Consolidated Communications Holdings, Inc. (Nasdaq:CNSL) (the
“Company”) reported results for the third quarter 2016.
Third quarter financial summary:
- Revenue was $191.5 million.
- Net cash from operations was $58.1 million.
- Adjusted EBITDA was $77.1 million.
- Dividend payout ratio was 74.4%.
“I am pleased with the solid financial results for the quarter
and the strong growth in our fiber-based commercial and carrier
sales,” said Bob Udell, President and Chief Executive
Officer. “We delivered another comfortable dividend payout
ratio and our year-to-date payout of 69.2% is right on plan.”
“During the third quarter, we closed on both the acquisition in
Illinois of Champaign Telephone Company, a fiber-based business
communications provider, and the sale of our rural independent
local exchange company in Iowa,” added Udell. “These
transactions strengthen our strategic focus on expanding our fiber
footprint and delivering fiber-based products and services.”
“Finally, in early October, we completed a refinancing of our
secured bank facility. This transaction is expected to
improve our annual cash interest expenses by approximately $2.0
million. In addition, it extended our maturities by three
years and increased our revolver capacity to $110.0 million from
$75.0 million. We could not have been more pleased with the
results of the transaction, and I would like to thank all of our
investors and underwriters for their support,” Udell
concluded.
Financial Results for the Third Quarter
- Total revenues were $191.5 million, compared to $194.0 million
for the same period last year. Growth in strategic revenues
were offset by declines in legacy voice revenues, network access
and subsidy step-downs from CAF II and Texas USF support.
- Income from operations was $22.7 million, compared to $13.6
million in the third quarter of 2015. Included in the third
quarter last year was $9.6 million of integration and severance
charges tied to the Enventis synergy efforts and an early
retirement offer made to, and accepted by, certain employees.
- Interest expense, net was $19.1 million compared to $19.2
million for the same period last year.
- Other income, net was $8.4 million, compared to $10.5 million
for the same period in 2015.
- On a GAAP basis, net income and net income per share were $7.0
million and $0.14, respectively. Adjusted diluted net income
per share excludes certain items in the manner described in the
table provided in this release. Adjusted diluted net income
per share was $0.16 for the current quarter, compared to $0.18 the
same period last year.
- Cash distributions from our Verizon Wireless partnerships were
$8.6 million compared to $20.0 million last year. The third
quarter of 2015 included a non-recurring cash distribution for the
partnership owned towers that Verizon sold to American Tower.
- Adjusted EBITDA was $77.1 million compared to $89.4 million for
the same period in 2015. As mentioned above, the third
quarter last year included non-recurring cash distributions from
the Company’s partnerships.
- The total net debt to last 12-month adjusted EBITDA ratio was
4.34.
Financial Results for the Nine Months Ended September
30, 2016
- Revenues were $567.3 million, net cash from operating
activities was $173.6 million and adjusted EBITDA was $233.7
million.
Cash Available to Pay Dividends For the
quarter, cash available to pay dividends, or CAPD, was $26.4
million, and the dividend payout ratio was 74.4%. At
September 30, 2016, cash and cash equivalents were $33.4
million. Capital expenditures for the quarter were $31.9
million.
Financial Guidance The Company is updating its
full year 2016 guidance as outlined below.
|
|
|
|
|
|
|
2016 Updated
Guidance |
|
2016 Original
Guidance |
|
|
|
|
|
Cash
Interest Expense |
|
$72.0
million to $73.0 million |
|
$73.0
million to $75.0 million |
Cash
Income Taxes |
|
Less
than $1.0 million |
|
$1.0
million to $3.0 million |
Capital
Expenditures |
|
$125.0
million to $130.0 million |
|
$125.0
million to $130.0 million |
|
|
|
|
|
Dividend PaymentsOn October 31, 2016, the
Company’s board of directors declared its next quarterly dividend
of $0.38738 per common share, which is payable on February 1, 2017
to stockholders of record at the close of business on January 13,
2017. This will represent the 46th consecutive quarterly
dividend paid by the Company.
Conference Call Information The Company
will host a conference call today at 11:00 a.m. ET / 10:00 a.m. CT
to discuss third quarter earnings and developments with respect to
the Company. The live webcast and replay can be accessed from
the “Investor Relations” section of the Company’s website at
http://ir.consolidated.com. The live conference call dial-in
number is 1-877-374-3981 with conference ID 94247732. A
telephonic replay of the conference call will be available through
November 10, 2016 and can be accessed by calling
1-855-859-2056.
Use of Non-GAAP Financial Measures This press
release, as well as the conference call, includes disclosures
regarding “EBITDA”, “adjusted EBITDA”, “cash available to pay
dividends” and the related “dividend payout ratio”, “total net debt
to last twelve month adjusted EBITDA coverage ratio”, “adjusted
diluted net income per share” and “adjusted net income attributable
to common stockholders”, all of which are non-GAAP financial
measures and described in this section as not being in compliance
with Regulation S-X. Accordingly, they should not be
construed as alternatives to net cash from operating or investing
activities, cash and cash equivalents, cash flows from operations,
net income or net income per share as defined by GAAP and are not,
on their own, necessarily indicative of cash available to fund cash
needs as determined in accordance with GAAP. In addition, not all
companies use identical calculations, and the non-GAAP financial
measures may not be comparable to other similarly titled measures
of other companies. A reconciliation of the differences
between these non-GAAP financial measures and the most directly
comparable financial measures presented in accordance with GAAP is
included in the tables that follow.
Adjusted EBITDA is comprised of EBITDA, adjusted for certain
items as permitted or required by the lenders under our credit
agreement in place at the end of each quarter in the periods
presented. The tables that follow include an explanation of
how adjusted EBITDA is calculated for each of the periods presented
with the reconciliation to net income. EBITDA is defined as
net earnings before interest expense, income taxes, depreciation
and amortization on a historical basis.
Cash available to pay dividends represents adjusted EBITDA plus
cash interest income less (1) cash interest expense, (2) capital
expenditures and (3) cash income taxes; this calculation differs in
certain respects from the similar calculation used in our credit
agreement.
We present adjusted EBITDA, cash available to pay dividends and
the related dividend payout ratio for several reasons.
Management believes adjusted EBITDA, cash available to pay
dividends and the dividend payout ratio are useful as a means to
evaluate our ability to fund our estimated uses of cash (including
interest on our debt) and pay dividends. In addition, we have
presented adjusted EBITDA, cash available to pay dividends and the
dividend payout ratio to investors in the past because they are
frequently used by investors, securities analysts and other
interested parties in the evaluation of companies in our industry,
and management believes presenting them here provides a measure of
consistency in our financial reporting. Adjusted EBITDA and cash
available to pay dividends, referred to as Available Cash in our
credit agreement, are also components 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 and to pay
dividends. The definitions in these covenants and ratios are
based on adjusted EBITDA and cash available to pay dividends after
giving effect to specified charges. In addition, adjusted
EBITDA, cash available to pay dividends and the dividend payout
ratio provide our board of directors with meaningful information to
determine, with other data, assumptions and considerations, our
dividend policy and our ability to pay dividends under the
restrictive covenants in our credit agreement and to measure our
ability to service and repay debt. We present the related
“total net debt to last twelve month adjusted EBITDA coverage
ratio” principally to put other non-GAAP measures in context and
facilitate comparisons by investors, security analysts and others;
this ratio differs in certain respects from the similar ratio used
in our credit agreement. 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. Similarly, while
we may generate cash available to pay dividends, we are not
required to use any such cash to pay dividends, and the payment of
any dividends is subject to declaration by our board of directors,
compliance with applicable law and the terms of our credit
agreement. Because adjusted EBITDA is a component of the
dividend payout ratio and the ratio of total net debt to last
twelve month adjusted EBITDA, these measures are also subject to
the material limitations discussed above. In addition, the
ratio of total net debt to last twelve 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 these ratios are useful as a means to evaluate
our ability to incur additional indebtedness in the
future.
We present the non-GAAP measures adjusted diluted net income per
share and adjusted diluted net income attributable to common
stockholders because our net income and net income 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.
About Consolidated Communications Consolidated
Communications provides business and broadband communications
services across its 11-state service area to carrier, commercial
and consumer customers. For more than a century, the Company has
consistently provided innovative, reliable, high-quality products
and services. The Company offers a wide range of communications
solutions including: High-Speed Internet, Data, Digital TV, Phone,
managed and cloud services and wireless backhaul over an extensive
fiber optic network.
Safe Harbor The Securities and Exchange
Commission (“SEC”) encourages companies to disclose forward-looking
information so that investors can better understand a company’s
future prospects and make informed investment decisions.
Certain statements in this press release are forward-looking
statements and are made pursuant to the safe harbor provisions of
the Securities Litigation Reform Act of 1995. These
forward-looking statements reflect, among other things, our current
expectations, plans, strategies, and anticipated financial results.
There are a number of risks, uncertainties, and conditions
that may cause our actual results to differ materially from those
expressed or implied by these forward-looking statements.
These risks and uncertainties include a number of factors
related to our business, including economic and financial market
conditions generally and economic conditions in our service areas;
various risks to shareholders of not receiving dividends and risks
to our ability to pursue growth opportunities if we continue to pay
dividends according to the current dividend policy; various risks
to the price and volatility of our common stock; changes in the
valuation of pension plan assets; the substantial amount of debt
and our ability to repay or refinance it or incur additional debt
in the future; our need for a significant amount of cash to service
and repay the debt and to pay dividends on the common stock;
restrictions contained in our debt agreements that limit the
discretion of management in operating the business; regulatory
changes, including changes to subsidies, rapid development and
introduction of new technologies and intense competition in the
telecommunications industry; risks associated with our possible
pursuit of acquisitions; system failures; losses of large customers
or government contracts; risks associated with the rights-of-way
for the network; disruptions in the relationship with third party
vendors; losses of key management personnel and the inability to
attract and retain highly qualified management and personnel in the
future; changes in the extensive governmental legislation and
regulations governing telecommunications providers and the
provision of telecommunications services; telecommunications
carriers disputing and/or avoiding their obligations to pay network
access charges for use of our network; high costs of regulatory
compliance; the competitive impact of legislation and regulatory
changes in the telecommunications industry; and liability and
compliance costs regarding environmental regulations. A detailed
discussion of these and other risks and uncertainties that could
cause actual results and events to differ materially from such
forward-looking statements are discussed in more detail in our
filings with the Securities and Exchange Commission, including our
reports on Form 10-K and Form 10-Q. Many of these
circumstances are beyond our ability to control or predict.
Moreover, forward-looking statements necessarily involve
assumptions on our part. These forward-looking statements
generally are identified by the words “believe”, “expect”,
“anticipate”, “estimate”, “project”, “intend”, “plan”, “should”,
“may”, “will”, “would”, “will be”, “will continue” or similar
expressions. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause
actual results, performance or achievements of Consolidated
Communications Holdings, Inc. and its subsidiaries to be different
from those expressed or implied in the forward-looking statements.
All forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified in their entirety by
the cautionary statements that appear throughout this press
release. Furthermore, forward-looking statements speak only
as of the date they are made. Except as required under the
federal securities laws or the rules and regulations of the
Securities and Exchange Commission, we disclaim any intention or
obligation to update or revise publicly any forward-looking
statements. You should not place undue reliance on
forward-looking statements.
- Tables Follow –
|
Consolidated Communications Holdings,
Inc. |
Condensed Consolidated Balance
Sheets |
(Dollars in thousands, except par value) |
(Unaudited) |
|
September
30, |
December
31, |
|
|
2016 |
|
|
|
2015 |
|
|
|
|
ASSETS |
|
|
Current assets: |
|
|
Cash and
cash equivalents |
$ |
33,403 |
|
|
$ |
15,878 |
|
Accounts
receivable, net |
|
68,447 |
|
|
|
68,848 |
|
Income
tax receivable |
|
9,132 |
|
|
|
23,867 |
|
Prepaid
expenses and other current assets |
|
18,081 |
|
|
|
17,815 |
|
Total current
assets |
|
129,063 |
|
|
|
126,408 |
|
|
|
|
Property, plant and
equipment, net |
|
1,065,528 |
|
|
|
1,093,261 |
|
Investments |
|
106,916 |
|
|
|
105,543 |
|
Goodwill |
|
760,998 |
|
|
|
764,630 |
|
Other intangible
assets |
|
34,758 |
|
|
|
43,497 |
|
Other assets |
|
6,896 |
|
|
|
5,187 |
|
Total assets |
$ |
2,104,159 |
|
|
$ |
2,138,526 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
Current
liabilities: |
|
|
Accounts
payable |
$ |
15,010 |
|
|
$ |
12,576 |
|
Advance
billings and customer deposits |
|
29,255 |
|
|
|
27,616 |
|
Dividends
payable |
|
19,623 |
|
|
|
19,551 |
|
Accrued
compensation |
|
17,569 |
|
|
|
21,883 |
|
Accrued
interest |
|
17,564 |
|
|
|
9,353 |
|
Accrued
expense |
|
38,154 |
|
|
|
42,384 |
|
Current
portion of long-term debt and capital lease obligations |
|
14,429 |
|
|
|
10,937 |
|
Total current
liabilities |
|
151,604 |
|
|
|
144,300 |
|
|
|
|
Long-term debt and
capital lease obligations |
|
1,377,549 |
|
|
|
1,377,892 |
|
Deferred income
taxes |
|
238,359 |
|
|
|
236,529 |
|
Pension and other
post-retirement obligations |
|
109,035 |
|
|
|
112,966 |
|
Other long-term
liabilities |
|
16,091 |
|
|
|
16,140 |
|
Total liabilities |
|
1,892,638 |
|
|
|
1,887,827 |
|
|
|
|
|
|
|
|
|
Shareholders'
equity: |
|
|
Common
stock, par value $0.01 per share; 100,000,000 shares |
|
|
authorized, 50,654,989 and 50,470,096, shares outstanding |
|
|
as of
September 30, 2016 and December 31, 2015, respectively |
|
507 |
|
|
|
505 |
|
Additional paid-in capital |
|
239,559 |
|
|
|
281,738 |
|
Retained
earnings (deficit) |
|
- |
|
|
|
(881 |
) |
Accumulated other comprehensive loss, net |
|
(33,792 |
) |
|
|
(35,699 |
) |
Noncontrolling interest |
|
5,247 |
|
|
|
5,036 |
|
Total
shareholders' equity |
|
211,521 |
|
|
|
250,699 |
|
Total
liabilities and shareholders' equity |
$ |
2,104,159 |
|
|
$ |
2,138,526 |
|
|
|
|
|
|
|
|
|
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, |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
$ |
191,541 |
|
|
$ |
193,958 |
|
|
$ |
567,258 |
|
|
$ |
587,546 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Cost of
services and products |
|
85,646 |
|
|
|
83,209 |
|
|
|
246,129 |
|
|
|
249,477 |
|
Selling,
general and administrative |
|
|
|
|
|
|
|
expenses |
|
39,935 |
|
|
|
51,044 |
|
|
|
119,664 |
|
|
|
136,737 |
|
Loss on
impairment |
|
- |
|
|
|
- |
|
|
|
610 |
|
|
|
- |
|
Depreciation and amortization |
|
43,224 |
|
|
|
46,057 |
|
|
|
130,855 |
|
|
|
133,264 |
|
Income from
operations |
|
22,736 |
|
|
|
13,648 |
|
|
|
70,000 |
|
|
|
68,068 |
|
Other income
(expense): |
|
|
|
|
|
|
|
Interest
expense, net of interest income |
|
(19,075 |
) |
|
|
(19,174 |
) |
|
|
(56,827 |
) |
|
|
(60,277 |
) |
Loss on
extinguishment of debt |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(41,242 |
) |
Other
income, net |
|
8,419 |
|
|
|
10,491 |
|
|
|
24,262 |
|
|
|
25,839 |
|
Income (loss) before
income taxes |
|
12,080 |
|
|
|
4,965 |
|
|
|
37,435 |
|
|
|
(7,612 |
) |
Income tax expense
(benefit) |
|
4,991 |
|
|
|
2,220 |
|
|
|
22,287 |
|
|
|
(2,258 |
) |
Net income (loss) |
|
7,089 |
|
|
|
2,745 |
|
|
|
15,148 |
|
|
|
(5,354 |
) |
|
|
|
|
|
|
|
|
Less: net income
attributable to noncontrolling interest |
|
77 |
|
|
|
150 |
|
|
|
211 |
|
|
|
209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to common shareholders |
$ |
7,012 |
|
|
$ |
2,595 |
|
|
$ |
14,937 |
|
|
$ |
(5,563 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) per basic and diluted common shares |
|
|
|
|
|
|
|
attributable to common shareholders |
$ |
0.14 |
|
|
$ |
0.05 |
|
|
$ |
0.29 |
|
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
Consolidated
Communications Holdings,
Inc. |
Condensed Consolidated
Statements of Cash
Flows |
(Dollars in
thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
|
September
30, |
|
September
30, |
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
7,089 |
|
|
$ |
2,745 |
|
|
$ |
15,148 |
|
|
$ |
(5,354 |
) |
|
|
Adjustments to
reconcile net income (loss) to cash provided by operating
activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
43,224 |
|
|
|
46,057 |
|
|
|
130,855 |
|
|
|
133,264 |
|
|
|
Deferred income
taxes |
|
|
469 |
|
|
|
4,213 |
|
|
|
7,993 |
|
|
|
4,218 |
|
|
|
Cash distributions from
wireless partnerships in excess of/(less than) earnings |
|
|
(97 |
) |
|
|
9,396 |
|
|
|
(1,250 |
) |
|
|
7,840 |
|
|
|
Non- cash stock-based
compensation |
|
|
862 |
|
|
|
742 |
|
|
|
2,666 |
|
|
|
2,265 |
|
|
|
Amortization of
deferred financing |
|
|
815 |
|
|
|
770 |
|
|
|
2,413 |
|
|
|
2,592 |
|
|
|
Loss on extinguishment
of debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
41,242 |
|
|
|
Other adjustments,
net |
|
|
382 |
|
|
|
226 |
|
|
|
1,017 |
|
|
|
924 |
|
|
|
Changes in operating
assets and liabilities, net |
|
|
5,342 |
|
|
|
7,672 |
|
|
|
14,749 |
|
|
|
(19,354 |
) |
|
|
Net cash
provided by operating activities |
|
|
58,086 |
|
|
|
71,821 |
|
|
|
173,591 |
|
|
|
167,637 |
|
INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Business acquisition,
net of cash acquired |
|
|
(13,422 |
) |
|
|
- |
|
|
|
(13,422 |
) |
|
|
- |
|
|
|
Purchase of property,
plant and equipment, net |
|
|
(31,887 |
) |
|
|
(34,581 |
) |
|
|
(94,158 |
) |
|
|
(100,119 |
) |
|
|
Proceeds from sale of
investments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
846 |
|
|
|
Proceeds from sale of
assets |
|
|
20,913 |
|
|
|
61 |
|
|
|
20,963 |
|
|
|
118 |
|
|
|
Net cash
used in investing activities |
|
|
(24,396 |
) |
|
|
(34,520 |
) |
|
|
(86,617 |
) |
|
|
(99,155 |
) |
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Proceeds from bond
offering |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
294,780 |
|
|
|
Proceeds on issuance of
long-term debt |
|
|
24,000 |
|
|
|
21,000 |
|
|
|
31,000 |
|
|
|
61,000 |
|
|
|
Payment of capital
lease obligation |
|
|
(945 |
) |
|
|
(214 |
) |
|
|
(1,757 |
) |
|
|
(658 |
) |
|
|
Payment on long-term
debt |
|
|
(28,275 |
) |
|
|
(21,275 |
) |
|
|
(39,825 |
) |
|
|
(80,825 |
) |
|
|
Redemption of senior
notes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(261,874 |
) |
|
|
Payment of financing
costs |
|
|
- |
|
|
|
(337 |
) |
|
|
- |
|
|
|
(4,805 |
) |
|
|
Share repurchases for
minimum tax withholding |
|
|
- |
|
|
|
- |
|
|
|
(71 |
) |
|
|
(282 |
) |
|
|
Dividends on common
stock |
|
|
(19,622 |
) |
|
|
(19,567 |
) |
|
|
(58,796 |
) |
|
|
(58,643 |
) |
|
|
Net cash used by
financing activities |
|
|
(24,842 |
) |
|
|
(20,393 |
) |
|
|
(69,449 |
) |
|
|
(51,307 |
) |
Net change
in cash and cash equivalents |
|
|
8,848 |
|
|
|
16,908 |
|
|
|
17,525 |
|
|
|
17,175 |
|
Cash and
cash equivalents at beginning of period |
|
|
24,555 |
|
|
|
6,946 |
|
|
|
15,878 |
|
|
|
6,679 |
|
Cash and
cash equivalents at end of period |
|
$ |
33,403 |
|
|
$ |
23,854 |
|
|
$ |
33,403 |
|
|
$ |
23,854 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Communications Holdings,
Inc. |
Consolidated Revenue by
Category |
(Dollars in thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
Q3'15 |
Q4'15 |
Q1'16 |
Q2'16 |
Q3'16 |
Commercial and carrier: |
|
|
|
|
|
Data and
transport services (includes VoIP) |
$ |
47,198 |
|
$ |
47,969 |
|
$ |
49,112 |
|
$ |
48,558 |
|
$ |
49,653 |
|
Voice
services |
|
25,463 |
|
|
25,288 |
|
|
25,025 |
|
|
25,323 |
|
|
25,098 |
|
Other |
|
3,208 |
|
|
3,621 |
|
|
2,624 |
|
|
2,703 |
|
|
3,481 |
|
|
|
75,869 |
|
|
76,878 |
|
|
76,761 |
|
|
76,584 |
|
|
78,232 |
|
Consumer: |
|
|
|
|
|
Broadband
(VoIP, Data and Video) |
|
52,956 |
|
|
52,863 |
|
|
54,559 |
|
|
53,103 |
|
|
51,363 |
|
Voice
services |
|
15,143 |
|
|
14,829 |
|
|
14,491 |
|
|
14,028 |
|
|
13,717 |
|
|
|
68,099 |
|
|
67,692 |
|
|
69,050 |
|
|
67,131 |
|
|
65,080 |
|
|
|
|
|
|
|
Equipment
sales and service |
|
14,759 |
|
|
10,080 |
|
|
9,640 |
|
|
10,448 |
|
|
17,695 |
|
Subsidies |
|
13,905 |
|
|
13,524 |
|
|
13,074 |
|
|
12,982 |
|
|
11,681 |
|
Network
access |
|
16,912 |
|
|
16,563 |
|
|
16,813 |
|
|
16,305 |
|
|
15,536 |
|
Other
products and services |
|
4,414 |
|
|
3,454 |
|
|
3,508 |
|
|
3,421 |
|
|
3,317 |
|
Total operating
revenue |
$ |
193,958 |
|
$ |
188,191 |
|
$ |
188,846 |
|
$ |
186,871 |
|
$ |
191,541 |
|
|
|
|
|
|
|
Consolidated Communications Holdings,
Inc. |
Schedule of Adjusted EBITDA
Calculation |
(Dollars in thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
September
30, |
|
September
30, |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Net income (loss) |
$ |
7,089 |
|
|
$ |
2,745 |
|
|
$ |
15,148 |
|
|
$ |
(5,354 |
) |
Add (subtract): |
|
|
|
|
|
|
|
Income
tax expense (benefit) |
|
4,991 |
|
|
|
2,220 |
|
|
|
22,287 |
|
|
|
(2,258 |
) |
Interest
expense, net |
|
19,075 |
|
|
|
19,174 |
|
|
|
56,827 |
|
|
|
60,277 |
|
Depreciation and amortization |
|
43,224 |
|
|
|
46,057 |
|
|
|
130,855 |
|
|
|
133,264 |
|
EBITDA |
|
74,379 |
|
|
|
70,196 |
|
|
|
225,117 |
|
|
|
185,929 |
|
|
|
|
|
|
|
|
|
Adjustments to EBITDA
(1): |
|
|
|
|
|
|
|
Other,
net (2) |
|
1,993 |
|
|
|
9,103 |
|
|
|
7,373 |
|
|
|
53,148 |
|
Investment income (accrual basis) |
|
(8,735 |
) |
|
|
(10,601 |
) |
|
|
(24,636 |
) |
|
|
(26,046 |
) |
Investment distributions (cash basis) |
|
8,638 |
|
|
|
19,996 |
|
|
|
23,218 |
|
|
|
34,162 |
|
Non-cash
compensation (3) |
|
862 |
|
|
|
742 |
|
|
|
2,666 |
|
|
|
2,265 |
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
77,137 |
|
|
$ |
89,436 |
|
|
$ |
233,738 |
|
|
$ |
249,458 |
|
|
|
|
|
|
|
|
|
Footnotes for Adjusted EBITDA: |
(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. |
Cash Available to Pay Dividends |
(Dollars in thousands) |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended |
|
|
Nine Months
Ended |
|
September 30,
2016 |
|
|
September 30,
2016 |
|
|
|
|
|
Adjusted EBITDA |
$ |
77,137 |
|
|
|
$ |
233,738 |
|
|
|
|
|
|
- Cash interest
expense |
|
(18,257 |
) |
|
|
|
(54,759 |
) |
- Capital
expenditures |
|
(31,887 |
) |
|
|
|
(94,158 |
) |
- Cash income
(taxes)/refund |
|
(616 |
) |
|
|
|
132 |
|
|
|
|
|
|
Cash available to pay
dividends |
$ |
26,377 |
|
|
|
$ |
84,953 |
|
|
|
|
|
|
Dividends Paid |
$ |
19,622 |
|
|
|
$ |
58,796 |
|
Payout Ratio |
|
74.4 |
% |
|
|
|
69.2 |
% |
|
|
|
|
|
Note:
The above calculation excludes the principal payments on our
debt |
|
|
|
|
|
Consolidated Communications Holdings,
Inc. |
Total Net Debt to LTM Adjusted EBITDA
Ratio |
(Dollars in thousands) |
(Unaudited) |
|
|
Summary of Outstanding
Debt |
|
Term loan, net of
discount $2,872 |
$ |
882,103 |
|
Revolving loan |
|
8,000 |
|
Senior unsecured notes
due 2022, net of discount $4,453 |
|
495,547 |
|
Capital leases |
|
17,141 |
|
Total debt as of
September 30, 2016 |
$ |
1,402,791 |
|
Less deferred debt
issuance costs |
|
(10,813 |
) |
Less cash on hand |
|
(33,403 |
) |
Total net debt as of
September 30, 2016 |
$ |
1,358,575 |
|
|
|
Adjusted EBITDA for the
last |
|
twelve
months ended September 30, 2016 |
$ |
313,184 |
|
|
|
Total Net Debt to last
twelve months |
|
Adjusted
EBITDA |
4.34x |
|
|
Consolidated Communications Holdings,
Inc. |
Adjusted Net Income
and Net Income Per Share |
(in thousands, except per share amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
Sep
30, |
|
Sep
30, |
|
Sep
30, |
|
Sep
30, |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Net income (loss) |
$ |
7,089 |
|
|
$ |
2,745 |
|
|
$ |
15,148 |
|
|
$ |
(5,354 |
) |
Transaction and
severance related costs, net of tax |
|
606 |
|
|
|
5,620 |
|
|
|
1,985 |
|
|
|
9,329 |
|
Impairment charge for
sale of Iowa ILEC, net of tax |
|
- |
|
|
|
- |
|
|
|
248 |
|
|
|
- |
|
Impairment charge for
sale of CVIN Investment, net of tax |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
573 |
|
Deferred tax related to
asset held for sale |
|
- |
|
|
|
- |
|
|
|
7,524 |
|
|
|
- |
|
Loss on extinguishment
of debt, net of tax |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
28,251 |
|
Non-cash stock
compensation, net of tax |
|
506 |
|
|
|
433 |
|
|
|
1,082 |
|
|
|
1,552 |
|
Adjusted net
income |
$ |
8,201 |
|
|
$ |
8,798 |
|
|
$ |
25,988 |
|
|
$ |
34,351 |
|
|
|
|
|
|
|
|
|
Weighted average number
of shares outstanding |
|
50,294 |
|
|
|
50,174 |
|
|
|
50,292 |
|
|
|
50,166 |
|
Adjusted diluted net
income per share |
$ |
0.16 |
|
|
$ |
0.18 |
|
|
$ |
0.52 |
|
|
$ |
0.68 |
|
|
|
|
|
|
|
|
|
*
Calculations above assume a 41.3% and 41.7% effective tax rate for
the three months ended and 59.4% and 31.5% for the nine |
months
ended September 30, 2016 and 2015, respectively. |
|
|
|
|
|
|
|
|
Consolidated Communications Holdings,
Inc. |
Key Operating Statistics |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
30-Sep-16 |
|
30-Jun-16 |
|
% Change in
Qtr |
|
30-Sep-15 |
|
% Change
yoy |
|
|
|
|
|
|
|
|
|
|
|
Voice
Connections |
|
|
462,232 |
|
|
|
471,458 |
|
|
|
(2.0 |
%) |
|
|
488,037 |
|
|
|
(5.3 |
%) |
|
|
|
|
|
|
|
|
|
|
|
Data and
Internet Connections |
|
|
470,474 |
|
|
|
462,559 |
|
|
|
1.7 |
% |
|
|
452,265 |
|
|
|
4.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
Video
Connections |
|
|
108,816 |
|
|
|
111,617 |
|
|
|
(2.5 |
%) |
|
|
119,643 |
|
|
|
(9.0 |
%) |
|
|
|
|
|
|
|
|
|
|
|
Business and Broadband as % of total revenue |
|
82.5 |
% |
|
|
80.9 |
% |
|
|
2.0 |
% |
|
|
80.1 |
% |
|
|
3.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
Fiber route network miles (long-haul and
metro) |
|
14,099 |
|
|
|
13,830 |
|
|
|
1.9 |
% |
|
|
13,441 |
|
|
|
4.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
On-net
buildings |
|
|
5,497 |
|
|
|
5,348 |
|
|
|
2.8 |
% |
|
|
4,981 |
|
|
|
10.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Consumer
Customers |
|
|
257,106 |
|
|
|
262,177 |
|
|
|
(1.9 |
%) |
|
|
270,466 |
|
|
|
(4.9 |
%) |
|
|
|
|
|
|
|
|
|
|
|
Consumer
ARPU |
|
$ |
84.38 |
|
|
$ |
85.35 |
|
|
|
(1.1 |
%) |
|
$ |
83.93 |
|
|
|
0.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: |
1) BB%
includes commercial/carrier, equipment sales and service,
directory, consumer broadband and special access. |
2) The
acquisition of Champaign Telephone Co. and the sale of our Iowa
ILEC resulted in a net increase of 4,905 data connections and |
a net
reduction of 4,290 voice connections in the third quarter
2016. |
|
|
|
|
|
|
|
|
|
|
|
Company Contacts:
Jennifer Spaude
Senior Director of Corporate Communications and IR
507-386-3765
Jennifer.spaude@consolidated.com
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