EDINBURG, Va., Aug. 02, 2023 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel”) ( 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
[email protected]
| SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | |||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||||||
| (in thousands, except per share amounts) | Three Months Ended June 30, | Six Months Ended 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) | June 30, 2023 | December 31, 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 | ||||||
