Sprint fiscal 1 q15 earnings slides final

Sprint fiscal 1 q15 earnings slides final

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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. August 4th, 2015 Fiscal 1Q15 Results Conference Call
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. Cautionary Statement 2 SAFE HARBOR This release includes “forward-looking statements” within the meaning of the securities laws. The words “may,” “could,” “should,” “estimate,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “target,” “plan,” “providing guidance,” and similar expressions are intended to identify information that is not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to our network, connections growth, and liquidity; and statements expressing general views about future operating results — are forward-looking statements. Forward- looking statements are estimates and projections reflecting management’s judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, the development and deployment of new technologies and services; efficiencies and cost savings of new technologies and services; customer and network usage; connection growth and retention; service, speed, coverage and quality; availability of devices; availability of various financings, including any leasing transactions; the timing of various events and the economic environment. Sprint believes these forward-looking statements are reasonable; however, you should not place undue reliance on forward-looking statements, which are based on current expectations and speak only as of the date when made. Sprint undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our company's historical experience and our present expectations or projections. Factors that might cause such differences include, but are not limited to, those discussed in Sprint Corporation’s Annual Report on Form 10-K for the fiscal year ended March 31, 2015. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. *Non-GAAP Financial Measures 3 *FINANCIAL MEASURES Sprint provides financial measures determined in accordance with GAAP and adjusted GAAP (non-GAAP). The non-GAAP financial measures reflect industry conventions, or standard measures of liquidity, profitability or performance commonly used by the investment community for comparability purposes. These measurements should be considered in addition to, but not as a substitute for, financial information prepared in accordance with GAAP. We have defined below each of the non-GAAP measures we use, but these measures may not be synonymous to similar measurement terms used by other companies. Sprint provides reconciliations of these non-GAAP measures in its financial reporting. Because Sprint does not predict special items that might occur in the future, and our forecasts are developed at a level of detail different than that used to prepare GAAP-based financial measures, Sprint does not provide reconciliations to GAAP of its forward-looking financial measures. The measures used in this release include the following: EBITDA is operating income/(loss) before depreciation and amortization. Adjusted EBITDA is EBITDA excluding severance, exit costs, and other special items. Adjusted EBITDA Margin represents Adjusted EBITDA divided by non-equipment net operating revenues for Wireless and Adjusted EBITDA divided by net operating revenues for Wireline. We believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors because they are an indicator of the strength and performance of our ongoing business operations. While depreciation and amortization are considered operating costs under GAAP, these expenses primarily represent non-cash current period costs associated with the use of long-lived tangible and definite-lived intangible assets. Adjusted EBITDA and Adjusted EBITDA Margin are calculations commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the telecommunications industry. ABPU is average billings per user and calculated by dividing service revenue earned from customers plus installment plan billings and lease revenue by the sum of the monthly average number of connections during the period. We believe that ABPU provides useful information to investors, analysts and our management to evaluate average Sprint platform postpaid customer billings as it approximates the expected cash collections, including installment plan billings and lease revenue, per user each month. ABPA is average billings per account and calculated by dividing service revenue earned from customers plus installment plan billings and lease revenue by the sum of the monthly average number of accounts during the period. We believe that ABPA provides useful information to investors, analysts and our management to evaluate average Sprint platform postpaid customer billings per account as it approximates the expected cash collections, including installment plan billings and lease revenue, per account each month. Free Cash Flow is the cash provided by operating activities less the cash used in investing activities other than short-term investments, including changes in restricted cash, if any, and amounts included as investments in Sprint Communications, Inc. during the period, if applicable. We believe that Free Cash Flow provides useful information to investors, analysts and our management about the cash generated by our core operations after interest and dividends, if any, and our ability to fund scheduled debt maturities and other financing activities, including discretionary refinancing and retirement of debt and purchase or sale of investments. Net Debt is consolidated debt, including current maturities, less cash and cash equivalents, short-term investments and, if any, restricted cash. We believe that Net Debt provides useful information to investors, analysts and credit rating agencies about the capacity of the company to reduce the debt load and improve its capital structure. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company’s website at www.sprint.com/investors.
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. Earnings per Share 4 1QFY14 1QFY15 Reported net income (loss) per share $0.01 ($0.01)
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. Sprint Turnaround Plan 5 Compelling Value Proposition Clear Funding Plan Network Continuous Cost Reduction Winning Team $ $ $ $ TURNAROUND SPRINT
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. (12) 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 Postpaid Phone Net Losses^ In Thousands Postpaid Results 6 ^ indicates results specific to Sprint Platform • Postpaid net additions for third consecutive quarter • Postpaid phone net additions in the last two months of the quarter • Best-ever postpaid churn Returning to Growth 500K UPNEARLY 600K UPOVER 49 bps IMPROVED Year-over-year Year-over-year Year-over-year
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. 1H14 1H15 27 180 Network Improvement 7 Frequency 1 ( + ) Frequency 2 2X Mbps Wins / Ties in All Categories AGGREGATION CARRIER FORMING BEAM • 180 RootScore® awards in 1H15 compared to 27 a year- ago, closing gap to the top • Lowest LTE latency among Big 4 carriers according to OpenSignal • Average download speeds doubled year-over-year • Now deploying 2X20 MHz in 80 markets - Expect capacity and speeds to double • One of first to roll-out carrier aggregation with antenna beamforming • Currently have seven 2X20 carrier aggregation devices available Significant Improvement
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. 8 Network Densification Speed Macro Sites Cells Small BIG Data Cells Small 2.5 GHz Expand Coverage
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. 9 Cost Reduction Simplification Transformation& Procurement Operational Efficiencies Zero Based Budgeting Attract & Retain Customers Customer Experience $ $ $ $
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. 10 Value Proposition
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. 11 Financing the Turnaround GROWTH 03 02 01 AGGRESSIVE OPEX REDUCTION CAPITAL EFFICIENCIES LEVERAGE BUSINESS RELATIONSHIPS & ASSETS
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. 12 Building the Team Kevin Crull Chief Marketing Officer Günther Ottendorfer Chief Operating Officer, Technology Tarek Robbiati Chief Financial Officer
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. Revenue 13 • Service revenue declines year-over-year driven by postpaid customer phone losses and a higher mix of device financing, where a portion of revenue shifts to equipment revenue • Equipment revenue declines year-over-year related to a shift from installment billing sales, which recognize more revenue at the point of sale, to leasing sales, which recognize revenues over time Consolidated Net Operating Revenue • Higher installment billings and lease revenues more than offset the lower rate plans offered in conjunction with device financing options • Average lines per account increased more than five percent year-over-year Postpaid Billings Per Account ^ indicates results specific to Sprint Platform
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. Adjusted EBITDA* and Operating Income 14 • Flat year-over-year Operating Income of $501 Million • Increased 14 percent year-over-year as expense reductions more than offset the decline in operating revenues Adjusted EBITDA* of $2.1 Billion
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. CapEx, FCF* and Liquidity 15 • Also have network vendor financing availability of $1.3 billion • Expect to establish facility for leasing • No significant maturities due until December 2016 Strong Liquidity of $6.6 Billion • Year-over-year increase driven by greater investment in the network as well as device leasing in our indirect channels Cash Capex of $2.3 Billion
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. Guidance 16 • Consolidated Adjusted EBITDA* between $7.2B - $7.6B • Cash Capex of approximately $5.0B excluding impact of leased devices sold through indirect channels
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  ©2015 Sprint. Thisinformation is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates. Any review, use, distribution or disclosure is prohibited without authorization. Questions & Answers