Shenandoah Telecommunications Company (SHEN) Q3 2024 earnings summary

Executive summary

• Revenue increased 30% year-over-year to $87.6 million in Q3 2024, driven by Horizon acquisition and Glo Fiber expansion, with Glo Fiber adding 6,000 subscribers and passings up over 50% year-over-year.

• Integration of Horizon is ahead of schedule, with four of six back-office systems converted and $11 million in annual synergy savings expected by Q2 2025.

• Net loss from continuing operations was $5.3 million in Q3 2024, compared to a $0.2 million loss in Q3 2023, mainly due to higher depreciation, amortization, and interest expense.

• Tower Portfolio was sold for $309.9 million, resulting in a $216.8 million gain and a strategic shift in business focus.

• Issued $81 million in Series A Preferred Stock and amended credit facility to add $225 million in term loans and $50 million in revolving credit.

Financial highlights

• Q3 2024 revenue was $87.6 million, up 30% year-over-year; adjusted EBITDA rose 31% to $26.6 million, with margin improving to 30% from 27% in Q2 2024.

• Net loss attributable to common shareholders for Q3 2024 was $6.9 million; net income for the nine months ended September 30, 2024 was $194.9 million, driven by the Tower sale.

• Glo Fiber legacy markets saw revenue, subscriber, and ARPU growth of 56%, 54%, and 7%, respectively.

• Cost of services increased 31% to $34.4 million, mainly from Horizon, partially offset by lower programming costs.

• Depreciation and amortization increased 71.7% to $27.7 million, primarily due to Horizon and Glo Fiber network growth.

Outlook and guidance

• Management expects Glo Fiber and Horizon synergies to be key growth drivers and margin expanders in 2025, with full $11 million in synergy savings expected by Q2 2025.

• Capital investments for 2024 projected at $293–$325 million, with $178–$188 million for Glo Fiber expansion.

• Integration of Horizon expected to complete in early 2025, with ERP and payroll conversions by January 2025.

• Management expects capital expenditures to exceed operating cash flow through 2026 due to Glo Fiber network expansion.