Good morning, everyone. Welcome to Shenandoah Telecommunications First 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. Please go ahead.

Good morning and thank you for joining us. The purpose of today’s call is to review Shentel’s results for first 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 are 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. And with that, I will now turn the call over to Chris. Go ahead, Chris.

Thanks, Kirk. We appreciate everyone joining us this morning and I hope everyone is staying healthy and safe. We are off to a great start in 2023. As noted on Slide 4, we had a record quarter for our Broadband segment driven by Glo Fiber results. Glo Fiber net customer additions were just over 4,500 in the first quarter, 87% higher than the first quarter 2022 and setting a quarterly record. Customer net additions benefited from the accelerating network expansion over the past few quarters. Glo Fiber revenue more than doubled to $7 million in the first quarter, also a new high when compared to the same period a year ago and was the primary driver in achieving an all-time high for quarterly Broadband segment revenue and adjusted EBITDA. We are beginning to see the operating leverage and margin expansion in our broadband business as Glo Fiber accelerates growth and achieve scale. We now have a critical mass of Glo Fiber markets with construction substantially complete, where we can drive up gross margins as we add customers with very little incremental network expense. We have a substantial opportunity to grow revenue, adjusted EBITDA and margins over the next few years as we increase our penetration rate from 17% to our target penetration rate of 38%. Moving to Slide 5 for an update on construction and customer growth. We added over 17,000 new Glo Fiber Passings in the first quarter and have increased passing 76% year-over-year to over 165,000 passings. Our sales team has more than kept pace with our construction team with Glo Fiber customers growing 109% to almost 29,000 by the end of March. Ed will provide more details on both our Glo Fiber network construction and customer growth later in the call. 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. Please refer to Slide 7 to review our financial results for the first quarter 2023. Please note that we have broken out Residential and SMB revenue between our Cable markets and our Glo Fiber markets for the current period and prior year period, and we will continue this reporting going forward. In addition, all of the government grant unserved residential passings that we were awarded and are different degrees of construction surrounding existing Cable or Glo Fiber market and will be reported with the adjacent market with most of the grant passings and customers reported in the Cable market segment. Turning now to our first quarter results. Broadband revenue grew $7.5 million or 12.5% to $67.2 million. Glo Fiber revenue was the primary catalyst, growing $3.6 million or over 100% from the prior year period with strong customer growth, as Chris mentioned earlier, and steady ARPU. Commercial Fiber revenue grew $2.6 million or 28.6% to $11.7 million due to $800,000 in recurring revenue from circuit growth and $1.8 million in nonrecurring early termination fees related to backhaul disconnects in the quarter. As previously announced T-Mobile is planning to shut down the former Sprint network and disconnected 188 backhaul circuits during the first quarter. We expect an additional 174 backhaul disconnects later in the year as part of this network rationalization. Broadband adjusted EBITDA grew 25% to $26.3 million in the first quarter when compared to the same period in 2022 due to strong revenue growth, partially offset by higher expenses with $1.7 million to support the Glo Fiber expansion and $300,000 in higher software-related costs from system upgrades. As Chris mentioned earlier, we are beginning to see the benefits of operating leverage as our Glo Fiber market scale. Adjusted EBITDA margins grew to…

Thanks, Jim, and good morning, everyone. I’ll start on Slide 13 with our integrated Broadband network. We had a record quarter for fiber construction, adding approximately 300 new route miles of fiber for new Glo Fiber Passings, new Commercial Fiber customers and our new government grant projects in unserved areas. Our network now consists of over 8,600 route miles of fiber, and we are on track to accelerate construction in the second half of the year. In the first quarter, we also announced State College, Pennsylvania, as our newest Glo Fiber market. Engineering work is currently underway, and we plan to start construction in 2024 for over 15,000 homes and businesses in the borough and adjacent townships. As we finalize additional franchise agreements in the market, this number will increase. We now have Glo franchise agreements in place with 60 municipalities in 24 different markets across five states. In addition, we have now launched gigabit broadband service in four counties in Virginia, where we won government grant funding for unserved areas, and we will be ramping up construction in the remainder of the year. Turning to Slide 14. We now have 460,000 approved Glo Fiber Passings with franchise agreements in place. This is more than enough to enable us to reach our goal of constructing 450,000 new greenfield passing by 2026. In addition, we continue to have success with government grants, and we recently won additional grants totaling $9.4 million in Frederick County, Maryland to bring fiber to over 1,500 unserved homes. We’ve now been awarded a total of over $81 million in grants that will enable us to extend broadband over 25,000 unserved locations, primarily through fiber-to-the-home technology. With the completion of over 17,500 new Glo Fiber Passings and over 200 new government subsidized fiber passings in the first…

[Operator Instructions] Our first question comes from the line of Frank Louthan with Raymond James. Your line is now open.

Hey guys. It’s Rob on for Frank. Hey. So, what’s the long-term margin potential of the business after you guys get the current homes built? And then as a follow-up, how would you rank your capital allocation priorities today? Thank you.

Yes. Rob, I will start with the first one. We got to 30s – if you exclude the early termination revenue from T-Mobile this quarter, we did see margin expansion in our broadband business of a little bit over 200 basis points to 37%. As we continue to scale and add more customers, specifically in the Glo existing markets, we expect that broadband EBITDA margin will get up to about 43% by 2025, which is consistent with where we started this back in 2018 before we had the dilutive effects of launching a new line of business like Glo Fiber. We also launched Beam and then shutdown Beam. And we have also been updating our system upgrades, and we had some increases in our software-related costs. Most of that is now behind us. So, as we move forward, we should start to see some regular expansion in our EBITDA margins on the broadband side of the business to get to, like I said, back to where we started at 43% in the next 2 years. And there is plenty of room above that as we slow down our investments in the ‘26, ‘27 timeframe. Those broadband adjusted EBITDA margins should get even higher than that.

And Rob, I will jump in on the capital spending. Our priority remains focused on extending our fiber-to-the-home networks. Roughly 75% of our entire capital budget this year is focused on adding new broadband passings both in Glo Fiber and our government subsidy projects.

Great. Thank you, guys.

Thank you. [Operator Instructions] And the next question comes from the line of Dan Day with B. Riley Financial. Your line is now open.

Yes. Good morning guys. Appreciate you taking the question. So, been in the news a little lately about the availability of labor for fiber builds being tight. It’s kind of been out there a lot, but you are seeing a little more recently. You are seeing contractors having like no capacity to take on new projects and some fiber overbuilders sort of maybe in-house and some things that they had previously contracted out. So, just wondering what you are seeing on that front and any potential savings from in-housing versus contracting?

So, yes. So, good morning, appreciate the question. So, from a contractor standpoint, we have had success holding on to our contractors. We have got over 100 construction crews right now working in over a dozen different markets mainly regional folks. We have had long-term relationships with most of these contract firms. So, we feel pretty good about that. We are bringing some of our labor in-house, particularly splicing work. We are bringing that work in-house and also we are bringing in drop bury crews to install the drop buries to customers’ homes. So, we are shifting some of that in-house, and it’s more about not only saving money by doing that, but also making sure we have reliable crews that we can get that work done.

Understood. Thanks. And then on Glo Fiber, the ARPU, and you might have talked about this, sorry, I hopped on the call late, but does the ARPU ticked back up where it was a year or so ago. Last time you were on, you guys had talked about launching that 100 meg tier on customer demand. I think that resulted in a couple of quarters of it going a little lower as people adopted that tier. So, just what you are seeing most recently as far as the puts and takes within Glo Fiber for ARPU features?

Yes. So, the big factor there is equipment revenue. Prior to the first quarter, we were actually offering free WiFi equipment in the home for 12 months to some customers. We have stopped offering the free WiFi equipment as a promotion. That’s why we had this roughly $0.70 uptick in the ARPU for the quarter. We continue to see customers take our higher-tier services. As I mentioned, over 42% of our customers are taking 1 gig or higher.

Okay. That’s all I have guys. Thanks for the time.

Thanks Dan.

Thank you. [Operator Instructions] And our next question comes from the line of Hamed Khorsand with BWS Financial. Your line is now open.

Hi. Good morning. The first question I had was just related to your comments about the customers that dropped off or not paying. Has that been a factor before in a recession – in a recessionary environment? And how do you adjust for that given that you are currently building out in these markets with fiber?

So, I would say, yes, it has been a factor during past recessionary times. It’s something we are monitoring very closely. We have seen the outstanding overdue balances come down. So, we are hoping that’s moving in the right direction, but it’s something we are monitoring very closely at this point.

Okay. And then as far as the fiber build goes, this past quarter, the CapEx that you spent, was that because of weather? And how does that play out for the rest of the year as far as your CapEx goes? Are you accelerating any programs?

We will be accelerating the number of new fiber passings throughout the year. We spent first quarter building a lot of connections out to the neighborhoods. We had to build from our POPs out to the neighborhoods. And then in the following quarters, particularly in the second half of the year, we will be connecting more of those neighborhoods particularly in some of our newer markets that we have recently launched.

Okay. Great. Thank you.

Thanks Hamed.

[Operator Instructions] And at this time, I am showing no further questions. I would like to hand the conference back over to Mr. Jim Volk for closing remarks.

Thank you for joining us on a Friday morning. We look forward to updating you on our fiber first growth plan in future quarters. Have a good day.

This concludes today’s conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.