Exhibit 99.1
Unaudited Pro Forma Condensed Consolidated Financial Information
Effective as of March 29, 2024, Shenandoah Mobile, LLC, a wholly-owned subsidiary of Shenandoah Telecommunications Company (the “Company”), completed the previously announced sale of substantially all of the Company’s tower portfolio and operations (“Tower Portfolio”) to Vertical Bridge Holdco, LLC for $309.9 million in cash (the “Transaction”). The Transaction was completed pursuant to the terms of Purchase and Sale Agreement, dated February 29, 2024, as amended by Amendment No. 1 to the Purchase and Sale Agreement, dated March 29, 2024.
The sale of the Tower Portfolio is considered a significant disposition for purposes of Item 2.01 of Form 8-K. As a result, the Company prepared the accompanying unaudited pro forma condensed consolidated financial information in accordance with Article 11 of Regulation S-X.
The Company has not previously reported its operations of the Tower Portfolio as discontinued operations in its consolidated financial statements included in Form 10-K for the year ended December 31, 2023. The accompanying unaudited pro forma condensed consolidated statements of comprehensive income (loss) for the years ended December 31, 2023, 2022 and 2021 give effect to the divestiture as if it had occurred on January 1, 2021. The unaudited pro forma condensed consolidated financial information only present financial results through continuing operations attributable to the Company and excludes any historically reported discontinued operations other than those of the Tower Portfolio. The accompanying unaudited pro forma condensed consolidated balance sheet gives effect to this divestiture as if it had occurred on December 31, 2023, the date of the Company’s most recently filed balance sheet.
The unaudited pro forma condensed consolidated financial information should be read in conjunction with the consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Form 10-K for the year ended December 31, 2023, filed with the SEC on February 21, 2024.
The unaudited pro forma condensed consolidated financial information is presented based on assumptions, adjustments, and currently available information described in the accompanying notes and is intended for informational purposes only. The unaudited pro forma condensed consolidated financial information is not necessarily indicative of what the Company’s results of operations or financial condition would have been had the divestiture been completed on the dates assumed. In addition, it is not necessarily indicative of the Company’s future results of operations or financial condition. Actual adjustments may differ materially from the information presented.
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | ||||||||||||||
Unaudited Pro Forma Condensed Consolidated Balance Sheet | ||||||||||||||
December 31, 2023 | ||||||||||||||
(in thousands) | ||||||||||||||
Historical | Transaction Accounting Adjustments | Unaudited Pro Forma Continuing Operations | ||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 139,255 | $ | 305,033 | a | $ | 444,288 | |||||||
Accounts receivable, net | 19,782 | — | 19,782 | |||||||||||
Income taxes receivable | 4,691 | — | 4,691 | |||||||||||
Prepaid expenses and other | 11,782 | — | 11,782 | |||||||||||
Current assets held for sale | 561 | — | 561 | |||||||||||
Total current assets | 176,071 | 305,033 | 481,104 | |||||||||||
Investments | 13,198 | — | 13,198 | |||||||||||
Property, plant and equipment, net | 879,499 | (29,162 | ) | b | 850,337 | |||||||||
Goodwill and intangible assets, net | 81,123 | — | 81,123 | |||||||||||
Operating lease right-of-use assets | 50,640 | (36,237 | ) | b | 14,403 | |||||||||
Deferred charges and other assets | 13,698 | (2,137 | ) | b | 11,561 | |||||||||
Total assets | $ | 1,214,229 | $ | 237,497 | $ | 1,451,726 | ||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Current maturities of long-term debt, net of unamortized loan fees | $ | 7,095 | $ | — | $ | 7,095 | ||||||||
Accounts payable | 53,546 | — | 53,546 | |||||||||||
Advanced billings and customer deposits | 13,241 | (847 | ) | b | 12,394 | |||||||||
Accrued compensation | 11,749 | — | 11,749 | |||||||||||
Current operating lease liabilities | 3,081 | (878 | ) | b | 2,203 | |||||||||
Accrued liabilities and other | 9,643 | (1,816 | ) | b | 7,827 | |||||||||
Total current liabilities | 98,355 | (3,541 | ) | 94,814 | ||||||||||
Long-term debt, less current maturities, net of unamortized loan fees | 292,804 | — | 292,804 | |||||||||||
Other long-term liabilities: | ||||||||||||||
Deferred income taxes | 88,147 | (2,087 | ) | b | 86,060 | |||||||||
Asset retirement obligations | 10,069 | (9,516 | ) | b | 553 | |||||||||
Benefit plan obligations | 3,943 | — | 3,943 | |||||||||||
Non-current operating lease liabilities | 48,358 | (39,534 | ) | b | 8,824 | |||||||||
Other liabilities | 19,883 | (3,550 | ) | b | 16,333 | |||||||||
Total other long-term liabilities | 170,400 | (54,687 | ) | 115,713 | ||||||||||
Shareholders' equity: | ||||||||||||||
Common stock | — | — | — | |||||||||||
Additional paid-in capital | 66,933 | — | 66,933 | |||||||||||
Retained earnings | 584,069 | 295,725 | a,b | 879,794 | ||||||||||
Accumulated other comprehensive income | 1,668 | — | 1,668 | |||||||||||
Total shareholders' equity | 652,670 | 295,725 | 948,395 | |||||||||||
Total liabilities and shareholders' equity | $ | 1,214,229 | $ | 237,497 | $ | 1,451,726 |
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | ||||||||||||
Unaudited Pro Forma Condensed Consolidated Statement of Comprehensive Income (Loss) | ||||||||||||
Year Ended December 31, 2023 | ||||||||||||
(in thousands) | ||||||||||||
Historical | Transaction Accounting Adjustments (c) | Unaudited Pro Forma Continuing Operations | ||||||||||
Service revenue and other | $ | 287,379 | $ | (18,247 | ) | $ | 269,132 | |||||
Operating Expenses: | ||||||||||||
Cost of services exclusive of depreciation and amortization | 106,101 | (5,251 | ) | 100,850 | ||||||||
Selling, general and administrative | 103,631 | (1,412 | ) | 102,219 | ||||||||
Impairment expense | 2,552 | — | 2,552 | |||||||||
Depreciation and amortization | 65,471 | (2,103 | ) | 63,368 | ||||||||
Total operating expenses | 277,755 | (8,766 | ) | 268,989 | ||||||||
Operating income (loss) | 9,624 | (9,481 | ) | 143 | ||||||||
Other income: | ||||||||||||
Other income, net | 1,387 | — | 1,387 | |||||||||
Income (loss) from continuing operations before income taxes | 11,011 | (9,481 | ) | 1,530 | ||||||||
Income tax expense (benefit) | 2,973 | (2,479 | ) | 494 | ||||||||
Income (loss) from continuing operations | $ | 8,038 | $ | (7,002 | ) | $ | 1,036 | |||||
Basic - Income (loss) from continuing operations | $ | 0.16 | $ | (0.14 | ) | $ | 0.02 | |||||
Diluted - Income (loss) from continuing operations | $ | 0.16 | $ | (0.14 | ) | $ | 0.02 | |||||
Weighted average shares outstanding, basic | 50,396 | — | 50,396 | |||||||||
Weighted average shares outstanding, diluted | 50,715 | — | 50,715 |
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | ||||||||||||
Unaudited Pro Forma Condensed Consolidated Statement of Comprehensive Income (Loss) | ||||||||||||
Year Ended December 31, 2022 | ||||||||||||
(in thousands) | ||||||||||||
Historical | Transaction Accounting Adjustments (c) | Unaudited Pro Forma Continuing Operations | ||||||||||
Service revenue and other | $ | 267,371 | $ | (18,460 | ) | $ | 248,911 | |||||
Operating Expenses: | ||||||||||||
Cost of services exclusive of depreciation and amortization | 107,546 | (5,267 | ) | 102,279 | ||||||||
Selling, general and administrative | 92,392 | (1,279 | ) | 91,113 | ||||||||
Restructuring expense | 1,251 | — | 1,251 | |||||||||
Impairment expense | 5,241 | — | 5,241 | |||||||||
Depreciation and amortization | 68,899 | (2,416 | ) | 66,483 | ||||||||
Total operating expenses | 275,329 | (8,962 | ) | 266,367 | ||||||||
Operating loss | (7,958 | ) | (9,498 | ) | (17,456 | ) | ||||||
Other expense: | ||||||||||||
Other expense, net | (1,348 | ) | — | (1,348 | ) | |||||||
Loss from continuing operations before income taxes | (9,306 | ) | (9,498 | ) | (18,804 | ) | ||||||
Income tax benefit | (927 | ) | (2,499 | ) | (3,426 | ) | ||||||
Loss from continuing operations | $ | (8,379 | ) | $ | (6,999 | ) | $ | (15,378 | ) | |||
Basic - Loss from continuing operations | $ | (0.17 | ) | $ | (0.14 | ) | $ | (0.31 | ) | |||
Diluted - Loss from continuing operations | $ | (0.17 | ) | $ | (0.14 | ) | $ | (0.31 | ) | |||
Weighted average shares outstanding, basic | 50,155 | — | 50,155 | |||||||||
Weighted average shares outstanding, diluted | 50,155 | — | 50,155 |
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | ||||||||||||
Unaudited Pro Forma Condensed Consolidated Statement of Comprehensive Income (Loss) | ||||||||||||
Year Ended December 31, 2021 | ||||||||||||
(in thousands) | ||||||||||||
Historical | Transaction Accounting Adjustments (c) | Unaudited Pro Forma Continuing Operations | ||||||||||
Service revenue and other | $ | 245,239 | $ | (17,048 | ) | $ | 228,191 | |||||
Operating Expenses: | ||||||||||||
Cost of services exclusive of depreciation and amortization | 102,299 | (5,005 | ) | 97,294 | ||||||||
Selling, general and administrative | 82,451 | (1,197 | ) | 81,254 | ||||||||
Restructuring expense | 1,727 | — | 1,727 | |||||||||
Impairment expense | 5,986 | — | 5,986 | |||||||||
Depreciation and amortization | 55,206 | (2,053 | ) | 53,153 | ||||||||
Total operating expenses | 247,669 | (8,255 | ) | 239,414 | ||||||||
Operating loss | (2,430 | ) | (8,793 | ) | (11,223 | ) | ||||||
Other income: | ||||||||||||
Other income, net | 8,665 | — | 8,665 | |||||||||
Income (loss) from continuing operations before income taxes | 6,235 | (8,793 | ) | (2,558 | ) | |||||||
Income tax benefit | (1,694 | ) | (2,175 | ) | (3,869 | ) | ||||||
Income (loss) from continuing operations | $ | 7,929 | $ | (6,618 | ) | $ | 1,311 | |||||
Basic - Income (loss) from continuing operations | $ | 0.16 | $ | (0.13 | ) | $ | 0.03 | |||||
Diluted - Income (loss) from continuing operations | $ | 0.16 | $ | (0.13 | ) | $ | 0.03 | |||||
Weighted average shares outstanding, basic | 50,026 | — | 50,026 | |||||||||
Weighted average shares outstanding, diluted | 50,149 | — | 50,149 |
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
a. | Adjustment represents the net cash proceeds from the sale of the Tower Portfolio as if the closing date was December 31, 2023. |
b. | Adjustment reflects the elimination of the assets and liabilities of the Tower Portfolio due to the Transaction. |
c. | Adjustments include the removal of historical operations of the Tower Portfolio and the addition of intercompany revenue and cost of services from continuing operations of the Company previously eliminated in consolidation. |