Shenandoah Telecommunications (SHEN)
Q1 2010 Earnings Call
May 06, 2010 10:00 am ET
Adele Skolits - CFO, VP, Finance
Earle MacKenzie - EVP, COO
Christopher French, President
Ric Prentiss - Raymond James
Barry Sine - CapStone Investments
Greg Burns - Sidoti & Company
William Lauber - Sterling Capital Management
Previous Statements by SHEN
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Good morning and thank you for joining us. The purpose of today’s call is to review Shentel’s results for the first quarter ended March 31st, 2010. 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.
Today's call will not address any future impacts of JetBroadband acquisition we expect to close late this year. As I am sure most of you recall, we held the conference call to discuss those on April 19th, shortly after we announce the agreement. The slides and audio from that presentation are available on our website. 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 will 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 are 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 this presentation.
I’ll turn the call over to Chris now.
Good morning, we appreciate you being able to join us today. We are very pleased with our operating results during the first quarter of 2010. While economic conditions remained weak, we were able to generate customer and revenue growth in each of our operating segments. We’ve completed system upgrades in many of our acquired cable markets and started to rollout voice services in a limited number of these markets.
As a result, we once again had significant gains and customer additions for the quarter. These efforts are positioning our company to generate future growth and earnings.
As you can see on slide five, on a consolidated basis we are reporting net income of $6.8 million for the quarter, compared to a net loss of $4.2 million from the first quarter of 2009. Net income from continuing operations was $6.6 million for the quarter as compared to $6.2 million in the first quarter of 2009, an increase of 7%. Included in this year’s first quarter was a $1.3 million aftertax loss from the cable TV segment which compares to a loss of $600,000 for the first quarter of 2009.
We expected to incur these losses while we’re rebuilding the CATV networks, launching news services and incurring cost to expand the customer base. This in turn should create long-term value as we began to grow revenues and profits.
On slide six, we've listed our progress in the wireless segment of the business. Wireless PCS customers are up 5% from a year ago and net adds are up 7% in the first quarter of 2010 over the first quarter of 2009. Continued growth was helped by churn of 1.91% relative to 1.99% for the fourth quarter of 2009. Our wireless CapEx spending has tapered off since we completed the significant initiatives we had underway to expand high speed data capability and to enhance coverage mainly in our central Pennsylvania markets.
Slide seven, shows progress in other areas of our business, upgrades to the acquired cable systems continued at a good pace with 68% of those markets now upgraded to 2A capability and now offering high speed data and other premium video services.
We now have voice services available to nearly 6400 of the homes passed outside Shenandoah county with additional systems scheduled to receive these services in the coming months. Our wireline segment now offers DSL service to all the customers served by the North River network we acquired last November. This service has been well received in that market and continues to be in demand in our legacy area. In total our DSL customers grew by 5% in the first quarter of 2010. Although frustrated with the slow progress, we are continuing to work towards the sale of our converged services business.
This process continues to be delayed due to challenges faced by buyers seeking funding in difficult economic times. However, we still have potential buyers actively working to obtain funding and we remain hopeful that the sale can be executed in the next quarter. I will now turn the call back to Adele to review our financial results in more detail.