Shenandoah Telecommunications Company Reports Fourth Quarter and Full Year 2024 Results

EDINBURG, Va., Feb. 20, 2025 (GLOBE NEWSWIRE) — Shenandoah Telecommunications Company (“Shentel”) (Nasdaq: SHEN) announced fourth quarter and full year 2024 financial and operating results.

2024 Highlights

• Glo Fiber Expansion Markets data customers grew 56% year-over-year to over 65,000.
• Glo Fiber Expansion Markets passings grew by approximately 112,400, or 48%, to approximately 346,000.
• Glo Fiber Expansion Markets revenue grew 65% or $22.8 million to $57.9 million.
• Completed the integration of Horizon Telcom (“Horizon”) in the fourth quarter. Annual run-rate synergy savings expected to reach $13.8 million by the beginning of second quarter 2025.

“2024 was a pivotal year as we successfully expanded into Ohio through our acquisition of Horizon, completed the integration in nine months and raised our synergy target by over $4 million from our original projection.” said President and CEO, Christopher E. French. “This was also a record year for construction and sales with the addition of approximately 97,000 new Glo Fiber passings and more than 21,000 net Glo Fiber customers. We expect our consolidated revenue and Adjusted EBITDA long-term compound annual growth rates will return to the levels achieved after the launch of our Glo Fiber line of business in 2019.”

Shentel’s fourth quarter earnings conference call will be webcast at 8:30 a.m. ET on Thursday, February 20, 2025. The webcast and related materials will be available on Shentel’s Investor Relations website at https://investor.shentel.com/. For Analysts, please register to dial-in at this link.

Full Year 2024 Results

• Revenue in 2024 increased $58.9 million, or 21.9%, to $328.1 million, primarily due to $47.7 million of revenues earned in the newly acquired Horizon markets. The Company made a $2.6 million measurement period negative adjustment to Horizon Commercial Fiber revenues and established a corresponding deferred revenue liability to be recognized over the contract period. The measurement period adjustment defers revenue to future years and does not impact billings and cash flows. Excluding Horizon, revenues grew by $11.2 million, or 4.3%, primarily due to Glo Fiber Expansion Markets Residential & SMB revenue growth of $21.4 million, or 61.0%. This growth was partially offset by a Commercial Fiber revenue decline of $5.8 million, or 13.8%, and an Incumbent Broadband Markets¹ Residential & SMB revenue decline of $5.0 million, or 2.9%. Glo Fiber Expansion Markets revenue growth in Shentel’s legacy markets was driven by a 50.9% increase in broadband data subscribers and a 7.3% increase in broadband data Average Revenue per User (“ARPU”). Commercial Fiber revenue decreased due to the previously disclosed decline in T-Mobile revenue from prior period backhaul circuit disconnects as part of decommissioning the former Sprint network. Incumbent Broadband Markets revenue declined due to a 16.9% decrease in video RGUs due to cord cutting and a 1.6% decline in data RGUs with the majority of the decline due to the end of the ACP program.

• Cost of services increased approximately $27.3 million, or 27.0%, compared with 2023, primarily due to $25.3 million of cost of services incurred in the newly acquired Horizon markets and a $2.0 million in the legacy Shentel markets due to higher maintenance costs from the Glo Fiber expansion.

• Selling, general and administrative expense increased $15.9 million, or 16.0%, compared with 2023, primarily driven by $11.7 million of recurring selling, general and administrative costs associated with the newly acquired Horizon teams and $4.2 million in higher expenses in the legacy Shentel markets due to higher advertising costs and sales headcount associated with the Company’s expansion of Glo Fiber.

• Restructuring, integration and acquisition expense for 2024 increased $11.6 million compared with 2023, primarily driven by non-recurring costs related to the Horizon acquisition and integration.

• Depreciation and amortization for 2024, increased $35.1 million, or 55.4%, compared with 2023, primarily driven by $25.5 million of depreciation and amortization related to the tangible and intangible assets acquired in the Horizon Transaction and $9.6 million of depreciation related to legacy Shentel’s expansion of its Glo Fiber network.

• Interest expense increased $11.7 million as compared to 2023 due to higher borrowings related to funding the Glo Fiber expansion.

• Loss from continuing operations was $28.4 million in 2024 compared with income from continuing operations of $1.0 million in 2023. The loss was due primarily to higher depreciation and amortization from the Horizon acquisition and Glo Fiber network expansion and higher interest expense from higher borrowings.

• Adjusted EBITDA for 2024 increased to $94.6 million, representing a $15.6 million, or 19.7%, increase compared with 2023. The former Horizon markets contributed $10.7 million. Excluding the former Horizon markets, Adjusted EBITDA grew $4.9 million, or 6.2%, driven by the previously disclosed revenue growth and partially offset by higher cost of services and sales and marketing expenses to support new Glo Fiber markets.

• Total homes passed grew to approximately 585,000, including 346,000 Glo Fiber Expansion Market passings and 239,000 Incumbent Broadband Markets passings. Glo Fiber Expansion Markets broadband data customer net additions were approximately 21,600, resulting in over 65,000 customers as of December 31, 2024. Incumbent Broadband Markets data customer net losses were approximately 1,300, resulting in over 111,000 customers as of December 31, 2024.

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_{¹ Incumbent Broadband Markets consists of Shentel Incumbent Cable Markets and Horizon Incumbent Telephone Markets including Fiber-To-The-Home (“FTTH”) passings.}

Fourth Quarter 2024 Results Compared with Fourth Quarter 2023 Results

• Revenue increased $17.5 million, or 25.8%, to $85.4 million, primarily due to $14.1 million of revenues earned in the newly acquired Horizon markets. The Company made a $2.6 million measurement period negative adjustment to Horizon Commercial Fiber revenues and established a corresponding deferred revenue liability to be recognized over the contract period. The measurement period adjustment defers revenue to future years and does not impact billings and cash flows. Excluding Horizon, revenues grew $3.4 million, or 5.0%, primarily driven by Glo Fiber Expansion Markets Residential & SMB revenue growth of $5.6 million, or 52.7% partially offset by an Incumbent Broadband Markets Residential & SMB revenue decline of $2.6 million, or 5.8%. Glo Fiber Expansion Markets revenue growth was driven by a 50.9% increase in broadband data subscribers and an 5.1% increase in broadband data Average Revenue per User (“ARPU”). The decline in Incumbent Broadband Markets revenue was primarily due to a 16.9% decrease in video RGUs due to cord cutting and a 1.6% decline in data RGUs with the majority of the decline due to the end of the ACP program.

• Cost of services increased approximately $8.8 million, or 36.0%, primarily due to $7.8 million of cost of services incurred in the newly acquired Horizon markets and a $1.0 million increase in the legacy Shentel markets maintenance costs due to Glo Fiber expansion.

• Selling, general and administrative expense increased $3.7 million, or 14.6%, primarily due to $3.9 million associated with the newly acquired Horizon teams and $0.2 million in lower expenses in the legacy Shentel markets due to lower fees for professional services.

• Restructuring, integration and acquisition expense decreased $0.4 million, primarily due to less non-recurring acquisition-related costs, as the acquisition was completed prior to the fourth quarter of 2024.

• Depreciation and amortization increased $11.4 million, or 69.9%, primarily due $8.9 million of depreciation and amortization expense related to the tangible and intangible assets acquired in the Horizon Transaction. The remaining increase in depreciation and amortization expense is attributable to the Company’s expansion of its Glo Fiber network.

• Interest expense increased $2.4 million due to higher borrowings related to funding the Glo Fiber expansion.

• Loss from continuing operations was $6.2 million in the fourth quarter of 2024 compared with income from continuing operations of $1.9 million in the fourth quarter of 2023. The net loss was due primarily to higher depreciation and amortization from Horizon and Glo Fiber network expansion and increased interest expense from higher borrowings.

• Adjusted EBITDA for the fourth quarter of 2024 increased to $25.5 million, representing a $5.6 million, or 28.1%, increase compared with the fourth quarter of 2023. The former Horizon markets contributed $2.4 million. Excluding the former Horizon markets, Adjusted EBITDA grew $3.2 million, or 16.0%, driven by the previously disclosed Glo Fiber revenue growth, and partially offset by higher cost of services and selling, general and administrative expenses to support new Glo Fiber markets.

Other Information

• Capital expenditures were $319.1 million for the year ended December 31, 2024 compared with $255.1 million in 2023. The $64.0 million increase in capital expenditures was primarily driven by $24.4 million of capital expenditures in the acquired Horizon markets and network expansion in Glo Fiber Expansion Markets and government-subsidized markets.

• The Company received $19.2 million and $1.9 million in government grant cash reimbursements during the years ended December 31, 2024 and 2023, respectively.

• As of December 31, 2024, our cash and cash equivalents totaled $46.3 million, the availability under our Revolver and Term Loan A-3 was $243.0 million, and the remaining reimbursements available under government grants was $110.6 million, which are subject to fulfilling the terms of the agreements, for total available liquidity of approximately $399.9 million. During 2024, we borrowed a total of $125.0 million under our term loans and had total indebtedness of $418.0 million as of December 31, 2024.

Conference Call and Webcast

Date: Thursday, February 20, 2025
Time: 8:30 a.m. (ET)
Listen via Internet: https://investor.shentel.com/
For Analysts, please register to dial-in at this link.

A live webcast of the call will be available on the “Investor Relations” page of the Company’s website at http://investor.shentel.com/.

A replay of the call will be available for a limited time on the Investor Relations page of the Company’s website.

About Shenandoah Telecommunications

Shenandoah Telecommunications Company (Shentel) provides broadband services through its high speed, state-of-the-art fiber optic and cable networks to residential and commercial customers in eight contiguous states in the eastern United States. The Company’s services include: broadband internet, video, voice, high-speed Ethernet, dark fiber leasing, and managed network services. The Company owns an extensive regional network with over 16,800 route miles of fiber. For more information, please visit www.shentel.com.

This release contains forward-looking statements about Shentel regarding, among other things, its business strategy, its prospects and its financial position. These statements can be identified by the use of forward-looking terminology such as “believes,” “estimates,” “expects,” “intends,” “may,” “will,” “should,” “could,” or “anticipates” or the negative or other variation of these or similar words, or by discussions of strategy or risks and uncertainties. The forward-looking statements are based upon management’s beliefs, assumptions and current expectations and may include comments as to Shentel’s beliefs and expectations as to future events and trends affecting its business that are necessarily subject to uncertainties, many of which are outside Shentel’s control. Although management believes that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are not, and should not be relied upon as, a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at which such performance or results will be achieved, and actual results may differ materially from those contained in or implied by the forward-looking statements as a result of various factors. A discussion of other factors that may cause actual results to differ from management’s projections, forecasts, estimates and expectations is available in Shentel’s filings with the Securities and Exchange Commission. Those factors may include, among others, the expected savings and synergies from the Horizon Transaction may not be realized or may take longer or cost more than expected to realize, changes in overall economic conditions including rising inflation, regulatory requirements, changes in technologies, changes in competition, demand for our products and services, availability of labor resources and capital, natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, and other conditions. The forward-looking statements included are made only as of the date of the statement. Shentel undertakes no obligation to revise or update such statements to reflect current events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events, except as required by law.

CONTACTS:
Shenandoah Telecommunications Company
Jim Volk
Senior Vice President – Chief Financial and Accounting Officer
540-984-5168
Jim.Volk@emp.shentel.com

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Figures for the quarters ended December 31, 2024 and 2023 are unaudited)

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1. Incumbent Broadband Markets consists of Shentel Incumbent Cable Markets and Horizon Incumbent Telephone Markets with Fiber-To-The-Home (“FTTH”) passings.
2. Glo Fiber Expansion Markets consists of FTTH passings in greenfield expansion markets in the Shentel and former Horizon market

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2024 and 2023

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2024 and 2023

Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA Margin

The Company defines Adjusted EBITDA as (loss) income from continuing operations calculated in accordance with GAAP, adjusted for the impact of depreciation and amortization, impairment expense, other income (expense), net, interest income, interest expense, income tax expense (benefit), stock compensation expense, transaction costs related to acquisition and disposition events (including professional advisory fees, integration costs, and related compensatory matters), restructuring expense, tax on equity award vesting and exercise events, and other non-comparable items. A reconciliation of (loss) income from continuing operations, which is the most directly comparable GAAP financial measure, to Adjusted EBITDA is provided below herein.

Adjusted EBITDA margin is the Company’s calculation of Adjusted EBITDA, divided by revenue calculated in accordance with GAAP.

The Company uses Adjusted EBITDA and Adjusted EBITDA margin as supplemental measures of performance to evaluate operating effectiveness and assess its ability to increase revenues while controlling expense growth and the scalability of the Company’s business growth strategy. Adjusted EBITDA is also a significant performance measure used by the Company in its incentive compensation programs. The Company believes that the exclusion of the expense and income items eliminated in calculating Adjusted EBITDA and Adjusted EBITDA margin provides management and investors a useful measure for period-to-period comparisons of the Company’s core operating results by excluding items that are not comparable across reporting periods or that do not otherwise relate to the Company’s ongoing operations. Accordingly, the Company believes that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating the Company’s operating results. However, use of Adjusted EBITDA and Adjusted EBITDA margin as analytical tools has limitations, and investors and others should not consider them in isolation or as substitutes for analysis of our financial results as reported under GAAP. In addition, other companies may calculate Adjusted EBITDA and Adjusted EBITDA margin or similarly titled measures differently, which may reduce their usefulness as comparative measures.

Supplemental Information

Operating Statistics

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(1) Homes and businesses are considered passed (“passings”) if we can connect them to our network without further extending the distribution system. Passings is an estimate based upon the best available information. Passings will vary among video, broadband data and voice services.
(2) Penetration is calculated by dividing the number of RGUs by the number of passings or available homes, as appropriate.
(3) Total fiber miles are measured by taking the number of fiber strands in a cable and multiplying that number by the route distance. For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles.
(4) Incumbent Broadband Markets consists of Shentel Incumbent Cable Markets and Horizon Incumbent Telephone Markets with Fiber-To-The-Home (“FTTH”) passings.
(5) Glo Fiber Expansion Markets consists of FTTH passings in greenfield expansion markets in the Shentel and former Horizon markets.

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(1) Average Revenue Per RGU calculation = (Residential & SMB Revenue) / average RGUs / 3 months.