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Shenandoah Telecommunications Company Reports First Quarter 2022 Results

·14 minuto per la lettura
Shenandoah Telecommunications Co
Shenandoah Telecommunications Co

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 Cable

211,442

210,210

Glo Fiber

93,611

34,441

Beam

27,667

15,240

Broadband customer relationships (2)

119,026

115,921

Residential & Small and Medium Business ("SMB") RGUs:

Broadband Data

122,753

107,569

Incumbent Cable

107,291

101,576

Glo Fiber

13,783

5,524

Beam

1,679

469

Video

49,163

51,989

Voice

36,042

33,322

Total Residential & SMB RGUs (excludes RLEC)

207,958

192,880

Residential & SMB Penetration (3)

Broadband Data

36.9

%

41.4

%

Incumbent Cable

50.7

%

48.3

%

Glo Fiber

14.7

%

16.0

%

Beam

6.1

%

3.1

%

Video

14.8

%

20.0

%

Voice

12.5

%

14.6

%

Fiber route miles

7,611

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 sites

223

223

Tenants (1)

468

443

Average tenants per tower

2.1

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.