SHEN - Earnings call transcript Q1 2022 | Shenandoah Telecommunications Company

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Operator

Good morning, everyone. Welcome to the Shenandoah Telecommunications First Quarter 2022 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.

Kirk Andrews

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

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

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

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

Christopher French

total our healthy quarter and passings over across with newly staying this We constructed appreciate to XXX,XXX. on passings I We everyone and an broadband passings with our and all for bringing is the Slide first quarter expansion Fiber I'll of Kirk. our another of networks XX,XXX Glo joining X. Fiber broadband almost record XX,XXX Glo safe. ended us start had network morning, Thanks, everyone update on hope

well, very our teams our are XXX,XXX to Our reaching of and and executing goal way year-end. on we're engineering construction by well passings Glo

last added first net We additions X. quarter Glo Glo Slide than quarter high the than almost adds Fiber finished the in first about on to Glo We and Fiber this additions during into year. a data higher data the X,XXX note momentum and quarter XX% with April. fourth X,XXX XX% the of March were Turning with have seen continue XXXX contributing higher X,XXX. net The quarter net

over terminal and our range, data XXX the Our growth additions penetration data the expected With slower Cable quarter. by periods Incumbent driven recent but customers from first the our we approaching products, business. Incumbent quarter our all mid-XX% in added in XX% steady with near of now had of Cable business expect services, high-quality and [ph] during net and pricing. penetration outstanding local across our this broadband quarters, to customer service data delighting churn Similar retaining X.X% strong of fair another coming we

first fiber to our aggressive set Before call strategy, priorities goals. I'd to turning achieve Jim, have the over we that we've financial accomplish growth To like comment for long-term the on to ourselves members. our increased scale salary our increased further attract One important couple In retain focus people. to is areas. and highly we've our labor a of key priority in market, competitive investing today's team in our

first ERP year, These converted long-term technology support, upgrade of we've scheduling website decision to allows a for In a management new relationship team Although customer Cable Incumbent dispatching financial towards our and business customer new we've a online workforce this investments, continuing shentel.com in technicians. that lease for margin platform on On launched system, the these deployed for months installations ordering and drivers the a half with have long-term as results continuity overlapping replacement and in pressure operations to four we fees conversions accounting system conversion incurred new are for ERP dozen adjustments have systems. have operating key put expenses compensation success. and and along expense are our maintenance short-term similar to our added customer another note, made our and maintaining best quarter the first legacy progress, that software. in and

to which complete the over savings we upgrades turn to help reduction margins out, now systems additional retire call expenses our our and the our XX following, automation create next The As legacy scale to of the and system and the will that, run in months, upgraded the overlapping we to of in million. long review expect details improve the I'll business will conversion phase to efficiencies, results. rate $X in Jim we expect With operating realize approximately years term. our financial leading the and a

James Volk

Commercial Chris, Please SMB X Thank revenue, morning, XXXX. primarily Slide the million, quarter $XX.X X.X% discuss and due financial by in declined broadband million, growth RGUs. to quarter to revenue increase results everyone. fiber EBITDA was to XX.X% the our the fourth for you, refer to T-Mobile with good for Broadband a data grew $X.X consistent Adjusted X.X% $XX.X X.X% an circuits. increase million. and X.X% primarily revenue from in to to backhaul XXXX. of due in Residential of grew revenue quarter first driven first

increased first our following expenses a due the than revenues drivers. the in major quarter broadband at Our to rate faster

XXXX. the supported due million and quarter upgrade OSS change ERP, was systems, Fiber First, the $X.X increase conversion practice our higher our services, we Chris to to cable accounting the expense $XXX,XXX as in of salary just million noted. related and for of fourth that CRM expansion in Glo replacements to the rates, of made vendor and the medical $XXX,XXXrelated of $X benefits,

conversion adjusted been Beam broadband have the the costs, our margins EBITDA EBITDA negative XX% would Excluding and adjusted software this Glo versus upgrade and quarter Fiber XX% and reported.

was second to cost to Glo EBITDA Slide strength. Adjusted in we year partially million tenants, adjusted with our prior primarily half lease T-Mobile broadband positive consistent with streamline the modestly the was in X, due EBITDA prior grow and of a Tower flat software grew development the $XXX,XXX XXXX, Fiber EBITDA lease revenue quarter, expect We as tenant. in by XX% increase On per by X.X% beam period this well. quarter. to and revenue in margins over revenue offset year X.X% improve decline as operations, churns a tower first $X.X segment

to the announced to revenues in X. for primarily Consolidated Slide force grew reduction fees. growth EBITDA Consolidated X.X%, revenue Moving to to respectively. quarter grew $XX.X X.X% to and the an million, in X.X% first tower XX% in and quarter previously due driven by corporate professional adjusted broadband the X.X% $XX.X lower expenses, due and decline million in of

in the corporate savings by we February, of the rate the to XXXX, in several cost savings end savings kick in, as Approximately expenses. of of reduction most year $X implement million annual As cost run $X achieve second expect quarter will of annual non-employee in million benefiting with initiatives. the announced we this

flow $XXX XX. Slide liquidity cash declined to $XX million million. the quarter. cash Free with first a Moving and position hand strong the in ended of on quarter We

half as of to down expect And the $XX now, delayed receive XXXX. term prior begin loans tax an to draws I'll refund now $XX turn call XXXX, million expect draw and to million We in draw in Ed. on the second quarter of $XXX we from the expect to in guidance, slightly the income million second to over

Edward McKay

winter our for X,XXX. expanding rapidly begin XXX we where we best morning. broadband good our bringing the had and depict Slide quarter of adding total construction, route Jim, XX, on weather, to Despite over I'll miles new network. Thanks, our ever fiber, over

homes total of the services Glo have new of XX now launched additional new we addition and and and existing XX,XXX of we our passings, plan to year. X added in market have both our with work businesses and with this target goal passed well Engineering in way four Fiber of ramp a including to continues Blacksburg, are markets Salisbury, XXXX, launch the agreements to markets Maryland. XX,XXX up over new achieving on Year-to-date, our we We markets Virginia. in construction the franchise new

We of XXXX. of in and with XX. by our XXX,XXX approximately XXX,XXX franchise way are now to goal passings Slide Glo have to XX% passings the approved agreements place, we Turning

homes As Chris a for have had to we available mentioned, and businesses. almost quarter and construction now XX,XXX record service

approximately each Engineering after fiber As grant Fiber passing already up of the is addition pass to more will XX,XXX in on originally been bring broadband over our currently ramp be construction total, able million fiber of constructed. to contracts used the In we plan gigabit we awarded XXX,XXX funding, preliminary to grant government homes to and county. in underway, Based approximately we local homes. previously announced, than being which un-served passings construction Shentel XX,XXX Glo have backlog $XX state half anticipate and design has with we with work, we planned. second to the execute a in XXXX

We to quarter Turning total and operating - markets. a broadband Fiber results customer data for RGUs XX XX.X% XX,XXX all had XX% our record over for across Slide Glo the aggregate another ended for growth rates and our penetration period with business.

is Our lower in rate XXXX. than same the penetration period

times our X.X However, past we over year. have passings in the of by grown number

about Our over the times Glow XX,XXX. also customer the year end to relationships Fiber almost quarter by X.X increased past at

and consistent in the $XX.XX. Our speed ARPU our XX% of broadband at results of XXXX, first quarter adopted higher, first at very X.XX% and data with our or In tiers X of line of from new the low remains data remained subs quarter churn approximately XXXX. gig our

perform in double well quarter, and play. in customers only, Our a XX% with our markets streaming the our services X% for Fiber At a XX% Slide demonstrates Glo TV triple our single-play to XX XX% of penetration XX% end as respectively. were and continue rates the broadband data of data QX, and voice were play attachment age. were

jumped a in the for rate, quarter launched mature launched XXXX quarter neighborhoods nine fourth to We XXXX. months XX% at in in the months. the second now XXXX markets quarter and passings and our XX% see penetration that already as have of steady rate an growth ago initial X.X% the Our after are XX penetration of launched nearly of of markets fourth

Cable on move our Incumbent on operating results Slide XX. Let's to

our grew RGUs grew the year-over-year XXXX, to approximately the XXX,XXX end approximately total year-over-year X.X% X.X% data Our RGUs with of at quarter over QX to end and $XX,XXX. broadband

Our broadband in increased XX.X% XX.X% quarter. the data to of penetration from quarter Cable this Incumbent first XXXX

second. XXXX, in X,XXX highlight and customers, per beam quarter XX, increased we X% Broadband target and average in lows, approximately see user XXX Slide service. ties originally churn our and download now migrated to record local card, subscribed we our to our be value launched tiers customers On megabits our average service higher in over this fixed customers our our Broadband revenue approximately as rate to at to Powerhouse of just Our our speed service. is our QX QX to X.X% continue is $XX.XX speed penetration local year-over-year We XXXX, households. and have per approximately X.XX%. near continues customer data finishing broadband now wireless the rate communities

very revenue average over per our remains user Our and at remained low X.XX%. at $XX steady churn

further we rates our previously path the at broadband have fixed plan un-served we sites announced, expansion. and grants of unprofitable to ceased As approximately the beam no The profitability. areas of we've to sites wireless beam many constructed of government model second has with XX We very fundamentally undermined penetration the for a quarter. end decommission influx longer low

a liabilities expect an approximately backhaul and early approximately $X and second termination charge for leases $X to quarter, restructuring the primarily tower million We in of charge recognize agreements. of impairment for million

in the changes, the starting wireless With expect remaining fixed business beam we breakeven be to third quarter. these EBITDA

XX. Slide Moving to on

have We towns cable speeds and an product in updated DOCSIS areas rural networks our small using incumbent offerings. view gigabit technology. provided offer data of primary X.X Shentel

we progress Tier significant to and urban in service areas Fiber XXX,XXX continue next suburban X targets new higher toward passings Glo and Tier markets, over X our the X of years. goal make Our density and greenfield

by mentioned to are As Glo to we XXXX. current track passings XXX,XXX double the end Fiber Chris our of earlier, on over

be fixed extensions to grant we our small and of government our cable cable beam our opportunities will XX,XXX fiber-to-the-home our adjusted wireless primarily target the account of plant. finally, our adjacent passings that we for for have For XX,XXX limited DOCSIS unprofitable expect targeted now number with sites. as updated constructed turndown And homes passings to service, have of to the pockets

with DOCSIS. For grants the in agreed that were have fiber-to-the-home with replace either counties wireless our proposed or awarded fixed XXXX, to verbally passings we

opportunities, Pennsylvania. the pursue and Virginia We also states Virginia, including to brand Maryland, of in West additional continue

very limited Slide We two enterprise have the to commercial markets than and provides un-served total, and business. XX these served XXX,XXX from updated with either fixed broadband terminal thirds more wireless of to penetration rate X with by approximately XX% years, world services our fiber. these broadband we homes a providers. businesses the offerings fiber wholesale over of next in In expect LEC or view projected given our broadband pass the

XX% quarter, revenue school XX, new systems. revenue first total systems. public this booked two contracts customers our systems, X by the During almost sales brings to school monthly with private schools Over we totaling and driven of XXX,XXX. X with number E-Rate including new E-Rate was XX library public of This

the first We combined with the improvement a Monthly of revenue. revenue the new contract first same and a significant $XXX,XXX totaling contract was a the fiber the with first extension of also XX% for the services services. for This customer to wholesale a large new X-year of quarter reduced at compression a fiber and hospitality installed wireless incremental The was quarter a major in phase for over dark new XXXX. churn in primarily of period previous year, primarily due a carrier. driven compression first by monthly high a Internet year-over-year also of commercial our for lease quarter X.X% and customer business to rate a significantly improved in total major XXXX data in

number year-over-year increased connections Our to backhaul XXX. site of slightly cell

they and is largest as after seven of assets and in sale did cell turn T-Mobile, reduction a and the customer we shortly operations. wireless systems see XXXX Our QX down sites backhaul our of repeater non-traditional circuits

number do into to we as have LTE left years circuits network former part not rationalize over this under term. visibility important in it will be the we of circuits As is note are with We that the in rationalization, Sprint our of these the expect decommission yet that disclosed, previously to CDMA backhaul T-Mobile but contract in wireless their service network. X the National former area they -

sales as our our in from enterprise new wholesale and center. team, local local and is fiber commercial see network operations by business success our expand operations significant into growth outstanding Glo Fiber services, our We our team Our our driven for support opportunities markets. we

the Turning operations. tenants at X.X% increased XXXX. primarily to Slide end Total for XX. intercompany fixed beam of XXX our XX wireless includes QX, tower to tenants, year-over-year This

As with network eventually approximately turn down tower their will XXX disclosed, they we our XX believe cell leases turn of T-Mobile as legacy and previously sites. we Sprint rationalize

XG and network with more in their We with to as relationship our the continue grow X DISH executed leases they out build XX national pipeline.

XXXX Capital the in in of the guidance provides XXXX. network. million our expenditures XXXX. of The our Fiber quarter were capital increase Finally, of our Slide compared of $XX.X driver XX spending $XX.X XXXX first and was the for to year-over-year expansion quarter million the primary Glo first

projects. For million investment to year new invest remains aggressively the to of on approximately passings for $XX connecting our million to completing to And million we remainder new XXXX full in XXXX, $XXX $XXX of $XX much. $XXX XXX,XXX to including work. million construction in approximately million and the at for and The subscribers passings and expansion construction questions. engineering is $XXX ramping networks. continue as fiber-to-the-home materials, preliminary over is the un-served broadband XX,XXX guidance as you we're for grant in operator, fiber-to-the-home, government related new and Thank very now million up Glo part is our for Of ready expanding XXXX, areas in focused

Operator

Raymond from James. come [Operator Frank from of will line Instructions] Louthan question Our the first

may You begin.

Frank Louthan

or expect for do Great. pace the doing sort the broadband question growth? Thank then when of should as you. expect to you're the is you the we as those CapEx? up for that the Walk be show that to revenue offset on the expectations grant to a - Thanks. of finished? when the ramping the be us marketing it is receive for through funding, second And to And construction [ph] how as going And funds? accounted

Christopher French

years those far on projects, now. table we cost reimbursement as right government expect lag roughly recovery to the And as months targeting the grant that to projects So construction. behind X six have three capital complete from the grant the we're we government to our

involvement. marketing us the As local for new is community of markets, one in a keys far Glo as the

things hopefully to a tailing with we we that us. off advantage here COVID back So up, provides think big think and opening

areas One is of focus events. on the we local community

engage. we've to really already, started spring this So

So there. big there's we think a opportunity

Frank Louthan

So through? to QX off start coming weather is pull the Should that of to going of we seasonality good benefit help? see

Christopher French

believe better good weather. times this Yeah. We hours daylight only the not more and sales weather help door-to-door our will team but - more is community in events, with successful

continued So growth. see we do to expect

Frank Louthan

you. Thank That's Very, good. great.

James Volk

on grants, to Frank, the account accounting A as we construction. for for will the them [ph]

considered They So they offset CapEx. revenue. not be will will

Frank Louthan

much. right. very That's All you right. really All Thank Great. helpful.

Operator

line Riley the B. next question will come from Dan from of Our Day Securities.

open. line Your is

Dan Day

Yeah. Morning, guys.

one the sort trending down It Fiber. looks last So from high X.X of XXs Glo over first ARPU mid-XXs. on like just the to years,

for you your moving expectations wondering forward? sort can Just provide of if that

Christopher French

say Well, than the past has over of downward issue steady. more trend declined. the was really I not year, would been an accounting has It ARPU actual ARPU

So don't ARPU be our we there almost most There's are that of for said, of large taking expect higher upside to at same service. take in speeds we roughly because area. We going currently to point. a this gig customers as probably expect a them lot not I think forward, increase half there -

Dan Day

Got it.

over the and two the that in showed in it And few looks change the sort on yet. the those we've towers, last it just then commercial on up line outlook hasn't T-Mobile segments of And Okay. any months. revenue fiber of like churn flagged on sort

outlook So for year just on this segments? the those thoughts for any

Christopher French

right. You're

have not yet. We seen any impact

they as And are as actually we how have start XX said from the LTE T-Mobile they with when standpoint, be still to rationalize But backhaul to impacted many CDMA Sprint is network. going has mentioned, shut legacy the a network. down T-Mobile. June clarity will circuits I think working publicly we're [indiscernible]

Dan Day

questions. guys my I appreciate Great, taking turn it you I'll okay. over.

Christopher French

Dan. Thanks, right. All

Operator

[Operator from Instructions] question of Hamed the Our from Khorsand Financial. next line comes BWS

open. Your line is

Hamed Khorsand

Good morning.

marketing to reception Just and Glo as customers far passings? what you're has your in understand home increase the I if been with wanted any as of your these targeting the so of with far the changing strategy like

Christopher French

high So middle and we've of at response the market. end seen excellent the

We are to we're can of customers of the pleased taking that services taking we But with at at speeds. lower very possibly. the we're end do a to look to market there's if customers half card almost see end capture with our gigabit that higher selling rate our what

Hamed Khorsand

like response said, the And but expecting? your penetration what bit? line is Because that increasing declined passing, you're the getting were you you you're in with rates a

Christopher French

line would in penetration it big to I we at that released expectations. a expect the the sales households driving the we of say, going really is there first quarter. to But yes, with up back ramp team factor that end of the our passed what's that's down And And rate significant was forward. number rate.

Hamed Khorsand

Okay.

So something X-year passings return on home like a X then? maybe those to

Christopher French

one? that on comment you let I'll Jim,

James Volk

that. that, sorry, I'm repeat Could on you please?

Hamed Khorsand

to to expect So those to that as pick up like the home to a to service? in released X-year customers were QX just something passings return X get

James Volk

Yeah.

you homes that, on referred where we - by passed call we show what the the were kind slide of to So vintage launched. the when they

can to And in EBITDA were generally homes positive. of about for turn then. essentially, that years, X the that's see - curve markets be penetration the the XX% You to expect those launched that range after when develops. about But time kind we the

by as we a whole of today. EBITDA markets be or expect the end year. subsegment EBITDA already line product the positive several And talk Glo as positive we So we the have to

So on Glo fiber we're here. monetizing investments progress making the great

Hamed Khorsand

just invest Okay. refund is expected? Last $XX was projects? And to in is, CapEx million the your the purely plan question

James Volk

the overpaid actually we preparing really we was made started year, - At accrual the refund due we the estimate payment XXXX. fourth did and quarter. our The the realized when coming to had This final return, we that we XXXX. the tax of end was of in estimated Yeah. out that

So driven that's where from. it's being

Hamed Khorsand

used dividends or it to just CapEx? to be $XX I going understood. share I Or is for understand is going this or if used No, buybacks the anything? million for be want to

James Volk

going Yes. forward. cash No, focusing on we're reinvesting mainly deploy it's Glo going Fiber - to to our

a We front of plan in investment have on heavy us that.

in back the reinvested be to continue business. we'll So

Hamed Khorsand

great. you. Okay, Thank

James Volk

All right. Thanks, Hamed.

Operator

questions showing like to to not I'm any the Jim I'd queue. you. Thank closing remarks. over call further turn for the in any

James Volk

in Well, a has everyone and for hope everyone Shentel, Friday. I the interest thanks you. Thank continued great

Operator

concludes this call. you today's participating. And for Thank conference

disconnect. great now have may Everyone, You a week.

Shenandoah Telecommunications (SHEN) 29 Apr 222022 Q1 Earnings call transcript