Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) (the “Company” or “Consolidated”), a top 10 fiber provider in the U.S., today reported results for the third quarter 2022.
“We achieved another record quarter with 12,100 fiber subscriber additions and are on track to complete at least 400,000 fiber location upgrades this year and reach 1 million total fiber locations,” said Bob Udell, chief executive officer at Consolidated Communications. “We remain committed to our five-year plan to bring FttP to 70% of our addressable market. Fiber is our future and Fidium is bringing meaningful benefits to consumers and communities as we deliver an industry-leading customer experience.”
“In September, we closed on the sale of our wireless investments for $490 million in gross proceeds to fund our fiber expansion,” added Udell. “We are executing on our growth plan and managing the build timeline and schedule well while working to secure new federal, state and local broadband partnership opportunities.”
Third Quarter 2022 Highlights and Results (compared to third quarter 2021)
- Revenue totaled $296.6 million, generating Adjusted EBITDA of $97.2 million.
- Consumer fiber revenue grew approximately 40%, driven by more than 3x consumer fiber net adds and increased ARPU.
- Commercial data services revenue was $56.8 million, down 1.3%.
- Carrier data-transport revenue was $33.9 million, up 1.0%.
- Subsidy revenue was $7.2 million, a decline of $10.1 million, primarily reflecting CAF II step down and transition to the Rural Digital Opportunity Fund (RDOF).
- Total committed capital expenditures were $139.9 million driven by 116,000 fiber upgrades.
Operating expenses increased $7.5 million primarily due to marketing expenses related to the expansion of the Company’s consumer fiber product and increased utility and fuel costs coupled with the non-recurrence of certain property tax rebates received in the third quarter of 2021.
Net interest expense was $32.1 million, a decrease of $11.1 million compared to a year ago, primarily as a result of non-cash interest of $10.9 million on the Searchlight note, which was converted to perpetual preferred stock in conjunction with the second stage closing of its investment in December 2021. Notwithstanding the heightened interest rate environment, the Company is well positioned with 77% of its total debt at a fixed rate. At Sept. 30, 2022, the weighted average cost of debt was 6.20%.
Cash distributions from the Company’s wireless partnerships totaled $5.5 million, compared to $11.1 million a year ago, primarily due to Verizon’s accelerated capital investments in the second quarter which impacted the Company’s third quarter distributions.
Loss from continuing operations was ($7.3 million) compared to ($13.1 million) in the prior year. Net loss per share from continuing operations was ($0.15) compared to ($0.14) in the prior year. Adjusted diluted net income (loss) per share excludes certain items as outlined in the table provided in this release. Adjusted diluted net income (loss) per share from continuing operations was ($0.13) compared to $0.09 a year ago.
Adjusted EBITDA was $97.2 million, compared to $127.4 million in the prior year.
Asset and Investment Sales
On Sept. 13, 2022, the Company completed the sale of its limited partnership interests in five wireless partnerships to Cellco Partnership, d/b/a Verizon Wireless, for aggregate gross proceeds of $490 million. The proceeds from the sale will be invested in the business and used to support the Company’s Fiber to the Premises (FttP) broadband growth plan. The sale is being treated as discontinued operations within the financial statements for all comparable periods. Upon closing the transaction, the Company recognized a pre-tax gain on the sale of $389.9 million.
On Mar. 3, 2022, Consolidated announced an agreement to sell substantially all of its Kansas City assets. The Company currently expects net cash proceeds of approximately $90 million for the sale, subject to certain purchase price adjustments, closing conditions and customary regulatory approvals. The transaction is expected to close by year-end 2022. Additionally, in the quarter the Company recognized an impairment loss of $5.2 million due to changes in net assets held for sale.
The Company continues to actively review its portfolio for further monetization opportunities in support of its growth plan. During the quarter Consolidated closed and recognized a pre-tax gain and proceeds from the sale of certain non-strategic communication towers and related equipment totaling $19.2 million.
Capital Structure
As of Sept. 30, 2022, total liquidity was approximately $686 million, including cash and short-term investments of approximately $462 million and $224 million of available borrowing capacity on the revolving credit facility. The net leverage ratio for the trailing 12 months ended Sept. 30, 2022, was 3.82x. The Company has no maturities until 2027.
2022 Outlook
Consolidated Communications reaffirmed its guidance for the full-year 2022.
- Adjusted EBITDA is expected to be in a range of $400 million to $410 million.
- Capital expenditures are expected to be in a range of $565 million to $585 million.
- Cash interest expense is expected to be in a range of $125 million to $129 million.
- Cash income taxes are expected to be in a range of $12 million to $17 million.
Conference Call Information
Consolidated’s third quarter earnings conference call will be webcast on Nov. 1 at 8:30 am ET. The webcast and materials will be available on Consolidated’s Investor Relations website at http://ir.consolidated.com. The live conference call dial-in number for analysts and investors is 888-440-5977, conference ID 8956400.
About Consolidated Communications
Consolidated Communications Holdings, Inc. (NASDAQ: CNSL) is dedicated to moving people, businesses and communities forward by delivering the most reliable fiber communications solutions. Consumers, businesses and wireless and wireline carriers depend on Consolidated for a wide range of high-speed internet, data, phone, security, cloud and wholesale carrier solutions. With a network spanning more than 57,500 fiber route miles, Consolidated is a top 10 U.S. fiber provider, turning technology into solutions that are backed by exceptional customer support. Learn more at consolidated.com.
Use of Non-GAAP Financial Measures
This press release, as well as the conference call, includes disclosures regarding “EBITDA,” “adjusted EBITDA,” “total net debt to last 12 month adjusted EBITDA ratio” or “Net debt leverage ratio,” and “adjusted diluted net income (loss) per share,” all of which are non-GAAP financial measures and described in this section as not being in compliance with Regulation S-X. Accordingly, they should not be construed as alternatives to net cash from operating or investing activities, cash and cash equivalents, cash flows from operations, net income or net income per share as defined by GAAP and are not, on their own, necessarily indicative of cash available to fund cash needs as determined in accordance with GAAP. In addition, not all companies use identical calculations, and the non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. A reconciliation of the differences between these non-GAAP financial measures and the most directly comparable financial measures presented in accordance with GAAP is included in the tables that follow.
Adjusted EBITDA is comprised of EBITDA, adjusted for certain items as permitted or required by the lenders under our credit agreement in place at the end of each quarter in the periods presented. The tables that follow include an explanation of how adjusted EBITDA is calculated for each of the periods presented with the reconciliation to net income. EBITDA is defined as net earnings before interest expense, income taxes, depreciation and amortization on a historical basis.
We present adjusted EBITDA for several reasons. Management believes adjusted EBITDA is useful as a means to evaluate our ability to fund our estimated uses of cash (including interest on our debt). In addition, we have presented adjusted EBITDA to investors in the past because it is frequently used by investors, securities analysts and other interested parties in the evaluation of companies in our industry, and management believes presenting it here provides a measure of consistency in our financial reporting. Adjusted EBITDA, referred to as Available Cash in our credit agreement, is also a component of the restrictive covenants and financial ratios contained in our credit agreement that requires us to maintain compliance with these covenants and limit certain activities, such as our ability to incur debt. The definitions in these covenants and ratios are based on adjusted EBITDA after giving effect to specified charges. In addition, adjusted EBITDA provides our board of directors with meaningful information, with other data, assumptions and considerations, to measure our ability to service and repay debt. We present the related “total net debt to last 12 month adjusted EBITDA ratio” or “Net debt leverage ratio” principally to help investors understand how we measure leverage and facilitate comparisons by investors, security analysts and others. This ratio differs in certain respects from the similar ratio used in our credit agreement against comparable measures of certain other companies in our industry. These measures differ in certain respects from the ratios used in our senior notes indenture.
These non-GAAP financial measures have certain shortcomings. In particular, adjusted EBITDA does not represent the residual cash flows available for discretionary expenditures, since items such as debt repayment and interest payments are not deducted from such measure. In addition, the ratio of total net debt to last 12-month adjusted EBITDA is subject to the risk that we may not be able to use the cash on the balance sheet to reduce our debt on a dollar-for-dollar basis. Management believes this ratio is useful as a means to evaluate our ability to incur additional indebtedness in the future.
We present the non-GAAP measure “adjusted diluted net income (loss) per share” because our net income (loss) and net income (loss) per share are regularly affected by items that occur at irregular intervals or are non-cash items. We believe that disclosing these measures assists investors, securities analysts and other interested parties in evaluating both our company over time and the relative performance of the companies in our industry.
Forward-Looking Statements
Certain statements in this communication are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect, among other things, our current expectations, plans, strategies, and anticipated financial results. There are a number of risks, uncertainties, and conditions that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements. These risks and uncertainties include a number of factors related to our business, including the uncertainties relating to the impact of the novel coronavirus (COVID-19) pandemic on the Company’s business, results of operations, cash flows, stock price and employees; the possibility that any of the anticipated benefits of the strategic investment from Searchlight Capital Partners, L.P. or our refinancing of outstanding debt, including our senior secured credit facilities, or of the sales of the limited partnership interests will not be realized;; the anticipated use of proceeds of the strategic investment or the sales of the limited partnership interests; the outcome of any legal proceedings that may be instituted against the Company or its directors; economic and financial market conditions generally and economic conditions in our service areas; various risks to the price and volatility of our common stock; changes in the valuation of pension plan assets; the substantial amount of debt and our ability to repay or refinance it or incur additional debt in the future; our need for a significant amount of cash to service and repay the debt restrictions contained in our debt agreements that limit the discretion of management in operating the business; regulatory changes, including changes to subsidies, rapid development and introduction of new technologies and intense competition in the telecommunications industry; risks associated with our possible pursuit of or failure to consummate acquisitions or dispositions; system failures; cyber-attacks, information or security breaches or technology failure of ours or of a third party; losses of large customers or government contracts; risks associated with the rights-of-way for the network; disruptions in the relationship with third party vendors; losses of key management personnel and the inability to attract and retain highly qualified management and personnel in the future; changes in the extensive governmental legislation and regulations governing telecommunications providers and the provision of telecommunications services; new or changing tax laws or regulations; telecommunications carriers disputing and/or avoiding their obligations to pay network access charges for use of our network; high costs of regulatory compliance; the competitive impact of legislation and regulatory changes in the telecommunications industry; liability and compliance costs regarding environmental regulations; risks associated with discontinuing paying dividends on our common stock; and the potential for the rights of our series A preferred stock to negatively impact our cash flow. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements are discussed in more detail in our filings with the Securities and Exchange Commission (“SEC”), including our reports on Form 10-K and Form 10-Q. Many of these circumstances are beyond our ability to control or predict. Moreover, forward-looking statements necessarily involve assumptions on our part. These forward-looking statements generally are identified by the words “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” “plan,” “should,” “may,” “will,” “would,” “will be,” “will continue” or similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company and its subsidiaries to be different from those expressed or implied in the forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements that appear throughout this communication. Furthermore, forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the SEC, we disclaim any intention or obligation to update or revise publicly any forward-looking statements. You should not place undue reliance on forward-looking statements.
Tag: [Consolidated-Communications-Earnings]
| Consolidated Communications Holdings, Inc. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (Dollars in thousands, except share and per share amounts) | ||||||||
| (Unaudited) | ||||||||
| September 30, | December 31, | |||||||
|
2022 |
2021 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ |
462,049 |
|
$ |
99,635 |
|
||
| Short-term investments |
— |
|
110,801 |
|
||||
| Accounts receivable, net |
115,985 |
|
133,362 |
|
||||
| Income tax receivable |
— |
|
1,134 |
|
||||
| Prepaid expenses and other current assets |
63,730 |
|
56,831 |
|
||||
| Assets held for sale |
92,822 |
|
26,052 |
|
||||
| Total current assets |
734,586 |
|
427,815 |
|
||||
| Property, plant and equipment, net |
2,175,557 |
|
2,019,444 |
|
||||
| Investments |
10,283 |
|
10,799 |
|
||||
| Goodwill |
929,570 |
|
1,013,243 |
|
||||
| Customer relationships, net |
50,801 |
|
73,939 |
|
||||
| Other intangible assets |
10,557 |
|
10,557 |
|
||||
| Assets of discontinued operations |
— |
|
98,779 |
|
||||
| Other assets |
57,626 |
|
58,116 |
|
||||
| Total assets | $ |
3,968,980 |
|
$ |
3,712,692 |
|
||
| LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ |
30,445 |
|
$ |
40,953 |
|
||
| Advance billings and customer deposits |
48,466 |
|
53,028 |
|
||||
| Accrued compensation |
65,722 |
|
68,272 |
|
||||
| Accrued interest |
35,139 |
|
17,819 |
|
||||
| Accrued expense |
108,867 |
|
97,417 |
|
||||
| Current portion of long-term debt and finance lease obligations |
10,278 |
|
7,959 |
|
||||
| Liabilities held for sale |
4,611 |
|
97 |
|
||||
| Total current liabilities |
303,528 |
|
285,545 |
|
||||
| Long-term debt and finance lease obligations |
2,125,994 |
|
2,118,853 |
|
||||
| Deferred income taxes |
268,962 |
|
194,458 |
|
||||
| Pension and other post-retirement obligations |
190,814 |
|
214,671 |
|
||||
| Other long-term liabilities |
46,901 |
|
62,789 |
|
||||
| Total liabilities |
2,936,199 |
|
2,876,316 |
|
||||
| Series A Preferred Stock, par value $0.01 per share; 10,000,000 shares authorized, 456,343 and 434,266 shares outstanding as of September 30, 2022 and December 31, 2021, respectively; liquidation preference of $466,695 and $436,943 as of September 30, 2022 and December 31, 2021, respectively |
318,328 |
|
288,576 |
|
||||
| Shareholders’ equity: | ||||||||
| Common stock, par value $0.01 per share; 150,000,000 shares authorized, 115,395,668 and 113,647,364 shares outstanding as of September 30, 2022 and December 31, 2021, respectively |
1,154 |
|
1,137 |
|
||||
| Additional paid-in capital |
729,186 |
|
740,746 |
|
||||
| Retained earnings (accumulated deficit) |
23,272 |
|
(141,599 |
) |
||||
| Accumulated other comprehensive loss, net |
(46,639 |
) |
(59,571 |
) |
||||
| Noncontrolling interest |
7,480 |
|
7,087 |
|
||||
| Total shareholders’ equity |
714,453 |
|
547,800 |
|
||||
| Total liabilities, mezzanine equity and shareholders’ equity | $ |
3,968,980 |
|
$ |
3,712,692 |
|
||
| Consolidated Communications Holdings, Inc. | ||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
| Net revenues | $ |
296,619 |
|
$ |
318,584 |
|
$ |
895,287 |
|
$ |
963,753 |
|
||||
| Operating expenses: | ||||||||||||||||
| Cost of services and products |
141,226 |
|
142,507 |
|
413,009 |
|
431,797 |
|
||||||||
| Selling, general and administrative expenses |
72,837 |
|
64,100 |
|
221,632 |
|
199,948 |
|
||||||||
| Loss on impairment of assets held for sale |
5,208 |
|
5,704 |
|
131,698 |
|
5,704 |
|
||||||||
| Gain on disposal of assets |
(19,163 |
) |
— |
|
(19,163 |
) |
— |
|
||||||||
| Depreciation and amortization |
75,659 |
|
73,765 |
|
220,552 |
|
225,455 |
|
||||||||
| Income (loss) from operations |
20,852 |
|
32,508 |
|
(72,441 |
) |
100,849 |
|
||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense, net of interest income |
(32,071 |
) |
(43,176 |
) |
(91,742 |
) |
(137,022 |
) |
||||||||
| Loss on extinguishment of debt |
— |
|
— |
|
— |
|
(17,101 |
) |
||||||||
| Change in fair value of contingent payment rights |
— |
|
(2,205 |
) |
— |
|
(99,619 |
) |
||||||||
| Other income, net |
2,984 |
|
2,325 |
|
9,425 |
|
4,491 |
|
||||||||
| Loss from continuing operations before income taxes |
(8,235 |
) |
(10,548 |
) |
(154,758 |
) |
(148,402 |
) |
||||||||
| Income tax expense (benefit) |
(978 |
) |
2,552 |
|
(17,814 |
) |
(1,860 |
) |
||||||||
| Loss from continuing operations |
(7,257 |
) |
(13,100 |
) |
(136,944 |
) |
(146,542 |
) |
||||||||
| Discontinued operations: | ||||||||||||||||
| Income from discontinued operations |
4,744 |
|
11,020 |
|
22,628 |
|
31,815 |
|
||||||||
| Gain on sale of discontinued operations |
389,905 |
|
— |
|
389,905 |
|
— |
|
||||||||
| Income tax expense |
94,715 |
|
2,401 |
|
99,973 |
|
6,926 |
|
||||||||
| Income from discontinued operations |
299,934 |
|
8,619 |
|
312,560 |
|
24,889 |
|
||||||||
| Net income (loss) |
292,677 |
|
(4,481 |
) |
175,616 |
|
(121,653 |
) |
||||||||
| Less: dividends on Series A preferred stock |
10,352 |
|
— |
|
29,752 |
|
— |
|
||||||||
| Less: net income attributable to noncontrolling interest |
75 |
|
240 |
|
393 |
|
523 |
|
||||||||
| Net income (loss) attributable to common shareholders | $ |
282,250 |
|
$ |
(4,721 |
) |
$ |
145,471 |
|
$ |
(122,176 |
) |
||||
| Net income (loss) per common share – basic and diluted | ||||||||||||||||
| Loss from continuing operations | $ |
(0.15 |
) |
$ |
(0.14 |
) |
$ |
(1.45 |
) |
$ |
(1.77 |
) |
||||
| Income from discontinued operations |
2.60 |
|
0.09 |
|
2.72 |
|
0.30 |
|
||||||||
| Net income (loss) per basic and diluted common shares attributable to common shareholders | $ |
2.45 |
|
$ |
(0.05 |
) |
$ |
1.27 |
|
$ |
(1.47 |
) |
||||
| Consolidated Communications Holdings, Inc. | ||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
| OPERATING ACTIVITIES | ||||||||||||||||
| Net income (loss) | $ |
292,677 |
|
$ |
(4,481 |
) |
$ |
175,616 |
|
$ |
(121,653 |
) |
||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||
| Depreciation and amortization |
75,659 |
|
73,765 |
|
220,552 |
|
225,455 |
|
||||||||
| Deferred income taxes |
81,775 |
|
4,949 |
|
69,949 |
|
4,975 |
|
||||||||
| Cash distributions from wireless partnerships in excess of earnings |
3,957 |
|
107 |
|
5,618 |
|
1,345 |
|
||||||||
| Pension and post-retirement contributions in excess of expense |
(4,830 |
) |
(11,755 |
) |
(23,991 |
) |
(29,968 |
) |
||||||||
| Non-cash, stock-based compensation |
2,939 |
|
3,217 |
|
7,971 |
|
7,160 |
|
||||||||
| Amortization of deferred financing costs and discounts |
1,849 |
|
4,472 |
|
5,475 |
|
13,121 |
|
||||||||
| Non-cash interest expense on convertible security interest |
— |
|
8,230 |
|
— |
|
24,334 |
|
||||||||
| Loss on extinguishment of debt |
— |
|
— |
|
— |
|
17,101 |
|
||||||||
| Loss on change in fair value of contingent payment rights |
— |
|
2,205 |
|
— |
|
99,619 |
|
||||||||
| Loss on impairment of assets held for sale |
5,208 |
|
5,704 |
|
131,698 |
|
5,704 |
|
||||||||
| Gain on sale of partnership interests |
(389,905 |
) |
— |
|
(389,905 |
) |
— |
|
||||||||
| Gain on disposal of assets |
(19,163 |
) |
— |
|
(19,163 |
) |
— |
|
||||||||
| Other adjustments, net |
(162 |
) |
(99 |
) |
(558 |
) |
3,632 |
|
||||||||
| Changes in operating assets and liabilities, net |
26,622 |
|
23,834 |
|
34,869 |
|
45,154 |
|
||||||||
| Net cash provided by operating activities |
76,626 |
|
110,148 |
|
218,131 |
|
295,979 |
|
||||||||
| INVESTING ACTIVITIES | ||||||||||||||||
| Purchase of property, plant and equipment, net |
(164,045 |
) |
(144,292 |
) |
(496,959 |
) |
(339,488 |
) |
||||||||
| Purchase of investments |
— |
|
(64,996 |
) |
(39,959 |
) |
(154,963 |
) |
||||||||
| Proceeds from sale of assets |
19,463 |
|
37 |
|
21,257 |
|
126 |
|
||||||||
| Proceeds from business dispositions |
— |
|
— |
|
26,042 |
|
— |
|
||||||||
| Proceeds from sale and maturity of investments |
25,006 |
|
— |
|
151,560 |
|
1,198 |
|
||||||||
| Proceeds from sale of partnership interests |
489,567 |
|
— |
|
489,567 |
|
— |
|
||||||||
| Net cash provided by (used in) investing activities |
369,991 |
|
(209,251 |
) |
151,508 |
|
(493,127 |
) |
||||||||
| FINANCING ACTIVITIES | ||||||||||||||||
| Proceeds from bond offering |
— |
|
— |
|
— |
|
400,000 |
|
||||||||
| Proceeds from issuance of long-term debt |
— |
|
— |
|
— |
|
150,000 |
|
||||||||
| Payment of finance lease obligations |
(2,587 |
) |
(1,529 |
) |
(7,111 |
) |
(4,465 |
) |
||||||||
| Payment on long-term debt |
— |
|
— |
|
— |
|
(397,000 |
) |
||||||||
| Payment of financing costs |
— |
|
— |
|
— |
|
(8,266 |
) |
||||||||
| Share repurchases for minimum tax withholding |
— |
|
— |
|
(114 |
) |
— |
|
||||||||
| Net cash provided by (used in) financing activities |
(2,587 |
) |
(1,529 |
) |
(7,225 |
) |
140,269 |
|
||||||||
| Net change in cash and cash equivalents |
444,030 |
|
(100,632 |
) |
362,414 |
|
(56,879 |
) |
||||||||
| Cash and cash equivalents at beginning of period |
18,019 |
|
199,314 |
|
99,635 |
|
155,561 |
|
||||||||
| Cash and cash equivalents at end of period | $ |
462,049 |
|
$ |
98,682 |
|
$ |
462,049 |
|
$ |
98,682 |
|
||||
| Consolidated Communications Holdings, Inc. | ||||||||||||
| Consolidated Revenue by Category | ||||||||||||
| (Dollars in thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||
| Consumer: | ||||||||||||
| Broadband (Data and VoIP) | $ |
69,641 |
$ |
68,604 |
$ |
203,144 |
$ |
202,340 |
||||
| Voice services |
36,444 |
40,587 |
110,539 |
121,180 |
||||||||
| Video services |
13,552 |
16,163 |
42,277 |
49,743 |
||||||||
|
119,637 |
125,354 |
355,960 |
373,263 |
|||||||||
| Commercial: | ||||||||||||
| Data services (includes VoIP) |
56,796 |
57,545 |
171,804 |
171,487 |
||||||||
| Voice services |
35,484 |
38,446 |
107,598 |
117,264 |
||||||||
| Other |
9,933 |
10,205 |
32,780 |
28,624 |
||||||||
|
102,213 |
106,196 |
312,182 |
317,375 |
|||||||||
| Carrier: | ||||||||||||
| Data and transport services |
33,878 |
33,556 |
103,626 |
100,775 |
||||||||
| Voice services |
3,517 |
4,173 |
11,087 |
13,095 |
||||||||
| Other |
605 |
375 |
1,350 |
1,161 |
||||||||
|
38,000 |
38,104 |
116,063 |
115,031 |
|||||||||
| Subsidies |
7,187 |
17,264 |
20,304 |
52,068 |
||||||||
| Network access |
27,277 |
29,923 |
78,336 |
92,641 |
||||||||
| Other products and services |
2,305 |
1,743 |
12,442 |
13,375 |
||||||||
| Total operating revenue | $ |
296,619 |
$ |
318,584 |
$ |
895,287 |
$ |
963,753 |
||||
| Consolidated Communications Holdings, Inc. | |||||||||||||||
| Consolidated Revenue Trend by Category | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | |||||||||||
| Consumer: | |||||||||||||||
| Broadband (Data and VoIP) | $ |
69,641 |
$ |
67,592 |
$ |
65,911 |
$ |
66,983 |
$ |
68,604 |
|||||
| Voice services |
36,444 |
36,643 |
37,452 |
39,518 |
40,587 |
||||||||||
| Video services |
13,552 |
14,359 |
14,366 |
15,371 |
16,163 |
||||||||||
|
119,637 |
118,594 |
117,729 |
121,872 |
125,354 |
|||||||||||
| Commercial: | |||||||||||||||
| Data services (includes VoIP) |
56,796 |
57,113 |
57,895 |
57,444 |
57,545 |
||||||||||
| Voice services |
35,484 |
35,775 |
36,339 |
37,303 |
38,446 |
||||||||||
| Other |
9,933 |
11,287 |
11,560 |
11,408 |
10,205 |
||||||||||
|
102,213 |
104,175 |
105,794 |
106,155 |
106,196 |
|||||||||||
| Carrier: | |||||||||||||||
| Data and transport services |
33,878 |
36,263 |
33,485 |
32,659 |
33,556 |
||||||||||
| Voice services |
3,517 |
3,718 |
3,852 |
4,088 |
4,173 |
||||||||||
| Other |
605 |
354 |
391 |
431 |
375 |
||||||||||
|
38,000 |
40,335 |
37,728 |
37,178 |
38,104 |
|||||||||||
| Subsidies |
7,187 |
6,534 |
6,583 |
17,671 |
17,264 |
||||||||||
| Network access |
27,277 |
24,846 |
26,213 |
27,846 |
29,923 |
||||||||||
| Other products and services |
2,305 |
3,906 |
6,231 |
7,758 |
1,743 |
||||||||||
| Total operating revenue | $ |
296,619 |
$ |
298,390 |
$ |
300,278 |
$ |
318,480 |
$ |
318,584 |
|||||
| Consolidated Communications Holdings, Inc. | ||||||||||||||||
| Schedule of Adjusted EBITDA Calculation | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
| Loss from continuing operations | $ |
(7,257 |
) |
$ |
(13,100 |
) |
$ |
(136,944 |
) |
$ |
(146,542 |
) |
||||
| Add (subtract): | ||||||||||||||||
| Income tax expense (benefit) |
(978 |
) |
2,552 |
|
(17,814 |
) |
(1,860 |
) |
||||||||
| Interest expense, net |
32,071 |
|
43,176 |
|
91,742 |
|
137,022 |
|
||||||||
| Depreciation and amortization |
75,659 |
|
73,765 |
|
220,552 |
|
225,455 |
|
||||||||
| EBITDA |
99,495 |
|
106,393 |
|
157,536 |
|
214,075 |
|
||||||||
| Adjustments to EBITDA (1): | ||||||||||||||||
| Other, net (2) |
6,186 |
|
919 |
|
17,754 |
|
11,155 |
|
||||||||
| Pension/OPEB benefit |
(2,950 |
) |
(2,207 |
) |
(8,897 |
) |
(7,290 |
) |
||||||||
| Gain on disposal of assets |
(19,163 |
) |
— |
|
(19,163 |
) |
— |
|
||||||||
| Loss on extinguishment of debt |
— |
|
— |
|
— |
|
17,101 |
|
||||||||
| Loss on impairment |
5,208 |
|
5,704 |
|
131,698 |
|
5,704 |
|
||||||||
| Change in fair value of contingent payment right |
— |
|
2,205 |
|
— |
|
99,619 |
|
||||||||
| Non-cash compensation (3) |
2,939 |
|
3,217 |
|
7,971 |
|
7,160 |
|
||||||||
| Adjusted EBITDA from continuing operations |
91,715 |
|
116,231 |
|
286,899 |
|
347,524 |
|
||||||||
| Investment distributions from discontinued operations |
5,478 |
|
11,127 |
|
25,023 |
|
33,160 |
|
||||||||
| Adjusted EBITDA | $ |
97,193 |
|
$ |
127,358 |
|
$ |
311,922 |
|
$ |
380,684 |
|
||||
| Notes: | ||||||||||||||||
| (1) These adjustments reflect those required or permitted by the lenders under our credit agreement. | ||||||||||||||||
| (2) Other, net includes income attributable to noncontrolling interests, acquisition and non-recurring related costs, and certain miscellaneous items. | ||||||||||||||||
| (3) Represents compensation expenses in connection with our Restricted Share Plan, which because of the non-cash nature of the expenses are excluded from adjusted EBITDA. | ||||||||||||||||
| Consolidated Communications Holdings, Inc. | |||||||
| Reconciliation of Net Loss to Adjusted EBITDA Guidance | |||||||
| (Dollars in millions) | |||||||
| (Unaudited) | |||||||
| Year Ended | |||||||
| December 31, 2022 | |||||||
| Range | |||||||
| Low | High | ||||||
| Net loss | $ |
(151 |
) |
$ |
(138 |
) |
|
| Add: | |||||||
| Income tax benefit |
(15 |
) |
(14 |
) |
|||
| Interest expense, net |
125 |
|
122 |
|
|||
| Depreciation and amortization |
293 |
|
290 |
|
|||
| EBITDA |
252 |
|
260 |
|
|||
| Adjustments to EBITDA (1): | |||||||
| Other, net (2) |
23 |
|
25 |
|
|||
| Loss on impairment |
126 |
|
126 |
|
|||
| Pension/OPEB benefit |
(11 |
) |
(11 |
) |
|||
| Non-cash compensation (3) |
10 |
|
10 |
|
|||
| Adjusted EBITDA | $ |
400 |
|
$ |
410 |
|
|
| Notes: | |||||||
| (1) These adjustments reflect those required or permitted by the lenders under our credit agreement. | |||||||
| (2) Other, net includes income attributable to noncontrolling interests, cash distributions less equity earnings from our investments, dividend income, acquisition and non-recurring related costs and certain miscellaneous items. | |||||||
| (3) Represents compensation expenses in connection with our Restricted Share Plan, which because of the non-cash nature of the expenses are excluded from adjusted EBITDA. | |||||||
| Consolidated Communications Holdings, Inc. | ||||
| Total Net Debt to LTM Adjusted EBITDA Ratio | ||||
| (Dollars in thousands) | ||||
| (Unaudited) | ||||
| September 30, | ||||
|
2022 |
||||
| Summary of Outstanding Debt: | ||||
| Term loans, net of discount $9,108 | $ |
990,767 |
|
|
| 6.50% Senior secured notes due 2028 |
750,000 |
|
||
| 5.00% Senior secured notes due 2028 |
400,000 |
|
||
| Finance leases |
28,975 |
|
||
| Total debt as of September 30, 2022 |
2,169,742 |
|
||
| Less deferred debt issuance costs |
(33,470 |
) |
||
| Less cash on hand |
(462,049 |
) |
||
| Total net debt as of September 30, 2022 | $ |
1,674,223 |
|
|
| Adjusted EBITDA for the 12 months ended September 30, 2022 | $ |
438,100 |
|
|
| Total Net Debt to last 12 months Adjusted EBITDA |
3.82 |
x |
||
| Consolidated Communications Holdings, Inc. | ||||||||||||||||
| Adjusted Net Income and Net Income Per Share | ||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
| Loss from continuing operations | $ |
(7,257 |
) |
$ |
(13,100 |
) |
$ |
(136,944 |
) |
$ |
(146,542 |
) |
||||
| Less: dividends on Series A preferred stock |
10,352 |
|
— |
|
29,752 |
|
— |
|
||||||||
| Less: net income attributable to noncontrolling interest |
75 |
|
240 |
|
393 |
|
523 |
|
||||||||
| Loss attributable to common shareholders from continuing operations |
(17,684 |
) |
(13,340 |
) |
(167,089 |
) |
(147,065 |
) |
||||||||
| Adjustments to loss attributable to common shareholders: | ||||||||||||||||
| Dividends on Series A preferred stock |
10,352 |
|
— |
|
29,752 |
|
— |
|
||||||||
| Integration and severance related costs, net of tax |
— |
|
674 |
|
1,604 |
|
2,353 |
|
||||||||
| Loss on impairment of assets held for sale |
5,208 |
|
5,704 |
|
131,698 |
|
5,704 |
|
||||||||
| Gain on disposition of tower assets, net of tax |
(14,167 |
) |
— |
|
(14,167 |
) |
— |
|
||||||||
| Loss on disposition of wireless spectrum licenses, net of tax |
— |
|
— |
|
— |
|
2,641 |
|
||||||||
| Loss on disposition of fixed wireless, net of tax |
— |
|
— |
|
— |
|
3,085 |
|
||||||||
| Loss on extinguishment of debt, net of tax |
— |
|
— |
|
— |
|
12,639 |
|
||||||||
| Change in fair value of contingent payment rights |
— |
|
2,205 |
|
— |
|
99,619 |
|
||||||||
| Non-cash interest expense for Searchlight note including amortization of discount and fees |
— |
|
10,944 |
|
— |
|
32,006 |
|
||||||||
| Non-cash interest expense for swaps, net of tax |
(328 |
) |
(261 |
) |
(932 |
) |
(682 |
) |
||||||||
| Tax impact of non-deductible goodwill |
821 |
|
— |
|
(11,118 |
) |
— |
|
||||||||
| Change in deferred tax rate |
(644 |
) |
— |
|
(644 |
) |
— |
|
||||||||
| Non-cash stock compensation, net of tax |
2,173 |
|
2,378 |
|
5,893 |
|
5,292 |
|
||||||||
| Adjusted net income (loss) from continuing operations | $ |
(14,269 |
) |
$ |
8,304 |
|
$ |
(25,003 |
) |
$ |
15,591 |
|
||||
| Weighted average number of common shares outstanding |
111,697 |
|
92,791 |
|
111,695 |
|
83,003 |
|
||||||||
| Adjusted diluted net income (loss) per common share: | ||||||||||||||||
| Adjusted net income (loss) from continuing operations | $ |
(0.13 |
) |
$ |
0.09 |
|
$ |
(0.22 |
) |
$ |
0.19 |
|
||||
| Adjusted income from discontinued operations excluding gain on sale of partnership interests, net of tax |
0.04 |
|
0.09 |
|
0.15 |
|
0.30 |
|
||||||||
| $ |
(0.09 |
) |
$ |
0.18 |
|
$ |
(0.07 |
) |
$ |
0.49 |
|
|||||
| Notes: | ||||||||||||||||
| Calculations above assume a 26.07% effective tax rate for the quarter and nine months ended September 30, 2022 and 26.10% effective tax rate for the quarter and nine months ended September 30, 2021. | ||||||||||||||||
| Consolidated Communications Holdings, Inc. | ||||||||||||||||||||
| Key Operating Metrics | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
|
2022 |
2022 |
2022 |
2021 |
2021 |
||||||||||||||||
| Passings | ||||||||||||||||||||
| Fiber Gig+ capable passings | ||||||||||||||||||||
| Northern New England |
531,035 |
|
451,414 |
|
341,010 |
|
291,921 |
|
217,660 |
|
||||||||||
| All other markets |
416,939 |
|
380,365 |
|
348,396 |
|
313,789 |
|
276,500 |
|
||||||||||
| Total Fiber Gig+ capable (1) |
947,974 |
|
831,779 |
|
689,406 |
|
605,710 |
|
494,160 |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
| DSL/Copper passings (2) | ||||||||||||||||||||
| Northern New England |
1,205,165 |
|
1,284,786 |
|
1,395,190 |
|
1,444,279 |
|
1,518,540 |
|
||||||||||
| All other markets |
602,216 |
|
635,428 |
|
663,835 |
|
702,098 |
|
737,016 |
|
||||||||||
| Total DSL/Copper (2) |
1,807,381 |
|
1,920,214 |
|
2,059,025 |
|
2,146,377 |
|
2,255,556 |
|
||||||||||
| Total Passings |
2,755,355 |
|
2,751,993 |
|
2,748,431 |
|
2,752,087 |
|
2,749,716 |
|
||||||||||
| % Fiber Gig+ Coverage/Total Passings |
34 |
% |
30 |
% |
25 |
% |
22 |
% |
18 |
% |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
| Consumer Broadband Connections | ||||||||||||||||||||
| Fiber Gig+ capable | ||||||||||||||||||||
| Northern New England |
38,778 |
|
31,050 |
|
24,882 |
|
20,032 |
|
17,288 |
|
||||||||||
| All other markets |
76,820 |
|
72,405 |
|
68,930 |
|
66,090 |
|
64,251 |
|
||||||||||
| Total Fiber Gig+ capable connections |
115,598 |
|
103,455 |
|
93,812 |
|
86,122 |
|
81,539 |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
| DSL/Copper (2) | ||||||||||||||||||||
| Northern New England |
121,230 |
|
126,475 |
|
131,763 |
|
136,140 |
|
140,893 |
|
||||||||||
| All other markets |
145,084 |
|
151,283 |
|
154,575 |
|
162,302 |
|
168,229 |
|
||||||||||
| Total DSL/Copper connections (2) |
266,314 |
|
277,758 |
|
286,338 |
|
298,442 |
|
309,122 |
|
||||||||||
| Total Consumer Broadband Connections |
381,912 |
|
381,213 |
|
380,150 |
|
384,564 |
|
390,661 |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
| Consumer Broadband Net Adds | ||||||||||||||||||||
| Northern New England |
2,483 |
|
880 |
|
473 |
|
(2,009 |
) |
(803 |
) |
||||||||||
| All other markets (2) |
(1,784 |
) |
183 |
|
(1,327 |
) |
(4,088 |
) |
(2,016 |
) |
||||||||||
| Total Consumer Broadband Net Adds |
699 |
|
1,063 |
|
(854 |
) |
(6,097 |
) |
(2,819 |
) |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
| Consumer Broadband Penetration % | ||||||||||||||||||||
| Fiber Gig+ capable | ||||||||||||||||||||
| Northern New England |
7 |
% |
7 |
% |
7 |
% |
7 |
% |
8 |
% |
||||||||||
| All other markets |
18 |
% |
19 |
% |
20 |
% |
21 |
% |
23 |
% |
||||||||||
| Total Fiber Gig+ capable |
12 |
% |
12 |
% |
14 |
% |
14 |
% |
17 |
% |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
| DSL/Copper (2) | ||||||||||||||||||||
| Northern New England |
10 |
% |
10 |
% |
9 |
% |
9 |
% |
9 |
% |
||||||||||
| All other markets |
24 |
% |
24 |
% |
23 |
% |
23 |
% |
23 |
% |
||||||||||
| Total DSL/Copper (2) |
15 |
% |
14 |
% |
14 |
% |
14 |
% |
14 |
% |
||||||||||
| Total Consumer Broadband Penetration % |
14 |
% |
14 |
% |
14 |
% |
14 |
% |
14 |
% |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
| Consumer Broadband Revenue by Service Type ($ in thousands) | ||||||||||||||||||||
| Fiber Broadband Revenue | $ |
21,558 |
|
$ |
19,218 |
|
$ |
17,241 |
|
$ |
16,152 |
|
$ |
15,423 |
|
|||||
| Copper and Other Broadband Revenue |
48,083 |
|
48,374 |
|
48,670 |
|
50,831 |
|
53,181 |
|
||||||||||
| Total Consumer Broadband Revenue by Service Type | $ |
69,641 |
|
$ |
67,592 |
|
$ |
65,911 |
|
$ |
66,983 |
|
$ |
68,604 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
| Consumer Average Revenue Per Unit (ARPU) | ||||||||||||||||||||
| Fiber Broadband ARPU | $ |
65.61 |
|
$ |
64.95 |
|
$ |
63.88 |
|
$ |
64.22 |
|
$ |
64.64 |
|
|||||
| Copper Broadband ARPU | $ |
53.87 |
|
$ |
52.36 |
|
$ |
50.78 |
|
$ |
50.65 |
|
$ |
51.32 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
| Consumer Voice Connections |
294,441 |
|
306,458 |
|
316,634 |
|
328,849 |
|
341,135 |
|
||||||||||
|
|
|
|
|
|
|
|
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| Video Connections |
51,339 |
|
55,225 |
|
58,812 |
|
63,447 |
|
66,971 |
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| Fiber route network miles (long-haul, metro and FttP) |
57,498 |
|
56,093 |
|
54,239 |
|
52,402 |
|
50,405 |
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| On-net buildings |
15,715 |
|
15,618 |
|
15,446 |
|
14,891 |
|
14,625 |
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| Notes: | ||||||||||||||||||||
| (1) In Q1 2021, the Company launched a multi-year fiber build plan to upgrade 1.6 million passings by 2025 or 70% of our service area to fiber Gig+ capable services by 2025. As of September 30, 2022, 342,200 of the target 400,000 passings for 2022 were upgraded to FttP and total fiber passings were ~948,000 or 34% of the Company’s service area. | ||||||||||||||||||||
| (2) The sale of the non-core Ohio operations resulted in a reduction of approximately 5,658 DSL/Copper passings and 3,560 DSL/Copper broadband connections in the first quarter of 2022. Prior period amounts have not been adjusted to reflect the sale. | ||||||||||||||||||||
| As of March 31, 2022, the net assets of our Kansas City operations are classified as held for sale. The Kansas City operations, which are included in All other markets above, include approximately 137,000 passings and approximately 10% consumer broadband penetration. Amounts above have not been adjusted to reflect the pending sale. | ||||||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20221031005683/en/