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Consolidated Communications Announces Second Quarter Financial Results; Delivers 93% Growth in Consumer Fiber Net Adds

  • Added 18,651 fiber net adds, an increase from 9,643 fiber net adds a year ago
  • Grew consumer fiber broadband revenue 58%1 and increased ARPU 5.1%
  • Upgraded 57,438 locations to fiber Gigabit+ speeds; FttP coverage to approach approximately 50% of addressable market by year end
  • Entered agreement to sell non-core Washington assets for gross proceeds of $73 million
  • Announced business simplification and cost cutting initiatives that are expected to generate annualized cost savings of more than $30 million

Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) (the “Company” or “Consolidated”), a top 10 fiber provider in the U.S., today reported results for the second quarter of 2023.

“With an improved go-to-market strategy, we have great momentum, as evidenced by 18,651 consumer fiber net adds in the second quarter and nearly 7,000 overall consumer broadband net adds, representing 190% growth versus the first quarter,” said Bob Udell, president and chief executive officer at Consolidated. “We carried this momentum into July by adding nearly 7,300 consumer fiber subscribers in the month.”

Udell added, “As we move into the second half of the year, we’ll continue to build upon a fiber-first strategy across our consumer, commercial and carrier channels as we generate long-term revenue growth and deliver the most reliable services for our customers. We expect that our business simplification and cost savings initiatives will contribute over $30 million on an annualized basis to improve EBITDA and margins starting in the second half of 2023.”

____________________

1 Q2 2022 normalized for the divestitures of the Company’s Kansas assets, where applicable, which closed on Nov. 30, 2022. Refer to the tables contained in this press release for a reconciliation of all non-GAAP measures.

Second Quarter 2023 Results (compared to second quarter 2022 where applicable)

  • Revenue totaled $275.2 million, down 7.8% or 3.0% normalized1.
  • Consumer fiber revenue was $29.6 million, up approximately 54% or 58% normalized1, driven by strong operating metrics including 18,651 consumer fiber net adds and increased ARPU of 5.1%.
  • Consumer broadband revenue was $71.3 million, up 5.5% or 8.4% normalized1.
  • Commercial data services revenue was $53.2 million, down 6.8% or up 0.5% normalized1.
  • Carrier data-transport revenue was $31.2 million, down 13.9% or 5.1% normalized1.
  • Other products and services revenue was $1.6 million, a decrease of $2.3 million, largely due to lower recognition of public private partnership construction projects.
  • Net loss was ($119.0 million). Adjusted EBITDA was $76.9 million.
  • Total committed capital expenditures were $164.4 million.

Operating expenses decreased $0.9 million versus the prior year driven by lower video programming costs and network access expense, in addition to the impact of the divestiture of the Kansas City operations on Nov. 30, 2022. The decline was mitigated by higher marketing and advertising expenses to drive growth and additional costs related to professional fees for customer service and process improvement initiatives.

Net interest expense was $36.9 million, an increase of $6.7 million versus the prior year, primarily as a result of higher interest on the term loan. The Company entered into a new three-year interest rate swap agreement for $500 million of its term loan debt, commencing upon the termination of its previous swap agreement. Including the new swap agreement, the Company has 77% of its total debt at a fixed rate through September 2026. As of June 30, 2023, the weighted average cost of debt was 6.72%.

Net loss in the second quarter of 2023, which includes an impairment loss of $77.8 million recorded in relation to the Washington assets held for sale, was ($119.0 million) compared to ($11.5 million) in the second quarter of 2022, which included $9.1 million of income from discontinued operations. Net loss per share was ($1.05) in the second quarter of 2023 as compared to ($0.10) in the second 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 ($0.28) compared to ($0.08) in the second quarter of 2022.

Capital Expenditures

Total committed capital expenditures were $164.4 million, driven by 57,438 new fiber passings added in the quarter, record second quarter fiber adds, seasonal infrastructure projects and pre-committed inventory purchases in support of future install and build activity.

Business Simplification and Cost Savings Initiatives

The Company has initiated a significant business simplification and cost savings initiative to further align and focus as a fiber-first provider, better serve its communities, generate efficiencies and drive improved margins. These actions are estimated to result in an annualized benefit of more than $30 million commencing in the second half of 2023.

Washington Divestiture

The Company entered into an agreement to sell its Washington assets for gross proceeds of $73 million, subject to the finalization of certain working capital and other post-closing purchase price adjustments, to Palisade Infrastructure in an all-cash transaction. This was a result of the Company’s ongoing strategic asset review and focus on its fiber expansion plans in its core regions. The transaction is expected to close in the second half of 2024. In the quarter, the Company recognized an impairment loss of $77.8 million associated with this transaction.

Capital Structure

As of June 30, 2023, the Company maintained liquidity with cash and short-term investments of approximately $203 million and $215 million of available borrowing capacity on the revolving credit facility, subject to certain covenants. The net leverage ratio for the trailing 12 months ended June 30, 2023, was 5.55x. The Company continues to balance its fiber build and growth initiatives with the timing of governmental broadband partnerships and its liquidity, which is being enhanced through recent actions, including cost savings initiatives and the sale of non-core assets.

Proposal by Searchlight Capital Partners

Discussions continue between the Special Committee of the Board of Directors and Searchlight Capital Partners regarding the non-binding proposal announced on April 13, 2023.

2023 Outlook

Consolidated Communications updated its guidance for capital expenditures and reaffirmed its guidance for all other metrics for the full-year 2023.

  • Adjusted EBITDA is expected to be in a range of $310 million to $330 million.
  • Capital expenditures are expected to be approximately $495 million. Previous capital outlook was $425 million to $445 million.
  • Cash interest expense is expected to be in a range of $145 million to $155 million.
  • Cash income taxes are expected to be below $10 million.

Conference Call Information

Consolidated’s second quarter earnings conference call will be webcast today 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. A replay of the webcast, together with a transcript thereof, will be available on the website following the earnings conference call.

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 59,000 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, 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,” “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 “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. 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 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 press release, including those relating to the current expectations, plans, strategies, anticipated financial results, contributions to EBITDA and margins as a result of business simplification and cost savings initiatives, and the timeline for and anticipated benefits related to the closing of the sale of certain Washington non-core assets in the second half of 2024, 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, 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. 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.

Tag: [Consolidated-Communications-Earnings]

Consolidated Communications Holdings, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
(Unaudited)
 
June 30, December 31,

2023

2022

ASSETS
Current assets:
Cash and cash equivalents $

202,578

 

$

325,852

 

Short-term investments

 

87,951

 

Accounts receivable, net

100,827

 

119,675

 

Income tax receivable

6,811

 

1,670

 

Prepaid expenses and other current assets

60,138

 

62,996

 

Assets held for sale

68,997

 

 

Total current assets

439,351

 

598,144

 

 
Property, plant and equipment, net

2,390,071

 

2,234,122

 

Investments

9,095

 

10,297

 

Goodwill

814,624

 

929,570

 

Customer relationships, net

29,772

 

43,089

 

Other intangible assets

10,557

 

10,557

 

Other assets

65,942

 

61,315

 

Total assets $

3,759,412

 

$

3,887,094

 

 
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $

50,306

 

$

33,096

 

Advance billings and customer deposits

45,625

 

46,664

 

Accrued compensation

55,585

 

60,903

 

Accrued interest

18,175

 

18,201

 

Accrued expense

126,220

 

95,206

 

Current portion of long-term debt and finance lease obligations

16,821

 

12,834

 

Liabilities held for sale

3,297

 

 

Total current liabilities

316,029

 

266,904

 

 
Long-term debt and finance lease obligations

2,135,344

 

2,129,462

 

Deferred income taxes

241,873

 

274,309

 

Pension and other post-retirement obligations

120,756

 

123,644

 

Other long-term liabilities

46,172

 

47,326

 

Total liabilities

2,860,174

 

2,841,645

 

 
Series A Preferred Stock, par value $0.01 per share; 10,000,000 shares authorized, 477,047 and 456,343 shares outstanding as of June 30, 2023 and December 31, 2022, respectively; liquidation preference of $498,338 and $477,047 as of June 30, 2023 and December 31, 2022, respectively

349,971

 

328,680

 

 
Shareholders' equity:
Common stock, par value $0.01 per share; 150,000,000 shares authorized, 116,610,525 and 115,167,193 shares outstanding as of June 30, 2023 and December 31, 2022, respectively

1,167

 

1,152

 

Additional paid-in capital

701,287

 

720,442

 

Accumulated deficit

(157,223

)

(11,866

)

Accumulated other comprehensive loss, net

(3,919

)

(610

)

Noncontrolling interest

7,955

 

7,651

 

Total shareholders' equity

549,267

 

716,769

 

Total liabilities, mezzanine equity and shareholders' equity $

3,759,412

 

$

3,887,094

 

Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
 
 
Three Months Ended Six Months Ended
June 30, June 30,

2023

2022

2023

2022

 
Net revenues $

275,162

 

$

298,390

 

$

551,288

 

$

598,668

 

Operating expenses:
Cost of services and products

126,967

 

135,888

 

258,905

 

271,783

 

Selling, general and administrative expenses

83,565

 

75,510

 

164,849

 

148,795

 

Loss on impairment of assets held for sale

77,755

 

 

77,755

 

126,490

 

Loss on disposal of assets

2,384

 

 

5,688

 

 

Depreciation and amortization

79,538

 

72,543

 

157,237

 

144,893

 

Income (loss) from operations

(95,047

)

14,449

 

(113,146

)

(93,293

)

Other income (expense):
Interest expense, net of interest income

(36,903

)

(30,156

)

(70,763

)

(59,671

)

Other income, net

5,410

 

3,099

 

8,168

 

6,441

 

Loss from continuing operations before income taxes

(126,540

)

(12,608

)

(175,741

)

(146,523

)

Income tax benefit

(18,448

)

(2,017

)

(30,688

)

(16,836

)

Loss from continuing operations

(108,092

)

(10,591

)

(145,053

)

(129,687

)

 
Discontinued operations:
Income from discontinued operations

 

9,821

 

 

17,884

 

Income tax expense

 

742

 

 

5,258

 

Income from discontinued operations

 

9,079

 

 

12,626

 

 
Net loss

(108,092

)

(1,512

)

(145,053

)

(117,061

)

Less: dividends on Series A preferred stock

10,704

 

9,802

 

21,291

 

19,400

 

Less: net income attributable to noncontrolling interest

161

 

203

 

304

 

318

 

Net loss attributable to common shareholders $

(118,957

)

$

(11,517

)

$

(166,648

)

$

(136,779

)

 
Net income (loss) per common share - basic and diluted:
Loss from continuing operations $

(1.05

)

$

(0.18

)

$

(1.47

)

$

(1.33

)

Income from discontinued operations

 

0.08

 

 

0.11

 

Net loss per basic and diluted common shares attributable to common shareholders $

(1.05

)

$

(0.10

)

$

(1.47

)

$

(1.22

)

Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
 
 
Three Months Ended Six Months Ended
June 30, June 30,

2023

2022

2023

2022

OPERATING ACTIVITIES
Net loss $

(108,092

)

$

(1,512

)

$

(145,053

)

$

(117,061

)

Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization

79,538

 

72,543

 

157,237

 

144,893

 

Deferred income taxes

(19,020

)

(1,266

)

(31,259

)

(11,826

)

Cash distributions from wireless partnerships in excess of earnings

 

1,508

 

 

1,661

 

Pension and post-retirement contributions in excess of expense

(2,676

)

(9,819

)

(5,537

)

(19,161

)

Non-cash, stock-based compensation

2,388

 

2,833

 

3,187

 

5,032

 

Amortization of deferred financing costs and discounts

1,874

 

1,824

 

3,721

 

3,626

 

Loss on impairment of assets held for sale

77,755

 

 

77,755

 

126,490

 

Loss on disposal of assets

2,384

 

 

5,688

 

 

Other adjustments, net

(2,443

)

(207

)

(2,861

)

(396

)

Changes in operating assets and liabilities, net

(19,475

)

(5,959

)

4,441

 

8,247

 

Net cash provided by operating activities

12,233

 

59,945

 

67,319

 

141,505

 

INVESTING ACTIVITIES
Purchase of property, plant and equipment, net

(150,034

)

(176,434

)

(280,860

)

(332,914

)

Purchase of investments

 

 

 

(39,959

)

Proceeds from sale of assets

6,509

 

1,720

 

6,801

 

1,794

 

Proceeds from business dispositions, net

 

 

 

26,042

 

Proceeds from sale and maturity of investments

90,000

 

60,800

 

91,623

 

126,554

 

Net cash used in investing activities

(53,525

)

(113,914

)

(182,436

)

(218,483

)

FINANCING ACTIVITIES
Payment of finance lease obligations

(4,007

)

(2,183

)

(7,121

)

(4,524

)

Share repurchases for minimum tax withholding

 

 

(1,036

)

(114

)

Net cash used in financing activities

(4,007

)

(2,183

)

(8,157

)

(4,638

)

Net change in cash and cash equivalents

(45,299

)

(56,152

)

(123,274

)

(81,616

)

Cash and cash equivalents at beginning of period

247,877

 

74,171

 

325,852

 

99,635

 

Cash and cash equivalents at end of period $

202,578

 

$

18,019

 

$

202,578

 

$

18,019

 

Consolidated Communications Holdings, Inc.
Consolidated Revenue by Category
(Dollars in thousands)
(Unaudited)
 
 
Three Months Ended Six Months Ended
June 30, June 30,

2023

2022

2023

2022

Consumer:
Broadband (Data and VoIP) $

71,339

$

67,592

$

139,300

$

133,503

Voice services

31,352

36,643

63,615

74,095

Video services

9,362

14,359

18,956

28,725

112,053

118,594

221,871

236,323

Commercial:
Data services (includes VoIP)

53,230

57,113

106,364

115,008

Voice services

32,236

35,775

64,867

72,114

Other

10,378

11,287

20,134

22,847

95,844

104,175

191,365

209,969

Carrier:
Data and transport services

31,224

36,263

64,147

69,748

Voice services

4,263

3,718

8,630

7,570

Other

313

354

663

745

35,800

40,335

73,440

78,063

 
Subsidies

7,072

6,534

14,108

13,117

Network access

22,747

24,846

47,191

51,059

Other products and services

1,646

3,906

3,313

10,137

Total operating revenue $

275,162

$

298,390

$

551,288

$

598,668

Consolidated Communications Holdings, Inc.
Consolidated Revenue Trend by Category
(Dollars in thousands)
(Unaudited)
 
 
Three Months Ended
Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022
Consumer:
Broadband (Data and VoIP) $

71,339

$

67,961

$

69,002

$

69,641

$

67,592

Voice services

31,352

32,263

34,314

36,444

36,643

Video services

9,362

9,594

11,876

13,552

14,359

112,053

109,818

115,192

119,637

118,594

Commercial:
Data services (includes VoIP)

53,230

53,134

56,662

56,796

57,113

Voice services

32,236

32,631

34,676

35,484

35,775

Other

10,378

9,756

10,320

9,933

11,287

95,844

95,521

101,658

102,213

104,175

Carrier:
Data and transport services

31,224

32,923

33,752

33,878

36,263

Voice services

4,263

4,367

3,685

3,517

3,718

Other

313

350

338

605

354

35,800

37,640

37,775

38,000

40,335

 
Subsidies

7,072

7,036

13,078

7,187

6,534

Network access

22,747

24,444

26,308

27,277

24,846

Other products and services

1,646

1,667

1,965

2,305

3,906

Total operating revenue $

275,162

$

276,126

$

295,976

$

296,619

$

298,390

Consolidated Communications Holdings, Inc.
Reconciliation of Historical Revenue by Category to Normalized Revenue by Category
(Dollars in thousands)
(Unaudited)
 
 
Three Months Ended Six Months Ended
June 30, 2022 June 30, 2022
Historical Adjustments(1) Normalized Historical Adjustments(1) Normalized
Consumer:
Broadband (Data and VoIP) $

67,592

$

(1,788

)

$

65,804

$

133,503

$

(3,836

)

$

129,667

Voice services

36,643

(541

)

36,102

74,095

(1,237

)

72,858

Video services

14,359

(2,696

)

11,663

28,725

(5,406

)

23,319

118,594

(5,025

)

113,569

236,323

(10,479

)

225,844

Commercial:
Data services (includes VoIP)

57,113

(4,140

)

52,973

115,008

(8,369

)

106,639

Voice services

35,775

(1,337

)

34,438

72,114

(2,792

)

69,322

Other

11,287

(286

)

11,001

22,847

(587

)

22,260

104,175

(5,763

)

98,412

209,969

(11,748

)

198,221

Carrier:
Data and transport services

36,263

(3,352

)

32,911

69,748

(3,640

)

66,108

Voice services

3,718

(4

)

3,714

7,570

(9

)

7,561

Other

354

(2

)

352

745

(3

)

742

40,335

(3,358

)

36,977

78,063

(3,652

)

74,411

 
Subsidies

6,534

 

6,534

13,117

(49

)

13,068

Network access

24,846

(430

)

24,416

51,059

(938

)

50,121

Other products and services

3,906

(106

)

3,800

10,137

(187

)

9,950

Total operating revenue $

298,390

$

(14,682

)

$

283,708

$

598,668

$

(27,053

)

$

571,615

 
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 Six Months Ended
June 30, June 30,

2023

2022

2023

2022

Loss from continuing operations $

(108,092

)

$

(10,591

)

$

(145,053

)

$

(129,687

)

Add (subtract):
Income tax benefit

(18,448

)

(2,017

)

(30,688

)

(16,836

)

Interest expense, net

36,903

 

30,156

 

70,763

 

59,671

 

Depreciation and amortization

79,538

 

72,543

 

157,237

 

144,893

 

EBITDA

(10,099

)

90,091

 

52,259

 

58,041

 

 
Adjustments to EBITDA (1):
Other, net (2)

5,441

 

6,244

 

15,471

 

11,568

 

Pension/OPEB benefit

(931

)

(2,964

)

(2,072

)

(5,947

)

Loss on disposal of assets

2,384

 

 

5,688

 

 

Loss on impairment

77,755

 

 

77,755

 

126,490

 

Non-cash compensation (3)

2,388

 

2,833

 

3,187

 

5,032

 

Adjusted EBITDA from continuing operations

76,938

 

96,204

 

152,288

 

195,184

 

Investment distributions from discontinued operations

 

11,329

 

 

19,545

 

Adjusted EBITDA $

76,938

 

$

107,533

 

$

152,288

 

$

214,729

 

 
 
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 Six Months Ended
June 30, June 30,

2023

2022

2023

2022

Loss from continuing operations $

(108,092

)

$

(10,591

)

$

(145,053

)

$

(129,687

)

Less: dividends on Series A preferred stock

10,704

 

9,802

 

21,291

 

19,400

 

Less: net income attributable to noncontrolling interest

161

 

203

 

304

 

318

 

Loss attributable to common shareholders from continuing operations

(118,957

)

(20,596

)

(166,648

)

(149,405

)

 
Adjustments to loss attributable to common shareholders:
Dividends on Series A preferred stock

10,704

 

9,802

 

21,291

 

19,400

 

Integration and severance related costs, net of tax

1,314

 

802

 

3,962

 

1,604

 

Loss on impairment of assets held for sale

77,755

 

 

77,755

 

126,490

 

Loss on disposition of assets, net of tax

1,761

 

 

4,202

 

 

Non-cash interest expense for swaps, net of tax

(293

)

(310

)

(631

)

(605

)

Tax impact of non-deductible goodwill

(5,901

)

(392

)

(5,901

)

(11,205

)

Non-cash stock compensation, net of tax

1,764

 

2,094

 

2,354

 

3,720

 

Adjusted net loss from continuing operations $

(31,853

)

$

(8,600

)

$

(63,616

)

$

(10,001

)

 
Weighted average number of common shares outstanding

113,050

 

111,697

 

112,995

 

111,694

 

 
Adjusted diluted net income (loss) per common share:
Adjusted net loss from continuing operations $

(0.28

)

$

(0.08

)

$

(0.56

)

$

(0.09

)

Adjusted income from discontinued operations, net of tax

 

0.08

 

 

0.11

 

$

(0.28

)

$

0.00

 

$

(0.56

)

$

0.02

 

 
Notes:
Calculations above assume a 26.13% effective tax rate for the three and six months ended June 30, 2023 and 26.07% effective tax rate for the three and six months ended June 30, 2022.
Consolidated Communications Holdings, Inc. 
Reconciliation of Loss from Continuing Operations to Adjusted EBITDA Guidance 

 (Dollars in millions) 

(Unaudited) 
Year Ended
December 31, 2023
Range
Low High
Loss from continuing operations $

(123

)

$

(105

)

Add:
Income tax benefit

(43

)

(37

)

Interest expense, net

152

 

148

 

Depreciation and amortization

314

 

312

 

EBITDA

300

 

318

 

Adjustments to EBITDA (1):
Other, net (2)

12

 

14

 

Pension/OPEB benefit

(12

)

(12

)

Non-cash compensation (3)

10

 

10

 

Adjusted EBITDA $

310

 

$

330

 

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, dividend income, integration 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 Total Net Debt to LTM Adjusted EBITDA Ratio
(Dollars in thousands)  
(Unaudited)  
   
   
June 30,

2023

Long-term debt and finance lease obligations:  
Term loans, net of discount $7,868 $

992,007

 

6.50% Senior secured notes due 2028

750,000

 

5.00% Senior secured notes due 2028

400,000

 

Finance leases

41,894

 

Total debt as of June 30, 2023

2,183,901

 

Less: deferred debt issuance costs

(31,736

)

Less: cash, cash equivalents and short-term investments

(202,578

)

Total net debt as of June 30, 2023 $

1,949,587

 

   
Adjusted EBITDA for the 12 months ended June 30, 2023 $

351,139

 

   
Total Net Debt to last 12 months Adjusted EBITDA

5.55x 

Consolidated Communications Holdings, Inc.
Key Operating Metrics
(Unaudited)
 

2021

 

 

 

 

 

2022

 

 

 

 

 

2023

 

 

Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2
Passings
Total Fiber Gig+ Capable Passings (1)(5)(6)

320,806

 

397,123

 

494,160

 

605,710

 

605,710

 

689,406

 

831,779

 

947,974

 

1,008,660

 

1,008,660

 

1,062,518

 

1,119,956

 

Total DSL/Copper Passings (2)(3)(5)(6)

2,421,292

 

2,347,816

 

2,255,556

 

2,146,377

 

2,146,377

 

2,059,025

 

1,920,214

 

1,807,381

 

1,617,077

 

1,617,077

 

1,564,889

 

1,509,875

 

Total Passings (1)(2)(3)(5)(6)

2,742,098

 

2,744,939

 

2,749,716

 

2,752,087

 

2,752,087

 

2,748,431

 

2,751,993

 

2,755,355

 

2,625,737

 

2,625,737

 

2,627,407

 

2,629,831

 

% Fiber Gig+ Coverage/Total Passings

12

%

14

%

18

%

22

%

22

%

25

%

30

%

34

%

38

%

38

%

40

%

43

%

 
Consumer Broadband Connections
Fiber Gig+ Capable (3)

74,495

 

77,521

 

81,539

 

86,122

 

86,122

 

93,812

 

103,455

 

115,598

 

122,872

 

122,872

 

135,209

 

153,860

 

DSL/Copper (2)(3)

323,507

 

315,959

 

309,122

 

298,442

 

298,442

 

286,338

 

277,758

 

266,314

 

244,586

 

244,586

 

234,653

 

222,969

 

Total Consumer Broadband Connections (2)(3)

398,002

 

393,480

 

390,661

 

384,564

 

384,564

 

380,150

 

381,213

 

381,912

 

367,458

 

367,458

 

369,862

 

376,829

 

 
Consumer Broadband Net Adds
Total Fiber Gig+ Capable Net Adds (7)

3,885

 

3,026

 

4,018

 

4,583

 

15,512

 

7,690

 

9,643

 

12,143

 

10,599

 

40,075

 

12,337

 

18,651

 

DSL/Copper Net Adds (7)

(7,240

)

(7,548

)

(6,837

)

(10,680

)

(32,305

)

(8,544

)

(8,580

)

(11,444

)

(10,783

)

(39,351

)

(9,933

)

(11,684

)

Total Consumer Broadband Net Adds (7)

(3,355

)

(4,522

)

(2,819

)

(6,097

)

(16,793

)

(854

)

1,063

 

699

 

(184

)

724

 

2,404

 

6,967

 

 
Consumer Broadband Penetration %
Fiber Gig+ Capable (on fiber passings)

23.2

%

19.5

%

16.5

%

14.2

%

14.2

%

13.6

%

12.4

%

12.2

%

12.2

%

12.2

%

12.7

%

13.7

%

DSL/Copper (on DSL/copper passings)

13.4

%

13.5

%

13.7

%

13.9

%

13.9

%

13.9

%

14.5

%

14.7

%

15.1

%

15.1

%

15.0

%

14.8

%

Total Consumer Broadband Penetration %

14.5

%

14.3

%

14.2

%

14.0

%

14.0

%

13.8

%

13.9

%

13.9

%

14.0

%

14.0

%

14.1

%

14.3

%

 
Consumer Average Revenue Per Unit (ARPU)
Fiber Gig+ Capable $

64.87

 

$

65.83

 

$

64.64

 

$

64.22

 

$

64.55

 

$

63.88

 

$

64.95

 

$

65.61

 

$

67.14

 

$

65.42

 

$

67.51

 

$

68.29

 

DSL/Copper $

47.72

 

$

49.92

 

$

51.32

 

$

50.65

 

$

50.06

 

$

50.78

 

$

52.36

 

$

53.87

 

$

53.55

 

$

53.36

 

$

53.21

 

$

55.88

 

 
Churn
Fiber Consumer Broadband Churn (7)

1.3

%

1.7

%

1.4

%

1.0

%

1.3

%

0.9

%

1.1

%

1.2

%

1.1

%

1.1

%

1.0

%

1.3

%

DSL/Copper Consumer Broadband Churn (7)

1.4

%

1.6

%

1.9

%

2.0

%

1.7

%

1.3

%

1.6

%

1.8

%

1.7

%

1.6

%

1.5

%

1.7

%

 
Consumer Broadband Revenue ($ in thousands)
Fiber Broadband Revenue (4) $

14,120

 

$

15,010

 

$

15,422

 

$

16,150

 

$

60,702

 

$

17,242

 

$

19,218

 

$

21,558

 

$

24,016

 

$

82,034

 

$

26,136

 

$

29,613

 

Copper and Other Broadband Revenue

51,633

 

52,967

 

53,182

 

50,833

 

208,615

 

48,669

 

48,374

 

48,083

 

44,986

 

190,112

 

41,825

 

41,726

 

Total Consumer Broadband Revenue $

65,753

 

$

67,977

 

$

68,604

 

$

66,983

 

$

269,317

 

$

65,911

 

$

67,592

 

$

69,641

 

$

69,002

 

$

272,146

 

$

67,961

 

$

71,339

 

 
Consumer Voice Connections (3)

362,384

 

352,835

 

341,135

 

328,849

 

328,849

 

316,634

 

306,458

 

294,441

 

276,779

 

276,779

 

267,509

 

258,680

 

 
Video Connections (3)

73,986

 

70,795

 

66,971

 

63,447

 

63,447

 

58,812

 

55,225

 

51,339

 

35,039

 

35,039

 

32,426

 

28,934

 

 
Fiber route network miles (long-haul, metro and FttP)

47,364

 

48,727

 

50,405

 

52,402

 

52,402

 

54,239

 

56,093

 

57,498

 

57,865

 

57,865

 

57,569

 

58,836

 

 
On-net buildings (3)

13,910

 

14,253

 

14,625

 

14,981

 

14,981

 

15,446

 

15,618

 

15,715

 

14,427

 

14,427

 

14,520

 

14,735

 

 
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 June 30, 2023, 111,296 of the targeted 225,000 passings for 2023 were upgraded to FttP and total fiber passings were ~1,119,956 or 43% 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.
(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, 2021 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.

 

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