SHEN Shenandoah Telecommunications Company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

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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

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Shenandoah Telecommunications Company

(Exact name of registrant as specified in its charter)

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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)

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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:

Securities registered pursuant to Section 12(b) of the Act:

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. ☐

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.

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

• Glo Fiber Expansion Markets¹ experienced growth in a number of key metrics:
  • Added approximately 6,000 subscribers in the third quarter of 2024, ending the quarter with over 59,000 subscribers.
  • Passings grew approximately 22,000 to a total of approximately 320,000.
  • Revenue grew $5.8 million or 62% to $15.1 million compared to the same period in 2023. Excluding Horizon markets, revenue grew 56% over the same period in 2023.
• Integration of Horizon ahead of schedule and on track to exceed synergy targets.

“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

• Revenue in the third quarter of 2024 grew $20.2 million, or 30.0%, to $87.6 million, primarily driven by $16.9 million of revenue resulting from the acquisition of Horizon. Excluding Horizon, revenues grew $3.3 million or 4.9% primarily driven by Glo Fiber Expansion Markets Residential & SMB revenue growth of $5.3 million partially offset by declines in commercial fiber and Incumbent Broadband Markets² Residential & SMB revenue. Glo Fiber Expansion Markets revenue growth was driven by a 54% increase in broadband data subscribers and an 7% increase in broadband data Average Revenue per User (“ARPU”). Commercial Fiber revenue decreased, as expected, due to the previously disclosed decline in T-Mobile revenue from prior period backhaul circuit disconnects as part of decommissioning the former Sprint network. Incumbent Broadband Markets revenue declined 3% due to lower video and other revenue.

• Cost of services for the three months ended September 30, 2024, increased approximately $8.1 million, or 31.0%, compared with the three months ended September 30, 2023, primarily driven by $8.6 million of cost of services from Horizon partially offset by $0.4 million decline in the legacy Shentel markets due primarily to lower programming costs as customers continue to migrate to video service alternatives.

• Selling, general and administrative expense for the three months ended September 30, 2024, increased $5.1 million, or 22.0%, compared with the three months ended September 30, 2023, primarily driven by $3.7 million of selling, general and administrative costs from Horizon and higher advertising and sales headcount to support the Glo Fiber expansion.

• Integration and acquisition expense for the three months ended September 30, 2024 increased $0.5 million compared with the three months ended September 30, 2023, primarily driven by non-recurring acquisition-related costs related to the Horizon acquisition and integration.

• Depreciation and amortization for the three months ended September 30, 2024, increased $11.6 million, or 71.7%, compared with the three months ended September 30, 2023, primarily driven by $8.3 million of depreciation and amortization expense resulting from Horizon. The remaining increase in depreciation and amortization expense is attributable to the Company’s expansion of its Glo Fiber network.

• Net loss from continuing operations was $5.3 million in the third quarter of 2024 compared with net loss from continuing operations of $0.2 million in the third quarter of 2023. The increase in the net loss was due primarily to higher depreciation and amortization from Horizon and Glo Fiber network expansion and higher interest expense from higher borrowings.

• Adjusted EBITDA for the three months ended September 30, 2024 increased to $26.6 million, representing a $6.3 million, or 31.3%, increase compared with the three months ended September 30, 2023. The former Horizon markets contributed $4.7 million. Excluding the former Horizon markets, Adjusted EBITDA grew $1.7 million, or 8.3%, driven by the previously disclosed revenue growth partially offset by higher sales and marketing expenses to support new Glo Fiber markets. Adjusted EBITDA margins grew sequentially from 27% in the second quarter to 30% in the third quarter.

• Total homes passed grew 23,800 to approximately 554,000 including 320,000 Glo Fiber Expansion Market passings and 234,000 Incumbent Broadband Markets passings. Glo Fiber Expansion Markets broadband data subscriber net additions was approximately 6,000. Incumbent Broadband Markets data subscriber net additions were flat in the third quarter 2024.

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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

• Capital expenditures were $226.5 million for the nine months ended September 30, 2024 compared with $189.3 million in the comparable 2023 period. The $37.1 million increase in capital expenditures was primarily driven by $20.8 million of capital expenditures in the former Horizon markets and expansion of the networks in Glo Fiber Expansion Markets and government-subsidized markets.

• As of September 30, 2024, our cash and cash equivalents totaled $43.1 million.

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

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.

Supplemental Information

Operating Statistics

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(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.

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

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