Shenandoah Telecommunications Company Reports Third Quarter 2022 Results
EDINBURG, Va., November 2, 2022 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel”) (Nasdaq: SHEN) announced third quarter 2022 financial and operating results.
Third Quarter 2022 Highlights
- Glo Fiber data net adds were approximately 4,000, an increase of 90.1% over the third quarter 2021 and 19.3% over the second quarter 2022.
- Revenue grew 7.5% to $66.9 million over the same period a year ago driven by 127.6% and 3.8% growth in Glo Fiber and incumbent cable data RGUs, respectively.
- Glo Fiber homes and businesses passed grew 16.4% sequentially to approximately 131,000.
“We had another record quarter for Glo Fiber net additions and we reached another important milestone in the third quarter with our Glo Fiber service contributing positive incremental Adjusted EBITDA for the first time since our launch of service three years ago,” said President and CEO, Christopher E. French. "We continue to build momentum against our competition and believe we are well positioned to continue to win market share with our fiber-to-the-home platform, strong liquidity position and de-levered balance sheet."
Shentel's third-quarter earnings conference call will be webcast at 8:30 a.m. ET on Wednesday, November 2, 2022. The webcast and related materials will be available on Shentel’s Investor Relations website at https://investor.shentel.com/.
Consolidated Third Quarter 2022 Results
- Revenue in the third quarter of 2022 grew 7.5% to $66.9 million compared with the third quarter of 2021, due to Broadband segment revenue growth of 7.7% and Tower segment revenue growth of 5.1%.
- Loss from continuing operations per share was $0.05 in the third quarter of 2022 compared with income per share from continuing operations of $0.13 in the third quarter of 2021. The decline was due primarily to higher depreciation from shortening the remaining life of Beam fixed assets and a lower non-cash tax benefit.
- Adjusted EBITDA in the third quarter of 2022 of $19.0 million was consistent with the third quarter of 2021, due to Tower segment growth of 15.0% offset by 5.3% higher Corporate expenses.
- During the third quarter of 2022, the Company entered into a definitive asset purchase agreement (the "Spectrum Purchase Agreement") with a wireless carrier pursuant to which the Company agreed to sell certain spectrum licenses and leases utilized in the Company's Beam branded fixed wireless service for total consideration of approximately $21.1 million (the "Spectrum Transaction"). The total consideration will be composed of $17.3 million cash and approximately $3.8 million of liabilities to be assumed by the wireless carrier. The Spectrum Transaction is expected to close in the first half of 2023 subject to the receipt of regulatory approvals and other customary closing conditions. As a result of the Spectrum Transaction, the Company plans to cease its Beam operations at the remaining Beam fixed wireless sites upon or prior to the closing of the Spectrum Transaction. As a result of the cease of Beam service and related decommissioning of the remaining Beam fixed wireless sites after they cease operations, the Company has revised the useful lives for these sites to reflect operation through the cease of service date, resulting in the acceleration of depreciation for the related assets. Finally, as a result of the Spectrum Purchase Agreement, the Company reclassified the remaining Beam assets and liabilities as held for sale and is no longer reporting Beam customers in its Broadband Revenue Generating Units ("RGUs").
- Total broadband data Revenue Generating Units ("RGUs") as of September 30, 2022, were 130,238, representing 13.9% year over year growth. Penetration for incumbent cable and Glo Fiber were 52% and 16%, respectively, compared to 50% and 15%, respectively, as of September 30, 2021. Total Glo Fiber passings grew year over year by approximately 70,100.
- Broadband revenue in the third quarter of 2022 grew $4.5 million, or 7.7%, to $62.4 million compared with $57.9 million in the third quarter of 2021, primarily driven by a $3.9 million, or 8.7%, increase in Residential and Small and Medium Business ("SMB") revenue due to a 127.6% and 3.8% increase, respectively, in Glo Fiber and incumbent cable broadband data RGUs.
- Cost of services increased approximately $1.9 million, or 7.6%, compared with the three months ended September 30, 2021 due to increases in compensation and maintenance expenses. Compensation increased due to higher salary and wages, medical expenses and headcount to support Glo Fiber expansion. Maintenance increased due to higher cable replacement, fuel and field engineering costs.
- Selling, general and administrative expense increased $2.0 million, or 17.2%, compared with the three months ended September 30, 2021, due primarily to higher compensation expense, advertising, bad debt and property taxes. Compensation increased due to higher salary and wages, medical expenses and headcount to support Glo Fiber expansion.
- Depreciation and amortization expense increased $4.6 million, or 37.5%, compared with the three months ended September 30, 2021, primarily as a result of our network expansion of our Glo Fiber network and due to the acceleration of depreciation associated with Beam assets as discussed above.
- Broadband operating income in the third quarter of 2022 was $4.8 million, compared to $9.4 million in the third quarter of 2021, due primarily to higher depreciation.
- Broadband Adjusted EBITDA in the third quarter of 2022 was $22.2 million, consistent with the third quarter of 2021.
- Revenue increased approximately $0.2 million, or 5.1%, for the three months ended September 30, 2022 compared with the three months ended September 30, 2021, primarily due to an increase in revenue per tenant.
- Tower operating income in the third quarter of 2022 was $2.6 million, compared to $2.2 million in the third quarter of 2021.
- Tower Adjusted EBITDA in the third quarter of 2022 grew 15.1% to $3.0 million, compared with $2.6 million for the third quarter of 2021.
- As of September 30, 2022, our cash and cash equivalents totaled $33.0 million and the availability under our delayed draw term loans and revolving line of credit was $375.0 million, for total available liquidity of $408.0 million. On July 1, 2022, we borrowed a total of $25.0 million in term loans. We expect to draw the remaining $275 million in delay draw term loans by June 30, 2023.
- Capital expenditures were $132.4 million for the nine months ended September 30, 2022 compared with $118.8 million in the comparable 2021 period. The $13.6 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
Date: Wednesday, November 2, 2022
Time: 8:30 A.M. (ET)
Dial in number: 833-630-1956
A live webcast of the call will be available on the “Investor Relations” page of the Company’s website at 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, 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 7,900 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.
Shenandoah Telecommunications Company
Senior Vice President, Chief Financial Officer