Shentel(SHEN) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Performance Overview Shentel's second quarter of 2025 was marked by strong growth in its Glo Fiber segment and the successful integration of Horizon Telcom Key Highlights and Management Commentary Shentel's second quarter of 2025 was marked by strong growth in its Glo Fiber segment and the successful integration of Horizon Telcom, driving sustainable Adjusted EBITDA growth and margin expansion - Glo Fiber revenue grew 40.5% over the same period a year ago, with an incremental margin of 71%[3] - The company realized the full impact of its projected $13.8 million of annual run-rate synergies from the Horizon Telcom acquisition in the second quarter[3] Consolidated Financial Results (Q2 2025 vs. Q2 2024) In Q2 2025, Shentel's total revenue grew 3.2% to $88.6 million, driven by a 40.5% increase in Glo Fiber Expansion Markets revenue, significantly improving profitability with a narrowed net loss and 21.9% Adjusted EBITDA growth Q2 2025 vs. Q2 2024 Financial Comparison | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $88.6M | $85.8M | 3.2% | | Glo Fiber Expansion Markets Revenue | $19.8M | $14.1M | 40.5% | | Net Loss from Continuing Operations | ($9.0M) | ($12.8M) | (29.7%) | | Adjusted EBITDA | $28.4M | $23.3M | 21.9% | | Adjusted EBITDA Margin | 32% | 27% | +5 pts | - Revenue growth was primarily driven by a 43.1% year-over-year increase in Glo Fiber Expansion Markets data subscribers (RGUs)[5][6] - Restructuring, integration, and acquisition expenses decreased by $11.1 million, or 98.2%, as costs related to the Horizon acquisition in 2024 did not recur[6] - Depreciation and amortization increased by $9.5 million (37.2%), partly due to a $4.2 million write-off of plant under construction inventory assets[6] Operational and Liquidity Update As of June 30, 2025, Shentel expanded its network to approximately 623,000 total broadband homes passed, maintaining a strong liquidity position of $266.7 million while increasing capital expenditures to support network growth and completing a small fiber asset acquisition - Total broadband homes passed grew by 92,847 year-over-year to approximately 623,000[7] - As of June 30, 2025, total available liquidity was $266.7 million, including $29.1 million in cash, $143.0 million in credit facility availability, and $94.6 million in available government grant reimbursements[12] - Capital expenditures for the six months ended June 30, 2025, were $169.4 million, an increase of $18.5 million from the prior year, driven by network expansion[12] - The company completed the acquisition of fiber-to-the-home assets in Virginia on July 9, 2025, for $5 million, adding over 1,500 passings and 700 customers[12] 2025 Financial Outlook Shentel has initiated its financial guidance for the full year ending December 31, 2025, projecting significant growth in revenue and Adjusted EBITDA 2025 Financial Guidance Shentel has initiated its financial guidance for the full year ending December 31, 2025, projecting total revenue between $352 million and $357 million, Adjusted EBITDA between $113 million and $118 million, and anticipated decreased net capital expenditures compared to 2024 Full Year 2025 Financial Guidance | Metric (in millions) | 2025 Guidance (Midpoint) | 2024 Actual | YoY % Change (Midpoint) | | :--- | :--- | :--- | :--- | | Total Revenue | $354.5 | $328 | 8.1% | | Adjusted EBITDA | $115.5 | $95 | 21.6% | | Capital Expenditures, net | $275.0 | $300 | (8.3%) | - The company does not provide a reconciliation for its Adjusted EBITDA forecast to GAAP net income due to the difficulty in predicting special items[10] Detailed Financial Statements This section provides a detailed overview of Shentel's financial performance and position through its statements of operations, balance sheets, and cash flows Statements of Operations For the three months ended June 30, 2025, Shentel reported total service revenue of $88.6 million, with a narrowed operating loss and improved net loss from continuing operations, largely due to lower restructuring expenses and controlled cost of services Q2 2025 Statement of Operations Highlights (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Service revenue and other | $88,568 | $85,799 | | Total operating expenses | $97,676 | $101,684 | | Operating loss | ($9,108) | ($15,885) | | Loss from continuing operations | ($9,048) | ($12,773) | | Net loss per share (continuing ops) | ($0.19) | ($0.24) | - For the six months ended June 30, 2025, the net loss from continuing operations was $18.2 million, compared to $16.9 million in the same period of 2024[16] Balance Sheets As of June 30, 2025, Shentel's total assets increased to $1.81 billion, primarily driven by growth in property, plant, and equipment, while total liabilities also rose due to increased long-term debt, and total shareholders' equity slightly decreased Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $29,077 | $46,272 | | Property, plant and equipment, net | $1,523,994 | $1,438,538 | | Total assets | $1,814,674 | $1,740,273 | | Long-term debt, less current | $501,611 | $407,675 | | Total liabilities | $827,277 | $739,226 | | Total shareholders' equity | $901,964 | $918,583 | Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities significantly improved to $41.5 million, while net cash used in investing activities was $151.9 million, primarily for capital expenditures, and net cash provided by financing activities was $93.2 million, driven by credit facility borrowings Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $41,470 | $17,699 | | Net cash used in investing activities | ($151,908) | ($183,130) | | Net cash provided by financing activities | $93,243 | $69,955 | | Net decrease in cash | ($17,195) | ($95,476) | | Cash and cash equivalents, end of period | $29,077 | $43,779 | - Capital expenditures totaled $169.4 million, offset by $17.3 million in government grants received during the first six months of 2025[19][20] Non-GAAP Measures and Supplemental Data This section provides a reconciliation of non-GAAP measures, specifically Adjusted EBITDA, along with key operating statistics and average revenue per user (ARPU) data Reconciliation of Non-GAAP Measures (Adjusted EBITDA) Shentel uses Adjusted EBITDA, a non-GAAP measure, to evaluate operating performance, reporting $28.4 million for Q2 2025, a 21.9% increase from Q2 2024, with margin expansion from 27% to 32% Adjusted EBITDA Reconciliation (Q2, in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Loss from continuing operations | ($9,048) | ($12,773) | | Depreciation and amortization | $35,103 | $25,579 | | Restructuring, integration and acquisition | $206 | $11,325 | | Other Adjustments (Interest, Tax, etc.) | $2,837 | ($2,842) | | Adjusted EBITDA | $28,388 | $23,289 | - The company defines Adjusted EBITDA as loss from continuing operations adjusted for items like depreciation, amortization, interest, taxes, stock compensation, and transaction/restructuring costs[21] Operating Statistics As of June 30, 2025, Shentel's network reached 622,923 homes and businesses, a substantial increase driven by 27.3% growth in Glo Fiber Expansion Market passings, with total Residential & SMB Revenue Generating Units (RGUs) growing to 251,761, led by a 14.3% increase in Broadband Data RGUs, despite a 10.6% decline in video RGUs Key Operating Metrics (as of June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total homes and businesses passed | 622,923 | 530,076 | | Glo Fiber Expansion Markets passed | 378,916 | 297,545 | | Total Residential & SMB RGUs | 251,761 | 231,468 | | Broadband Data RGUs | 188,006 | 164,541 | | Video RGUs | 37,626 | 42,079 | Residential & SMB ARPU For Q2 2025, Broadband Data ARPU was $80.56, a slight decrease from Q2 2024, while Incumbent Broadband Markets ARPU remained stable at $83.05, Glo Fiber Expansion Markets ARPU was $76.72, and Video ARPU significantly increased to $125.15 despite subscriber decline ARPU for Three Months Ended June 30 | ARPU Category | 2025 | 2024 | | :--- | :--- | :--- | | Incumbent Broadband Markets | $83.05 | $83.49 | | Glo Fiber Expansion Markets | $76.72 | $77.56 | | Broadband Data | $80.56 | $81.64 | | Video | $125.15 | $116.96 | | Voice | $32.68 | $35.21 |