Shenandoah Telecommunications Company Reports Third Quarter 2024 Results
EDINBURG, Va., Nov. 07, 2024 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company ("Shentel" or the "Company") (NASDAQ:SHEN) announced third quarter 2024 financial and operating results.
Third Quarter 2024 Highlights
Glo Fiber Expansion Markets1 experienced growth in a number of key metrics:
Added approximately 6,000 subscribers in the third quarter of 2024, ending the quarter with over 59,000 subscribers.
Passings grew approximately 22,000 to a total of approximately 320,000.
Revenue grew $5.8 million or 62% to $15.1 million compared to the same period in 2023. Excluding Horizon markets, revenue grew 56% over the same period in 2023.
Integration of Horizon ahead of schedule and on track to exceed synergy targets.
"We had a record quarter for Glo Fiber net additions and revenue driving top line revenue growth." said President and CEO, Christopher E. French. "We made great progress with the integration of our Horizon acquisition, converting four of the six Horizon back-office systems to-date with clear line of sight to finish the integration in early 2025. We now expect to realize $11 million in annual synergy savings. We expect Glo Fiber and synergies will be key growth catalysts in 2025 and drivers of margin expansion."
Shentel's third-quarter earnings conference call will be webcast at 8:00 a.m. ET on Thursday, November 7, 2024. The webcast and related materials will be available on Shentel's Investor Relations website at https://investor.shentel.com/.
Third Quarter 2024 Results
Revenue in the third quarter of 2024 grew $20.2 million, or 30.0%, to $87.6 million, primarily driven by $16.9 million of revenue resulting from the acquisition of Horizon. Excluding Horizon, revenues grew $3.3 million or 4.9% primarily driven by Glo Fiber Expansion Markets Residential & SMB revenue growth of $5.3 million partially offset by declines in commercial fiber and Incumbent Broadband Markets2 Residential & SMB revenue. Glo Fiber Expansion Markets revenue growth was driven by a 54% increase in broadband data subscribers and an 7% increase in broadband data Average Revenue per User ("ARPU"). Commercial Fiber revenue decreased, as expected, due to the previously disclosed decline in T-Mobile revenue from prior period backhaul circuit disconnects as part of decommissioning the former Sprint network. Incumbent Broadband Markets revenue declined 3% due to lower video and other revenue.
Cost of services for the three months ended September 30, 2024, increased approximately $8.1 million, or 31.0%, compared with the three months ended September 30, 2023, primarily driven by $8.6 million of cost of services from Horizon partially offset by $0.4 million decline in the legacy Shentel markets due primarily to lower programming costs as customers continue to migrate to video service alternatives.
Selling, general and administrative expense for the three months ended September 30, 2024, increased $5.1 million, or 22.0%, compared with the three months ended September 30, 2023, primarily driven by $3.7 million of selling, general and administrative costs from Horizon and higher advertising and sales headcount to support the Glo Fiber expansion.
Integration and acquisition expense for the three months ended September 30, 2024 increased $0.5 million compared with the three months ended September 30, 2023, primarily driven by non-recurring acquisition-related costs related to the Horizon acquisition and integration.
Depreciation and amortization for the three months ended September 30, 2024, increased $11.6 million, or 71.7%, compared with the three months ended September 30, 2023, primarily driven by $8.3 million of depreciation and amortization expense resulting from Horizon. The remaining increase in depreciation and amortization expense is attributable to the Company's expansion of its Glo Fiber network.
Net loss from continuing operations was $5.3 million in the third quarter of 2024 compared with net loss from continuing operations of $0.2 million in the third quarter of 2023. The increase in the net loss was due primarily to higher depreciation and amortization from Horizon and Glo Fiber network expansion and higher interest expense from higher borrowings.
Adjusted EBITDA for the three months ended September 30, 2024 increased to $26.6 million, representing a $6.3 million, or 31.3%, increase compared with the three months ended September 30, 2023. The former Horizon markets contributed $4.7 million. Excluding the former Horizon markets, Adjusted EBITDA grew $1.7 million, or 8.3%, driven by the previously disclosed revenue growth partially offset by higher sales and marketing expenses to support new Glo Fiber markets. Adjusted EBITDA margins grew sequentially from 27% in the second quarter to 30% in the third quarter.
Total homes passed grew 23,800 to approximately 554,000 including 320,000 Glo Fiber Expansion Market passings and 234,000 Incumbent Broadband Markets passings. Glo Fiber Expansion Markets broadband data subscriber net additions was approximately 6,000. Incumbent Broadband Markets data subscriber net additions were flat in the third quarter 2024.
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1 Glo Fiber Expansion Markets consists of FTTH passings in greenfield expansion markets in the Shentel and former Horizon markets.2 Incumbent Broadband Markets consists of Shentel Incumbent Cable Markets and Horizon Incumbent Telephone Markets with Fiber-To-The-Home ("FTTH") passings.
Other Information
Capital expenditures were $226.5 million for the nine months ended September 30, 2024 compared with $189.3 million in the comparable 2023 period. The $37.1 million increase in capital expenditures was primarily driven by $20.8 million of capital expenditures in the former Horizon markets and expansion of the networks in Glo Fiber Expansion Markets and government-subsidized markets.
As of September 30, 2024, our cash and cash equivalents totaled $43.1 million.
Earnings Call Webcast
Date: Thursday, November 7, 2024Time: 8:00 a.m. ETListen via Internet: https://investor.shentel.com/For Analysts, please register to dial-in at this link.
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 fiber optic and cable networks to residential and commercial customers in eight contiguous states in the eastern United States. The Company's services include: broadband internet, video, voice, high-speed Ethernet, dark fiber leasing, and managed network services. The Company owns an extensive regional network with over 16,300 route miles of fiber. 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," "plans," "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, 2023 and our Quarterly Reports on Form 10-Q. Those factors may include, among others, the expected savings and synergies from the Horizon Transaction may not be realized or may take longer or cost more than expected to realize, changes in overall economic conditions including rising inflation, regulatory requirements, changes in technologies, changes in competition, demand for our products and services, availability of labor resources and capital, natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, and other conditions. 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 CompanyJim Volk Senior Vice President and Chief Financial
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
Service revenue and other
$
87,599
$
67,409
$
242,646
$
201,218
Operating expenses:
Cost of services exclusive of depreciation and amortization
34,415
26,268
94,941
76,451
Selling, general and administrative
28,006
22,952
86,223
74,021
Integration and acquisition
1,673
1,146
13,616
1,578
Impairment expense
—
1,532
—
2,552
Depreciation and amortization
27,681
16,121
70,703
47,037
Total operating expenses
91,775
68,019
265,483
201,639
Operating loss
(4,176
)
(610
)
(22,837
)
(421
)
Other (expense) income:
Interest expense
(3,668
)
(1,198
)
(11,740
)
(2,495
)
Other income, net
998
2,024
4,642
4,615
(Loss) income from continuing operations before income taxes
(6,846
)
216
(29,935
)
1,699
Income tax (benefit) expense
(1,542
)
399
(7,768
)
2,540
Loss from continuing operations
(5,304
)
(183
)
(22,167
)
(841
)
Discontinued operations:
Income from discontinued operations, net of tax
41
1,776
1,923
6,290
Gain on the sale of discontinued operations, net of tax
—
—
216,805
—
Total income from discontinued operations, net of tax
41
1,776
218,728
6,290
Net (loss) income
(5,263
)
1,593
196,561
5,449
Net income attributable to redeemable noncontrolling interest
1,638
—
1,638
—
Net (loss) income attributable to common shareholders
$
(6,901
)
$
1,593
$
194,923
$
5,449
Net (loss) income per share attributable to common shareholders, basic and diluted:
Loss from continuing operations
$
(0.13
)
$
—
$
(0.45
)
$
(0.02
)
Income from discontinued operations, net of tax
—
0.03
4.10
0.13
Net (loss) income per share
$
(0.13
)
$
0.03
$
3.65
$
0.11
