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/
Philip Kranz, Investor Relations +1 217-238-8480
Philip.kranz@consolidated.com
Jennifer Spaude, Media Relations +1 507-386-3765
Jennifer.spaude@consolidated.com
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