Form 8-K
0000354963 False 0000354963 2021-04-29 2021-04-29 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):  April 29, 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 April 29, 2021, Shenandoah Telecommunications Company (the “Company”) issued a press release announcing its financial position as of March 31, 2021, results of operations for the three months ended March 31, 2021, 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 prior to the earnings call scheduled for 8:00 A.M. (ET) April 30, 2021. 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

99.1* First Quarter 2021 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: April 29, 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 First Quarter 2021 Results

EDINBURG, Va., April 29, 2021 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel”) (Nasdaq: SHEN) announced first quarter 2021 financial and operating results.

First Quarter 2021 Highlights  

“We made excellent progress in executing our 2021 plan with strong growth in broadband data net additions, newly constructed passings, revenues and Adjusted OIBDA,” said President and CEO, Christopher E. French. “In particular, we are very pleased with our broadband data churn result in the quarter. We believe strongly that we have a superior value proposition to our competitors in all of the markets we serve and the continued gains in customer satisfaction we are experiencing are strong validation of our broadband investment thesis.”  

Shentel's first-quarter earnings conference call will be webcast at 8:00 a.m. ET on Friday, April 30, 2021. The webcast and related materials will be available on Shentel’s Investor Relations website at https://investor.shentel.com/.

Consolidated First Quarter 2021 Results

Broadband

Tower

Other Information

2021 Outlook
The Company is affirming the full-year 2021 guidance as summarized below:

($ 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: April 30, 2021
Time: 8:00 A.M. (ET)
Dial in number: 1-888-695-7639

Password: 5934209

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 30, 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 COMPREHENSIVE INCOME
(in thousands, except per share amounts)Three Months Ended
March 31,
 2021 2020
Service revenue and other$59,691  $53,134  
Operating expenses:   
Cost of services23,283  20,317  
Selling, general and administrative20,153  22,096  
Restructuring expense618    
Depreciation and amortization13,266  12,085  
Total operating expenses57,320  54,498  
Operating income (loss)2,371  (1,364) 
Other income:   
Other income, net1,600  749  
Income (loss) before income taxes3,971  (615) 
Income tax expense (benefit)922  (765) 
Income from continuing operations3,049  150  
Income from discontinued operations, net of tax48,472  13,130  
Net income51,521  13,280  
    
Net income per share, basic and diluted:   
Basic - Income from continuing operations$0.06  $  
Basic - Income from discontinued operations, net of tax$0.97  $0.27  
Basic net income per share$1.03  $0.27  
    
Diluted - Income from continuing operations$0.06  $  
Diluted - Income from discontinued operations, net of tax$0.97  $0.27  
Diluted net income per share$1.03  $0.27  
    
Weighted average shares outstanding, basic49,947  49,888  
Weighted average shares outstanding, diluted50,081  50,036  
       

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

 March 31,
2021
 December 31,
2020
    
Cash and cash equivalents$229,182  $195,397 
Other current assets79,561  80,024 
Current assets held for sale1,117,528  1,133,294 
Total current assets1,426,271  1,408,715 
    
Investments13,376  13,769 
Property, plant and equipment, net468,383  440,427 
Intangible assets, net and Goodwill106,543  106,759 
Operating lease right-of-use assets52,738  50,387 
Deferred charges and other assets, net14,998  11,650 
Non-current assets held for sale   
Total assets$2,082,309  $2,031,707 
    
Current liabilities held for sale443,089  $452,202 
Total current liabilities759,228  $755,859 
Long-term debt, less current maturities   
Non-current liabilities held for sale   
Other liabilities246,038  241,252 
Total shareholders’ equity633,954  582,394 
Total liabilities and shareholders’ equity$2,082,309  $2,031,707 
        


SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


 Three Months Ended
March 31,
(in thousands)2021 2020
Cash flows from operating activities:   
Net income$51,521   $13,280  
Income from operations of discontinued operations, net of tax48,472   13,130  
Income from continuing operations3,049   150  
    
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation13,043   11,931  
Amortization of intangible assets223   154  
Bad debt expense137   205  
Stock based compensation expense, net of amount capitalized642   2,739  
Deferred income taxes5,256   (385) 
Other adjustments(339)  (257) 
Changes in assets and liabilities(12,875)  (1,283) 
Net cash provided by operating activities – continuing operations9,136   13,254  
Net cash provided by operating activities – discontinued operations75,530   47,854  
Net cash provided by operating activities84,666   61,108  
    
Cash flows from investing activities:   
Capital expenditures(39,482)  (23,362) 
Proceeds from sale of assets and other14   263  
Net cash used in investing activities – continuing operations(39,468)  (23,099) 
Net cash used in investing activities – discontinued operations(882)  (8,926) 
Net cash used in investing activities(40,350)  (32,025) 
    
Cash flows from financing activities:   
Taxes paid for equity award issuances(1,486)  (1,945) 
Other(496)  (27) 
Net cash used in financing activities – continuing operations(1,982)  (1,972) 
Net cash used in financing activities – discontinued operations(8,549)  (8,530) 
Net cash used in financing activities(10,531)  (10,502) 
    
Net increase in cash and cash equivalents33,785   18,581  
Cash and cash equivalents, beginning of period195,397   101,651  
Cash and cash equivalents, end of period$229,182   $120,232  
          

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:

Three Months Ended March 31, 2021        
(in thousands) Broadband Tower Corporate & Eliminations Consolidated
Operating income (loss) from continuing operations $10,427  $2,702  $(10,758)  $2,371 
Depreciation 11,538  481  1,024   13,043 
Amortization 223       223 
OIBDA 22,188  3,183  (9,734)  15,637 
Stock compensation expense     642   642 
Deal advisory fees 115    109   224 
Restructuring expense 105    513   618 
Adjusted OIBDA $22,408  $3,183  $(8,470)  $17,121 
                  


Three Months Ended March 31, 2020        
(in thousands) Broadband Tower Corporate & Eliminations Consolidated
Operating income (loss) from continuing operations $10,662  $1,795  $(13,821)  $(1,364) 
Depreciation 9,880  470  1,581   11,931  
Amortization 154       154  
OIBDA 20,696  2,265  (12,240)  10,721  
Stock compensation expense     2,739   2,739  
Deal advisory fees     910   910  
Adjusted OIBDA $20,696  $2,265  $(8,591)  $14,370  
                   

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 $53  $53  $48   $46  
Amortization $1  $1  $1   $1  
Stock compensation expense $6  $6  $6   $3  
Deal advisory fees $  $  $3   $  
Restructuring expense and other $2  $2  $   $  
Adjusted OIBDA $69  $76  $57   $49  
                   

Segment Results

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 22,136  1,248  (101)  23,283 
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 44,727  1,963  10,630   57,320 
Operating income (loss) $10,427  $2,702  $(10,758)  $2,371 
                  

Three Months Ended March 31, 2020:

(in thousands) Broadband Tower Corporate & Eliminations Consolidated
External revenue        
Residential & SMB $37,009  $  $   $37,009  
Commercial Fiber 6,200       6,200  
RLEC & Other 4,044       4,044  
Tower lease   1,797     1,797  
Service revenue and other 47,253  1,797     49,050  
Revenue for service provided to the discontinued Wireless operations 2,533  1,933  (382)  4,084  
Total revenue 49,786  3,730  (382)  53,134  
Operating expenses        
Cost of services 19,386  939  (8)  20,317  
Selling, general and administrative 9,704  526  11,866   22,096  
Depreciation and amortization 10,034  470  1,581   12,085  
Total operating expenses 39,124  1,935  13,439   54,498  
Operating income (loss) $10,662  $1,795  $(13,821)  $(1,364) 
                   

Supplemental Information

Broadband Operating Statistics

 March 31,
2021
 March 31,
2020
Broadband homes and businesses passed (1)259,891  212,129 
Incumbent Cable (2)210,210  206,782 
Glo Fiber34,441  5,347 
Beam15,240   
    
Broadband customer relationships (3)115,921  103,287 
    
Residential & SMB RGUs:   
Broadband Data107,569  86,667 
Incumbent Cable (2)101,576  86,214 
Glo Fiber5,524  453 
Beam469   
Video (2)51,989  53,067 
Voice (2)33,322  31,836 
Total Residential & SMB RGUs (excludes RLEC)192,880  171,570 
    
Residential & SMB Penetration (4)   
Broadband Data41.4% 40.9%
Incumbent Cable48.3% 41.7%
Glo Fiber16.0% 8.5%
Beam3.1% %
Video20.0% 25.0%
Voice14.6% 16.3%
    
Fiber route miles6,888  6,273 
Total fiber miles (5)407,710  334,802 

______________________________________________________

(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) The Company acquired Canaan Cable on December 31, 2020 adding 1,100 homes passed, 512 data RGUs, 324 video RGUs and 164 voice RGUs. 
(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) 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,
 2021 2020
Residential and SMB Revenue:   
Broadband$24,585   $19,833  
Incumbent Cable23,465    19,768   
Glo Fiber1,068    65   
Beam52    —   
Video15,652   14,821  
Voice2,899   2,827  
Discounts and adjustments(206)  (472) 
Total Revenue$42,930    $37,009   
    
Average RGUs:   
Broadband Data105,149   84,890  
Incumbent Cable100,117    84,621   
Glo Fiber4,795    269   
Beam237    —   
Video52,436   52,995  
Voice32,931   31,593  
    
ARPU: (1)   
Broadband$77.93   $77.88  
Incumbent Cable$78.12    $77.87   
Glo Fiber$74.24    $80.55   
Beam$73.14    $—   
Video$99.50   $93.22  
Voice$29.34   $29.83  

______________________________________________________

(1) Average Revenue Per RGU calculation = (Residential & SMB Revenue * 1,000) / average RGUs / 3 months 
  

Tower Operating Statistics

 March 31,
2021
 March 31,
2020
Macro tower sites223  220 
Tenants (1)443  408 
Average tenants per tower2.0  1.85 

______________________________________________________

(1) Includes 236 and 203 intercompany tenants for our Wireless operations, (reported as a discontinued operation), and Broadband operations, as of March 31, 2021 and 2020, respectively.