8-K
SHENANDOAH TELECOMMUNICATIONS CO/VA/ (SHEN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K
_________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 2, 2023
_______________________________
Shenandoah Telecommunications Company
(Exact name of registrant as specified in its charter)
_______________________________
| Virginia | 000-09881 | 54-1162807 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
500 Shentel Way P.O. Box 459
Edinburg, Virginia 22824
(Address of Principal Executive Offices) (Zip Code)
(540) 984-4141
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
_______________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock (No Par Value) | SHEN | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On August 2, 2023, Shenandoah Telecommunications Company (the “Company”) issued a press release announcing its financial position as of June 30, 2023, results of operations for the three and six months ended June 30, 2023, and other related information. The Company also posted supplemental earnings presentation materials on the investor section of the Company’s website at www.Shentel.com. A copy of the press release is furnished as Exhibit 99.1 and is incorporated herein by reference.
These materials may contain forward-looking statements about Shenandoah Telecommunications Company regarding, among other things, our business strategy, our prospects and our financial position. These statements can be identified by the use of forward-looking terminology such as “believes,” “estimates,” “expects,” “intends,” “may,” “will,” “should,” “could,” or “anticipates” or the negative or other variation of these or similar words, or by discussions of strategy or risks and uncertainties. Shenandoah Telecommunications Company undertakes no obligation to revise or update such statements to reflect current events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibit is furnished with this Current Report on Form 8-K.
| 99.1* | Second Quarter 2023 Earnings Press Release |
|---|---|
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Furnished herewith
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Shenandoah Telecommunications Company | ||
|---|---|---|
| Date: August 2, 2023 | By: | /s/ James J. Volk |
| James J. Volk | ||
| Senior Vice President – Chief Financial Officer<br>(Principal Financial Officer) |
EdgarFiling EXHIBIT 99.1
Shenandoah Telecommunications Company Reports Second Quarter 2023 Results
EDINBURG, Va., Aug. 02, 2023 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel”) (Nasdaq: SHEN) announced second quarter 2023 financial and operating results.
Second Quarter 2023 Highlights
- Glo Fiber Markets added approximately 4,000 subscribers; 20.7% higher than the second quarter of 2022.
- Consolidated revenue grew 8.1% to $71.3 million compared to the second quarter of 2022. Glo Fiber Markets revenue grew 101.3% to $8.2 million and Broadband revenue grew 8.6% to $66.7 million over the same period.
- Consolidated net income was $1.8 million in the second quarter of 2023, compared with net loss of $3.2 million in the second quarter of 2022.
- Consolidated Adjusted EBITDA grew 21.1% to $22.5 million compared to the second quarter of 2022. Broadband Adjusted EBITDA grew 18.4% to $26.1 million over the same period.
“I am pleased with our solid execution of our Fiber First growth plan and the continued scaling of our fiber network. Broadband Adjusted EBITDA margin was 39% compared to 36% in the same period a year ago. We expect margins to increase as our Glo Fiber penetration rate grows,” said President and CEO, Christopher E. French.
Shentel’s second -quarter earnings conference call will be webcast at 8:30 a.m. ET on Wednesday, August 2, 2023 . The webcast and related materials will be available on Shentel’s Investor Relations website at https://investor.shentel.com/ .
Consolidated Second Quarter 2023 Results
Revenue in the second quarter of 2023 grew 8.1% to $71.3 million compared with the second quarter of 2022, due to Broadband segment revenue growth of 8.6%.
Net income per share was $0.04 in the second quarter of 2023 compared with net loss per share of $0.06 in the second quarter of 2022.
Adjusted EBITDA was $22.5 million in the second quarter of 2023 compared with $18.6 million in the second quarter of 2022 due to Broadband segment growth of 18.4% and Tower segment growth of 3.7%.
Broadband
Total Cable Markets and Glo Fiber Markets broadband data Revenue Generating Units (“RGUs”) as of June 30, 2023 were 142,247, representing 13.8% year-over-year growth. Penetration for Cable Markets and Glo Fiber Markets as of June 30, 2023 were 51% and 18%, respectively, compared to 51% and 15%, respectively, as of June 30, 2022. Total Glo Fiber Markets passings grew year-over-year by 70,342 from 112,505 to 182,847.
Broadband revenue in the second quarter of 2023 grew $5.3 million, or 8.6%, to $66.7 million compared with $61.4 million in the second quarter of 2022, primarily driven by a $4.1 million, or 101.3%, increase in Residential & Small and Medium Business (“SMB”) - Glo Fiber Markets revenue. Residential & SMB - Glo Fiber Markets increased due to a 91.8% increase in broadband data RGUs. In addition, Residential & SMB - Cable Markets revenue grew $0.6 million, or 1.3%, due to a 1.4% increase in data RGUs and 2.1% increase in data ARPU. Commercial Fiber revenue increased $0.9 million, or 9.8%, primarily due to $0.5 million in recurring revenue driven by 19.6% increase in connections and $0.4 million in T-Mobile non-recurring early termination fees. T-Mobile disconnected 22 backhaul circuits during the second quarter as part of their previously announced rationalization of the former Sprint network. The Company expects 151 additional backhaul disconnects in 2023 as part of the network rationalization.
Cost of services decreased approximately $0.7 million, or 2.7%, compared with the three months ended June 30, 2022 due to higher capitalized labor and lower medical benefit costs, partially offset by higher line costs due to the expansion of the network into new markets and mobile switching centers of wireless carrier customers.
Selling, general and administrative expense increased $2.0 million, or 14.1%, compared with the three months ended June 30, 2022, due primarily to higher advertising costs associated with the Company’s expansion of Glo Fiber and a change in strategy to drive more gross subscriber additions to low cost sales channels, as well as higher bad debt expense.
Shentel recorded impairment charges of $0.8 million during the three months ended June 30, 2023, compared with $4.1 million of impairment charges for the three months ended June 30, 2022. Impairment charges for the three months ended June 30, 2023 were primarily a result of colocation lease right-of-use assets that are no longer expected to be used and have no alternative use, while impairment charges in the three months ended June 30, 2022 were primarily a result of the Company’s expected decommissioning of Beam fixed wireless sites.
Depreciation and amortization expense increased $2.1 million, or 15.6%, compared with the three months ended June 30, 2022, primarily as a result of the Company’s expansion of its Glo Fiber network.
Broadband operating income was $9.7 million in the second quarter of 2023, compared to $4.1 million in the second quarter of 2022.
Broadband Adjusted EBITDA was $26.1 million in the second quarter of 2023 compared to $22.0 million in the second quarter of 2022.
Tower
Revenue for the three months ended June 30, 2023 was consistent with revenue for the three months ended June 30, 2022.
Tower operating income was $2.5 million in the second quarter of 2023, compared to $2.3 million in the second quarter of 2022.
Tower Adjusted EBITDA in the second quarter of 2023 grew 3.7% to $3.0 million, compared with $2.9 million for the second quarter of 2022.
Other Information
As of June 30, 2023, our cash and cash equivalents totaled $26.3 million and the availability under our delayed draw term loans and revolving line of credit was $275.0 million, for total available liquidity of $301.3 million. We expect to draw the remaining $175.0 million in delayed draw term loans by December 31, 2023.
Capital expenditures were $136.2 million for the six months ended June 30, 2023 compared with $88.7 million in the comparable 2022 period. The $47.5 million increase in capital expenditures was primarily due to higher spending in the Broadband segment to enable our Glo Fiber market expansion.
Earnings Call Webcast
Date: Wednesday, August 2, 2023 Time: 8:30 A.M. (ET) Listen via Internet: https://investor.shentel.com/
A replay of the call will be available for a limited time on the Investor Relations page of the Company’s website.
About Shenandoah Telecommunications
Shenandoah Telecommunications Company (Shentel) provides broadband services through its high speed, state-of-the-art cable and fiber optic networks to customers in the Mid-Atlantic United States. The Company’s services include: broadband internet, video, and voice; fiber optic Ethernet, wavelength and leasing; and tower colocation leasing. The Company owns an extensive regional network with over 9,000 route miles of fiber and over 220 macro cellular towers. For more information, please visit www.shentel.com.
This release contains forward-looking statements about Shentel regarding, among other things, its business strategy, its prospects and its financial position. These statements can be identified by the use of forward-looking terminology such as “believes,” “estimates,” “expects,” “intends,” “may,” “will,” “should,” “could,” or “anticipates” or the negative or other variation of these or similar words, or by discussions of strategy or risks and uncertainties. The forward-looking statements are based upon management’s beliefs, assumptions and current expectations and may include comments as to Shentel’s beliefs and expectations as to future events and trends affecting its business that are necessarily subject to uncertainties, many of which are outside Shentel’s control. Although management believes that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are not, and should not be relied upon as, a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at which such performance or results will be achieved, and actual results may differ materially from those contained in or implied by the forward-looking statements as a result of various factors. A discussion of other factors that may cause actual results to differ from management’s projections, forecasts, estimates and expectations is available in Shentel’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2022 and our Quarterly Reports on Form 10-Q. Those factors may include natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, changes in general economic conditions including high inflation, increases in costs, changes in regulation and other competitive factors. The forward-looking statements included are made only as of the date of the statement. Shentel undertakes no obligation to revise or update such statements to reflect current events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events, except as required by law.
CONTACTS:
Shenandoah Telecommunications Company Jim Volk Senior Vice President and Chief Financial Officer 540-984-5168 Jim.Volk@emp.shentel.com
| SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||||||||
| (in thousands, except per share amounts) | Three Months Ended<br>June 30, | Six Months Ended<br>June 30, | ||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||
| Service revenue and other | $ | 71,341 | $ | 66,021 | $ | 143,027 | $ | 130,435 | ||
| Operating expenses: | ||||||||||
| Cost of services exclusive of depreciation and amortization | 26,076 | 26,756 | 52,643 | 53,095 | ||||||
| Selling, general and administrative | 25,691 | 23,090 | 52,300 | 46,925 | ||||||
| Restructuring expense | — | 454 | — | 390 | ||||||
| Impairment expense | 836 | 4,068 | 1,020 | 4,407 | ||||||
| Depreciation and amortization | 16,369 | 14,790 | 31,967 | 29,135 | ||||||
| Total operating expenses | 68,972 | 69,158 | 137,930 | 133,952 | ||||||
| Operating income (loss) | 2,369 | (3,137 | ) | 5,097 | (3,517 | ) | ||||
| Other income (expense): | ||||||||||
| Other income (expense), net | 177 | (589 | ) | 1,294 | (759 | ) | ||||
| Income (loss) before income taxes | 2,546 | (3,726 | ) | 6,391 | (4,276 | ) | ||||
| Income tax expense (benefit) | 756 | (501 | ) | 2,535 | (448 | ) | ||||
| Net income (loss) | $ | 1,790 | $ | (3,225 | ) | $ | 3,856 | $ | (3,828 | ) |
| Other comprehensive income: | ||||||||||
| Unrealized income on interest rate hedge, net of tax | 2,127 | — | 2,127 | — | ||||||
| Comprehensive income (loss) | $ | 3,917 | $ | (3,225 | ) | $ | 5,983 | $ | (3,828 | ) |
| Net income (loss) per share, basic and diluted: | ||||||||||
| Basic net income (loss) per share | $ | 0.04 | $ | (0.06 | ) | $ | 0.08 | $ | (0.08 | ) |
| Diluted net income (loss) per share | $ | 0.04 | $ | (0.06 | ) | $ | 0.08 | $ | (0.08 | ) |
| Weighted average shares outstanding, basic | 50,366 | 50,157 | 50,330 | 50,133 | ||||||
| Weighted average shares outstanding, diluted | 50,693 | 50,157 | 50,569 | 50,133 | ||||||
| SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | ||||||||||
| --- | --- | --- | --- | |||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (in thousands) | December 31,<br>2022 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | 26,304 | $ | 44,061 | |||||||
| Accounts receivable, net of allowance for doubtful accounts of 726 and 776, respectively | 15,344 | 20,615 | ||||||||
| Income taxes receivable | 4,647 | 29,755 | ||||||||
| Prepaid expenses and other | 12,874 | 11,509 | ||||||||
| Current assets held for sale | 19,742 | 22,622 | ||||||||
| Total current assets | 78,911 | 128,562 | ||||||||
| Investments | 13,016 | 12,971 | ||||||||
| Property, plant and equipment, net | 786,446 | 687,553 | ||||||||
| Goodwill and intangible assets, net | 81,270 | 81,515 | ||||||||
| Operating lease right-of-use assets | 52,258 | 53,859 | ||||||||
| Deferred charges and other assets | 15,557 | 13,259 | ||||||||
| Total assets | 1,027,458 | $ | 977,719 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Current maturities of long-term debt, net of unamortized loan fees | 1,056 | $ | 648 | |||||||
| Accounts payable | 41,238 | 49,173 | ||||||||
| Advanced billings and customer deposits | 12,359 | 12,425 | ||||||||
| Accrued compensation | 7,532 | 9,616 | ||||||||
| Current operating lease liabilities | 3,076 | 2,829 | ||||||||
| Accrued liabilities and other | 12,766 | 17,906 | ||||||||
| Current liabilities held for sale | 3,804 | 3,824 | ||||||||
| Total current liabilities | 81,831 | 96,421 | ||||||||
| Long-term debt, less current maturities, net of unamortized loan fees | 123,795 | 74,306 | ||||||||
| Other long-term liabilities: | ||||||||||
| Deferred income taxes | 87,830 | 84,600 | ||||||||
| Asset retirement obligations | 10,187 | 9,932 | ||||||||
| Benefit plan obligations | 4,035 | 3,758 | ||||||||
| Non-current operating lease liabilities | 49,872 | 50,477 | ||||||||
| Other liabilities | 20,483 | 20,218 | ||||||||
| Total other long-term liabilities | 172,407 | 168,985 | ||||||||
| Commitments and contingencies (Note 13) | ||||||||||
| Shareholders’ equity: | ||||||||||
| Common stock, no par value, authorized 96,000; 50,264 and 50,110 issued and outstanding at June 30, 2023 and December 31, 2022, respectively | — | — | ||||||||
| Additional paid in capital | 62,888 | 57,453 | ||||||||
| Retained earnings | 584,410 | 580,554 | ||||||||
| Accumulated other comprehensive income, net of taxes | 2,127 | — | ||||||||
| Total shareholders’ equity | 649,425 | 638,007 | ||||||||
| Total liabilities and shareholders’ equity | 1,027,458 | $ | 977,719 |
All values are in US Dollars.
| SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | ||||||
|---|---|---|---|---|---|---|
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| (in thousands) | Six Months Ended<br>June 30, | |||||
| 2023 | 2022 | |||||
| Cash flows from operating activities: | ||||||
| Net income (loss) | $ | 3,856 | $ | (3,828 | ) | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 31,967 | 29,135 | ||||
| Stock-based compensation expense, net of amount capitalized | 6,320 | 5,528 | ||||
| Impairment expense | 1,020 | 4,407 | ||||
| Deferred income taxes | 2,491 | (392 | ) | |||
| Other, net | 1,118 | 1,985 | ||||
| Changes in assets and liabilities: | ||||||
| Accounts receivable | 4,499 | 4,430 | ||||
| Current income taxes | 25,108 | — | ||||
| Operating lease assets and liabilities, net | 408 | 414 | ||||
| Other assets | 1,937 | (1,902 | ) | |||
| Accounts payable | (3,012 | ) | 127 | |||
| Other deferrals and accruals | (5,912 | ) | (1,180 | ) | ||
| Net cash provided by operating activities | 69,800 | 38,724 | ||||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (136,158 | ) | (88,706 | ) | ||
| Proceeds from sale of assets and other | 508 | 279 | ||||
| Net cash used in investing activities | (135,650 | ) | (88,427 | ) | ||
| Cash flows from financing activities: | ||||||
| Proceeds from credit facility borrowings | 50,000 | — | ||||
| Payments for debt issuance costs | (300 | ) | — | |||
| Taxes paid for equity award issuances | (1,317 | ) | (835 | ) | ||
| Payments for financing arrangements and other | (290 | ) | (471 | ) | ||
| Net cash provided by (used in) financing activities | 48,093 | (1,306 | ) | |||
| Net decrease in cash and cash equivalents | (17,757 | ) | (51,009 | ) | ||
| Cash and cash equivalents, beginning of period | 44,061 | 84,344 | ||||
| Cash and cash equivalents, end of period | $ | 26,304 | $ | 33,335 | ||
| Supplemental Disclosures of Cash Flow Information | ||||||
| Interest paid | $ | 3,111 | $ | — | ||
| Income tax refunds received, net | $ | 25,481 | $ | — |
Non-GAAP Financial Measures Adjusted EBITDA and Adjusted EBITDA Margin
The Company defines Adjusted EBITDA as net income (loss) calculated in accordance with GAAP, adjusted for the impact of depreciation and amortization, impairment, other income (expense), net, interest income, interest expense, income tax expense (benefit), stock compensation expense, transaction costs related to acquisition and disposition events (including professional advisory fees, integration costs, and related compensatory matters), restructuring expense, tax on equity award vesting and exercise events, and other non-comparable items. A reconciliation of net income (loss), which is the most directly comparable GAAP financial measure, to Adjusted EBITDA is provided below herein.
Adjusted EBITDA margin is the Company’s calculation of Adjusted EBITDA, divided by revenue calculated in accordance with GAAP.
The Company uses Adjusted EBITDA and Adjusted EBITDA margin as supplemental measures of performance to evaluate operating effectiveness and assess its ability to increase revenues while controlling expense growth and the scalability of the Company’s business growth strategy. Adjusted EBITDA is also a significant performance measure used by the Company in its incentive compensation programs. The Company believes that the exclusion of the expense and income items eliminated in calculating Adjusted EBITDA and Adjusted EBITDA margin provides management and investors a useful measure for period-to-period comparisons of the Company’s core operating results by excluding items that are not comparable across reporting periods or that do not otherwise relate to the Company’s ongoing operations. Accordingly, the Company believes that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating the Company’s operating results. However, use of Adjusted EBITDA and Adjusted EBITDA margin as analytical tools has limitations, and investors and others should not consider them in isolation or as substitutes for analysis of our financial results as reported under GAAP. In addition, other companies may calculate Adjusted EBITDA and Adjusted EBITDA margin or similarly titled measures differently, which may reduce their usefulness as comparative measures.
| Three Months Ended June 30, 2023 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | ||||||||
| Net income (loss) | $ | 9,613 | $ | 2,487 | $ | (10,310 | ) | $ | 1,790 | |||
| Depreciation and amortization | 15,490 | 538 | 341 | 16,369 | ||||||||
| Impairment expense | 836 | — | — | 836 | ||||||||
| Other expense (income), net | 62 | — | (239 | ) | (177 | ) | ||||||
| Income tax benefit | — | — | 756 | 756 | ||||||||
| Stock-based compensation | — | — | 2,603 | 2,603 | ||||||||
| Restructuring charges and other | 71 | — | 230 | 301 | ||||||||
| Adjusted EBITDA | $ | 26,072 | $ | 3,025 | $ | (6,619 | ) | $ | 22,478 | |||
| Adjusted EBITDA margin | 39 | % | 64 | % | N/A | 32 | % | |||||
| Three Months Ended June 30, 2022 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | ||||||||
| Net income (loss) | $ | 4,042 | $ | 2,285 | $ | (9,552 | ) | $ | (3,225 | ) | ||
| Depreciation and amortization | 13,396 | 633 | 761 | 14,790 | ||||||||
| Impairment expense | 4,068 | — | — | 4,068 | ||||||||
| Other expense (income), net | 65 | — | 524 | 589 | ||||||||
| Income tax benefit | — | — | (501 | ) | (501 | ) | ||||||
| Stock-based compensation | — | — | 2,385 | 2,385 | ||||||||
| Restructuring charges and other | 443 | — | 11 | 454 | ||||||||
| Adjusted EBITDA | $ | 22,014 | $ | 2,918 | $ | (6,372 | ) | $ | 18,560 | |||
| Adjusted EBITDA margin | 36 | % | 62 | % | N/A | 28 | % | |||||
| Six Months Ended June 30, 2023 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | ||||||||
| Net income (loss) | $ | 20,887 | $ | 4,908 | $ | (21,939 | ) | $ | 3,856 | |||
| Depreciation and amortization | 30,173 | 1,051 | 743 | 31,967 | ||||||||
| Impairment expense | 1,020 | — | — | 1,020 | ||||||||
| Other expense (income), net | 124 | — | (1,418 | ) | (1,294 | ) | ||||||
| Income tax benefit | — | — | 2,535 | 2,535 | ||||||||
| Stock-based compensation | — | — | 6,320 | 6,320 | ||||||||
| Restructuring charges and other | 202 | — | 230 | 432 | ||||||||
| Adjusted EBITDA | $ | 52,406 | $ | 5,959 | $ | (13,529 | ) | $ | 44,836 | |||
| Adjusted EBITDA margin | 39 | % | 64 | % | N/A | 31 | % | |||||
| Six Months Ended June 30, 2022 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | ||||||||
| Net income (loss) | $ | 12,169 | $ | 5,038 | $ | (21,035 | ) | $ | (3,828 | ) | ||
| Depreciation and amortization | 25,933 | 1,117 | 2,085 | 29,135 | ||||||||
| Impairment expense | 4,407 | — | — | 4,407 | ||||||||
| Other expense (income), net | 119 | — | 640 | 759 | ||||||||
| Income tax benefit | — | — | (448 | ) | (448 | ) | ||||||
| Stock-based compensation | — | — | 5,528 | 5,528 | ||||||||
| Restructuring charges and other | 460 | — | (70 | ) | 390 | |||||||
| Adjusted EBITDA | $ | 43,088 | $ | 6,155 | $ | (13,300 | ) | $ | 35,943 | |||
| Adjusted EBITDA margin | 36 | % | 64 | % | N/A | 28 | % |
Segment Results
| Three Months Ended June 30, 2023: | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | ||||||
| External revenue | ||||||||||
| Residential & SMB - Cable Markets^1^ | $ | 44,403 | $ | — | $ | — | $ | 44,403 | ||
| Residential & SMB - Glo Fiber Markets^1^ | 8,164 | — | — | 8,164 | ||||||
| Commercial Fiber | 10,253 | — | — | 10,253 | ||||||
| Tower lease | — | 4,715 | — | 4,715 | ||||||
| RLEC & Other | 3,806 | — | — | 3,806 | ||||||
| Service revenue and other | 66,626 | 4,715 | — | 71,341 | ||||||
| Intercompany revenue and other | 51 | 38 | (89 | ) | — | |||||
| Total revenue | 66,677 | 4,753 | (89 | ) | 71,341 | |||||
| Operating expenses | ||||||||||
| Cost of services | 24,752 | 1,379 | (55 | ) | 26,076 | |||||
| Selling, general and administrative | 15,924 | 349 | 9,418 | 25,691 | ||||||
| Impairment expense | 836 | — | — | 836 | ||||||
| Depreciation and amortization | 15,490 | 538 | 341 | 16,369 | ||||||
| Total operating expenses | 57,002 | 2,266 | 9,704 | 68,972 | ||||||
| Operating income (loss) | $ | 9,675 | $ | 2,487 | $ | (9,793 | ) | $ | 2,369 | |
| Three Months Ended June 30, 2022: | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | ||||||
| External revenue | ||||||||||
| Residential & SMB - Cable Markets^1^ | $ | 43,843 | $ | — | $ | — | $ | 43,843 | ||
| Residential & SMB - Glo Fiber Markets^1^ | 4,056 | — | — | 4,056 | ||||||
| Commercial Fiber | 9,340 | — | — | 9,340 | ||||||
| Tower lease | — | 4,615 | — | 4,615 | ||||||
| RLEC & Other | 4,124 | — | — | 4,124 | ||||||
| Service revenue and other | 61,363 | 4,615 | — | 65,978 | ||||||
| Intercompany revenue and other | 49 | 87 | (93 | ) | 43 | |||||
| Total revenue | 61,412 | 4,702 | (93 | ) | 66,021 | |||||
| Operating expenses | ||||||||||
| Cost of services | 25,440 | 1,378 | (62 | ) | 26,756 | |||||
| Selling, general and administrative | 13,958 | 406 | 8,726 | 23,090 | ||||||
| Restructuring expense | 443 | — | 11 | 454 | ||||||
| Impairment expense | 4,068 | — | — | 4,068 | ||||||
| Depreciation and amortization | 13,396 | 633 | 761 | 14,790 | ||||||
| Total operating expenses | 57,305 | 2,417 | 9,436 | 69,158 | ||||||
| Operating income (loss) | $ | 4,107 | $ | 2,285 | $ | (9,529 | ) | $ | (3,137 | ) |
| Six Months Ended June 30, 2023: | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | ||||||
| External revenue | ||||||||||
| Residential & SMB - Cable Markets^1^ | $ | 89,159 | $ | — | $ | — | $ | 89,159 | ||
| Residential & SMB - Glo Fiber Markets^1^ | 15,167 | — | — | 15,167 | ||||||
| Commercial Fiber | 21,951 | — | — | 21,951 | ||||||
| Tower lease | — | 9,253 | — | 9,253 | ||||||
| RLEC & Other | 7,497 | — | — | 7,497 | ||||||
| Service revenue and other | 133,774 | 9,253 | — | 143,027 | ||||||
| Intercompany revenue and other | 106 | 76 | (182 | ) | — | |||||
| Total revenue | 133,880 | 9,329 | (182 | ) | 143,027 | |||||
| Operating expenses | ||||||||||
| Cost of services | 50,181 | 2,571 | (109 | ) | 52,643 | |||||
| Selling, general and administrative | 31,495 | 799 | 20,006 | 52,300 | ||||||
| Impairment expense | 1,020 | — | — | 1,020 | ||||||
| Depreciation and amortization | 30,173 | 1,051 | 743 | 31,967 | ||||||
| Total operating expenses | 112,869 | 4,421 | 20,640 | 137,930 | ||||||
| Operating income (loss) | $ | 21,011 | $ | 4,908 | $ | (20,822 | ) | $ | 5,097 | |
| Six Months Ended June 30, 2022: | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | ||||||
| External revenue | ||||||||||
| Residential & SMB - Cable Markets^1^ | $ | 87,336 | $ | — | $ | — | $ | 87,336 | ||
| Residential & SMB - Glo Fiber Markets^1^ | 7,476 | — | — | 7,476 | ||||||
| Commercial Fiber | 18,402 | — | — | 18,402 | ||||||
| Tower lease | — | 9,361 | — | 9,361 | ||||||
| RLEC & Other | 7,813 | — | — | 7,813 | ||||||
| Service revenue and other | 121,027 | 9,361 | — | 130,388 | ||||||
| Intercompany revenue and other | 99 | 188 | (240 | ) | 47 | |||||
| Total revenue | 121,126 | 9,549 | (240 | ) | 130,435 | |||||
| Operating expenses | ||||||||||
| Cost of services | 50,608 | 2,670 | (183 | ) | 53,095 | |||||
| Selling, general and administrative | 27,430 | 724 | 18,771 | 46,925 | ||||||
| Restructuring expense | 460 | — | (70 | ) | 390 | |||||
| Impairment expense | 4,407 | — | — | 4,407 | ||||||
| Depreciation and amortization | 25,933 | 1,117 | 2,085 | 29,135 | ||||||
| Total operating expenses | 108,838 | 4,511 | 20,603 | 133,952 | ||||||
| Operating income (loss) | $ | 12,288 | $ | 5,038 | $ | (20,843 | ) | $ | (3,517 | ) |
_________________________________________ ^***(1)***Shentel has presented Residential & SMB - Cable Markets and Residential & SMB - Glo Fiber Markets separately for the three and six months ended June 30, 2023. These revenues were previously reported in one line under the description “Residential & SMB”. Shentel has amended the presentation for the three and six months ended June 30, 2022 for comparability.^
Supplemental Information
| Broadband Operating Statistics | ||||
|---|---|---|---|---|
| June 30,<br>2023 | June 30,<br>2022 | |||
| Broadband homes and businesses passed (1) | 396,035 | 324,186 | ||
| Cable Markets | 213,188 | 211,681 | ||
| Glo Fiber Markets | 182,847 | 112,505 | ||
| Residential & Small and Medium Business ("SMB") RGUs: | ||||
| Broadband Data | 142,247 | 125,003 | ||
| Cable Markets | 109,404 | 107,878 | ||
| Glo Fiber Markets | 32,843 | 17,125 | ||
| Video | 44,800 | 49,027 | ||
| Voice | 40,313 | 39,535 | ||
| Total Residential & SMB RGUs (excludes RLEC) | 227,360 | 213,565 | ||
| Residential & SMB Penetration (2) | ||||
| Broadband Data | 35.9 | % | 38.6 | % |
| Cable Markets | 51.3 | % | 51.0 | % |
| Glo Fiber Markets | 18.0 | % | 15.2 | % |
| Video | 11.3 | % | 15.1 | % |
| Voice | 10.7 | % | 12.9 | % |
| Fiber route miles | 9,082 | 7,906 | ||
| Total fiber miles (3) | 767,173 | 589,923 |
______________________________________________________ ^(1) Homes and businesses are considered passed (“passings”) if we can connect them to our network without further extending the distribution system. Passings is an estimate based upon the best available information. Passings will vary among video, broadband data and voice services.^ ^(2) Penetration is calculated by dividing the number of users by the number of passings or available homes, as appropriate.^ ^(3) 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.^
| Broadband - Residential and SMB ARPU | ||||||||
|---|---|---|---|---|---|---|---|---|
| Three Months Ended<br>June 30, | Six Months Ended<br>June 30, | |||||||
| 2023 | 2022 | 2023 | 2022 | |||||
| Residential and SMB Revenue: | ||||||||
| Broadband | $ | 34,152 | $ | 29,568 | $ | 67,326 | $ | 58,217 |
| Cable Markets | 27,172 | 26,123 | 54,445 | 51,986 | ||||
| Glo Fiber Markets | 6,980 | 3,445 | 12,881 | 6,231 | ||||
| Video | 14,411 | 15,210 | 29,056 | 30,551 | ||||
| Voice | 3,054 | 2,994 | 6,084 | 5,910 | ||||
| Discounts, adjustments and other | 950 | 127 | 1,860 | 134 | ||||
| Total Revenue | $ | 52,567 | $ | 47,899 | $ | 104,326 | $ | 94,812 |
| Average RGUs: | ||||||||
| Broadband Data | 140,481 | 123,153 | 138,376 | 121,832 | ||||
| Cable Markets | 109,716 | 107,738 | 109,737 | 107,878 | ||||
| Glo Fiber Markets | 30,765 | 15,415 | 28,639 | 13,954 | ||||
| Video | 45,229 | 49,146 | 45,749 | 49,295 | ||||
| Voice | 40,164 | 38,463 | 40,078 | 36,650 | ||||
| ARPU: (1) | ||||||||
| Broadband | $ | 81.03 | $ | 79.94 | $ | 81.06 | $ | 80.02 |
| Cable Markets | $ | 82.55 | $ | 80.82 | $ | 82.69 | $ | 80.85 |
| Glo Fiber Markets | $ | 75.63 | $ | 74.49 | $ | 74.96 | $ | 74.42 |
| Video | $ | 106.21 | $ | 103.16 | $ | 105.85 | $ | 103.29 |
| Voice | $ | 25.35 | $ | 25.95 | $ | 25.30 | $ | 26.88 |
______________________________________________________ ^(1) Average Revenue Per RGU calculation = (Residential & SMB Revenue) / average RGUs / 3 months.^
| Tower Operating Statistics | ||
|---|---|---|
| June 30,<br>2023 | June 30,<br>2022 | |
| Macro tower sites | 222 | 223 |
| Tenants | 448 | 465 |
| Average tenants per tower | 1.9 | 2.0 |