Shenandoah Telecommunications Company (“Shentel”) (NASDAQ: SHEN)
announced third quarter results, an increase in its cash dividend,
a share repurchase program, and commencement of its Fiber to the
Home service.
Highlights
- Free cash flow of $35.9 million in the third quarter 2019 and
$86.4 million for year to date 2019.
- Record third quarter Wireless postpaid net additions of
11,698.
- Dividend to increase 7.4% to $0.29 per share representing the
7th consecutive year of an annual increase.
- Authorization of $80 million for a share repurchase
program.
- Launch of Fiber to the Home ("FTTH") business with initiation
of Glo Fiber service in Harrisonburg, Virginia.
"Our company’s growth was led by record net additions of
Wireless postpaid services in the quarter. The commencement of Glo
Fiber service in Harrisonburg reflects the start of our latest
growth initiative as we continue to expand our footprint and
service offerings,” said President and CEO Christopher E. French.
“We continue to generate strong free cash flow, which along with
our solid operating results, enables us to return value to our
shareholders with both an increase in our cash dividend and
initiation of a share repurchase program. The continuing
dispute over the travel fee with Sprint caused uneven
financial results, but we have triggered the dispute resolution
process with Sprint which we expect will lead to a resolution by
early 2020."
Please refer to
our Third 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 Third Quarter 2019
Results
- Operating revenue in the third quarter of 2019 was $155.2
million compared with $158.7 million in the third quarter of 2018
driven by continued dispute of the travel fee with Sprint in the
Wireless segment, partially offset by growth in the Cable
segment.
- Adjusted OIBDA in the third quarter of 2019 was $62.8 million
compared with $69.5 million in the third quarter of 2018 due to a
decline in the Wireless segment.
- Operating income for the third quarter 2019 was $25.4 million
compared with $28.3 million in the third quarter of 2018.
- Net income in the third quarter of 2019 was $14.4 million or
$0.29 per diluted share compared with $15.5 million or $0.31 per
diluted share in the third quarter of 2018.
Wireless
- Shentel's network served 823,417 wireless postpaid subscribers
at September 30, 2019, representing an increase of 4.8%
compared with 785,537 subscribers as of September 30,
2018. Third quarter 2019 postpaid gross adds increased 25.7%
to 60,477 and churn increased 15 basis points to 1.99% compared to
third quarter 2018. At September 30, 2019, tablets and
data devices represented 11.0% of the postpaid base.
- Shentel's network served 271,551 wireless prepaid subscribers
at September 30, 2019, representing an increase of 6.3%
compared with 255,462 subscribers as of September 30, 2018.
Third quarter 2019 prepaid churn was 4.38%, representing an
improvement of 24 basis points compared with the prior year.
- Wireless operating revenue decreased $5.7 million to $110.4
million for the third quarter of 2019 from $116.1 million in the
third quarter of 2018. Sprint travel Revenue declined $4.5 million
due to the continuing dispute over the resetting of the travel
fee. Subscriber revenue declined $1.1 million from the third
quarter 2018 due to a combination of higher contract asset
amortization from higher gross adds over the past year, reduced
variable revenue resulting from increased bad debt write-offs in
the West Virginia market, lower postpaid Average Revenue Per User
("ARPU") of $1.67, partially offset by an increase of 37,880
postpaid subscribers.
- Wireless operating expenses in the third quarter of 2019 were
$86.7 million compared to $88.7 million in the third quarter of
2018. This decrease was primarily due to a $3.2 million decline in
depreciation and amortization expense as certain assets acquired
from nTelos became fully depreciated and $1.7 million in lower
advertising, offset by $2.8 million in higher tower rents due to an
increase of 132 cell sites in our network.
- Wireless Adjusted OIBDA in the third quarter of 2019 was
$50.9 million, compared with $57.7 million for the third quarter of
2018.
- Wireless operating income in the third quarter of 2019 was
$23.7 million, compared with $27.4 million for the third quarter of
2018.
Cable
- Total Revenue Generating Units ("RGUs") as of
September 30, 2019 were 150,191, representing an increase of
3% and includes the addition of approximately 4,800 RGUs obtained
through the Big Sandy acquisition that occurred in the first
quarter of 2019. Please note that we have changed the
computation of bulk RGUs to conform to industry standards.
Revised RGUs for current and past periods are presented in the
supplemental information in this earnings release.
- Cable operating revenue for the third quarter of 2019 was $35.1
million, representing an increase of 9.1% from $32.2 million in the
third quarter of 2018. The increase was primarily attributable to a
full quarter of results from the Big Sandy acquisition and growth
in ARPU from an increase in video rates.
- Cable operating expenses in the third quarter of 2019 were
$28.8 million, representing an increase of 9.3% from $26.3 million
for the third quarter of 2018. The increase was primarily due to
$0.8 million of expenses incurred that were associated with
starting our FTTH product offering, higher repair and maintenance
expenses of $0.8 million associated with maintaining our growing
network, higher sales and marketing expenses of $0.6 million and
$0.2 million in higher programming costs. We expect to continue to
incur expenses related to the initiation of FTTH in select markets,
in advance of generating revenue from this new product.
- Cable Adjusted OIBDA for the third quarter of 2019 was
$12.5 million, representing an increase of 4.9% from $11.9 million
for the third quarter of 2018.
- Cable operating income for the third quarter of 2019 was $6.3
million, representing an increase of 7.9% from $5.8 million for the
third quarter of 2018.
Wireline
- Wireline operating revenue for the third quarter of 2019 was
$19.1 million, representing a decrease of $0.5 million from $19.6
million in the third quarter of 2018. The decrease in operating
revenue was primarily attributable to the timing of receiving
regulatory support funds. Cable and fiber revenues grew 11.8%
to offset the 8.3% decline in RLEC revenues.
- Wireline operating expenses in the third quarter of 2019 were
$14.2 million, consistent with operating expenses in the third
quarter of 2018.
- Wireline Adjusted OIBDA for the third quarter of 2019 was $8.0
million, representing a decrease of $0.6 million from $8.6 million
in the third quarter of 2018.
- Wireline operating income for the third quarter of 2019 was
$4.9 million, representing a decrease of $0.2 million from $5.1
million in the third quarter of 2018.
Other Information
- Capital expenditures were $107.0 million for the nine months
ended September 30, 2019 compared with $92.3 million in the
comparable 2018 period due to a $6.0 million increase in Wireless
spending to support the expansion of the network and an $8.7
million increase in Cable segment spending required to support the
launch of our FTTH initiative.
- Outstanding debt at September 30, 2019 totaled $740.6
million compared with $760.5 million and $785.2 million as of June
30, 2019 and December 31, 2018, respectively. As of
September 30, 2019, the Company had liquidity of approximately
$172.4 million, including $75.0 million of revolving line of credit
availability. Our interest rate decreased by 25 basis points
starting in September 2019 as our net leverage ratio declined below
the lowest threshold as defined in our credit facility resulting in
approximately $1.8 million of expected annual savings.
Conference Call and Webcast
Teleconference Information:
Date: October 31, 2019 Time: 8:30 A.M.
(ET)Dial in number: 1-888-695-7639
Password: 6872816 Audio
webcast: http://investor.shentel.com/
An audio replay of the call will be available
approximately two hours after the call is complete, through
December 7, 2019 by calling (855) 859-2056.
About Shenandoah
TelecommunicationsShenandoah 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
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(in thousands, except per share
amounts)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Operating revenue: |
|
|
|
|
|
|
|
Service revenue and other |
$ |
138,832 |
|
|
$ |
142,768 |
|
|
$ |
424,122 |
|
|
$ |
419,819 |
|
Equipment revenue |
16,320 |
|
|
15,963 |
|
|
48,787 |
|
|
49,551 |
|
Total operating revenue |
155,152 |
|
|
158,731 |
|
|
472,909 |
|
|
469,370 |
|
Operating expenses: |
|
|
|
|
|
|
|
Cost of services |
50,164 |
|
|
47,886 |
|
|
149,179 |
|
|
146,362 |
|
Cost of goods sold |
15,825 |
|
|
15,036 |
|
|
46,336 |
|
|
46,007 |
|
Selling, general and administrative |
27,178 |
|
|
27,452 |
|
|
83,070 |
|
|
86,117 |
|
Depreciation and amortization |
36,626 |
|
|
40,028 |
|
|
120,158 |
|
|
124,632 |
|
Total operating expenses |
129,793 |
|
|
130,402 |
|
|
398,743 |
|
|
403,118 |
|
Operating income |
25,359 |
|
|
28,329 |
|
|
74,166 |
|
|
66,252 |
|
Other income (expense): |
|
|
|
|
|
|
|
Interest expense |
(7,505 |
) |
|
(9,001 |
) |
|
(22,981 |
) |
|
(27,184 |
) |
Other |
1,099 |
|
|
1,054 |
|
|
3,562 |
|
|
2,882 |
|
Income before income taxes |
18,953 |
|
|
20,382 |
|
|
54,747 |
|
|
41,950 |
|
Income tax expense |
4,599 |
|
|
4,848 |
|
|
13,333 |
|
|
10,207 |
|
Net income |
$ |
14,354 |
|
|
$ |
15,534 |
|
|
$ |
41,414 |
|
|
$ |
31,743 |
|
|
|
|
|
|
|
|
|
Net income per share, basic
and diluted: |
|
|
|
|
|
|
|
Basic net income per share |
$ |
0.29 |
|
|
$ |
0.31 |
|
|
$ |
0.83 |
|
|
$ |
0.64 |
|
Diluted net income per share |
$ |
0.29 |
|
|
$ |
0.31 |
|
|
$ |
0.83 |
|
|
$ |
0.63 |
|
Weighted average shares outstanding, basic |
49,857 |
|
|
49,559 |
|
|
49,827 |
|
|
49,527 |
|
Weighted average shares outstanding, diluted |
50,129 |
|
|
50,117 |
|
|
50,110 |
|
|
50,044 |
|
|
|
|
|
|
|
|
|
SHENANDOAH TELECOMMUNICATIONS COMPANY AND
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS(in thousands)
|
September 30, 2019 |
|
December 31, 2018 |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
97,415 |
|
|
$ |
85,086 |
|
Other current assets |
124,225 |
|
|
125,116 |
|
Total current assets |
221,640 |
|
|
210,202 |
|
|
|
|
|
Investments |
11,851 |
|
|
10,788 |
|
Property, plant and equipment,
net |
688,516 |
|
|
701,359 |
|
Intangible assets, net |
328,831 |
|
|
366,029 |
|
Goodwill |
149,070 |
|
|
146,497 |
|
Operating lease right-of-use
assets |
400,489 |
|
|
— |
|
Deferred charges and other
assets |
50,469 |
|
|
49,891 |
|
Total assets |
$ |
1,850,866 |
|
|
$ |
1,484,766 |
|
|
|
|
|
Total current liabilities |
$ |
132,055 |
|
|
$ |
88,539 |
|
Long-term debt, less current
maturities |
696,378 |
|
|
749,624 |
|
Other liabilities |
546,579 |
|
|
204,356 |
|
Total shareholders’
equity |
475,854 |
|
|
442,247 |
|
Total liabilities and shareholders’ equity |
$ |
1,850,866 |
|
|
$ |
1,484,766 |
|
|
|
|
|
|
|
|
|
SHENANDOAH TELECOMMUNICATIONS COMPANY AND
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(in thousands)
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net income |
$ |
41,414 |
|
|
$ |
31,743 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation |
104,503 |
|
|
106,002 |
|
Amortization |
15,655 |
|
|
18,630 |
|
Accretion of asset retirement obligations |
1,093 |
|
|
710 |
|
Bad debt expense |
1,215 |
|
|
1,362 |
|
Stock based compensation expense, net of amount capitalized |
3,158 |
|
|
4,578 |
|
Deferred income taxes |
4,999 |
|
|
(1,989 |
) |
Other adjustments |
(439 |
) |
|
1,060 |
|
Changes in assets and liabilities |
21,861 |
|
|
26,704 |
|
Net cash provided by operating activities |
193,459 |
|
|
188,800 |
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Acquisition of property, plant and equipment |
(107,038 |
) |
|
(92,309 |
) |
Cash disbursed for acquisition, net of cash acquired |
(10,000 |
) |
|
(52,000 |
) |
Cash disbursed for FCC spectrum licenses |
(16,742 |
) |
|
— |
|
Proceeds from sale of assets |
156 |
|
|
539 |
|
Net cash used in investing activities |
(133,624 |
) |
|
(143,770 |
) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Principal payments on long-term debt |
(44,666 |
) |
|
(46,375 |
) |
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 |
) |
|
(2,033 |
) |
Other |
(9 |
) |
|
— |
|
Net cash used in financing activities |
(47,506 |
) |
|
(48,408 |
) |
Net increase (decrease) in cash and cash equivalents |
12,329 |
|
|
(3,378 |
) |
Cash and cash equivalents, beginning of period |
85,086 |
|
|
78,585 |
|
Cash and cash equivalents, end of period |
$ |
97,415 |
|
|
$ |
75,207 |
|
|
|
|
|
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.
Adjusted OIBDA has limitations as an analytical
tool and should not be considered in isolation or as a substitute
for operating income, 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 September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Consolidated |
Operating income |
|
$ |
23,731 |
|
|
$ |
6,296 |
|
|
$ |
4,927 |
|
|
$ |
(9,595 |
) |
|
$ |
25,359 |
|
Depreciation and amortization |
|
27,200 |
|
|
6,226 |
|
|
3,077 |
|
|
123 |
|
|
36,626 |
|
OIBDA |
|
50,931 |
|
|
12,522 |
|
|
8,004 |
|
|
(9,472 |
) |
|
61,985 |
|
Share-based compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
851 |
|
|
851 |
|
Adjusted OIBDA |
|
$ |
50,931 |
|
|
$ |
12,522 |
|
|
$ |
8,004 |
|
|
$ |
(8,621 |
) |
|
$ |
62,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2018 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Consolidated |
Operating income |
|
$ |
27,352 |
|
|
$ |
5,834 |
|
|
$ |
5,122 |
|
|
$ |
(9,979 |
) |
|
$ |
28,329 |
|
Depreciation and amortization |
|
30,363 |
|
|
6,102 |
|
|
3,435 |
|
|
128 |
|
|
40,028 |
|
OIBDA |
|
57,715 |
|
|
11,936 |
|
|
8,557 |
|
|
(9,851 |
) |
|
68,357 |
|
Share-based compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
1,171 |
|
|
1,171 |
|
Adjusted OIBDA |
|
$ |
57,715 |
|
|
$ |
11,936 |
|
|
$ |
8,557 |
|
|
$ |
(8,680 |
) |
|
$ |
69,528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Consolidated |
Operating income |
|
$ |
71,092 |
|
|
$ |
18,785 |
|
|
$ |
14,367 |
|
|
$ |
(30,078 |
) |
|
$ |
74,166 |
|
Depreciation and amortization |
|
90,469 |
|
|
19,239 |
|
|
10,057 |
|
|
393 |
|
|
120,158 |
|
OIBDA |
|
161,561 |
|
|
38,024 |
|
|
24,424 |
|
|
(29,685 |
) |
|
194,324 |
|
Share-based compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
3,158 |
|
|
3,158 |
|
Adjusted OIBDA |
|
$ |
161,561 |
|
|
$ |
38,024 |
|
|
$ |
24,424 |
|
|
$ |
(26,527 |
) |
|
$ |
197,482 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2018 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Consolidated |
Operating income |
|
$ |
66,870 |
|
|
$ |
17,444 |
|
|
$ |
14,687 |
|
|
$ |
(32,749 |
) |
|
$ |
66,252 |
|
Depreciation and amortization |
|
95,853 |
|
|
18,305 |
|
|
10,069 |
|
|
405 |
|
|
124,632 |
|
OIBDA |
|
162,723 |
|
|
35,749 |
|
|
24,756 |
|
|
(32,344 |
) |
|
190,884 |
|
Share-based compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
4,578 |
|
|
4,578 |
|
Adjusted OIBDA |
|
$ |
162,723 |
|
|
$ |
35,749 |
|
|
$ |
24,756 |
|
|
$ |
(27,766 |
) |
|
$ |
195,462 |
|
Segment Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Eliminations |
|
Consolidated |
External revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
|
$ |
91,108 |
|
|
$ |
30,829 |
|
|
$ |
5,446 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
127,383 |
|
Equipment revenue |
|
15,975 |
|
|
292 |
|
|
53 |
|
|
— |
|
|
— |
|
|
16,320 |
|
Tower revenue |
|
1,660 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,660 |
|
Other revenue |
|
395 |
|
|
2,392 |
|
|
7,002 |
|
|
— |
|
|
— |
|
|
9,789 |
|
Total external revenue |
|
109,138 |
|
|
33,513 |
|
|
12,501 |
|
|
— |
|
|
— |
|
|
155,152 |
|
Internal revenue |
|
1,290 |
|
|
1,591 |
|
|
6,643 |
|
|
— |
|
|
(9,524 |
) |
|
— |
|
Total operating revenue |
|
110,428 |
|
|
35,104 |
|
|
19,144 |
|
|
— |
|
|
(9,524 |
) |
|
155,152 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
34,044 |
|
|
15,790 |
|
|
9,104 |
|
|
— |
|
|
(8,774 |
) |
|
50,164 |
|
Cost of goods sold |
|
15,571 |
|
|
156 |
|
|
98 |
|
|
— |
|
|
— |
|
|
15,825 |
|
Selling, general and administrative |
|
9,882 |
|
|
6,636 |
|
|
1,938 |
|
|
9,472 |
|
|
(750 |
) |
|
27,178 |
|
Depreciation and amortization |
|
27,200 |
|
|
6,226 |
|
|
3,077 |
|
|
123 |
|
|
— |
|
|
36,626 |
|
Total operating expenses |
|
86,697 |
|
|
28,808 |
|
|
14,217 |
|
|
9,595 |
|
|
(9,524 |
) |
|
129,793 |
|
Operating income (loss) |
|
$ |
23,731 |
|
|
$ |
6,296 |
|
|
$ |
4,927 |
|
|
$ |
(9,595 |
) |
|
$ |
— |
|
|
$ |
25,359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2018 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Eliminations |
|
Consolidated |
External revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
|
$ |
96,299 |
|
|
$ |
28,578 |
|
|
$ |
5,443 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
130,320 |
|
Equipment revenue |
|
15,666 |
|
|
234 |
|
|
63 |
|
|
— |
|
|
— |
|
|
15,963 |
|
Tower revenue |
|
1,639 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,639 |
|
Other revenue |
|
1,232 |
|
|
2,104 |
|
|
7,473 |
|
|
— |
|
|
— |
|
|
10,809 |
|
Total external revenue |
|
114,836 |
|
|
30,916 |
|
|
12,979 |
|
|
— |
|
|
— |
|
|
158,731 |
|
Internal revenue |
|
1,263 |
|
|
1,266 |
|
|
6,643 |
|
|
— |
|
|
(9,172 |
) |
|
— |
|
Total operating revenue |
|
116,099 |
|
|
32,182 |
|
|
19,622 |
|
|
— |
|
|
(9,172 |
) |
|
158,731 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
32,253 |
|
|
14,837 |
|
|
9,266 |
|
|
(12 |
) |
|
(8,458 |
) |
|
47,886 |
|
Cost of goods sold |
|
14,940 |
|
|
78 |
|
|
19 |
|
|
(1 |
) |
|
— |
|
|
15,036 |
|
Selling, general and administrative |
|
11,191 |
|
|
5,331 |
|
|
1,780 |
|
|
9,864 |
|
|
(714 |
) |
|
27,452 |
|
Depreciation and amortization |
|
30,363 |
|
|
6,102 |
|
|
3,435 |
|
|
128 |
|
|
— |
|
|
40,028 |
|
Total operating expenses |
|
88,747 |
|
|
26,348 |
|
|
14,500 |
|
|
9,979 |
|
|
(9,172 |
) |
|
130,402 |
|
Operating income (loss) |
|
$ |
27,352 |
|
|
$ |
5,834 |
|
|
$ |
5,122 |
|
|
$ |
(9,979 |
) |
|
$ |
— |
|
|
$ |
28,329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Eliminations |
|
Consolidated |
External revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
|
$ |
282,533 |
|
|
$ |
91,250 |
|
|
$ |
16,489 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
390,272 |
|
Equipment revenue |
|
47,814 |
|
|
817 |
|
|
156 |
|
|
— |
|
|
— |
|
|
48,787 |
|
Tower revenue |
|
4,985 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4,985 |
|
Other revenue |
|
1,060 |
|
|
6,895 |
|
|
20,910 |
|
|
— |
|
|
— |
|
|
28,865 |
|
Total external revenue |
|
336,392 |
|
|
98,962 |
|
|
37,555 |
|
|
— |
|
|
— |
|
|
472,909 |
|
Internal revenue |
|
3,830 |
|
|
4,541 |
|
|
20,025 |
|
|
— |
|
|
(28,396 |
) |
|
— |
|
Total operating revenue |
|
340,222 |
|
|
103,503 |
|
|
57,580 |
|
|
— |
|
|
(28,396 |
) |
|
472,909 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
101,085 |
|
|
47,138 |
|
|
27,234 |
|
|
— |
|
|
(26,278 |
) |
|
149,179 |
|
Cost of goods sold |
|
45,740 |
|
|
443 |
|
|
153 |
|
|
— |
|
|
— |
|
|
46,336 |
|
Selling, general and administrative |
|
31,836 |
|
|
17,898 |
|
|
5,769 |
|
|
29,685 |
|
|
(2,118 |
) |
|
83,070 |
|
Depreciation and amortization |
|
90,469 |
|
|
19,239 |
|
|
10,057 |
|
|
393 |
|
|
— |
|
|
120,158 |
|
Total operating expenses |
|
269,130 |
|
|
84,718 |
|
|
43,213 |
|
|
30,078 |
|
|
(28,396 |
) |
|
398,743 |
|
Operating income (loss) |
|
$ |
71,092 |
|
|
$ |
18,785 |
|
|
$ |
14,367 |
|
|
$ |
(30,078 |
) |
|
$ |
— |
|
|
$ |
74,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2018 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Eliminations |
|
Consolidated |
External revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
|
$ |
284,154 |
|
|
$ |
85,797 |
|
|
$ |
16,052 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
386,003 |
|
Equipment revenue |
|
48,859 |
|
|
537 |
|
|
155 |
|
|
— |
|
|
— |
|
|
49,551 |
|
Tower revenue |
|
4,934 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4,934 |
|
Other revenue |
|
1,963 |
|
|
6,276 |
|
|
20,643 |
|
|
— |
|
|
— |
|
|
28,882 |
|
Total external revenue |
|
339,910 |
|
|
92,610 |
|
|
36,850 |
|
|
— |
|
|
— |
|
|
469,370 |
|
Internal revenue |
|
3,746 |
|
|
3,394 |
|
|
21,591 |
|
|
— |
|
|
(28,731 |
) |
|
— |
|
Total operating revenue |
|
343,656 |
|
|
96,004 |
|
|
58,441 |
|
|
— |
|
|
(28,731 |
) |
|
469,370 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
99,491 |
|
|
45,118 |
|
|
28,441 |
|
|
— |
|
|
(26,688 |
) |
|
146,362 |
|
Cost of goods sold |
|
45,749 |
|
|
197 |
|
|
61 |
|
|
— |
|
|
— |
|
|
46,007 |
|
Selling, general and administrative |
|
35,693 |
|
|
14,940 |
|
|
5,183 |
|
|
32,344 |
|
|
(2,043 |
) |
|
86,117 |
|
Depreciation and amortization |
|
95,853 |
|
|
18,305 |
|
|
10,069 |
|
|
405 |
|
|
— |
|
|
124,632 |
|
Total operating expenses |
|
276,786 |
|
|
78,560 |
|
|
43,754 |
|
|
32,749 |
|
|
(28,731 |
) |
|
403,118 |
|
Operating income (loss) |
|
$ |
66,870 |
|
|
$ |
17,444 |
|
|
$ |
14,687 |
|
|
$ |
(32,749 |
) |
|
$ |
— |
|
|
$ |
66,252 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Information
Subscriber Statistics
The following tables indicate selected operating
statistics of Wireless, including Sprint subscribers:
|
|
September 30, 2019 |
|
September 30, 2018 |
Retail PCS subscribers - postpaid |
|
823,417 |
|
|
785,537 |
|
Retail PCS subscribers -
prepaid |
|
271,551 |
|
|
255,462 |
|
PCS market POPS (000) (1) |
|
7,227 |
|
|
7,024 |
|
PCS covered POPS (000)
(1) |
|
6,294 |
|
|
5,921 |
|
CDMA base stations
(sites) |
|
1,920 |
|
|
1,788 |
|
Towers owned |
|
221 |
|
|
193 |
|
Cell site leases |
|
203 |
|
|
192 |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 (2) |
Gross PCS subscriber additions - postpaid |
|
60,477 |
|
|
48,111 |
|
|
164,123 |
|
|
135,817 |
|
Net PCS subscriber additions - postpaid |
|
11,698 |
|
|
4,879 |
|
|
28,241 |
|
|
48,940 |
|
Gross PCS subscriber additions - prepaid |
|
38,014 |
|
|
38,486 |
|
|
112,746 |
|
|
112,437 |
|
Net PCS subscriber additions - prepaid |
|
2,512 |
|
|
3,408 |
|
|
12,847 |
|
|
29,640 |
|
PCS average monthly retail churn % - postpaid |
|
1.99 |
% |
|
1.84 |
% |
|
1.87 |
% |
|
1.80 |
% |
PCS average monthly retail churn % - prepaid |
|
4.38 |
% |
|
4.62 |
% |
|
4.17 |
% |
|
4.42 |
% |
_______________________________________________________
- "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.
- Beginning February 1, 2018 includes Richmond Expansion Area
except for gross PCS subscriber additions.
Except for gross additions, the subscriber statistics above
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 and Wireline:
|
September 30, 2019 |
|
September 30, 2018 |
|
Cable |
Wireline |
Total |
|
Cable |
Wireline |
Total |
Cable homes passed (1) |
189,762 |
|
16,500 |
|
206,262 |
|
|
185,119 |
|
16,500 |
|
201,619 |
|
|
|
|
|
|
|
|
|
Cable customer relationships (2) |
39,195 |
|
4,249 |
|
43,444 |
|
|
41,807 |
|
5,300 |
|
47,107 |
|
Non-cable customers |
45,564 |
|
13,429 |
|
58,993 |
|
|
37,619 |
|
13,538 |
|
51,157 |
|
Total cable customer relationships |
84,759 |
|
17,678 |
|
102,437 |
|
|
79,426 |
|
18,838 |
|
98,264 |
|
|
|
|
|
|
|
|
|
Video RGUs: |
|
|
|
|
|
|
|
RGUs former methodology |
41,331 |
|
4,438 |
|
45,769 |
|
|
44,093 |
|
4,796 |
|
48,889 |
|
Bulk adjustment |
8,632 |
|
614 |
|
9,246 |
|
|
9,624 |
|
817 |
|
10,441 |
|
RGUs revised methodology (3) |
49,963 |
|
5,052 |
|
55,015 |
|
|
53,717 |
|
5,613 |
|
59,330 |
|
Penetration (4) |
26.3 |
% |
30.6 |
% |
|
|
29.0 |
% |
34.0 |
% |
|
Digital video penetration (5) |
95.9 |
% |
100.0 |
% |
|
|
77.8 |
% |
100.0 |
% |
|
|
|
|
|
|
|
|
|
Broadband RGUs: |
|
|
|
|
|
|
|
RGUs former methodology |
73,557 |
|
14,061 |
|
87,618 |
|
|
67,089 |
|
14,734 |
|
81,823 |
|
Less: Rural Local Exchange Carrier ("RLEC") |
— |
|
(8,112 |
) |
(8,112 |
) |
|
— |
|
(9,625 |
) |
(9,625 |
) |
Bulk adjustment |
2,601 |
|
306 |
|
2,907 |
|
|
1,939 |
|
(456 |
) |
1,483 |
|
RGUs revised methodology (3) |
76,158 |
|
6,255 |
|
82,413 |
|
|
69,028 |
|
4,653 |
|
73,681 |
|
Penetration (4) |
40.1 |
% |
37.9 |
% |
|
|
37.3 |
% |
28.2 |
% |
|
|
|
|
|
|
|
|
|
Voice RGUs: |
|
|
|
|
|
|
|
RGUs former methodology |
23,636 |
|
19,135 |
|
42,771 |
|
|
23,268 |
|
17,786 |
|
41,054 |
|
Less: RLEC |
— |
|
(14,594 |
) |
(14,594 |
) |
|
— |
|
(15,002 |
) |
(15,002 |
) |
Bulk adjustment |
434 |
|
2,345 |
|
2,779 |
|
|
504 |
|
105 |
|
609 |
|
RGUs revised methodology (3) |
24,070 |
|
6,886 |
|
30,956 |
|
|
23,772 |
|
2,889 |
|
26,661 |
|
Penetration (4) |
12.7 |
% |
41.7 |
% |
|
|
12.8 |
% |
17.5 |
% |
|
|
|
|
|
|
|
|
|
Total RGUs former
methodology |
138,524 |
|
37,634 |
|
176,158 |
|
|
134,450 |
|
37,316 |
|
171,766 |
|
Less: RLEC |
— |
|
(22,706 |
) |
(22,706 |
) |
|
— |
|
(24,627 |
) |
(24,627 |
) |
Bulk adjustment |
11,667 |
|
3,265 |
|
14,932 |
|
|
12,067 |
|
466 |
|
12,533 |
|
Total RGUs revised
methodology |
150,191 |
|
18,193 |
|
168,384 |
|
|
146,517 |
|
13,155 |
|
159,672 |
|
|
|
|
|
|
|
|
|
RLEC homes passed |
— |
|
25,495 |
|
25,495 |
|
|
— |
|
25,457 |
|
25,457 |
|
RLEC RGUs: |
|
|
|
|
|
|
|
Data RLEC |
— |
|
8,112 |
|
8,112 |
|
|
— |
|
9,625 |
|
9,625 |
|
Penetration (4) |
— |
|
31.8 |
% |
|
|
— |
|
37.8 |
% |
|
Voice RLEC |
— |
|
14,594 |
|
14,594 |
|
|
— |
|
15,002 |
|
15,002 |
|
Penetration (4) |
— |
|
57.2 |
% |
|
|
— |
|
58.9 |
% |
|
Total RLEC RGUs |
— |
|
22,706 |
|
22,706 |
|
|
— |
|
24,627 |
|
24,627 |
|
|
|
|
|
|
|
|
|
Average revenue generating
units |
150,022 |
|
17,851 |
|
167,873 |
|
|
145,516 |
|
12,058 |
|
157,574 |
|
Fiber route miles |
3,678 |
|
2,186 |
|
5,864 |
|
|
3,436 |
|
2,112 |
|
5,548 |
|
Total fiber miles (6) |
147,331 |
|
164,371 |
|
311,702 |
|
|
134,411 |
|
158,526 |
|
292,937 |
|
_____________________________
- 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.
- As of September 30, 2019, the Company revised its methodology
for counting RGUs associated with hotels, multiple dwelling units
("MDUs") and certain commercial customers. We now count each
dwelling or unit of service as a separate RGU. Prior year
information has been recast to reflect our revised
methodology. Previously we counted RGUs on an equivalent
basis consistent with carriage fee practices.
- 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.
- 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 shows the components of free
cash flow:
|
|
Three Months Ended |
|
Nine Months Ended |
September 30, |
September 30, |
(in thousands) |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net cash provided by operating activities |
|
$ |
63,827 |
|
|
$ |
61,656 |
|
|
$ |
193,459 |
|
|
$ |
188,800 |
|
Less: Capital expenditures |
|
27,914 |
|
|
29,987 |
|
|
107,038 |
|
|
92,309 |
|
Free cash flow |
|
$ |
35,913 |
|
|
$ |
31,669 |
|
|
$ |
86,421 |
|
|
$ |
96,491 |
|
Free cash flow is a non-GAAP financial measure that, when viewed
with our GAAP results, provides a more complete understanding of
factors and trends affecting our cash flows. Free cash flow is
calculated by subtracting capital expenditures from net cash
provided by operating activities. We believe it is a more
conservative measure of our cash flow since purchases of fixed
assets are necessary for ongoing operations and expansion. Free
Cash Flow is utilized by our management, investors and analysts to
evaluate cash available that may be used to pay scheduled principal
payments on our debt obligations and provide further investment in
the business.
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