SHEN - Earnings call transcript Q3 2024 | Shenandoah Telecommunications Company

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Operator

Good morning, everyone. Welcome to Shenandoah Telecommunications Third Quarter 2024 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 the purpose of third quarter XXXX.

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

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

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

Christopher French

by brand during commercial and our and integration our us progress Ohio ownership. morning with efficiencies carrier provide joining appreciate and leadership wholesale hope with integrated can change team team is has We've provide on Kirk. to Thanks, my We've as was we bookings implemented Glo have launched former everyone the of X. quarter. believe Horizon providing realize we on-net also combined compensation months now well The also experience. successfully teams sales tools made and and this system platform, on now our convert. solutions. the most payroll which of $XX will is Most will Horizon in this one Shentel over expect programs start comments to our a our XXXX. We've more Work conversions, Fiber complete We well. and the second X everyone We customer sales in which complex an better underway upsized sight X billing update of to the upside and Slide quality significant completed customers I line the migrated the aligned start ERP We million. to January savings have provide our for synergy target back-office enhanced X to system the of systems in to we conversion, in customer company. for XXXX. benefit X January to changes care integrations, We serving including clear the savings recently, the our the

and acquired we Fiber XX% XX,XXX to This rate gives with addition the XXX,XXX new transaction. the passings. a released year a constructed execution. in realized. I'll We X strategy second second of when Slide an the quarter ended the will first with the the turn synergy be expect over XXX,XXX from Glo approximately passings We We to passings on ago. year to update Horizon give savings be past will to XXXX quarter now all sales quarter our growth

Glo have customers, year-over-year Fiber of XX% representing end September, a rate. of over As XX,XXX also the we growth

fourth has results. turn call quarter a and I'll with of We over into to sales good the now financial the the that, additions, quarter. With details Jim to continued have subscriber net record X,XXX review momentum our

James Volk

million The our start $XX.X I'll XXXX. grew contributed former the million in third and XX% on Chris, financial $XX.X Slide for for the you, to Revenue quarter revenue. X results third of Horizon Thank morning. markets good quarter.

revenue former Horizon We ARPU Glo million million. The had revenue, subscribers revenue third $X.X markets, record markets another year and The $X.X quarter declines grew Fiber respectively. in X%, a same $XX.X quarter the million revenue expected Fiber Glo Fiber ago. X.X% over the Excluding of and offset XX% revenue. incumbent revenue. growth or period T-Mobile by declined Glo million partially of grew due legacy was revenue commercial markets in broadband XX%, decline legacy to $X.X the by Commercial and

in declines the reflects As of reported circuits part network. The to revenue due as disconnected declined in Sprint period broadband $X.X a grew broadband backhaul with in fees. EBITDA XX% quarter T-Mobile was Incumbent revenue. these early offset to third related former growth ARPU installation the disconnects data reduction XXXX flat million the revenue contributed in of video The lower decommissioning million data markets and million a former of throughout XXXX, $XX.X full termination Incumbent the revenue of $X.X markets RGUs. Adjusted period and as decline the adjusted Horizon same XXXX. EBITDA. X%

EBITDA quarter by X% slower-than-usual same growth in the period and Horizon was The synergy decline grew a the XXXX in EBITDA adjusted third Fiber ago. year Excluding the adjusted in quarter savings beginning Glo from the primarily due to to of be revenue the second T-Mobile XX% growth the markets, EBITDA revenue. Adjusted increased to from margin XX% realized. XXXX, former driven expected Horizon in

expense million the Glo reimbursements million September future Liquidity draw $XXX loans, on in positions revolver in delayed $XX improve XX, available including on X. you cash, million realize We under was with $XXX revenue in full $XXX remaining and million available expect grants. in Slide million and term million like in government available now as on capacity in margins we $XXX continued Fiber debt quarters to in target synergies. I'd our $XX growth update liquidity and to

expand upgrade awarded middle-mile our have million in government to homes previously broadband our to been grants As $XXX we network. of disclosed, and network unserved parts

had in we X we $XXX collect quarter, outstanding We to over these when of and remaining funds of end the grant million date years. At to projects $XX the have million third debt. collected the complete expect next the

maturity major The first is June XXXX.

is third EBITDA annualized adjusted based leverage on X.Xx. net Our ratio quarter XXXX our

For turn to over bank synergies X.Xx purposes, losses. And Ed. leverage is net Glo approximately consider call and now market add-backs the when Fiber for you loan expected I'll

Edward McKay

morning. you, I'll and Slide network. XX integrated broadband with Thank our good on Jim, start

added the pace provides fiber over in XX,XXX third construction fiber markets areas are miles. Slide Fiber to approximately services, construction greenfield nearly into improving now former approximately markets in now network on XX unserved constructing and and fiber network XXX broadband are or XX homes projects a We our We regional passings previously areas. businesses engineering by expansion broadband and our approximately fiber-dominant quickly X,XXX the additional extensive quarter, details with our We fiber miles fiber In part now greenfield approximately Glo and government-subsidized markets fiber of of to third route our We pass of optic of unserved. including XXX,XXX of these pass metrics. added government-subsidized fiber quarter, over new XXXX. in teams provider. consists as and, third route currently homes construction Horizon approximately businesses XX% and the bring over with in XX% and via that evolving XXX,XXX quarter served XX,XXX in nearly fiber, were our XX,XXX passings

passings stages of XX,XXX pipeline with markets. remains new in in engineering, permitting former passings robust construction construction, and Horizon additional Our various XXX,XXX including

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

and over of quarter sales, total the at third we for had approximately reaching adding net a mentioned, X,XXX record XX,XXX Chris quarter. customers the As customers end

our we rate Our voice The in video the than units broadband total XXX,XXX XX,XXX markets and the constant of penetration XX year-over-year. reached more data, the XX% constructed number data quarter, as expansion new year-over-year remained of Glo over past XX.X% approximately revenue-generating passings end at at months. up Fiber

of rate equipment tiers. to and the our selecting revenue average user broadband or per that additional higher In X% higher. Our took of combination of including quarter, adjustments, year-over-year X% third revenue residential XX% subscribers X gig X data speed higher, speed speeds due adopted or gig over customers of increased tiers a

former Our the about was points broadband with customers for quarter churn. connectivity accounting for program basis X churn of affordable data X.XX%, third

our across Slide XX, penetration mature, as we've cohorts. low continue updated penetration the Our to all and with consistent competitors and remained rates previous increase churn extremely data rates to year. On we markets

First market, rates approximately exceed the Glo penetration X typically XX%. And after year to years, rates continue penetration data typical we of XX%. see Fiber after launching

We reach also penetration new rates launching in service to about after years average X to terminal expect a to continue of XX% area. X

oldest XXXX penetration in cohort our in launched now and Our late launched has XX% cohorts approaching reached XXXX target. quickly penetration terminal are

in our year-over-year our Moving markets markets Slide slightly incumbent broadband cover we from incumbent XX, customers voice from of RGUs passings. on offsetting units Horizon X,XXX metrics data, incumbent XXX,XXX, Horizon driven increased for over slightly to telephone markets. with declined These markets. year-over-year revenue-generating our cable subscribers Broadband data by data to acquisition and former with cable results and Shentel operating fiber-to-the-home Shentel approximately approximately to partially the losses Horizon. acquired video Total XXX,XXX, broadband show

For expect ACP minimal basis quarter accounted third the believe of year-over-year we and of in third are and ACP peaked, XX end the in as X of the the despite was quarter, the XX% ACP today. X.XX%, broadband we connectivity for the year. Even pleased with customers point customers ACP impact former has the with churn from for the improvement the subscribers remain for churn points We third the flat of the impact, impact quarter. Data remained remainder program. data churn. churn former customers affordable basis Approximately

increased same have markets, cards a of adjustments new effective Despite speeds speed $XX speed to been more ARPU combination incumbent at giving rate broadband competitive mitigating the by in customers portions rate pressure of additional rolls customers we more customer churn, some selecting tiers. at and higher of higher X.X% for end price Our October. due and data initiated value to the and than year-over-year

data third the markets. incumbent penetration former in cable end XX.X% in penetration XX.X% Horizon telephone to and incumbent Shentel of broadband overall decreased rates the at quarter XX.X% the of markets Our with

to We continue with in markets the and the upside parity believe former Horizon cable provider. improve there's to penetration gain

X,XXX our new we of unserved launching of XX% months. area, data past grant projects after approximately new rates XX government we penetration also typically see incumbent markets. of cable after in as XX in nearly the year, Over And passings and part a fiber XX% services constructed months areas after

unserved goal opportunities toward subsidized we passings government these progress areas. we customer of years, significant see few growth in the XX,XXX As next make fiber our over

business with new in we monthly more finished XX% fiber monthly the than commercial is backlog new year-over-year. We installed new on sales revenue year-over-year, approximately monthly and third of quarter, former of in sales Horizon XXX% installation in $XXX,XXX increases the service our drove quarter revenue. totaling addition of team markets the revenue. The delivery XX. revenue, monthly new of significant In installations and up Slide booked both bookings Our an $XXX,XXX, over up $XXX,XXX highlighted

network rationalization X.X% monthly churn T-Mobile the very for third remained of the compression that Jim low impact at discussed the Excluding earlier, and quarter.

spending capital government year-to-date areas for million in Total guidance end Our Slide quarter cable Fiber the $XXX subsidized of are investments approximately and Glo to incumbent for unserved expansion and XXXX shown approximately full million third million, markets. $XXX including totaled through our on for projects adjacent year the $XX capital XX.

We reimbursed. XX% now expenditures We operator, approximately capital $XXX you grant finish plan questions. to we're $XXX for investments to be capital our And to guidance. Thank of range, for much. expect with our million with ready projects in these line previous in year million the very the

Operator

comes from Raymond first from Our Palmisano question James. Instructions] [Operator Rob

Robert Palmisano

And have might really you in bid. territory meaningful that attractive in states also, markets? you particular, uptick putting Verizon your or from but amounts in any seen territories out have in your some separately, any of BEAD bidding activity looks be -- funding that any and for Anything been on? other competitors So

Edward McKay

one. take I'll Rob, Ed. this that is

Verizon we new So as markets. the have as in fiber significant as activity question, seen far Verizon builds as any far our not

footprint As see we've received opportunities, feel Plan through we big some those nearly are already telephone in Act as BEAD opportunities as our as the the we The question, funds. don't grants far but incumbent where do opportunities Rescue areas, American

but to modest BEAD be for some it's at us. but going a closely, opportunity looking we're opportunity, So

Operator

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

Hamed Khorsand

First far that seeing benefits you as quarter, adds this just primarily to see, as are you had want the off, I Horizon? Or Shentel? X,XXX from any is

Edward McKay

legacy the So that is markets. is X,XXX a number, primarily number combined but that Shentel

markets, fiber the markets. XX,XXX Our the right in passings Shentel that Horizon about will Horizon now. markets to have But of over significantly time. only larger grow the legacy number passings In XX,XXX than we is

Hamed Khorsand

is is follow-up, would that when And as was revenue timing see to my be to the going synergies there concerned? far as as a you Horizon

Edward McKay

As far synergies general? revenue the just side as the on in commercial or

Hamed Khorsand

Glo well. now in just you're Fiber In because general, Ohio but as primarily

Edward McKay

ramping is now construction construction. there We've construction. engine on restarted Horizon the big button the hit the fiber-to-the-home. back has Well, key up that for pause

We pipeline. actually new XX,XXX started additional in We turned passings have about We've passings construction. October. up our in fiber construction

customers Horizon we -- some the should construction. in we're markets quarter So increases that with in fourth see additional new in the

Hamed Khorsand

footprint there Fiber? that now going seasonality bigger, be is adds to the net And any in of for your getting Glo is kind number

Edward McKay

see second larger our excuse August our -- typically third growth We as quarter is large The typically time frame -- months. a me, one of opportunity.

So see continue to similar we've the we'll seen what seasonality to past. in

Operator

this time, At back on closing questions are remarks. for no to the hand Volk I call May Mr. further there Jim queue. the

James Volk

of forward of for our Yes. hope I call our we the everyone, joining Thank in with Fiber you. good and broadband updating you future morning. progress Glo Thanks, day, rest a and quarters look this have business. the to you

Operator

call. conference your Thank for conclude today's That you participating. does

your You may now disconnect lines.

Shenandoah Telecommunications (SHEN) 7 Nov 242024 Q3 Earnings call transcript