8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

_________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  April 28, 2023

_______________________________

Shenandoah Telecommunications Company

(Exact name of registrant as specified in its charter)

_______________________________

Virginia	000-09881	54-1162807
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

500 Shentel Way
P.O. Box 459

Edinburg, Virginia 22824

(Address of Principal Executive Offices) (Zip Code)

(540) 984-4141

(Registrant's telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

_______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock (No Par Value)	SHEN	NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

On April 28, 2023, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

99.1     Press release dated April 28, 2023
104      Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Shenandoah Telecommunications Company
Date: April 28, 2023	By:	/s/ James J. Volk
		James J. Volk
		Senior Vice President – Chief Financial Officer (Principal Financial Officer)

EX-99.1

EXHIBIT 99.1

Shenandoah Telecommunications Company Reports First Quarter 2023 Results

EDINBURG, Va., April 28, 2023 (GLOBE NEWSWIRE) -- Shenandoah Telecommunications Company (“Shentel”) (Nasdaq: SHEN) announced first quarter 2023 financial and operating results.

First Quarter 2023 Highlights

• Glo Fiber Markets data net additions were 4,507 or 87.3% higher than the first quarter of 2022.
• Consolidated revenue grew 11.3% to $71.7 million compared to the first quarter of 2022. Glo Fiber Markets revenue grew 104.7% to $7.0 million and Broadband revenue grew 12.5% to $67.2 million over the same period.
• Consolidated net income was $2.1 million in the first quarter of 2023, compared with net loss of $0.6 million in the first quarter of 2022.
• Consolidated Adjusted EBITDA grew 28.6% to $22.4 million compared to the first quarter of 2022. Broadband Adjusted EBITDA grew 25.0% to $26.3 million over the same period.

“We had a record quarter for Glo Fiber Markets data net additions and revenue, and for Broadband revenue and Adjusted EBITDA,” said President and CEO, Christopher E. French. "We are beginning to see the operating leverage and margin expansion in our Broadband business as Glo Fiber accelerates growth and increases scale."

Shentel's first-quarter earnings conference call will be webcast at 8:00 a.m. ET on Friday, April 28, 2023. The webcast and related materials will be available on Shentel’s Investor Relations website at https://investor.shentel.com/.

Consolidated First Quarter 2023 Results

• Revenue in the first quarter of 2023 grew 11.3% to $71.7 million compared with the first quarter of 2022, due to Broadband segment revenue growth of 12.5%, partially offset by Tower segment revenue decline of 5.6%.

• Net income per share was $0.04 in the first quarter of 2023 compared with net loss per share of $0.01 in the first quarter of 2022.

• Adjusted EBITDA was $22.4 million in the first quarter of 2023 compared with $17.4 million in the first quarter of 2022 due to Broadband segment growth of 25.0% partially offset by Tower segment decline of 9.4%.

Broadband

• Total Cable Markets and Glo Fiber Markets broadband data Revenue Generating Units ("RGUs") as of March 31, 2023, were 138,713, representing 14.6% year over year growth. Penetration for Cable Markets and Glo Fiber Markets were 52% and 17%, respectively, compared to 51% and 15%, respectively, as of March 31, 2022. Total Glo Fiber Markets passings grew year over year by 71,447 from 93,611 to 165,058.

• Broadband revenue in the first quarter of 2023 grew $7.5 million, or 12.5%, to $67.2 million compared with $59.7 million in the first quarter of 2022, primarily driven by a $3.6 million, or 104.7%, increase in Residential & Small and Medium Business ("SMB") - Glo Fiber Markets revenue. Residential & SMB - Glo Fiber Markets increased due to a 108.9% increase in broadband data RGUs. In addition, Residential & SMB - Cable Markets revenue grew $1.3 million, or 2.9%, due to a 2.5% increase in data RGUs and 2.4% increase in data ARPU. Commercial Fiber revenue increased $2.6 million, or 29.1%, primarily due to $1.8 million in non-recurring early termination fees and a $0.8 million increase in recurring revenue. T-Mobile disconnected 188 backhaul circuits during the first quarter as part of their previously announced rationalization of the former Sprint network. The Company expects 174 additional backhaul disconnects in 2023 as part of the network rationalization.

• Cost of services increased approximately $0.3 million, or 1.0%, compared with the three months ended March 31, 2022 due to higher costs associated with consumable materials and supplies, maintenance and rent, partially offset by lower medical costs.

• Selling, general and administrative expense increased $2.1 million, or 15.4%, compared with the three months ended March 31, 2022, due primarily to higher advertising costs associated with the Company's expansion of Glo Fiber and a change in strategy to drive more gross adds to low cost sales channels, higher information technology costs as a result of the Company's investment in upgraded systems, and higher property taxes associated with increased network assets associated with the expansion of Glo Fiber.

• Depreciation and amortization expense increased $2.0 million, or 15.5%, compared with the three months ended March 31, 2022, primarily as a result of the Company's expansion of its Glo Fiber network.

• Broadband operating income was $11.3 million in the first quarter of 2023, compared to $8.2 million in the first quarter of 2022.

• Broadband Adjusted EBITDA was $26.3 million in the first quarter of 2023 compared to $21.1 million in the first quarter of 2022.

Tower

• Revenue decreased approximately $0.3 million, or 5.6%, for the three months ended March 31, 2023 compared with the three months ended March 31, 2022, primarily due to lower application fee revenue.

• Tower operating income was $2.4 million in the first quarter of 2023, compared to $2.8 million in the first quarter of 2022.

• Tower Adjusted EBITDA in the first quarter of 2023 decreased 9.4% to $2.9 million, compared with $3.2 million for the first quarter of 2022.

Other Information

• As of March 31, 2023, our cash and cash equivalents totaled $48.4 million and the availability under our delayed draw term loans and revolving line of credit was $300.0 million, for total available liquidity of $348.4 million. We expect to draw the remaining $200.0 million in delay draw term loans by June 30, 2023.

• Capital expenditures were $67.7 million for the three months ended March 31, 2023 compared with $45.7 million in the comparable 2022 period. The $22.0 million increase in capital expenditures was primarily due to higher spending in the Broadband segment to enable our Glo Fiber market expansion.

Earnings Call Webcast

Date: Friday, April 28, 2023
Time: 8:00 A.M. (ET)
Listen via Internet: https://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 cable and fiber optic networks to customers in the Mid-Atlantic United States. The Company’s services include: broadband internet, video, and voice; fiber optic Ethernet, wavelength and leasing; and tower colocation leasing. The Company owns an extensive regional network with over 8,600 route miles of fiber and over 220 macro cellular towers. 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 natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as COVID-19, changes in general economic conditions including high inflation, increases in costs, changes in regulation and other competitive factors. 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 and Chief Financial Officer
540-984-5168
Jim.Volk@emp.shentel.com

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)	Three Months Ended March 31,
		2023		2022
Service revenue and other	$	71,686	$	64,414
Operating expenses:
Cost of services exclusive of depreciation and amortization		26,567		26,339
Selling, general and administrative		26,609		23,771
Depreciation and amortization		15,782		14,684
Total operating expenses		68,958		64,794
Operating income (loss)		2,728		(380	)
Other income (expense):
Other income (expense), net		1,117		(170	)
Income (loss) before income taxes		3,845		(550	)
Income tax expense		1,779		53
Net income (loss)	$	2,066	$	(603	)
Net income (loss) per share, basic and diluted:
Basic net income (loss) per share	$	0.04	$	(0.01	)
Diluted net income (loss) per share	$	0.04	$	(0.01	)
Weighted average shares outstanding, basic		50,291		50,146
Weighted average shares outstanding, diluted		50,512		50,146

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)	March 31, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	48,396	$	44,061
Accounts receivable, net of allowance for doubtful accounts of $698 and $776, respectively		15,854		20,615
Income taxes receivable		5,079		29,755
Prepaid expenses and other		12,762		11,509
Current assets held for sale		22,432		22,622
Total current assets		104,523		128,562
Investments		13,118		12,971
Property, plant and equipment, net		739,587		687,553
Goodwill and intangible assets, net		81,392		81,515
Operating lease right-of-use assets		54,999		53,859
Deferred charges and other assets		13,021		13,259
Total assets	$	1,006,640	$	977,719
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt, net of unamortized loan fees	$	1,302	$	648
Accounts payable		48,822		49,173
Advanced billings and customer deposits		12,391		12,425
Accrued compensation		6,857		9,616
Current operating lease liabilities		2,946		2,829
Accrued liabilities and other		16,103		17,906
Current liabilities held for sale		3,815		3,824
Total current liabilities		92,236		96,421
Long-term debt, less current maturities, net of unamortized loan fees		98,655		74,306
Other long-term liabilities:
Deferred income taxes		86,335		84,600
Asset retirement obligations		10,252		9,932
Benefit plan obligations		3,887		3,758
Non-current operating lease liabilities		51,629		50,477
Other liabilities		20,866		20,218
Total other long-term liabilities		172,969		168,985
Commitments and contingencies
Shareholders’ equity:
Common stock, no par value, authorized 96,000; 50,247 and 50,110 issued and outstanding at March 31, 2023 and December 31, 2022, respectively		—		—
Additional paid in capital		60,160		57,453
Retained earnings		582,620		580,554
Total shareholders’ equity		642,780		638,007
Total liabilities and shareholders’ equity	$	1,006,640	$	977,719

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)	Three Months Ended March 31,
		2023			2022
Cash flows from operating activities:
Net income (loss)	$	2,066		$	(603	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		15,782			14,684
Stock-based compensation expense, net of amount capitalized		3,717			3,143
Deferred income taxes		1,735			(349	)
Other, net		740			1,017
Changes in assets and liabilities:
Accounts receivable		4,488			5,890
Current income taxes		24,676			459
Operating lease assets and liabilities, net		129			80
Other assets		(1,030	)		(1,365	)
Accounts payable		(837	)		(4,130	)
Other deferrals and accruals		(3,142	)		(2,760	)
Net cash provided by operating activities		48,324			16,066
Cash flows from investing activities:
Capital expenditures		(67,671	)		(45,693	)
Proceeds from sale of assets and other		101			86
Net cash used in investing activities		(67,570	)		(45,607	)
Cash flows from financing activities:
Proceeds from credit facility borrowings		25,000			—
Taxes paid for equity award issuances		(1,156	)		(603	)
Payments for financing arrangements and other		(263	)		(219	)
Net cash provided by (used in) financing activities		23,581			(822	)
Net increase (decrease) in cash and cash equivalents		4,335			(30,363	)
Cash and cash equivalents, beginning of period		44,061			84,344
Cash and cash equivalents, end of period	$	48,396		$	53,981
Supplemental Disclosures of Cash Flow Information
Interest paid	$	1,327		$	—
Income tax refunds received	$	25,030		$	—

Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA Margin

The Company defines Adjusted EBITDA as net income (loss) calculated in accordance with GAAP, adjusted for the impact of depreciation and amortization, impairment, 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 net income (loss), 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.

Three Months Ended March 31, 2023
(in thousands)	Broadband			Tower			Corporate & Eliminations			Consolidated
Net income (loss)	$	11,274		$	2,421		$	(11,629	)	$	2,066
Depreciation and amortization		14,867			513			402			15,782
Other expense (income), net		62			—			(1,179	)		(1,117	)
Income tax benefit		—			—			1,779			1,779
Stock-based compensation		—			—			3,717			3,717
Restructuring charges and other		131			—			—			131
Adjusted EBITDA	$	26,334		$	2,934		$	(6,910	)	$	22,358
Adjusted EBITDA margin		39	%		64	%	N/A				31	%

Three Months Ended March 31, 2022
(in thousands)	Broadband			Tower			Corporate & Eliminations			Consolidated
Net income (loss)	$	8,127		$	2,753		$	(11,483	)	$	(603	)
Depreciation and amortization		12,876			484			1,324			14,684
Other expense (income), net		54			—			116			170
Income tax benefit		—			—			53			53
Stock-based compensation		—			—			3,143			3,143
Restructuring charges and other		17			—			(81	)		(64	)
Adjusted EBITDA	$	21,074		$	3,237		$	(6,928	)	$	17,383
Adjusted EBITDA margin		35	%		67	%	N/A				27	%

Segment Results

Three Months Ended March 31, 2023:

(in thousands)	Broadband		Tower		Corporate & Eliminations			Consolidated
External revenue
Residential & SMB - Cable Markets1	$	44,756	$	—	$	—		$	44,756
Residential & SMB - Glo Fiber Markets1		7,003		—		—			7,003
Commercial Fiber		11,698		—		—			11,698
Tower lease		—		4,538		—			4,538
RLEC & Other		3,691		—		—			3,691
Service revenue and other		67,148		4,538		—			71,686
Intercompany revenue and other		55		38		(93	)		—
Total revenue		67,203		4,576		(93	)		71,686
Operating expenses
Cost of services		25,429		1,192		(54	)		26,567
Selling, general and administrative		15,571		450		10,588			26,609
Depreciation and amortization		14,867		513		402			15,782
Total operating expenses		55,867		2,155		10,936			68,958
Operating income (loss)	$	11,336	$	2,421	$	(11,029	)	$	2,728

Three Months Ended March 31, 2022:

(in thousands)	Broadband		Tower		Corporate & Eliminations			Consolidated
External revenue
Residential & SMB - Cable Markets1	$	43,492	$	—	$	—		$	43,492
Residential & SMB - Glo Fiber Markets1		3,421		—		—			3,421
Commercial Fiber		9,062		—		—			9,062
Tower lease		—		4,746		—			4,746
RLEC & Other		3,689		—		—			3,689
Service revenue and other		59,664		4,746		—			64,410
Intercompany revenue and other		50		101		(147	)		4
Total revenue		59,714		4,847		(147	)		64,414
Operating expenses
Cost of services		25,168		1,292		(121	)		26,339
Selling, general and administrative		13,489		318		9,964			23,771
Depreciation and amortization		12,876		484		1,324			14,684
Total operating expenses		51,533		2,094		11,167			64,794
Operating income (loss)	$	8,181	$	2,753	$	(11,314	)	$	(380	)

_________________________________________
^{(1)   Shentel has presented Residential & SMB - Cable Markets and Residential & SMB - Glo Fiber Markets separately for the three months ended March 31, 2023. These revenues were previously reported in one line under the description “Residential & SMB”. Shentel has amended the presentation for the three months ended March 31, 2022 for comparability.}

Supplemental Information

Broadband Operating Statistics

	March 31, 2023		March 31, 2022
Broadband homes and businesses passed (1)	377,348		305,053
Cable Markets	212,290		211,442
Glo Fiber Markets	165,058		93,611
Residential & Small and Medium Business ("SMB") RGUs:
Broadband Data	138,713		121,074
Cable Markets	109,920		107,291
Glo Fiber Markets	28,793		13,783
Video	45,660		49,163
Voice	40,135		36,042
Total Residential & SMB RGUs (excludes RLEC)	224,508		206,279
Residential & SMB Penetration (2)
Broadband Data	36.8	%	39.7	%
Cable Markets	51.8	%	50.7	%
Glo Fiber Markets	17.4	%	14.7	%
Video	12.1	%	16.1	%
Voice	11.2	%	12.5	%
Fiber route miles	8,663		7,611
Total fiber miles (3)	709,123		564,097

______________________________________________________
^{(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 users 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.}

Broadband - Residential and SMB ARPU
	Three Months Ended March 31,
		2023		2022
Residential and SMB Revenue:
Broadband	$	33,174	$	28,649
Cable Markets		27,273		25,863
Glo Fiber Markets		5,901		2,786
Video		14,645		15,341
Voice		3,030		2,916
Discounts, adjustments and other		910		7
Total Revenue	$	51,759	$	46,913
Average RGUs:
Broadband Data		136,271		119,083
Cable Markets		109,758		106,590
Glo Fiber Markets		26,513		12,493
Video		46,268		49,445
Voice		39,992		34,836
ARPU: (1)
Broadband	$	81.09	$	80.11
Cable Markets	$	82.83	$	80.88
Glo Fiber Markets	$	74.18	$	74.33
Video	$	105.51	$	103.42
Voice	$	25.25	$	27.90

______________________________________________________
^{(1)   Average Revenue Per RGU calculation = (Residential & SMB Revenue) / average RGUs / 3 months}

Tower Operating Statistics

	March 31, 2023	March 31, 2022
Macro tower sites	222	223
Tenants	445	468
Average tenants per tower	2.0	2.1

XML

Cover	Apr. 28, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Apr. 28, 2023
Entity File Number	000-09881
Entity Registrant Name	Shenandoah Telecommunications Company
Entity Central Index Key	0000354963
Entity Tax Identification Number	54-1162807
Entity Incorporation, State or Country Code	VA
Entity Address, Address Line One	500 Shentel Way
Entity Address, Address Line Two	P.O. Box 459
Entity Address, City or Town	Edinburg
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	22824
City Area Code	540
Local Phone Number	984-4141
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock (No Par Value)
Trading Symbol	SHEN
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false