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 of 2023.
Third Quarter 2023 Results
- Revenue totaled $283.7 million
- Overall consumer revenue was $115.2 million
- Consumer fiber revenue was $34.0 million
- Total consumer broadband net adds were 9,392
- Consumer broadband revenue was $75.1 million
- Commercial data services revenue was $53.9 million
- Carrier data-transport revenue was $31.4 million
- Other products and services revenue was $10.0 million
- Net loss was ($69.2 million). Adjusted EBITDA was $80.2 million
- Total committed capital expenditures were $111.3 million
Operating expenses increased $15.2 million versus the prior year largely due to increased severance costs in relation to the previously announced business simplification and costs savings initiatives, in addition to higher costs related to professional fees for customer service and process improvement initiatives. Partly offsetting the higher operating expenses was the impact of the divestiture of the Kansas City operations on Nov. 30, 2022, lower video programming costs and a decrease in required contributions to the federal and state Universal Service Funds.
Net interest expense was $39.6 million, an increase of $7.5 million versus the prior year, primarily as a result of higher interest on the term loan. The Company has 77% of its total debt at a fixed rate through September 2026. As of Sept. 30, 2023, the weighted average cost of debt was 7.03%.
Net loss in the third quarter of 2023 was ($69.2 million) compared to net income of $282.3 million in the third quarter of 2022, which included $299.9 million of income from discontinued operations. Net loss per share was ($0.61) in the third quarter of 2023 as compared to net income per share of $2.45 in the third quarter of 2022. Adjusted diluted net income (loss) per share excludes certain items as outlined in the table provided in this release. Adjusted diluted net loss per share from continuing operations was ($0.31) compared to ($0.13) in the third quarter of 2022.
Capital Expenditures
Total committed capital expenditures were $111.3 million, driven by 67,120 new fiber passings and third quarter fiber adds. Capital expenditures were lower than the first two quarters of 2023 due to the usage of existing inventory for install and build activity.
Capital Structure
As of Sept. 30, 2023, the Company maintained liquidity with cash and short-term investments of approximately $90 million and $215 million of available borrowing capacity on the revolving credit facility, subject to certain covenants. The net debt leverage ratio for the trailing 12 months ended Sept. 30, 2023, was 6.15x.
In connection with execution of the definitive agreement to be acquired by Searchlight Capital Partners, L.P. (“Searchlight”) and British Columbia Investment Management Corporation (“BCI”), on Oct. 15, 2023 Consolidated entered into an amendment (the “Amendment”) to its credit agreement. The Amendment provides for interim financial covenant relief by increasing the maximum consolidated first lien leverage ratio permitted under the credit agreement, subject to certain conditions. The covenant relief provided for in the Amendment will provide the Company with near-term financial and operational flexibility. The Amendment is expected to remain in effect following closing of the proposed transaction. In the event the proposed transaction does not close by Aug. 1, 2025, it is expected that the maximum consolidated first lien leverage ratio under the financial covenant will revert to the levels that currently apply.
Pending Transaction
As previously announced on Oct. 16, 2023, Consolidated entered into an agreement to be acquired by Searchlight and BCI in an all-cash transaction with an enterprise value of approximately $3.1 billion, including the assumption of debt. The proposed transaction will result in Consolidated becoming a private company and is expected to close by the first quarter of 2025, subject to customary closing conditions, including receipt of regulatory approvals and approval of the holders of a majority of the voting power represented by the outstanding shares that are entitled to vote thereon and held by shareholders other than Searchlight and BCI, their investment fund affiliates and the directors and officers of the Company.
In light of the announced transaction, Consolidated will not host an earnings conference call and has withdrawn its 2023 outlook.
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 nearly 60,000 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 includes disclosures regarding “EBITDA,” “adjusted EBITDA,” “Net debt leverage ratio,” “adjusted diluted net income (loss) per share,” and “Normalized revenue,” all of which are non-GAAP financial measures. 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 these non-GAAP financial measures to 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 (loss) from continuing operations. EBITDA is defined as income (loss) from continuing operations 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 “Net debt leverage ratio” principally to help investors understand how we measure leverage and facilitate comparisons by investors, security analysts and others. Total net debt is defined as the current and long-term portions of debt and finance lease obligations less cash, cash equivalents and short-term investments, deferred debt issuance costs and discounts on debt. Our Net debt leverage ratio differs in certain respects from the similar ratio used in our credit agreement or 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 Net debt leverage ratio 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 press release, including those relating to the current expectations, plans, strategies, and the timeline for consummating the take private transaction with Searchlight and BCI by the first quarter of 2025, 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, including: significant competition in all parts of our business and among our customer channels; our ability to adapt to rapid technological changes; shifts in our product mix that may result in a decline in operating profitability; public health threats, including the COVID-19 pandemic; continued receipt of support from various funds established under federal and state laws; disruptions in our networks and infrastructure and any related service delays or disruptions could cause us to lose customers and incur additional expenses; cyber-attacks may lead to unauthorized access to confidential customer, personnel and business information that could adversely affect our business; our operations require substantial capital expenditures and our business, financial condition, results of operations and liquidity may be impacted if funds for capital expenditures are not available when needed; our ability to obtain and maintain necessary rights-of-way for our networks; our ability to obtain necessary hardware, software and operational support from third-party vendors; substantial video content costs continue to rise; our ability to enter into new collective bargaining agreements or renew existing agreements; our ability to attract and/or retain certain key management and other personnel in the future; risks associated with acquisitions and the realization of anticipated benefits from such acquisitions; increasing attention to, and evolving expectations for, environmental, social and governance initiatives; unfavorable changes in financial markets could affect pension plan investments; weak economic conditions; the risk that the proposed transaction may not be completed in a timely manner or at all; the failure to receive, on a timely basis or otherwise, the required approvals of the proposed transaction by the Company’s stockholders; the possibility that any or all of the various conditions to the consummation of the proposed transaction may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals); the possibility that competing offers or acquisition proposals for the Company will be made; the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive transaction agreement relating to the proposed transaction, including in circumstances which would require the Company to pay a termination fee; the effect of the announcement or pendency of the proposed transaction on the Company’s ability to attract, motivate or retain key executives and employees, its ability to maintain relationships with its customers, suppliers and other business counterparties, or its operating results and business generally; risks related to the proposed transaction diverting management’s attention from the Company’s ongoing business operations; the amount of costs, fees and expenses related to the proposed transaction; the risk that the Company’s stock price may decline significantly if the proposed transaction is not consummated; the risk of shareholder litigation in connection with the proposed transaction, including resulting expense or delay; and the other risk factors described in Part I, Item 1A of Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022 and the other risk factors identified from time to time in the Company’s other filings with the SEC. Filings with the SEC are available on the SEC’s website at http://www.sec.gov. 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. 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 press release. Furthermore, undue reliance should not be placed on forward-looking statements, which are based on the information currently available to us and speak only as of the date they are made. Except as required under federal securities laws or the rules and regulations of the Securities and Exchange Commission, we disclaim any intention or obligation to update or revise publicly any forward-looking statements.
Participants in the Solicitation
The Company and its directors, executive officers and certain other members of management and employees, under SEC rules, may be deemed to be “participants” in the solicitation of proxies from stockholders of the Company in connection with the proposed transaction. Information about who may, under SEC rules, be considered to be participants in the solicitation of the Company’s stockholders in connection with the proposed transaction will be set forth in the definitive proxy statement when it is filed with the SEC in connection with the proposed transaction. Information relating to the foregoing can also be found in the Company’s Proxy Statement on Schedule 14A for its 2023 Annual Meeting of Shareholders, which was filed with the SEC on March 21, 2023. To the extent holdings of the Company’s securities have changed since the amounts set forth in such 2023 proxy statement, such changes have been or will be reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC. Additional information concerning the interests of the Company’s participants in the solicitation, which may, in some cases, be different than those of the Company’s stockholders generally, will be set forth in the Company’s proxy statement relating to the proposed transaction when it becomes available.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in respect of the proposed acquisition of the Company by Condor Holdings LLC. In connection with the proposed transaction, the Company intends to file relevant materials with the SEC, including the Company’s proxy statement in preliminary and definitive form. In addition, the Company and certain affiliates of the Company intend to jointly file a transaction statement on Schedule 13e-3 (the “Schedule 13e-3”). INVESTORS AND STOCKHOLDERS OF THE COMPANY ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE COMPANY’S PROXY STATEMENT AND THE SCHEDULE 13E-3 (WHEN THEY ARE AVAILABLE), BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, SEARCHLIGHT AND BCI AND THE PROPOSED TRANSACTION. Investors and stockholders of the Company are or will be able to obtain these documents (when they are available) free of charge from the SEC’s website at www.sec.gov, or free of charge from the Company by directing a request to the Company at 2116 South 17th Street, Mattoon, IL 61938, Attention: Investor Relations or at tel: +1 (844) 909-2675.
No Offer or Solicitation
This communication is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any offer, solicitation or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
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, |
||||||
|
2023 |
|
2022 |
||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ |
89,617 |
|
$ |
325,852 |
|
||
| Short-term investments |
— |
|
87,951 |
|
||||
| Accounts receivable, net |
107,361 |
|
119,675 |
|
||||
| Income tax receivable |
3,594 |
|
1,670 |
|
||||
| Prepaid expenses and other current assets |
51,921 |
|
62,996 |
|
||||
| Assets held for sale |
69,816 |
|
— |
|
||||
| Total current assets |
322,309 |
|
598,144 |
|
||||
| Property, plant and equipment, net |
2,429,213 |
|
2,234,122 |
|
||||
| Investments |
8,980 |
|
10,297 |
|
||||
| Goodwill |
814,624 |
|
929,570 |
|
||||
| Customer relationships, net |
24,035 |
|
43,089 |
|
||||
| Other intangible assets |
10,557 |
|
10,557 |
|
||||
| Other assets |
76,245 |
|
61,315 |
|
||||
| Total assets | $ |
3,685,963 |
|
$ |
3,887,094 |
|
||
| LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ |
44,380 |
|
$ |
33,096 |
|
||
| Advance billings and customer deposits |
44,939 |
|
46,664 |
|
||||
| Accrued compensation |
53,896 |
|
60,903 |
|
||||
| Accrued interest |
35,623 |
|
18,201 |
|
||||
| Accrued expense |
121,016 |
|
95,206 |
|
||||
| Current portion of long-term debt and finance lease obligations |
15,540 |
|
12,834 |
|
||||
| Liabilities held for sale |
2,727 |
|
— |
|
||||
| Total current liabilities |
318,121 |
|
266,904 |
|
||||
| Long-term debt and finance lease obligations |
2,129,087 |
|
2,129,462 |
|
||||
| Deferred income taxes |
229,005 |
|
274,309 |
|
||||
| Pension and other post-retirement obligations |
118,394 |
|
123,644 |
|
||||
| Other long-term liabilities |
46,004 |
|
47,326 |
|
||||
| Total liabilities |
2,840,611 |
|
2,841,645 |
|
||||
| Series A Preferred Stock, par value $0.01 per share; 10,000,000 shares authorized, 434,266 and 456,343 shares outstanding as of September 30, 2023 and December 31, 2022, respectively; liquidation preference of $509,646 and $477,047 as of September 30, 2023 and December 31, 2022, respectively |
361,276 |
|
328,680 |
|
||||
| Shareholders’ equity: | ||||||||
| Common stock, par value $0.01 per share; 150,000,000 shares authorized, 116,487,985 and 115,167,193 shares outstanding as of September 30, 2023 and December 31, 2022, respectively |
1,165 |
|
1,152 |
|
||||
| Additional paid-in capital |
692,197 |
|
720,442 |
|
||||
| Accumulated deficit |
(215,080 |
) |
(11,866 |
) |
||||
| Accumulated other comprehensive loss, net |
(2,298 |
) |
(610 |
) |
||||
| Noncontrolling interest |
8,092 |
|
7,651 |
|
||||
| Total shareholders’ equity |
484,076 |
|
716,769 |
|
||||
| Total liabilities, mezzanine equity and shareholders’ equity | $ |
3,685,963 |
|
$ |
3,887,094 |
|
||
| 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, |
||||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||
| Net revenues | $ |
283,654 |
|
$ |
296,619 |
|
$ |
834,942 |
|
$ |
895,287 |
|
||||
| Operating expenses: | ||||||||||||||||
| Cost of services and products |
132,422 |
|
141,226 |
|
391,327 |
|
413,009 |
|
||||||||
| Selling, general and administrative expenses |
96,814 |
|
72,837 |
|
261,663 |
|
221,632 |
|
||||||||
| Loss on impairment of assets held for sale |
— |
|
5,208 |
|
77,755 |
|
131,698 |
|
||||||||
| Loss (gain) on disposal of assets |
6,692 |
|
(19,163 |
) |
12,380 |
|
(19,163 |
) |
||||||||
| Depreciation and amortization |
79,604 |
|
75,659 |
|
236,841 |
|
220,552 |
|
||||||||
| Income (loss) from operations |
(31,878 |
) |
20,852 |
|
(145,024 |
) |
(72,441 |
) |
||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense, net of interest income |
(39,571 |
) |
(32,071 |
) |
(110,334 |
) |
(91,742 |
) |
||||||||
| Other income, net |
3,509 |
|
2,984 |
|
11,677 |
|
9,425 |
|
||||||||
| Loss from continuing operations before income taxes |
(67,940 |
) |
(8,235 |
) |
(243,681 |
) |
(154,758 |
) |
||||||||
| Income tax benefit |
(10,220 |
) |
(978 |
) |
(40,908 |
) |
(17,814 |
) |
||||||||
| Loss from continuing operations |
(57,720 |
) |
(7,257 |
) |
(202,773 |
) |
(136,944 |
) |
||||||||
| Discontinued operations: | ||||||||||||||||
| Income from discontinued operations |
— |
|
4,744 |
|
— |
|
22,628 |
|
||||||||
| Gain on sale of discontinued operations |
— |
|
389,905 |
|
— |
|
389,905 |
|
||||||||
| Income tax expense |
— |
|
94,715 |
|
— |
|
99,973 |
|
||||||||
| Income from discontinued operations |
— |
|
299,934 |
|
— |
|
312,560 |
|
||||||||
| Net income (loss) |
(57,720 |
) |
292,677 |
|
(202,773 |
) |
175,616 |
|
||||||||
| Less: dividends on Series A preferred stock |
11,305 |
|
10,352 |
|
32,596 |
|
29,752 |
|
||||||||
| Less: net income attributable to noncontrolling interest |
137 |
|
75 |
|
441 |
|
393 |
|
||||||||
| Net income (loss) attributable to common shareholders | $ |
(69,162 |
) |
$ |
282,250 |
|
$ |
(235,810 |
) |
$ |
145,471 |
|
||||
| Net income (loss) per common share – basic and diluted: | ||||||||||||||||
| Loss from continuing operations | $ |
(0.61 |
) |
$ |
(0.15 |
) |
$ |
(2.09 |
) |
$ |
(1.45 |
) |
||||
| Income from discontinued operations |
— |
|
2.60 |
|
— |
|
2.72 |
|
||||||||
| Net income (loss) per basic and diluted common shares attributable to common shareholders | $ |
(0.61 |
) |
$ |
2.45 |
|
$ |
(2.09 |
) |
$ |
1.27 |
|
||||
| Consolidated Communications Holdings, Inc. | ||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||
|
September 30, |
|
September 30, |
||||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||
| OPERATING ACTIVITIES | ||||||||||||||||
| Net income (loss) | $ |
(57,720 |
) |
$ |
292,677 |
|
$ |
(202,773 |
) |
$ |
175,616 |
|
||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||
| Depreciation and amortization |
79,604 |
|
75,659 |
|
236,841 |
|
220,552 |
|
||||||||
| Deferred income taxes |
(13,438 |
) |
81,775 |
|
(44,697 |
) |
69,949 |
|
||||||||
| Cash distributions from wireless partnerships in excess of earnings |
— |
|
3,957 |
|
— |
|
5,618 |
|
||||||||
| Pension and post-retirement contributions in excess of expense |
(3,704 |
) |
(4,830 |
) |
(9,241 |
) |
(23,991 |
) |
||||||||
| Non-cash, stock-based compensation |
2,261 |
|
2,939 |
|
5,448 |
|
7,971 |
|
||||||||
| Amortization of deferred financing costs and discounts |
1,901 |
|
1,849 |
|
5,622 |
|
5,475 |
|
||||||||
| Loss on impairment of assets held for sale |
— |
|
5,208 |
|
77,755 |
|
131,698 |
|
||||||||
| Gain on sale of partnership interests |
— |
|
(389,905 |
) |
— |
|
(389,905 |
) |
||||||||
| Loss (gain) on disposal of assets |
6,692 |
|
(19,163 |
) |
12,380 |
|
(19,163 |
) |
||||||||
| Other adjustments, net |
614 |
|
(162 |
) |
(2,247 |
) |
(558 |
) |
||||||||
| Changes in operating assets and liabilities, net |
19,064 |
|
26,622 |
|
23,505 |
|
34,869 |
|
||||||||
| Net cash provided by operating activities |
35,274 |
|
76,626 |
|
102,593 |
|
218,131 |
|
||||||||
| INVESTING ACTIVITIES | ||||||||||||||||
| Purchase of property, plant and equipment, net |
(143,337 |
) |
(164,045 |
) |
(424,197 |
) |
(496,959 |
) |
||||||||
| Purchase of investments |
— |
|
— |
|
— |
|
(39,959 |
) |
||||||||
| Proceeds (disbursements) from sale of assets |
(712 |
) |
19,463 |
|
6,089 |
|
21,257 |
|
||||||||
| Proceeds from business dispositions, net |
— |
|
— |
|
— |
|
26,042 |
|
||||||||
| Proceeds from sale and maturity of investments |
— |
|
25,006 |
|
91,623 |
|
151,560 |
|
||||||||
| Proceeds from sale of partnership interests, net |
— |
|
489,567 |
|
— |
|
489,567 |
|
||||||||
| Net cash provided by (used in) investing activities |
(144,049 |
) |
369,991 |
|
(326,485 |
) |
151,508 |
|
||||||||
| FINANCING ACTIVITIES | ||||||||||||||||
| Payment of finance lease obligations |
(4,138 |
) |
(2,587 |
) |
(11,259 |
) |
(7,111 |
) |
||||||||
| Share repurchases for minimum tax withholding |
(48 |
) |
— |
|
(1,084 |
) |
(114 |
) |
||||||||
| Net cash used in financing activities |
(4,186 |
) |
(2,587 |
) |
(12,343 |
) |
(7,225 |
) |
||||||||
| Net change in cash and cash equivalents |
(112,961 |
) |
444,030 |
|
(236,235 |
) |
362,414 |
|
||||||||
| Cash and cash equivalents at beginning of period |
202,578 |
|
18,019 |
|
325,852 |
|
99,635 |
|
||||||||
| Cash and cash equivalents at end of period | $ |
89,617 |
|
$ |
462,049 |
|
$ |
89,617 |
|
$ |
462,049 |
|
||||
| Consolidated Communications Holdings, Inc. | ||||||||||||
| Consolidated Revenue by Category | ||||||||||||
| (Dollars in thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||
|
September 30, |
|
September 30, |
||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||
| Consumer: | ||||||||||||
| Broadband (Data and VoIP) | $ |
75,089 |
$ |
69,641 |
$ |
214,389 |
$ |
203,144 |
||||
| Voice services |
31,616 |
36,444 |
95,231 |
110,539 |
||||||||
| Video services |
8,541 |
13,552 |
27,497 |
42,277 |
||||||||
|
115,246 |
119,637 |
337,117 |
355,960 |
|||||||||
| Commercial: | ||||||||||||
| Data services (includes VoIP) |
53,870 |
56,796 |
160,234 |
171,804 |
||||||||
| Voice services |
31,825 |
35,484 |
96,692 |
107,598 |
||||||||
| Other |
9,228 |
9,933 |
29,362 |
32,780 |
||||||||
|
94,923 |
102,213 |
286,288 |
312,182 |
|||||||||
| Carrier: | ||||||||||||
| Data and transport services |
31,388 |
33,878 |
95,535 |
103,626 |
||||||||
| Voice services |
4,090 |
3,517 |
12,720 |
11,087 |
||||||||
| Other |
262 |
605 |
925 |
1,350 |
||||||||
|
35,740 |
38,000 |
109,180 |
116,063 |
|||||||||
| Subsidies |
6,878 |
7,187 |
20,986 |
20,304 |
||||||||
| Network access |
20,842 |
27,277 |
68,033 |
78,336 |
||||||||
| Other products and services |
10,025 |
2,305 |
13,338 |
12,442 |
||||||||
| Total operating revenue | $ |
283,654 |
$ |
296,619 |
$ |
834,942 |
$ |
895,287 |
||||
| Consolidated Communications Holdings, Inc. | |||||||||||||||
| Consolidated Revenue Trend by Category | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||
| (Unaudited) | |||||||||||||||
|
Three Months Ended |
|||||||||||||||
|
Q3 2023 |
|
Q2 2023 |
|
Q1 2023 |
|
Q4 2022 |
|
Q3 2022 |
|||||||
| Consumer: | |||||||||||||||
| Broadband (Data and VoIP) | $ |
75,089 |
$ |
71,339 |
$ |
67,961 |
$ |
69,002 |
$ |
69,641 |
|||||
| Voice services |
31,616 |
31,352 |
32,263 |
34,314 |
36,444 |
||||||||||
| Video services |
8,541 |
9,362 |
9,594 |
11,876 |
13,552 |
||||||||||
|
115,246 |
112,053 |
109,818 |
115,192 |
119,637 |
|||||||||||
| Commercial: | |||||||||||||||
| Data services (includes VoIP) |
53,870 |
53,230 |
53,134 |
56,662 |
56,796 |
||||||||||
| Voice services |
31,825 |
32,236 |
32,631 |
34,676 |
35,484 |
||||||||||
| Other |
9,228 |
10,378 |
9,756 |
10,320 |
9,933 |
||||||||||
|
94,923 |
95,844 |
95,521 |
101,658 |
102,213 |
|||||||||||
| Carrier: | |||||||||||||||
| Data and transport services |
31,388 |
31,224 |
32,923 |
33,752 |
33,878 |
||||||||||
| Voice services |
4,090 |
4,263 |
4,367 |
3,685 |
3,517 |
||||||||||
| Other |
262 |
313 |
350 |
338 |
605 |
||||||||||
|
35,740 |
35,800 |
37,640 |
37,775 |
38,000 |
|||||||||||
| Subsidies |
6,878 |
7,072 |
7,036 |
13,078 |
7,187 |
||||||||||
| Network access |
20,842 |
22,747 |
24,444 |
26,308 |
27,277 |
||||||||||
| Other products and services |
10,025 |
1,646 |
1,667 |
1,965 |
2,305 |
||||||||||
| Total operating revenue | $ |
283,654 |
$ |
275,162 |
$ |
276,126 |
$ |
295,976 |
$ |
296,619 |
|||||
| Consolidated Communications Holdings, Inc. | ||||||||||||||||||||
| Reconciliation of Historical Revenue by Category to Normalized Revenue by Category | ||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, 2022 | September 30, 2022 | |||||||||||||||||||
| Historical | Adjustments (1) | Normalized | Historical | Adjustments (1) | Normalized | |||||||||||||||
| Consumer: | ||||||||||||||||||||
| Broadband (Data and VoIP) | $ |
69,641 |
$ |
(1,745 |
) |
$ |
67,896 |
$ |
203,144 |
$ |
(5,581 |
) |
$ |
197,563 |
||||||
| Voice services |
36,444 |
(514 |
) |
35,930 |
110,539 |
(1,751 |
) |
108,788 |
||||||||||||
| Video services |
13,552 |
(2,599 |
) |
10,953 |
42,277 |
(8,005 |
) |
34,272 |
||||||||||||
|
119,637 |
(4,858 |
) |
114,779 |
355,960 |
(15,337 |
) |
340,623 |
|||||||||||||
| Commercial: | ||||||||||||||||||||
| Data services (includes VoIP) |
56,796 |
(4,034 |
) |
52,762 |
171,804 |
(12,403 |
) |
159,401 |
||||||||||||
| Voice services |
35,484 |
(1,253 |
) |
34,231 |
107,598 |
(4,045 |
) |
103,553 |
||||||||||||
| Other |
9,933 |
(273 |
) |
9,660 |
32,780 |
(860 |
) |
31,920 |
||||||||||||
|
102,213 |
(5,560 |
) |
96,653 |
312,182 |
(17,308 |
) |
294,874 |
|||||||||||||
| Carrier: | ||||||||||||||||||||
| Data and transport services |
33,878 |
(283 |
) |
33,595 |
103,626 |
(3,923 |
) |
99,703 |
||||||||||||
| Voice services |
3,517 |
(4 |
) |
3,513 |
11,087 |
(13 |
) |
11,074 |
||||||||||||
| Other |
605 |
(5 |
) |
600 |
1,350 |
(8 |
) |
1,342 |
||||||||||||
|
38,000 |
(292 |
) |
37,708 |
116,063 |
(3,944 |
) |
112,119 |
|||||||||||||
| Subsidies |
7,187 |
— |
|
7,187 |
20,304 |
(49 |
) |
20,255 |
||||||||||||
| Network access |
27,277 |
(474 |
) |
26,803 |
78,336 |
(1,412 |
) |
76,924 |
||||||||||||
| Other products and services |
2,305 |
(181 |
) |
2,124 |
12,442 |
(368 |
) |
12,074 |
||||||||||||
| Total operating revenue | $ |
296,619 |
$ |
(11,365 |
) |
$ |
285,254 |
$ |
895,287 |
$ |
(38,418 |
) |
$ |
856,869 |
||||||
| Notes: | ||||||||||||||||||||
| (1) These adjustments reflect the removal of operating revenues for divestitures. We completed the sale of the Company’s Ohio and Kansas assets on January 31, 2022 and November 30, 2022, respectively. | ||||||||||||||||||||
| Consolidated Communications Holdings, Inc. | ||||||||||||||||
| Reconciliation of Loss from Continuing Operations to Adjusted EBITDA | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||
|
September 30, |
|
September 30, |
||||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||
| Loss from continuing operations | $ |
(57,720 |
) |
$ |
(7,257 |
) |
$ |
(202,773 |
) |
$ |
(136,944 |
) |
||||
| Add (subtract): | ||||||||||||||||
| Income tax benefit |
(10,220 |
) |
(978 |
) |
(40,908 |
) |
(17,814 |
) |
||||||||
| Interest expense, net |
39,571 |
|
32,071 |
|
110,334 |
|
91,742 |
|
||||||||
| Depreciation and amortization |
79,604 |
|
75,659 |
|
236,841 |
|
220,552 |
|
||||||||
| EBITDA |
51,235 |
|
99,495 |
|
103,494 |
|
157,536 |
|
||||||||
| Adjustments to EBITDA (1): | ||||||||||||||||
| Other, net (2) |
21,366 |
|
6,186 |
|
36,837 |
|
17,754 |
|
||||||||
| Pension/OPEB benefit |
(1,323 |
) |
(2,950 |
) |
(3,395 |
) |
(8,897 |
) |
||||||||
| Loss (gain) on disposal of assets |
6,692 |
|
(19,163 |
) |
12,380 |
|
(19,163 |
) |
||||||||
| Loss on impairment |
— |
|
5,208 |
|
77,755 |
|
131,698 |
|
||||||||
| Non-cash compensation (3) |
2,261 |
|
2,939 |
|
5,448 |
|
7,971 |
|
||||||||
| Adjusted EBITDA from continuing operations |
80,231 |
|
91,715 |
|
232,519 |
|
286,899 |
|
||||||||
| Investment distributions from discontinued operations |
— |
|
5,478 |
|
— |
|
25,023 |
|
||||||||
| Adjusted EBITDA | $ |
80,231 |
|
$ |
97,193 |
|
$ |
232,519 |
|
$ |
311,922 |
|
||||
| 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 Loss Attributable to Common Shareholders from Continuing Operations to Adjusted Loss from Continuing Operations and Calculation of Adjusted Diluted Net Income (Loss) Per Common Share | ||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||
|
September 30, |
|
September 30, |
||||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||
| Loss from continuing operations | $ |
(57,720 |
) |
$ |
(7,257 |
) |
$ |
(202,773 |
) |
$ |
(136,944 |
) |
||||
| Less: dividends on Series A preferred stock |
11,305 |
|
10,352 |
|
32,596 |
|
29,752 |
|
||||||||
| Less: net income attributable to noncontrolling interest |
137 |
|
75 |
|
441 |
|
393 |
|
||||||||
| Loss attributable to common shareholders from continuing operations |
(69,162 |
) |
(17,684 |
) |
(235,810 |
) |
(167,089 |
) |
||||||||
| Adjustments to loss attributable to common shareholders: | ||||||||||||||||
| Dividends on Series A preferred stock |
11,305 |
|
10,352 |
|
32,596 |
|
29,752 |
|
||||||||
| Integration and severance related costs, net of tax |
13,099 |
|
— |
|
17,062 |
|
1,604 |
|
||||||||
| Loss on impairment of assets held for sale |
— |
|
5,208 |
|
77,755 |
|
131,698 |
|
||||||||
| Loss on disposition of assets, net of tax |
4,943 |
|
— |
|
9,145 |
|
— |
|
||||||||
| Gain on disposition of tower assets, net of tax |
— |
|
(14,167 |
) |
— |
|
(14,167 |
) |
||||||||
| Non-cash interest expense for swaps, net of tax |
(101 |
) |
(328 |
) |
(732 |
) |
(932 |
) |
||||||||
| Tax impact of non-deductible goodwill |
3,283 |
|
821 |
|
(2,618 |
) |
(11,118 |
) |
||||||||
| Change in deferred tax rate |
— |
|
(644 |
) |
— |
|
(644 |
) |
||||||||
| Non-cash stock compensation, net of tax |
1,670 |
|
2,173 |
|
4,024 |
|
5,893 |
|
||||||||
| Adjusted net loss from continuing operations | $ |
(34,963 |
) |
$ |
(14,269 |
) |
$ |
(98,578 |
) |
$ |
(25,003 |
) |
||||
| Weighted average number of common shares outstanding |
113,054 |
|
111,697 |
|
113,015 |
|
111,695 |
|
||||||||
| Adjusted diluted net income (loss) per common share: | ||||||||||||||||
| Adjusted net loss from continuing operations | $ |
(0.31 |
) |
$ |
(0.13 |
) |
$ |
(0.87 |
) |
$ |
(0.22 |
) |
||||
| Adjusted income from discontinued operations excluding gain on sale of partnership interests, net of tax |
— |
|
0.04 |
|
— |
|
0.15 |
|
||||||||
| $ |
(0.31 |
) |
$ |
(0.09 |
) |
$ |
(0.87 |
) |
$ |
(0.07 |
) |
|||||
| Notes: | ||||||||||||||||
| Calculations above assume a 26.13% effective tax rate for the three and nine months ended September 30, 2023 and 26.07% effective tax rate for the three and nine months ended September 30, 2022. | ||||||||||||||||
| Consolidated Communications Holdings, Inc. | ||||
| Reconciliation of Total Net Debt to LTM Adjusted EBITDA Ratio | ||||
| (Dollars in thousands) | ||||
| (Unaudited) | ||||
|
September 30, |
||||
|
2023 |
||||
| Long-term debt and finance lease obligations: | ||||
| Term loans, net of discount $7,445 | $ |
992,430 |
|
|
| 6.50% Senior secured notes due 2028 |
750,000 |
|
||
| 5.00% Senior secured notes due 2028 |
400,000 |
|
||
| Finance leases |
32,455 |
|
||
| Total debt as of September 30, 2023 |
2,174,885 |
|
||
| Less: deferred debt issuance costs |
(30,258 |
) |
||
| Less: cash, cash equivalents and short-term investments |
(89,617 |
) |
||
| Total net debt as of September 30, 2023 | $ |
2,055,010 |
|
|
| Adjusted EBITDA for the 12 months ended September 30, 2023 | $ |
334,177 |
|
|
| Total Net Debt to last 12 months Adjusted EBITDA |
6.15x |
|||
| Consolidated Communications Holdings, Inc. | ||||||||||||||||||||||||||||||||
| Key Operating Metrics | ||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||
|
2022 |
|
2023 |
||||||||||||||||||||||||||||||
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
FY |
|
Q1 |
|
Q2 |
|
Q3 |
||||||||||||||||||
| Passings | ||||||||||||||||||||||||||||||||
| Total Fiber Gig+ Capable Passings (1)(5)(6) |
689,406 |
|
831,779 |
|
947,974 |
|
1,008,660 |
|
1,008,660 |
|
1,062,518 |
|
1,119,956 |
|
1,187,076 |
|
||||||||||||||||
| Total DSL/Copper Passings (2)(3)(5)(6) |
2,059,025 |
|
1,920,214 |
|
1,807,381 |
|
1,617,077 |
|
1,617,077 |
|
1,564,889 |
|
1,509,875 |
|
1,447,539 |
|
||||||||||||||||
| Total Passings (1)(2)(3)(5)(6) |
2,748,431 |
|
2,751,993 |
|
2,755,355 |
|
2,625,737 |
|
2,625,737 |
|
2,627,407 |
|
2,629,831 |
|
2,634,615 |
|
||||||||||||||||
| % Fiber Gig+ Coverage/Total Passings |
25 |
% |
30 |
% |
34 |
% |
38 |
% |
38 |
% |
40 |
% |
43 |
% |
45 |
% |
||||||||||||||||
| Consumer Broadband Connections | ||||||||||||||||||||||||||||||||
| Fiber Gig+ Capable (3) |
93,812 |
|
103,455 |
|
115,598 |
|
122,872 |
|
122,872 |
|
135,209 |
|
153,860 |
|
175,748 |
|
||||||||||||||||
| DSL/Copper (2)(3) |
286,338 |
|
277,758 |
|
266,314 |
|
244,586 |
|
244,586 |
|
234,653 |
|
222,969 |
|
210,473 |
|
||||||||||||||||
| Total Consumer Broadband Connections (2)(3) |
380,150 |
|
381,213 |
|
381,912 |
|
367,458 |
|
367,458 |
|
369,862 |
|
376,829 |
|
386,221 |
|
||||||||||||||||
| Consumer Broadband Net Adds | ||||||||||||||||||||||||||||||||
| Total Fiber Gig+ Capable Net Adds (7) |
7,690 |
|
9,643 |
|
12,143 |
|
10,599 |
|
40,075 |
|
12,337 |
|
18,651 |
|
21,888 |
|
||||||||||||||||
| DSL/Copper Net Adds (7) |
(8,544 |
) |
(8,580 |
) |
(11,444 |
) |
(10,783 |
) |
(39,351 |
) |
(9,933 |
) |
(11,684 |
) |
(12,496 |
) |
||||||||||||||||
| Total Consumer Broadband Net Adds (7) |
(854 |
) |
1,063 |
|
699 |
|
(184 |
) |
724 |
|
2,404 |
|
6,967 |
|
9,392 |
|
||||||||||||||||
| Consumer Broadband Penetration % | ||||||||||||||||||||||||||||||||
| Fiber Gig+ Capable (on fiber passings) |
13.6 |
% |
12.4 |
% |
12.2 |
% |
12.2 |
% |
12.2 |
% |
12.7 |
% |
13.7 |
% |
14.8 |
% |
||||||||||||||||
| DSL/Copper (on DSL/copper passings) |
13.9 |
% |
14.5 |
% |
14.7 |
% |
15.1 |
% |
15.1 |
% |
15.0 |
% |
14.8 |
% |
14.5 |
% |
||||||||||||||||
| Total Consumer Broadband Penetration % |
13.8 |
% |
13.9 |
% |
13.9 |
% |
14.0 |
% |
14.0 |
% |
14.1 |
% |
14.3 |
% |
14.7 |
% |
||||||||||||||||
| Consumer Average Revenue Per Unit (ARPU) | ||||||||||||||||||||||||||||||||
| Fiber Gig+ Capable | $ |
63.88 |
|
$ |
64.95 |
|
$ |
65.61 |
|
$ |
67.14 |
|
$ |
65.42 |
|
$ |
67.51 |
|
$ |
68.29 |
|
$ |
68.78 |
|
||||||||
| DSL/Copper | $ |
50.78 |
|
$ |
52.36 |
|
$ |
53.87 |
|
$ |
53.55 |
|
$ |
53.36 |
|
$ |
53.21 |
|
$ |
55.88 |
|
$ |
57.18 |
|
||||||||
| Churn | ||||||||||||||||||||||||||||||||
| Fiber Consumer Broadband Churn (7) |
0.9 |
% |
1.1 |
% |
1.2 |
% |
1.1 |
% |
1.1 |
% |
1.0 |
% |
1.3 |
% |
1.3 |
% |
||||||||||||||||
| DSL/Copper Consumer Broadband Churn (7) |
1.3 |
% |
1.6 |
% |
1.8 |
% |
1.7 |
% |
1.6 |
% |
1.5 |
% |
1.7 |
% |
2.0 |
% |
||||||||||||||||
| Consumer Broadband Revenue ($ in thousands) | ||||||||||||||||||||||||||||||||
| Fiber Broadband Revenue (4) | $ |
17,242 |
|
$ |
19,218 |
|
$ |
21,558 |
|
$ |
24,016 |
|
$ |
82,034 |
|
$ |
26,136 |
|
$ |
29,613 |
|
$ |
34,004 |
|
||||||||
| Copper and Other Broadband Revenue |
48,669 |
|
48,374 |
|
48,083 |
|
44,986 |
|
190,112 |
|
41,825 |
|
41,726 |
|
41,085 |
|
||||||||||||||||
| Total Consumer Broadband Revenue | $ |
65,911 |
|
$ |
67,592 |
|
$ |
69,641 |
|
$ |
69,002 |
|
$ |
272,146 |
|
$ |
67,961 |
|
$ |
71,339 |
|
$ |
75,089 |
|
||||||||
| Consumer Voice Connections (3) |
316,634 |
|
306,458 |
|
294,441 |
|
276,779 |
|
276,779 |
|
267,509 |
|
258,680 |
|
249,081 |
|
||||||||||||||||
| Video Connections (3) |
58,812 |
|
55,225 |
|
51,339 |
|
35,039 |
|
35,039 |
|
32,426 |
|
28,934 |
|
26,158 |
|
||||||||||||||||
| Fiber route network miles (long-haul, metro and FttP) |
54,239 |
|
56,093 |
|
57,498 |
|
57,865 |
|
57,865 |
|
57,569 |
|
58,836 |
|
59,915 |
|
||||||||||||||||
| On-net buildings (3) |
15,446 |
|
15,618 |
|
15,715 |
|
14,427 |
|
14,427 |
|
14,520 |
|
14,735 |
|
14,928 |
|
||||||||||||||||
| Notes: | ||||||||||||||||||||||||||||||||
| (1) In Q1 2021, the Company launched a multi-year fiber build plan to upgrade 1.6 million passings or 70% of our service area to fiber Gig+ capable services. As of September 30, 2023, 178,416 of the targeted 222,000 passings for 2023 were upgraded to FttP and total fiber passings were ~1,187,076 or 45% 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. | ||||||||||||||||||||||||||||||||
| (3) The sale of the net assets of our Kansas City operations in the fourth quarter of 2022 resulted in a reduction of approximately 135,144 DSL/Copper passings, 3,325 fiber broadband connections, 10,945 DSL/Copper broadband connections, 6,670 consumer voice connections, 13,425 video connections and 1,415 on-net buildings. Prior period amounts have not been adjusted to reflect the sale. | ||||||||||||||||||||||||||||||||
| (4) Fiber broadband revenue includes revenue from our Kansas City operations of approximately $0.3 million for the quarter ended December 31, 2022 and approximately $0.5 million for each of the quarters ended March 31, 2022 through September 30, 2022. Amounts have not been adjusted to reflect the sale. | ||||||||||||||||||||||||||||||||
| (5) Passings counts are estimates of single family units, multi-dwelling units, and multi-tenant units within consumer, small business and enterprise. These counts are based upon the information available at this time and are subject to updates as additional information becomes available. | ||||||||||||||||||||||||||||||||
| (6) When a passing is both fiber and DSL/Copper capable it is counted as a fiber passing. | ||||||||||||||||||||||||||||||||
| (7) Consumer Broadband net adds and churn have been normalized to reflect the divestitures of our Kansas City and Ohio operations. | ||||||||||||||||||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20231106553659/en/