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Form 8-K
0000354963 False 0000354963 2020-02-26 2020-02-26 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

_________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  February 26, 2020

_______________________________

Shenandoah Telecommunications Company

(Exact name of registrant as specified in its charter)

_______________________________

Virginia0-988154-1162807
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification No.)

500 Shentel Way

Edinburg, Virginia 22824

(Address of Principal Executive Offices) (Zip Code)

(540) 984-4141

(Registrant's telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

_______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock (No Par Value)SHENNASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 
 

Item 2.02. Results of Operations and Financial Condition.

On February 26, 2020, Shenandoah Telecommunications Company (the “Company”) issued a press release announcing its financial position as of December 31, 2019, results of operations for the three and twelve months ended December 31, 2019, and other related information. The Company will also post supplemental earnings presentation materials on the investor section of the Company’s website at www.Shentel.com. A copy of the press release is furnished as Exhibit 99.1 and is incorporated herein by reference.

These materials may contain forward-looking statements about Shenandoah Telecommunications Company regarding, among other things, our business strategy, our prospects and our 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. Shenandoah Telecommunications Company 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.

Item 9.01. Financial Statements and Exhibits.

         (d) Exhibits

The following exhibit is furnished with this Current Report on Form 8-K.

         99.1*      Fourth Quarter 2019 Earnings Press Release

         * Furnished herewith

 
 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 Shenandoah Telecommunications Company
   
  
Date: February 26, 2020By: /s/ James J. Volk        
  James J. Volk
  Senior Vice President – Chief Financial Officer
(Principal Financial Officer)
  

 
EdgarFiling

EXHIBIT 99.1

Shenandoah Telecommunications Company Reports Fourth Quarter and Full Year 2019 Results

EDINBURG, Va., Feb. 26, 2020 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel”) (Nasdaq: SHEN) announced fourth quarter and full year 2019 financial and operating results.

2019 Highlights

"We are pleased with the progress we made in 2019 in executing our strategic plan.  Our recently completed investments in our cable and wireless networks have already begun to produce positive returns with our cable broadband penetration growing from 37.4% to 40.6% in 2019 and our Wireless business achieving a record year of postpaid gross and net additions," said President and CEO, Christopher E. French.  "In addition, we launched our new fiber edge-out strategy, Glo Fiber, and acquired valuable mid-band spectrum in our region for our planned fixed wireless broadband launch later this year. We expect these investments will drive long-term growth in our Broadband business for the next several years and we are well positioned financially and operationally to continue the positive momentum in 2020."

Shentel's fourth-quarter earnings conference call will be webcast at 8:30 a.m. ET on Thursday, February 27, 2020. The webcast and related materials will be available on Shentel’s Investor Relations website at https://investor.shentel.com/.

Consolidated Full Year 2019 Results

Wireless

Broadband

Tower

Consolidated Fourth Quarter 2019 Results

Wireless

Broadband

Tower

Other Information

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: February 27, 2020   
Time: 8:30 A.M. (ET)
Dial in number: 1-888-695-7639

Password: 2493817
 
Audio webcast: http://investor.shentel.com/

An audio replay of the call will be available approximately two hours after the call is complete, through March 26, 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 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)

 Quarter Ended December 31, Year Ended December 31,
 2019 2018 2019 2018
Revenue:       
Service revenue and other$140,941  $142,637  $565,063  $562,456 
Equipment revenue20,056  18,847  68,843  68,398 
Total revenue160,997  161,484  633,906  630,854 
Operating expenses:       
Cost of services49,574  47,660  198,753  194,022 
Cost of goods sold19,578  17,952  65,914  63,959 
Selling, general and administrative29,470  27,105  112,540  113,222 
Depreciation and amortization39,495  41,773  159,653  166,405 
Total operating expenses138,117  134,490  536,860  537,608 
Operating income22,880  26,994  97,046  93,246 
Other income (expense):       
Interest expense(6,487) (7,663) (29,468) (34,847)
Other(101) 831  3,461  3,713 
Income before income taxes16,292  20,162  71,039  62,112 
Income tax expense2,771  5,310  16,104  15,517 
Net income$13,521  $14,852  $54,935  $46,595 
        
Net income per share, basic and diluted:       
Basic net income per share$0.27  $0.31  $1.10  $0.94 
Diluted net income per share$0.27  $0.30  $1.10  $0.93 
Weighted average shares outstanding, basic49,762  49,587  49,811  49,542 
Weighted average shares outstanding, diluted50,067  50,112  50,101  50,063 


SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

 December 31,
 2019		 December 31,
 2018
    
Cash and cash equivalents$101,651  $85,086 
Other current assets137,380  125,116 
Total current assets239,031  210,202 
    
Investments12,388  10,788 
Property, plant and equipment, net700,114  701,359 
Intangible assets, net314,147  366,029 
Goodwill149,070  146,497 
Operating lease right-of-use assets392,589  — 
Deferred charges and other assets, net53,352  49,891 
Total assets$1,860,691  $1,484,766 
    
Total current liabilities147,336  $88,539 
Long-term debt, less current maturities688,464  749,624 
Other liabilities555,469  204,356 
Total shareholders’ equity469,422  442,247 
Total liabilities and shareholders’ equity$1,860,691  $1,484,766 


SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)


 Year Ended December 31,
 2019 2018
Cash flows from operating activities:   
Net income$54,935  $46,595 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation139,543  142,111 
Amortization of intangible assets20,535  24,294 
Accretion of asset retirement obligations1,478  1,045 
Bad debt expense1,743  1,983 
Stock based compensation expense, net of amount capitalized3,817  4,959 
Deferred income taxes11,644  6,208 
Other adjustments(1,489) 553 
Changes in assets and liabilities26,939  37,899 
Net cash provided by operating activities$259,145  $265,647 
    
Cash flows from investing activities:   
Capital expenditures(138,792) (136,641)
Cash disbursed for acquisitions(10,000) (52,000)
Cash disbursed for FCC spectrum licenses(16,742) — 
Proceeds from sale of assets and other200  841 
Net cash used in investing activities$(165,334) $(187,800)
    
Cash flows from financing activities:   
Principal payments on long-term debt(53,197) (51,264)
Dividends paid, net of dividends reinvested(13,943) (12,866)
Repurchase of common stock(7,231) — 
Proceeds from revolving credit facility borrowings—  15,000 
Principal payments on revolving credit facility—  (15,000)
Taxes paid for equity award issuances(2,911) (3,245)
Payments for debt issuance costs—  (3,971)
Proceeds from exercise of stock options36  — 
Net cash used in financing activities$(77,246) $(71,346)
Net increase in cash and cash equivalents16,565  $6,501 
Cash and cash equivalents, beginning of period85,086  78,585 
Cash and cash equivalents, end of period$101,651  $85,086 


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:

Year Ended December 31, 2019          
(in thousands) Wireless Broadband Tower Corporate Consolidated
Operating income $88,541  $42,521  $5,899  $(39,915) $97,046 
Depreciation 96,094  40,831  2,025  593  139,543 
Amortization of intangible assets 20,062  473  —  —  20,535 
OIBDA 204,697  83,825  7,924  (39,322) 257,124 
Share-based compensation expense —  —  —  3,817  3,817 
Adjusted OIBDA $204,697  $83,825  $7,924  $(35,505) $260,941 


Year Ended December 31, 2018          
(in thousands) Wireless Broadband Tower Corporate Consolidated
Operating income $88,004  $41,620  $4,843  $(41,221) $93,246 
Depreciation 100,950  38,140  2,454  567  142,111 
Amortization of intangible assets 24,117  177  —  —  24,294 
OIBDA 213,071  79,937  7,297  (40,654) 259,651 
Share-based compensation expense —  —  —  4,959  4,959 
Adjusted OIBDA $213,071  $79,937  $7,297  $(35,695) $264,610 


Quarter ended December 31, 2019          
(in thousands) Wireless Broadband Tower Corporate Consolidated
Operating income $20,908  $9,371  $2,439  $(9,838) $22,880 
Depreciation 23,110  11,842  (113) 201  35,040 
Amortization of intangible assets 4,714  166  —  —  4,880 
OIBDA 48,732  21,379  2,326  (9,637) 62,800 
Share-based compensation expense —  —  —  659  659 
Adjusted OIBDA $48,732  $21,379  $2,326  $(8,978) $63,459 


Quarter Ended December 31, 2018          
(in thousands) Wireless Broadband Tower Corporate Consolidated
Operating income $24,957  $9,487  $1,023  $(8,473) $26,994 
Depreciation 25,154  9,898  894  163  36,109 
Amortization of intangible assets 5,620  44  —  —  5,664 
OIBDA 55,731  19,429  1,917  (8,310) 68,767 
Share-based compensation expense —  —  —  381  381 
Adjusted OIBDA $55,731  $19,429  $1,917  $(7,929) $69,148 


Segment Results

Year ended December 31, 2019
(in thousands)		Wireless Broadband Tower Corporate & Eliminations Consolidated
External revenue         
Postpaid$302,031  $—  $—  —  $302,031 
Prepaid53,540  —  —  —  53,540 
Tower lease—  —  6,964  —  6,964 
Cable, residential and SMB—  134,187  —  —  134,187 
Fiber, enterprise and wholesale—  20,187  —  —  20,187 
Rural local exchange carrier—  21,074  —  —  21,074 
Travel, installation, and other20,160  6,920  —  —  27,080 
Service revenue and other375,731  182,368  6,964  —  565,063 
Equipment67,659  1,184  —  —  68,843 
Total external443,390  183,552  6,964  —  633,906 
Revenue from other segments—  10,392  6,020  (16,412) — 
Total revenue443,390  193,944  12,984  (16,412) 633,906 
Operating expenses         
Cost of services131,745  76,674  3,894  (13,560) 198,753 
Cost of goods sold65,148  766  —  —  65,914 
Selling, general and administrative42,225  32,679  1,166  36,470  112,540 
Depreciation and amortization115,731  41,304  2,025  593  159,653 
Total operating expenses354,849  151,423  7,085  23,503  536,860 
Operating income (loss)$88,541  $42,521  $5,899  $(39,915) $97,046 
                    


Year ended December 31, 2018
(in thousands)		Wireless Broadband Tower Corporate & Eliminations Consolidated
External revenue         
Postpaid$300,775  $—  $—  $—  $300,775 
Prepaid51,602  —  —  —  51,602 
Tower lease—  —  7,180  —  7,180 
Cable, residential and SMB—  124,072  —  —  124,072 
Fiber, enterprise and wholesale—  18,218  —  —  18,218 
Rural local exchange carrier—  23,485  —  —  23,485 
Travel, installation, and other30,572  6,552  —  —  37,124 
Service revenue and other382,949  172,327  7,180  —  562,456 
Equipment67,510  888  —  —  68,398 
Total external450,459  173,215  7,180  —  630,854 
Revenue from other segments—  9,905  5,016  (14,921) — 
Total revenue450,459  183,120  12,196  (14,921) 630,854 
Operating expenses         
Cost of services127,045  75,066  4,121  (12,210) 194,022 
Cost of goods sold63,583  376  —  —  63,959 
Selling, general and administrative46,760  27,741  778  37,943  113,222 
Depreciation and amortization125,067  38,317  2,454  567  166,405 
Total operating expenses362,455  141,500  7,353  26,300  537,608 
Operating income (loss)$88,004  $41,620  $4,843  $(41,221) $93,246 
          


Quarter ended December 31, 2019
(in thousands)		Wireless Broadband Tower Corporate & Eliminations Consolidated
External revenue         
Postpaid$75,623  $—  $—  —  $75,623 
Prepaid13,115  —  —  —  13,115 
Tower lease—  —  1,598  —  1,598 
Cable, residential and SMB—  34,484  —  —  34,484 
Fiber, enterprise and wholesale—  5,276  —  —  5,276 
Rural local exchange carrier—  5,175  —  —  5,175 
Travel, installation, and other3,779  1,891  —  —  5,670 
Service revenue and other92,517  46,826  1,598  —  140,941 
Equipment19,845  211  —  —  20,056 
Total external112,362  47,037  1,598  —  160,997 
Revenue from other segments—  2,795  2,190  (4,985) — 
Total revenue112,362  49,832  3,788  (4,985) 160,997 
Operating expenses         
Cost of services33,452  19,271  1,102  (4,251) 49,574 
Cost of goods sold19,408  170  —  —  19,578 
Selling, general and administrative11,195  9,012  360  8,903  29,470 
Depreciation and amortization27,399  12,008  (113) 201  39,495 
Total operating expenses91,454  40,461  1,349  4,853  138,117 
Operating income (loss)$20,908  $9,371  $2,439  $(9,838) $22,880 
                    


Quarter ended December 31, 2018
(in thousands)		Wireless Broadband Tower Corporate & Eliminations Consolidated
External revenue         
Postpaid$75,970  $—  $—  $—  $75,970 
Prepaid13,341  —  —  —  13,341 
Tower lease—  —  1,830  —  1,830 
Cable, residential and SMB—  31,676  —  —  31,676 
Fiber, enterprise and wholesale—  4,589  —  —  4,589 
Rural local exchange carrier—  5,528  —  —  5,528 
Travel, installation, and other7,937  1,766  —  —  9,703 
Service revenue and other97,248  43,559  1,830  —  142,637 
Equipment18,651  196  —  —  18,847 
Total external115,899  43,755  1,830  —  161,484 
Revenue from other segments—  2,302  1,270  (3,572) — 
Total revenue115,899  46,057  3,100  (3,572) 161,484 
Operating expenses         
Cost of services30,555  18,891  1,119  (2,905) 47,660 
Cost of goods sold17,833  119  —  —  17,952 
Selling, general and administrative11,780  7,618  64  7,643  27,105 
Depreciation and amortization30,774  9,942  894  163  41,773 
Total operating expenses90,942  36,570  2,077  4,901  134,490 
Operating income (loss)$24,957  $9,487  $1,023  $(8,473) $26,994 


Supplemental Information

Wireless Operating Statistics

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

  December 31,
 2019		 December 31,
 2018 (2)
Retail PCS total subscribers - postpaid 844,194  795,176 
Retail PCS phone subscribers 740,958  723,455 
Retail PCS connected device subscribers 103,236  71,721 
Retail PCS subscribers - prepaid 274,012  258,704 
PCS market POPS (000) (1) 7,227  7,023 
PCS covered POP (000) (1) 6,324  6,109 
Macro base stations (cell sites) 1,960  1,853 


  Three Months Ended
December 31,		 Twelve Months Ended
December 31,
Postpaid: 2019 2018 2019 2018 (2)
Gross PCS total subscriber additions 71,830  54,517  235,953  190,334 
Gross PCS phone additions 50,188  42,114  174,237  156,601 
Gross PCS connected device additions 21,642  12,403  61,716  33,733 
Net PCS total subscriber additions 20,777  9,639  49,018  20,236 
Net PCS phone additions 8,654  4,179  19,846  12,310 
Net PCS connected device additions 12,123  5,460  29,172  7,926 
PCS monthly retail total churn % 2.05% 1.90% 1.92% 1.82%
PCS monthly phone churn % 1.88% 1.76% 1.77% 1.69%
PCS monthly connected device churn % 3.30% 3.40% 3.21% 3.35%
Prepaid:        
Gross PCS subscriber additions 39,352  38,225  152,098  150,662 
Net PCS subscriber additions 2,461  3,242  15,308  17,191 
PCS monthly retail churn % 4.52% 4.56% 4.26% 4.45%

___________________________

(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. Historical periods previously referred to other third party population data and have been recast to refer to U.S. census data. 
(2) Acquired the Richmond Expansion Area on February 1, 2018 with market POPs of 1,082,000 and covered POPs of 602,000. 2018 net adds results exclude 38,343 postpaid and 15,691 prepaid subscribers acquired. 

Broadband Operating Statistics

  December 31,
2019		 December 31,
2018		 
Broadband homes passed (1) 208,298  201,633  
Broadband customer relationships (2) 100,890  95,328  
      
Video:     
RGUs (3) 53,673  58,672  
Penetration (4) 25.8% 29.1% 
Digital video penetration (5) 95.0% 78.8% 
Broadband:     
RGUs (3) 84,045  75,389  
Penetration (4) 40.3% 37.4% 
Voice:     
RGUs (3) 31,380  29,474  
Penetration (4) 16.2% 15.9% 
Total Cable and Glo Fiber RGUs 169,098  163,535  
      
RLEC homes passed 25,846  26,782  
RLEC customer relationships (2) 10,306  11,226  
RLEC RGUs:     
Data RLEC 7,797  9,104  
Penetration (4) 30.2% 34.0% 
Voice RLEC 14,332  15,698  
Penetration (4) 55.5% 58.6% 
Total RLEC RGUs 22,129  24,802  
      
Total RGUs 191,227  188,337  
      
Fiber route miles 6,139  5,641  
Total fiber miles (6) 320,444  300,200  

___________________________

(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) Customer relationships represent the number of billed customers who receive at least one of our services. 
(3) As of September 30, 2019, the Company revised its methodology for counting RGUs associated with hotels, multiple dwelling units ("MDUs") and certain commercial customers.  We now count each dwelling or unit of service as a separate RGU.  Prior year information has been recast to reflect our revised methodology.  Previously we counted RGUs on an equivalent basis consistent with carriage fee practices. 
(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

  December 31,
2019		 December 31,
2018
Towers owned 225  208 
Tenants (1) 404  367 
Average tenants per tower 1.8  1.8 

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(1) Includes 201 and 174 intercompany tenants for our Wireless segment as of December 31, 2019 and 2018, respectively.


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

  Three Months Ended
December 31,		 Twelve Months Ended
December 31,
(in thousands) 2019 2018 2019 2018
Net cash provided by operating activities $65,686  $76,847  $259,145  $265,647 
Less: Capital expenditures (1) (22,988) (44,332) (119,954) (136,641 
Normalized free cash flow 42,698  32,515  139,191  129,006 
Glo Fiber and Fixed Wireless capital expenditures (8,766) —  (18,838) — 
Free cash flow $33,932  $32,515  $120,353  $129,006 

(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.