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Form 8-K
0000354963 False 0000354963 2024-08-07 2024-08-07 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):  August 7, 2024

_______________________________

Shenandoah Telecommunications Company

(Exact name of registrant as specified in its charter)

_______________________________

Virginia000-0988154-1162807
(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 August 7, 2024, Shenandoah Telecommunications Company (the “Company”) issued a press release announcing its financial position as of June 30, 2024, results of operations for the three and six months ended June 30, 2024, 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* Second Quarter 2024 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: August 7, 2024By: /s/ James J. Volk        
  James J. Volk
  Senior Vice President – Chief Financial Officer
(Principal Financial Officer)
  

 
EdgarFiling

EXHIBIT 99.1

Shenandoah Telecommunications Company Reports Second Quarter 2024 Results

EDINBURG, Va., Aug. 07, 2024 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel” or the “Company”) (Nasdaq: SHEN) announced second quarter 2024 financial and operating results.

Second Quarter 2024 Highlights

“We made good progress executing our Fiber First strategy with another solid quarter of Glo Fiber net subscriber additions and construction of new passings, and integration of our recent Horizon acquisition with its fiber rich network has gone well” said President and CEO, Christopher E. French. “Recently announced acquisitions of Fiber-To-The-Home companies have re-affirmed our investment thesis for our Glo Fiber line of business.”

Shentel’s second-quarter earnings conference call will be webcast at 8:30 a.m. ET on Wednesday, August 7, 2024. The webcast and related materials will be available on Shentel’s Investor Relations website at https://investor.shentel.com/.

Second Quarter 2024 Results

Other Information

__________________________
1 Glo Fiber Expansion Markets consists of FTTH passings in greenfield expansion markets in the Shentel and former Horizon markets.
2 Incumbent Broadband Markets consists of Shentel Incumbent Cable Markets and Horizon Incumbent Telephone Markets with Fiber-To-The-Home (“FTTH”) passings.

Earnings Call Webcast

Date: Wednesday, August 7, 2024
Time: 8:30 A.M. (ET)
Listen via Internet: https://investor.shentel.com/
For Analysts, please register to dial-in at this link.

A replay of the call will be available for a limited time on the Investor Relations page of the Company’s website.

About Shenandoah Telecommunications

Shenandoah Telecommunications Company (Shentel) provides broadband services through its high speed, state-of-the-art fiber optic and cable networks to residential and commercial customers in eight contiguous states in the eastern United States. The Company’s services include: broadband internet, video, voice, high-speed Ethernet, dark fiber leasing, and managed network services. The Company owns an extensive regional network with over 16,000 route miles of fiber. For more information, please visit www.shentel.com.

This release contains forward-looking statements about Shentel regarding, among other things, its business strategy, its prospects and its financial position. These statements can be identified by the use of forward-looking terminology such as “believes,” “estimates,” “expects,” “intends,” “may,” “will,” “plans,” “should,” “could,” or “anticipates” or the negative or other variation of these or similar words, or by discussions of strategy or risks and uncertainties. The forward-looking statements are based upon management’s beliefs, assumptions and current expectations and may include comments as to Shentel’s beliefs and expectations as to future events and trends affecting its business that are necessarily subject to uncertainties, many of which are outside Shentel’s control. Although management believes that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are not, and should not be relied upon as, a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at which such performance or results will be achieved, and actual results may differ materially from those contained in or implied by the forward-looking statements as a result of various factors. A discussion of other factors that may cause actual results to differ from management’s projections, forecasts, estimates and expectations is available in Shentel’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2023 and our Quarterly Reports on Form 10-Q. Those factors may include, among others, the expected savings and synergies from the Horizon Transaction may not be realized or may take longer or cost more than expected to realize, changes in overall economic conditions including rising inflation, regulatory requirements, changes in technologies, changes in competition, demand for our products and services, availability of labor resources and capital, natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, and other conditions. The forward-looking statements included are made only as of the date of the statement. Shentel undertakes no obligation to revise or update such statements to reflect current events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events, except as required by law.

CONTACTS:
  Shenandoah Telecommunications Company
  Jim Volk
  Senior Vice President and Chief Financial Officer
  540-984-5168
  Jim.Volk@emp.shentel.com

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in thousands, except per share amounts)Three Months Ended
June 30,		 Six Months Ended
June 30,
  2024   2023   2024   2023 
Service revenue and other$85,799  $66,644  $155,047  $133,809 
Operating expenses:       
Cost of services exclusive of depreciation and amortization 34,541   24,753   60,526   50,183 
Selling, general and administrative 30,239   25,041   58,217   51,069 
Integration and acquisition 11,325   301   11,943   432 
Impairment expense —   836   —   1,020 
Depreciation and amortization 25,579   15,831   43,022   30,916 
Total operating expenses 101,684   66,762   173,708   133,620 
Operating (loss) income (15,885)  (118)  (18,661)  189 
Other (expense) income:       
Interest expense (3,996)  (905)  (8,072)  (1,297)
Other income, net 1,908   1,082   3,644   2,591 
(Loss) income from continuing operations before income taxes (17,973)  59   (23,089)  1,483 
Income tax (benefit) expense (5,200)  1,459   (6,226)  2,141 
Loss from continuing operations (12,773)  (1,400)  (16,863)  (658)
Discontinued operations:       
(Loss) income from discontinued operations, net of tax (99)  3,190   1,882   4,514 
Gain on the sale of discontinued operations, net of tax —   —   216,805   — 
Total (loss) income from discontinued operations, net of tax (99)  3,190   218,687   4,514 
Net (loss) income (12,872)  1,790   201,824   3,856 
        
Other comprehensive income:       
Gain on interest rate hedge, net of tax 143   2,127   1,737   2,127 
Comprehensive (loss) income$(12,729) $3,917  $203,561  $5,983 
        
Net (loss) income per share, basic and diluted:       
Loss from continuing operations$(0.24) $(0.03) $(0.32) $(0.01)
(Loss) income from discontinued operations, net of tax —   0.07   4.16   0.09 
Net (loss) income per share$(0.24) $0.04  $3.84  $0.08 
        
Weighted average shares outstanding, basic and diluted 54,730   50,366   52,620   50,330 


SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)June 30,
2024		 December 31,
2023
ASSETS   
Current assets:   
Cash and cash equivalents$43,779 $139,255
Accounts receivable, net of allowance for credit losses of $1,333 and $886, respectively 29,639  19,782
Income taxes receivable 5,537  4,691
Prepaid expenses and other 20,567  11,782
Current assets held for sale —  561
Total current assets 99,522  176,071
Investments 15,135  13,198
Property, plant and equipment, net 1,337,252  850,337
Goodwill and intangible assets, net 169,489  81,123
Operating lease right-of-use assets 20,444  13,024
Deferred charges and other assets 14,491  11,561
Non-current assets held for sale —  68,915
Total assets$1,656,333 $1,214,229
LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ EQUITY   
Current liabilities:   
Current maturities of long-term debt, net of unamortized loan fees$8,726 $7,095
Accounts payable 57,725  53,546
Advanced billings and customer deposits 14,928  12,394
Accrued compensation 12,308  11,749
Current operating lease liabilities 3,138  2,222
Accrued liabilities and other 15,264  7,747
Current liabilities held for sale —  3,602
Total current liabilities 112,089  98,355
Long-term debt, less current maturities, net of unamortized loan fees 288,570  292,804
Other long-term liabilities:   
Deferred income taxes 186,305  85,664
Benefit plan obligations 4,971  3,943
Non-current operating lease liabilities 11,431  7,185
Other liabilities 40,505  16,912
Non-current liabilities held for sale —  56,696
Total other long-term liabilities 243,212  170,400
Commitments and contingencies (Note 15)   
Temporary equity:   
Redeemable noncontrolling interest 79,380  —
Shareholders’ equity:   
Common stock, no par value, authorized 96,000; 54,572 and 50,272 issued and outstanding at June 30, 2024 and December 31, 2023, respectively —  —
Additional paid in capital 143,784  66,933
Retained earnings 785,893  584,069
Accumulated other comprehensive income, net of taxes 3,405  1,668
Total shareholders’ equity 933,082  652,670
Total liabilities, temporary equity and shareholders’ equity$1,656,333 $1,214,229


SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES   
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS   
(in thousands)Six Months Ended
June 30,
  2024   2023 
Cash flows from operating activities:   
Net income$201,824  $3,856 
Income from discontinued operations, net of tax 218,687   4,514 
Loss from continuing operations (16,863)  (658)
Adjustments to reconcile net income to net cash provided by operating activities, net of effects of business acquisition   
Depreciation and amortization 43,022   30,916 
Stock-based compensation expense, net of amount capitalized 6,236   6,320 
Impairment expense —   1,020 
Deferred income taxes (6,226)  2,860 
Provision for credit losses 1,266   1,141 
Other, net 150   (313)
Changes in assets and liabilities:   
Accounts receivable 965   4,499 
Current income taxes 234   25,108 
Operating lease assets and liabilities, net (233)  73 
Other assets (3,354)  2,233 
Accounts payable (1,140)  (3,012)
Other deferrals and accruals (882)  (6,696)
Net cash provided by operating activities - continuing operations 23,175   63,491 
Net cash (used in) provided by operating activities - discontinued operations (5,476)  6,309 
Net cash provided by operating activities 17,699   69,800 
    
Cash flows from investing activities:   
Capital expenditures (150,914)  (135,261)
Government grants received 7,653   110 
Cash disbursed for acquisition, net of cash acquired (347,411)  — 
Proceeds from sale of assets and other 1,715   508 
Net cash used in investing activities - continuing operations (488,957)  (134,643)
Net cash provided by (used in) investing activities - discontinued operations 305,827   (1,007)
Net cash used in investing activities (183,130)  (135,650)
    
Cash flows from financing activities:   
Principal payments on long-term debt (2,618)  — 
Proceeds from credit facility borrowings —   50,000 
Payments for debt amendment costs (4,390)  (300)
Proceeds from the issuance of redeemable noncontrolling interest, net of financing fees paid 79,380   — 
Taxes paid for equity award issuances (1,671)  (1,317)
Payments for financing arrangements and other (746)  (290)
Net cash provided by financing activities 69,955   48,093 
Net decrease in cash and cash equivalents (95,476)  (17,757)
Cash and cash equivalents, beginning of period 139,255   44,061 
Cash and cash equivalents, end of period$43,779  $26,304 
    
Supplemental Disclosures of Cash Flow Information   
Interest paid, net of amounts capitalized$(6,526) $(841)
Income tax (paid) refunds received, net$(7,085) $25,481 


Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA Margin

The Company defines Adjusted EBITDA as net (loss) income from continuing operations calculated in accordance with GAAP, adjusted for the impact of depreciation and amortization, impairment, other income (expense), net, interest income, interest expense, income tax expense (benefit), stock compensation expense, transaction costs related to acquisition and disposition events (including professional advisory fees, integration costs, and related compensatory matters), restructuring expense, tax on equity award vesting and exercise events, and other non-comparable items. A reconciliation of net (loss) income from continuing operations, which is the most directly comparable GAAP financial measure, to Adjusted EBITDA is provided below herein.

Adjusted EBITDA margin is the Company’s calculation of Adjusted EBITDA, divided by revenue calculated in accordance with GAAP.

The Company uses Adjusted EBITDA and Adjusted EBITDA margin as supplemental measures of performance to evaluate operating effectiveness and assess its ability to increase revenues while controlling expense growth and the scalability of the Company’s business growth strategy. Adjusted EBITDA is also a significant performance measure used by the Company in its incentive compensation programs. The Company believes that the exclusion of the expense and income items eliminated in calculating Adjusted EBITDA and Adjusted EBITDA margin provides management and investors a useful measure for period-to-period comparisons of the Company’s core operating results by excluding items that are not comparable across reporting periods or that do not otherwise relate to the Company’s ongoing operations. Accordingly, the Company believes that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating the Company’s operating results. However, use of Adjusted EBITDA and Adjusted EBITDA margin as analytical tools has limitations, and investors and others should not consider them in isolation or as substitutes for analysis of our financial results as reported under GAAP. In addition, other companies may calculate Adjusted EBITDA and Adjusted EBITDA margin or similarly titled measures differently, which may reduce their usefulness as comparative measures.

 Three Months Ended
June 30,		 Six Months Ended
June 30,
(in thousands) 2024   2023   2024   2023 
Loss from continuing operations$(12,773) $(1,400) $(16,863) $(658)
Depreciation and amortization 25,579   15,831   43,022   30,916 
Impairment expense —   836   —   1,020 
Other expense (income), net 2,088   (177)  4,428   (1,294)
Income tax (benefit) expense (5,200)  1,459   (6,226)  2,141 
Stock-based compensation 2,270   2,603   6,236   6,320 
Integration and acquisition 11,325   301   11,943   432 
Adjusted EBITDA$23,289  $19,453  $42,540  $38,877 
        
Adjusted EBITDA margin 27%  29%  27%  29%


Supplemental Information

Operating Statistics

 June 30,
2024		 June 30,
2023
Homes and businesses passed (1)530,076  396,035 
Incumbent Broadband Markets (4)232,531  213,188 
Glo Fiber Expansion Markets (5)297,545  182,847 
    
Residential & Small and Medium Business ("SMB") Revenue Generating Units ("RGUs"):   
Broadband Data164,566  142,247 
Incumbent Broadband Markets (4)111,256  109,404 
Glo Fiber Expansion Markets (5)53,310  32,843 
Video42,079  44,800 
Voice44,126  40,313 
Total Residential & SMB RGUs (excludes RLEC)250,771  227,360 
    
Residential & SMB Penetration (2)   
Broadband Data31.0% 35.9%
Incumbent Broadband Markets (4)47.8% 51.3%
Glo Fiber Expansion Markets (5)17.9% 18.0%
Video7.9% 11.3%
Voice8.7% 10.7%
    
Fiber route miles16,029  9,082 
Total fiber miles (3)1,798,211  767,173 

______________________________________________________
(1) Homes and businesses are considered passed (“passings”) if we can connect them to our network without further extending the distribution system. Passings is an estimate based upon the best available information. Passings will vary among video, broadband data and voice services.
(2) Penetration is calculated by dividing the number of users by the number of passings or available homes, as appropriate.
(3) 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.
(4) Incumbent Broadband Markets consists of Shentel Incumbent Cable Markets and Horizon Incumbent Telephone Markets with Fiber-To-The-Home (“FTTH”) passings.
(5) Glo Fiber Expansion Markets consists of FTTH passings in greenfield expansion markets in the Shentel and former Horizon markets.

Residential and SMB ARPU       
 Three Months Ended
June 30,		 Six Months Ended
June 30,
  2024  2023  2024  2023
Residential and SMB Revenue:       
Broadband Data$40,823 $34,152 $79,404 $67,326
Incumbent Broadband 28,324  27,172  56,122  54,445
Glo Fiber Expansion Markets 12,499  6,980  23,282  12,881
Video 14,913  14,411  29,307  29,056
Voice 3,283  3,054  6,306  6,084
Discounts, adjustments and other 34  950  524  1,860
Total Residential and SMB Revenue$59,053 $52,567 $115,541 $104,326
        
Average RGUs:       
Broadband Data 162,581  140,481  157,999  138,376
Incumbent Broadband 111,689  109,716  110,472  109,737
Glo Fiber Expansion Markets 50,892  30,765  47,527  28,639
Video 42,443  45,229  41,869  45,749
Voice 43,865  40,164  42,277  40,078
        
ARPU: (1)       
Broadband Data$83.70 $81.03 $83.76 $81.06
Incumbent Broadband$84.53 $82.55 $84.67 $82.69
Glo Fiber Expansion Markets$81.86 $75.63 $81.64 $74.96
Video$117.12 $106.21 $116.66 $105.85
Voice$24.95 $25.35 $24.86 $25.30

______________________________________________________
(1)   Average Revenue Per RGU calculation = (Residential & SMB Revenue) / average RGUs / 3 months.