Shenandoah Telecommunications Company Reports First Quarter 2020 Results

April 30, 2020 at 6:00 AM EDT

EDINBURG, Va., April 30, 2020 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel”) (Nasdaq: SHEN) announced first quarter 2020 financial and operating results.

First Quarter 2020 Highlights

  • Generated $36.0 million in normalized free cash flow and $61.1 million in operating cash flow.
  • Ended the quarter with $195.2 million of liquidity.
  • Broadband revenues and Adjusted OIBDA increased 6.2%, and 4.3%, respectively.  Operating income was flat with prior year.
  • Launched Glo Fiber into three new markets increasing homes passed to over 5,000.

"Although we do not operate in the densely populated urban markets most affected, the COVID-19 crisis began to affect our operating and financial results during the latter part of the first quarter of 2020," said President and CEO, Christopher E. French. “These effects were not material to our overall first quarter performance, but our postpaid gross additions decreased as a result of the temporary closure, beginning in the middle of March, of approximately 40% of our Sprint-branded retail stores and the stay-at-home directives in the states where we operate. We expect that the interruption of our wireless operating momentum will continue until the economies in the markets that we serve more fully re-open, but do not expect that the long-term growth prospects of our wireless business will be materially affected. Impacts from COVID-19 related closures to our broadband and tower segments have been minimal, and we have introduced a number of initiatives, including temporarily upgrading the broadband speeds of more than 27,000 customers to a minimum of 50Mbps, temporarily increasing broadband data allowances, and introducing lower cost pre-paid broadband plans, designed to benefit our customers during this difficult period. We continue to focus on protecting our employees while maintaining and enhancing our networks, and enabling our communities to further rely on our essential services during these difficult times.”

Shentel's first-quarter earnings conference call will be webcast at 8:00 a.m. ET on Thursday, April 30, 2020. The webcast and related materials will be available on Shentel’s Investor Relations website at https://investor.shentel.com.

Consolidated First Quarter 2020 Results

  • Revenue in the first quarter of 2020 was $153.2 million compared with $158.8 million in the first quarter of 2019, due primarily to a decline of $8.5 million in the Wireless segment, partially offset by growth of $2.9 million and $0.7 million in the Broadband and Tower segments, respectively. The Wireless segment recognized $4.5 million in lower travel revenue in the first quarter of 2020 compared to the first quarter of 2019 due to the ongoing dispute with Sprint over resetting of the travel fee. We expect to settle this dispute in the second quarter of 2020 through binding arbitration.

  • Adjusted OIBDA in the first quarter of 2020 decreased $3.5 million to $64.2 million compared with $67.7 million in 2019 due primarily to the $4.5 million travel revenue decline in the Wireless segment.

  • Operating income decreased 7.0% to $23.1 million in 2020 from $24.8 million in 2019.

  • Earnings per diluted share decreased 3.6% to $0.27 from $0.28 per diluted share in 2019.

Wireless

  • Shentel served 847,771 wireless postpaid subscribers at March 31, 2020, representing an increase of 5.8% compared with March 31, 2019. First quarter 2020 postpaid gross adds were 51,991, as compared to 60,477 in the third quarter of 2019 and 50,847 in the first quarter of 2019. Net adds were 3,577 as compared to 11,698 in the third quarter 2019 and 5,776 in the first quarter 2019. Postpaid churn was 1.91%, consistent with the third quarter and first quarter 2019. The COVID-19 related retail store closures and local government mandated stay at home directives in second half of March adversely affected gross and net additions during the quarter diluting the sales momentum from the network and distributions expansions we completed in the summer of 2019. At March 31, 2020, phones represented 87.1% of the postpaid base.

  • Shentel served 279,096 wireless prepaid subscribers at March 31, 2020, representing an increase of 4.4% compared with March 31, 2019. First quarter 2020 prepaid gross adds of 39,074 declined from 40,979 in the first quarter 2019. Net adds were 5,084, as compared to 8,516 in the same period a year ago. Prepaid phone churn was 4.13%, consistent with the first quarter 2019. Prepaid subscriber results were consistent with our expectations.

  • Wireless revenue decreased approximately $8.5 million for the three months ended March 31, 2020 compared with the three months ended March 31, 2019. The decrease was primarily attributable to the aforementioned $4.5 million decline in travel revenue, $2.5 million in lower equipment revenue, $3.0 million in higher amortized customer contract costs, partially offset by a $1.7 million increase in postpaid and prepaid revenue from growth in subscribers.

  • Wireless operating expenses in the first quarter of 2020 were $80.7 million compared to $88.4 million in the first quarter of 2019. The decrease was primarily attributable to a $4.6 million decrease in depreciation and amortization as certain assets acquired from nTelos became fully utilized, a $1.9 million decline in cost of goods sold resulting from reduced volume of equipment sales, $1.0 million in lower advertising costs driven by temporary closure of certain retail stores, a $0.8 million sales and use tax settlement gain, partially offset by higher cell site rent expense of $1.0 million related to our network expansion.

  • Wireless Adjusted OIBDA in the first quarter of 2020 was $49.2 million, compared with $54.6 million for the first quarter of 2019.

  • Wireless operating income in the first quarter of 2020 was $23.4 million, compared to $24.2 million for the first quarter of 2019.

Broadband

  • Total Revenue Generating Units ("RGUs") as of March 31, 2020 were 193,654, representing an increase of 0.4% from March 31, 2019. Incumbent cable broadband penetration grew from 38.3% to 41.7% and broadband churn declined 5 basis points to 1.48%. Glo Fiber added over 3,600 homes passed and ended the quarter with approximately 5,350 homes passed and 8.5% broadband penetration.

  • Broadband revenue in the first quarter of 2020 grew $2.9 million or 6.2% to $49.8 million compared with $46.9 million in the first quarter of 2019, primarily driven by a $2.5 million increase in Cable Residential and SMB revenue and $1.1 million increase in Fiber, enterprise and wholesale revenue partially offset by $0.5 million decline in RLEC revenues.

  • Broadband operating expenses in the first quarter of 2020 were $39.8 million compared to $36.8 million in the first quarter of 2019. The increase was primarily due to $1.3 million of Glo Fiber start-up expenses, $0.9 million increase in depreciation and amortization expense due to the expansion of our network and $0.5 million increase in advertising expenses,

  • Broadband Adjusted OIBDA in the first quarter of 2020 grew 4.3% to $20.9 million, compared with $20.0 million for the first quarter of 2019.

  • Broadband Operating income in the first quarter of 2020 was $10.0 million, compared to $10.0 million in the first quarter of 2019.

Tower

  • Total towers and tenants were 226 and 408 as of March 31, 2020 as compared to 211 and 368, respectively, as of March 31, 2019.

  • Tower revenue in the first quarter of 2020 grew 23.0% to $3.7 million, compared with $3.0 million for the first quarter of 2019. This increase was due to a 10.9% increase in tenants and an 11.4% increase in the average lease rate.

  • Tower operating expenses in both the first quarter of 2020 and 2019 were $1.9 million.

  • Tower Adjusted OIBDA in the first quarter of 2020 grew 25.5% to $2.3 million, compared with $1.8 million for the first quarter of 2019.

  • Tower operating income in the first quarter of 2020 was $1.8 million, compared to $1.1 million for the first quarter of 2019.

Other Information

  • Capital expenditures were $32.3 million for the three months ended March 31, 2020 compared with $44.4 million in the comparable 2019 period. The $12.1 million decrease in capital expenditures was primarily due to a $17.0 million decline in Wireless as the Ntelos and Parkersburg network expansions were completed in the first half of 2019 partially offset by $5.0 million in higher spending in Broadband driven by our Glo Fiber market expansion.

  • Outstanding debt at March 31, 2020 totaled $712.2 million, net of unamortized loan costs, compared to $720.1 million as of March 31, 2019. As of March 31, 2020, the Company had liquidity of approximately $195.2 million, including $75.0 million of revolving line of credit availability.

  • On April 1, 2020, T-Mobile announced the completion of its business combination with Sprint and subsequently delivered to the Company a notice of Network Technology Conversion, Brand Conversion and Combination Conversion (a “Conversion Notice”) pursuant to the terms of the Company’s affiliate agreement with Sprint. As described in more detail in the Company’s 2019 Annual Report on Form 10-K, our Wireless segment has been an affiliate of Sprint since 1995. The affiliate agreement provides for a 90 day period following receipt of the Conversion Notice for the parties to negotiate mutually agreeable terms and conditions under which the Company would continue as an affiliate of T-Mobile. The affiliate agreement further provides that, if T-Mobile and the Company have not negotiated a mutually acceptable agreement within the 90 day period, then T-Mobile would have a period of 60 days thereafter to exercise an option to purchase the assets of our Wireless operations for 90% of the “Entire Business Value” (as defined under our affiliate agreement). If T-Mobile does not exercise its purchase option, the Company would then have a 60 day period to exercise an option to purchase the legacy T-Mobile network and subscribers in our service area. If the Company does not exercise its purchase option, T-Mobile must sell or decommission its legacy network and customers in our service area.

  • We have been closely monitoring the latest developments around the outbreak of a new strain of coronavirus ("COVID-19") and its impact globally. As we focus on our community and do our part to stop COVID-19 from spreading we have taken the following actions to keep families and businesses safe and connected virtually: 
    -- In our Broadband segment, we expanded our service offerings by temporarily increasing the minimum speed and data allowance of our broadband service to 50 Mbps and by 250 GB, respectively, each at no additional charge and introducing a new $25 per month prepaid internet service. 
    -- In our Wireless segment, we have supported Sprint’s adoption of the Keep Americans Connected pledge while temporarily closing approximately 40% of the Sprint branded retail locations in our service area to comply with federal and state mandates. 
    -- We have implemented alternative working arrangements where practicable to keep our employees safe and maintained our geographically redundant equipment, diverse fiber facilities and monitoring services to support maximum uptime of all our essential networks and services.

    While these actions did not have a material impact on our first quarter operating results nor do we expect them to impact our long-term growth prospects, we do expect them to temporarily dislocate our wireless operating momentum until the economies in the markets that we serve re-open.

Free cash flow, normalized free cash flow and Adjusted OIBDA are non-GAAP financial measures that are not determined in accordance with US generally accepted accounting principles. Reconciliations of these non-GAAP financial measures are provided in this press release after the consolidated financial statements.

Conference Call and Webcast

Teleconference Information:

Date: April 30, 2020 
Time: 8:00 A.M. (ET)
Dial in number: 1-888-695-7639

Password: 6654869

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, 2020 by calling (855) 859-2056.

About Shenandoah Telecommunications

Shenandoah Telecommunications Company (Shentel) provides a broad range of diversified communications services through its high speed, state-of-the-art wireless, cable and fiber optic networks to customers in the Mid-Atlantic United States. The Company’s services include: wireless voice and data; broadband internet, video, and digital voice; fiber optic Ethernet, wavelength and leasing; telephone voice and digital subscriber line; and tower colocation leasing. Shentel is the exclusive personal communications service (“PCS”) Affiliate of Sprint in a multi-state area covering large portions of central and western Virginia, south-central Pennsylvania, West Virginia, and portions of Maryland, Kentucky, and Ohio. For more information, please visit www.shentel.com.

This release contains forward-looking statements that are subject to various risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of unforeseen factors. A discussion of factors that may cause actual results to differ from management's projections, forecasts, estimates and expectations, is available in the Company’s filings with the SEC. 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, increases in costs, changes in regulation and other competitive factors.

CONTACTS:
Shenandoah Telecommunications Company
Jim Volk
Senior Vice President - Chief Financial Officer
540-984-5168
Jim.Volk@emp.shentel.com 
Or
John Nesbett/Jennifer Belodeau
IMS Investor Relations
203-972-9200
jnesbett@institutionalms.com 

 
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
  Three Months Ended March 31,
  2020   2019
Revenue:      
Service revenue and other $ 140,188     $ 143,231  
Equipment revenue 13,000     15,612  
Total revenue 153,188     158,843  
Operating expenses:      
Cost of services 49,565     49,518  
Cost of goods sold 12,671     14,637  
Selling, general and administrative 30,991     28,722  
Depreciation and amortization 36,911     41,179  
Total operating expenses 130,138     134,056  
Operating income 23,050     24,787  
Other income (expense):      
Interest expense (6,211 )   (7,954 )
Other 733     1,287  
Income before income taxes 17,572     18,120  
Income tax expense 4,292     4,210  
Net income $ 13,280     $ 13,910  
       
Net income per share, basic and diluted:      
Basic net income per share $ 0.27     $ 0.28  
Diluted net income per share $ 0.27     $ 0.28  
Weighted average shares outstanding, basic 49,888     49,775  
Weighted average shares outstanding, diluted 50,036     50,115  
               


SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES 
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS 
(in thousands)
  March 31,   December 31,
  2020   2019
       
Cash and cash equivalents $ 120,232     $ 101,651  
Other current assets 137,677     140,102  
Total current assets 257,909     241,753  
       
Investments 12,011     12,388  
Property, plant and equipment, net 695,920     701,514  
Intangible assets, net 299,458     314,147  
Goodwill 149,070     149,070  
Operating lease right-of-use assets 382,973     392,589  
Deferred charges and other assets, net 53,436     53,352  
Total assets $ 1,850,777     $ 1,864,813  
       
Total current liabilities 139,644     $ 147,336  
Long-term debt, less current maturities 680,531     688,464  
Other liabilities 549,952     556,585  
Total shareholders’ equity 480,650     472,428  
Total liabilities and shareholders’ equity $ 1,850,777     $ 1,864,813  
               


SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES    
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS    
(in thousands)              
  Three Months Ended March 31,
  2020   2019
Cash flows from operating activities:      
Net income $ 13,280     $ 13,910  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation 32,468     35,520  
Amortization of intangible assets 4,868     5,659  
Bad debt expense 205     367  
Stock based compensation expense, net of amount capitalized 2,905     1,714  
Deferred income taxes 2,135     (3,378 )
Other adjustments 739     173  
Changes in assets and liabilities 4,508     7,698  
Net cash provided by operating activities 61,108     61,663  
       
Cash flows from investing activities:      
Capital expenditures (32,299 )   (44,420 )
Cash disbursed for acquisitions     (10,000 )
Proceeds from sale of assets and other 274     45  
Net cash used in investing activities (32,025 )   (54,375 )
       
Cash flows from financing activities:      
Principal payments on long-term debt (8,530 )   (19,889 )
Taxes paid for equity award issuances (1,945 )   (2,698 )
Proceeds from exercise of stock options (27 )   72  
Net cash used in financing activities (10,502 )   (22,515 )
Net increase (decrease) in cash and cash equivalents 18,581     (15,227 )
Cash and cash equivalents, beginning of period 101,651     85,086  
Cash and cash equivalents, end of period $ 120,232     $ 69,859  
       

Non-GAAP Financial Measures  
Adjusted OIBDA

Adjusted OIBDA represents Operating income before depreciation, amortization of intangible assets, stock-based compensation and certain other items of revenue, expense, gain or loss not reflective of our operating performance, which may or may not be recurring in nature.

Adjusted OIBDA is a non-GAAP financial measure that we use to evaluate our operating performance in comparison to our competitors. Management believes that analysts and investors use Adjusted OIBDA as a supplemental measure of operating performance to facilitate comparisons with other telecommunications companies. This measure isolates and evaluates operating performance by excluding the cost of financing (e.g., interest expense), as well as the non-cash depreciation and amortization of past capital investments, non-cash share-based compensation expense, and certain other items of revenue, expense, gain or loss not reflective of our operating performance, which may or may not be recurring in nature.

Adjusted OIBDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for operating income, net income or any other measure of financial performance reported in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).

The following tables reconcile Adjusted OIBDA to operating income, which we consider to be the most directly comparable GAAP financial measure:

                                         
Three Months Ended March 31, 2020                    
(in thousands)   Wireless   Broadband   Tower   Corporate &
Eliminations
  Consolidated
Operating income   $ 23,444     $ 10,030     $ 1,795     $ (12,219 )   $ 23,050  
Depreciation   21,010     10,717     470     271     32,468  
Amortization of intangible assets   4,714     154             4,868  
OIBDA   49,168     20,901     2,265     (11,948 )   60,386  
Share-based compensation expense               2,905     2,905  
Non-recurring deal advisory fees               910     910  
Adjusted OIBDA   $ 49,168     $ 20,901     $ 2,265     $ (8,133 )   $ 64,201  
                                         
Three Months Ended March 31, 2019                    
(in thousands)   Wireless   Broadband   Tower   Corporate &
Eliminations
  Consolidated
Operating income   $ 24,213     $ 10,049     $ 1,124     $ (10,599 )   $ 24,787  
Depreciation   24,752     9,950     680     138     35,520  
Amortization of intangible assets   5,618     41             5,659  
OIBDA   54,583     20,040     1,804     (10,461 )   65,966  
Share-based compensation expense               1,714     1,714  
Adjusted OIBDA   $ 54,583     $ 20,040     $ 1,804     $ (8,747 )   $ 67,680  
                                         

Segment Results

Three Months Ended March 31, 2020 Wireless    Broadband    Tower    Corporate &
Eliminations
 
  Consolidated 
(in thousands)                                      
External revenue                  
Postpaid $ 74,928     $     $         $ 74,928  
Prepaid 13,109                 13,109  
Tower lease         1,797         1,797  
Cable, residential and SMB (1)     34,943             34,943  
Fiber, enterprise and wholesale     5,488             5,488  
Rural local exchange carrier     4,756             4,756  
Travel, installation, and other 3,351     1,816             5,167  
Service revenue and other 91,388     47,003     1,797         140,188  
Equipment 12,750     250             13,000  
Total external revenue 104,138     47,253     1,797         153,188  
Revenue from other segments     2,533     1,933     (4,466 )    
Total revenue 104,138     49,786     3,730     (4,466 )   153,188  
Operating expenses                  
Cost of services 33,439     19,243     939     (4,056 )   49,565  
Cost of goods sold 12,528     143             12,671  
Selling, general and administrative 9,428     9,499     526     11,538     30,991  
Depreciation and amortization 25,299     10,871     470     271     36,911  
Total operating expenses 80,694     39,756     1,935     7,753     130,138  
Operating income (loss) $ 23,444     $ 10,030     $ 1,795     $ (12,219 )   $ 23,050  
                                       

_______________________________________________________
(1) SMB refers to Small and Medium Businesses.

Three Months Ended March 31, 2019 Wireless    Broadband    Tower    Corporate & Eliminations    Consolidated 
(in thousands)                                      
External revenue                  
Postpaid $ 76,182     $     $     $     $ 76,182  
Prepaid 13,130                 13,130  
Tower lease         1,763         1,763  
Cable, residential and SMB     32,426             32,426  
Fiber, enterprise and wholesale     4,828             4,828  
Rural local exchange carrier     5,238             5,238  
Travel, installation, and other 8,018     1,646             9,664  
Service revenue and other 97,330     44,138     1,763         143,231  
Equipment 15,291     321             15,612  
Total external revenue 112,621     44,459     1,763         158,843  
Revenue from other segments     2,422     1,270     (3,692 )    
Total revenue 112,621     46,881     3,033     (3,692 )   158,843  
Operating expenses                  
Cost of services 32,532     19,061     946     (3,021 )   49,518  
Cost of goods sold 14,427     211         (1 )   14,637  
Selling, general and administrative 11,079     7,569     283     9,791     28,722  
Depreciation and amortization 30,370     9,991     680     138     41,179  
Total operating expenses 88,408     36,832     1,909     6,907     134,056  
Operating income (loss) $ 24,213     $ 10,049     $ 1,124     $ (10,599 )   $ 24,787  
                                       
                                       

Supplemental Information

Wireless Operating Statistics

The following tables indicate selected operating statistics of Wireless, including Sprint subscribers, as of the dates shown:

    March 31,
 2020
  March 31,
 2019
Postpaid:        
Retail PCS total subscribers   847,771     800,952  
Retail PCS phone subscribers   738,410     722,830  
Retail PCS connected device subscribers   109,361     78,122  
Gross PCS total subscriber additions   51,991     50,847  
Gross PCS phone additions   36,734     37,786  
Gross PCS connected device additions   15,257     13,061  
Net PCS total subscriber additions   3,577     5,776  
Net PCS phone additions (losses)   (2,311 )   105  
Net PCS connected device additions   5,888     5,671  
PCS monthly retail total churn %   1.91 %   1.89 %
PCS monthly phone churn %   1.76 %   1.74 %
PCS monthly connected device churn %   2.97 %   3.35 %
Prepaid:            
Retail PCS subscribers   279,096     267,220  
Gross PCS subscriber additions   39,074     40,979  
Net PCS subscriber additions   5,084     8,516  
PCS monthly retail churn %   4.13 %   4.14 %
         
PCS market POPS (000) (1)   7,227     7,023  
PCS covered POP (000) (1)   6,325     6,261  
Macro base stations (cell sites)   1,966     1,874  

_______________________________________________________
(1) "POPS" refers to the estimated population of a given geographic area.  Market POPS are those within a market area which we are authorized to serve under our Sprint PCS affiliate agreements, and Covered POPS are those covered by our network. The data source for POPS is U.S. census data.

Broadband Operating Statistics

    March 31,
2020
  March 31,
 2019
Broadband homes passed (1) (2)   212,129     206,113  
Broadband customer relationships (3)   103,287     95,933  
         
Video:        
RGUs   53,067     59,202  
Penetration (4)   25.0 %   28.7 %
Digital video penetration (5)   94.3 %   85.7 %
Broadband:            
RGUs   86,667     78,867  
Penetration (4)   40.9 %   38.3 %
Voice:            
RGUs   31,836     30,737  
Penetration (4)   16.3 %   16.2 %
Total Cable and Glo Fiber RGUs   171,570     168,806  
         
RLEC homes passed   25,848     25,798  
RLEC customer relationships (3)   10,111     11,101  
RLEC RGUs:        
Data RLEC   7,947     8,744  
Penetration (4)   30.7 %   33.9 %
Voice RLEC   14,137     15,262  
Penetration (4)   54.7 %   59.2 %
Total RLEC RGUs   22,084     24,006  
         
Total RGUs   193,654     192,812  
         
Fiber route miles   6,273     5,799  
Total fiber miles (6)   334,802     303,511  

_______________________________________________________

(1) Homes and businesses are considered passed (“homes passed”) if we can connect them to our distribution system without further extending the transmission lines. Homes passed is an estimate based upon the best available information. Homes passed have access to video, broadband and voice services.
(2) Includes approximately 16,600 RLEC homes passed where we are the dual incumbent telephone and cable provider.
(3) Customer relationships represent the number of billed customers who receive at least one of our services.
(4) Penetration is calculated by dividing the number of users by the number of homes passed or available homes, as appropriate.
(5) Digital video penetration is calculated by dividing the number of digital video users by total video users. Digital video users are video customers who receive any level of video service via digital transmission. A dwelling with one or more digital set-top boxes or digital adapters counts as one digital video user.
(6) 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.

Tower Operating Statistics

    March 31,
2020
  March 31,
2019
Towers owned   226     211  
Tenants (1)   408     368  
Average tenants per tower   1.8     1.7  

_______________________________________________________
(1) Includes 203 and 175 intercompany tenants for our Wireless segment as of March 31, 2020 and 2019, respectively.

Reconciliation of Non-GAAP Measures Normalized Free Cash Flow and Free Cash Flow

    Three Months Ended
    March 31,
(in thousands)   2020   2019
Net cash provided by operating activities   $ 61,108     $ 61,663  
Less: Capital expenditures (1)   (25,104 )   (44,420 )
Normalized free cash flow   36,004     17,243  
Glo Fiber and Fixed Wireless capital expenditures   (7,195 )    
Free cash flow   $ 28,809     $ 17,243  
                 

_______________________________________________________ 
(1) Excludes capital expenditures for the development of Glo Fiber and Fixed Wireless.

Free cash flow and normalized free cash flow are non-GAAP financial measures that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. Free cash flow is calculated by subtracting capital expenditures from net cash provided by operating activities. Normalized free cash flow is calculated by subtracting capital expenditures, excluding spending on the development of Glo Fiber and Fixed Wireless services, from net cash provided by operating activities. We believe they are more conservative measures of our cash flow since purchases of fixed assets are necessary for ongoing operations and expansion. Free cash flow and normalized free cash flow are utilized by our management, investors and analysts to evaluate cash available that may be used to pay scheduled principal payments on our debt obligations and provide further investment in the business.

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Source: Shenandoah Telecommunications Co

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