Shenandoah Telecommunications (SHEN) 7 Nov 24 2024 Q3 Earnings call transcript

In a recent earnings call, Shenandoah Telecommunications (Shentel) shared updates on its third quarter 2024 performance, revealing significant progress in its integration of the Horizon acquisition and strategic growth initiatives. The call, led by President and CEO Christopher French, Executive Vice President and COO Edward McKay, Senior Vice President of Finance and CFO James Volk, and Director of Financial Planning and Analysis Kirk Andrews, provided insights into Shentel's operational performance, financial results, and future outlook.

Strategic Acquisition Integration and Synergy Savings

Shentel's acquisition of Horizon in the second quarter of 2024 has proven to be a strategic move, with notable progress made in system integrations. The company has successfully implemented leadership changes, integrated commercial sales teams, and converted several back-office systems, including the billing system. Shentel is now on track to achieve its targeted synergy savings of $11 million, with a clear line of sight to realizing these savings by the second quarter of 2025.

Financial Performance and Revenue Growth

Shentel reported a 30% increase in revenue to $87.6 million for the third quarter of 2024, driven primarily by the addition of Horizon's markets. Excluding the former Horizon markets, revenue grew by 4.9%, underscoring the company's organic growth. Glo Fiber, Shentel's broadband segment, experienced a record quarter with a 58% year-over-year growth rate in passings and customers, demonstrating the success of its strategic focus on fiber expansion.

Broadband Expansion and Customer Growth

Shentel's broadband expansion continues to gain momentum, with a robust construction pipeline of 337,000 additional passings in various stages of engineering, permitting, and construction. The company is now passing approximately 554,000 homes and businesses with broadband services, with approximately 59% of these passings served via fiber. Shentel added approximately 6,000 net customers in the third quarter, reaching over 59,000 total customers, highlighting the strong demand for its broadband services.

Competitive Landscape and Future Outlook

Shentel's competitive landscape remains dynamic, with ongoing construction and expansion efforts in the face of competition from Verizon and other players. The company is actively bidding on BEAD funding opportunities, but anticipates modest growth from these opportunities compared to the potential in its already-grant-funded projects. Shentel's focus on fiber expansion and its strategic acquisition of Horizon position it well for future growth and synergy savings, setting the stage for continued success in the broadband market.

In conclusion, Shenandoah Telecommunications' earnings call showcased a company on the rise, with significant progress in its strategic acquisitions, operational integration, and financial performance. The company's focus on fiber expansion and customer growth, coupled with its strategic acquisitions, positions it well for continued success in the competitive broadband market. As Shentel continues to execute its growth strategies, investors and stakeholders will be watching closely for further updates on its progress and future outlook.