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): October 28, 2021
_______________________________
Shenandoah Telecommunications Company
(Exact name of registrant as specified in its charter)
_______________________________
| Virginia | 0-9881 | 54-1162807 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
500 Shentel Way
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 October 28, 2021, Shenandoah Telecommunications Company (the “Company”) issued a press release announcing its financial position as of September 30, 2021, results of operations for the three and nine months ended September 30, 2021, 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* | Third Quarter 2021 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: October 28, 2021 | 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 Third Quarter 2021 Results
EDINBURG, Va., Oct. 28, 2021 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel”) (Nasdaq: SHEN) announced third quarter 2021 financial and operating results.
Highlights
- Revenue, Adjusted OIBDA, and Operating Income grew 12.8%, 31.7%, and 149.4%, respectively, over the same period a year ago.
- Earnings per diluted share for continuing operations grew to $0.13 compared to $0.03 per diluted share in the third quarter 2020.
- Broadband data net adds were approximately 4,100 including 2,100 for Glo Fiber and 350 for Beam, respectively.
- Broadband homes and businesses passed grew sequentially 17,000 to approximately 296,000.
- Executed 17 new Glo Fiber franchise agreements in 2021 adding 160,000 target passings for a total of over 304,000 franchise approved passings.
“Our team executed well in the quarter, driving the third consecutive quarter of double digit revenue and Adjusted OIBDA growth rates.” said President and CEO, Christopher E. French. “With strong momentum in business development, construction and sales, we are upgrading our target for Glo Fiber from 300,000 to 450,000 serviceable addresses by 2026.”
Shentel's third-quarter earnings conference call will be webcast at 8:00 a.m. ET on Friday, October 29, 2021. The webcast and related materials will be available on Shentel’s Investor Relations website at https://investor.shentel.com/ .
Consolidated Third Quarter 2021 Results
Revenue in the third quarter of 2021 grew 12.8% to $62.2 million, compared with the third quarter of 2020, due to growth of 14.2% in the Broadband segment.
Adjusted OIBDA in the third quarter of 2021 grew 31.7% to $19.3 million, compared with the third quarter of 2020, due to growth in Broadband of 15.4%. Corporate expenses declined approximately 24% from the same period a year ago due to lower compensation and bank fees.
Operating income in the third quarter of 2021 was $1.2 million compared with $0.5 million in the third quarter of 2020.
Earnings from continuing operations per diluted share was $0.13 in the third quarter of 2021 representing an increase of $0.10 per share or 333% from the third quarter of 2020.
Broadband
Total broadband data Revenue Generating Units ("RGUs") as of September 30, 2021, were 115,579, representing 17.0% year over year growth. Penetration for incumbent cable, Glo Fiber and Beam were 50%, 15% and 5%, respectively, compared to 46%, 13% and 0%, respectively, as of September 30, 2020. Total Glo Fiber and Beam passings grew year over year by approximately 38,500 and 24,300, respectively.
Broadband revenue in the third quarter of 2021 grew $7.2 million or 14.2% to $57.9 million compared with $50.7 million in the third quarter of 2020, primarily driven by a $5.3 million or 13.4% increase in Residential and Small and Medium Business ("SMB") revenue on a 17.0% increase in broadband data RGUs. Commercial fiber revenue grew $1.8 million or 24.0% due to growth in circuits, $0.7 million non-recurring amortized revenue reduction in 2020 and $0.5 million in non-recurring dark fiber sales-type leases in 2021.
Broadband operating expenses in the third quarter of 2021 were $48.2 million compared to $41.2 million in the third quarter of 2020, primarily driven by costs incurred to support the continued expansion of Glo Fiber and Beam, including a $2.1 million increase in depreciation, a $1.6 million increase in maintenance and installation expenses, a $0.7 million increase in non-recurring expenses relating to the wireless sale and related reduction in workforce, a $0.6 million increase in Glo Fiber and Beam advertising expenses, a $0.6 million increase in software and professional fees from enhancements to our back-office systems, $0.5 million of higher video programming costs, and $0.5 million in higher line costs from an increase in off-network circuits.
Broadband Adjusted OIBDA in the third quarter of 2021 grew 15.4% to $22.6 million, compared with $19.6 million for the third quarter of 2020.
Broadband Operating income in the third quarter of 2021 was $9.7 million, compared to $9.5 million in the third quarter of 2020.
Tower
Tower revenue in the third quarter of 2021 declined 1.2% to $4.4 million compared with the third quarter of 2020. Tenants increased 13.0% to 470 offset by a 14.1% reduction the average revenue per tenant. T-Mobile exercised an option in the third quarter to convert 80 assumed tower leases to a month-to-month term resulting in a change in revenue recognition accounting driving the decline in average revenue per tenant.
Tower Adjusted OIBDA in the third quarter of 2021 decreased 8.7% to $2.6 million, compared with $2.9 million for the third quarter of 2020, due primarily to the revenue decline and an increase in ground lease expenses.
Tower operating income in the third quarter of 2021 was $2.2 million, compared to $2.4 million in the third quarter of 2020.
Other Information
On July 1, 2021, Shentel completed the sale of its Wireless assets and operations to T-Mobile for cash consideration of approximately $1.94 billion.
The Company currently expects to pay approximately $428 million in December 2021 in income taxes for the sale of the Wireless assets and operations resulting in after-tax proceeds of approximately $1.5 billion. The Company used approximately $684 million of the proceeds to fully repay all outstanding principal amounts under, and terminate, the then-existing credit agreement (the "Prior Credit Agreement") and to fully repay and terminate the interest rate swaps. Approximately $937 million of the proceeds were used to pay a special dividend of $18.75 per share on the issued and outstanding shares of the Company's common stock (the "Special Dividend") in August 2021.
On July 1, 2021, we entered into a new Credit Agreement (the “New Credit Agreement”) with various financial institutions party thereto. The New Credit Agreement provides for three credit facilities, in an aggregate amount equal to $400 million: (i) a $100 million five-year revolving credit facility, (ii) a $150 million five-year delayed draw amortizing term loan and (iii) a $150 million seven-year delayed draw amortizing term loan. We have not made any borrowing under the New Credit Agreement as of the date of this press release. We do not currently expect to draw upon any portion of the New Credit Agreement until the first quarter of 2022.
The Company currently has incurred approximately $4.7 million of severance expense during 2021, with approximately $2.1 million attributable to continuing operations and $2.6 million related to discontinued operations, all of which has been recognized. The Company has realized $3.3 million in annualized run-rate expense savings from the previously announced reduction in workforce as of September 30, 2021 and expects to realize approximately $4 million by early 2022.
As of September 30, 2021 our cash and cash equivalents totaled $532.5 million and the availability under our revolving line of credit and delay draw term loans were $400.0 million, for total available liquidity of $932.5 million.
Capital expenditures were $118.8 million for the nine months ended September 30, 2021 compared with $82.7 million in the comparable 2020 period. The $36.1 million increase in capital expenditures was primarily due to higher spending in the Broadband segment driven by the expansion of Glo Fiber and Beam.
As previously announced, the Company’s Board of Directors declared an annual cash dividend of $0.07 per share to shareholders of record as of the close of business November 8, 2021, payable on December 1, 2021.
2021 Outlook The Company is reaffirming and narrowing the full-year 2021 guidance as summarized below:
| ($ in millions) | Year Ending December 31, | Year Ended December 31, 2019 | % Change 2020 to 2021 Midpoint | % Change 2019 to 2020 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||||||||||
| Guidance | Actual | |||||||||||||
| Low | High | |||||||||||||
| Revenue | $ | 243 | $ | 246 | $ | 221 | $ | 207 | 10.6 | % | 6.8 | % | ||
| Operating Income (loss) | $ | 7 | $ | 10 | $ | (1 | ) | $ | (1 | ) | nm | — | % | |
| Adjusted OIBDA | $ | 70 | $ | 73 | $ | 57 | $ | 49 | 25.4 | % | 16.3 | % | ||
| Capital Expenditures | $ | 161 | $ | 166 | $ | 120 | $ | 67 | 36.3 | % | 79.1 | % |
Adjusted OIBDA is a non-GAAP financial measure that is not determined in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). Reconciliations of this non-GAAP financial measures are provided in this press release after the consolidated financial statements.
Conference Call and Webcast
Teleconference Information:
Date: October 29, 2021 Time: 8:00 A.M. (ET) Dial in number: 1-888-695-7639
Password: 1977780
Audio webcast: http://investor.shentel.com/
An audio replay of the call will be available approximately two hours after the call is complete, through November 29, 2021 by calling (855) 859-2056.
About Shenandoah Telecommunications
Shenandoah Telecommunications Company (Shentel) provides broadband services through its high speed, state-of-the-art cable, fiber optic and fixed wireless 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 7,200 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. 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, 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 | |||||||||||
| (in thousands, except per share amounts) | Three Months Ended<br>September 30, | Nine Months Ended<br>September 30, | |||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||
| Service revenue and other | $ | 62,244 | $ | 55,173 | $ | 182,635 | $ | 162,643 | |||
| Operating expenses: | |||||||||||
| Cost of services | 25,426 | 22,669 | 73,044 | 65,167 | |||||||
| Selling, general and administrative | 20,238 | 20,039 | 60,711 | 64,227 | |||||||
| Restructuring expense | 1,160 | — | 1,821 | — | |||||||
| Depreciation and amortization | 14,248 | 11,995 | 40,813 | 36,010 | |||||||
| Total operating expenses | 61,072 | 54,703 | 176,389 | 165,404 | |||||||
| Operating income (loss) | 1,172 | 470 | 6,246 | (2,761 | ) | ||||||
| Other income: | |||||||||||
| Other income, net | 138 | 1,083 | 3,076 | 3,103 | |||||||
| Income before income taxes | 1,310 | 1,553 | 9,322 | 342 | |||||||
| Income tax expense (benefit) | (5,422 | ) | 141 | (2,315 | ) | (684 | ) | ||||
| Income from continuing operations | 6,732 | 1,412 | 11,637 | 1,026 | |||||||
| Discontinued operations: | |||||||||||
| (Loss) income from discontinued operations, net of tax | (406 | ) | 33,509 | 99,632 | 76,422 | ||||||
| Gain on the sale of discontinued operations, net of tax | 886,732 | — | 886,732 | — | |||||||
| Total income from discontinued operations, net of tax | 886,326 | 33,509 | 986,364 | 76,422 | |||||||
| Net income | $ | 893,058 | $ | 34,921 | $ | 998,001 | $ | 77,448 | |||
| Net income per share, basic and diluted: | |||||||||||
| Basic - Income from continuing operations | $ | 0.13 | $ | 0.03 | $ | 0.23 | $ | 0.02 | |||
| Basic - Income from discontinued operations, net of tax | $ | 17.73 | $ | 0.67 | $ | 19.73 | $ | 1.53 | |||
| Basic net income per share | $ | 17.86 | $ | 0.70 | $ | 19.96 | $ | 1.55 | |||
| Diluted - Income from continuing operations | $ | 0.13 | $ | 0.03 | $ | 0.23 | $ | 0.02 | |||
| Diluted - Income from discontinued operations, net of tax | $ | 17.68 | $ | 0.67 | $ | 19.67 | $ | 1.53 | |||
| Diluted net income per share | $ | 17.81 | $ | 0.70 | $ | 19.90 | $ | 1.55 | |||
| Weighted average shares outstanding, basic | 49,984 | 49,911 | 49,984 | 49,889 | |||||||
| Weighted average shares outstanding, diluted | 50,120 | 50,105 | 50,136 | 50,049 |
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
| September 30,<br>2021 | December 31,<br>2020 | |||||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | $ | 532,544 | $ | 195,397 | ||
| Other current assets | 41,489 | 80,024 | ||||
| Current assets held for sale | — | 1,133,294 | ||||
| Total current assets | 574,033 | 1,408,715 | ||||
| Investments | 13,410 | 13,769 | ||||
| Property, plant and equipment, net | 525,799 | 440,427 | ||||
| Intangible assets, net and Goodwill | 106,146 | 106,759 | ||||
| Operating lease right-of-use assets | 56,952 | 50,387 | ||||
| Deferred charges and other assets, net | 16,750 | 11,650 | ||||
| Total assets | $ | 1,293,090 | $ | 2,031,707 | ||
| Current liabilities held for sale | $ | — | $ | 452,202 | ||
| Total current liabilities | 485,423 | 755,859 | ||||
| Other liabilities | 158,901 | 241,252 | ||||
| Total shareholders’ equity | 648,766 | 582,394 | ||||
| Total liabilities and shareholders’ equity | $ | 1,293,090 | $ | 2,031,707 | ||
| SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | ||||||
| --- | ||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| Nine Months Ended<br>September 30, | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | 2021 | 2020 | ||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 998,001 | $ | 77,448 | ||
| Income from operations of discontinued operations, net of tax | 986,364 | 76,422 | ||||
| Income (loss) from continuing operations | 11,637 | 1,026 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation | 40,193 | 35,522 | ||||
| Amortization of intangible assets | 620 | 488 | ||||
| Bad debt expense | 755 | 514 | ||||
| Stock based compensation expense, net of amount capitalized | 1,953 | 5,306 | ||||
| Deferred income taxes | 4,384 | (279 | ) | |||
| Other adjustments | (31 | ) | (349 | ) | ||
| Changes in assets and liabilities | (27,939 | ) | 2,572 | |||
| Net cash provided by operating activities – continuing operations | 31,572 | 44,800 | ||||
| Net cash provided by operating activities – discontinued operations | 121,067 | 182,499 | ||||
| Net cash provided by operating activities | 152,639 | 227,299 | ||||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (118,800 | ) | (82,740 | ) | ||
| Proceeds from sale of assets and other | 200 | (15,866 | ) | |||
| Net cash used in investing activities – continuing operations | (118,600 | ) | (98,606 | ) | ||
| Net cash used in investing activities – discontinued operations | 1,944,063 | (17,794 | ) | |||
| Net cash used in investing activities | 1,825,463 | (116,400 | ) | |||
| Cash flows from financing activities: | ||||||
| Dividends paid, net of dividends reinvested | (936,850 | ) | — | |||
| Taxes paid for equity award issuances | (1,627 | ) | (2,182 | ) | ||
| Other | (1,922 | ) | (727 | ) | ||
| Net cash used in financing activities – continuing operations | (940,399 | ) | (2,909 | ) | ||
| Net cash used in financing activities – discontinued operations | (700,556 | ) | (25,591 | ) | ||
| Net cash used in financing activities | (1,640,955 | ) | (28,500 | ) | ||
| Net increase in cash and cash equivalents | 337,147 | 82,399 | ||||
| Cash and cash equivalents, beginning of period | 195,397 | 101,651 | ||||
| Cash and cash equivalents, end of period | $ | 532,544 | $ | 184,050 |
Non-GAAP Financial Measures Adjusted OIBDA
Adjusted OIBDA represents Operating income before depreciation, amortization of intangible assets, stock-based compensation and certain other items of revenue, expense, gain or loss not reflective of our operating performance, which may or may not be recurring in nature.
Adjusted OIBDA is a non-GAAP financial measure that we use to evaluate our operating performance in comparison to our competitors. Management believes that analysts and investors use Adjusted OIBDA as a supplemental measure of operating performance to facilitate comparisons with other telecommunications companies. This measure isolates and evaluates operating performance by excluding the cost of financing (e.g., interest expense), as well as the non-cash depreciation and amortization of past capital investments, non-cash share-based compensation expense, and certain other items of revenue, expense, gain or loss not reflective of our operating performance.
Adjusted OIBDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for operating income, net income or any other measure of financial performance reported in accordance with GAAP.
The following tables reconcile Adjusted OIBDA to operating income, which we consider to be the most directly comparable GAAP financial measure:
| Three Months Ended September 30, 2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | ||||||
| Operating income (loss) from continuing operations | $ | 9,721 | $ | 2,163 | $ | (10,712 | ) | $ | 1,172 | |
| Depreciation | 12,012 | 468 | 1,569 | 14,049 | ||||||
| Amortization | 199 | — | — | 199 | ||||||
| OIBDA | 21,932 | 2,631 | (9,143 | ) | 15,420 | |||||
| Stock compensation expense | — | — | 1,119 | 1,119 | ||||||
| Transaction related fees | 676 | 6 | 2,048 | 2,730 | ||||||
| Adjusted OIBDA | $ | 22,608 | $ | 2,637 | $ | (5,976 | ) | $ | 19,269 | |
| Three Months Ended September 30, 2020 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | ||||||
| Operating income (loss) from continuing operations | $ | 9,486 | $ | 2,421 | $ | (11,437 | ) | $ | 470 | |
| Depreciation | 9,939 | 467 | 1,422 | 11,828 | ||||||
| Amortization | 167 | — | — | 167 | ||||||
| OIBDA | 19,592 | 2,888 | (10,015 | ) | 12,465 | |||||
| Stock compensation expense | — | — | 1,137 | 1,137 | ||||||
| Transaction related fees | — | — | 1,032 | 1,032 | ||||||
| Adjusted OIBDA | $ | 19,592 | $ | 2,888 | $ | (7,846 | ) | $ | 14,634 | |
| Nine Months Ended September 30, 2021 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | ||||||
| Operating income (loss) from continuing operations | $ | 28,640 | $ | 7,374 | $ | (29,768 | ) | $ | 6,246 | |
| Depreciation | 35,127 | 1,398 | 3,668 | 40,193 | ||||||
| Amortization | 620 | — | — | 620 | ||||||
| OIBDA | 64,387 | 8,772 | (26,100 | ) | 47,059 | |||||
| Stock compensation expense | — | — | 1,953 | 1,953 | ||||||
| Transaction related fees | 924 | 6 | 2,713 | 3,643 | ||||||
| Adjusted OIBDA | $ | 65,311 | $ | 8,778 | $ | (21,434 | ) | $ | 52,655 | |
| Nine Months Ended September 30, 2020 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | ||||||
| Operating income (loss) from continuing operations | $ | 29,650 | $ | 6,444 | $ | (38,855 | ) | $ | (2,761 | ) |
| Depreciation | 29,960 | 1,414 | 4,148 | 35,522 | ||||||
| Amortization | 488 | — | — | 488 | ||||||
| OIBDA | 60,098 | 7,858 | (34,707 | ) | 33,249 | |||||
| Stock compensation expense | — | — | 5,306 | 5,306 | ||||||
| Transaction related fees | — | — | 3,002 | 3,002 | ||||||
| Adjusted OIBDA | $ | 60,098 | $ | 7,858 | $ | (26,399 | ) | $ | 41,557 |
2021 Outlook – Adjusted OIBDA
| ($ in millions) | Year Ending December 31, | Year Ended December 31, 2019 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||||||
| Guidance | Actual | |||||||||
| Low | High | |||||||||
| Operating Income (loss) | $ | 7 | $ | 10 | $ | (1 | ) | $ | (1 | ) |
| Depreciation | $ | 54 | $ | 54 | $ | 48 | $ | 46 | ||
| Amortization | $ | 1 | $ | 1 | $ | 1 | $ | 1 | ||
| Stock compensation expense | $ | 4 | $ | 4 | $ | 6 | $ | 3 | ||
| Transaction related fees | $ | 4 | $ | 4 | $ | 3 | $ | — | ||
| Adjusted OIBDA | $ | 70 | $ | 73 | $ | 57 | $ | 49 |
Segment Results
Three Months Ended September 30, 2021:
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | |||||
|---|---|---|---|---|---|---|---|---|---|
| External revenue | |||||||||
| Residential & SMB | $ | 44,783 | $ | — | $ | — | $ | 44,783 | |
| Commercial Fiber | 9,059 | — | — | 9,059 | |||||
| RLEC & Other | 3,972 | — | — | 3,972 | |||||
| Tower lease | — | 4,356 | — | 4,356 | |||||
| Service revenue and other | 57,814 | 4,356 | — | 62,170 | |||||
| Revenue for service provided to the discontinued Wireless operations | 99 | 93 | (118 | ) | 74 | ||||
| Total revenue | 57,913 | 4,449 | (118 | ) | 62,244 | ||||
| Operating expenses | |||||||||
| Cost of services | 24,012 | 1,504 | (90 | ) | 25,426 | ||||
| Selling, general and administrative | 11,898 | 314 | 8,026 | 20,238 | |||||
| Restructuring expense | 71 | — | 1,089 | 1,160 | |||||
| Depreciation and amortization | 12,211 | 468 | 1,569 | 14,248 | |||||
| Total operating expenses | 48,192 | 2,286 | 10,594 | 61,072 | |||||
| Operating income (loss) | $ | 9,721 | $ | 2,163 | $ | (10,712 | ) | $ | 1,172 |
Three Months Ended September 30, 2020
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | |||||
|---|---|---|---|---|---|---|---|---|---|
| External revenue | |||||||||
| Residential & SMB | $ | 39,477 | $ | — | $ | — | $ | 39,477 | |
| Commercial Fiber | 5,280 | — | — | 5,280 | |||||
| RLEC & Other | 3,853 | — | — | 3,853 | |||||
| Tower lease | — | 1,864 | — | 1,864 | |||||
| Service revenue and other | 48,610 | 1,864 | — | 50,474 | |||||
| Revenue for service provided to the discontinued Wireless operations | 2,100 | 2,637 | (38 | ) | 4,699 | ||||
| Total revenue | 50,710 | 4,501 | (38 | ) | 55,173 | ||||
| Operating expenses | |||||||||
| Cost of services | 21,326 | 1,283 | 60 | 22,669 | |||||
| Selling, general and administrative | 9,792 | 330 | 9,917 | 20,039 | |||||
| Depreciation and amortization | 10,106 | 467 | 1,422 | 11,995 | |||||
| Total operating expenses | 41,224 | 2,080 | 11,399 | 54,703 | |||||
| Operating income (loss) | $ | 9,486 | $ | 2,421 | $ | (11,437 | ) | $ | 470 |
Nine Months Ended September 30, 2021:
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | |||||
|---|---|---|---|---|---|---|---|---|---|
| External revenue | |||||||||
| Residential & SMB | $ | 131,702 | $ | — | $ | — | $ | 131,702 | |
| Commercial Fiber | 21,975 | — | — | 21,975 | |||||
| RLEC & Other | 11,208 | — | — | 11,208 | |||||
| Tower lease | — | 8,525 | — | 8,525 | |||||
| Service revenue and other | 164,885 | 8,525 | — | 173,410 | |||||
| Revenue for service provided to the discontinued Wireless operations | 4,409 | 5,203 | (387 | ) | 9,225 | ||||
| Total revenue | 169,294 | 13,728 | (387 | ) | 182,635 | ||||
| Operating expenses | |||||||||
| Cost of services | 69,275 | 4,070 | (301 | ) | 73,044 | ||||
| Selling, general and administrative | 35,429 | 886 | 24,396 | 60,711 | |||||
| Restructuring expense | 203 | — | 1,618 | 1,821 | |||||
| Depreciation and amortization | 35,747 | 1,398 | 3,668 | 40,813 | |||||
| Total operating expenses | 140,654 | 6,354 | 29,381 | 176,389 | |||||
| Operating income (loss) | $ | 28,640 | $ | 7,374 | $ | (29,768 | ) | $ | 6,246 |
Nine Months Ended September 30, 2020:
| (in thousands) | Broadband | Tower | Corporate & Eliminations | Consolidated | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| External revenue | ||||||||||
| Residential & SMB | $ | 114,170 | $ | — | $ | — | $ | 114,170 | ||
| Commercial Fiber | 17,762 | — | — | 17,762 | ||||||
| RLEC & Other | 11,880 | — | — | 11,880 | ||||||
| Tower lease | — | 5,490 | — | 5,490 | ||||||
| Service revenue and other | 143,812 | 5,490 | — | 149,302 | ||||||
| Revenue for service provided to the discontinued Wireless operations | 6,818 | 7,000 | (477 | ) | 13,341 | |||||
| Total revenue | 150,630 | 12,490 | (477 | ) | 162,643 | |||||
| Operating expenses | ||||||||||
| Cost of services | 61,572 | 3,537 | 58 | 65,167 | ||||||
| Selling, general and administrative | 28,960 | 1,095 | 34,172 | 64,227 | ||||||
| Depreciation and amortization | 30,448 | 1,414 | 4,148 | 36,010 | ||||||
| Total operating expenses | 120,980 | 6,046 | 38,378 | 165,404 | ||||||
| Operating income (loss) | $ | 29,650 | $ | 6,444 | $ | (38,855 | ) | $ | (2,761 | ) |
Supplemental Information
Broadband Operating Statistics
| September 30,<br>2021 | September 30,<br>2020 | |||
|---|---|---|---|---|
| Broadband homes and businesses passed (1) | 296,196 | 230,002 | ||
| Incumbent Cable (2) | 211,013 | 207,655 | ||
| Glo Fiber | 60,836 | 22,347 | ||
| Beam | 24,347 | — | ||
| Broadband customer relationships (3) | 118,143 | 106,314 | ||
| Residential & Small and Medium Business ("SMB") RGUs: | ||||
| Broadband Data | 115,579 | 98,764 | ||
| Incumbent Cable (2) | 105,116 | 95,962 | ||
| Glo Fiber | 9,272 | 2,802 | ||
| Beam | 1,191 | — | ||
| Video (2) | 50,652 | 53,647 | ||
| Voice (2) | 34,592 | 33,019 | ||
| Total Residential & SMB RGUs (excludes RLEC) | 200,823 | 185,430 | ||
| Residential & SMB Penetration (4) | ||||
| Broadband Data | 39.0 | % | 42.9 | % |
| Incumbent Cable | 49.8 | % | 46.2 | % |
| Glo Fiber | 15.2 | % | 12.5 | % |
| Beam | 4.9 | % | — | % |
| Video | 17.1 | % | 23.3 | % |
| Voice | 13.6 | % | 15.5 | % |
| Fiber route miles | 7,219 | 6,705 | ||
| Total fiber miles (5) | 469,387 | 367,154 |
______________________________________________________ (1) Homes and businesses are considered passed (“homes passed”) if we can connect them to our network without further extending the distribution system. Homes passed is an estimate based upon the best available information. Homes passed will vary among video, broadband data and voice services. (2) The Company acquired Canaan Cable on December 31, 2020 adding 1,100 homes passed, 512 data RGUs, 324 video RGUs and 164 voice RGUs. (3) Customer relationships represent the number of billed customers who receive at least one of our services. (4) Penetration is calculated by dividing the number of users by the number of homes passed or available homes, as appropriate. (5) 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>September 30, | Nine Months Ended<br>September 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Residential and SMB Revenue: | ||||||||||||
| Broadband | $ | 26,813 | $ | 22,261 | $ | 77,111 | $ | 63,097 | ||||
| Incumbent Cable | 24,780 | 21,770 | 72,421 | 62,340 | ||||||||
| Glo Fiber | 1,810 | 491 | 4,272 | 757 | ||||||||
| Beam | 223 | — | 418 | — | ||||||||
| Video | 15,391 | 14,823 | 46,654 | 44,582 | ||||||||
| Voice | 2,968 | 2,894 | 8,760 | 8,528 | ||||||||
| Discounts and adjustments | (389 | ) | (501 | ) | (823 | ) | (2,037 | ) | ||||
| Total Revenue | $ | 44,783 | $ | 39,477 | $ | 131,702 | $ | 114,170 | ||||
| Average RGUs: | ||||||||||||
| Broadband Data | 113,356 | 95,486 | 109,387 | 90,052 | ||||||||
| Incumbent Cable | 104,150 | 93,441 | 102,319 | 89,011 | ||||||||
| Glo Fiber | 8,188 | 2,045 | 6,430 | 1,041 | ||||||||
| Beam | 1,018 | — | 638 | — | ||||||||
| Video | 50,921 | 53,085 | 51,691 | 53,063 | ||||||||
| Voice | 34,789 | 32,581 | 33,904 | 32,071 | ||||||||
| ARPU: (1) | ||||||||||||
| Broadband | $ | 78.85 | $ | 77.71 | $ | 78.33 | $ | 77.85 | ||||
| Incumbent Cable | $ | 79.31 | $ | 77.66 | $ | 78.64 | $ | 77.82 | ||||
| Glo Fiber | $ | 73.69 | $ | 80.03 | $ | 73.82 | $ | 80.80 | ||||
| Beam | $ | 73.02 | $ | — | $ | 72.80 | $ | — | ||||
| Video | $ | 100.75 | $ | 93.08 | $ | 100.28 | $ | 93.35 | ||||
| Voice | $ | 28.44 | $ | 29.61 | $ | 28.71 | $ | 29.55 |
______________________________________________________ (1) Average Revenue Per RGU calculation = (Residential & SMB Revenue * 1,000) / average RGUs / 3 months
Tower Operating Statistics
| September 30,<br>2021 | September 30,<br>2020 | |
|---|---|---|
| Macro tower sites | 223 | 222 |
| Tenants (1) | 470 | 414 |
| Average tenants per tower | 2.0 | 1.8 |
______________________________________________________ (1) Includes 34 and 208 tenants for our Wireless operations, (reported as a discontinued operation), and Broadband operations, as of September 30, 2021 and 2020, respectively.