Shenandoah Telecommunications Company Reports Second Quarter 2018 Results
Posted 7 August 2018 10:26 AM by shentel
EDINBURG, Va., August 7, 2018 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel”) (NASDAQ: SHEN) announces financial and operating results for the three months ended June 30, 2018.
President and CEO Christopher E. French commented, “Shentel delivered solid second quarter results which included consolidated
revenue growth, significantly enhanced operating income and improved net profitability. In the past year, our Wireless geographic
coverage area has grown significantly with the expansion of our affiliate agreement with Sprint, and we are focused on driving
distribution and activation levels in our expanded footprint. During the second quarter, our wireless segment achieved growth in
both postpaid and prepaid customers, reflective of Shentel’s reputation as a provider of reliable coverage, excellent service and
robust capacity which has positioned us as the ‘carrier of choice’ in the markets in which we operate."
“Revenues in our cable segment grew 9% in the second quarter, with increased RGUs, and we are encouraged by the opportunity to
capture additional market share as consumers seek the high speed bandwidth and dependable service that our network provides. In
the Wireline segment we continued our focus on growth in our regional fiber network and transitioning our legacy telephone area
from DSL service to cable modem service. Our focus on providing high quality, reliable service across all of our offerings remains
the cornerstone of our service commitment to our customers and the foundation for our continued growth".
Second Quarter Results
Consolidated
- Net income for the three months ended June 30, 2018 was $7.8 million, or $0.16 per share, compared with a net loss of $80
thousand, or less than $0.01 per share, in the second quarter of 2017. Effective January 1, 2018, the Company adopted the
new revenue recognition standard, which requires the Company to record costs such as commissions for the national sales
channel that are settled separately with Sprint as reductions of revenue. Previously these costs were recorded in costs of
goods and services and in selling, general and administrative expense. Excluding the impact of this standard, second
quarter net income was $5.9 million, or $0.12 per share, due to the deferral of certain commissions and device costs as
required by the new revenue recognition standard.
- Operating revenues for the three months ended June 30, 2018 were $154.0 million, a year over year increase of 0.5%,
compared with $153.3 million for the three months ended June 30, 2017. Excluding the impact of the new revenue
recognition standard, total operating revenues improved approximately $4.8 million, or 3.1%, driven by Wireless and Cable
operations, partially offset by Wireline.
- Operating expenses for the second quarter of 2018 were $135.3 million, compared with $145.0 million for the equivalent
quarter in the prior year. Excluding the impacts of the new revenue recognition standard, operating expenses decreased
$3.0 million, or 2.1% due to the absence of acquisition and integration costs related to the prior year nTelos integration, and
a decrease in depreciation and amortization as assets acquired in the nTelos acquisition were retired. These declines were
partially offset by increases in network and selling costs associated with the continued expansion of our networks to
support the increase and demand for the subscriber base.
- Operating income increased 126.6% in the second quarter of 2018 to $18.7 million from $8.3 million in the equivalent
quarter of the prior year.
- Adjusted OIBDA for the three months ended June 30, 2018 was $69.8 million, compared with $69.4 million for the three
months ended June 30, 2017. Continuing OIBDA for the three months ended June 30, 2018 was $60.3 million, compared
with $60.3 million for the three months ended June 30, 2017. The adoption of the new revenue recognition standard did not
have an impact on adjusted OIBDA.
Wireless
- Wireless operating revenues increased $2.2 million, excluding the impacts of adopting the new revenue
recognition standard, compared with the three months ended June 30, 2017. The increase was driven by growth in
postpaid and prepaid PCS subscribers, improvements in PCS average monthly churn for postpaid and prepaid, and
was partially offset by a decline in average revenue per subscriber primarily related to promotions and discounts.
- Wireless operating expenses for the three months ended June 30, 2018 were $92.5 million, compared with $107.8
million for the three months ended June 30, 2017, a year over year decrease of 14.2%. Excluding the impacts of
the new revenue recognition standard, operating expenses decreased $8.6 million due to the absence of acquisition
and integration costs related to the prior year nTelos integration and a reduction in depreciation and amortization.
These decreases were partially offset by increases in network costs resulting from the completion of our 4G rollout
and expanded coverage area, as well as additional selling costs.
- Wireless adjusted OIBDA for the three months ended June 30, 2018 was $60.1 million, compared with $58.2
million for the three months ended June 30, 2017. Wireless continuing OIBDA for the three months ended June
30, 2018 was $50.5 million, compared with $49.0 million from the three months ended June 30, 2017.
- Shentel served 780,658 wireless postpaid retail PCS subscribers as of June 30, 2018, up 6.6% over the second
quarter of 2017. Postpaid churn for the three months ended June 30, 2018, was 1.67%, compared with 2.00% for
the three months ended June 30, 2017. The Company had net additions of 5,797 postpaid customers in the three
months ended June 30, 2018, compared with net additions of 15,514 for the three months ended June 30, 2017. As
of the three months ended June 30, 2018, tablets and data devices were 14% of the postpaid base reflecting a net
gain of 821 for these devices over the prior year.
Cable
- Cable operating revenues for the second quarter of 2018 were $32.1 million, a year over year increase of 8.6%
compared with $29.6 million for the three months ended June 30, 2017. The increase was primarily due to growth
in broadband ARPU and rate increases for video services.
- Cable operating expenses were flat at $26.0 million in the second quarter of both 2018 and 2017. The Company
added 3,519 High Speed Data users and 790 voice users, and lost 3,448 video users.
- Cable adjusted OIBDA for the three months ended June 30, 2018 was $12.3 million, an increase of 23.7%.
Wireline
- Wireline operating revenues for the three months ended June 30, 2018 were $19.1 million, compared with $19.6
million for the prior year second quarter. The decrease in operating revenues was primarily attributable to
migrating Wireless backhaul circuits from traditional circuit-switched facilities to more cost effective Voice Over
IP ("VoIP") facilities.
- Wireline operating expenses for the three months ended June 30, 2018 were $14.3 million, compared with $14.2
million for the quarter ended June 30, 2017, due primarily to costs to support new fiber contracts.
- Wireline adjusted OIBDA for the three months ended June 30, 2018 was $8.0 million, compared with $8.6 million
for the prior year equivalent quarter, primarily driven by the decline in revenue.
Network & Technology Highlights
- Beginning in 2018, we began transitioning Wireless backhaul circuits from traditional circuit-switched facilities to VoIP
facilities, in our Wireline operations. We expect to complete the transition by year-end 2018 and expect to realize a
reduction in overall Wireless network costs beginning in 2019.
Other Information
- Capital expenditures were $62.3 million in the six months ended June 30, 2018 compared with $68.8 million in the
comparable 2017 period. The Company's estimated 2018 capital budget remains $163 million.
- Cash and cash equivalents as of June 30, 2018 were $65.6 million, compared with $78.6 million at December 31, 2017.
- Outstanding debt at June 30, 2018 totaled $799.9 million, net of unamortized loan costs, compared to $822.0 million as of
December 31, 2017. As of June 30, 2018, no amounts were outstanding under the revolving line of credit. The total
leverage ratio as of June 30, 2018 was 2.89.
Conference Call and Webcast
Teleconference Information:
Date: August 7, 2018
Time: 10:00 A.M. (ET)
Dial in number: 1-888-695-7639
Password: 1890438
Audio webcast: http://investor.shentel.com/
An audio replay of the call will be available approximately two hours after the call is complete, through August 16, 2018 by calling
(855) 859-2056.