Shenandoah Telecommunications (SHEN)
Q2 2010 Earnings Call
August 5, 2010 3:00 pm ET
Adele Skolits - CFO, VP, Finance
Earle MacKenzie - EVP, COO
Christopher French, President
Richard Prentiss – Raymond James
Barry Sine - CapStone Investments
Greg Burns - Sidoti & Company
Previous Statements by SHEN
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Good day, Ladies and Gentlemen. And welcome to the Shenandoah Telecommunications Second Quarter 2010 Results Conference Call. At this time, all participants are on a listen-only mode. Later, we’ll conduct a question-and answer-session, and instructions will be given at that time. (Operator Instructions)
I would now like to turn this conference over to our host, Ms. Adele Skolits. Ma’am, you may begin.
Thank you. Good afternoon, everyone. Thank you for joining us. The purpose of today’s call is to review Shentel’s results for the quarter and the June 30
Our results were announced in a press release distributed yesterday evening and the presentation we’ll be reviewing is included on our website at www.shentel.com. Please note that a replay of the call will be made available later today. The details were set forth in the press release announcing this call.
With us on the call today are Christopher French, our President and Chief Executive Officer; and Earle MacKenzie, our Executive Vice President and Chief Operating Officer. After our prepared remarks, we’ll conduct a question-and-answer session.
I’ll begin with slide two of the presentation. While we don’t provide guidance with respect to specific future financial results, we caution that this call may contain forward-looking statements, which involve a number of known and unknown risks and uncertainties. These may cause our actual results to differ materially from these statements.
Shentel provides a detailed discussion of various risk factors in our SEC filings, which you are strongly encouraged to review. You’re cautioned not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements.
Also, in an effort to provide useful information to investors, we note on slide three that our comments today include non-GAAP financial measures. Details on these measures, including why we use them and reconciliations to the most comparable GAAP measures, are included in our FCC filings.
I’ll turn the call now, over to Chris.
Thank you, Adele. We appreciate everyone joining us this afternoon.
The second quarter 2010 was a very busy one for our company, and we’ve had many significant accomplishments since our last quarterly call.
I’ve listed some of the highlights on Slide 5. Last Friday, we closed on the acquisition of Jet Broadband. At close, the Jet Broadband network past approximately 115,000 homes, and had approximately 66,000 revenue generating units or RGUs. This acquisition was funded with new credit facilities, which Adele will discuss later on this call.
In our existing cable business, we’re pleased with the 7% increase and RGUs during the quarter. These results are driven by the substantial progress we’ve made in expanding voice services to 40% of the homes past and high-speed internet to nearly 60% of the homes past.
In early July, we signed an amendment to the current contract with Sprint-Nextel to allow Shentel to sell Virgin Mobile and Boost Prepaid Wireless Services.
With the signing, these prepaid products and services became available in the Shentel Wireless service area through Sprint stores, operated by Shentel, as well as hundreds of other locations.
Shentel also acquired the rights to future revenues related to the approximately 50,000 existing Virgin Mobile customers in our service area.
Late in the second quarter, we also began offering 3G-4G data cards. And more recently, handsets. This happened in conjunction with 4G services becoming available in our York and our Harrisburg, Pennsylvania markets.
A third highlight was the final distribution of the assets from our defined benefit pension plan, which happened in early June. We recorded significant incremental non-recurring expenses in the second quarter as a result the final distribution and the curtailment of the supplemental executive retirement plan.
As you can see on Slide 6, on a consolidated basis, we’re reporting net income of $4.6 million for the quarter compared to 6.7 million from the second quarter of 2009. Net income from continuing operations was $4.5 million for the quarter as compared to 6.8 million in the second quarter of '09.
The 2010 results from continuing operations include 3.8 million before taxes, and 2.2 million after taxes of expense related to the just-mentioned retirement plans.
On Slide 7, we’ve listed highlights of our progress in the wireless segment of our business. Post-paid wireless PCS customers are up 5% from a year ago. Continued growth was helped by churn of just 1.7% , relative to the 1.9% for the first quarter of 2010.
We’ve still have not reached agreement for the sale of our converged services business, although we continue to work with potential buyers. This process remains challenging as potential buyers actively work to obtain funding. We continue to expect that a sale will ultimately be achieved.
I’ll now turn the call back to Adele to review our financial results in more detail.
Thank you, Chris. I’ll begin on Slide 9. For Q2 ‘10, earnings per share from continuing operations were $0.19 in comparison to $0.29 for Q2 ‘09. The impact of closing and curtailment of the retirement plans was over $0.9, which accounted for most of the change.