Form 8-K
0000354963 False 0000354963 2021-02-25 2021-02-25 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 25, 2021

_______________________________

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, P.O. Box 459

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 25, 2021, Shenandoah Telecommunications Company (the “Company”) issued a press release announcing its financial position as of December 31, 2020, results of operations for the three and twelve months ended December 31, 2020, and other related information. The Company also posted 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 2020 Earnings Press Release

104            Cover Page Interactive Data File (embedded within the Inline XBRL document)

*     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 25, 2021By: /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 2020 Results

EDINBURG, Va., Feb. 25, 2021 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel”) (Nasdaq: SHEN) announced fourth quarter and full year 2020 financial and operating results.

2020 Highlights  

“2020 was a very successful and pivotal year for our Company, as we built momentum executing our Broadband strategy. Our incumbent cable business had a record year of data net additions, driven by our upgraded DOCSIS 3.1 cable network, the value of our Powerhouse rate card, and the increase in customers working and learning from home,” said President and CEO, Christopher E. French. “Our first full year of Glo Fiber exceeded our expectations for construction pace, penetration rates and churn, validating our investment thesis. We are also pleased to have successfully launched our Beam fixed wireless service in October, providing an additional means to deliver broadband services. We are excited that the foundational investments made in our integrated broadband network will support sustainable high growth rates for the next several years.”

Shentel's fourth-quarter earnings conference call will be webcast at 8:30 a.m. ET on Thursday, February 25, 2021. The webcast and related materials will be available on Shentel’s Investor Relations website at https://investor.shentel.com/

Consolidated Full Year 2020 Results

Broadband

Tower

Consolidated Fourth Quarter 2020 Results

Broadband

Tower

Other Information

2021 Outlook
Shentel is affirming the full-year 2021 guidance issued by the Company on February 3, 2021. As previously conveyed, full year guidance for 2021 is summarized as follows:

($ in millions) Year Ending December 31, Year Ended
December 31,
2019
 % Change
2020 to 2021
Midpoint
 % Change
2019 to 2020
  2021 2020   
  Guidance Actual   
  Low High     
Revenue $241  $248  $221  $207  10.6% 6.8%
Operating Income (loss) $7  $14  $(1) $(1) nm  %
Adjusted OIBDA $69  $76  $57  $49  27.2% 16.3%
Capital Expenditures $157  $168  $120  $67  35.4% 79.1%

Adjusted OIBDA is a non-GAAP financial measure that is not determined in accordance with US generally accepted accounting principles. Reconciliations of this non-GAAP financial measures are provided in this press release after the consolidated financial statements.

Conference Call and Webcast
  
Teleconference Information:
 Date: February 25, 2021
 Time: 8:30 A.M. (ET)
 Dial in number: 1-888-695-7639
  
 Password: 6067574
  
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, 2021 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 and fixed wireless networks to customers in the Mid-Atlantic United States. The Company’s services include: broadband internet, video, and digital voice; fiber optic Ethernet, wavelength and leasing; telephone voice and digital subscriber line; tower colocation leasing; and wireless voice and data. 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, and Kentucky. 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
  
  


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,
 2020 2019 2020 2019
Service revenue and other$58,132  $53,602  $220,775  $206,862 
Operating expenses:       
Cost of services23,036  20,949  88,203  82,949 
Selling, general and administrative20,789  20,225  85,016  77,846 
Depreciation and amortization12,693  12,978  48,703  46,786 
Total operating expenses56,518  54,152  221,922  207,581 
Operating income (loss)1,614  (550) (1,147) (719)
Other income:       
Other income, net84  (178) 3,187  3,280 
Income before income taxes1,698  (728) 2,040  2,561 
Income tax expense (benefit)98  168  (586) 173 
Income (loss) from continuing operations1,600  (896) 2,626  2,388 
Income from discontinued operations, net of tax47,675  15,439  124,097  53,568 
Net income49,275  14,543  126,723  55,956 
        
Net income per share, basic and diluted:       
Basic - Income (loss) from continuing operations$0.03  $(0.01) $0.05  $0.05 
Basic - Income from discontinued operations, net of tax$0.96  $0.30  $2.49  $1.07 
Basic net income per share$0.99  $0.29  $2.54  $1.12 
        
Diluted - Income (loss) from continuing operations$0.03  $(0.01) $0.05  $0.05 
Diluted - Income from discontinued operations, net of tax$0.95  $0.30  $2.48  $1.07 
Diluted net income per share$0.98  $0.29  $2.53  $1.12 
        
Weighted average shares outstanding, basic49,922  49,762  49,901  49,811 
Weighted average shares outstanding, diluted50,010  49,762  50,024  50,101 
            
            


SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
 December 31,
2020
 December 31,
2019
    
Cash and cash equivalents$195,397  $101,651 
Other current assets80,024  85,125 
Current assets held for sale1,133,294  55,077 
Total current assets1,408,715  241,853 
    
Investments13,769  12,388 
Property, plant and equipment, net440,427  363,087 
Intangible assets, net and Goodwill106,759  88,241 
Operating lease right-of-use assets50,387  42,568 
Deferred charges and other assets, net11,650  9,267 
Non-current assets held for sale  1,141,498 
Total assets$2,031,707  $1,898,902 
    
Current liabilities held for sale452,202  $53,912 
Total current liabilities755,859  $99,665 
Long-term debt, less current maturities  688,464 
Non-current liabilities held for sale  368,423 
Other liabilities241,252  216,010 
Total shareholders’ equity582,394  472,428 
Total liabilities and shareholders’ equity$2,031,707  $1,898,902 
        
        


SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(in thousands)2020 2019
Cash flows from operating activities:   
Net income$126,723  $55,956 
Income from operations of discontinued operations, net of tax124,097  53,568 
Income from continuing operations2,626  2,388 
    
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation47,964  46,313 
Amortization of intangible assets739  473 
Bad debt expense1,220  1,743 
Stock based compensation expense, net of amount capitalized5,907  3,367 
Deferred income taxes15,310  16,848 
Other adjustments(978) (4,359)
Changes in assets and liabilities(19,429) (24,444)
Net cash provided by operating activities – continuing operations53,359  42,329 
Net cash provided by operating activities – discontinued operations249,508  216,816 
Net cash provided by operating activities302,867  259,145 
    
Cash flows from investing activities:   
Capital expenditures(120,450) (67,048)
Cash disbursed for acquisitions(1,890) (10,000)
Cash disbursed for FCC spectrum licenses(16,118) (16,742)
Proceeds from sale of assets and other370  112 
Net cash used in investing activities – continuing operations(138,088) (93,678)
Net cash used in investing activities – discontinued operations(17,500) (71,656)
Net cash used in investing activities(155,588) (165,334)
    
Cash flows from financing activities:   
Dividends paid, net of dividends reinvested(16,424) (13,943)
Taxes paid for equity award issuances(2,217) (2,910)
Other(769) (7,195)
Net cash used in financing activities – continuing operations(19,410) (24,048)
Net cash used in financing activities – discontinued operations(34,123) (53,198)
Net cash used in financing activities(53,533) (77,246)
    
Net increase in cash and cash equivalents93,746  16,565 
Cash and cash equivalents, beginning of period101,651  85,086 
Cash and cash equivalents, end of period$195,397  $101,651 
        
        

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.

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, 2020        
(in thousands) Broadband Tower Corporate &
Eliminations
 Consolidated
Operating income (loss) from continuing operations $40,360  $8,823  $(50,330) $(1,147)
Depreciation 40,337  1,906  5,721  47,964 
Amortization 739      739 
OIBDA 81,436  10,729  (44,609) 47,556 
Share-based compensation expense     5,907  5,907 
Deal advisory fees 101    3,679  3,780 
Adjusted OIBDA $81,537  $10,729  $(35,023) $57,243 


Year Ended December 31, 2019        
(in thousands) Broadband Tower Corporate &
Eliminations
 Consolidated
Operating income (loss) from continuing operations $42,597  $6,295  $(49,611) $(719)
Depreciation 38,093  1,976  6,244  46,313 
Amortization 473      473 
OIBDA 81,163  8,271  (43,367) 46,067 
Share-based compensation expense     3,367  3,367 
Adjusted OIBDA $81,163  $8,271  $(40,000) $49,434 


Quarter ended December 31, 2020        
(in thousands) Broadband Tower Corporate &
Eliminations
 Consolidated
Operating income (loss) from continuing operations $10,710  $2,379  $(11,475) $1,614 
Depreciation 10,377  492  1,573  12,442 
Amortization 251      251 
OIBDA 21,338  2,871  (9,902) 14,307 
Share-based compensation expense     601  601 
Deal advisory fees 101    677  778 
Adjusted OIBDA $21,439  $2,871  $(8,624) $15,686 


Quarter Ended December 31, 2019        
(in thousands) Broadband Tower Corporate &
Eliminations
 Consolidated
Operating income (loss) from continuing operations $9,392  $2,539  $(12,481) $(550)
Depreciation 11,157  (125) 1,780  12,812 
Amortization 166      166 
OIBDA 20,715  2,414  (10,701) 12,428 
Share-based compensation expense     597  597 
Adjusted OIBDA $20,715  $2,414  $(10,104) $13,025 


2021 Outlook – Adjusted OIBDA
 
($ in millions) Year Ending December 31, Year Ended
December 31,
2019
  2021 2020 
  Guidance Actual 
  Low High   
Operating Income (loss) $7  $14  $(1) $(1)
Depreciation $54  $54  $48  $46 
Amortization $1  $1  $1  $1 
Stock comp $6  $6  $6  $3 
Deal advisory fees $  $  $3  $ 
Restructuring and other $1  $1  $  $ 
Adjusted OIBDA $69   $76   $57   $49  
                 


Segment Results
 
Year ended December 31, 2020
(in thousands)
 Broadband Tower Corporate &
Eliminations
 Consolidated
External revenue        
Residential & SMB $154,956  $  $  $154,956 
Commercial Fiber 24,431      24,431 
RLEC & Other 15,971      15,971 
Tower lease   7,402    7,402 
Service revenue and other 195,358  7,402    202,760 
Revenue for service provided to the discontinued Wireless operations 8,989  9,653  (627) 18,015 
Total revenue 204,347  17,055  (627) 220,775 
Operating expenses                
Cost of services 83,439  4,896  (132) 88,203 
Selling, general and administrative 39,472  1,430  44,114  85,016 
Depreciation and amortization 41,076  1,906  5,721  48,703 
Total operating expenses 163,987  8,232  49,703  221,922 
Operating income (loss) $40,360  $8,823  $(50,330) $(1,147)


Year ended December 31, 2019
(in thousands)
 Broadband Tower Corporate &
Eliminations
 Consolidated
External revenue        
Residential & SMB $142,290  $  $  $142,290 
Commercial Fiber 23,004      23,004 
RLEC & Other 18,257      18,257 
Tower lease   6,965    6,965 
Service revenue and other 183,551  6,965    190,516 
Revenue for service provided to the discontinued Wireless operations 10,392  6,020  (66) 16,346 
Total revenue 193,943  12,985  (66) 206,862 
Operating expenses        
Cost of services 79,235  3,777  (63) 82,949 
Selling, general and administrative 33,545  937  43,364  77,846 
Depreciation and amortization 38,566  1,976  6,244  46,786 
Total operating expenses 151,346  6,690  49,545  207,581 
Operating income (loss) $42,597  $6,295  $(49,611) $(719)


Quarter ended December 31, 2020
(in thousands)
 Broadband Tower Corporate &
Eliminations
 Consolidated
External revenue        
Residential & SMB $40,786  $  $  $40,786 
Commercial Fiber 6,669      6,669 
RLEC & Other 4,091      4,091 
Tower lease   1,912    1,912 
Service revenue and other 51,546  1,912    53,458 
Revenue for service provided to the discontinued Wireless operations 2,171  2,653  (150) 4,674 
Total revenue 53,717  4,565  (150) 58,132 
Operating expenses        
Cost of services 21,867  1,359  (190) 23,036 
Selling, general and administrative 10,512  335  9,942  20,789 
Depreciation and amortization 10,628  492  1,573  12,693 
Total operating expenses 43,007  2,186  11,325  56,518 
Operating income (loss) $10,710  $2,379  $(11,475) $1,614 


Quarter ended December 31, 2019
(in thousands)
 Broadband Tower Corporate &
Eliminations
 Consolidated
External revenue        
Residential & SMB $36,586  $  $  $36,586 
Commercial Fiber 5,992      5,992 
RLEC & Other 4,458      4,458 
Tower lease   1,599    1,599 
Service revenue and other 47,036  1,599    48,635 
Revenue for service provided to the discontinued Wireless operations 2,794  2,191  (18) 4,967 
Total revenue 49,830  3,790  (18) 53,602 
Operating expenses                
Cost of services 19,887  1,073  (11) 20,949 
Selling, general and administrative 9,228  303  10,694  20,225 
Depreciation and amortization 11,323  (125) 1,780  12,978 
Total operating expenses 40,438  1,251  12,463  54,152 
Operating income (loss) $9,392  $2,539  $(12,481) $(550)
                 


Supplemental Information
 
Broadband Operating Statistics
 
  December 31,
2020
 December 31,
2019
Broadband homes passed (1) 246,790  208,298 
Incumbent Cable 208,691  206,575 
Glo Fiber 28,652  1,723 
Beam 9,447   
       
Broadband customer relationships (2) 109,458  100,890 
       
Residential & SMB RGUs:      
Broadband Data 102,812  84,045 
Incumbent Cable 98,555  83,919 
Glo Fiber 4,158  126 
Beam 99   
Video 52,817  53,673 
Voice 32,646  31,380 
Total Residential & SMB RGUs (excludes RLEC) 188,275  169,098 
       
Residential & SMB Penetration (3)      
Broadband Data 41.7% 40.3%
Incumbent Cable 47.2% 40.6%
Glo Fiber 14.5% 7.3%
Beam 1.0% %
Video 21.4% 25.8%
Voice 14.8% 16.2%
       
Fiber route miles 6,794  6,139 
Total fiber miles (5) 394,316  320,444 
       

_______________
(1)  Homes and businesses are considered passed (“homes passed”) if we can connect them to our network without further extending the distribution system. Homes passed is an estimate based upon the best available information. Homes passed 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 homes passed or available homes, as appropriate.
(4)  Average Revenue Per Data RGU calculation = (Residential & SMB Revenue * 1,000) / average data RGUs / 3 months
(5)  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        
  Quarter Ended December 31, Year Ended December 31,
  2020 2019 2020 2019
Residential and SMB Revenue:        
Broadband $23,618  $19,377  $86,715  $75,604 
Incumbent Cable 22,787   19,377   85,127   75,604  
Glo Fiber 819   —   1,576   —  
Beam 12   —   12   —  
Video 14,840  14,783  59,422  59,980 
Voice 2,912  2,850  11,441  11,311 
Discounts and adjustments (524) (425) (2,561) (4,605)
Total Revenue $40,846   $36,585   $155,017   $142,290  
                 
Average RGUs:                
Broadband Data 100,826  83,196  92,730  80,035 
Incumbent Cable 97,210   83,196   90,983   80,035  
Glo Fiber 3,534   —   1,665   —  
Beam 82   —   82   —  
Video 53,410  54,327  53,150  56,830 
Voice 33,310  31,113  32,381  30,726 
                 
ARPU:                
Broadband $78.08  $77.64  $77.93  $78.72 
Incumbent Cable $78.14   $77.64   $77.97   $78.72  
Glo Fiber $77.25   $—   $78.90   $—  
Beam $73.17   $—   $73.17   $—  
Video $92.62  $90.70  $93.17  $87.95 
Voice $29.14  $30.53  $29.44  $30.68 
                 
                 


Tower Operating Statistics
 
  December 31,
2020
 December 31,
2019
Macro tower sites 223  225 
Tenants (1) 427  404 
Average tenants per tower 1.8  1.8 

_______________
(1)   Includes 221, 201 and 174 intercompany tenants for our Wireless operations, (reported as a discontinued operation), as of December 31, 2020, 2019 and 2018, respectively.