• Shenandoah Telecommunications Company Reports First Quarter 2022 Results

    Source: Nasdaq GlobeNewswire / 28 Apr 2022 16:30:01   America/New_York

    EDINBURG, Va., April 28, 2022 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel”) (Nasdaq: SHEN) announced first quarter 2022 financial and operating results.

    Highlights

    • Revenue grew 7.9% to $64.4 million over the same period a year ago.
    • Broadband data net adds were approximately 3,600 including 2,400 for Glo Fiber.
    • Glo Fiber homes and businesses passed grew sequentially 18,000 to approximately 94,000.

    “We are pleased with our progress in executing our fiber first broadband strategy with another record quarter for Glo Fiber net adds and passings” said President and CEO, Christopher E. French. "Although top line revenue growth was solid, increases in our operating expenses adversely impacted margins as we improved employee compensation and upgraded our back-office systems. We expect margin improvements in the second half of 2022 as we implement our cost savings initiatives to drive costs out of the business."

    Shentel's first-quarter earnings conference call will be webcast at 8:00 a.m. ET on Friday, April 29, 2022. The webcast and related materials will be available on Shentel’s Investor Relations website at https://investor.shentel.com/.  

    Consolidated First Quarter 2022 Results

    • Revenue in the first quarter of 2022 grew 7.9% to $64.4 million, compared with the first quarter of 2021, due to revenue growth of 8.3% in the Broadband segment and 3.9% in the Tower segment.
    • Loss from continuing operations per share was $(0.01) in the first quarter of 2022 compared with income per share from continuing operations of $0.06 the first quarter of 2021 due primarily to higher stock compensation expense.
    • Adjusted EBITDA in the first quarter of 2022 grew 2.4% to $17.4 million, compared with the first quarter of 2021, due primarily to 18.2% lower Corporate expenses from lower compensation expenses from the 2021 reduction in force and lower professional fees.

    Broadband

    • Total broadband data Revenue Generating Units ("RGUs") as of March 31, 2022, were 122,753, representing 14.1% year over year growth. Penetration for incumbent cable, Glo Fiber and Beam were 51%, 15% and 6%, respectively, compared to 48%, 16% and 3%, respectively, as of March 31, 2021. Total Glo Fiber and Beam passings grew year over year by approximately 59,200 and 12,400, respectively.
    • Broadband revenue in the first quarter of 2022 grew $4.6 million or 8.3% to $59.7 million compared with $55.2 million in the first quarter of 2021, primarily driven by a $4.0 million or 9.3% increase in Residential and Small and Medium Business ("SMB") revenue on a 14.1% increase in broadband data RGUs.
    • Cost of services increased approximately $2.9 million, or 13.0%, compared with the three months ended March 31, 2021, driven by higher maintenance and compensation expenses. Maintenance increased due to higher cable replacement costs, higher gasoline, field engineering and software costs. Compensation increased due to higher headcount to support the expansion of our Glo Fiber network, salary and wage increases and higher medical benefit costs.
    • Selling, general and administrative expense increased $2.8 million, or 25.8%, compared with the three months ended March 31, 2021, driven primarily by a $1.0 million increase in compensation, $0.7 million in software and professional service fees due to upgrades to our ERP, OSS and CRM systems, and $0.5 million in advertising to support Glo Fiber expansion. Compensation costs increased due primarily to increased headcount to support the expansion of Glo Fiber, salary and wage increases and higher medical benefit costs.
    • Depreciation and amortization increased $1.1 million or 9.5%, compared with the three months ended March 31, 2021, primarily as a result of our network expansion of our Glo Fiber network.
    • Broadband Operating income in the first quarter of 2022 was $8.2 million, compared to $10.3 million in the first quarter of 2021.
    • Broadband Adjusted EBITDA in the first quarter of 2022 decreased 5.4% to $21.1 million, compared with $22.3 million for the first quarter of 2021.

    Tower

    • Tower revenue in the first quarter of 2022 increased 3.9% to $4.8 million compared with the first quarter of 2021. Tenants increased 5.6% to 468 partially offset by 3.6% decline in average lease revenue per tenant.
    • Tower operating income in the first quarter of 2022 was $2.8 million, compared to $2.7 million in the first quarter of 2021.
    • Tower Adjusted EBITDA in the first quarter of 2022 was consistent with the first quarter of 2021 at $3.2 million for both periods.

    Other Information

    • As of March 31, 2022 our cash and cash equivalents totaled $54.0 million and the availability under our revolving line of credit and delay draw term loans were $400.0 million, for total available liquidity of $454.0 million.
    • Capital expenditures were $45.7 million for the three months ended March 31, 2022 compared with $39.5 million in the comparable 2021 period. The $6.2 million increase in capital expenditures was primarily due to higher spending in the Broadband segment driven by the expansion of our Glo Fiber network.

    Conference Call and Webcast

    Teleconference Information:

    Date: April 29, 2022
    Time: 8:00 A.M. (ET)
    Dial in number: 1-888-695-7639

    Password: 2869853

    Audio webcast: http://investor.shentel.com/ 

    An audio replay of the call will be available approximately two hours after the call is complete, through May 29, 2022 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 7,600 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 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
    March 31,
      2022   2021
    Service revenue and other$64,414  $59,691
    Operating expenses:   
    Cost of services exclusive of depreciation and amortization 26,339   23,424
    Selling, general and administrative 23,771   20,153
    Restructuring expense —   618
    Depreciation and amortization 14,684   13,266
    Total operating expenses 64,794   57,461
    Operating income (loss) (380)  2,230
    Other income (expense):   
    Other income (expense), net (170)  1,600
    Income (loss) from continuing operations before income taxes (550)  3,830
    Income tax expense 53   885
    Income (loss) from continuing operations (603)  2,945
    Income from discontinued operations, net of tax —   48,472
    Net income (loss)$(603) $51,417
        
    Net income (loss) per share, basic and diluted:   
    Basic - Income (loss) from continuing operations$(0.01) $0.06
    Basic - Income from discontinued operations, net of tax$—  $0.97
    Basic net income (loss) per share$(0.01) $1.03
        
    Diluted - Income (loss) from continuing operations$(0.01) $0.06
    Diluted - Income from discontinued operations, net of tax$—  $0.97
    Diluted net income (loss) per share$(0.01) $1.03
        
    Weighted average shares outstanding, basic 50,146   49,947
    Weighted average shares outstanding, diluted 50,146   50,081
     

    SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
    (in thousands)

        
     March 31,
    2022    		 December 31,
    2021
        
    Cash and cash equivalents$53,981 $84,344
    Other current assets 72,129  82,023
    Total current assets 126,110  166,367
        
    Investments 13,284  13,661
    Property, plant and equipment, net 581,541  554,162
    Intangible assets, net and goodwill 89,633  89,831
    Operating lease right-of-use assets 57,130  56,414
    Deferred charges and other assets, net 15,553  10,298
    Total assets$883,251 $890,733
        
    Total current liabilities 57,058  67,290
    Total other long-term liabilities 181,864  181,168
    Total shareholders’ equity 644,329  642,275
    Total liabilities and shareholders’ equity$883,251 $890,733
     

    SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in thousands)

     Three Months Ended
    March 31,
      2022   2021 
    Cash flows from operating activities:   
    Net income (loss)$(603) $51,417 
    Income from discontinued operations, net of tax —   48,472 
    Income (loss) from continuing operations (603)  2,945 
    Adjustments to reconcile net income (loss) to net cash provided by operating activities:   
    Depreciation and amortization 14,684   13,266 
    Stock based compensation expense, net of amount capitalized 3,143   642 
    Deferred income taxes (349)  — 
    Other, net 1,017   (202)
    Changes in assets and liabilities:   
    Accounts receivable 5,890   1,861 
    Current income taxes 459   885 
    Operating lease assets and liabilities, net 80   (260)
    Other assets (1,365)  (5,683)
    Accounts payable (4,130)  (281)
    Other deferrals and accruals (2,760)  (4,037)
    Net cash provided by operating activities - continuing operations 16,066   9,136 
    Net cash provided by operating activities - discontinued operations —   75,530 
    Net cash provided by operating activities 16,066   84,666 
        
    Cash flows from investing activities:   
    Capital expenditures (45,693)  (39,482)
    Proceeds from sale of assets and other 86   14 
    Net cash used in investing activities - continuing operations (45,607)  (39,468)
    Net cash used in investing activities - discontinued operations —   (882)
    Net cash used in investing activities (45,607)  (40,350)
        
    Cash flows from financing activities:   
    Taxes paid for equity award issuances (603)  (1,486)
    Payments for financing arrangements and other (219)  (496)
    Net cash used in financing activities - continuing operations (822)  (1,982)
    Net cash used in financing activities - discontinued operations —   (8,549)
    Net cash used in financing activities (822)  (10,531)
    Net increase (decrease) in cash and cash equivalents (30,363)  33,785 
    Cash and cash equivalents, beginning of period 84,344   195,397 
    Cash and cash equivalents, end of period$53,981  $229,182 
     

    Non-GAAP Financial Measures
    Adjusted EBITDA

    The Company defines Adjusted EBITDA as net income (loss) from continuing operations calculated in accordance with GAAP, adjusted for the impact of depreciation and amortization, 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) from continuing operations, 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. 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 March 31, 2022        
    (in thousands) Broadband Tower Corporate &
    Eliminations    		 Consolidated
    Net income (loss) from continuing operations $8,127  $2,753  $(11,483) $(603)
    Depreciation and amortization  12,876   484   1,324   14,684 
    Other income, net  54   —   116   170 
    Income tax (benefit)  —   —   53   53 
    EBITDA  21,057   3,237   (9,990)  14,304 
    Stock-based compensation  —   —   3,143   3,143 
    Restructuring charges and other  17   —   (81)  (64)
    Adjusted EBITDA $21,074  $3,237  $(6,928) $17,383 
             
    Adjusted EBITDA margin  35%  67% N/A   27%


    Three Months Ended March 31, 2021        
    (in thousands) Broadband Tower Corporate &
    Eliminations    		 Consolidated
    Net income (loss) from continuing operations $10,217  $2,702  $(9,974) $2,945 
    Depreciation and amortization  11,761   481   1,024   13,266 
    Other income, net  69   —   (1,669)  (1,600)
    Income tax expense  —   —   885   885 
    EBITDA  22,047   3,183   (9,734)  15,496 
    Stock-based compensation  —   —   642   642 
    Restructuring charges and other  220   —   622   842 
    Adjusted EBITDA $22,267  $3,183  $(8,470) $16,980 
             
    Adjusted EBITDA margin  40%  68% N/A   28%

    Segment Results

    Three Months Ended March 31, 2022:

    (in thousands) Broadband Tower Corporate &
    Eliminations    		 Consolidated
    External revenue        
    Residential & SMB $46,913 $— $—  $46,913 
    Commercial Fiber  9,062  —  —   9,062 
    RLEC & Other  3,689  —  —   3,689 
    Tower lease  —  4,746  —   4,746 
    Service revenue and other  59,664  4,746  —   64,410 
    Revenue for service provided to the discontinued Wireless operations  50  101  (147)  4 
    Total revenue  59,714  4,847  (147)  64,414 
    Operating expenses        
    Cost of services  25,168  1,292  (121)  26,339 
    Selling, general and administrative  13,489  318  9,964   23,771 
    Depreciation and amortization  12,876  484  1,324   14,684 
    Total operating expenses  51,533  2,094  11,167   64,794 
    Operating income (loss) $8,181 $2,753 $(11,314) $(380)

    Three Months Ended March 31, 2021:

    (in thousands) Broadband Tower Corporate &
    Eliminations    		 Consolidated
    External revenue        
    Residential & SMB $42,930 $— $—  $42,930
    Commercial Fiber  6,385  —  —   6,385
    RLEC & Other  3,631  —  —   3,631
    Tower lease  —  2,150  —   2,150
    Service revenue and other  52,946  2,150  —   55,096
    Revenue for service provided to the discontinued Wireless operations  2,208  2,515  (128)  4,595
    Total revenue  55,154  4,665  (128)  59,691
    Operating expenses        
    Cost of services  22,277  1,248  (101)  23,424
    Selling, general and administrative  10,725  234  9,194   20,153
    Restructuring expense  105  —  513   618
    Depreciation and amortization  11,761  481  1,024   13,266
    Total operating expenses  44,868  1,963  10,630   57,461
    Operating income (loss) $10,286 $2,702 $(10,758) $2,230

    Supplemental Information

    Broadband Operating Statistics

     March 31,
    2022    		 March 31,
    2021
    Broadband homes and businesses passed (1)332,720  259,891 
    Incumbent Cable211,442  210,210 
    Glo Fiber93,611  34,441 
    Beam27,667  15,240 
        
    Broadband customer relationships (2)119,026  115,921 
        
    Residential & Small and Medium Business ("SMB") RGUs:   
    Broadband Data122,753  107,569 
    Incumbent Cable107,291  101,576 
    Glo Fiber13,783  5,524 
    Beam1,679  469 
    Video49,163  51,989 
    Voice36,042  33,322 
    Total Residential & SMB RGUs (excludes RLEC)207,958  192,880 
        
    Residential & SMB Penetration (3)   
    Broadband Data36.9% 41.4%
    Incumbent Cable50.7% 48.3%
    Glo Fiber14.7% 16.0%
    Beam6.1% 3.1%
    Video14.8% 20.0%
    Voice12.5% 14.6%
        
    Fiber route miles7,611  6,888 
    Total fiber miles (4)564,097  407,710 

    ______________________________________________________

    (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) Customer relationships represent the number of billed customers who receive at least one of our services.
    (3) Penetration is calculated by dividing the number of users by the number of passings or available homes, as appropriate.
    (4) 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
    March 31,
      2022   2021 
    Residential and SMB Revenue:   
    Broadband$28,994  $24,585 
    Incumbent Cable 25,863   23,465 
    Glo Fiber 2,786   1,068 
    Beam 345   52 
    Video 15,341   15,652 
    Voice 2,916   2,899 
    Discounts and adjustments (338)  (206)
    Total Revenue$46,913  $42,930 
        
    Average RGUs:   
    Broadband Data 120,648   105,149 
    Incumbent Cable 106,590   100,117 
    Glo Fiber 12,493   4,795 
    Beam 1,565   237 
    Video 49,445   52,436 
    Voice 34,836   32,931 
        
    ARPU: (1)   
    Broadband$80.11  $77.93 
    Incumbent Cable$80.88  $78.12 
    Glo Fiber$74.33  $74.24 
    Beam$73.48  $73.14 
    Video$103.42  $99.50 
    Voice$27.90  $29.34 

    ______________________________________________________

    (1) Average Revenue Per RGU calculation = (Residential & SMB Revenue * 1,000) / average RGUs / 3 months

       

    Tower Operating Statistics

     March 31,
    2022    		 March 31,
    2021
    Macro tower sites223 223
    Tenants (1)468 443
    Average tenants per tower2.1 2.0

    ______________________________________________________

    (1) Includes 33 and 236 tenants for our Wireless operations, (reported as a discontinued operation), and Broadband operations, as of March 31, 2022 and 2021, respectively.


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