SHEN - Earnings call 3 2023 | Shenandoah Telecommunications Company

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Operator

Good morning, everyone. Welcome to Shenandoah Telecommunications' Third Quarter 2023 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 XXXX. for today's call review Shentel's is to the purpose of third quarter of

announcing results the audio be later are our call. and in our made website this the were available distributed note at press this Our morning, that set call Please this be an Investor press page details the of is forth today. reviewing release we'll release The www.shentel.com. in included replay on presentation announced will

With Ed President Chris Jim Executive Operating us remarks, of today President French, prepared will are and our President we on the session. McKay, call conduct Finance and Chief After question-and-answer and Volk, Officer; and Officer; Senior Vice Vice CFO. Executive Chief a

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

undue required these revise no reliance to statements. Except statements. forward-looking as forward-looking any You're not to publicly cautioned by place undertake we or law, on obligation update

that, I'll With now turn to Chris. the ahead, Chris. over Go call

Christopher French

expressly us and and our week everyone Horizon hope results noted. it's joining morning transaction the is we're this excluding everyone financial quarter announced third discuss Telcom appreciate and planning of last Today, We to Kirk. operating unless Thanks, impact we the well. results,

the for approvals started this integration. very the work and transformative doing Our on combination and excited planning are have about respective upcoming early-stage already necessary obtaining teams

more calls. to in We will earnings future have share

now to quarter of highlights third I'll our results. turn the

in progress Glo make growth our continue to Fiber plan. solid executing We

the quarter. on the Fiber passing increased in during noted and XXX,XXX third XX% crossed year-over-year added Glo almost new passings X, XX,XXX quarter. milestone Slide we As the We

Fiber Market Glo of passings our Cable Our the almost size Passing. are now

market With quarter As our across expected Horizon we we fourth double the accelerated passing. approach and passings anticipated have our will XXXX. all our broadband XXXX to Fiber the of of terms markets, of of our doubled we in again business of construction in Telcom acquisition broadband first in close to the November, Glo expect by launching end size

to Slide X. Moving

base added team in X,XXX sales Similar past the grown Fiber since has year. the passing, we've over growth over quarter subscribers total broadband the subscribers and to XXXX. Our broadband customer data third by third in data by Glo the grown Glo XX% quarter XX% Fiber high of the

our Our to expand track grow provides Fiber over we growth data to rates subscriber in years X at X years us past for as the confidence base similar broadband next X our the network. record Glo

and X, our extremely growth key of margin consolidated subscribers gross Slide XXXX on XX% EBITDA administrative scale margin The data general to for adjusted and of a Fiber. the are incremental ability when fiber driving which in the combination high-speed broadband our since more data launched selling, of improvement are reflected gain margins our scalable Glo in than has driven networks, we expenses. As steady the catalysts expansion year-over-year

Horizon. our Glo continue plan on expect we of We margins expand to as close our to execute acquisition and Fiber growth

to our review financial I'll the now details call results. of over turn that, With the Jim to

James Volk

with everyone. X. the and start Chris, you, for XXXX of good financial will our I on Thank results quarter morning, third Slide broadband

subscriber ARPU. in revenue nonrecurring the recurring growth in strong data X.X% or ARPU. $XXX,XXX termination impact excluding Glo a due to grew million $XXX,XXX to discontinued or early X.X% to $XXX,XXX the Fiber service, X.X% grew data circuit the our the grew Commercial related to X.X% in revenues, and and customer year from $XX.X Cable $XX.X fees catalyst, $XXX,XXX subscriber $X.X million. quarter. $X.X million disconnects growth revenue or Fiber in growing revenue increase backhaul Beam primary primarily prior in was X% from with million due of or revenue Broadband XX% a to period Market growth

As to down Sprint disconnected previously portions former the backhaul network of announced, the T-Mobile and planning is XX quarter. during circuits shut third

this in to third as partially approximately offset backhaul growth expect adjusted by disconnects quarter of revenue in the the advertising $X.X $XX.X expansion. in when to Glo Fiber additional EBITDA period grew support Broadband the We compared XX expenses million XXXX of part due network to XX.X% to million, $XXX,XXX higher rationalization. same

see leverage customers business Fiber XX,XXX over $XXX,XXX As Chris months. XX to continue we earlier, past of operating Glo of broadband only cost service adding the despite as the benefits mentioned of our increased

On Tower the segment in same period revenue XXXX. Slide X, with line was

T-Mobile Sprint ] any to walk T-Mobile have We $XX,XXX with ended of leased from terminate T-Mobile to terminate network. pay leases revenue the X. and leases [ inspection the not XX received property of generate continue recognized though plan the we have they required XX is on to agreement former termination renewed allows notices churn that until fee previously issued. from year-to-date, and only notice announced The will rental leases decommissioning part that all These with a September equipment the as is

Tower ground of the adjusted transfer lease accounting of due related with leases. could to more $XXX,XXX leases of have segment tower these associated T-Mobile declined revenues XXXX. rental Most with years the initial the the primarily the ending up EBITDA continue termination cable-only two to tower Broadband remaining and a for for optional to XXXX intercompany in to lease. a extensions a of an portion expect We term

to to grew EBITDA due to adjusted X.X% third million, pre Moving broadband. -- XX. also Consolidated revenue million quarter the Consolidated XX.X% $XX.X $XX.X growth in to to broadband. Slide grew in the due

$XX cash displayed prior -- free year sales flow construction million reported and in in million primarily Negative Glo committed subsidized as first not liquidity the for liquidity closing received financings XX. [ the that of more July million the the investments Horizon the tax of sale from tax months Slide we flow is cash was than to We capital include in expanding X.X September XXXX of government also due million does increased as income have investing by for Please refunds to This to $XX unserved in spectrum position and gigahertz XXXX. X Fiber offset $XXX XX, on from proceeds separately transaction. incremental note, related the $XX in received partially expenditures ] activities. of

reflected $XXX million outstanding was as September XX, As Slide our XX. on debt of

until have significant We maturities debt XXXX. no

fourth the terms remaining delayed for of of draw the million in credit agreement. draw our We expect to $XXX the term loans quarter

turn Ed. to I'll over call now And the

Edward McKay

Thank of an you, our of network on rapidly X,XXX update good expanding Slide now consist morning. Jim, start fiber. and broadband miles route to over I'll XX integrated with on

service quarter, offer In and launched multi-gigabit Glo Pennsylvania, Fiber markets. new with we construction Greekcastle, XX third the additional engineering Glo two Fiber we and four and underway now in markets Virginia, markets County, in Hanover in

franchise We adjacent in the added additional bring including to over five townships also quarter and markets to of boroughs our XX,XXX Glo in third and homes new additional Lancaster to Fiber agreements existing businesses, the Pennsylvania. city and

to XX. Turning Slide

franchise XX five approved of XXX,XXX passings states. Our has in with Glo total agreements markets XX Fiber to grown number across

been over total We've grants awarded approximately will to homes in quarter, to through extend bring cable now systems Virginia. a technology. broadband awards. $XX West additional government success adjacent have grants awarded unserved to approximately with third continue we to locations, X,XXX of enable addition, that the primarily In in to unserved to us grant million were we $X.X In broadband XX,XXX our fiber-to-the-home in million

addition the total Our government-subsidized that quarter engineering and fiber over to construction bringing new including to deliver continue teams with passings, of XXX,XXX approximately the X,XXX projects. in XX,XXX over part of third are our

backlog incremental for passings with XXX,XXX In robust addition, remains approved construction. our very construction

permitting and with to utility finish and year causing volume for a risk locates. on Our industry-wide to of we're to permits construction underground with process and total is In cases, existing pole dependent both mitigate fiber we other attachment partners closely the facilities. broadband deployment XXX,XXX actively the approximately monitoring some expect and pace locate is utilities our is delays high working passes. This

As up continue growth see Fiber on Slide customer to XX. construction, we Glo shown as ramp we strong

XX% over XX,XXX data year climbed past to with from broadband saw XX.X% Chris XX.X% customers rate mentioned, penetration increased quarter, in the the a our As ago. ending we the year, Glo We've over quarter added year-over-year, in up customers XX,XXX. data Fiber third

Our total has year-over-year. number revenue-generating units voice data, video of approximately up and reached XX% XX,XXX,

average a combination data revenue was $XX equipment user broadband revenue additional speed and selecting and of Our by higher for by year-over-year customers quarter. X.X% the reached tiers. driven per This increased

quarter, to available of TV that XX% or tiers approximately quarter, subscribers XX% third XX% XX% approximately very new X we and approximately Video third of the XXXX. Glo quarter Fiber subscribe service. And X% churn an voice of our of or including total points At gig finally, For tiers gig our improvement of X.X%, service low the adopted to Glo speed customers the of higher. of of residential is pass. that Service remain continues to to at took now basis speed XX higher, over our the video end X homes the subscribe over

local fastest pleased customer Promoter the Fiber of pricing. customers, XX. to X,XXX with outstanding fair almost we Net were our We speeds recently We our surveyed on very markets, service focus continue and and in providing Glo Score straightforward

even in single the broadband many the comparison, negative range. As providers are or in digits

that indicated have already or In Glo addition, family. of over customers to recommended friend they a our XX% Fiber

Moving age. our to data Slide penetration markets XX, rates we highlight as our

steady cohorts our increases quarter-over-quarter. to see of All continue

years. has we penetration Our reached after third three one year, quarter after seeing are XXXX cohort XX% penetration and rates XX% above already

late our is of penetration Our XXXX in oldest average now approaching rate cohort XX%. terminal launched quickly target

remained Cable slight ended XX. operating about flat and on move quarter had results our increase year-over-year, Slide at to third XXX,XXX. our Broadband on data subscribers Markets quarter-over-quarter the for a Let's

data by service to Our decreased year-over-year and XX.X% from as to declines about service ] year-over-year XX.X% at residential continue video see total of quarter churn. voice quarter. units slightly in [ revenue-generating decreased to the the end penetration Our we third X% due

number the increase new we've slight added almost of also a past over year. X,XXX subscribers the saw we Although data year-over-year, broadband in passings

for in data the customers fairly markets for some overbuilder same value speeds speeds price. that We've and broadband higher Broadband of churn markets, giving our activity quarter increased and the consistent despite in we year-over-year more disclosed. X.XX% previously was all

up the X% ARPU, able $XX is to moved we As we've quarter year-over-year approximately maintain have in customers to our of third higher proactively XXXX. been which speeds, to

we our and business. Slide Wholesale Commercial Turning to Broadband Enterprise Fiber XX, highlight

new a of quarter, is During booked sales we totaling with $XX,XXX. approximately revenue quarter the monthly decline third versus This third XXXX.

However, XXXX XXXX. line bookings sales new our with are year-to-date in

new about quarters. X monthly [ revenue almost than $XX,XXX in installed is We third higher the the services totaling in XX% past quarter, over our also ] which incremental average

elevated was generating customer installation due to XXXX over E-Rate the quarter $XX,XXX major Third primarily monthly in a of revenue.

continues to project. circuits as T-Mobile connections, Sprint their backhaul of reduce the network site rationalization number cell For of part

the long-term year, sites removed past remaining as expect XXX And disconnects. are approximately Over they contracts. we under cell XX connections. additional The mentioned, Jim

a to and X.X% the operations for our excluding rationalization, engineering network T-Mobile team quarter. continues decreased the to business Commercial year-over-year provide quality customers churn Fiber experience and Our and compression revenue network in third for

Turning third our approximately with to total XX, and We Tower tower. two ended tenants tenants quarter the segment. tower per Slide XXX

XXX. Our third-party tower tenants remained constant at

leases as XX Beam intercompany decreased wireless we turned tower fixed our However, XXXX. down sites XX to in from

finally, As decommissioned as as number we project. decreased towers. reduce eventually of XXX towers we of their And T-Mobile rationalization total do Sprint two to complete tower network nonrevenue mentioned, they the Jim expect to number leases our

grants. the subsidized XX. as the year government win year-to-date. projects We've construction. construction and capital complete the for and reflected increase markets driven is Fiber we invested reimbursed and we unserved Glo Our Slide year-over-year invested by XX% approximately government was We've $XX markets significant guidance in for in these projects costs approximately in $XXX approximately of expect on ramp-up our million to year-to-date, of capital The be million we where spending

For almost million we've including and approximately $XXX $XXX construction million engineering invested Glo to Fiber, million $XX and connect for year-to-date, customers. new

government in full Glo $XXX year. guidance $XXX to capital fewer planned million projects primarily fiber Fiber a range year, spending to of the to we million, for the our have subsidized new lowered originally and markets than For passings due

markets. In to addition, cable some planned our able capacity customer we speeds while upgrades still cable were postpone increasing system broadband in

you now we're for Thank much. And ready questions. very operator,

Operator

James. Instructions] first [Operator our Raymond Frank comes And of Louthan from question

Frank Louthan

a the bit up and on Can little little a outlook. so It you taking like kind forward? kind that from rate of sum us you're the sort Where of and of does getting more get shutdowns forth What's fees seems a run the quarterly there? longer. expectation things going Tower

the finish need you so then think I $XXX to And the million or deal, funding. on about Horizon

You're the financing comes you anything at look ] sale for or looking What you are up short, [ that? the possibly ABS at from a tower tower get if would it your sale. or options don't like market that

James Volk

jump both in Frank, can those. Yes, on I

T-Mobile those leases a conversations X them, that for had we're they seen sounds proper upon plan given recent be notice the teams We more could leases. But on like had is under us seeing The when with agreement based be walk haven't of any churn pay ended yet September gradual on this exactly it than tower and a churn from disconnects or what will XX terminated. backhaul terminate. the side. to this our that that timing leases They uncertain

And million million conversations. revenue our up you see maybe EBITDA $X leases is expectation $X.X million some to my So continue all they're when we'll see two for XX term adjusted probably can about to translate years The of based upon in doing about these we're annually. of these more results, a of in terminated. as leases fully $XX quarter, about quarterly some

I your So question. hope that answers first

especially candidates another to markets, them level, ABS post we're as go Glo of then capital at. can ABS growth sources as the kind penetration Horizon, market, we financing. that some the Towers would multiple additional be we Fiber one us, now for business is source fund appealing XX%, going mentioned, that which we're XX% that markets plan far above as the acquisition you explore. of look attractive And is as would make to for need we But that sources capital -- to of our getting have our the

in Lastly also 'XX, capital. and that credit maturities to early first in mentioned conversations occur also additional facility, the current our so some be refinance could of that likely 'XX, facility, by June to we're provide

capital several have funding growth we of sources achieve how we our So gap. can

Frank Louthan

right. Last That's question. great. All

kind deferred CapEx How next blurring this we into the that just So year, year? should think of that? is about

James Volk

ran getting some testing mentioned, especially getting the correct. and We the we're Yes, that this we some subsidize into on had And many area before construction. 'XX. done cumulative locate do to Ed here delays, in as effect of just you to hope [ ] likely get but as facilities some builds to year, catch a are not the to has and on -- underground done up that access of poles in we that locates

Frank Louthan

-- a continue? polls there Or that going that guys an addressed? is make temporary something whatever Anything is slowdown? ongoing to been on co-ops to has about those or Or that's own items going that locate the going Was problem? that that the to of the

Edward McKay

Yes. volume This folks. really a issue is these Ed. for It's

additional will We number even some roughly to of XXXX XX% I ramp projecting passings scale, this, see challenges. fiber But markets. can construction we our we short-term XXXX. a we think and in we're some as with think increase in continue between particularly to up continue

passings even So number of still challenges can the we're those. we continuing with we to have think there, some grow but

Frank Louthan

with of or to small And vendors some giving resources? it time your ahead by life commitments just can America? Or something of in you some them mitigate town is some divert that

Edward McKay

in So we case, have our materials. the

the our do for own We and underground resources the having their work. It's not the actual work then ready other issue crews permitting That's locates utility for the their construction where to getting the is. the companies, -- do to with trouble poles they're have facilities.

able work some So for time by mitigate -- example. that cases, are located overtime the for in facilities, that we're over to locators or underground for paying

we're the the We're on self working, in telecommunication what's other able remedy some called adjust poles. do to cases, where also to facilities

but year to plus. dealing with we're working for that's to mitigate next something going we're ways the be So that, on

Operator

question Hamed next our Khorsand BWS comes of Financial. And from

Hamed Khorsand

the this forward topic markets maybe year? already CapEx penetration in focused be just the and are and shift rates permitting Or getting forth. so next into on investment Would you the CapEx moving about Just that the putting and really connected? established more into you on you've up

Edward McKay

Hamed, this is Ed.

on So that very and markets. teams the existing goal primary That's of and focused sales in in penetration definitely increasing our we're area. our focus the marketing

Hamed Khorsand

planning -- trying I any get year, to? of Horizon is your How into to guess, involved, for this scope the form you're there everything given I'm next that does marketing Glo, doing fit distractions

Edward McKay

we'll engineering So in construction a the market. using be separate Horizon team and

be distraction So that, markets. Glo we the we're the feel construction in don't doing that a from will current

Operator

I'm showing would no back time, further questions. I At turn to this for like Jim it Volk to remarks. closing

James Volk

Thank for you. Thanks, today, everyone, great day. have joining and a us

Operator

now you today's you participating, and concludes may Thank for This conference call. disconnect.

Shenandoah Telecommunications (SHEN) 3 Nov 232023 Q3 Earnings call transcript