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Form 8-K
0000354963 False 0000354963 2024-11-07 2024-11-07 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):  November 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 November 7, 2024, Shenandoah Telecommunications Company (the “Company”) issued a press release announcing its financial position as of September 30, 2024, results of operations for the three and nine months ended September 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* Third 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: November 7, 2024By: /s/ James J. Volk        
  James J. Volk
  Senior Vice President – Chief Financial Officer
(Principal Financial and Accounting Officer)
  

 
EdgarFiling

EXHIBIT 99.1

Shenandoah Telecommunications Company Reports Third Quarter 2024 Results

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

Third Quarter 2024 Highlights

“We had a record quarter for Glo Fiber net additions and revenue driving top line revenue growth.” said President and CEO, Christopher E. French. “We made great progress with the integration of our Horizon acquisition, converting four of the six Horizon back-office systems to-date with clear line of sight to finish the integration in early 2025. We now expect to realize $11 million in annual synergy savings. We expect Glo Fiber and synergies will be key growth catalysts in 2025 and drivers of margin expansion.”

Shentel’s third-quarter earnings conference call will be webcast at 8:00 a.m. ET on Thursday, November 7, 2024. The webcast and related materials will be available on Shentel’s Investor Relations website at https://investor.shentel.com/.

Third Quarter 2024 Results

______________________________________________________

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.

Other Information

Earnings Call Webcast

Date: Thursday, November 7, 2024
Time: 8:00 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 16,300 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 OPERATIONS
(in thousands, except per share amounts)Three Months Ended
September 30,		 Nine Months Ended
September 30,
  2024   2023   2024   2023 
Service revenue and other$87,599  $67,409  $242,646  $201,218 
Operating expenses:       
Cost of services exclusive of depreciation and amortization 34,415   26,268   94,941   76,451 
Selling, general and administrative 28,006   22,952   86,223   74,021 
Integration and acquisition 1,673   1,146   13,616   1,578 
Impairment expense —   1,532   —   2,552 
Depreciation and amortization 27,681   16,121   70,703   47,037 
Total operating expenses 91,775   68,019   265,483   201,639 
Operating loss (4,176)  (610)  (22,837)  (421)
Other (expense) income:       
Interest expense (3,668)  (1,198)  (11,740)  (2,495)
Other income, net 998   2,024   4,642   4,615 
(Loss) income from continuing operations before income taxes (6,846)  216   (29,935)  1,699 
Income tax (benefit) expense (1,542)  399   (7,768)  2,540 
Loss from continuing operations (5,304)  (183)  (22,167)  (841)
Discontinued operations:       
Income from discontinued operations, net of tax 41   1,776   1,923   6,290 
Gain on the sale of discontinued operations, net of tax —   —   216,805   — 
Total income from discontinued operations, net of tax 41   1,776   218,728   6,290 
Net (loss) income (5,263)  1,593   196,561   5,449 
Net income attributable to redeemable noncontrolling interest 1,638   —   1,638   — 
Net (loss) income attributable to common shareholders$(6,901) $1,593  $194,923  $5,449 
        
Net (loss) income per share attributable to common shareholders, basic and diluted:       
Loss from continuing operations$(0.13) $—  $(0.45) $(0.02)
Income from discontinued operations, net of tax —   0.03   4.10   0.13 
Net (loss) income per share$(0.13) $0.03  $3.65  $0.11 
        
Weighted average shares outstanding, basic and diluted 54,781   50,379   53,370   50,346 
        



SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)September 30,
2024		 December 31,
2023
ASSETS   
Current assets:   
Cash and cash equivalents$43,099  $139,255 
Accounts receivable, net of allowance for credit losses of $1,574 and $886, respectively 32,526   19,782 
Income taxes receivable 4,700   4,691 
Prepaid expenses and other 17,189   11,782 
Current assets held for sale —   561 
Total current assets 97,514   176,071 
Investments 15,369   13,198 
Property, plant and equipment, net 1,385,355   850,337 
Goodwill and intangible assets, net 162,822   81,123 
Operating lease right-of-use assets 20,738   13,024 
Deferred charges and other assets 13,011   11,561 
Non-current assets held for sale —   68,915 
Total assets$1,694,809  $1,214,229 
LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ EQUITY   
Current liabilities:   
Current maturities of long-term debt, net of unamortized loan fees$8,628  $7,095 
Accounts payable 65,952   53,546 
Advanced billings and customer deposits 15,212   12,394 
Accrued compensation 16,030   11,749 
Current operating lease liabilities 3,317   2,222 
Accrued liabilities and other 13,994   7,747 
Current liabilities held for sale —   3,602 
Total current liabilities 123,133   98,355 
Long-term debt, less current maturities, net of unamortized loan fees 335,931   292,804 
Other long-term liabilities:   
Deferred income taxes 181,613   85,664 
Benefit plan obligations 5,091   3,943 
Non-current operating lease liabilities 11,657   7,185 
Other liabilities 31,008   16,912 
Non-current liabilities held for sale —   56,696 
Total other long-term liabilities 229,369   170,400 
Commitments and contingencies (Note 15)   
Temporary equity:   
Redeemable noncontrolling interest 81,018   — 
Shareholders’ equity:   
Common stock, no par value, authorized 96,000; 54,573 and 50,272 issued and outstanding at June 30, 2024 and December 31, 2023, respectively —   — 
Additional paid in capital 145,363   66,933 
Retained earnings 778,992   584,069 
Accumulated other comprehensive income, net of taxes 1,003   1,668 
Total shareholders’ equity 925,358   652,670 
Total liabilities, temporary equity and shareholders’ equity$1,694,809  $1,214,229 


SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES   
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS   
(in thousands)Nine Months Ended
September 30,
  2024   2023 
Cash flows from operating activities:   
Net income$196,561  $5,449 
Income from discontinued operations, net of tax 218,728   6,290 
Loss from continuing operations (22,167)  (841)
Adjustments to reconcile net income to net cash provided by operating activities, net of effects of business acquisition   
Depreciation and amortization 70,703   47,037 
Stock-based compensation expense, net of amount capitalized 7,620   8,364 
Impairment expense —   2,552 
Deferred income taxes (7,768)  3,211 
Provision for credit losses 1,748   1,837 
Gain on sale of FCC spectrum licenses —   (1,328)
Other, net 903   5 
Changes in assets and liabilities:   
Accounts receivable (630)  1,257 
Current income taxes 1,154   25,108 
Operating lease assets and liabilities, net (123)  (156)
Other assets (3,045)  2,914 
Accounts payable (583)  (3,458)
Other deferrals and accruals 564   (4,220)
Net cash provided by operating activities - continuing operations 48,376   82,282 
Net cash (used in) provided by operating activities - discontinued operations (6,405)  9,407 
Net cash provided by operating activities 41,971   91,689 
    
Cash flows from investing activities:   
Capital expenditures (226,452)  (189,343)
Government grants received 11,094   448 
Cash disbursed for acquisition, net of cash acquired (347,411)  — 
Proceeds from the sale of FCC spectrum licenses —   17,300 
Proceeds from sale of assets and other 1,846   566 
Net cash used in investing activities - continuing operations (560,923)  (171,029)
Net cash provided by (used in) investing activities - discontinued operations 305,827   (1,459)
Net cash used in investing activities (255,096)  (172,488)
    
Cash flows from financing activities:   
Principal payments on long-term debt (4,843)  — 
Proceeds from credit facility borrowings 50,000   75,000 
Payments for debt amendment costs (4,570)  (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 (1,327)  (679)
Net cash provided by financing activities - continuing operations 116,969   72,704 
Net decrease in cash and cash equivalents (96,156)  (8,095)
Cash and cash equivalents, beginning of period 139,255   44,061 
Cash and cash equivalents, end of period$43,099  $35,966 
    
Supplemental Disclosures of Cash Flow Information   
Interest paid, net of amounts capitalized$(8,935) $(1,633)
Income tax (paid) refunds received, net$(6,657) $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 expense, 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
September 30,		 Nine Months Ended
September 30,
(in thousands) 2024   2023   2024   2023 
Loss from continuing operations$(5,304) $(183) $(22,167) $(841)
Depreciation and amortization 27,681   16,121   70,703   47,037 
Impairment expense —   1,532   —   2,552 
Other expense (income), net 2,670   (826)  7,098   (2,120)
Income tax (benefit) expense (1,542)  399   (7,768)  2,540 
Stock-based compensation 1,384   2,044   7,620   8,364 
Integration and acquisition 1,673   1,146   13,616   1,578 
Adjusted EBITDA$26,562  $20,233  $69,102  $59,110 
        
Adjusted EBITDA margin 30%  30%  28%  29%


Supplemental Information

Operating Statistics

 Three Months Ended
September 30,
  2024   2023 
Homes and businesses passed (1) 553,877   415,971 
Incumbent Broadband Markets (4) 234,366   213,317 
Glo Fiber Expansion Markets (5) 319,511   202,654 
    
Residential & Small and Medium Business ("SMB") Revenue Generating Units ("RGUs"):   
Broadband Data 170,586   146,797 
Incumbent Broadband Markets (4) 111,320   109,404 
Glo Fiber Expansion Markets (5) 59,266   37,393 
Video 41,192   44,050 
Voice 44,389   40,699 
Total Residential & SMB RGUs (excludes RLEC) 256,167   231,546 
    
Residential & SMB Penetration (2)   
Broadband Data 30.8%  35.3%
Incumbent Broadband Markets (4) 47.5%  51.3%
Glo Fiber Expansion Markets (5) 18.5%  18.5%
Video 7.4%  10.6%
Voice 8.3%  10.2%
    
Fiber route miles 16,357   9,387 
Total fiber miles (3) 1,825,122   813,273 

______________________________________________________
(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 & SMB ARPU       
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
  2024   2023   2024   2023 
Residential & SMB Revenue:       
Broadband Data$42,038  $35,096  $121,442  $102,422 
Incumbent Broadband Markets 28,241   26,977   84,363   81,422 
Glo Fiber Expansion Markets 13,797   8,119   37,079   21,000 
Video 14,520   14,077   43,827   43,133 
Voice 3,275   3,062   9,580   9,146 
Discounts, adjustments and other (508)  769   17   2,629 
Total Residential & SMB Revenue$59,325  $53,004  $174,866  $157,330 
        
Average RGUs:       
Broadband Data 167,514   144,510   161,169   140,420 
Incumbent Broadband Markets 111,224   109,364   110,722   109,612 
Glo Fiber Expansion Markets 56,290   35,146   50,447   30,808 
Video 41,630   44,385   41,789   45,294 
Voice 44,214   40,605   42,923   40,254 
        
ARPU: (1)       
Broadband Data$83.65  $80.95  $83.72  $81.02 
Incumbent Broadband Markets$84.64  $82.22  $84.66  $82.54 
Glo Fiber Expansion Markets$81.70  $77.00  $81.67  $75.74 
Video$116.26  $105.72  $116.53  $105.81 
Voice$24.69  $25.14  $24.80  $25.24 

______________________________________________________

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