Shenandoah Telecommunications Company (“Shentel”) (NASDAQ: SHEN)
announced solid second quarter results.
Second Quarter 2019 Highlights•
Consolidated operating
revenue grew 1.5% to $158.9 million.•
Consolidated Adjusted
OIBDA(1) grew 5.2% to $67.0 million with growth in all segments.•
Consolidated operating
income grew 13.5% to $24.0 million.•
Diluted earnings per
share grew 36.4% to $0.26 per share compared with $0.19 per share
in second quarter 2018.•
Wireless postpaid net additions of 10,767.
"Our second quarter results demonstrate continued strength of
our high quality networks and operations highlighted by growth in
Adjusted OIBDA across all of our business segments," said President
and CEO Christopher E. French. "Shentel continued to achieve growth
in both our postpaid and prepaid wireless customer base, as we
capitalized on the investments we've made in our network to
solidify our leadership role providing the highest reliability and
broadest coverage in the markets we serve. Our Cable segment
benefited from the successful integration of Big Sandy Broadband
("Big Sandy"), the DOCSIS 3.1 upgrade and new pricing introduced
earlier in the year that led to bandwidth speed upgrades and
growing customer ARPU. We continue to leverage our strong balance
sheet and cash flow generation to make targeted investments to
position the Company for strong growth for the next several
years."
Please refer to
our Second Quarter 2019 Earnings Presentation
Supplement available at https://investor.shentel.com/ for
additional information, including matters that will be referenced
during the Company’s conference call. Included in this release are
certain non-GAAP financial measures that are not determined in
accordance with U.S. generally accepted accounting principles.
Please refer to additional information for non-GAAP measures
provided herein.
Consolidated Second Quarter 2019
Results
- Operating revenue in the second quarter of 2019 was $158.9
million, representing an increase of 1.5% from $156.5 million in
the second quarter of 2018 driven by growth in the Cable and
Wireline segments.
- Operating expenses for the second quarter of 2019 were $134.9
million, representing a decrease of 0.3% from $135.3 million in the
second quarter of 2018. The decrease was primarily due to a decline
in selling, general and administrative expenses in our Wireless and
Other segments.
- Operating income for the second quarter 2019 was $24.0 million,
representing an increase of 13.5% from $21.2 million in the second
quarter of 2018.
- Adjusted OIBDA(1) in the second quarter of 2019 was $67.0
million, representing an increase of 5.2% from $63.7 million in the
second quarter of 2018. The increase was driven by revenue growth
in Cable and Wireline and lower transactional tax and professional
fee expenses in the Wireless and Other segments.
- Net income in the second quarter of 2019 was $13.2 million,
representing an increase of 36.6% from $9.6 million in the second
quarter of 2018.
Wireless
- Shentel's network served 811,719 wireless postpaid subscribers
at June 30, 2019, an increase of 4.0% compared with 780,658
subscribers as of June 30, 2018. Second quarter 2019
postpaid churn was 1.74%. At June 30, 2019, tablets and
data devices represented 10.4% of the postpaid base.
- Shentel's network served 269,039 wireless prepaid subscribers
at June 30, 2019, an increase of 6.7% compared with 252,054
subscribers as of June 30, 2018. Second quarter 2019 prepaid
churn was 3.97%, representing an improvement of 28 basis points
compared with the prior year.
- Wireless operating revenue decreased 0.5% to $114.1 million for
the second quarter of 2019 from $114.8 million in the second
quarter of 2018. Travel revenue declined $3.0 million during the
second quarter of 2019 due to the suspension by Sprint of travel
revenue payments. The travel revenue decline was substantially
offset by increases in subscriber service revenue of $0.9 million,
in equipment revenue of $0.7 million, and in roaming revenue of
$0.5 million.
- Under our Sprint affiliate agreement, Shentel and Sprint
compensate one another when subscribers use the other company's
network. This has been reflected in a net monthly payment of $1.5
million from Sprint to Shentel for the period beginning at the
closing of the Ntelos transaction in 2016 through April of 2019.
Sprint suspended the monthly payments beginning in May 2019
pending agreement on new travel fees. Under our affiliate
agreement with Sprint, the travel fees are to be reset for a three
year period. Although we have been working with Sprint to establish
the new fees, we have not reached an agreement and have begun the
escalation process as outlined in our affiliate agreement. We
expect to resolve the new travel fees in the third quarter
2019.
- Wireless operating expenses in the second quarter of 2019 were
$92.1 million, representing a decrease of 0.4% from $92.5 million
in the second quarter of 2018. This decrease was primarily
due to a $1.8 million decline in selling, general and
administrative expenses due to reductions in transactional tax
expenses, partially offset by increases of $0.7 million in cost of
goods sold and $0.7 million in depreciation expense.
- Wireless operating income in the second quarter of 2019 was
$22.0 million, compared to $22.3 million for the second quarter of
2018.
- Wireless Adjusted OIBDA(1) in the second quarter of 2019
was $54.2 million, compared to $53.8 million for the second quarter
of 2018.
Cable
- Total Revenue Generating Units ("RGUs") as of June 30,
2019 were 138,572, representing an increase of 4.1% and includes
the addition of approximately 4,800 RGUs obtained through the Big
Sandy acquisition that occurred in the first quarter of 2019.
- Cable operating revenue for the second quarter of 2019 was
$34.7 million, representing an increase of 8.0% from $32.1 million
in the second quarter of 2018. The increase was primarily
attributable to a full quarter of Big Sandy results and growth in
average revenue per customer ("ARPU") as broadband customers
upgraded to higher-speed data access packages and an increase in
video rates.
- Cable operating expenses in the second quarter of 2019 were
$27.9 million, representing an increase of 7.2% from $26.0 million
for the second quarter of 2018. The increase was primarily due to
higher repair and maintenance expense associated with maintaining
our growing network and an increase in business development
expenses aimed at expanding our product portfolio.
- Cable operating income for the second quarter of 2019 was $6.8
million, representing an increase of 11.6% from $6.1 million for
the second quarter of 2018.
- Cable Adjusted OIBDA for the second quarter of 2019 was
$13.3 million, representing an increase of 8.8% from $12.3 million
for the second quarter of 2018.
Wireline
- Wireline operating revenue for the second quarter of 2019 was
$19.5 million, representing an increase of 2.2% from $19.1 million
in the second quarter of 2018. The increase in operating revenue
was primarily attributable to the timing of receiving regulatory
support funds.
- Wireline operating expenses in the second quarter of 2019 were
$14.4 million, consistent with operating expenses in the second
quarter of 2018.
- Wireline operating income for the second quarter of 2019 was
$5.1 million, representing an increase of 6.3%
from $4.8 million in the second quarter of 2018.
- Wireline Adjusted OIBDA for the second quarter of 2019 was $8.5
million, representing an increase of 6.3% from $8.0 million in the
second quarter of 2018.
(1) |
The calculation and presentation of Adjusted OIBDA was changed to
conform to industry practices. Please refer to non-GAAP Financial
Measures for the reconciliation from operating income and the
current reported definition to the prior reported definition. |
Other Information
- Capital expenditures were $79.1 million for the six months
ended June 30, 2019 compared with $62.3 million in the comparable
2018 period. We are increasing our capital expenditures guidance
for 2019 from $150 million to $170 million to reflect the
acquisition of 2.5 GHz spectrum that we plan to use to increase the
reach of our residential broadband service via fixed wireless in
the underserved areas of our markets.
- Outstanding debt at June 30, 2019 totaled $760.5 million
compared with $785.2 million as of December 31, 2018. As of
June 30, 2019, the Company had liquidity of approximately
$173.1 million, including $75.0 million of revolving line of credit
availability.
Conference Call and Webcast
Teleconference Information:
Date: August 6, 2019 Time: 10:00 A.M. (ET)Dial
in number: 1-888-695-7639
Password: 7559363 Audio
webcast: http://investor.shentel.com/
An audio replay of the call will be available
approximately two hours after the call is complete, through
September 6, 2019 by calling (855) 859-2056.
About Shenandoah
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 CompanyJim VolkSenior
Vice President - Chief Financial
Officer540-984-5168Jim.Volk@emp.shentel.com
OrJohn Nesbett/Jennifer BelodeauIMS Investor
Relations203-972-9200jnesbett@institutionalms.com
SHENANDOAH TELECOMMUNICATIONS COMPANY AND
SUBSIDIARIES |
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(in thousands,
except per share amounts) |
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Operating revenue: |
|
|
|
|
|
|
|
Service revenue and other |
$ |
142,059 |
|
|
$ |
140,492 |
|
|
$ |
285,290 |
|
|
$ |
277,051 |
|
Equipment revenue |
16,855 |
|
|
16,009 |
|
|
32,467 |
|
|
33,588 |
|
Total operating revenue |
158,914 |
|
|
156,501 |
|
|
317,757 |
|
|
310,639 |
|
Operating expenses: |
|
|
|
|
|
|
|
Cost of services |
49,497 |
|
|
49,134 |
|
|
99,015 |
|
|
98,476 |
|
Cost of goods sold |
15,874 |
|
|
15,166 |
|
|
30,511 |
|
|
30,971 |
|
Selling, general and administrative |
27,170 |
|
|
29,915 |
|
|
55,892 |
|
|
58,665 |
|
Depreciation and amortization |
42,353 |
|
|
41,117 |
|
|
83,532 |
|
|
84,604 |
|
Total operating expenses |
134,894 |
|
|
135,332 |
|
|
268,950 |
|
|
272,716 |
|
Operating income |
24,020 |
|
|
21,169 |
|
|
48,807 |
|
|
37,923 |
|
Other income (expense): |
|
|
|
|
|
|
|
Interest expense |
(7,522 |
) |
|
(8,851 |
) |
|
(15,476 |
) |
|
(18,183 |
) |
Other |
1,176 |
|
|
839 |
|
|
2,463 |
|
|
1,828 |
|
Income before income taxes |
17,674 |
|
|
13,157 |
|
|
35,794 |
|
|
21,568 |
|
Income tax expense |
4,524 |
|
|
3,531 |
|
|
8,734 |
|
|
5,359 |
|
Net income |
$ |
13,150 |
|
|
$ |
9,626 |
|
|
$ |
27,060 |
|
|
$ |
16,209 |
|
|
|
|
|
|
|
|
|
Net income per share, basic
and diluted: |
|
|
|
|
|
|
|
Basic net income per share |
$ |
0.26 |
|
|
$ |
0.19 |
|
|
$ |
0.54 |
|
|
$ |
0.33 |
|
Diluted net income per share |
$ |
0.26 |
|
|
$ |
0.19 |
|
|
$ |
0.54 |
|
|
$ |
0.32 |
|
Weighted average shares outstanding, basic |
49,848 |
|
|
49,547 |
|
|
49,812 |
|
|
49,511 |
|
Weighted average shares outstanding, diluted |
50,142 |
|
|
50,070 |
|
|
50,118 |
|
|
50,029 |
|
|
|
|
|
|
|
|
|
SHENANDOAH TELECOMMUNICATIONS COMPANY AND
SUBSIDIARIES |
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
(in thousands) |
|
June 30, 2019 |
|
December 31, 2018 |
|
|
|
|
Cash and cash equivalents |
$ |
98,091 |
|
|
$ |
85,086 |
|
Other current assets |
124,057 |
|
|
125,116 |
|
Total current assets |
222,148 |
|
|
210,202 |
|
|
|
|
|
Investments |
11,563 |
|
|
10,788 |
|
Property, plant and equipment,
net |
695,725 |
|
|
701,359 |
|
Intangible assets, net |
324,890 |
|
|
366,029 |
|
Goodwill |
149,070 |
|
|
146,497 |
|
Operating lease right-of-use
assets |
369,715 |
|
|
— |
|
Deferred charges and other
assets |
48,929 |
|
|
49,891 |
|
Total assets |
$ |
1,822,040 |
|
|
$ |
1,484,766 |
|
|
|
|
|
Total current liabilities |
$ |
127,781 |
|
|
$ |
88,539 |
|
Long-term debt, less current
maturities |
719,067 |
|
|
749,624 |
|
Other liabilities |
513,143 |
|
|
204,356 |
|
Total shareholders’
equity |
462,049 |
|
|
442,247 |
|
Total liabilities and shareholders’ equity |
$ |
1,822,040 |
|
|
$ |
1,484,766 |
|
SHENANDOAH
TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES |
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
(in thousands) |
|
|
Six Months Ended June 30, |
|
2019 |
|
2018 |
Cash flows from operating
activities: |
|
|
|
Net income |
$ |
27,060 |
|
|
$ |
16,209 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation |
72,737 |
|
|
71,637 |
|
Amortization |
10,795 |
|
|
12,967 |
|
Accretion of asset retirement obligations |
708 |
|
|
471 |
|
Bad debt expense |
764 |
|
|
758 |
|
Stock based compensation expense, net of amount capitalized |
2,307 |
|
|
3,407 |
|
Deferred income taxes |
3,434 |
|
|
(8,004 |
) |
Other adjustments |
(433 |
) |
|
789 |
|
Changes in assets and liabilities |
12,260 |
|
|
28,910 |
|
Net cash provided by operating activities |
129,632 |
|
|
127,144 |
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
Acquisition of property, plant and equipment |
(79,124 |
) |
|
(62,322 |
) |
Cash disbursed for acquisition, net of cash acquired |
(10,000 |
) |
|
(52,000 |
) |
Proceeds from sale of assets |
108 |
|
|
447 |
|
Other |
(3 |
) |
|
(3 |
) |
Net cash used in investing activities |
(89,019 |
) |
|
(113,878 |
) |
|
|
|
|
Cash flows from financing
activities: |
|
|
|
Principal payments on long-term debt |
(24,777 |
) |
|
(24,250 |
) |
Proceeds from revolving credit facility borrowings |
— |
|
|
15,000 |
|
Principal payments on revolving credit facility |
— |
|
|
(15,000 |
) |
Proceeds from exercises of stock option |
81 |
|
|
— |
|
Taxes paid for equity award issuances |
(2,912 |
) |
|
(2,032 |
) |
Net cash used in financing activities |
(27,608 |
) |
|
(26,282 |
) |
Net increase (decrease) in cash and cash equivalents |
13,005 |
|
|
(13,016 |
) |
Cash and cash equivalents, beginning of period |
85,086 |
|
|
78,585 |
|
Cash and cash equivalents, end of period |
$ |
98,091 |
|
|
$ |
65,569 |
|
Non-GAAP Financial Measures
Adjusted OIBDA
Adjusted OIBDA represents Operating income
before depreciation, amortization, stock-based compensation and
certain other items of revenue, expense, gain or loss not
reflective of our operating performance, which may or may not be
recurring in nature.
Adjusted OIBDA is a non-GAAP financial measure
that we use to evaluate our operating performance in comparison to
our competitors. Management believes that analysts and investors
use Adjusted OIBDA as a supplemental measure of operating
performance to facilitate comparisons with other telecommunications
companies. This measure isolates and evaluates operating
performance by excluding the cost of financing (e.g., interest
expense), as well as the non-cash depreciation and amortization of
past capital investments, non-cash share-based compensation
expense, and certain other items of revenue, expense, gain or loss
not reflective of our operating performance, which may or may not
be recurring in nature.
During Q2 2019, we modified our definition of
Adjusted OIBDA to exclude the benefit received from the waived
management fee and non-cash amortization of deferred contract
costs, as well as certain other immaterial items. This change
enhances the comparability of our non-GAAP performance measure with
similar performance measures reported by comparable companies in
our industry. We have applied this change consistently to all
comparable periods presented below.
Adjusted OIBDA has limitations as an analytical
tool and should not be considered in isolation or as a substitute
for income from operations, net income or any other measure of
financial performance reported in accordance with U.S. Generally
Accepted Accounting Principles (“GAAP”).
The following tables reconcile Adjusted OIBDA to
operating income, which we consider to be the most directly
comparable GAAP financial measure:
Adjusted OIBDA
Three Months Ended
June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Wireless |
|
|
Cable |
|
Wireline |
|
Other |
|
Consolidated |
Operating income |
|
$ |
22,024 |
|
|
$ |
6,786 |
|
|
$ |
5,094 |
|
|
$ |
(9,884 |
) |
|
$ |
24,020 |
|
Depreciation and amortization |
|
32,219 |
|
|
6,555 |
|
|
3,447 |
|
|
132 |
|
|
42,353 |
|
OIBDA |
|
54,243 |
|
|
13,341 |
|
|
8,541 |
|
|
(9,752 |
) |
|
66,373 |
|
Share-based compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
593 |
|
|
593 |
|
Adjusted OIBDA |
|
$ |
54,243 |
|
|
$ |
13,341 |
|
|
$ |
8,541 |
|
|
$ |
(9,159 |
) |
|
$ |
66,966 |
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue |
|
$ |
114,140 |
|
|
$ |
34,690 |
|
|
$ |
19,527 |
|
|
(9,443 |
) |
|
$ |
158,914 |
|
Adjusted OIBDA margin |
|
47.5 |
% |
|
38.5 |
% |
|
43.7 |
% |
|
N/A |
|
|
42.1 |
% |
During Q2 2019, we modified our definition of Adjusted OIBDA to
exclude the benefit received from the waived management fee and
non-cash amortization of deferred contract costs, as well as
certain other immaterial items. This change enhances the
comparability of our non-GAAP performance measure with similar
performance measures reported by comparable companies in our
industry. In the table below, we demonstrate how our new definition
of Adjusted OIBDA reconciles to how we previously reported Adjusted
OIBDA.
(in
thousands) |
|
Wireless |
|
|
|
Cable |
|
|
|
Wireline |
|
|
|
Other |
|
|
|
Consolidated |
Adjusted OIBDA from above |
|
$ |
54,243 |
|
|
$ |
13,341 |
|
|
$ |
8,541 |
|
|
$ |
(9,159 |
) |
|
$ |
66,966 |
Non-cash amortization of
deferred contract costs |
|
(3,903 |
) |
|
(32 |
) |
|
(51 |
) |
|
2 |
|
|
(3,984 |
) |
Benefit received from the
waived management fee |
|
9,692 |
|
|
— |
|
|
— |
|
|
— |
|
|
9,692 |
|
Other |
|
(19 |
) |
|
3 |
|
|
— |
|
|
326 |
|
|
310 |
|
Adjusted OIBDA as previously reported |
|
$ |
60,013 |
|
|
$ |
13,312 |
|
|
$ |
8,490 |
|
|
$ |
(8,831 |
) |
|
$ |
72,984 |
|
Three Months Ended June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
Wireless |
|
|
|
Cable |
|
|
|
Wireline |
|
|
|
Other |
|
|
|
Consolidated |
|
Operating income |
|
$ |
22,251 |
|
|
$ |
6,083 |
|
|
$ |
4,793 |
|
|
$ |
(11,958 |
) |
|
$ |
21,169 |
|
Depreciation and amortization |
|
31,565 |
|
|
6,179 |
|
|
3,240 |
|
|
133 |
|
|
41,117 |
|
OIBDA |
|
53,816 |
|
|
12,262 |
|
|
8,033 |
|
|
(11,825 |
) |
|
62,286 |
|
Share-based compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
1,370 |
|
|
1,370 |
|
Adjusted OIBDA |
|
$ |
53,816 |
|
|
$ |
12,262 |
|
|
$ |
8,033 |
|
|
$ |
(10,455 |
) |
|
$ |
63,656 |
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue |
|
$ |
114,753 |
|
|
$ |
32,111 |
|
|
$ |
19,112 |
|
|
(9,475 |
) |
|
$ |
156,501 |
|
Adjusted OIBDA margin |
|
46.9 |
% |
|
38.2 |
% |
|
42.0 |
% |
|
N/A |
|
40.7 |
% |
In the table below, we demonstrate how our new definition of
Adjusted OIBDA reconciles to how we previously reported Adjusted
OIBDA.
(in
thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Consolidated |
Adjusted OIBDA from above |
|
$ |
53,816 |
|
|
$ |
12,262 |
|
|
$ |
8,033 |
|
|
$ |
(10,455 |
) |
|
$ |
63,656 |
|
Non-cash amortization of
deferred contract costs |
|
(3,394 |
) |
|
(26 |
) |
|
(27 |
) |
|
— |
|
|
(3,447 |
) |
Benefit received from the
waived management fee |
|
9,558 |
|
|
— |
|
|
— |
|
|
— |
|
|
9,558 |
|
Other |
|
94 |
|
|
— |
|
|
— |
|
|
(83 |
) |
|
11 |
|
Adjusted OIBDA as previously reported |
|
$ |
60,074 |
|
|
$ |
12,236 |
|
|
$ |
8,006 |
|
|
$ |
(10,538 |
) |
|
$ |
69,778 |
|
Six Months Ended June
30, 2019 |
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Consolidated |
Operating Income |
|
$ |
47,361 |
|
|
$ |
12,489 |
|
|
$ |
9,440 |
|
|
$ |
(20,483 |
) |
|
$ |
48,807 |
|
Depreciation and amortization |
|
63,269 |
|
|
13,013 |
|
|
6,980 |
|
|
270 |
|
|
83,532 |
|
OIBDA |
|
110,630 |
|
|
25,502 |
|
|
16,420 |
|
|
(20,213 |
) |
|
132,339 |
|
Share-based compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
2,307 |
|
|
2,307 |
|
Adjusted OIBDA |
|
$ |
110,630 |
|
|
$ |
25,502 |
|
|
$ |
16,420 |
|
|
$ |
(17,906 |
) |
|
$ |
134,646 |
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue |
|
$ |
229,794 |
|
|
$ |
68,399 |
|
|
$ |
38,436 |
|
|
(18,872 |
) |
|
$ |
317,757 |
|
Adjusted OIBDA margin |
|
48.1 |
% |
|
37.3 |
% |
|
42.7 |
% |
|
N/A |
|
42.4 |
% |
In the table below, we demonstrate how our new definition of
Adjusted OIBDA reconciles to how we previously reported Adjusted
OIBDA.
(in
thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Consolidated |
Adjusted OIBDA from above |
|
$ |
110,630 |
|
|
$ |
25,502 |
|
|
$ |
16,420 |
|
|
$ |
(17,906 |
) |
|
$ |
134,646 |
|
Non-cash amortization of
deferred contract costs |
|
(8,114 |
) |
|
(269 |
) |
|
(115 |
) |
|
— |
|
|
(8,498 |
) |
Benefit received from the
waived management fee |
|
19,320 |
|
|
— |
|
|
— |
|
|
— |
|
|
19,320 |
|
Other |
|
— |
|
|
139 |
|
|
— |
|
|
353 |
|
|
492 |
|
Adjusted OIBDA as previously reported |
|
$ |
121,836 |
|
|
$ |
25,372 |
|
|
$ |
16,305 |
|
|
$ |
(17,553 |
) |
|
$ |
145,960 |
|
Six Months Ended June
30, 2018 |
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Consolidated |
Operating
income |
|
$ |
39,518 |
|
|
$ |
11,610 |
|
|
$ |
9,565 |
|
|
$ |
(22,770 |
) |
|
$ |
37,923 |
|
Depreciation and amortization |
|
65,490 |
|
|
12,203 |
|
|
6,634 |
|
|
277 |
|
|
84,604 |
|
OIBDA |
|
105,008 |
|
|
23,813 |
|
|
16,199 |
|
|
(22,493 |
) |
|
122,527 |
|
Share-based compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
3,407 |
|
|
3,407 |
|
Adjusted OIBDA |
|
$ |
105,008 |
|
|
$ |
23,813 |
|
|
$ |
16,199 |
|
|
$ |
(19,086 |
) |
|
$ |
125,934 |
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue |
|
$ |
227,557 |
|
|
$ |
63,822 |
|
|
$ |
38,819 |
|
|
(19,559 |
) |
|
$ |
310,639 |
|
Adjusted OIBDA margin |
|
46.1 |
% |
|
37.3 |
% |
|
41.7 |
% |
|
N/A |
|
40.5 |
% |
In the table below, we demonstrate how our new definition of
Adjusted OIBDA reconciles to how we previously reported Adjusted
OIBDA.
(in
thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Consolidated |
Adjusted OIBDA from above |
|
$ |
105,008 |
|
|
$ |
23,813 |
|
|
$ |
16,199 |
|
|
$ |
(19,086 |
) |
|
$ |
125,934 |
|
Non-cash amortization of
deferred contract costs |
|
(6,154 |
) |
|
115 |
|
|
(62 |
) |
|
— |
|
|
(6,101 |
) |
Benefit received from the
waived management fee |
|
18,606 |
|
|
— |
|
|
— |
|
|
— |
|
|
18,606 |
|
Other |
|
175 |
|
|
— |
|
|
— |
|
|
(165 |
) |
|
10 |
|
Adjusted OIBDA as previously reported |
|
$ |
117,635 |
|
|
$ |
23,928 |
|
|
$ |
16,137 |
|
|
$ |
(19,251 |
) |
|
$ |
138,449 |
|
Segment Results
Three
Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Eliminations |
|
Consolidated |
External revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
|
$ |
94,350 |
|
|
$ |
30,716 |
|
|
$ |
5,558 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
130,624 |
|
Equipment revenue |
|
16,548 |
|
|
255 |
|
|
52 |
|
|
— |
|
|
— |
|
|
16,855 |
|
Tower revenue |
|
1,654 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,654 |
|
Other revenue |
|
318 |
|
|
2,238 |
|
|
7,225 |
|
|
— |
|
|
— |
|
|
9,781 |
|
Total external
revenue |
|
112,870 |
|
|
33,209 |
|
|
12,835 |
|
|
— |
|
|
— |
|
|
158,914 |
|
Internal revenue |
|
1,270 |
|
|
1,481 |
|
|
6,692 |
|
|
— |
|
|
(9,443 |
) |
|
— |
|
Total operating
revenue |
|
114,140 |
|
|
34,690 |
|
|
19,527 |
|
|
— |
|
|
(9,443 |
) |
|
158,914 |
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
33,563 |
|
|
15,701 |
|
|
8,979 |
|
|
— |
|
|
(8,746 |
) |
|
49,497 |
|
Cost of goods sold |
|
15,742 |
|
|
112 |
|
|
19 |
|
|
— |
|
|
1 |
|
|
15,874 |
|
Selling, general and administrative |
|
10,592 |
|
|
5,536 |
|
|
1,988 |
|
|
9,752 |
|
|
(698 |
) |
|
27,170 |
|
Depreciation and amortization |
|
32,219 |
|
|
6,555 |
|
|
3,447 |
|
|
132 |
|
|
— |
|
|
42,353 |
|
Total operating
expenses |
|
92,116 |
|
|
27,904 |
|
|
14,433 |
|
|
9,884 |
|
|
(9,443 |
) |
|
134,894 |
|
Operating income
(loss) |
|
$ |
22,024 |
|
|
$ |
6,786 |
|
|
$ |
5,094 |
|
|
$ |
(9,884 |
) |
|
$ |
— |
|
|
$ |
24,020 |
|
Three
Months Ended June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
Wireless |
|
Cable |
|
Wireline |
|
Other |
|
Eliminations |
|
Consolidated |
External revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
|
$ |
95,690 |
|
|
$ |
28,748 |
|
|
$ |
5,301 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
129,739 |
|
Equipment revenue |
|
15,819 |
|
|
144 |
|
|
46 |
|
|
— |
|
|
— |
|
|
16,009 |
|
Tower revenue |
|
1,636 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,636 |
|
Other revenue |
|
364 |
|
|
2,122 |
|
|
6,631 |
|
|
— |
|
|
— |
|
|
9,117 |
|
Total external
revenue |
|
113,509 |
|
|
31,014 |
|
|
11,978 |
|
|
— |
|
|
— |
|
|
156,501 |
|
Internal revenue |
|
1,244 |
|
|
1,097 |
|
|
7,134 |
|
|
— |
|
|
(9,475 |
) |
|
— |
|
Total operating
revenue |
|
114,753 |
|
|
32,111 |
|
|
19,112 |
|
|
— |
|
|
(9,475 |
) |
|
156,501 |
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services |
|
33,488 |
|
|
15,125 |
|
|
9,373 |
|
|
12 |
|
|
(8,864 |
) |
|
49,134 |
|
Cost of goods sold |
|
15,082 |
|
|
63 |
|
|
20 |
|
|
1 |
|
|
— |
|
|
15,166 |
|
Selling, general and administrative |
|
12,367 |
|
|
4,661 |
|
|
1,686 |
|
|
11,812 |
|
|
(611 |
) |
|
29,915 |
|
Depreciation and amortization |
|
31,565 |
|
|
6,179 |
|
|
3,240 |
|
|
133 |
|
|
— |
|
|
41,117 |
|
Total operating
expenses |
|
92,502 |
|
|
26,028 |
|
|
14,319 |
|
|
11,958 |
|
|
(9,475 |
) |
|
135,332 |
|
Operating income
(loss) |
|
$ |
22,251 |
|
|
$ |
6,083 |
|
|
$ |
4,793 |
|
|
$ |
(11,958 |
) |
|
$ |
— |
|
|
$ |
21,169 |
|
Supplemental Information
Subscriber Statistics
The following tables indicate selected operating
statistics of Wireless, including Sprint subscribers:
|
|
June 30, 2019 (4) |
|
June 30, 2018 (4) |
Retail PCS subscribers - postpaid |
|
811,719 |
|
|
780,658 |
|
Retail PCS subscribers -
prepaid |
|
269,039 |
|
|
252,054 |
|
PCS market POPS (000) (1) |
|
7,227 |
|
|
7,023 |
|
PCS covered POPS (000)
(1) |
|
6,285 |
|
|
5,908 |
|
CDMA base stations
(sites) |
|
1,910 |
|
|
1,770 |
|
Towers owned |
|
217 |
|
|
193 |
|
Cell site leases |
|
200 |
|
|
192 |
|
|
|
Three Months Ended June 30, |
|
|
2019 |
|
2018 |
Gross PCS subscriber additions - postpaid |
|
52,799 |
|
|
44,629 |
|
Net PCS subscriber additions - postpaid (2) |
|
10,767 |
|
|
5,797 |
|
Gross PCS subscriber additions - prepaid |
|
33,753 |
|
|
33,840 |
|
Net PCS subscriber additions - prepaid (3) |
|
1,819 |
|
|
1,863 |
|
PCS average monthly retail churn % - postpaid |
|
1.74 |
% |
|
1.67 |
% |
PCS average monthly retail churn % - prepaid |
|
3.97 |
% |
|
4.25 |
% |
_______________________________________________________
- "POPS" refers to the estimated population of a given geographic
area. Market POPS are those within a market area which we are
authorized to serve under our Sprint PCS affiliate agreement, and
Covered POPS are those covered by our network. The data source for
POPS is U.S. census data.
- For the six months ended June 30, 2018 Net PCS subscriber
additions - postpaid were 5,718 excluding the acquisition of the
expansion area on February 1, 2018.
- For the six months ended June 30, 2018 Net PCS subscriber
additions - prepaid were 10,541 excluding the acquisition of the
expansion area on February 1, 2018.
- Beginning February 1, 2018 includes Richmond Expansion Area
except for gross PCS subscriber additions.
The subscriber stats above, excluding gross additions, include
the Richmond Expansion Area as follows:
|
|
February 1, 2018 |
|
|
Expansion Area |
PCS subscribers - postpaid |
|
38,343 |
|
PCS subscribers - prepaid |
|
15,691 |
|
Acquired PCS market POPS
(000) |
|
1,082 |
|
Acquired PCS covered POPS
(000) |
|
602 |
|
Acquired CDMA base stations
(sites) |
|
105 |
|
The following table indicates selected operating
statistics of Cable:
|
|
June 30, 2019 |
|
June 30, 2018 |
Homes passed (1) |
|
189,762 |
|
|
185,016 |
|
Customer relationships
(2) |
|
|
|
|
Video users |
|
40,497 |
|
|
42,483 |
|
Non-video customers |
|
43,024 |
|
|
35,773 |
|
Total customer relationships |
|
83,521 |
|
|
78,256 |
|
Video |
|
|
|
|
Customers (3) |
|
42,874 |
|
|
44,800 |
|
Penetration (4) |
|
22.6 |
% |
|
24.2 |
% |
Digital video penetration (5) |
|
90.3 |
% |
|
76.9 |
% |
Broadband |
|
|
|
|
Users (3) |
|
71,893 |
|
|
65,466 |
|
Penetration (4) |
|
37.9 |
% |
|
35.4 |
% |
Voice |
|
|
|
|
Users (3) |
|
23,805 |
|
|
22,882 |
|
Penetration (4) |
|
12.5 |
% |
|
12.4 |
% |
Total revenue generating units
(6) |
|
138,572 |
|
|
133,148 |
|
Fiber route miles |
|
3,657 |
|
|
3,426 |
|
Total fiber miles (7) |
|
143,762 |
|
|
133,702 |
|
Average revenue generating
units |
|
138,016 |
|
|
132,287 |
|
_______________________________________________________
- Homes and businesses are considered passed (“homes passed”) if
we can connect them to our distribution system without further
extending the transmission lines. Homes passed is an estimate
based upon the best available information. Homes passed have access
to video, broadband and voice services.
- Customer relationships represent the number of billed customers
who receive at least one of our services.
- Generally, a dwelling or commercial unit with one or more
television sets connected to our distribution system counts as one
video customer. Where services are provided on a bulk basis
for video, broadband, or voice services, such as to hotels and some
multi-dwelling units, the revenue charged to the customer is
divided by the rate for comparable service in the local market to
determine the number of customer equivalents included in the
customer counts shown above.
- Penetration is calculated by dividing the number of users by
the number of homes passed or available homes, as appropriate.
- Digital video penetration is calculated by dividing the number
of digital video users by total video users. Digital video
users are video customers who receive any level of video service
via digital transmission. A dwelling with one or more digital
set-top boxes or digital adapters counts as one digital video
user.
- Revenue generating units are the sum of video, voice and
broadband users.
- Total fiber miles are measured by taking the number of fiber
strands in a cable and multiplying that number by the route
distance. For example, a 10 mile route with 144 fiber strands
would equal 1,440 fiber miles.
The following table includes selected operating
statistics of the Wireline operations:
|
|
June 30, 2019 |
|
June 30, 2018 |
Long distance subscribers |
|
9,461 |
|
|
8,930 |
|
Video customers (1) |
|
4,520 |
|
|
4,850 |
|
Broadband customers |
|
14,643 |
|
|
14,694 |
|
Fiber route miles |
|
2,176 |
|
|
2,099 |
|
Total fiber miles (2) |
|
163,363 |
|
|
157,008 |
|
_______________________________________________________
- Wireline’s video service passes approximately 16,500
homes.
- Fiber miles are measured by taking the number of fiber strands
in a cable and multiplying that number by the route
distance. For example, a 10 mile route with 144 fiber strands
would equal 1,440 fiber miles.
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