In This Article:
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Revenue Growth: 27% increase to $87.9 million in Q1 2025.
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Glow Fiber Revenue: Increased by 52% over the same period in 2024.
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Adjusted EBITDA: Grew 43% to $27.6 million, with margins increasing from 28% to 31%.
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Free Cash Flow Margins: Over 40% in mature market cohorts.
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Liquidity: $335 million as of March 31, including $88 million in cash.
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Outstanding Debt: $516 million as of March 31.
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Glow Fiber Subscribers: Added 5,400 new subscribers, totaling approximately 71,000.
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Broadband Data Penetration: Increased to 19.4% in glow fiber expansion markets.
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Broadband Data Churn: Monthly churn remained low at 0.9%.
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Commercial Sales Bookings: Record quarter with nearly $200,000 in monthly recurring revenues.
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Capital Investments: $76 million in Q1, with full-year guidance of $250 million to $280 million net of subsidies.
Release Date: April 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Shenandoah Telecommunications Co (NASDAQ:SHEN) reported a 52% increase in revenues from its glow fiber expansion markets compared to the same period in 2024.
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The company added 5,400 new subscribers and 16,600 new passings in its glow fiber markets during the first quarter of 2025.
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Mature market cohorts generated free cash flow margins of over 40% in Q1 2025, with expectations for these margins to expand further.
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The commercial sales team achieved a record quarter for sales bookings, with nearly $200,000 in monthly recurring revenues.
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Adjusted EBITDA increased by 43% to $27.6 million, with margins improving from 28% in Q1 2024 to 31% in Q1 2025.
Negative Points
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The incumbent broadband markets experienced a $2.2 million decline in revenue, primarily due to a 14% decline in video RTUs as customers switched to streaming services.
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Capital expenditures remain elevated due to the construction of fiber to unserved homes, impacting free cash flow generation in the short term.
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The company faces potential future tariff exposure with electronic equipment, which could lead to increased costs.
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Shenandoah Telecommunications Co (NASDAQ:SHEN) has $516 million in outstanding debt, with plans to refinance its credit facilities, which could involve significant internal restructuring efforts.
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The company anticipates capital intensity to remain relatively high at 20% to 25% of revenues even after completing its current expansion phase by the end of 2026.
Q & A Highlights
Q: What are the expected interest rates for asset-backed securities (ABS), and can a deal be completed this year? What is the optimal capital structure for Shenandoah Telecommunications? A: James Volk, CFO, stated that ABS is expected to save about 100 basis points in interest expense. The plan is to use only investment-grade tranches of ABS to minimize debt costs. A revolver credit facility will also be put in place for the incumbent broadband business. Long-term, most debt is expected to be on the fiber side of the capital structure.