Shenandoah Telecommunications Company Reports Fourth Quarter and Full Year 2022 Results

EDINBURG, Va., Feb. 22, 2023 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel”) (Nasdaq: SHEN) announced fourth quarter and full year 2022 financial and operating results.

2022 Highlights for Continuing Operations

• Glo Fiber data customers grew 113.5% year over year to approximately 24,000.
• Glo Fiber passings grew by approximately 72,300, or 96.1%, to approximately 147,000.
• Revenue grew 9.0% to $267.4 million.
• Net loss in 2022 was $8.4 million, compared with net income of $7.9 million in 2021. The Company discontinued its Beam fixed wireless operations in 2022 and incurred $12.2 million in accelerated depreciation, impairment and restructuring charges.
• Adjusted EBITDA grew 15.6% to $76.0 million.

“We executed very well on our Glo Fiber business plan in 2022, more than doubling our customers and expanding our network passings 96%. Key operating metrics including cost to pass, customer satisfaction, and average revenue per user ("ARPU") met or exceeded plan,” said President and CEO, Christopher E. French. "As we continue to execute on our Fiber First growth plan, we are ramping up construction and sales to take advantage of the attractive market opportunity."

Shentel's fourth-quarter earnings conference call will be webcast at 8:30 a.m. ET on Wednesday, February 22, 2023. The webcast and related materials will be available on Shentel’s Investor Relations website at https://investor.shentel.com/.

Full Year 2022 Results

Broadband

• Total Broadband Data Revenue Generating Units ("RGUs") grew 16,208, or 13.8%, in 2022 to 133,930. Glo Fiber Data RGUs grew 12,909, or 113.5%, year-over-year to 24,286 driven by network expansion of approximately 72,300 passings and churn of 1.1%. Incumbent Cable Data RGUs grew 3,299 to 109,644. Penetration for Incumbent Cable and Glo Fiber were 51.7% and 16.5%, respectively, as of December 31, 2022.

• Broadband revenue grew $20.9 million, or 9.2%, to $249.0 million. Residential & SMB revenue increased approximately $16.4 million, or 9.3%, during 2022 primarily driven by 13.8% growth in data RGUs. Commercial Fiber revenue increased approximately $3.9 million or 11.2% during 2022 due to increased connections. Rural Local Exchange Carrier (RLEC) & Other revenue increased approximately $0.6 million, or 3.8%, compared with 2021.

• Broadband operating expenses increased approximately $29.1 million, or 14.6%, to $228.3 million in 2022, compared with 2021, primarily due to $12.2 million in accelerated depreciation, impairment and restructuring charges due to cessation of Beam operations and services, $6.6 million in higher payroll costs due to additional employees and higher incentive costs, $2.5 million in higher advertising costs to support the expansion of Glo Fiber, $1.6 million in higher maintenance due to higher fuel, supplies, and contractor costs, $2.0 million in higher software related costs and professional fees resulting from operational system upgrades, and $1.7 million increases in bad debt and operating taxes.

• Broadband operating income in 2022 was $20.7 million, compared with $28.8 million in 2021.

• Broadband Adjusted EBITDA in 2022 grew 7.5% to $90.0 million, compared with $83.7 million in 2021.

Tower

• Total macro towers and tenants were 222 and 446, respectively, as of December 31, 2022 as compared with 223 and 485, respectively, as of December 31, 2021.

• Revenue increased approximately $1.2 million, or 6.9%, in 2022 to $18.9 million compared with 2021. This increase was primarily driven by a 4.1% increase in average revenue per tenant.

• Operating expenses increased approximately $0.7 million, or 8.3%, in 2022 compared with 2021, primarily driven by higher costs of service as a result of higher rent costs and higher depreciation.

• Tower operating income in 2022 was $9.5 million, compared with $9.0 million in 2021.

• Tower Adjusted EBITDA grew 7.7% to $11.9 million, compared with $11.1 million in 2021.

Consolidated Fourth Quarter 2022 Results

• Revenue in the fourth quarter of 2022 grew 11.8% to $70.0 million primarily due to growth of 11.4% in the Broadband segment and 18.0% in the Tower segment.

• Loss from continuing operations in the fourth quarter of 2022 was $1.8 million, compared with loss from continuing operations of $3.1 million in the fourth quarter of 2021.

• Adjusted EBITDA in the fourth quarter of 2022 increased $7.2 million, or 51.9%, to $21.0 million due to growth of 28.7% in the Broadband segment, 19.2% growth in the Tower segment and a 16.4% decline in in corporate expenses.

Broadband

• Broadband revenue in the fourth quarter of 2022 grew $6.7 million, or 11.4%, to $65.5 million compared with $58.8 million in the fourth quarter of 2021, primarily driven by $4.6 million or 10.1% increase in Residential and SMB revenue as a result of a 13.8% increase in broadband data RGUs and a $1.01 improvement for data ARPU. Commercial fiber grew 22.9% to $10.9 million from higher enterprise and backhaul connections. RLEC revenue grew 1.3% to $4.1 million due primarily to government support revenue.

• Broadband operating expenses in the fourth quarter of 2022 were $61.9 million compared with $57.8 million in the fourth quarter of 2021. The increase was primarily due to $2.3 million in additional depreciation primarily attributable to Beam assets described above, $0.9 million in higher advertising to support the Glo Fiber expansion and $0.8 million in higher software development and professional fees as Shentel upgrades its information technology resources.

• Broadband net income in the fourth quarter of 2022 was $3.5 million, compared with $0.9 million in the fourth quarter of 2021.

• Broadband Adjusted EBITDA in the fourth quarter of 2022 grew 28.7% to $24.6 million, compared with $19.1 million for the fourth quarter of 2021.

Tower

• Tower revenue increased $0.7 million, or 18.0%, to $4.7 million due to higher average revenue recognized per tenant.

• Tower net income in the fourth quarter of 2022 was $1.9 million, compared with $1.6 million for the fourth quarter of 2021.

• Tower Adjusted EBITDA in the fourth quarter of 2022 grew 19.2% to $2.7 million, compared with $2.3 million for the fourth quarter of 2021.

Other Information

• Capital expenditures were $189.6 million for the year ended December 31, 2022 compared with $160.1 million in 2021. The $29.5 million increase in capital expenditures was primarily due to higher spending in the Broadband segment driven by the expansion of Glo Fiber.

• The Company declared and paid a cash dividend of $0.08 per share in the fourth quarter 2022.

• As of December 31, 2022, our cash and cash equivalents totaled $44.1 million and the availability under our delayed draw term loans and revolving line of credit was $325.0 million, for total available liquidity of $369.1 million. During 2022, we borrowed a total of $75.0 million under our term loans. We expect to draw the remaining $225.0 million in delay draw term loans by June 30, 2023.

Conference Call and Webcast

Date: Wednesday, February 22, 2023
Time: 8:30 a.m. (ET)
Dial in number: (800) 715-9871

A live webcast of the call will be available on the “Investor Relations” page of the Company’s website at http://investor.shentel.com/.

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

Shentel provides broadband services through its high speed, state-of-the-art fiber-optic and cable networks to customers in the Mid-Atlantic United States. The Company's services include: broadband internet, video, and voice; fiber-optic Ethernet, wavelength and leasing; and tower colocation leasing. The Company owns an extensive regional network with over 8,300 route miles of fiber and over 220 macro cellular towers. 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,” “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. Those factors may include natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, changes in general economic conditions including high inflation, increases in costs, changes in regulation and other competitive factors. 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 - Chief Financial Officer
      540-984-5168
      Jim.Volk@emp.shentel.com

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(in thousands, except per share amounts)
(Figures for the quarters ended December 31, 2022 and 2021 are unaudited)

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS

Non-GAAP Financial Measures
Adjusted EBITDA

The Company defines Adjusted EBITDA as net income (loss) 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 income (loss) 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.

Segment Results

Year ended December 31, 2022:

Year ended December 31, 2021:

Quarter ended December 31, 2022:

Quarter ended December 31, 2021:

Supplemental Information

Broadband Operating Statistics

______________________________________________________
^{(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.}

^{(1)   Average Revenue Per Data RGU calculation = (Residential & SMB Revenue * 1,000) / average data RGUs / 12 months}

Tower Operating Statistics