Sign in
ST

SHENANDOAH TELECOMMUNICATIONS CO/VA/ (SHEN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue grew 25.8% year over year to $85.4M on Horizon contribution and strong Glo Fiber growth; Adjusted EBITDA rose 28.1% to $25.5M with a 30% margin .
  • Management raised Horizon synergy target to $13.8M run-rate by early Q2’25 (from $11M in Q3), completed integration in nine months, and expects long-term revenue and Adjusted EBITDA CAGRs to return to post-2019 Glo launch levels .
  • Net loss persisted due to higher D&A and interest from Horizon and network expansion (Q4 loss from continuing ops: $6.2M; diluted net EPS: $(0.05)), while a $2.6M measurement period adjustment deferred Horizon commercial revenue to future periods .
  • 2025 capex guided to $250–$280M with grant reimbursements of $60–$70M; long-term capital intensity guided down to 20–25% post-2026; management plans to refinance 2026 maturities in 2025 .
  • Street estimates: S&P Global consensus was unavailable at this time due to data access limits; beat/miss vs. consensus cannot be assessed right now (we will update once accessible). Values intended from S&P Global could not be retrieved due to request limits.

What Went Well and What Went Wrong

What Went Well

  • Adjusted EBITDA strength: Q4 Adjusted EBITDA increased 28.1% YoY to $25.5M; margin improved to 30% (up from 27% in Q2 and 30% in Q3), supported by Glo Fiber growth and synergy realization .
  • Glo Fiber momentum: Q4 Glo Fiber R&SMB revenue up 52.7% YoY; broadband data ARPU increased, and total Glo data customers reached ~65k (+56% YoY) with penetration at 18.8% (+100 bps YoY) .
  • Synergy upgrade and integration: “We completed the integration in nine months and raised our synergy target by over $4 million…to $13.8 million” (CEO) ; management expects LT revenue/EBITDA growth to return to post-2019 Glo levels .

What Went Wrong

  • GAAP losses on higher D&A and interest: Q4 loss from continuing operations of $6.2M vs. $1.9M income LY; diluted net EPS $(0.05); interest expense +$2.4M due to higher borrowings .
  • Incumbent Broadband pressure: Q4 Incumbent R&SMB revenue declined 5.8% YoY; video RGUs down 16.9% on cord cutting and ACP end; data RGUs down 1.6% .
  • Revenue deferral: A $2.6M measurement period negative adjustment reduced Horizon Commercial Fiber revenue in Q4 (deferred to future periods; no cash impact), modestly weighing on current revenue recognition .

Financial Results

Consolidated Results vs. Prior Quarters

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$85.8 $87.6 $85.4
GAAP Diluted Net EPS ($)$(0.24) $(0.13) $(0.05)
Adjusted EBITDA ($USD Millions)$23.3 $26.6 $25.5
Adjusted EBITDA Margin (%)27% 30% 30%
Consensus RevenueN/A – S&P Global unavailable (to be updated)*N/A – S&P Global unavailable*N/A – S&P Global unavailable*
Consensus EPSN/A – S&P Global unavailable (to be updated)*N/A – S&P Global unavailable*N/A – S&P Global unavailable*

*Consensus values are normally sourced from S&P Global; unavailable at this time due to request limits.

Notes:

  • Management cited Q4 revenue +25.8% YoY, Adjusted EBITDA +28.1% YoY .
  • Q4 diluted EPS from continuing ops was $(0.11), with net diluted EPS $(0.05) including discontinued operations .

Revenue by Category (Q4 2024 vs. Q4 2023)

Category (Q4)2024 ($USD ‘000s)2023 ($USD ‘000s)
Residential & SMB – Incumbent Broadband Markets43,930 44,041
Residential & SMB – Glo Fiber Expansion Markets16,596 10,611
Commercial Fiber17,456 9,766
RLEC & Other7,430 3,495
Total Service Revenue & Other85,412 67,913

Management commentary on mix:

  • Q4 revenue +$17.5M YoY to $85.4M, primarily from Horizon (+$14.1M) and Glo Fiber growth; incumbent R&SMB declined 5.8% .

Key KPIs and Operating Metrics

KPIDec 31, 2023Sep 30, 2024Dec 31, 2024
Homes & businesses passed (total)449,635 553,877 585,340
Glo Fiber Expansion passings233,872 319,511 346,299
Incumbent Broadband passings215,763 234,366 239,041
Broadband Data RGUs (total)151,389 170,586 176,465
– Incumbent Broadband Data RGUs109,679 111,320 111,325
– Glo Fiber Data RGUs41,710 59,266 65,140
Broadband Data Penetration (%)33.7% 30.8% 30.1%
– Incumbent Penetration (%)50.8% 47.5% 46.6%
– Glo Fiber Penetration (%)17.8% 18.5% 18.8%
Fiber route miles9,875 16,357 16,830
Broadband Data ARPU ($/month)$81.98 $83.65 $83.52
– Incumbent Broadband ARPU ($/month)$83.39 $84.64 $85.26
– Glo Fiber ARPU ($/month)$78.10 $81.70 $80.42

Additional operational insights:

  • Glo Fiber net adds of ~21.6k in 2024, total ~65k customers at YE; churn 0.94% in Q4; 49% on ≥1 Gbps; 6% on 2 Gbps .
  • Commercial fiber T-Mobile churn (~$7.1M 2024 impact) is behind the company; expected return to mid/high single-digit growth in future periods .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capex (Total)FY 2025N/A$250–$280M New
Grant ReimbursementsFY 2025N/A$60–$70M New
Glo Fiber New PassingsFY 2025N/A~95,000 New
Capex by BusinessFY 2025N/AGlo $175–$190M; Incumbent $40–$50M; Commercial $35–$40M New
Capital Intensity (LT)Post-2026N/AOverall 20–25%; Glo/Inc 15–25%; Commercial 20–30% New
Horizon Synergy Run-RateBy early Q2’25$11M target (Q3’24) $13.8M; $4.5M realized in 2024; +$8.5M in 2025; remainder Q1’26 Raised
Commercial Fiber Growth OutlookFY 2025+Return to mid- to high-single-digit growth (Q2’24) Reiterated Maintained
Debt Refinancing2025 planTarget 2H’25 (Q2’24) Refinance 2026 maturities in 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2’24 and Q3’24)Current Period (Q4’24)Trend
Horizon integration & synergiesQ2: $10.6M target, 43% realized by Q2 exit ; Q3: target increased to $11M; 4/6 systems done Integration completed in nine months; target raised to $13.8M run-rate by early Q2’25 Improving
Glo Fiber expansion & penetrationQ2: ~302k passings, ~53k customers, 17.9% penetration ; Q3: 320k passings, ~59k customers, 18.5% penetration 346k passings, ~65k customers, 18.8% penetration; 49% on ≥1 Gbps; churn 0.94% Upward
Commercial Fiber/T-Mobile churnQ2: ~$7M YoY revenue headwind expected in 2024 ; Q3: still pressuring comps “Behind us…that is all,” now at steady-state Resolving
Capital intensity & capex trajectoryQ2: FY24 capex $290–$329M ; Q3: FY24 capex $293–$325M FY25 capex $250–$280M; LT capital intensity 20–25% overall Peaking then declining
Government grantsQ3: $143M awards; $31M collected $150M awards; $39M collected; $111M remaining reimbursements Supportive
Competitive dynamics & pricingQ2: Limited need for heavy discounts; 95% passings w/o fiber competitor Competitors discount low-tier plans; Shentel avoids heavy promos; overlap ~28%→~30% Stable/managed

Management Commentary

  • “2024 was a pivotal year…we successfully expanded into Ohio through our acquisition of Horizon, completed the integration in nine months and raised our synergy target…to $13.8 million.” – Christopher E. French, CEO .
  • “We expect our consolidated revenue and Adjusted EBITDA long-term compound annual growth rates will return to the levels achieved after the launch of our Glo Fiber line of business in 2019.” – CEO .
  • “Liquidity was $400 million on December 31…we had $418 million of outstanding debt…We are planning to refinance the 2026 maturities in 2025.” – CFO .
  • “Our monthly broadband data churn for the fourth quarter was very low at 0.94%…49% of our residential subscribers adopted speed tiers of 1 gig or higher.” – COO .

Q&A Highlights

  • T-Mobile backhaul churn is done: “That is behind us, that's all.” – CFO; ~$7.1M high-margin revenue headwind now fully flowed through .
  • Horizon revenue recognition: Horizon’s “monthly amortized revenue” ~8% of its revenues (deferral dynamics disclosed) – CFO .
  • Competitive overlap and promotions: ~28% of incumbent passings face cable/fiber competitor, trending to ~30%; competitors discount lower tiers; Shentel uses targeted promos and everyday pricing, not heavy discounting .
  • Pricing strategy: initial market entries without heavy discounting; targeted promotions later to boost penetration in mature cohorts – COO .
  • Minimal cannibalization: Glo Fiber builds in new markets, not overbuilding legacy cable footprint – COO .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q4 2024 (Primary EPS, Revenue, EBITDA), but data was unavailable due to request limits at the time of analysis. As a result, we cannot definitively assess beats/misses vs. Street for this quarter. We will update with S&P Global consensus once accessible. Values intended from S&P Global were unavailable at the time of request.

Key Takeaways for Investors

  • Horizon synergy trajectory improved (run-rate $13.8M by early Q2’25), integration complete, and margin uplift visible; this supports near-term EBITDA momentum and positive estimate revisions to EBITDA if realized .
  • Capital intensity has likely peaked; 2025 capex down to $250–$280M with $60–$70M reimbursements expected; long-term capital intensity guided to 20–25% post-2026, supporting future FCF inflection as Glo penetration rises .
  • T-Mobile churn headwind is cleared, de-risking Commercial Fiber and paving the way for a return to mid/high-single-digit growth in that segment .
  • Glo Fiber remains the core growth engine (passings +48% YoY to 346k; customers +56% to ~65k; ARPU up), with low churn and increasing adoption of ≥1 Gbps tiers, underpinning multi-year revenue and EBITDA growth .
  • Incumbent Broadband pressure (video cord cutting, ACP end) continues to weigh on legacy revenue and penetration; ARPU management and targeted promotions help mitigate churn but remain a watch item .
  • Balance sheet/liquidity adequate ($~400M liquidity YE’24) with 2026 maturities slated for 2025 refi; watch interest expense trajectory and refinancing terms in 2025 updates .
  • Near-term trading catalysts: synergy realization pace, 2025 capex discipline and grant reimbursement execution, and sustained Glo net add strength; medium-term thesis centers on capital intensity decline and penetration-driven EBITDA scaling .