Quarterly Operating Income Increases to $27.0
million
Shenandoah Telecommunications Company (“Shentel”) (Nasdaq: SHEN)
announced strong fourth quarter financial and operating results,
reflecting record subscriber additions in both the Wireless and
Cable segments. The net addition of 9,639 postpaid wireless
customers during the quarter set an all-time high during Shentel's
nearly two-decade relationship with Sprint. Growth in the Cable
segment was led by strong sales of the Company's newly introduced
PowerHouse broadband service. These successes drove quarterly
operating income to $27.0 million.
Shentel's solid fourth quarter performance
closed out a strong fiscal 2018, with significant increases in
consolidated revenue and operating income, and improved OIBDA.
Consolidated revenue increased to $630.9 million, compared to
$612.0 million in 2017. Operating income more than doubled from
$46.5 million in 2017 to $93.2 million in 2018. Adjusted OIBDA was
$285.7 million for 2018 compared with $280.9 million in 2017.
Fourth Quarter 2018 Highlights
- Operating revenue of $161.5 million grew 6.5%
- Operating income up 49.1% to $27.0 million
- Net income of $14.9 million, or $0.31 per basic
share
- Adjusted OIBDA of $73.2 million
Full Year 2018 Highlights
- Operating revenue of $630.9 million grew 3.1%
- Operating income more than doubles to $93.2 million
- Net income of $46.6 million, or $0.94 per basic
share
- Adjusted OIBDA of $285.7 million
Please refer to
our Fourth Quarter 2018 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 US generally accepted accounting principles. Please
refer to page 10 for additional information for non-GAAP
measures.
Results
Consolidated Fourth Quarter 2018
Results
- Net income for the three months ended December 31, 2018
was $14.9 million, or $0.31 per share, compared with net income of
$60.6 million, or $1.23 per share, in the fourth quarter of
2017.
- Effective January 1, 2018, the Company adopted the new revenue
recognition standard (Topic 606) that requires the Company to
record costs such as commissions for the national sales channel
that are settled separately with Sprint as reductions of
revenue. The impact of adopting Topic 606 is detailed in the
section titled "Impact of Topic 606".
- Fourth quarter 2017 included a one-time non-cash tax benefit of
approximately $53.4 million as a result of the enactment of the Tax
Cuts and Jobs Act in December of 2017.
- Operating revenue for the fourth quarter of 2018 was $161.5
million, representing a year-over-year increase of 6.5%, driven by
growth in Wireless and Cable subscribers.
- Operating expenses for the three months ended December 31,
2018 were $134.5 million, compared with $133.5 million for the
equivalent quarter in the prior year.
- Operating income increased 49.1% in the fourth quarter of 2018
to $27.0 million from $18.1 million in the equivalent quarter of
the prior year.
- Adjusted OIBDA increased 3.1% to $73.2 million for the three
months ended December 31, 2018, driven by subscriber based
revenue growth in Wireless and
Cable.Wireless • Wireless
operating revenue increased $7.5 million, to $119.0 million
compared with the three months ended December 31, 2017,
primarily driven by growth in postpaid and prepaid PCS subscribers,
improvements in average monthly churn, and was partially offset by
a decline in postpaid average revenue per subscriber primarily
related to promotions and discounts. • Wireless
operating expenses decreased 8.0% in the fourth quarter of 2018 to
$93.0 million, compared with $99.6 million for the three months
ended December 31, 2017, primarily due to reducing back-office
expenses that were required to support former nTelos subscribers
that migrated to Sprint's back-office in 2017 and a reduction in
acquisition, integration and migration expenses as the integration
of the acquired nTelos business was completed during 2017. •
Wireless Adjusted OIBDA for the three months ended
December 31, 2018 was $63.2 million, compared with $56.6
million for the three months ended December 31, 2017. Wireless
Continuing OIBDA for the three months ended December 31, 2018
was $53.6 million, compared with $47.6 million for the three months
ended December 31, 2017.Cable •
Cable operating revenue for the fourth quarter of
2018 was $32.9 million, representing a quarter over quarter
increase of 7.9% compared with $30.5 million for the prior year
fourth quarter. This growth was primarily due to increases in our
broadband and voice subscribers, higher video rates and our
customers selecting or upgrading to higher-speed data access
packages. • Cable operating expenses for the
fourth quarter of 2018 were $26.6 million, a quarter over quarter
increase of 5.9% compared with $25.1 million for the three months
ended December 31, 2017. The increase was primarily due to new
fiber contracts and installation services that were driven by
growth in our customer base. The Company lost 3,013 video users
while adding 4,261 broadband users and 811 voice users, since
December 31, 2017. • Cable
Adjusted OIBDA for the three months ended December 31,
2018 was $12.6 million, compared with $11.3 million for the three
months ended December 31, 2017.Wireline
• Wireline operating revenue for the three months
ended December 31, 2018 was $18.7 million, compared with $20.7
million for the prior year fourth quarter. The decrease in
operating revenue was primarily attributable to repricing Wireless
backhaul circuits to market rates and migrating Wireless voice
traffic from traditional circuit-switched facilities to more cost
effective Voice over IP ("VoIP") facilities. •
Wireline operating expenses for the three months ended
December 31, 2018 were $15.5 million, compared with $15.3
million for the three months ended December 31, 2017. This
increase was primarily attributable to the expansion of the
underlying network assets and investments in infrastructure
necessary to support the growth in our fiber
network. • Wireline Adjusted OIBDA for the
three months ended December 31, 2018 was $6.7 million,
compared with $8.8 million for the prior year equivalent
quarter.
Consolidated Full Year 2018
Results
- Net income in 2018 was $46.6 million, or $0.94 per share,
compared with net income of $66.4 million, or $1.35 per share, in
2017.
- The impact of adopting Topic 606 is detailed in the section
titled "Impact of Topic 606".
- 2017 included a one-time non-cash tax benefit of approximately
$53.4 million as a result of the enactment of the Tax Cuts and Jobs
Act in December of 2017.
- Operating revenue in 2018 was $630.9 million, representing a
year-over-year increase of 3.1%, compared with $612.0 million in
2017 driven by Wireless and Cable operations.
- Operating expenses in 2018 were $537.6 million, compared with
$565.5 million in 2017 primarily due to the absence of acquisition,
integration and migration costs related to the completion of the
transformation of the nTelos network in 2017 as well as lower
depreciation and amortization costs due to the retirement of assets
acquired with nTelos, partially offset by increased costs necessary
to support our continued growth and expansion.
- Operating income increased 100.5% in 2018 to $93.2 million from
$46.5 million in 2017.
- Adjusted OIBDA increased 1.7% in 2018 to $285.7 million,
fueled by the continued expansion of our Wireless segment and
growth in Cable's broadband
subscribers.Wireless •
Wireless operating revenue increased $7.6 million, to $462.7
million compared with 2017, primarily driven by growth in postpaid
and prepaid PCS subscribers, improvements in average monthly churn,
and was partially offset by a decline in postpaid average revenue
per subscriber primarily related to promotions and
discounts. • Wireless operating expenses in
2018 were $369.8 million, compared with $420.9 million in 2017, a
year over year decrease of 12.1%, primarily due to repricing
Wireless backhaul circuits to market rates, migrating Wireless
voice traffic from traditional circuit-switched facilities to more
cost effective VoIP facilities, reducing back-office expenses that
were required to support former nTelos subscribers that migrated to
Sprint's back-office in 2017, and a reduction in acquisition,
integration and migration expenses as the integration of the
acquired nTelos business was completed during 2017.
• Wireless Adjusted OIBDA in 2018 was
$243.4 million, compared with $230.4 million in 2017. Wireless
Continuing OIBDA in 2018 was $205.7 million, compared with $194.3
million in 2017.Cable •
Cable operating revenue in 2018 was $128.9 million,
representing a year over year increase of 8.2% compared with $119.2
million in 2017. This growth was primarily due to increases in our
broadband and voice subscribers, higher video rates, and our
customers selecting or upgrading to higher-speed data access
packages. • Cable operating expenses in
2018 were $105.1 million, a year over year increase of 1.8%
compared with $103.3 million in 2017. The increase was primarily
due to new fiber contracts and installation services that were
driven by growth in our customer base. The Company lost 3,013 video
users while adding 4,261 broadband users and 811 voice users, since
December 31, 2017. • Cable
Adjusted OIBDA in 2018 was $48.3 million, compared with $40.5
million in
2017. Wireline •
Wireline operating revenue in 2018 was $77.1 million,
compared with $79.3 million in 2017. The decrease in operating
revenue was primarily attributable to repricing Wireless backhaul
circuits to market rates and migrating Wireless voice traffic from
traditional circuit-switched facilities to more cost effective
Voice over IP ("VoIP") facilities. •
Wireline operating expenses in 2018 were $59.3 million,
compared with $58.3 million in 2017. This increase was primarily
attributable to the expansion of the underlying network assets and
investments in infrastructure necessary to support the growth in
our fiber network. • Wireline Adjusted
OIBDA in 2018 was $31.3 million, compared with $34.3 million in
2017.
"2018 was a strong year for Shentel, as
demonstrated by solid consolidated revenue growth, significantly
increased operating income and improved OIBDA," said President and
CEO Christopher E. French. "During the past few years, we've
strategically expanded our geographic reach and upgraded our
network to ensure that we provide the most reliable coverage and
highest data speeds and bandwidth in the areas we serve. Throughout
2018 we saw the benefits of these efforts as distribution levels
and activation rates steadily increased. We believe our
state-of-the-art network and expanded market coverage competitively
position us to continue to capture market share and to grow our
leadership position as the telecommunications provider of choice in
the communities in which we operate."
"We achieved customer growth in all of our
operating segments during fiscal 2018, highlighted by record
customer adds in both our Wireless and our Cable segments during
the fourth quarter," French continued. "Consumer reliance on
wireless connectivity continues to increase exponentially, and our
robust network meets and exceeds customer expectations for
reliability and capacity. Likewise, in the Cable segment our high
bandwidth capabilities are attractive to new customers and play a
key role in our ability to transition existing customers to
upgraded service packages. We're pleased with our achievements in
2018 and with our visibility today we believe we are well
positioned to leverage our extensive coverage area, high caliber
network and exceptional service to cultivate continued momentum as
we move through 2019."
Other Information
Capital expenditures were $136.6 million for the
year ended December 31, 2018 compared with $146.5 million in
the comparable 2017 period.
The Company declared a cash dividend of $0.27
per share. The dividend was an increase of $0.01 per share or 3.8%
over the 2017 dividend and was paid on November 30, 2018, to
shareholders of record as of the close of business on November 12,
2018. The total payout to shareholders, before reinvestment, was
approximately $13.4 million. The Company has paid an annual
dividend every year since 1960, when its predecessor Shenandoah
Telephone Company declared its first dividend.
Outstanding debt at December 31, 2018
totaled $770.2 million, net of unamortized loan costs, compared to
$822.0 million as of December 31, 2017. As of
December 31, 2018, no amounts were outstanding under the
revolving line of credit. The total leverage ratio as of
December 31, 2018 was 2.54.
On November 9, 2018, the Company amended its
credit agreement resulting in a 25 basis point reduction in the
applicable base interest rate, extended maturity of both term loans
and reduced near-term principle payments. Including our first
quarter credit agreement amendment we reduced our base interest
rate by 75 basis points in 2018.
Conference Call and Webcast
Teleconference Information:
Date: February 28, 2019 Time: 10:00 A.M.
(ET)Dial in number: 1-888-695-7639
Password: 3786506 Audio
webcast: http://investor.shentel.com/
An audio replay of the call will be available
approximately two hours after the call is complete, through
March 28, 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, Inc.James F. WoodwardSenior Vice
President, Finance and Chief Financial
Officer540-984-5990James.Woodward@emp.shentel.com
Or
John Nesbett/Jennifer BelodeauIMS Investor
Relations203-972-9200jnesbett@institutionalms.com
SHENANDOAH TELECOMMUNICATIONS COMPANY AND
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(in thousands, except per share
amounts)
|
Three Months EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
Operating
revenue |
|
|
|
|
|
|
|
Service
revenue and other |
$ |
142,637 |
|
|
$ |
149,602 |
|
|
$ |
562,456 |
|
|
$ |
601,673 |
|
Equipment
revenue |
18,847 |
|
|
2,015 |
|
|
68,398 |
|
|
10,318 |
|
Total
operating revenue |
161,484 |
|
|
151,617 |
|
|
630,854 |
|
|
611,991 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Cost of
services |
47,660 |
|
|
42,977 |
|
|
194,022 |
|
|
188,721 |
|
Cost of
goods sold |
17,952 |
|
|
5,554 |
|
|
63,959 |
|
|
22,786 |
|
Selling,
general and administrative |
27,105 |
|
|
40,563 |
|
|
113,222 |
|
|
165,937 |
|
Acquisition, integration and migration expenses |
— |
|
|
1,157 |
|
|
— |
|
|
11,030 |
|
Depreciation and amortization |
41,773 |
|
|
43,256 |
|
|
166,405 |
|
|
177,007 |
|
Total
operating expenses |
134,490 |
|
|
133,507 |
|
|
537,608 |
|
|
565,481 |
|
Operating
income (loss) |
26,994 |
|
|
18,110 |
|
|
93,246 |
|
|
46,510 |
|
Other income
(expense): |
|
|
|
|
|
|
|
Interest
expense |
(7,663 |
) |
|
(9,925 |
) |
|
(34,847 |
) |
|
(38,237 |
) |
Gain
(loss) on investments, net |
(387 |
) |
|
169 |
|
|
(275 |
) |
|
564 |
|
Non-operating income (loss), net |
1,218 |
|
|
938 |
|
|
3,988 |
|
|
4,420 |
|
Income
(loss) before income taxes |
20,162 |
|
|
9,292 |
|
|
62,112 |
|
|
13,257 |
|
Income tax expense
(benefit) |
5,310 |
|
|
(51,303 |
) |
|
15,517 |
|
|
(53,133 |
) |
Net income
(loss) |
$ |
14,852 |
|
|
$ |
60,595 |
|
|
$ |
46,595 |
|
|
$ |
66,390 |
|
|
|
|
|
|
|
|
|
Net income (loss) per
share, basic and diluted: |
|
|
|
|
|
|
|
Basic net income (loss)
per share |
$ |
0.31 |
|
|
$ |
1.23 |
|
|
$ |
0.94 |
|
|
$ |
1.35 |
|
Diluted net income
(loss) per share |
$ |
0.30 |
|
|
$ |
1.21 |
|
|
$ |
0.93 |
|
|
$ |
1.33 |
|
Weighted average shares
outstanding, basic |
49,587 |
|
|
49,298 |
|
|
49,542 |
|
|
49,150 |
|
Weighted average shares
outstanding, diluted |
50,112 |
|
|
50,043 |
|
|
50,063 |
|
|
50,026 |
|
|
|
|
|
|
|
|
|
SHENANDOAH TELECOMMUNICATIONS COMPANY AND
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS(in thousands)
|
December 31,2018 |
|
December 31,2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
85,086 |
|
|
$ |
78,585 |
|
Other current
assets |
|
125,116 |
|
|
|
94,310 |
|
Total
current assets |
|
210,202 |
|
|
|
172,895 |
|
|
|
|
|
|
|
|
|
Investments |
|
10,788 |
|
|
|
11,472 |
|
Property, plant and
equipment, net |
|
701,359 |
|
|
|
686,327 |
|
Intangible assets,
net |
|
366,029 |
|
|
|
380,979 |
|
Goodwill |
|
146,497 |
|
|
|
146,497 |
|
Deferred charges and
other assets, net |
|
49,891 |
|
|
|
13,690 |
|
Total
assets |
$ |
1,484,766 |
|
|
$ |
1,411,860 |
|
|
|
|
|
|
|
|
|
Total current
liabilities |
|
88,539 |
|
|
|
137,584 |
|
Long-term debt, less
current maturities |
|
749,624 |
|
|
|
757,561 |
|
Other liabilities |
|
204,356 |
|
|
|
166,493 |
|
Total shareholders’
equity |
|
442,247 |
|
|
|
350,222 |
|
Total
liabilities and shareholders’ equity |
$ |
1,484,766 |
|
|
$ |
1,411,860 |
|
SHENANDOAH TELECOMMUNICATIONS COMPANY AND
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(in thousands)
|
2018 |
|
2017 |
Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net income
(loss) |
$ |
46,595 |
|
|
$ |
66,390 |
|
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities: |
|
|
|
Depreciation |
142,111 |
|
|
151,063 |
|
Amortization |
24,294 |
|
|
25,944 |
|
Amortization
reflected as rent expense in cost of services |
342 |
|
|
1,528 |
|
Bad debt
expense |
1,983 |
|
|
2,179 |
|
Stock based
compensation expense, net of amount capitalized |
4,959 |
|
|
3,580 |
|
Waived
management fee |
37,763 |
|
|
36,056 |
|
Deferred
income taxes |
6,208 |
|
|
(54,055 |
) |
Other
adjustments |
(1,135 |
) |
|
311 |
|
Changes in
assets and liabilities |
2,527 |
|
|
(10,066 |
) |
Net cash
provided by (used in) operating activities |
$ |
265,647 |
|
|
$ |
222,930 |
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Acquisition
of property, plant and equipment |
(136,641 |
) |
|
(146,489 |
) |
Proceeds
from sale of assets |
840 |
|
|
980 |
|
Cash
disbursed for acquisition, net of cash acquired |
(52,000 |
) |
|
(6,000 |
) |
Release of
restricted cash |
— |
|
|
— |
|
Cash
distributions (contributions) from investments and other |
1 |
|
|
14 |
|
Net cash
provided by (used in) investing activities |
$ |
(187,800 |
) |
|
$ |
(151,495 |
) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Principal
payments on long-term debt |
(51,264 |
) |
|
(36,375 |
) |
Proceeds
from revolving credit facility borrowings |
15,000 |
|
|
— |
|
Proceeds
from credit facility borrowings |
— |
|
|
25,000 |
|
Principal
payments on revolving credit facility |
(15,000 |
) |
|
— |
|
Payments for
debt issuance costs |
(3,971 |
) |
|
— |
|
Dividends
paid, net of dividends reinvested |
(12,866 |
) |
|
(12,257 |
) |
Taxes paid
for equity award issuances |
(3,245 |
) |
|
(5,411 |
) |
Net cash
provided by (used in) financing activities |
$ |
(71,346 |
) |
|
$ |
(29,043 |
) |
Net increase
(decrease) in cash and cash equivalents |
6,501 |
|
|
42,392 |
|
Cash and
cash equivalents, beginning of period |
$ |
78,585 |
|
|
$ |
36,193 |
|
Cash
and cash equivalents, end of period |
85,086 |
|
|
78,585 |
|
|
|
|
|
Supplemental
Disclosures of Cash Flow Information |
|
|
|
Cash
payments for: |
|
|
|
Interest,
net of capitalized interest of $1,556, $1,559 and $1,374 in 2018,
2017 and 2016, respectively |
$ |
33,034 |
|
|
$ |
33,495 |
|
Income tax
(refunds received) paid, net |
$ |
(2,721 |
) |
|
$ |
20,066 |
|
Capital
expenditures payable |
$ |
23,501 |
|
|
$ |
7,254 |
|
Impact of Topic 606The Company
adopted ASU 2014-09, Revenue from Contracts with Customers (Topic
606), effective January 1, 2018, using the modified retrospective
method. The following tables identify the impact that the
application of Topic 606 had on the Company for the fourth quarter
and full year 2018:
|
Three Months Ended December 31,
2018 |
|
|
Topic 606 Impact - CONSOLIDATED |
|
($ in thousands, except per share amounts) |
Prior to Adoption of Topic 606 |
Changes in Presentation (1) |
Equipment Revenue (2) |
Deferred Costs (3) |
As Reported 12/31/2018 |
Service revenue and
other |
$ |
161,185 |
|
$ |
(22,568 |
) |
$ |
— |
|
$ |
4,020 |
|
$ |
142,637 |
|
Equipment
revenue |
2,262 |
|
— |
|
16,585 |
|
— |
|
18,847 |
|
Total operating revenue |
163,447 |
|
(22,568 |
) |
16,585 |
|
4,020 |
|
161,484 |
|
Cost of
services |
47,661 |
|
— |
|
— |
|
(1 |
) |
47,660 |
|
Cost of
goods sold |
8,061 |
|
(6,694 |
) |
16,585 |
|
— |
|
17,952 |
|
Selling,
general & administrative |
43,042 |
|
(15,874 |
) |
— |
|
(63 |
) |
27,105 |
|
Depreciation and amortization |
41,773 |
|
— |
|
— |
|
— |
|
41,773 |
|
Total operating expenses |
140,537 |
|
(22,568 |
) |
16,585 |
|
(64 |
) |
134,490 |
|
Operating income (loss) |
22,910 |
|
— |
|
— |
|
4,084 |
|
26,994 |
|
Other
income (expense) |
(6,832 |
) |
— |
|
— |
|
— |
|
(6,832 |
) |
Income
tax expense (benefit) |
4,186 |
|
— |
|
— |
|
1,124 |
|
5,310 |
|
Net income (loss) |
$ |
11,892 |
|
$ |
— |
|
$ |
— |
|
$ |
2,960 |
|
$ |
14,852 |
|
|
|
|
|
|
|
Earnings (loss)
per share |
|
|
|
|
|
Basic |
$ |
0.24 |
|
|
|
$ |
0.07 |
|
$ |
0.31 |
|
Diluted |
$ |
0.24 |
|
|
|
$ |
0.06 |
|
$ |
0.30 |
|
Weighted average shares
outstanding, basic |
49,587 |
|
|
|
|
49,587 |
|
Weighted average shares
outstanding, diluted |
50,112 |
|
|
|
|
50,112 |
|
|
Year Ended December 31, 2018 |
|
|
Topic 606 Impact - CONSOLIDATED |
|
($ in thousands, except per share amounts) |
Prior to Adoption of Topic 606 |
Changes in Presentation (1) |
Equipment Revenue (2) |
Deferred Costs (3) |
As Reported 12/31/2018 |
Service revenue and
other |
$ |
632,340 |
|
$ |
(86,637 |
) |
$ |
— |
|
$ |
16,753 |
|
$ |
562,456 |
|
Equipment
revenue |
8,298 |
|
— |
|
60,100 |
|
— |
|
68,398 |
|
Total operating revenue |
640,638 |
|
(86,637 |
) |
60,100 |
|
16,753 |
|
630,854 |
|
Cost of
services |
193,860 |
|
— |
|
— |
|
162 |
|
194,022 |
|
Cost of
goods sold |
28,377 |
|
(24,518 |
) |
60,100 |
|
— |
|
63,959 |
|
Selling,
general & administrative |
175,753 |
|
(62,119 |
) |
— |
|
(412 |
) |
113,222 |
|
Depreciation and amortization |
166,405 |
|
— |
|
— |
|
— |
|
166,405 |
|
Total operating expenses |
564,395 |
|
(86,637 |
) |
60,100 |
|
(250 |
) |
537,608 |
|
Operating income (loss) |
76,243 |
|
— |
|
— |
|
17,003 |
|
93,246 |
|
Other
income (expense) |
(31,134 |
) |
— |
|
— |
|
— |
|
(31,134 |
) |
Income
tax expense (benefit) |
10,926 |
|
— |
|
— |
|
4,591 |
|
15,517 |
|
Net income (loss) |
$ |
34,183 |
|
$ |
— |
|
$ |
— |
|
$ |
12,412 |
|
$ |
46,595 |
|
|
|
|
|
|
|
Earnings (loss)
per share |
|
|
|
|
|
Basic |
$ |
0.69 |
|
|
|
$ |
0.25 |
|
$ |
0.94 |
|
Diluted |
$ |
0.68 |
|
|
|
$ |
0.25 |
|
$ |
0.93 |
|
Weighted average shares
outstanding, basic |
49,542 |
|
|
|
|
49,542 |
|
Weighted average shares
outstanding, diluted |
50,063 |
|
|
|
|
50,063 |
|
(1) |
Amounts payable to
Sprint for the reimbursement of costs incurred by Sprint in their
national sales channel for commissions and device costs for both
postpaid and prepaid, and to provide on-going support to their
prepaid customers in our territory were historically recorded as
expense when incurred. Under Topic 606, these amounts represent
consideration payable to our customer, Sprint, and are recorded as
a reduction of revenue. In 2017, these amounts were approximately
$44.8 million for the postpaid national commissions, previously
recorded in selling, general and administrative, $18.7 million for
national device costs previously recorded in cost of goods and
services, and $16.9 million for the on-going service to Sprint's
prepaid customers, previously recorded in selling, general and
administrative. |
(2) |
Costs
incurred by the Company for the sale of devices under Sprint’s
device financing and lease programs were previously recorded net
against revenue. Under Topic 606, the revenue and related costs
from device sales are recorded gross. These amounts were
approximately $63.8 million in 2017. |
(3) |
Amounts
payable to Sprint for the reimbursement of costs incurred by Sprint
in their national sales channel for commissions and device costs,
which historically have been expensed when incurred and presented
net of revenue, are deferred and amortized against revenue over the
expected period of benefit of approximately 21 to 53 months. In
Cable and Wireline, installation revenues are recognized over a
period of approximately 10-11 months. The deferred balance as of
December 31, 2018 is approximately $75.8 million and is
classified on the balance sheet as current and non-current assets,
as applicable. |
The following tables identify the impact that
the application of Topic 606 had on the Company's Wireless
operations for the fourth quarter and full year 2018:
|
Three Months Ended December 31,
2018 |
|
|
Topic 606 Impact - WIRELESS |
|
($ in thousands) |
Prior to Adoption of Topic 606 |
Changes in Presentation (1) |
Equipment Revenue (2) |
Deferred Costs (3) |
As Reported 12/31/2018 |
Service revenue |
$ |
115,187 |
|
$ |
(22,568 |
) |
$ |
— |
|
$ |
4,045 |
|
$ |
96,664 |
|
Equipment revenue |
2,066 |
|
— |
|
16,585 |
|
— |
|
18,651 |
|
Tower and other
revenue |
3,684 |
|
— |
|
— |
|
— |
|
3,684 |
|
Total operating
revenue |
120,937 |
|
(22,568 |
) |
16,585 |
|
4,045 |
|
118,999 |
|
Cost of services |
31,675 |
|
— |
|
— |
|
— |
|
31,675 |
|
Cost of goods sold |
7,943 |
|
(6,694 |
) |
16,585 |
|
— |
|
17,834 |
|
Selling, general &
administrative |
27,719 |
|
(15,874 |
) |
— |
|
— |
|
11,845 |
|
Depreciation and
amortization |
31,668 |
|
— |
|
— |
|
— |
|
31,668 |
|
Total operating
expenses |
99,005 |
|
(22,568 |
) |
16,585 |
|
— |
|
93,022 |
|
Operating
income (loss) |
$ |
21,932 |
|
$ |
— |
|
$ |
— |
|
$ |
4,045 |
|
$ |
25,977 |
|
|
Year Ended December 31, 2018 |
|
|
Topic 606 Impact - WIRELESS |
|
($ in thousands) |
Prior to Adoption of Topic 606 |
Changes in Presentation (1) |
Equipment Revenue (2) |
Deferred Costs (3) |
As Reported 12/31/2018 |
Service revenue |
$ |
450,735 |
|
$ |
(86,637 |
) |
$ |
— |
|
$ |
16,720 |
|
$ |
380,818 |
|
Equipment revenue |
7,410 |
|
— |
|
60,100 |
|
— |
|
67,510 |
|
Tower and other
revenue |
14,327 |
|
— |
|
— |
|
— |
|
14,327 |
|
Total operating
revenue |
472,472 |
|
(86,637 |
) |
60,100 |
|
16,720 |
|
462,655 |
|
Cost of services |
131,166 |
|
— |
|
— |
|
— |
|
131,166 |
|
Cost of goods sold |
28,001 |
|
(24,518 |
) |
60,100 |
|
— |
|
63,583 |
|
Selling, general &
administrative |
109,657 |
|
(62,119 |
) |
— |
|
— |
|
47,538 |
|
Depreciation and
amortization |
127,521 |
|
— |
|
— |
|
— |
|
127,521 |
|
Total operating
expenses |
396,345 |
|
(86,637 |
) |
60,100 |
|
— |
|
369,808 |
|
Operating
income (loss) |
$ |
76,127 |
|
$ |
— |
|
$ |
— |
|
$ |
16,720 |
|
$ |
92,847 |
|
(1) |
Amounts payable to
Sprint for the reimbursement of costs incurred by Sprint in their
national sales channel for commissions and device costs for both
postpaid and prepaid, and to provide on-going support to their
prepaid customers in our territory were historically recorded as
expense when incurred. Under Topic 606, these amounts represent
consideration payable to our customer, Sprint, and are recorded as
a reduction of revenue. In 2017, these amounts were approximately
$44.8 million for the postpaid national commissions, previously
recorded in selling, general and administrative, $18.7 million for
national device costs previously recorded in cost of goods and
services, and $16.9 million for the on-going service to Sprint's
prepaid customers, previously recorded in selling, general and
administrative. |
(2) |
Costs
incurred by the Company for the sale of devices under Sprint’s
device financing and lease programs were previously recorded net
against revenue. Under Topic 606, the revenue and related costs
from device sales are recorded gross. These amounts were
approximately $63.8 million in 2017. |
(3) |
Amounts
payable to Sprint for the reimbursement of costs incurred by Sprint
in their national sales channel for commissions and device costs,
which historically have been expensed when incurred and presented
net of revenue, are deferred and amortized against revenue over the
expected period of benefit of approximately 21 to 53 months. The
deferred balance as of December 31, 2018 is approximately
$75.8 million and is classified on the balance sheet as current and
non-current assets, as applicable. |
Non-GAAP Financial MeasuresIn
managing our business and assessing our financial performance,
management supplements the information provided by the financial
statement measures prepared in accordance with GAAP with Adjusted
OIBDA and Continuing OIBDA, which are considered “non-GAAP
financial measures” under SEC rules.
Adjusted OIBDA is defined as operating income
(loss) before depreciation and amortization, adjusted to exclude
the effects of: certain non-recurring transactions;
impairment of assets; gains and losses on asset sales; actuarial
gains and losses on pension and other post-retirement benefit
plans; and share-based compensation expense, amortization of
deferred costs related to the impacts of the adoption of Topic 606,
and adjusted to include the benefit received from the waived
management fee by Sprint. Continuing OIBDA is defined as Adjusted
OIBDA, less the benefit received from the waived management fee by
Sprint. Adjusted OIBDA and Continuing OIBDA should not be construed
as an alternative to operating income as determined in accordance
with GAAP as a measure of operating performance.
In a capital-intensive industry such as
telecommunications, management believes that Adjusted OIBDA and
Continuing OIBDA and the associated percentage margin calculations
are meaningful measures of our operating performance. We use
Adjusted OIBDA and Continuing OIBDA as supplemental performance
measures because management believes these measures facilitate
comparisons of our operating performance from period to period and
comparisons of our operating performance to that of our peers and
other companies by excluding potential differences caused by the
age and book depreciation of fixed assets (affecting relative
depreciation expenses) as well as the other items described above
for which additional adjustments were made. In the future,
management expects that the Company may again report Adjusted OIBDA
and Continuing OIBDA excluding these items and may incur expenses
similar to these excluded items. Accordingly, the exclusion
of these and other similar items from our non-GAAP presentation
should not be interpreted as implying these items are
non-recurring, infrequent or unusual.
While depreciation and amortization are
considered operating costs under generally accepted accounting
principles, these expenses primarily represent the current period
allocation of costs associated with long-lived assets acquired or
constructed in prior periods, and accordingly may obscure
underlying operating trends for some purposes. By isolating
the effects of these expenses and other items that vary from period
to period without any correlation to our underlying performance, or
that vary widely among similar companies, management believes
Adjusted OIBDA and Continuing OIBDA facilitates internal
comparisons of our historical operating performance, which are used
by management for business planning purposes, and also facilitates
comparisons of our performance relative to that of our
competitors. In addition, we believe that Adjusted OIBDA and
Continuing OIBDA and similar measures are widely used by investors
and financial analysts as measures of our financial performance
over time, and to compare our financial performance with that of
other companies in our industry.
Adjusted OIBDA and Continuing OIBDA have
limitations as an analytical tool, and should not be considered in
isolation or as a substitute for analysis of our results as
reported under GAAP. These limitations include, but are not
limited to, the following:
- they do not reflect capital expenditures;
- they do not reflect the impacts of adoption of Topic 606;
- many of the assets being depreciated and amortized will have to
be replaced in the future and Adjusted OIBDA and Continuing OIBDA
do not reflect cash requirements for such replacements;
- they do not reflect costs associated with share-based awards
exchanged for employee services;
- they do not reflect interest expense necessary to service
interest or principal payments on indebtedness;
- they do not reflect gains, losses or dividends on
investments;
- they do not reflect expenses incurred for the payment of income
taxes; and
- other companies, including companies in our industry, may
calculate Adjusted OIBDA and Continuing OIBDA differently than we
do, limiting its usefulness as a comparative measure.
In light of these limitations, management
considers Adjusted OIBDA and Continuing OIBDA as a financial
performance measure that supplements but does not replace the
information reflected in our GAAP results.
The adoption of the new revenue standard did not
impact Adjusted OIBDA.
The following tables reconcile Adjusted OIBDA
and Continuing OIBDA to operating income, which we consider to be
the most directly comparable GAAP financial measure, for the fourth
quarter and full year 2018 and 2017:
Adjusted OIBDA and Continuing OIBDA
Three Months
Ended December 31, 2018 (in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Consolidated |
Operating income |
|
$ |
25,977 |
|
|
$ |
6,311 |
|
|
$ |
3,178 |
|
|
$ |
(8,472 |
) |
|
$ |
26,994 |
|
Impact of ASC topic 606 |
|
(4,026 |
) |
|
(17 |
) |
|
(58 |
) |
|
— |
|
|
(4,101 |
) |
Depreciation and amortization |
|
31,668 |
|
|
6,339 |
|
|
3,604 |
|
|
162 |
|
|
41,773 |
|
Share-based compensation
expense |
|
— |
|
|
— |
|
|
— |
|
|
381 |
|
|
381 |
|
Benefit received from the waived
management fee (1) |
|
9,599 |
|
|
— |
|
|
— |
|
|
— |
|
|
9,599 |
|
Amortization of intangibles netted
in rent expense |
|
(30 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(30 |
) |
Actuarial (gains) losses on pension
plans |
|
— |
|
|
— |
|
|
— |
|
|
(1,441 |
) |
|
(1,441 |
) |
Adjusted OIBDA |
|
63,188 |
|
|
12,633 |
|
|
6,724 |
|
|
(9,370 |
) |
|
73,175 |
|
Waived management fee |
|
(9,599 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(9,599 |
) |
Continuing OIBDA |
|
$ |
53,589 |
|
|
$ |
12,633 |
|
|
$ |
6,724 |
|
|
$ |
(9,370 |
) |
|
$ |
63,576 |
|
Three Months
Ended December 31, 2017 (in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Consolidated |
Operating income |
|
$ |
11,907 |
|
|
$ |
5,386 |
|
|
$ |
5,393 |
|
|
$ |
(4,576 |
) |
|
$ |
18,110 |
|
Depreciation and amortization |
|
33,922 |
|
|
5,898 |
|
|
3,293 |
|
|
142 |
|
|
43,255 |
|
(Gain) loss on asset sales |
|
6 |
|
|
(128 |
) |
|
53 |
|
|
90 |
|
|
21 |
|
Share-based compensation
expense |
|
233 |
|
|
146 |
|
|
63 |
|
|
88 |
|
|
530 |
|
Benefit received from the waived
management fee (1) |
|
8,988 |
|
|
— |
|
|
— |
|
|
— |
|
|
8,988 |
|
Amortization of intangibles netted
in rent expense |
|
(645 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(645 |
) |
Temporary back-office costs to
support the billing operations through migration (2) |
|
964 |
|
|
— |
|
|
— |
|
|
— |
|
|
964 |
|
Actuarial gains on pension
plans |
|
— |
|
|
— |
|
|
— |
|
|
(1,391 |
) |
|
(1,391 |
) |
Integration and acquisition related
expenses, and other |
|
1,187 |
|
|
— |
|
|
— |
|
|
(30 |
) |
|
1,157 |
|
Adjusted OIBDA |
|
56,562 |
|
|
11,302 |
|
|
8,802 |
|
|
(5,677 |
) |
|
70,989 |
|
Waived management fee |
|
(8,988 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(8,988 |
) |
Continuing OIBDA |
|
$ |
47,574 |
|
|
$ |
11,302 |
|
|
$ |
8,802 |
|
|
$ |
(5,677 |
) |
|
$ |
62,001 |
|
Year Ended
December 31, 2018 (in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Consolidated |
Operating income |
|
$ |
92,847 |
|
|
$ |
23,755 |
|
|
$ |
17,865 |
|
|
$ |
(41,221 |
) |
|
$ |
93,246 |
|
Impact of ASC topic 606 |
|
(15,048 |
) |
|
(74 |
) |
|
(197 |
) |
|
— |
|
|
(15,319 |
) |
Depreciation and amortization |
|
127,521 |
|
|
24,644 |
|
|
13,673 |
|
|
567 |
|
|
166,405 |
|
Share-based compensation
expense |
|
— |
|
|
— |
|
|
— |
|
|
4,959 |
|
|
4,959 |
|
Benefit received from the waived
management fee (1) |
|
37,763 |
|
|
— |
|
|
— |
|
|
— |
|
|
37,763 |
|
Amortization of intangibles netted
in rent expense |
|
342 |
|
|
— |
|
|
— |
|
|
— |
|
|
342 |
|
Actuarial (gains) losses on pension
plans |
|
— |
|
|
— |
|
|
— |
|
|
(1,688 |
) |
|
(1,688 |
) |
Adjusted OIBDA |
|
243,425 |
|
|
48,325 |
|
|
31,341 |
|
|
(37,383 |
) |
|
285,708 |
|
Waived management fee |
|
(37,763 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(37,763 |
) |
Continuing OIBDA |
|
$ |
205,662 |
|
|
$ |
48,325 |
|
|
$ |
31,341 |
|
|
$ |
(37,383 |
) |
|
$ |
247,945 |
|
Year Ended
December 31, 2017 (in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Consolidated |
Operating income |
|
$ |
34,139 |
|
|
$ |
15,846 |
|
|
$ |
20,965 |
|
|
$ |
(24,440 |
) |
|
$ |
46,510 |
|
Depreciation and amortization |
|
139,610 |
|
|
23,968 |
|
|
12,829 |
|
|
600 |
|
|
177,007 |
|
(Gain) loss on asset sales |
|
214 |
|
|
(243 |
) |
|
79 |
|
|
68 |
|
|
118 |
|
Share-based compensation
expense |
|
1,579 |
|
|
916 |
|
|
384 |
|
|
701 |
|
|
3,580 |
|
Benefit received from the waived
management fee (1) |
|
36,056 |
|
|
— |
|
|
— |
|
|
— |
|
|
36,056 |
|
Amortization of intangibles netted
in rent expense |
|
1,528 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,528 |
|
Temporary back-office costs to
support the billing operations through migration (2) |
|
6,459 |
|
|
— |
|
|
— |
|
|
1 |
|
|
6,460 |
|
Actuarial gains on pension
plans |
|
— |
|
|
— |
|
|
— |
|
|
(1,387 |
) |
|
(1,387 |
) |
Integration and acquisition related
expenses, and other |
|
10,793 |
|
|
— |
|
|
— |
|
|
237 |
|
|
11,030 |
|
Adjusted OIBDA |
|
230,378 |
|
|
40,487 |
|
|
34,257 |
|
|
(24,220 |
) |
|
280,902 |
|
Waived management fee |
|
(36,056 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(36,056 |
) |
Continuing OIBDA |
|
$ |
194,322 |
|
|
$ |
40,487 |
|
|
$ |
34,257 |
|
|
$ |
(24,220 |
) |
|
$ |
244,846 |
|
________________________________
(1) |
Under our amended
affiliate agreement, Sprint agreed to waive the Management Fees
charged on both postpaid and prepaid revenues, up to $4.2 million
per month, until the total amount waived reaches approximately
$255.6 million, which is expected to occur in 2022. |
(2) |
Represents back-office expenses required to support former nTelos
subscribers that migrated to Sprint back-office systems. |
Segment Results
Three Months Ended December 31, 2018 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Eliminations |
|
Consolidated |
External revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
|
$ |
96,664 |
|
|
$ |
29,120 |
|
|
$ |
5,469 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
131,253 |
|
Equipment
revenue |
|
18,651 |
|
|
158 |
|
|
38 |
|
|
— |
|
|
— |
|
|
18,847 |
|
Other |
|
2,414 |
|
|
2,309 |
|
|
6,661 |
|
|
— |
|
|
— |
|
|
11,384 |
|
Total external
revenue |
|
117,729 |
|
|
31,587 |
|
|
12,168 |
|
|
— |
|
|
— |
|
|
161,484 |
|
Internal
revenue |
|
1,270 |
|
|
1,312 |
|
|
6,533 |
|
|
— |
|
|
(9,115 |
) |
|
— |
|
Total operating
revenue |
|
118,999 |
|
|
32,899 |
|
|
18,701 |
|
|
— |
|
|
(9,115 |
) |
|
161,484 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
services |
|
31,675 |
|
|
14,817 |
|
|
9,615 |
|
|
— |
|
|
(8,447 |
) |
|
47,660 |
|
Cost of
goods sold |
|
17,834 |
|
|
98 |
|
|
20 |
|
|
— |
|
|
— |
|
|
17,952 |
|
Selling,
general and administrative |
|
11,845 |
|
|
5,334 |
|
|
2,284 |
|
|
8,310 |
|
|
(668 |
) |
|
27,105 |
|
Depreciation and amortization |
|
31,668 |
|
|
6,339 |
|
|
3,604 |
|
|
162 |
|
|
— |
|
|
41,773 |
|
Total operating
expenses |
|
93,022 |
|
|
26,588 |
|
|
15,523 |
|
|
8,472 |
|
|
(9,115 |
) |
|
134,490 |
|
Operating income
(loss) |
|
$ |
25,977 |
|
|
$ |
6,311 |
|
|
$ |
3,178 |
|
|
$ |
(8,472 |
) |
|
$ |
— |
|
|
$ |
26,994 |
|
Three Months Ended December 31, 2017 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Eliminations |
|
Consolidated |
External revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
|
$ |
106,468 |
|
|
$ |
27,109 |
|
|
$ |
5,087 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
138,664 |
|
Equipment
revenue |
|
1,801 |
|
|
177 |
|
|
37 |
|
|
— |
|
|
— |
|
|
2,015 |
|
Other |
|
2,011 |
|
|
2,119 |
|
|
6,808 |
|
|
— |
|
|
— |
|
|
10,938 |
|
Total external
revenue |
|
110,280 |
|
|
29,405 |
|
|
11,932 |
|
|
— |
|
|
— |
|
|
151,617 |
|
Internal revenue |
|
1,242 |
|
|
1,092 |
|
|
8,740 |
|
|
— |
|
|
(11,074 |
) |
|
— |
|
Total operating revenue |
|
111,522 |
|
|
30,497 |
|
|
20,672 |
|
|
— |
|
|
(11,074 |
) |
|
151,617 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
28,881 |
|
|
14,379 |
|
|
10,060 |
|
|
39 |
|
|
(10,382 |
) |
|
42,977 |
|
Cost of goods sold |
|
5,569 |
|
|
(82 |
) |
|
67 |
|
|
— |
|
|
— |
|
|
5,554 |
|
Selling, general and
administrative |
|
30,056 |
|
|
4,916 |
|
|
1,858 |
|
|
4,425 |
|
|
(692 |
) |
|
40,563 |
|
Integration and acquisition
expenses |
|
1,186 |
|
|
— |
|
|
— |
|
|
(29 |
) |
|
— |
|
|
1,157 |
|
Depreciation and amortization |
|
33,925 |
|
|
5,898 |
|
|
3,293 |
|
|
140 |
|
|
— |
|
|
43,256 |
|
Total operating expenses |
|
99,617 |
|
|
25,111 |
|
|
15,278 |
|
|
4,575 |
|
|
(11,074 |
) |
|
133,507 |
|
Operating income (loss) |
|
$ |
11,905 |
|
|
$ |
5,386 |
|
|
$ |
5,394 |
|
|
$ |
(4,575 |
) |
|
$ |
— |
|
|
$ |
18,110 |
|
Year Ended December 31, 2018 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Eliminations |
|
Consolidated |
External revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
|
$ |
380,818 |
|
|
$ |
114,917 |
|
|
$ |
21,521 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
517,256 |
|
Equipment
revenue |
|
67,510 |
|
|
695 |
|
|
193 |
|
|
— |
|
|
— |
|
|
68,398 |
|
Other |
|
9,311 |
|
|
8,585 |
|
|
27,304 |
|
|
— |
|
|
— |
|
|
45,200 |
|
Total external
revenue |
|
457,639 |
|
|
124,197 |
|
|
49,018 |
|
|
— |
|
|
— |
|
|
630,854 |
|
Internal
revenue |
|
5,016 |
|
|
4,706 |
|
|
28,124 |
|
|
— |
|
|
(37,846 |
) |
|
— |
|
Total operating
revenue |
|
462,655 |
|
|
128,903 |
|
|
77,142 |
|
|
— |
|
|
(37,846 |
) |
|
630,854 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
services |
|
131,166 |
|
|
59,935 |
|
|
38,056 |
|
|
— |
|
|
(35,135 |
) |
|
194,022 |
|
Cost of
goods sold |
|
63,583 |
|
|
295 |
|
|
81 |
|
|
— |
|
|
— |
|
|
63,959 |
|
Selling,
general and administrative |
|
47,538 |
|
|
20,274 |
|
|
7,467 |
|
|
40,654 |
|
|
(2,711 |
) |
|
113,222 |
|
Depreciation and amortization |
|
127,521 |
|
|
24,644 |
|
|
13,673 |
|
|
567 |
|
|
— |
|
|
166,405 |
|
Total operating
expenses |
|
369,808 |
|
|
105,148 |
|
|
59,277 |
|
|
41,221 |
|
|
(37,846 |
) |
|
537,608 |
|
Operating income
(loss) |
|
$ |
92,847 |
|
|
$ |
23,755 |
|
|
$ |
17,865 |
|
|
$ |
(41,221 |
) |
|
$ |
— |
|
|
$ |
93,246 |
|
Year Ended December 31, 2017 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Eliminations |
|
Consolidated |
External revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
|
$ |
431,184 |
|
|
$ |
107,338 |
|
|
$ |
20,388 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
558,910 |
|
Equipment
revenue |
|
9,467 |
|
|
724 |
|
|
127 |
|
|
— |
|
|
— |
|
|
10,318 |
|
Other |
|
9,478 |
|
|
7,855 |
|
|
25,430 |
|
|
— |
|
|
— |
|
|
42,763 |
|
Total external
revenue |
|
450,129 |
|
|
115,917 |
|
|
45,945 |
|
|
— |
|
|
— |
|
|
611,991 |
|
Internal revenue |
|
4,949 |
|
|
3,245 |
|
|
33,308 |
|
|
— |
|
|
(41,502 |
) |
|
— |
|
Total operating revenue |
|
455,078 |
|
|
119,162 |
|
|
79,253 |
|
|
— |
|
|
(41,502 |
) |
|
611,991 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
129,626 |
|
|
59,335 |
|
|
38,417 |
|
|
39 |
|
|
(38,696 |
) |
|
188,721 |
|
Cost of goods sold |
|
22,653 |
|
|
14 |
|
|
119 |
|
|
— |
|
|
— |
|
|
22,786 |
|
Selling, general and
administrative |
|
118,257 |
|
|
19,999 |
|
|
6,923 |
|
|
23,564 |
|
|
(2,806 |
) |
|
165,937 |
|
Integration and acquisition
expenses |
|
10,793 |
|
|
— |
|
|
— |
|
|
237 |
|
|
— |
|
|
11,030 |
|
Depreciation and amortization |
|
139,610 |
|
|
23,968 |
|
|
12,829 |
|
|
600 |
|
|
— |
|
|
177,007 |
|
Total operating expenses |
|
420,939 |
|
|
103,316 |
|
|
58,288 |
|
|
24,440 |
|
|
(41,502 |
) |
|
565,481 |
|
Operating income (loss) |
|
$ |
34,139 |
|
|
$ |
15,846 |
|
|
$ |
20,965 |
|
|
$ |
(24,440 |
) |
|
$ |
— |
|
|
$ |
46,510 |
|
Supplemental Information
Subscriber Statistics
The following tables indicate selected operating
statistics of Wireless, including Sprint subscribers, as of the
dates shown:
|
|
December 31, 2018 (3) |
|
December 31, 2017 (4) |
Postpaid: |
|
|
|
|
Retail PCS subscribers -
postpaid |
|
795,176 |
|
|
736,597 |
|
Gross PCS
subscriber additions - postpaid |
|
190,334 |
|
|
173,871 |
|
Net PCS
subscriber additions (losses) - postpaid |
|
58,579 |
|
|
14,035 |
|
PCS
average monthly retail churn % - postpaid |
|
1.82 |
% |
|
2.04 |
% |
Prepaid: |
|
|
|
|
Retail
PCS subscribers - prepaid (1) |
|
258,704 |
|
|
225,822 |
|
Gross PCS
subscriber additions - prepaid (1) |
|
150,662 |
|
|
151,926 |
|
Net PCS
subscriber additions (losses) - prepaid (1) |
|
32,882 |
|
|
19,150 |
|
PCS
average monthly retail churn % - prepaid (1) |
|
4.45 |
% |
|
5.07 |
% |
|
|
|
|
|
PCS market POPS (000)
(2) |
|
7,023 |
|
|
5,942 |
|
PCS covered POP (000)
(2) |
|
6,109 |
|
|
5,272 |
|
CDMA base stations
(sites) |
|
1,853 |
|
|
1,623 |
|
Towers owned |
|
208 |
|
|
192 |
|
Non-affiliate cell site
leases |
|
193 |
|
|
192 |
|
_______________________________________________________
(1) |
As of September 2017,
the Company is no longer including Lifeline subscribers to be
consistent with Sprint's policy. Historical customer counts have
been adjusted accordingly. |
(2) |
"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 agreements, and
Covered POPS are those covered by our network. The data source for
POPS is U.S. census data. Historical periods previously referred to
other third party population data and have been recast to refer to
U.S. census data. |
(3) |
Beginning February 1, 2018 includes Richmond Expansion Area except
for gross PCS subscriber additions. |
(4) |
Beginning April 6, 2017 includes Parkersburg Expansion Area except
for gross PCS subscriber additions. |
The subscriber statistics shown above include
the following:
|
|
February 1, 2018 |
|
April 6, 2017 |
|
|
Expansion Area |
|
Expansion Area |
PCS subscribers - postpaid |
|
38,343 |
|
|
19,067 |
|
PCS subscribers - prepaid (1) |
|
15,691 |
|
|
4,517 |
|
Acquired PCS market POPS (000) |
|
1,082 |
|
|
511 |
|
Acquired PCS covered POPS (000) |
|
602 |
|
|
244 |
|
Acquired CDMA base stations (sites) (2) |
|
105 |
|
|
— |
|
_______________________________________________________
(1) |
Excludes Lifeline
subscribers. |
(2) |
As of
December 31, 2018 we have shut down 107 overlap sites
associated with the nTelos Area. |
The following table shows selected operating statistics for
Cable as of the dates shown:
|
|
December 31, 2018 |
|
December 31, 2017 |
Homes passed (1) |
|
185,133 |
|
|
184,910 |
|
Customer relationships
(2) |
|
|
|
|
Video
users |
|
41,269 |
|
|
44,269 |
|
Non-video
customers |
|
38,845 |
|
|
33,559 |
|
Total
customer relationships |
|
80,114 |
|
|
77,828 |
|
Video |
|
|
|
|
Customers
(3) |
|
43,600 |
|
|
46,613 |
|
Penetration (4) |
|
23.6 |
% |
|
25.2 |
% |
Digital
video penetration (5) |
|
78.8 |
% |
|
76.2 |
% |
Broadband |
|
|
|
|
Available
homes (6) |
|
185,133 |
|
|
184,910 |
|
Users
(3) |
|
68,179 |
|
|
63,918 |
|
Penetration (4) |
|
36.8 |
% |
|
34.6 |
% |
Voice |
|
|
|
|
Available
homes (6) |
|
185,133 |
|
|
182,379 |
|
Users
(3) |
|
23,366 |
|
|
22,555 |
|
Penetration (4) |
|
12.6 |
% |
|
12.4 |
% |
Total revenue
generating units (7) |
|
135,145 |
|
|
133,086 |
|
Fiber route miles |
|
3,514 |
|
|
3,356 |
|
Total fiber miles
(8) |
|
138,648 |
|
|
122,011 |
|
Average revenue
generating units |
|
133,109 |
|
|
132,759 |
|
(1) |
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. |
(2) |
Customer
relationships represent the number of billed customers who receive
at least one of our services. |
(3) |
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,
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. |
(4) |
Penetration is calculated by dividing the number of users by the
number of homes passed or available homes, as appropriate. |
(5) |
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. |
(6) |
Homes
and businesses are considered available (“available homes”) if we
can connect them to our distribution system without further
extending the transmission lines and if we offer the service in
that area. |
(7) |
Revenue
generating units are the sum of video, voice and high-speed
internet users. |
(8) |
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 selected operating
statistics for Wireline as of the dates shown:
|
|
December 31, 2018 |
|
December 31, 2017 |
Long distance
subscribers |
|
9,452 |
|
|
9,078 |
|
Video customers
(1) |
|
4,742 |
|
|
5,019 |
|
Broadband
customers |
|
14,464 |
|
|
14,353 |
|
Fiber route miles |
|
2,127 |
|
|
2,073 |
|
Total fiber miles
(2) |
|
161,552 |
|
|
154,165 |
|
_______________________________________________________
(1) |
Wireline's video service
passes approximately 16,500 homes. |
(2) |
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. |
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