On August 7, 2024, Shenandoah Telecommunications Co (SHEN, Financial) released its 8-K filing detailing its financial and operating results for the second quarter of 2024. Shenandoah Telecommunications Company, with its subsidiaries, provides various broadband communication products and services via its wireless, cable, fiber optic, and fixed wireless networks to customers in the Mid-Atlantic United States. The company operates through two business units: tower and broadband. The tower segment leases company-owned cell tower spaces to other wireless communication providers, while the broadband segment provides broadband Internet, video, and voice services to residential and commercial customers. The broadband segment generates the vast majority of the company's revenue, with the bulk of sales flowing from residential and small, and medium businesses within the broadband unit.
Performance Overview
Shenandoah Telecommunications Co (SHEN, Financial) reported a significant increase in revenue for Q2 2024, reaching $85.8 million, a 28.7% rise compared to $66.6 million in Q2 2023. This growth was primarily driven by the acquisition of Horizon Acquisition Parent LLC, which contributed $16.7 million to the revenue. Excluding Horizon, the Glo Fiber Expansion Markets saw a 67% revenue growth over the same period in 2023.
Despite the revenue growth, the company reported a net loss from continuing operations of $12.8 million, compared to a net loss of $1.4 million in Q2 2023. This increase in net loss was primarily due to non-recurring integration and acquisition expenses and depreciation related to the Horizon acquisition.
Financial Achievements and Challenges
The acquisition of Horizon has been a significant milestone for Shenandoah Telecommunications Co (SHEN, Financial), enhancing its commercial fiber capabilities in Ohio and adjacent states. The integration of Horizon's fiber-rich network has been progressing well, contributing to the company's overall growth strategy.
“We made good progress executing our Fiber First strategy with another solid quarter of Glo Fiber net subscriber additions and construction of new passings, and integration of our recent Horizon acquisition with its fiber rich network has gone well,” said President and CEO, Christopher E. French.
However, the company faced challenges with increased costs. The cost of services for Q2 2024 rose by 39.5% to $34.5 million, driven by $8.9 million in costs from the Horizon acquisition. Additionally, selling, general, and administrative expenses increased by 20.8% to $30.2 million, primarily due to higher advertising and sales headcount to support the Glo Fiber expansion.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Revenue | $85.8 million | $66.6 million |
| Net Loss from Continuing Operations | $(12.8) million | $(1.4) million |
| Adjusted EBITDA | $23.3 million | $19.5 million |
| Cost of Services | $34.5 million | $24.8 million |
| Selling, General, and Administrative Expenses | $30.2 million | $25.0 million |
Income Statement Highlights
Shenandoah Telecommunications Co (SHEN, Financial) reported an operating loss of $15.9 million for Q2 2024, compared to an operating loss of $0.1 million in Q2 2023. The increase in operating loss was primarily due to higher integration and acquisition expenses, which rose to $11.3 million from $0.3 million in the previous year.
Adjusted EBITDA for Q2 2024 increased to $23.3 million, representing a 19.5% increase compared to $19.5 million in Q2 2023. The former Horizon markets contributed $3.7 million to this growth. Excluding Horizon, Adjusted EBITDA grew by 0.8%, driven by Glo Fiber growth and partially offset by a decline in T-Mobile revenue from prior period backhaul circuit disconnects.
Balance Sheet and Cash Flow
As of June 30, 2024, Shenandoah Telecommunications Co (SHEN, Financial) had cash and cash equivalents totaling $43.8 million, down from $139.3 million at the end of 2023. The decrease in cash was primarily due to capital expenditures and the cash consideration paid for the Horizon acquisition.
Capital expenditures for the first six months of 2024 were $150.9 million, compared to $135.3 million in the same period of 2023. The increase was driven by $9.8 million in capital expenditures in the former Horizon markets and $5.9 million for the expansion of Glo Fiber Expansion Markets.
Conclusion
Shenandoah Telecommunications Co (SHEN, Financial) has demonstrated strong revenue growth driven by strategic acquisitions and expansion of its Glo Fiber network. However, the company faces challenges with increased costs and integration expenses. The successful integration of Horizon and continued focus on the Fiber First strategy will be crucial for the company's future performance.
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Explore the complete 8-K earnings release (here) from Shenandoah Telecommunications Co for further details.
