Shentel - Shenandoah Telecommunications Co.

07/29/2026 | Press release | Distributed by Public on 07/29/2026 06:05

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management's discussion and analysis includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). When used in this report, the words "anticipate," "believe," "estimate," "expect," "intend," "may," "will," "should," "could" or "plan" and similar expressions as they relate to Shenandoah Telecommunications Company or its management are intended to identify these forward-looking statements. All statements regarding Shenandoah Telecommunications Company's expected future financial position, operating results and cash flows, business strategy, financing plans, forecasted trends relating to the markets in which Shenandoah Telecommunications Company operates and similar matters are forward-looking statements. We cannot assure you that the Company's expectations expressed or implied in these forward-looking statements will turn out to be correct. The Company's actual results could be materially different from its expectations because of various factors, including, but not limited to, those discussed under the caption "Risk Factors" in the Company's Annual Report on Form 10-K for its fiscal year ended December 31, 2025 ("2025 Form 10-K"). The forward-looking statements included in this Form 10-Q are made only as of the date of the statement. We undertake no obligation to revise or update such statements to reflect current events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events, except as required by law.
The following management's discussion and analysis should be read in conjunction with the Company's 2025 Form 10-K, including the consolidated financial statements and related notes included therein.
Overview
Shenandoah Telecommunications Company ("Shentel", "we", "our", "us", or the "Company") is a provider of a comprehensive range of broadband communication services in eight contiguous states in the eastern United States.
Results of Operations
Three Months Ended June 30, 2026 Compared with the Three Months Ended June 30, 2025
The Company's unaudited condensed consolidated results from operations are summarized as follows:
Three Months Ended June 30, Change
($ in thousands) 2026 % of Revenue 2025 % of Revenue $ %
Broadband operating revenue
Residential & SMB - Incumbent Broadband Markets $ 40,282 43.1 % $ 42,837 48.4 % $ (2,555) (6.0) %
Residential & SMB - Glo Fiber Expansion Markets 26,289 28.1 % 19,796 22.4 % 6,493 32.8 %
Commercial Fiber 21,386 22.9 % 19,483 22.0 % 1,903 9.8 %
RLEC & Other 5,505 5.9 % 6,452 7.3 % (947) (14.7) %
Total revenue 93,462 100.0 % 88,568 100.0 % 4,894 5.5 %
Operating expenses
Cost of services, exclusive of depreciation and amortization 32,703 35.0 % 32,624 36.8 % 79 0.2 %
Selling, general and administrative 31,022 33.2 % 29,743 33.6 % 1,279 4.3 %
Restructuring, integration and acquisition 134 0.1 % 206 0.2 % (72) (35.0) %
Depreciation and amortization 30,619 32.8 % 35,103 39.6 % (4,484) (12.8) %
Total operating expenses 94,478 101.1 % 97,676 110.3 % (3,198) (3.3) %
Operating loss (1,016) (1.1) % (9,108) (10.3) % 8,092 (88.8) %
Other (expense) income:
Interest expense (9,696) (10.4) % (6,003) (6.8) % (3,693) 61.5 %
Other income, net 472 0.5 % 3,015 3.4 % (2,543) (84.3) %
Loss before income taxes (10,240) (11.0) % (12,096) (13.7) % 1,856 (15.3) %
Income tax benefit (2,541) (2.7) % (3,048) (3.4) % 507 (16.6) %
Net loss (7,699) (8.2) % (9,048) (10.2) % 1,349 (14.9) %
Dividends on redeemable noncontrolling interest 1,605 1.7 % 1,497 1.7 % 108 7.2 %
Net loss attributable to common shareholders $ (9,304) (10.0) % $ (10,545) (11.9) % $ 1,241 (11.8) %
Residential & SMB - Incumbent Broadband Markets revenue
Revenue from residential and small and medium business ("SMB") customers in Incumbent Broadband Markets is primarily earned through the Company's provision of data, video and voice services over primarily HFC cable and to a lesser extent FTTH networks in incumbent markets.
Residential & SMB - Incumbent Broadband Markets revenue decreased by $2.6 million, or 6.0%. The decrease was primarily due to lower video and data revenue. Video revenue declined due to a 14.1% decrease in video RGUs as customers switched to streaming video services. Data revenue declined due to a 2.6% decline in data ARPU, driven in part by our rate card in markets where we face a fixed broadband competitor and in part due to our recently implemented rate card in lower demographic markets experiencing softer demand.
Residential & SMB - Glo Fiber Expansion Markets revenue
Revenue from residential and SMB customers in Glo Fiber Expansion Markets is primarily earned through the Company's provision of data, video and voice services over FTTH networks in new greenfield expansion markets.
Residential & SMB - Glo Fiber Expansion Markets revenue increased by $6.5 million, or 32.8%. The increase was primarily due to a 32.1% increase in data RGUs driven by the Company's increase in penetration rates and increase in passings.
Commercial Fiber revenue
Shentel's Commercial Fiber revenue is primarily earned through the Company's provision of high-speed Ethernet, dedicated internet access, wavelength services, dark fiber leasing and managed services over fiber optic networks to commercial customers.
Commercial Fiber revenue increased by $1.9 million, or 9.8%. The increase was due to a combination of recurring revenue in the enterprise and carrier verticals, a non-cash sales-type lease of customer equipment and a negative non-cash deferred revenue adjustment for one of our national wireless carrier customers in the second quarter of 2025.
RLEC & Other revenue
Shentel's RLEC & Other revenue is primarily earned through the Company's provision of voice and DSL telephone services over copper networks, primarily in Shenandoah County, Virginia and Ross County, Ohio. Shentel also earns governmental support revenue through the federal USF.
RLEC & Other revenue decreased by $0.9 million, or 14.7%. The decrease was primarily due to the decrease in DSL RGUs and to a lesser extent a decrease in government support revenue.
Cost of services, exclusive of depreciation and amortization
Cost of services primarily consist of costs to acquire and deliver video programming, internal labor to maintain our network and service our customers, third party network maintenance, and line expenses
Cost of services increased by $0.1 million, or 0.2%. The increase was primarily due to increased fleet maintenance and fuel expenses.
Selling, general and administrative
Selling, general and administrative expenses consist of employee compensation, advertising, software maintenance, stock-based compensation, and operating taxes.
Selling, general and administrative expense increased by $1.3 million, or 4.3%. The increase was primarily due to higher operating and property taxes, higher advertising to support RGU growth and higher software maintenance expenses.
Restructuring, integration and acquisition
Restructuring, integration and acquisition expense decreased by $0.1 million, or 35.0%, primarily due to fees incurred in the prior year to amend debt terms.
Depreciation and amortization
Depreciation and amortization decreased by $4.5 million, or 12.8%. The decrease was primarily due to a $4.2 million write-off in the prior year related to inventory assets that were no longer planned to be used.
Interest expense
Interest expense increased by $3.7 million, or 61.5%. The increase was primarily due to an increase in the Company's outstanding debt as well as less capitalized interest due to less plant under construction than in prior year.
Other income, net
Other income, net decreased by $2.5 million, or 84.3%. The decrease was primarily due to a favorable settlement of the Horizon acquisition related escrow claim in the prior year that did not recur in 2026, as well as lower patronage income.
Income tax benefit
Income tax benefit decreased by $0.5 million, or 16.6%. The decrease was primarily due to lower pre-tax loss than in the prior year.
Six Months Ended June 30, 2026 Compared with the Six Months Ended June 30, 2025
The Company's unaudited condensed consolidated results from operations are summarized as follows:
Six Months Ended June 30, Change
($ in thousands) 2026 % of Revenue 2025 % of Revenue $ %
Broadband operating revenue
Residential & SMB - Incumbent Broadband Markets $ 81,425 43.9 % $ 86,196 48.8 % $ (4,771) (5.5) %
Residential & SMB - Glo Fiber Expansion Markets 51,117 27.5 % 38,240 21.7 % 12,877 33.7 %
Commercial Fiber 41,928 22.6 % 39,095 22.2 % 2,833 7.2 %
RLEC & Other 11,145 6.0 % 12,935 7.3 % (1,790) (13.8) %
Total revenue 185,615 100.0 % 176,466 100.0 % 9,149 5.2 %
Operating expenses
Cost of services, exclusive of depreciation and amortization 64,527 34.8 % 65,654 37.2 % (1,127) (1.7) %
Selling, general and administrative 64,409 34.7 % 60,735 34.4 % 3,674 6.0 %
Restructuring, integration and acquisition 2,574 1.4 % 716 0.4 % 1,858 259.5 %
Depreciation and amortization 65,590 35.3 % 64,561 36.6 % 1,029 1.6 %
Total operating expenses 197,100 106.2 % 191,666 108.6 % 5,434 2.8 %
Operating loss (11,485) (6.2) % (15,200) (8.6) % 3,715 (24.4) %
Other (expense) income:
Interest expense (19,131) (10.3) % (10,895) (6.2) % (8,236) 75.6 %
Other income, net 517 0.3 % 3,748 2.1 % (3,231) (86.2) %
Loss before income taxes (30,099) (16.2) % (22,347) (12.7) % (7,752) 34.7 %
Income tax benefit (6,649) (3.6) % (4,167) (2.4) % (2,482) 59.6 %
Net loss (23,450) (12.6) % (18,180) (10.3) % (5,270) NMF
Dividends on redeemable noncontrolling interest 3,182 1.7 % 2,969 1.7 % 213 NMF
Net loss attributable to common shareholders $ (26,632) (14.3) % $ (21,149) (12.0) % $ (5,483) NMF
Residential & SMB - Incumbent Broadband Markets revenue
Residential & SMB - Incumbent Broadband Markets revenue decreased by $4.8 million, or 5.5%. The decrease was primarily due to lower video and data revenue. Video revenue declined due to a 14.3% decrease in video RGUs as customers switched to streaming video services. Data revenue declined due to a 2.1% decline in data ARPU, driven in part by our rate card in markets where we face a fixed broadband competitor and in part due to our recently implemented rate card in lower demographic markets experiencing softer demand.
Residential & SMB - Glo Fiber Expansion Markets revenue
Residential & SMB - Glo Fiber Expansion Markets revenue increased by $12.9 million, or 33.7%. The increase was primarily due to a 32.9% increase in data RGUs driven by the Company's increase in penetration rates and increase in passings.
Commercial Fiber revenue
Commercial Fiber revenue increased by $2.8 million, or 7.2%. The increase was due to a combination of recurring revenue in the enterprise and carrier verticals, a non-cash sales-type lease of customer equipment and a negative non-cash deferred revenue adjustment for one of our national wireless carrier customers in the second quarter of 2025.
RLEC & Other revenue
RLEC & Other revenue decreased by $1.8 million, or 13.8%. The decrease was primarily due to a 29.6% decrease in DSL RGUs and to a lesser extent a decrease in government support revenue.
Cost of services, exclusive of depreciation and amortization
Cost of services decreased by $1.1 million, or 1.7%. The decrease was primarily due to indirect cost reimbursements on government grant projects.
Selling, general and administrative
Selling, general and administrative expense increased by $3.7 million, or 6.0%. The increase was primarily due to an increase in stock compensation, advertising costs and payroll costs driven by expansion of the Glo Fiber homes passed, as well as increased IT infrastructure maintenance expenses.
Restructuring, integration and acquisition
Restructuring, integration and acquisition expense increased by $1.9 million, or 259.5%, primarily related to severance costs incurred associated with the previously announced reduction in force in 2026.
Depreciation and amortization
Depreciation and amortization increased by $1.0 million, or 1.6%. The increase was primarily due to the Company's expansion of its Glo Fiber network and $3.0 million in project cost write-offs for markets under construction but cancelled due to higher costs to build. The increase was partially offset by the $4.2 million write-off of inventory assets in the prior year.
Interest expense
Interest expense increased by $8.2 million, or 75.6%. The increase was primarily due to an increase in the Company's outstanding debt and debt issuance costs, and less capitalized interest due to less plant under construction than in the prior year.
Other income, net
Other income, net decreased by $3.2 million, or 86.2%. The decrease was primarily due to a favorable settlement of the Horizon acquisition related escrow claim in the prior year as well as lower patronage income in the current year.
Income tax benefit
Income tax benefit increased by $2.5 million, or 59.6%. The increase was primarily due to higher pre-tax loss than in the prior year.
Additional Information
Shentel provides broadband internet, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania, Kentucky, Delaware, Ohio and Indiana, via fiber optic and hybrid fiber coaxial cable networks. We also lease dark fiber and provide Ethernet, Dedicated Internet Access and Wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area. Shentel's Broadband business also provides voice and DSL telephone services as a Rural Local Exchange Carrier ("RLEC") to customers in Shenandoah County and portions of adjacent counties in Virginia, and in Ross County and portions of adjacent counties in Ohio. These integrated networks are connected by over 19,800 route miles of fiber.
The following table indicates selected operating statistics.
Three Months Ended
June 30,
2026 2025
Homes and businesses passed (1)
Incumbent Broadband Markets 253,059 244,007
Glo Fiber Expansion Markets 475,677 378,916
Total homes and businesses passed
728,736 622,923
Residential & SMB RGUs:
Incumbent Broadband Markets 110,620 111,730
Glo Fiber Expansion Markets 100,155 76,276
Broadband Data 210,775 188,006
Video 34,615 37,626
Voice 27,013 26,129
Total Residential & SMB RGUs (excludes RLEC)
272,403 251,761
Residential & SMB Penetration (2)
Incumbent Broadband Markets 43.7 % 45.8 %
Glo Fiber Expansion Markets 21.1 % 20.1 %
Broadband Data 28.9 % 30.2 %
Video 4.8 % 6.0 %
Voice 3.9 % 4.4 %
Residential & SMB ARPU (3)
Incumbent Broadband Markets $ 80.93 $ 83.05
Glo Fiber Expansion Markets $ 76.57 $ 76.72
Broadband Data $ 78.90 $ 80.56
Video $ 132.36 $ 125.15
Voice $ 32.31 $ 32.68
Fiber route miles 19,847 17,740
Total fiber miles (4) 2,096,114 1,936,922
_______________________________________________________
(1)Homes and businesses are considered passed ("passings") if we can connect them to our network without further extending the distribution system. Passings is an estimate based upon the best available information. Passings will vary among video, broadband data and voice services.
(2)Penetration is calculated by dividing the number of users by the number of passings or available homes, as appropriate.
(3)ARPU calculation = (Residential & SMB Revenue) / average RGUs / 3 months.
(4)Total fiber miles are measured by taking the number of fiber strands in a cable and multiplying that number by the route distance. For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles.
Financial Condition, Liquidity and Capital Resources
Sources and Uses of Cash:
Shentel's principal sources of liquidity are our cash and cash equivalents, restricted cash, cash generated from operations, government grants and borrowing capacity available under the Company's VFN and RCF.
In 2021, Congress passed the American Rescue Plan Act and the Infrastructure Investment and Jobs Act to subsidize the deployment of high-speed broadband internet access in unserved areas. We have been awarded approximately $151.2 million in grants to serve unserved homes in the states of Virginia, Ohio, Maryland and West Virginia and to upgrade the capacity of the Ohio middle mile network. The grants will be paid to the Company as certain milestones are completed. As of June 30, 2026, the Company had received a total of $123.9 million in cash receipts and had $27.4 million in remaining reimbursements available under these grant programs. The Company expects to fulfill the majority of its obligations under these programs by the end of 2026.
As of June 30, 2026, the Company's total available liquidity was $158.9 million, consisting of (i) unrestricted cash and cash equivalents totaling $23.9 million; (ii) restricted cash as required by the ABS Indenture totaling $30.9 million (iii) $74.8 million of availability under Shentel Broadband's RCF; (iv) $1.9 million under Shentel Issuer's VFN; and (v) an aggregate of $27.4 million remaining reimbursements available under government grants, which reimbursements are subject to fulfilling the terms of the underlying agreements. In addition, the Company has $105.1 million of VFN commitments that are not available to draw as of June 30, 2026. The available capacity of the VFN will increase based on the secured fiber network revenue growth from the ABS Entities multiplied by (i) a margin as defined in the ABS Indenture and (ii) a 6.25x multiple.
Net cash provided by operating activities from operations was approximately $48.8 million during the six months ended June 30, 2026, representing an increase of $5.1 million compared with the prior year period, primarily driven by timing of changes in working capital.
Net cash used in investing activities from operations was approximately $124.8 million during the six months ended June 30, 2026, representing a decrease of $27.1 million compared with the prior year period. The $23.2 million decrease in capital expenditures was primarily driven by lower capital expenditures on government grant construction projects in Incumbent Broadband Markets, offset by a $3.3 million increase in cash receipts from government grant programs.
Net cash provided by financing activities from operations was approximately $82.6 million during the six months ended June 30, 2026, representing a decrease of $10.6 million compared with the prior year period. This decrease was primarily driven by an increase in payments made on the various debt facilities, and partially offset by increases in debt borrowings and payments on financing arrangements.
Indebtedness:
As of June 30, 2026, the Company's net indebtedness was approximately $715.0 million, including $728.4 million in outstanding ABS Notes, the VFN, and the RCF, net of unamortized loan fees of $13.4 million. The borrowed Class A-2 Notes and the Class B Notes incur interest at 5.64% and 6.03%, respectively. The borrowed VFN and RCF bear interest at a variable rate determined by one-month term SOFR, plus a margin based on net leverage. The weighted-average interest rate was 5.73% for the ABS Notes, VFN, and RCF at June 30, 2026.
Shentel's ABS Notes, which include Class A-2 Notes and Class B Notes, have outstanding balances of $489.1 million and $78.3 million, respectively. Shentel Issuer's VFN has an outstanding balance of $68.0 million. Shentel's RCF has an outstanding balance of $93.0 million. The ABS Notes have a contractually stated anticipated repayment date ("ARD") of December 2030 with the exception of the VFN. The initial anticipated repayment date for the VFN is December 2029 which may be extended, at the option of Shentel, to December 2030, subject to the satisfaction of certain conditions. Shentel has not made any borrowings under its LFN as of June 30, 2026. Amounts borrowed under the LFN do not have an anticipated repayment date. The legal final maturity date of each class of the ABS Notes is in December 2055. If Shentel has not repaid or refinanced any Series 2025-1 Notes prior to the relevant ARD, additional interest will accrue on outstanding principal. Shentel Broadband's RCF matures on December 5, 2030. No principal payments on Shentel Broadband's RCF are required prior to the final maturity date.
Shentel and its non-ABS Entities have no recourse of the loans of the ABS Entities. Likewise, the ABS Entities have no recourse of the loans of Shentel Broadband.
Refer to Note 8, Debt, in the Company's unaudited condensed consolidated financial statements within this Form 10-Q and Note 10, Debt, in the Company's consolidated financial statements in the Company's 2025 Form 10-K for more information about the outstanding debt.
As of June 30, 2026, the Company was in compliance with the financial covenants related to our outstanding debt.
We expect our cash on hand, restricted cash, cash flows from operations, availability of funds from our RCF and VFN agreements and government grants will be sufficient to meet our anticipated liquidity needs for business operations for the next twelve months. There can be no assurance that we will continue to generate cash flows at or above current levels.
During the six months ended June 30, 2026, our capital expenditures of $146.2 million exceeded our net cash provided by operating activities by $97.4 million, and we expect our capital expenditures to exceed the cash flows provided from operations through 2026, as we expand our Glo Fiber broadband network.
The actual amount and timing of our future capital requirements may differ materially from our estimates depending on the demand for our products and services, new market developments and expansion opportunities.
Our cash flows from operations could be adversely affected by events outside our control, including, without limitation, changes in overall economic conditions, including rising inflation, regulatory requirements, changes in technologies, changes in competition, demand for our products and services, availability of labor resources and capital, natural disasters, pandemics and other adverse public health developments, and other conditions. Our ability to attract and maintain a sufficient customer base is critical to our ability to maintain a positive cash flow from operations. The foregoing events individually or collectively could affect our results.
During 2025, Shentel formed Shentel Guarantor LLC, Shentel Issuer LLC, Shentel Asset Entity I LLC and Shentel Asset Entity II LLC (collectively, the "ABS Entities"), each a bankruptcy-remote subsidiary of the Company. The ABS Entities were formed as part of a securitization transaction, pursuant to which certain of the Company's fiber network assets and related customer contracts primarily in Virginia, Ohio, Pennsylvania, Indiana, Maryland and West Virginia were contributed to Shentel Asset Entity I LLC and Shentel Asset Entity II LLC (collectively, the "ABS Asset Entities"). As of June 30, 2026, all of the Company's commercial fiber network assets and approximately 312,000 Glo Fiber passings were contributed to the ABS Asset Entities. The cash flow from these contributed assets are used to service the obligations under Shentel's ABS Notes.
Supplemental Financing Reporting Requirements:
Our RCF requires consolidated financial statements of restricted subsidiaries under the RCF (the "Non-ABS Entities" or the "Restricted Subsidiaries") and unrestricted subsidiaries (the "ABS Entities" or the "Unrestricted Subsidiaries"). Below are the unaudited condensed consolidating balance sheets as of June 30, 2026 and December 31, 2025, and the unaudited condensed consolidating statements of operations for the three and six months ended June 30, 2026.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2026
(in thousands) Unrestricted Subsidiaries (ABS Entities) Restricted Subsidiaries (Non-ABS Entities) Eliminations Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ - $ 23,895 $ - $ 23,895
Restricted cash and cash equivalents 30,899 - - 30,899
Accounts receivable 9,732 19,250 (8,456) 20,526
Prepaid expenses and other 5,947 14,564 (2,405) 18,106
Total current assets 46,578 57,709 (10,861) 93,426
Investments - 363,172 (346,860) 16,312
Property, plant and equipment, net 819,656 851,810 - 1,671,466
Goodwill and intangible assets, net 7,765 148,339 - 156,104
Operating lease right-of-use assets 10,269 8,823 - 19,092
Deferred charges and other assets 128,183 8,297 (117,932) 18,548
Total assets $ 1,012,451 $ 1,438,150 $ (475,653) $ 1,974,948
LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,697 $ 57,976 $ (8,456) $ 58,217
Advanced billings and customer deposits 10,072 10,379 (2,405) 18,046
Accrued compensation - 12,750 - 12,750
Accrued liabilities and other 5,235 16,913 (1,493) 20,655
Total current liabilities 24,004 98,018 (12,354) 109,668
Long-term debt, less current maturities, net of unamortized loan fees 622,426 92,601 - 715,027
Other long-term liabilities:
Deferred income taxes - 150,969 - 150,969
Other liabilities 34,846 129,251 (116,439) 47,658
Total other long-term liabilities 34,846 280,220 (116,439) 198,627
Temporary equity:
Redeemable noncontrolling interest - 91,688 - 91,688
Shareholders' equity:
Total shareholders' equity 331,175 875,623 (346,860) 859,938
Total liabilities, temporary equity and shareholders' equity $ 1,012,451 $ 1,438,150 $ (475,653) $ 1,974,948
As of December 31, 2025
(in thousands) Unrestricted Subsidiaries (ABS Entities) Restricted Subsidiaries (Non-ABS Entities) Eliminations Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ - $ 27,259 $ - $ 27,259
Restricted cash and cash equivalents 20,945 - - 20,945
Accounts receivable 12,580 31,880 (12,963) 31,497
Prepaid expenses and other 5,344 14,803 (2,405) 17,742
Total current assets 38,869 73,942 (15,368) 97,443
Investments - 392,737 (376,227) 16,510
Property, plant and equipment, net 793,874 807,735 - 1,601,609
Goodwill and intangible assets, net 8,234 148,657 - 156,891
Operating lease right-of-use assets 10,199 9,458 - 19,657
Deferred charges and other assets 129,635 7,794 (118,777) 18,652
Total assets $ 980,811 $ 1,440,323 $ (510,372) $ 1,910,762
LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,561 $ 66,757 $ (12,963) $ 61,355
Advanced billings and customer deposits 8,953 10,361 (2,405) 16,909
Accrued compensation - 13,334 - 13,334
Accrued liabilities and other 3,894 14,116 (1,112) 16,898
Total current liabilities 20,408 104,568 (16,480) 108,496
Long-term debt, less current maturities, net of unamortized loan fees 554,288 73,949 - 628,237
Other long-term liabilities:
Deferred income taxes - 157,618 - 157,618
Other liabilities 33,628 131,159 (117,665) 47,122
Total other long-term liabilities 33,628 288,777 (117,665) 204,740
Temporary equity:
Redeemable noncontrolling interest - 88,506 - 88,506
Shareholders' equity:
Total shareholders' equity 372,487 884,523 (376,227) 880,783
Total liabilities, temporary equity and shareholders' equity $ 980,811 $ 1,440,323 $ (510,372) $ 1,910,762
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30, 2026
(in thousands) Unrestricted Subsidiaries (ABS Entities) Restricted Subsidiaries (Non-ABS Entities) Eliminations Consolidated
Service revenue and other $ 44,460 $ 61,252 $ (12,250) $ 93,462
Operating expenses:
Cost of services exclusive of depreciation and amortization 18,009 21,264 (6,570) 32,703
Selling, general and administrative 7,053 29,649 (5,680) 31,022
Restructuring, integration and acquisition - 134 - 134
Depreciation and amortization 15,794 14,825 - 30,619
Total operating expenses 40,856 65,872 (12,250) 94,478
Operating (loss) income 3,604 (4,620) - (1,016)
Other (expense) income:
Interest expense (8,365) (1,331) - (9,696)
Other income (expense), net 222 250 - 472
Loss before income taxes (4,539) (5,701) - (10,240)
Income tax benefit - (2,541) - (2,541)
Net loss $ (4,539) $ (3,160) $ - $ (7,699)
Six Months Ended June 30, 2026
(in thousands) Unrestricted Subsidiaries (ABS Entities) Restricted Subsidiaries (Non-ABS Entities) Eliminations Consolidated
Service revenue and other $ 87,090 $ 123,549 $ (25,024) $ 185,615
Operating expenses:
Cost of services exclusive of depreciation and amortization 36,025 41,357 (12,855) 64,527
Selling, general and administrative 14,680 61,898 (12,169) 64,409
Restructuring, integration and acquisition - 2,574 - 2,574
Depreciation and amortization 32,257 33,333 - 65,590
Total operating expenses 82,962 139,162 (25,024) 197,100
Operating (loss) income 4,128 (15,613) - (11,485)
Other (expense) income:
Interest expense (16,493) (2,638) - (19,131)
Other income (expense), net 449 68 - 517
Loss before income taxes (11,916) (18,183) - (30,099)
Income tax benefit - (6,649) - (6,649)
Net loss $ (11,916) $ (11,534) $ - $ (23,450)
Horizon Acquisition - Representation and Warranty Insurance Claim:
On April 1, 2024, Shentel completed the acquisition of Horizon Acquisition Parent LLC, a Delaware limited liability company ("Horizon"), pursuant to the terms of an Agreement and Plan of Merger, dated October 24, 2023 (the "Merger Agreement"), by and among Shentel, Horizon, the sellers set forth on the signature pages thereto, and the other parties thereto. Horizon made customary representations and warranties in the Merger Agreement relating to periods prior to, and as of, the closing of the acquisition. Shentel purchased representation and warranty insurance ("RWI"), with a policy limit of $40.0 million to cover potential losses resulting from a breach of these representations and warranties. In June 2026, the Company submitted claims to the RWI carrier seeking coverage for losses arising out of the alleged breaches of representations and warranties in the Merger Agreement. Although we believe that the breaches and our claims are meritorious, no assurance can be given as to whether we will recover all, or any part, of the incurred loss. No gains or receivables have been recognized related to this RWI claim as of and for the period ended June 30, 2026.
Critical Accounting Policies
There have been no material changes to the critical accounting policies previously disclosed in Part II, Item 8 of our 2025 Form 10-K for the year ended December 31, 2025.
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