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Shenandoah Telecommunications Company Reports Second Quarter 2021 Results

Posted 29 July 2021 12:00 AM by Shentel

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

Highlights

  • Completed the sale of Wireless assets and operations to T-Mobile for $1.94 billion in cash on July 1, 2021. 

  • Declared a Special Dividend of $18.75 per share on July 2, 2021 payable on August 2, 2021. 

  • Broadband data net adds were approximately 3,900 including 1,645 for Glo Fiber and 372 for Beam, respectively.

  • Revenue and Adjusted OIBDA grew 11.7% and 29.6%, respectively.

  • Earnings per diluted share for continuing operations grew to $0.04 compared to a loss of $0.01 per diluted share in the second quarter 2020.

  • Total Broadband homes and businesses passed grew sequentially 19,000 or 7.3% to approximately 279,000.


“Our transformation into a broadband-centric company is now complete with the closing of the sale of our Wireless assets and operations to T-Mobile on July 1, 2021. As a result of the successful sale, we are very pleased to return over $936 million in value to our shareholders via a special dividend.” said President and CEO, Christopher E. French. “We made strong progress in the second quarter in growing our broadband networks and data subscribers and reducing our operating expenses to align with our broadband and tower businesses. The combination of these actions has led to outstanding revenue and Adjusted OIBDA growth rates in the second quarter and have positioned us well for sustainable growth in future periods.”


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

Consolidated Second Quarter 2021 Results

  • Revenue in the second quarter of 2021 grew 11.7% to $60.7 million, compared with the second quarter of 2020, due to the growth of 12.2% in Broadband and 8.3% in Tower segments.

  • Adjusted OIBDA in the second quarter of 2021 grew 29.6% to $16.3 million, compared with the second quarter of 2020, due to growth in Broadband and Tower of 2.5% and 9.3%, respectively. Corporate expenses declined 30.0% from the same period a year ago due to lower compensation, legal and professional fees.

  • Operating income in the second quarter of 2021 was $2.7 million compared with a loss of $1.9 million in the second quarter of 2020.

  • Earnings from continuing operations per diluted share was $0.04 in the second quarter of 2021 and earnings from discontinued operations grew 74.6% to $1.03 per diluted share from the second quarter of 2020.


Broadband

  • Total broadband data Revenue Generating Units ("RGUs") as of June 30, 2021, were 111,475, representing 20.3% year over year growth. Penetration for incumbent cable, Glo Fiber and Beam were 49%, 15% and 4%, respectively, compared to 44%, 10% and 0%, respectively, as of June 30, 2020. Total Glo Fiber and Beam passings grew year over year by approximately 33,200 and 21,800, respectively.

  • Broadband revenue in the second quarter of 2021 grew $6.1 million or 12.2% to $56.2 million compared with $50.1 million in the second quarter of 2020, primarily driven by a $6.3 million or 16.7% increase in Residential & SMB revenue on a 20.3% increase in broadband data RGUs. RLEC revenue declined by $0.4 million, or 8.8%, to $3.7 million, primarily driven by the migration of DSL subscribers to our Broadband cable modem service, and lower governmental support. We expect RLEC revenue to continue to decline.

  • Broadband operating expenses in the second quarter of 2021 were $47.7 million compared to $40.6 million in the second quarter of 2020, driven by costs incurred to support the growth of Glo Fiber and Beam fixed wireless, including a $1.4 million increase in depreciation, a $1.2 million increase in compensation and commissions expenses primarily from increased staffing, a $1.0 million increase in software and professional fees due to enhancements in our back-office systems, a $0.7 million increase in maintenance and line costs from growth in our network, a $0.6 million increase in advertising, a $0.5 million increase in telemarketing fees, a $0.5 million increase in franchise and regulatory fees, and a $0.5 million increase in programming fees.

  • Broadband Adjusted OIBDA in the second quarter of 2021 grew 2.5% to $20.3 million, compared with $19.8 million for the second quarter of 2020.

  • Broadband Operating income in the second quarter of 2021 was $8.5 million, compared to $9.5 million in the second quarter of 2020.


Tower

  • Tower revenue in the second quarter of 2021 grew 8.3% to $4.6 million, compared with the second quarter of 2020, due to an 8.5% increase in tenants.

  • Tower Adjusted OIBDA in the second quarter of 2021 grew 9.3% to $3.0 million, compared with $2.7 million for the second quarter of 2020, due to revenue growth and steady expenses.

  • Tower operating income in the second quarter of 2021 was $2.5 million, compared to $2.2 million in the second quarter of 2020.


Other Information 

  • On July 1, 2021, pursuant to the previously announced Asset Purchase Agreement, dated May 28, 2021, between Shentel and T-Mobile USA, Inc. (“T-Mobile”), Shentel completed the sale of its Wireless assets and operations to TMobile for cash consideration of approximately $1.94 billion, inclusive of the approximately $60 million settlement of the waived management fees by Sprint Corporation, an indirect subsidiary of T-Mobile, and net of certain transaction expenses (the “Transaction”).

  • The Company currently expects the after-tax proceeds from the Transaction to be approximately $1.5 billion. The Company used approximately $684 million of the proceeds to fully repay all outstanding principal amounts under, and terminate, the then-existing credit agreement (the "Prior Credit Agreement") and to fully repay and terminate the interest rate swaps. The remainder of the proceeds will be used to fund a special dividend of $18.75 per share on the issued and outstanding shares of the Company's common stock (the "Special Dividend").

  • On July 1, 2021, we entered into a new Credit Agreement (the “New Credit Agreement”) with various financial institutions party thereto. The New Credit Agreement provides for three credit facilities, in an aggregate amount equal to $400 million: (i) a $100 million five-year revolving credit facility, (ii) a $150 million five-year delay draw amortizing term loan and (iii) a $150 million seven-year delay draw amortizing term loan. We have not made any borrowing under the New Credit Agreement as of the date of this press release. We do not currently expect to draw upon any portion of the New Credit Agreement until the fourth quarter of 2021.

  • On July 2, 2021, the Company’s Board of Directors declared a special dividend of $18.75 per share on the issued and outstanding shares of the Company’s common stock (the “Special Dividend”). The Special Dividend is payable on August 2, 2021 to shareholders of record as of the close of business on July 13, 2021. Since the Special Dividend is more than 25% of the current share price, in accordance with NASDAQ rules, the ex-dividend date will be August 3, 2021, the first business day after the payment date. The Company currently expects approximately $14.5 million of the Special Dividend to be reinvested in shares of the Company’s common stock via the Company’s Dividend Reinvestment Plan. The reinvested dividends are expected to be used to purchase shares of the Company’s common stock in market transactions during the thirty days following the dividend payment date. The total payout to Shentel shareholders, before any reinvestment via the Company’s Dividend Reinvestment Plan, will be approximately $937 million.

  • The Company currently expects to incur approximately $5.1 million of severance expense during 2021, with approximately $2.1 million attributable to continuing operations and $3.0 million related to discontinued operations. Approximately $1.2 million of severance expense was recognized during the first half of 2021, with $0.7 million related to continuing operations and $0.5 million related to discontinued operations. The remaining severance expenses are expected to be incurred in the third quarter of 2021 following the sale of our Wireless operations. The workforce reduction is expected to decrease the Company's annualized run-rate operating expenses for continuing operations by approximately $4 million.

  • Cash and cash equivalents grew sequentially $19.6 million to $248.8 million as of June 30, 2021 driven by strong cash flow from discontinued operations. Giving effect to the closing of the Transaction, the Special Dividend, termination of the Prior Credit Agreement, and the execution of the New Credit Agreement, as if those events had occurred on June 30, 2021, the Company would have had approximately $480 million of liquidity on a pro forma basis.

  • Capital expenditures were $79.6 million for the six months ended June 30, 2021 compared with $52.9 million in the comparable 2020 period. The $26.7 million increase in capital expenditures was primarily due to higher spending in the Broadband segment driven by the expansion of Glo Fiber and Beam.

     

Conference Call and Webcast

Teleconference information:

Date: July 30, 2021

Time: 8:00 AM ET

Dial in number: 1-888-695-7639

Password: 7086645

Audio webcast: https://investor.shentel.com/

An audio replay of the call will also be available approximately two hours after the call is complete, through August 29, 2021 by calling (855) 859-2056.



About Shenandoah Telecommunications 

Shenandoah Telecommunications Company (Shentel) provides broadband services through its high speed, state-of-the-art cable, fiber optic and fixed wireless 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 7,000 route miles of fiber and 223 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, 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 and Chief Financial Officer

540-984-5168

Jim.Volk@emp.shentel.com

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