Shentel(US:SHEN)2022-04-29 14:24Financial Data and Key Metrics Changes - Broadband revenue grew 8.3% to $59.7 million, driven by a 9.3% increase in Residential and SMB revenue due primarily to a 14.1% increase in broadband data RGUs [17] - Adjusted EBITDA for the first quarter declined 5.4% to $21.1 million, with broadband expenses increasing at a faster rate than revenues [18] - Consolidated revenue grew 7.9% to $64.4 million, with consolidated adjusted EBITDA growing 2.4% to $17.4 million [21][22] - Free cash flow and cash on hand declined by $30 million, ending the quarter with a liquidity position of $454 million [24] Business Line Data and Key Metrics Changes - Glo Fiber added about 3,600 net data additions during the first quarter, with Glo Fiber contributing 2,400, marking a 14% increase from Q4 2021 and a 76% increase from Q1 2021 [9] - Incumbent Cable business added over 900 data net additions, with data penetration now near 51% [10] - Beam fixed wireless broadband service has approximately 1,700 customers, with a penetration rate just over 6% [36] Market Data and Key Metrics Changes - Glo Fiber services are now available in 13 markets, with a total of 339,000 approved Glo passings and a goal of 450,000 passings by 2026 [28][39] - The company has been awarded approximately $54 million in state and local grant funding to bring gigabit broadband to over 16,000 un-served homes [29] Company Strategy and Development Direction - The company is focused on a fiber-first growth strategy, investing in people and technology to enhance operations and customer service [12][13] - Plans to achieve $5 million in annual run rate cost savings by the end of 2022 through non-employee cost reduction initiatives [23] - The company expects to pass more than 700,000 homes and businesses with broadband services over the next five years, with approximately two-thirds served by fiber [42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued growth of Glo Fiber and the positive impact of community engagement on marketing efforts [58] - The company anticipates that the Glo Fiber product line will be EBITDA positive as a whole by the end of the year [75] - Management noted that the downward trend in ARPU was more of an accounting issue, with expectations for ARPU to remain steady going forward [64] Other Important Information - The company plans to decommission approximately 20 unprofitable beam fixed wireless sites, expecting an impairment charge of approximately $4 million and a restructuring charge of approximately $1 million [38] - Capital expenditures were $45.7 million in Q1 2022, with guidance for the full year remaining at $220 million to $240 million [50][51] Q&A Session Summary Question: Expectations for ramping marketing for broadband growth and pace of grant funding - Management expects capital reimbursement from government grants to lag three to six months behind construction, targeting roughly two years to complete the projects [57] - Local community involvement is key for marketing in new Glo markets, with expectations for growth as COVID restrictions ease [58] Question: Trends in Glo Fiber ARPU and outlook for commercial fiber and towers - Management clarified that the downward trend in ARPU was more of an accounting issue, with expectations for ARPU to remain steady [64] - No impact from T-Mobile churn has been observed yet, with clarity expected as T-Mobile rationalizes their network [66] Question: Changes in marketing strategy for Glo and customer reception - Management reported excellent response at the middle and high end of the market, with plans to adjust the rate card to capture lower-end customers [71] - The decline in penetration rates is expected to improve as new households passed are monetized [72]