SHEN - Earnings call transcript Q2 2021 | Shenandoah Telecommunications Company

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Operator

Good morning, everyone. Welcome to Shenandoah Telecommunications Second Quarter 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Kirk Andrews, Director of Financial Planning and Analysis for Shentel. ahead. go Please

Kirk Andrews

thank today's and the joining The us. quarter Good is you to of call XXXX. for review purpose of morning, for Shentel's second results

announcing With the night, and a Our will today Executive session. will Executive announced call. the release be Senior are this today. that of Investor website, later and Chris Operating reviewing press Officer; an McKay, and our Vice on the call The press on at made set the Volk, Finance Chief Please CFO. this us release H. is results available and a and included presentation in forth French, details call distributed Chief www.shentel.com. were Vice page we audio be After conduct we'll question-and-answer Jim of President in last remarks, Officer; our President are note President Edward prepared replay

uncertainties. me contains and may let statements always, conference refer call to of include Slide harbor X we These filings, detailed to provided our may of differ our discussion you have this remind in risks risk certain safe As various factors and a subject which the our statements. you're presentation, that results to which forward-looking materially SEC to from cause encouraged Therefore, you the review. actual disclaimer,

or to will over update Chris. forward-looking as I required Except the publicly call statements. any by With to these undertake Go not to on cautioned we no reliance ahead, turn You're obligation undue place forward-looking now law, Chris. that, revise statements.

Chris French

of It their our following very shortly. our the the facility with us to on business, special fully X.The is hope totaling this Broadband Board provide us $XXX details since T-Mobile, our growth on Jim X.As but business, Wireless sale growing Sprint more Thanks, to completed July our be growing on significant return broadband broadband business. to share staying announced T-Mobile closed million. Shentel to paid everyone repaid morning, shareholders, passings allows passings. XXX,XXX per value special and merger financing term provide Kirk. sale, an loans totaling and from $XXX joining that years business chapter focus appreciate healthy expand history have a billion we've dividend, $XXX we our to on dividend our look XX-year approved capital successfully million, sale financing safe. and X a The XXX,XXX I outstanding of homes all of everyone approximately temporarily operations and $XX.XX Directors took delever Immediately $X.XX will new to and August in the will million pleased we we're networks and completes and of our assets to our the on will forward We rapidly

the quarter, structure our second exit the and million to announced in allow savings quarter. rate During broadband as us will second April annual in we run continuing also in we tower realize cost $X.X around began to transform that operations workforce our We cost reductions businesses.

broadband run savings as million As and announced enter we we to cost the now to we previously expect complete XXXX.Shifting these quarter $X the exit Slide annual we to reductions, third grow expansion million as $X.X our on X. rate network

added under the strong XXX,XXX. now with quarter new continued the second with We momentum XX,XXX just total in construction being our passings passings

in of doubling of Home of to Fiber the Our including Roanoke the branded and the last in passings, launch XX,XXX business service the Glo X Lynchburg markets Virginia pace quarters, April. new Fiber added the

over service counties. XX,XXX quarter West X the now to wireless X,XXX fixed over Beam with Virginia available Virginia network added Beam Our in during homes passings our and

data Broadband of end to the to in our due seasonal broadband several Slide integrated over student churn net markets. college despite additions X,XXX, reach of primarily were approximately XXX,XXX by expect passings our XXXX.Turning move-outs network bump X. We a to in

several next a the and our quarters the drivers The adjusted during second adds. trend was years. over turning net in additions now outstanding second XX% over net the last our in Data Fiber corporate Beam in Glo the OIBDA expenses growth this over quarter the reduction net and point contributing We of and anticipate were several pivotal of will primary with quarter. additions revenue the continue mix

XX introduce been serving Engineering over to the financial of with H. outstanding our leader of Chief been our results, for to in the Vice broadband has who Ed centric our Fiber Operations. review growth of McKay, most and Shentel Before lead and recently growth Officer Ed financial turning making the I'd Jim -- Senior our instrumental Operating on recently natural and I'll now to call as promoted successor chapter launch details into has a was Edward call the services, is and of to to operations years, him X. the Beam to like new July With President results. the over our Glo next turn that, business. an

Jim Volk

year revenue Broadband million the offset higher by adjusted expenses. of expenses Fiber second partially $X.X commission $X.X the period and of including million, declined primarily the broadband other to lower The revenue Please and X.X% revenue, a increase of advertising Thank million compensation, Slide XX.X% or data Chris, for $XXX,XXX grew was $XXX,XXX residential $XX.X X.X% by million services, of fewer XX.X% OIBDA costs. increase and in and driven from due from revenues our to our refer Beam $X in from million $X.X and results quarter million for Broadband $X.X you, million, second increase RGUs. $XX.X in RLEC the and DSL to XX.X% of to primarily a discuss $X.X government financial grew same an or subscribers good to or line of expansion the X and quarter. morning, Glo and maintenance everyone. $X.X of support. expense, million supported $XXX,XXX telemarketing million increase SMB ago.

Software and back to fees $X million increased systems. due our office -- enhancements to in professional our

a We regulatory grew quarter video adjusted increase and second X. million, to increase recurring $XXX,XXX due franchise grew for also fees X.X% in $X.X revenues totaling non-recurring Slide in and X.X% of fees to segment Tower OIBDA XXXX, of $XXX,XXX.On million tenants. to the X.X% incurred and a in $X programming an growth

The fees. Moving the grew Consolidated Tower second $XX.X Consolidated were XX.X% legal the decline customer, T-Mobile were the adjusted expenses revenue. The XX.X% note corporate X.X% revenues expenses. of to of to and a to quarter effective XX% and with sale, Please and due now that OIBDA become $XX.X revenue approximately Slide representing XX. corporate professional in to our due XXXX. million combination in strong million. will Wireless in to Broadband primarily a for quarter increases grew consolidated lower decline growth compensation, of largest

Turning XX. now to on full year Slide XXXX outlook

the Wireless from second our with due operations. an $XXX.X discontinued $XX $XXX related as OIBDA sale midpoint million, around $XX We of to the expected non-recurring end $XX.X million of with to our million quarter and the of $XXX from XXXX outlook range. We revenues million million of cash cash expenses, And strong range equivalents XXXX quarter the to flow adjusted increase free ended due segment to first million Wireless the the the reported higher consolidated reaffirming transaction. are to expected in lower primarily

special and noted liquidity pro new that transactions Slide position We for dividend forma Wireless reflect XX. the our the to financing earlier. Moving sale, Chris

terms facility until over facility quarter the consists million in million income summarized $XXX we sale. until Slide delayed not XXXX.On the closed expect fourth X. on new we of of We do when payments will positive plan XX, fully to a July make million million We The of estimated of new our draw term fund in $XXX cash key certain to liquidity free line loans, credit. draw tax business facility return related the we revolving we the to credit that flow in expect on Wireless $XXX $XXX

financial new acquisition have incremental facility opportunistic reflecting net to debt our that total with will and facility the allow the business. strong broadband attractive, We add Xx our credit mergers to profile centric front. significant up Pricing us is on leverage of be of the flexibility new to

to the now, the turn from leverage to of And net I'll Ed. generally below be most X.XXx of acquisitions. for total excluding potential over any call impact ratio expect the the life facility, We the

Edward H. McKay

our Thanks, good and Jim, primary product Slide show XX, X everyone. offerings. morning, we where I'll begin on

and Shentel Our and and services serve both networks Kentucky. small TV cable homes Maryland rural in towns incumbent XXX,XXX broadband, gigabit Virginia, cable Virginia, areas West voice across businesses in services with

per build and now XX% from Fiber starting second OurGlo rural of markets our an density with businesses our lower increase where wireless prohibitive Fiber over passed of of XX,XXX urban our it almost be cost cable. Internet edge-out represents service targets XXXX.Our services. fiber fixed service can Beam Shentel existing homes fiber utilities higher higher our rate. or suburban have This and areas, penetration to cost density service pass, areas targets or areas to We XXX,XXX to-date, neighborhoods have These we also between to quarter to have lower density be a target to areas. in tend also construct into Based increased passing suburban but Glo a $X,XXX and less performance higher $X,XXX where for lower to increased suburban our XX%, areas underground. on and these typically has we target and density as our terminal broadband is with to original Glo while cost the penetration

Broadband our industry-leading business out sustainable we our the growth expect to build next continue have We networks years. several to as over

to Slide XX. Turning

Glo now rapidly of networks. depicted incumbent cable, fiber X,XXX wireless expanding route Fiber connecting network our consists have and fixed our broadband miles broadband over We of

in the launching Beam footprint, of our In Borough X counties, agreements Pennsylvania. and additional and Hempfield reached service launched Lancaster, in outside and township Mountville Roanoke Virginia to Glo quarter, Virginia. first in addition during West Lynchburg, X franchise with wireless we county fixed In we East our Fiber in Virginia service second

approximately prior in in broadband quarter, to a results XX. on to added the our cable of total year. XX.X% the quarter move significant XXX,XXX incumbent compared business, starting nearly about X,XXX the in compared RGUs grew same almost In year-over-year to increase during This Slide quarter period year. the operating same is We on to our prior RGUs Let's the period the end net the to in X% XXX,XXX second with second XXX,XXX.

of customer with primary also year cable quarter. metric our our value and operations broadband this in increased behind overall satisfaction. field from customer second success. last the the Net in broadband penetration card, Shentel incumbent research service our quarter are indicator The service rate Our leverages the combined an XX.X% XX.X% Score of drivers improvements Promoter of to data as

average We over XXXX of revenue quarter per an second years, to broadband customer Scores data a quarter increased a dramatic the modestly seen this have the from XX.X% the the in in a Promoter past growing in versus second quarter user per in of second, X rate year. XX% period or Net our $XX.XX, increase to of our of rating data Broadband DSL subscribers by the rating subscribed speed megabits XX year our of on second prior XX competitors. higher, our are well megabits with driven reach average broadband per the Powerhouse-branded card. plans is beyond now download which of XX%

the year-over-year levels. pre-COVID Although churn churn to by X.XX%, than in points remains second basis XX increased quarter significantly lower

for across We Glo penetration all XX broadband Slide approximately with a rate the had second of to end total Turning at X,XXX XX.X% business. RGUs Fiber aggregate quarter markets. the our data

X.XX%, X,XXX increased to rate but year-over-year did customer number the X,XXX.Our was at churn prior Our on extremely relationships increase year quarter end customer almost an Glo over data the XX points base. small basis broadband Fiber year-over-year based to

the very continue strategy year-over-year small and Glo and ARPU to quarter. bullish edge-out service. to broadband was on our on Fiber business our down fiber be for residential churn low $XX.XX We

a adopted gig of X Fiber base, XXXX, deferred is comprises to In new this the which speed level customer subs product increase of of to for the from second beginning the XX% accounting now quarter the tier, However, revenue the an XX% of due change quarter-over-quarter. account Glo level. year overall of our X%

and with of quarter. residential as quarter released our passings same approximately mature higher passings Stanton, we We fourth first than target Glo have And new quarter to more Low now months. quarter construction penetration our the have Glo than attachment were this to municipalities of Virginia small the well construction in of the the XX% passed sales. data we approved of of and fixed goal broadband work Glo the Our multi-gigabit, approved Beam in last in of have latency respectively. reached and to constructed our almost our X,XXX On markets second approved all and franchise 'XX new and a XXX,XXX, XX.X%, rate for passings And end years. XX continue broadband rates our XX% of and respectively. was the XX,XXX markets Fiber in XX% double-play exceed and a perform is XX.X% in next business very XXXX, with add the markets surrounding depicts XX% markets counties to all low and XX% in and the in reached toward results in as plans. now quarter, penetration Engineering we our most were early only, of Fiber streaming continue our after status year. period active these Harrisonburg now passings households Glo highlighted voice the XX, Slide XXXX, of TV as we single-play Internet XXX,XXX launched we neighborhoods of have now end and customers wireless and only XX% Broadband symmetrical, to triple service. service the underway work play. bringing were X% in several XX,XXX emerging services second At Slide

of this small a cells gain a service spectrum, mid-band gigahertz standards-based fixed same quarter, sites have customers' customers. Beam wireless high XG are the commercial-grade antennas low predominantly and provide a and for and home on and licensed new completed total XX X.X now is robust technology a the gigahertz latency LTE that As sites network, and we fiber-fed. We X X.X air. towers new incumbent WiFi technology using the purpose-built outdoor Internet leveraging that ready we our We highly at Fiber reliable, reminder, second Glo in and indoor leverage cable

markets penetration this investment Beam in year. target our the now service about X.X%. the by cable of RGUs XX% households, rural currently past low-density broadband or quarter, increased options. by the available over have XX,XXX this double are number we approximately Our early-stage without areas our fiber target Internet expect to and in We We end data to and is

are numbers ARPU of by our strong our of We encouraged X% churn and $XX. approximately over

of adopting approximately second to XX tier. X/X per the megabit continue our see per We customers month, $XX speed

of XX. of as tower including intercompany XXX wireless market. includes Slide our This XG quarter, At begin X.X% upgrades network to related XX a of existing tenants, or second to new the build to primarily increased tenants, Total tenants of open XXX backlog applications for XXX. from year-over-year tenants end Turning we operations. the DISH national our orders to the they addition had their in

commercial were $XX spending continued capital provides expansion wholesale operations and approximately XXXX. Finally, Capital are our our and in million, of the Fiber $XX $X Beam Slide business, increase, increase continuing XX our current for million broadband success-based to with year-to-date year-to-date drivers legacy same through expenditures the data of penetration. and business in spending investments results and XXXX. capital Internet of the almost million in period respectively. million capital in and $XX Of the our Glo quarter time the support guidance $XX broadband growth million $XX compared our behind million in in approximately in second is for wireless fixed XXXX fiber

confirming our networks. spending guidance and We $XXX on of the are $XXX in year and as expanding aggressively fiber we broadband capital between continue our for to million invest million

spending range. ready on we are Thank capital high-end that much. we're of And Given our for construction, very Fiber likely in to now the accelerated operator, come Glo you questions.

Operator

Raymond [Operator comes line the Ric question Instructions] Prentiss first Our of from with James.

Ric Prentiss

of couple a Just questions.

as as of for chain of chain kind your we well homes questions out the to related First, bit we the to building force Beam Talk questions. little listen to and a supply the a there, hit and labor lot the Glo what's out supply targets as passed. about get us COVID on

Edward H. McKay

Ric, I'll Yes, this is that. Ed. comment on

ordering for now a We And year as our advance. our the We're construction, right in a we of have materials customer in year Fiber over We're a fiber CPE warehouse. definite required well. in and have premise ordering lead-times equipment a that seen advance increase lot Glo as well. includes now for raw fiber in

because on had labor construction at closely any we're getting supply build contractors into very well, a this to impact So we our chain that network monitoring had up that closely. schedule perspective, our any this but as issues, From we're but we have problems not point, have our to not of point, monitoring networks.

Ric Prentiss

then, And busy summer continue a looks obviously, been like to very so be busy. far,

us there anything is You the what couple the happening of talk little you on bit to near mentioned Can footprint? your front. footprint a of and out times universe, in broadband both outside maybe about opportunistic M&A

Edward H. McKay

pretty we're of growth I'd organic our high this lot say our but end in disciplined opportunities now, we're We our but significant a M&A believe in just there's have monitoring closely. right approach. we not near very upside footprint, being plan, valuations,

Ric Prentiss

large outside And ones around that out any shopped there? footprint, are anything being

Edward H. McKay

No. this Nothing at point to on. comment

Ric Prentiss

tower you targeting XXX the you happen final How of towers? we And what think business. one on mentioned to about time for the You get guys with mentioned How might consolidated the should related portfolio? potential the backlog, kind what's the tower think amendment on for and And new the revenues. X.X% should process are me, of we question, T-Mobile's orders churn? colos about

Edward H. McKay

particularly far It's provisions expect most don't now that we that the a don't embedded until Sprint in agreement, at have until governed in a revenue that We of But a Network of be cell certainly network. to with there strategic fourth don't And has But turn impact occur that point. the that's but think network. happen process. this out, rationalization the separate after exact some terminations the see that to rationalization DISH typically they don't details the revenue consider provide of T-Mobile, backhaul portfolio XXXX.As likely will We standpoint, that long tower XXXX. that. a see build site until expect as quarter, of general, from early a we We'll in some T-Mobile, that new CDMA we from to fairly be under tenants, we we industry asset. to standard down won't

monetizing consider the credit that future to equity issuing more would we broadband opposed or a So to transformative in future. the in issuing fund as acquisition

Operator

the from comes Day with Dan question Securities. B. next Our of Riley line

Dan Day

-- believe. same Glo targeted level provide What that's So kind of think the numbers? looking miss for and those for for happen maybe Beam of targets on and and to of and just materially passed need I for kind might homes you the Just the in of rates, for just respectively, on needs can or the coming XXXX, years? exceed question XXX,XXX/XXX,XXX to numbers you for some about what commentary either the and puts penetration then sort takes variance those we to --

Edward H. McKay

Well, plan at good feel point. the about construction we this very

actively we've right doing earlier, As where pipeline passed franchised and said now. have over engineering in we we're already construction XXX,XXX households the work

So there. we the construction feel good very about

prepared market funding as eye Fiber keeping for resources the But funding the We as state our that. with do incumbent ability of so of home. an is the think increases, That going and believe opportunity Glo the of Glo total to the to is our we service, are be Glo an have that that's we example, additional opportunity home our that out proposed, than for some Beam Virginia, to could opportunity for funding shift more or from us. us right broadband to probably to there there. Fiber to build needed, with to that threat a could on Beam we're We do be to addressable the that's out Glo. in decrease universal We not now of in either with level that business areas broadband serve, available

Dan Day

then Beam. And on follow-up for pricing a

that only know Just hundred it's a subscribers -- days very I in now. early couple of right product,

Just that Just think How new from Do especially pricing pricing? would anything X/X, of always to right, you tier, you it have satellite? on maybe you sounds for how like a do about product. maybe it's are middle out higher -- pricing think that great. tweaking do do switching it in be sort think you tier. How about tough

Edward H. McKay

per -- meg most have XX it then per we these moved month month XXX And me, meg XX have we $XXX important. per have X at $XX. or tiers at We currently. right, excuse with a rural $XX think -- $XX per out with plan higher month. We But meg plan plan, is think we month, to customers, start I then a reliability

be believe an we to DSL. have priced for advantage could So ISPs there. we're already over believe go per we month $XXX a service. and up other they against meg also typically, wireless satellite XX be And charging we very competitively that And may

to I service pay reliability So reliable believe out markets. these that will key. think these rural is get We the in customers

Dan Day

customers of anything that speeds, commentary so can program, that EBV upgrading The coming number you a would you material And are provide it because mostly around that? around in customers any seeing of new just program? or Is far great. existing be

Edward H. McKay

So we been of now, vast customers. have majority have total XXX them right EBB existing about The customers.

point. But team, not leave we're at program. new whole are that sales can get this materials So EBB having customers traction lot with our something door-to-door the into so of is a we that customers with behind seeing

Operator

of Our line Hamed comes next from question Khorsand with Financial. BWS the

Hamed Khorsand

in COVID as subscription seeing consumer first now ask, that far you're I churn habits the to want as restrictions just and So much any looser? off, if changes are

Edward H. McKay

is slightly, was but than we for pre-COVID up mentioned, lower is as much it levels. Churn it

product So positive increase our but change. slight we very, all a churn, not have lines. across in dramatic of A seen very it's still

Hamed Khorsand

quite cable pre-COVID? in that adds the of bit. Is your But to a were seasonality down a return

Edward H. McKay

a from Correct. yes, -- that The are COVID quite tailwinds decreasing. But net adds bit. the were that's is going down

we last in how adds going we to as COVID. opposed be were year in with middle of quarter So the our line expect more forward net this to

represents net to to this see in quarter to incumbent accelerate. in business, and starting towards our what But -- Glo of going expect forward. our think were past to net adds and and the shift our we're we likely Over Glo XX% quarter adds see is a in we are cable that We see Beam. Beam, continue

Hamed Khorsand

as Do far that being T-Mobile? revenue, would And a have X.X% for? of how T-Mobile you last time frame long from as

Edward H. McKay

still We plan at yet. on their do We details have not don't this point.

don't conversations engaging we with them, update are time. an We at have that for just this but

Hamed Khorsand

then know a about but comment that? would questions there any that like previous make to I you is And acquisitions plans acquisitions, make the

Jim Volk

Yes. I one. Ed, if on this could in jump

great grow allow plan opportunistic in a business a a an us going have that's us create M&A growth value. to the would the years to I organic We here. and player quite of bit X lot view as shareholder next

We We've do are looking done some right crosses. acquisitions. for small maybe to tuck-ins, opportunity and and we'll if that bigger the continue something

Hamed Khorsand

But because I asking laid that the that was a of was out really robust. reason why questions, program you've is kind CapEx

would I that see you you lacking like, it? where it's do think to do somewhere. Or grow is cheaper you that to to So was acquisition want trying think

Jim Volk

allow a for And Glo so. be be bigger year generally hopefully announced the aren't have allow scale deals are Yes. It that bigger to tuck-ins as and platform been the launching. some have that a us expand They're it larger unique opportunity. -- opportunities. the will buying. tend very accretive. of then and scale something in Beam not On transformative, to as our last just a or acquisitions, We're and we're They would us those products deals more to frothy

Operator

the I Jim like Thank remarks. call questions you. at There are to now no closing Volk over would for Mr. turn time. to this further

Jim Volk

you thank of our dividend I the you. the been special shareholders, paid. we has again of want Early with progress pretty month. on loyal going you keeping being and for come progress. a being And everyone updated to to everyone thank look Thank transformation forward process kind we'll end forward. just our August, here call our Well, and busy for to our July joining following

Operator

today's participation. your concludes this gentlemen, and you Thank call. Ladies for conference

now disconnect. may You

Shenandoah Telecommunications (SHEN) 31 Jul 212021 Q2 Earnings call transcript