EDINBURG, Va., May 09, 2019 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (Nasdaq: SHEN) announced strong first quarter results, reflecting continued revenue growth and significantly improved profitability. Wireless service revenue demonstrated solid growth driven by the net addition of 5,776 postpaid wireless customers and 8,516 prepaid wireless subscribers, including record gross activations for the Boost brand. Postpaid gross and net activations reached an all-time high as compared to any historical first quarter. Growth in the Cable Segment was bolstered primarily by continued increases in broadband subscribers.

First Quarter 2019 Highlights

• Operating revenue of $158.8 million grew 3.1%
• Operating income grew 47.9% to $24.8 million
• Net income of $13.9 million, or $0.28 per share
• Adjusted OIBDA of $73.0 million grew 6.3%
• Acquired Big Sandy Broadband, Inc. ("Big Sandy"), adding approximately 4,800 revenue generating units

Please refer to our First 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 page 7 for additional information for non-GAAP measures.

Results

Consolidated First Quarter 2019 Results

• Net income for the three months ended March 31, 2019 was $13.9 million, resulting in net income per share of $0.28, compared with $0.13 per share in the first quarter of 2018, reflecting an increase of approximately 115%.
• Operating revenue for the first quarter of 2019 was $158.8 million, representing a year-over-year increase of 3.1%, driven by strong subscriber growth in the Wireless and Cable segments.
• Operating expenses for the three months ended March 31, 2019 were $134.1 million, compared with $137.4 million for the equivalent quarter in the prior year primarily due to a decline in network costs for the Wireless segment attributable to repricing backhaul circuits and migrating voice traffic from traditional circuit-switched facilities to more cost effective VoIP facilities. The decrease was offset by higher costs for the Cable segment primarily due to our deployment of higher-speed data access packages and infrastructure investments necessary to support its growing cable and fiber networks.
• Operating income for the three months ended March 31, 2019 increased 47.9% to $24.8 million from $16.8 million in the prior year quarter.
• Adjusted OIBDA increased 6.3% to $73.0 million for the three months ended March 31, 2019, driven by subscriber growth in the Wireless and Cable segments.

Wireless

• Shentel served 800,952 wireless postpaid customers at March 31, 2019, an increase of 3.4% over 774,861 subscribers as of March 31, 2018. As of March 31, 2019, tablets and data devices were 9.8% of the postpaid base.
• Shentel served 267,220 wireless prepaid customers at March 31, 2019, an increase of 6.8% over 250,191 subscribers as of March 31, 2018. First quarter prepaid churn was 4.14%, representing an improvement of 28 basis points compared with the prior year.
• Wireless operating revenue increased 2.5%, to $115.7 million for the three months ended March 31, 2019, compared with $112.8 million in the first quarter of 2018, primarily driven by a 3.4% increase in postpaid subscribers and a 6.8% increase in prepaid PCS subscribers.
• Wireless operating expenses decreased 5.5% in the first quarter of 2019 to $90.3 million, compared with $95.5 million for the three months ended March 31, 2018. This decrease was primarily due to a $2.9 million decrease in depreciation and amortization as a result of the retirement of assets acquired in the nTelos acquisition; a $1.3 million decrease in cost of goods sold as a result of decreased equipment costs; a $0.3 million decrease in cost of services due to the repricing of Wireless backhaul circuits to market rates and migrating Wireless voice traffic from traditional circuit-switched facilities to more cost effective VoIP facilities; and a $0.8 million decrease in selling, general and administrative due to a prior year reassessment of property taxes in West Virginia.
• Wireless Adjusted OIBDA for the three months ended March 31, 2019 increased 7.4% to $61.8 million, compared with $57.6 million for the three months ended March 31, 2018. Wireless Continuing OIBDA for the three months ended March 31, 2019 was $52.2 million, compared with $48.5 million for the three months ended March 31, 2018.

Cable

• Total Revenue Generating Units increased 4.5% in the first quarter of 2019 to 139,504 which includes the addition of approximately 4,800 Big Sandy subscribers, compared with 133,439 for the three months ended March 31, 2018.
• Cable operating revenue for the first quarter of 2019 was $33.7 million, representing a quarter over quarter increase of 6.3% compared with $31.7 million for the prior year first quarter. The increase was primarily attributable to increases in broadband and voice subscribers, higher video rates implemented to pass through programming cost increases, and customers selecting or upgrading to higher-speed data access packages.
• Cable operating expenses for the first quarter of 2019 were $28.0 million, a quarter over quarter increase of 7.0% compared with $26.2 million for the three months ended March 31, 2018. The increase was primarily due to our deployment of higher-speed data access packages and investments in infrastructure necessary to support the growth of the cable and fiber network.
• Cable Adjusted OIBDA for the three months ended March 31, 2019 was $12.1 million, compared with $11.7 million for the three months ended March 31, 2018.

Wireline

• Wireline operating revenue for the three months ended March 31, 2019 was $18.9 million, compared with $19.7 million for the prior year first 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 VoIP facilities.
• Wireline operating expenses for the three months ended March 31, 2019 were $14.6 million, a quarter-over-quarter decrease of 2.5% compared with $14.9 million for the three months ended March 31, 2018. The decline in operating expenses was primarily attributable to a reduction in network costs.
• Wireline Adjusted OIBDA for the three months ended March 31, 2019 was $7.8 million, compared with $8.1 million for the prior year equivalent quarter.

“Shentel delivered solid first quarter results, building on the success we achieved in 2018. We achieved consolidated revenue growth, dramatically increased operating income, significantly improved profitability, and continued OIBDA growth in the first quarter,” said President and CEO Chris E. French, “We saw customer growth in all of our operating segments, highlighted by record customer additions in both our Wireless and Cable businesses.

“The investments we’ve made to improve the reliability and coverage of our network and to expand our base of stores have elevated brand recognition in the markets we serve, enabling us to attract new customers and drive growth in both our postpaid and prepaid customer base. Our Cable segment continued to see increased RGUs and revenue as customers upgraded their service plans to accommodate a growing need for higher bandwidth. We were pleased to add the assets of Big Sandy Broadband, which expands our service area in Kentucky. Shentel is well-positioned to continue to provide our customers with the best service in our expanding footprint and we look forward to driving continued growth as we move through 2019.”

Other Information

• Capital expenditures budgeted for 2019 have been updated to reflect the acquisition of Big Sandy and are expected to be approximately $149.5 million, including $64.1 million in the Wireless segment primarily for wireless network capacity improvements. In addition, $55.0 million is budgeted primarily to support growth in our Cable segment including new fiber routes and continuing investments in DOCSIS 3.1 upgrades, $20.5 million in Wireline projects including expansion of the fiber network, and $9.9 million primarily for IT and other miscellaneous projects.
• Capital expenditures were $44.4 million for the three months ended March 31, 2019 compared with $24.4 million in the comparable 2018 period.
• The Company expanded its Cable segment into the adjacent market of eastern Kentucky through the acquisition of Big Sandy on February 28, 2019.
• Outstanding debt at March 31, 2019 totaled $751.3 million, net of unamortized loan costs, compared to $770.2 million as of December 31, 2018. During the quarter, the Company reduced debt $19.9 million, including a voluntary $15.0 million prepayment in addition to the scheduled quarterly payment. As of March 31, 2019, no amounts were outstanding under the revolving line of credit. The total leverage ratio as of March 31, 2019 was 2.42.

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.