of 2018.
- Wireline Adjusted OIBDA for the second quarter of 2019 was $8.5 million, representing an increase of 6.3% from $8.0 million in the second quarter of 2018.
| (1) | The calculation and presentation of Adjusted OIBDA was changed to conform to industry practices. Please refer to non-GAAP Financial Measures for the reconciliation from operating income and the current reported definition to the prior reported definition. |
Other Information
- Capital expenditures were $79.1 million for the six months ended June 30, 2019 compared with $62.3 million in the comparable 2018 period. We are increasing our capital expenditures guidance for 2019 from $150 million to $170 million to reflect the acquisition of 2.5 GHz spectrum that we plan to use to increase the reach of our residential broadband service via fixed wireless in the underserved areas of our markets.
- Outstanding debt at June 30, 2019 totaled $760.5 million compared with $785.2 million as of December 31, 2018. As of June 30, 2019, the Company had liquidity of approximately $173.1 million, including $75.0 million of revolving line of credit availability.
Conference Call and Webcast
Teleconference Information:
Date: August 6, 2019
Time: 10:00 A.M. (ET)
Dial in number: 1-888-695-7639
Password: 7559363
Audio webcast: http://investor.shentel.com/
An audio replay of the call will be available approximately two hours after the call is complete, through September 6, 2019 by calling (855) 859-2056.
About Shenandoah Telecommunications
Shenandoah Telecommunications Company (Shentel) provides a broad range of diversified communications services through its high speed, state-of-the-art network to customers in the Mid-Atlantic United States. The Company’s services include: wireless voice and data; cable video, internet and digital voice; fiber network and services; and regulated local and long distance telephone. Shentel is the exclusive personal communications service (“PCS”) Affiliate of Sprint in a multi-state area covering large portions of central and western Virginia, south-central Pennsylvania, West Virginia, and portions of Maryland, North Carolina, Kentucky, and Ohio. For more information, please visit www.shentel.com.
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’s filings with the SEC. Those factors may include changes in general economic conditions, increases in costs, changes in regulation and other competitive factors.
CONTACTS:
Shenandoah Telecommunications Company
Jim Volk
Senior Vice President - Chief Financial Officer
540-984-5168
Jim.Volk@emp.shentel.com
Or
John Nesbett/Jennifer Belodeau
IMS Investor Relations
203-972-9200
jnesbett@institutionalms.com
| SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | |||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Operating revenue: | |||||||||||||||
| Service revenue and other | $ | 142,059 | $ | 140,492 | $ | 285,290 | $ | 277,051 | |||||||
| Equipment revenue | 16,855 | 16,009 | 32,467 | 33,588 | |||||||||||
| Total operating revenue | 158,914 | 156,501 | 317,757 | 310,639 | |||||||||||
| Operating expenses: | |||||||||||||||
| Cost of services | 49,497 | 49,134 | 99,015 | 98,476 | |||||||||||
| Cost of goods sold | 15,874 | 15,166 | 30,511 | 30,971 | |||||||||||
| Selling, general and administrative | 27,170 | 29,915 | 55,892 | 58,665 | |||||||||||
| Depreciation and amortization | 42,353 | 41,117 | 83,532 | 84,604 | |||||||||||
| Total operating expenses | 134,894 | 135,332 | 268,950 | 272,716 | |||||||||||
| Operating income | 24,020 | 21,169 | 48,807 | 37,923 | |||||||||||
| Other income (expense): | |||||||||||||||
| Interest expense | (7,522 | ) | (8,851 | ) | (15,476 | ) | (18,183 | ) | |||||||
| Other | 1,176 | 839 | 2,463 | 1,828 | |||||||||||
| Income before income taxes | 17,674 | 13,157 | 35,794 | 21,568 | |||||||||||
| Income tax expense | 4,524 | 3,531 | 8,734 | 5,359 | |||||||||||
| Net income | $ | 13,150 | $ | 9,626 | $ | 27,060 | $ | 16,209 | |||||||
| Net income per share, basic and diluted: | |||||||||||||||
| Basic net income per share | $ | 0.26 | $ | 0.19 | $ | 0.54 | $ | 0.33 | |||||||
| Diluted net income per share | $ | 0.26 | $ | 0.19 | $ | 0.54 | $ | 0.32 | |||||||
| Weighted average shares outstanding, basic | 49,848 | 49,547 | 49,812 | 49,511 | |||||||||||
| Weighted average shares outstanding, diluted | 50,142 | 50,070 | 50,118 | 50,029 | |||||||||||
| SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | |||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (in thousands) | |||||||
| June 30, 2019 | December 31, 2018 | ||||||
| Cash and cash equivalents | $ | 98,091 | $ | 85,086 | |||
| Other current assets | 124,057 | 125,116 | |||||
| Total current assets | 222,148 | 210,202 | |||||
| Investments | 11,563 | 10,788 | |||||
| Property, plant and equipment, net | 695,725 | 701,359 | |||||
| Intangible assets, net | 324,890 | 366,029 | |||||
| Goodwill | 149,070 | 146,497 | |||||
| Operating lease right-of-use assets | 369,715 | — | |||||
| Deferred charges and other assets | 48,929 | 49,891 | |||||
| Total assets | $ | 1,822,040 | $ | 1,484,766 | |||
| Total current liabilities | $ | 127,781 | $ | 88,539 | |||
| Long-term debt, less current maturities | 719,067 | 749,624 | |||||
| Other liabilities | 513,143 | 204,356 | |||||
| Total shareholders’ equity | 462,049 | 442,247 | |||||
| Total liabilities and shareholders’ equity | $ | 1,822,040 | $ | 1,484,766 | |||
| SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | |||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (in thousands) | |||||||||||
| Six Months Ended June 30, | |||||||||||
| 2019 | 2018 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 27,060 | $ | 16,209 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation | 72,737 | 71,637 | |||||||||
| Amortization | 10,795 | 12,967 | |||||||||
| Accretion of asset retirement obligations | 708 | 471 | |||||||||
| Bad debt expense | 764 | 758 | |||||||||
| Stock based compensation expense, net of amount capitalized | 2,307 | 3,407 | |||||||||
| Deferred income taxes | 3,434 | (8,004 | ) | ||||||||
| Other adjustments | (433 | ) | 789 | ||||||||
| Changes in assets and liabilities | 12,260 | 28,910 | |||||||||
| Net cash provided by operating activities | 129,632 | 127,144 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Acquisition of property, plant and equipment | (79,124 | ) | (62,322 | ) | |||||||
| Cash disbursed for acquisition, net of cash acquired | (10,000 | ) | (52,000 | ) | |||||||
| Proceeds from sale of assets | 108 | 447 | |||||||||
| Other | (3 | ) | (3 | ) | |||||||
| Net cash used in investing activities | (89,019 | ) | (113,878 | ) | |||||||
| Cash flows from financing activities: | |||||||||||
| Principal payments on long-term debt | (24,777 | ) | (24,250 | ) | |||||||
| Proceeds from revolving credit facility borrowings | — | 15,000 | |||||||||
| Principal payments on revolving credit facility | — | (15,000 | ) | ||||||||
| Proceeds from exercises of stock option | 81 | — | |||||||||
| Taxes paid for equity award issuances | (2,912 | ) | (2,032 | ) | |||||||
| Net cash used in financing activities | (27,608 | ) | (26,282 | ) | |||||||
| Net increase (decrease) in cash and cash equivalents | 13,005 | (13,016 | ) | ||||||||
| Cash and cash equivalents, beginning of period | 85,086 | 78,585 | |||||||||
| Cash and cash equivalents, end of period | $ | 98,091 | $ | 65,569 | |||||||
Non-GAAP Financial Measures
Adjusted OIBDA
Adjusted OIBDA represents Operating income before depreciation, amortization, stock-based compensation and certain other items of revenue, expense, gain or loss not reflective of our operating performance, which may or may not be recurring in nature.
Adjusted OIBDA is a non-GAAP financial measure that we use to evaluate our operating performance in comparison to our competitors. Management believes that analysts and investors use Adjusted OIBDA as a supplemental measure of operating performance to facilitate comparisons with other telecommunications companies. This measure isolates and evaluates operating performance by excluding the cost of financing (e.g., interest expense), as well as the non-cash depreciation and amortization of past capital investments, non-cash share-based compensation expense, and certain other items of revenue, expense, gain or loss not reflective of our operating performance, which may or may not be recurring in nature.
During Q2 2019, we modified our definition of Adjusted OIBDA to exclude the benefit received from the waived management fee and non-cash amortization of deferred contract costs, as well as certain other immaterial items. This change enhances the comparability of our non-GAAP performance measure with similar performance measures reported by comparable companies in our industry. We have applied this change consistently to all comparable periods presented below.
Adjusted OIBDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for income from operations, net income or any other measure of financial performance reported in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).
The following tables reconcile Adjusted OIBDA to operating income, which we consider to be the most directly comparable GAAP financial measure:
Adjusted OIBDA
| Three Months Ended June 30, 2019 | ||||||||||||||||||||||||||||
| (in thousands) | Wireless | Cable | Wireline | Other | Consolidated | |||||||||||||||||||||||
| Operating income | $ | 22,024 | $ | 6,786 | $ | 5,094 | $ | (9,884 | ) | $ | 24,020 | |||||||||||||||||
| Depreciation and amortization | 32,219 | 6,555 | 3,447 | 132 | 42,353 | |||||||||||||||||||||||
| OIBDA | 54,243 | 13,341 | 8,541 | (9,752 | ) | 66,373 | ||||||||||||||||||||||
| Share-based compensation expense | — | — | — | 593 | 593 | |||||||||||||||||||||||
| Adjusted OIBDA | $ | 54,243 | $ | 13,341 | $ | 8,541 | $ | (9,159 | ) | $ | 66,966 | |||||||||||||||||
| Total operating revenue | $ | 114,140 | $ | 34,690 | $ | 19,527 | (9,443 | ) | $ | 158,914 | ||||||||||||||||||
| Adjusted OIBDA margin | 47.5 | % | 38.5 | % | 43.7 | % | N/A | 42.1 | % | |||||||||||||||||||
During Q2 2019, we modified our definition of Adjusted OIBDA to exclude the benefit received from the waived management fee and non-cash amortization of deferred contract costs, as well as certain other immaterial items. This change enhances the comparability of our non-GAAP performance measure with similar performance measures reported by comparable companies in our industry. In the table below, we demonstrate how our new definition of Adjusted OIBDA reconciles to how we previously reported Adjusted OIBDA.
| (in thousands) | Wireless | Cable | Wireline | Other | Consolidated | |||||||||||||||||
| Adjusted OIBDA from above | $ | 54,243 | $ | 13,341 | $ | 8,541 | $ | (9,159 | ) | $ | 66,966 | |||||||||||
| Non-cash amortization of deferred contract costs | (3,903 | ) | (32 | ) | (51 | ) | 2 | (3,984 | ) | |||||||||||||
| Benefit received from the waived management fee | 9,692 | — | — | — | 9,692 | |||||||||||||||||
| Other | (19 | ) | 3 | — | 326 | 310 | ||||||||||||||||
| Adjusted OIBDA as previously reported | $ | 60,013 | $ | 13,312 | $ | 8,490 | $ | (8,831 | ) | $ | 72,984 | |||||||||||
| Three Months Ended June 30, 2018 | ||||||||||||||||||||
| (in thousands) | Wireless | Cable | Wireline | Other | Consolidated | |||||||||||||||
| Operating income | $ | 22,251 | $ | 6,083 | $ | 4,793 | $ | (11,958 | ) | $ | 21,169 | |||||||||
| Depreciation and amortization | 31,565 | 6,179 | 3,240 | 133 | 41,117 | |||||||||||||||
| OIBDA | 53,816 | 12,262 | 8,033 | (11,825 | ) | 62,286 | ||||||||||||||
| Share-based compensation expense | — | — | — | 1,370 | 1,370 | |||||||||||||||
| Adjusted OIBDA | $ | 53,816 | $ | 12,262 | $ | 8,033 | $ | (10,455 | ) | $ | 63,656 | |||||||||
| Total operating revenue | $ | 114,753 | $ | 32,111 | $ | 19,112 | (9,475 | ) | $ | 156,501 | ||||||||||
| Adjusted OIBDA margin | 46.9 | % | 38.2 | % | 42.0 | % | N/A | 40.7 | % | |||||||||||
In the table below, we demonstrate how our new definition of Adjusted OIBDA reconciles to how we previously reported Adjusted OIBDA.
| (in thousands) | Wireless | Cable | Wireline | Other | Consolidated | |||||||||||||||||||||||||
| Adjusted OIBDA from above | $ | 53,816 | $ | 12,262 | $ | 8,033 | $ | (10,455 | ) | $ | 63,656 | |||||||||||||||||||
| Non-cash amortization of deferred contract costs | (3,394 | ) | (26 | ) | (27 | ) | — | (3,447 | ) | |||||||||||||||||||||
| Benefit received from the waived management fee | 9,558 | — | — | — | 9,558 | |||||||||||||||||||||||||
| Other | 94 | — | — | (83 | ) | 11 | ||||||||||||||||||||||||
| Adjusted OIBDA as previously reported | $ | 60,074 | $ | 12,236 | $ | 8,006 | $ | (10,538 | ) | $ | 69,778 | |||||||||||||||||||
| Six Months Ended June 30, 2019 | ||||||||||||||||||||
| (in thousands) | Wireless | Cable | Wireline | Other | Consolidated | |||||||||||||||
| Operating Income | $ | 47,361 | $ | 12,489 | $ | 9,440 | $ | (20,483 | ) | $ | 48,807 | |||||||||
| Depreciation and amortization | 63,269 | 13,013 | 6,980 | 270 | 83,532 | |||||||||||||||
| OIBDA | 110,630 | 25,502 | 16,420 | (20,213 | ) | 132,339 | ||||||||||||||
| Share-based compensation expense | — | — | — | 2,307 | 2,307 | |||||||||||||||
| Adjusted OIBDA | $ | 110,630 | $ | 25,502 | $ | 16,420 | $ | (17,906 | ) | $ | 134,646 | |||||||||
| Total operating revenue | $ | 229,794 | $ | 68,399 | $ | 38,436 | (18,872 | ) | $ | 317,757 | ||||||||||
| Adjusted OIBDA margin | 48.1 | % | 37.3 | % | 42.7 | % | N/A | 42.4 | % | |||||||||||
In the table below, we demonstrate how our new definition of Adjusted OIBDA reconciles to how we previously reported Adjusted OIBDA.
| (in thousands) | Wireless | Cable | Wireline | Other | Consolidated | |||||||||||||||
| Adjusted OIBDA from above | $ | 110,630 | $ | 25,502 | $ | 16,420 | $ | (17,906 | ) | $ | 134,646 | |||||||||
| Non-cash amortization of deferred contract costs | (8,114 | ) | (269 | ) | (115 | ) | — | (8,498 | ) | |||||||||||
| Benefit received from the waived management fee | 19,320 | — | — | — | 19,320 | |||||||||||||||
| Other | — | 139 | — | 353 | 492 | |||||||||||||||
| Adjusted OIBDA as previously reported | $ | 121,836 | $ | 25,372 | $ | 16,305 | $ | (17,553 | ) | $ | 145,960 | |||||||||
| Six Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||
| (in thousands) | Wireless | Cable | Wireline | Other | Consolidated | |||||||||||||||||||||||||
| Operating income | $ | 39,518 | $ | 11,610 | $ | 9,565 | $ | (22,770 | ) | $ | 37,923 | |||||||||||||||||||
| Depreciation and amortization | 65,490 | 12,203 | 6,634 | 277 | 84,604 | |||||||||||||||||||||||||
| OIBDA | 105,008 | 23,813 | 16,199 | (22,493 | ) | 122,527 | ||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | 3,407 | 3,407 | |||||||||||||||||||||||||
| Adjusted OIBDA | $ | 105,008 | $ | 23,813 | $ | 16,199 | $ | (19,086 | ) | $ | 125,934 | |||||||||||||||||||
| Total operating revenue | $ | 227,557 | $ | 63,822 | $ | 38,819 | (19,559 | ) | $ | 310,639 | ||||||||||||||||||||
| Adjusted OIBDA margin | 46.1 | % | 37.3 | % | 41.7 | % | N/A | 40.5 | % | |||||||||||||||||||||
In the table below, we demonstrate how our new definition of Adjusted OIBDA reconciles to how we previously reported Adjusted OIBDA.
| (in thousands) | Wireless | Cable | Wireline | Other | Consolidated | |||||||||||||||
| Adjusted OIBDA from above | $ | 105,008 | $ | 23,813 | $ | 16,199 | $ | (19,086 | ) | $ | 125,934 | |||||||||
| Non-cash amortization of deferred contract costs | (6,154 | ) | 115 | (62 | ) | — | (6,101 | ) | ||||||||||||
| Benefit received from the waived management fee | 18,606 | — | — | — | 18,606 | |||||||||||||||
| Other | 175 | — | — | (165 | ) | 10 | ||||||||||||||
| Adjusted OIBDA as previously reported | $ | 117,635 | $ | 23,928 | $ | 16,137 | $ | (19,251 | ) | $ | 138,449 | |||||||||
Segment Results
| Three Months Ended June 30, 2019 | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | Wireless | Cable | Wireline | Other | Eliminations | Consolidated | ||||||||||||||||||||||||||||||||||
| External revenue | ||||||||||||||||||||||||||||||||||||||||
| Service revenue | $ | 94,350 | $ | 30,716 | $ | 5,558 | $ | — | $ | — | $ | 130,624 | ||||||||||||||||||||||||||||
| Equipment revenue | 16,548 | 255 | 52 | — | — | 16,855 | ||||||||||||||||||||||||||||||||||
| Tower revenue | 1,654 | — | — | — | — | 1,654 | ||||||||||||||||||||||||||||||||||
| Other revenue | 318 | 2,238 | 7,225 | — | — | 9,781 | ||||||||||||||||||||||||||||||||||
| Total external revenue | 112,870 | 33,209 | 12,835 | — | — | 158,914 | ||||||||||||||||||||||||||||||||||
| Internal revenue | 1,270 | 1,481 | 6,692 | — | (9,443 | ) | — | |||||||||||||||||||||||||||||||||
| Total operating revenue | 114,140 | 34,690 | 19,527 | — | (9,443 | ) | 158,914 | |||||||||||||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||||||||||||||
| Cost of services | 33,563 | 15,701 | 8,979 | — | (8,746 | ) | 49,497 | |||||||||||||||||||||||||||||||||
| Cost of goods sold | 15,742 | 112 | 19 | — | 1 | 15,874 | ||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 10,592 | 5,536 | 1,988 | 9,752 | (698 | ) | 27,170 | |||||||||||||||||||||||||||||||||
| Depreciation and amortization | 32,219 | 6,555 | 3,447 | 132 | — | 42,353 | ||||||||||||||||||||||||||||||||||
| Total operating expenses | 92,116 | 27,904 | 14,433 | 9,884 | (9,443 | ) | 134,894 | |||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | 22,024 | $ | 6,786 | $ | 5,094 | $ | (9,884 | ) | $ | — | $ | 24,020 | |||||||||||||||||||||||||||
| Three Months Ended June 30, 2018 | ||||||||||||||||||||||||||||||||||||||||
| (in thousands) | Wireless | Cable | Wireline | Other | Eliminations | Consolidated | ||||||||||||||||||||||||||||||||||
| External revenue | ||||||||||||||||||||||||||||||||||||||||
| Service revenue | $ | 95,690 | $ | 28,748 | $ | 5,301 | $ | — | $ | — | $ | 129,739 | ||||||||||||||||||||||||||||
| Equipment revenue | 15,819 | 144 | 46 | — | — | 16,009 | ||||||||||||||||||||||||||||||||||
| Tower revenue | 1,636 | — | — | — | — | 1,636 | ||||||||||||||||||||||||||||||||||
| Other revenue | 364 | 2,122 | 6,631 | — | — | 9,117 | ||||||||||||||||||||||||||||||||||
| Total external revenue | 113,509 | 31,014 | 11,978 | — | — | 156,501 | ||||||||||||||||||||||||||||||||||
| Internal revenue | 1,244 | 1,097 | 7,134 | — | (9,475 | ) | — | |||||||||||||||||||||||||||||||||
| Total operating revenue | 114,753 | 32,111 | 19,112 | — | (9,475 | ) | 156,501 | |||||||||||||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||||||||||||||
| Cost of services | 33,488 | 15,125 | 9,373 | 12 | (8,864 | ) | 49,134 | |||||||||||||||||||||||||||||||||
| Cost of goods sold | 15,082 | 63 | 20 | 1 | — | 15,166 | ||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 12,367 | 4,661 | 1,686 | 11,812 | (611 | ) | 29,915 | |||||||||||||||||||||||||||||||||
| Depreciation and amortization | 31,565 | 6,179 | 3,240 | 133 | — | 41,117 | ||||||||||||||||||||||||||||||||||
| Total operating expenses | 92,502 | 26,028 | 14,319 | 11,958 | (9,475 | ) | 135,332 | |||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | 22,251 | $ | 6,083 | $ | 4,793 | $ | (11,958 | ) | $ | — | $ | 21,169 | |||||||||||||||||||||||||||
Supplemental Information
Subscriber Statistics
The following tables indicate selected operating statistics of Wireless, including Sprint subscribers:
| June 30, 2019 (4) | June 30, 2018 (4) | |||||||
| Retail PCS subscribers - postpaid | 811,719 | 780,658 | ||||||
| Retail PCS subscribers - prepaid | 269,039 | 252,054 | ||||||
| PCS market POPS (000) (1) | 7,227 | 7,023 | ||||||
| PCS covered POPS (000) (1) | 6,285 | 5,908 | ||||||
| CDMA base stations (sites) | 1,910 | 1,770 | ||||||
| Towers owned | 217 | 193 | ||||||
| Cell site leases | 200 | 192 | ||||||
| Three Months Ended June 30, | |||||||||||
| 2019 | 2018 | ||||||||||
| Gross PCS subscriber additions - postpaid | 52,799 | 44,629 | |||||||||
| Net PCS subscriber additions - postpaid (2) | 10,767 | 5,797 | |||||||||
| Gross PCS subscriber additions - prepaid | 33,753 | 33,840 | |||||||||
| Net PCS subscriber additions - prepaid (3) | 1,819 | 1,863 | |||||||||
| PCS average monthly retail churn % - postpaid | 1.74 | % | 1.67 | % | |||||||
| PCS average monthly retail churn % - prepaid | 3.97 | % | 4.25 | % | |||||||
_______________________________________________________
- "POPS" refers to the estimated population of a given geographic area. Market POPS are those within a market area which we are authorized to serve under our Sprint PCS affiliate agreement, and Covered POPS are those covered by our network. The data source for POPS is U.S. census data.
- For the six months ended June 30, 2018 Net PCS subscriber additions - postpaid were 5,718 excluding the acquisition of the expansion area on February 1, 2018.
- For the six months ended June 30, 2018 Net PCS subscriber additions - prepaid were 10,541 excluding the acquisition of the expansion area on February 1, 2018.
- Beginning February 1, 2018 includes Richmond Expansion Area except for gross PCS subscriber additions.
The subscriber stats above, excluding gross additions, include the Richmond Expansion Area as follows:
| February 1, 2018 | ||||
| Expansion Area | ||||
| PCS subscribers - postpaid | 38,343 | |||
| PCS subscribers - prepaid | 15,691 | |||
| Acquired PCS market POPS (000) | 1,082 | |||
| Acquired PCS covered POPS (000) | 602 | |||
| Acquired CDMA base stations (sites) | 105 | |||
The following table indicates selected operating statistics of Cable:
| June 30, 2019 | June 30, 2018 | |||||||
| Homes passed (1) | 189,762 | 185,016 | ||||||
| Customer relationships (2) | ||||||||
| Video users | 40,497 | 42,483 | ||||||
| Non-video customers | 43,024 | 35,773 | ||||||
| Total customer relationships | 83,521 | 78,256 | ||||||
| Video | ||||||||
| Customers (3) | 42,874 | 44,800 | ||||||
| Penetration (4) | 22.6 | % | 24.2 | % | ||||
| Digital video penetration (5) | 90.3 | % | 76.9 | % | ||||
| Broadband | ||||||||
| Users (3) | 71,893 | 65,466 | ||||||
| Penetration (4) | 37.9 | % | 35.4 | % | ||||
| Voice | ||||||||
| Users (3) | 23,805 | 22,882 | ||||||
| Penetration (4) | 12.5 | % | 12.4 | % | ||||
| Total revenue generating units (6) | 138,572 | 133,148 | ||||||
| Fiber route miles | 3,657 | 3,426 | ||||||
| Total fiber miles (7) | 143,762 | 133,702 | ||||||
| Average revenue generating units | 138,016 | 132,287 | ||||||
_______________________________________________________
- Homes and businesses are considered passed (“homes passed”) if we can connect them to our distribution system without further extending the transmission lines. Homes passed is an estimate based upon the best available information. Homes passed have access to video, broadband and voice services.
- Customer relationships represent the number of billed customers who receive at least one of our services.
- Generally, a dwelling or commercial unit with one or more television sets connected to our distribution system counts as one video customer. Where services are provided on a bulk basis for video, broadband, or voice services, such as to hotels and some multi-dwelling units, the revenue charged to the customer is divided by the rate for comparable service in the local market to determine the number of customer equivalents included in the customer counts shown above.
- Penetration is calculated by dividing the number of users by the number of homes passed or available homes, as appropriate.
- Digital video penetration is calculated by dividing the number of digital video users by total video users. Digital video users are video customers who receive any level of video service via digital transmission. A dwelling with one or more digital set-top boxes or digital adapters counts as one digital video user.
- Revenue generating units are the sum of video, voice and broadband users.
- Total fiber miles are measured by taking the number of fiber strands in a cable and multiplying that number by the route distance. For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles.
The following table includes selected operating statistics of the Wireline operations:
| June 30, 2019 | June 30, 2018 | |||||||
| Long distance subscribers | 9,461 | 8,930 | ||||||
| Video customers (1) | 4,520 | 4,850 | ||||||
| Broadband customers | 14,643 | 14,694 | ||||||
| Fiber route miles | 2,176 | 2,099 | ||||||
| Total fiber miles (2) | 163,363 | 157,008 | ||||||
_______________________________________________________
- Wireline’s video service passes approximately 16,500 homes.
- Fiber miles are measured by taking the number of fiber strands in a cable and multiplying that number by the route distance. For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles.