Good morning, everyone. Welcome to Shenandoah Telecommunications' Third Quarter 2023 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Kirk Andrews, Director of Financial Planning and Analysis for Shentel.

Good morning, and thank you for joining us. The purpose of today's call is to review Shentel's results for the third quarter of 2023. Our results were announced in our press release distributed this morning, and the presentation we'll be reviewing is included on the Investor page at our website www.shentel.com. Please note that an audio replay of this call will be made available later today. The details are set forth in the press release announcing this call. With us on the call today are Chris French, President and Chief Executive Officer; Ed McKay, Executive Vice President and Chief Operating Officer; and Jim Volk, Senior Vice President of Finance and CFO. After our prepared remarks, we will conduct a question-and-answer session. As always, let me refer you to Slide 2 of the presentation, which contains our safe harbor disclaimer and remind you that this conference call may include forward-looking statements subject to certain risks and uncertainties. These may cause our actual results to differ materially from the statements. Therefore, we have provided a detailed discussion of various risk factors in our SEC filings, which you are encouraged to review. You're cautioned not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements. With that, I'll now turn the call over to Chris. Go ahead, Chris.

Thanks, Kirk. We appreciate everyone joining us this morning and hope everyone is well. Today, we're planning to discuss our third quarter financial and operating results, excluding the results and impact of the Horizon Telcom transaction we announced last week unless it's expressly noted. Our respective teams are very excited about this transformative combination and have already started work on obtaining the necessary approvals and doing early-stage planning for the upcoming integration. We will have more to share in future earnings calls. I'll now turn to the highlights of our third quarter results. We continue to make solid progress in executing our Glo Fiber growth plan. As noted on Slide 4, we added almost 20,000 new Glo Fiber passings in the third quarter. We increased passing 55% year-over-year and crossed the 200,000 milestone during the quarter. Our Glo Fiber passings are now almost the size of our Cable Market Passing. As we approach our fourth quarter of launching our first Glo Fiber market in November, we will have doubled the size of our broadband business in terms of passing. With Horizon Telcom acquisition expected to close in 2024 and accelerated construction anticipated across all of our markets, we expect to double the broadband passings again by the end of 2026. Moving to Slide 5. Our sales team added over 4,500 Glo Fiber data subscribers in the third quarter and has grown the Glo Fiber customer base by 77% over the past year. Similar to the high growth in broadband passing, we've grown total broadband data subscribers by 78% since the third quarter of 2019. Our track record over the past four years provides confidence for us to grow our broadband data subscriber base at similar growth rates in the next three to four years as we expand our Glo Fiber network. As reflected on Slide 6, the growth in broadband data subscribers has driven a steady expansion of our consolidated adjusted EBITDA margin year-over-year since 2019 when we launched Glo Fiber. The key catalysts for the margin improvement are the combination of extremely scalable fiber networks, which are driving incremental high-speed data gross margins of more than 80% and our ability to gain scale in our selling, general and administrative expenses. We expect margins to continue to expand as we execute our Glo Fiber growth plan and close on our acquisition of Horizon. With that, I'll now turn the call over to Jim to review the details of our financial results.

Thank you, Chris, and good morning, everyone. I will start with our broadband financial results for the third quarter of 2023 on Slide 8. Broadband revenue grew $5.1 million or 8.1% to $67.4 million. Glo Fiber revenue was the primary catalyst, growing $4.4 million or 90% from the prior year period with strong customer growth and a 5.8% increase in data subscriber ARPU. Cable Market revenues, excluding the impact of our discontinued Beam service, grew $300,000 or 0.7% due primarily to a 1% growth in data subscriber ARPU. Commercial Fiber revenue grew $900,000 or 9.4% to $10.4 million due to $500,000 in recurring revenue from circuit growth and $400,000 in non-recurring early termination fees related to backhaul disconnects in the quarter. As previously announced, T-Mobile is planning to shut down portions of the former Sprint network and disconnected 71 backhaul circuits during the third quarter. We expect approximately 80 additional backhaul disconnects as part of this network rationalization. Broadband adjusted EBITDA grew 19.4% to $26.6 million in the third quarter when compared to the same period in 2022, due to revenue growth of $5.1 million, partially offset by $700,000 in higher advertising expenses to support the Glo Fiber expansion. As Chris mentioned earlier, we continue to see the benefits of operating leverage of our Glo Fiber business as broadband cost of service increased only $100,000 despite adding 15,000 customers over the past 12 months. On Slide 9, Tower segment revenue was in line with the same period 2022. We have not recognized any churn from T-Mobile year-to-date, though we have received notices that they plan to terminate 53 leases as part of the previously announced decommissioning of the former Sprint network. The pay and walk agreement with T-Mobile that allows T-Mobile to terminate leases with only a $10,000 termination fee…

Thank you, Jim, and good morning. I'll start on Slide 14 with an update on our rapidly expanding integrated broadband network to now consist of over 9,300 route miles of fiber. In the third quarter, we launched two new Glo Fiber markets in Hanover County, Virginia, and Greekcastle, Pennsylvania, and we now offer Glo Fiber multi-gigabit service in 21 markets with engineering and construction underway in four additional markets. We also added five new franchise agreements in the third quarter to bring Glo Fiber to over 40,000 additional homes and businesses, including the city of Lancaster and additional boroughs and townships adjacent to our existing markets in Pennsylvania. Turning to Slide 15. Our total number of approved Glo Fiber passings has grown to 519,000 with 70 franchise agreements in 23 markets across five states. In addition, we continue to have success with government grant awards. In the third quarter, we were awarded $2.6 million in grants to bring broadband to approximately 1,000 additional unserved homes adjacent to our cable systems in West Virginia. We've now been awarded a total of approximately $90 million in grants that will enable us to extend broadband to over 28,000 unserved locations, primarily through fiber-to-the-home technology. Our engineering and construction teams continue to deliver in the third quarter with the addition of over 20,000 new fiber passings, bringing our total to over 203,000 including approximately 1,000 that are part of government-subsidized projects. In addition, our construction backlog remains very robust with 340,000 incremental passings approved for construction. Our construction pace is dependent on other utilities to process pole attachment permits and locate existing underground facilities. In some cases, the industry-wide high volume of broadband deployment is causing delays for both permitting and locates. This is a risk we're monitoring closely and actively working with our…

[Operator Instructions] And our first question comes from Frank Louthan of Raymond James.

Great. Thank you. Can you kind of sum up sort of the Tower outlook. It seems like you're getting a little bit more fees on the shutdowns and so forth and things taking a little longer. Where does that get us kind of from a quarterly run rate going forward? What's the expectation there? And then on the Horizon deal, I think you need about $250 million or so to finish the funding. You're looking at from possibly a tower sale. What are your options for financing that if you don't get the tower sale or it comes up short, would you look at the ABS market or anything like that? Thanks.

Yeah, Frank. I can jump in on both those. We haven't seen any churn yet from T-Mobile on the tower leases. They had given us proper notice under this pay and walk agreement that ended September 1 for 53 leases that they plan to terminate. The timing is uncertain exactly when those leases will be terminated. But based upon recent conversations that our teams had with them, it sounds like this could be a more of a gradual churn or disconnects than what we're seeing on the backhaul side. So my expectation is we'll probably see some of these leases continue for up to maybe two more years based upon some of these conversations. And as you can see in our quarterly results, we're doing about $3 million of adjusted EBITDA a quarter, about $12 million annually. The 53 leases translate to about $2.2 million in revenue term when they're all fully terminated. So I hope that answers your first question.

Okay. Great. Yeah.

And then as far as for the additional capital -- growth capital that we need to fund our business plan post-acquisition of Horizon, we have multiple sources that we can look at. Towers is one of the sources we're going to explore. But the ABS market, as you mentioned, is another source that would be appealing to us, especially as our Glo Fiber markets, we're now getting some markets kind of go above that 20%, 25% penetration level, which would make them attractive candidates for the ABS financing. Lastly also mentioned our current credit facility, the first maturities occur in June of '26, so by early '25, we're likely to be in conversations to refinance that facility, and that could also provide some additional capital. So we have several sources of how we can achieve our growth capital funding gap.

All right. That's great. Last question, so the CapEx blurring this year, is that just kind of deferred into next year? How should we think about that?

Yeah. You are correct. We ran into some delays, as Ed mentioned, on -- especially on the subsidize builds and getting access to some of the poles and just getting some of the locates done to locate facilities before we do underground construction. And that has had a cumulative effect here that we're not likely to get as many testing done in that area this year, but we hope to catch up in '24.

Anything on those items going to -- is that going to continue? Was that a temporary slowdown or is there something about the co-ops or whatever that own the polls of the locate guys that's going to make that an ongoing problem or has that been addressed?

Yeah. This is Ed. It's really a volume issue for these folks. I think we will continue to see some short-term challenges. But even with this, we're projecting roughly a 25% increase in our number of fiber passings between 2022 and 2023. We think we can continue to scale, particularly as we ramp up construction in some additional markets. So we're continuing to have some challenges there, but we think we can still grow the number of passings even with those.

And can you mitigate that with some of your vendors by giving them some commitments or something ahead of time to divert some resources or is it just life in small town America?

So in our case, we have the materials. We have our own construction crews ready to do the work. That's not where the issue is. It's with the actual -- the other utility companies, they're having trouble getting resources to do their permitting work for the poles and then their locates for the underground facilities. So in some cases, we're able to mitigate that by paying overtime work for -- or over time for the locators that are located underground facilities, for example. We're also working, in some cases, to do what's called self-remedy where we're able to adjust the other telecommunication facilities on the poles. So we're working on ways to mitigate that, but that's something we're going to be dealing with for the next year plus.

Yeah. Okay. Thanks, guys.

Thank you. One moment for our next question. And our next question comes from Hamed Khorsand of BWS Financial.

Hey. Good morning. Just on the topic about this CapEx shift and the permitting and so forth. Would you be putting in more investment into getting penetration rates up into the markets that you've already established and connected or are you just really focused on the CapEx moving forward maybe next year?

Hamed, this is Ed. So we're very focused on increasing the penetration in our existing markets. That's the primary goal of our sales and marketing teams and definitely focus in that area.

How does Horizon fit into this -- I guess, your planning scope for next year, given that you're doing everything Glo, the marketing involved, is there any form of distractions I'm trying to get to?

So we'll be using a separate engineering and construction team in the Horizon market. So we don't feel that, that will be a distraction from the current construction we're doing in the Glo markets.

Okay. Very good. Thank you.

Thank you. I'm showing no further questions. At this time, I would like to turn it back to Jim Volk for closing remarks.

Thanks, everyone for joining us today, and have a great day. Thank you.

This concludes today's conference call. Thank you for participating and you may now disconnect.