Cablevision Systems Corporation (NYSE:CVC) today reported
financial results for the second quarter ended June 30,
2015.
Second quarter consolidated net revenues increased 1.6% to
$1.653 billion, consolidated adjusted operating cash flow
(“AOCF”)1 decreased 2.7% to $474.3 million and consolidated
operating income decreased 4.5% to $244.5 million, all
compared with the prior year period.
Operating highlights for the second quarter include:
- Improved subscriber performance with
largest quarterly gains in both customer relationships and
high-speed data, in more than two years.
- Average Monthly Cable Revenue per
Customer ("RPC") of $158.52, an increase of $5.80 or 3.8%, compared
with the prior year period.
- Year to date Consolidated Free Cash
Flow from Continuing Operations1 of $207.3 million.
Cablevision CEO James L. Dolan said, “Cablevision continued to
perform well in the second quarter, achieving growth in net revenue
and revenue per customer. Over the past three years, we have
transformed our company through strategic investments that have
made our operations more efficient, increased the reliability and
performance of our network, and enhanced our products and the
customer experience. This has contributed to our largest quarterly
gains in both customer relationships and high-speed data customers
in more than two years. We will continue to focus on providing
superior service and innovative products that will resonate with
consumers.”
1. See definition of AOCF and Consolidated Free Cash Flow
from Continuing Operations included in the discussion of non-GAAP
financial measures on page 3 of this earnings release.
Cable
Cable includes our Optimum-branded digital cable television,
high-speed Internet and voice services as well as Optimum WiFi, the
nation's most robust WiFi network.
Cable net revenues for the second quarter 2015 increased 1.8% to
$1.481 billion, AOCF decreased 3.4% to $462.7 million and
operating income decreased 4.4% to $268.6 million, all
compared with the prior year period. Second quarter net revenue
growth primarily reflects rate initiatives and continued
disciplined pricing strategies, partially offset by fewer customers
and lower advertising revenue. Second quarter AOCF reflects higher
programming, legal fees, product development and marketing costs,
partially offset by the increase in revenue and lower customer
service-related costs, as compared to the prior year period.
The following table illustrates the change in the Cable customer
base during the second quarter of 2015:
Customer
Data
(rounded to nearest thousand)
TotalMarch 31, 2015
Net Gain/(Loss)
TotalJune 30, 2015
Total Customers(a)
3,112 5 3,117
Video 2,653 (16) 2,637
High-Speed Data 2,767 14 2,781
Voice 2,215 (7) 2,208
Serviceable Passings 5,055 12
5,067 (a) Total customers are defined as the number
of households/businesses that receive at least one of the Company's
services.
Lightpath
Lightpath is a premier provider of integrated business
communications solutions to large and mid-sized commercial
organizations across the New York metropolitan area.
For the second quarter 2015, Lightpath net revenues increased
3.4% to $91.0 million, AOCF increased 11.5% to
$43.8 million and operating income increased 19.5% to
$20.3 million, each as compared with the prior year period.
Second quarter results primarily reflect an increase in revenue
from Ethernet services.
Other
Other principally consists of Newsday, News 12 Networks,
Cablevision Media Sales Corporation and certain other businesses
and unallocated corporate costs.
Second quarter net revenues decreased 3.7% to
$91.3 million, AOCF deficit increased 4.3% to
$32.1 million and operating loss increased 6.0% to
$44.5 million, all compared with the prior year period. Second
quarter net revenue decline primarily reflects lower advertising
revenue at Newsday, partially offset by increased advertising
revenue at News 12 Networks. Second quarter AOCF reflects lower
revenue and higher corporate costs, partially offset by a decrease
in expenses at Newsday due to lower operating costs.
Other Matters
On August 6, 2015, the Board of Directors of Cablevision
declared a quarterly dividend of $0.15 per share on each
outstanding share of Cablevision NY Group Class A Common Stock and
Cablevision NY Group Class B Common Stock. This quarterly dividend
is payable on September 10, 2015 to shareholders of
record at the close of business on August 21, 2015.
There were no stock repurchases during the second quarter of
2015. As of June 30, 2015, Cablevision had approximately $455
million available under its stock repurchase authorization.
Non-GAAP Financial Measures
We define adjusted operating cash flow (“AOCF”), which is a
non-GAAP financial measure, as operating income (loss) before
depreciation and amortization (including impairments), excluding
share-based compensation expense and restructuring charges or
credits. Because it is based upon operating income (loss), AOCF
also excludes interest expense (including cash interest expense)
and other non-operating income and expense items. We believe that
the exclusion of share-based compensation expense allows investors
to better track the performance of the various operating units of
our business without regard to expense associated with awards of
restricted shares, restricted stock units and stock options that
are not expected to be made in cash.
We present AOCF as a measure of our ability to service our debt
and make continuing investments, including in our capital
infrastructure. We believe AOCF is an appropriate measure for
evaluating the operating performance of our business segments and
the company on a consolidated basis. AOCF and similar measures with
similar titles are common performance measures used by investors,
analysts and peers to compare performance in our industry.
Internally, we use net revenues and AOCF measures as the most
important indicators of our business performance, and evaluate
management’s effectiveness with specific reference to these
indicators. AOCF should be viewed as a supplement to and not a
substitute for operating income (loss), net income (loss), cash
flows from operating activities, and other measures of performance
and/or liquidity presented in accordance with U.S. generally
accepted accounting principles ("GAAP"). Since AOCF is not a
measure of performance calculated in accordance with GAAP, this
measure may not be comparable to similar measures with similar
titles used by other companies. For a reconciliation of AOCF to
operating income (loss), please see page 6 of this release.
We define Consolidated Free Cash Flow from Continuing Operations
(“Free Cash Flow”), which is a non-GAAP financial measure, as net
cash from operating activities (continuing operations) plus any
excess tax benefit related to share-based awards less capital
expenditures (continuing operations), all of which are reported in
our Consolidated Statement of Cash Flows. Net cash from operating
activities excludes net cash from operating activities of our
discontinued operations. We believe the most comparable GAAP
financial measure of our liquidity is net cash from operating
activities. We believe that Free Cash Flow is useful as an
indicator of our overall liquidity, as the amount of Free Cash Flow
generated in any period is representative of cash that is available
for debt repayment and other discretionary and non-discretionary
cash uses. It is also one of several indicators of our ability to
make investments and/or return capital to our shareholders. We also
believe that Free Cash Flow is one of several benchmarks used by
analysts and investors who follow our industry for comparison of
our liquidity with other companies in our industry, although our
measure of Free Cash Flow may not be directly comparable to similar
measures reported by other companies.
ABOUT CABLEVISION
Cablevision Systems Corporation (NYSE: CVC) is a leading media
and telecommunications company, serving millions of households and
businesses throughout the greater New York area. Providing quality
products that keep customers connected, Cablevision offers
Optimum-branded digital cable television, high-speed Internet and
voice services as well as Optimum WiFi, the nation's most robust
WiFi network. Cablevision’s Lightpath subsidiary is a premier
provider of integrated business communications solutions for larger
companies. Through its local media and programming properties –
News 12 Networks and Newsday Media Group – Cablevision also
delivers news and information created specifically for the
communities it serves. Additional information about Cablevision is
available at www.cablevision.com.
This earnings release may contain statements that constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Investors are
cautioned that any such forward-looking statements are not
guarantees of future performance or results and involve risks and
uncertainties, and that actual results or developments may differ
materially from those in the forward-looking statements as a result
of various factors, including financial community and rating agency
perceptions of the company and its business, operations, financial
condition and the industries in which it operates and the factors
described in the company’s filings with the Securities and Exchange
Commission, including the sections entitled "Risk Factors" and
"Management’s Discussion and Analysis of Financial Condition and
Results of Operations" contained therein. The company
disclaims any obligation to update any forward-looking statements
contained herein.
Cablevision’s website: www.cablevision.com
The conference call will be webcast live today at 10:00 a.m.
ET
Conference call dial-in number is (888) 694-4641 / Conference ID
Number 64694958 / Conference call replay number (855) 859-2056 /
Conference ID Number 64694958 until August 14, 2015.
CABLEVISION SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(Dollars in thousands, except per share
data)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2015
2014 2015 2014 Revenues, net $ 1,653,393 $
1,628,137 $ 3,268,164 $ 3,203,723 Operating expenses
Technical and operating 805,596 788,317 1,601,484 1,561,300
Selling, general and administrative 389,408 363,187 766,172 743,407
Restructuring expense (credits) (4 ) (348 ) (536 ) 667 Depreciation
and amortization (including impairments) 213,929 221,088
432,829 435,373 Operating income 244,464
255,893 468,215 462,976 Other income (expense): Interest expense,
net (145,876 ) (143,135 ) (290,888 ) (284,017 ) Gain on
investments, net 78,818 78,612 45,747 36,837 Gain (loss) on equity
derivative contracts, net (22,693 ) (32,613 ) 23,473 6,036
Loss on extinguishment of debt and
write-off of deferred financing costs
(1,735 ) (7,687 ) (1,735 ) (8,298 ) Miscellaneous, net 1,307
1,806 2,314 2,537 Income from continuing
operations before income taxes 154,285 152,876 247,126 216,071
Income tax expense (a) (78,609 ) (61,848 ) (116,549 ) (34,909 )
Income from continuing operations, net of income taxes 75,676
91,028 130,577 181,162 Income (loss) from discontinued operations,
net of income taxes (b) — 3,510 (10,502 ) 3,076
Net income 75,676 94,538 120,075 184,238 Net loss (income)
attributable to noncontrolling interests (81 ) (328 ) 153
(265 ) Net income attributable to Cablevision Systems Corporation
stockholders $ 75,595 $ 94,210 $ 120,228 $
183,973
Basic income (loss) per share attributable
to Cablevision Systems Corporation stockholders: Income from
continuing operations, net of income taxes $ 0.28 $ 0.34
$ 0.49 $ 0.69 Income (loss) from discontinued
operations, net of income taxes $ — $ 0.01 $ (0.04 )
$ 0.01 Net income $ 0.28 $ 0.36 $ 0.45
$ 0.70 Basic weighted average common shares (in thousands)
269,301 263,730 268,614 263,033
Diluted income (loss) per share attributable to Cablevision
Systems Corporation stockholders: Income from continuing
operations, net of income taxes $ 0.27 $ 0.34 $ 0.48
$ 0.67 Income (loss) from discontinued operations, net of
income taxes $ — $ 0.01 $ (0.04 ) $ 0.01 Net income $
0.27 $ 0.35 $ 0.44 $ 0.68 Diluted weighted
average common shares (in thousands) 275,228 269,260 274,802
268,729
Amounts attributable to Cablevision
Systems Corporation stockholders: Income from continuing
operations, net of income taxes $ 75,595 $ 90,700 $ 130,730 $
180,897 Income (loss) from discontinued operations, net of income
taxes —
3,510 (10,502 ) 3,076 Net income $ 75,595 $ 94,210
$ 120,228 $ 183,973
Cash dividends declared
per share of common stock $ 0.15 $ 0.15 $ 0.30 $
0.30 (a) Income tax expense for the six months ended
June 30, 2014 includes a tax benefit of $53,132 resulting from the
reversal of an uncertain tax position liability. (b) The Company
recorded an expense of $10,502, net of income taxes, during the
three months ended March 31, 2015,with respect to the decision in a
case relating to Rainbow Media Holdings LLC, a business whose
operations were previously discontinued.
CABLEVISION SYSTEMS CORPORATION
RECONCILIATION OF OPERATING INCOME TO
ADJUSTED OPERATING CASH FLOW AND
CONSOLIDATED FREE CASH FLOW FROM
CONTINUING OPERATIONS
(Dollars in thousands)
(Unaudited)
RECONCILIATION OF
OPERATING INCOME TO ADJUSTED OPERATING CASH
FLOW(a)
Three Months Ended June 30, Six Months Ended June 30,
2015 2014 2015 2014 Operating income
$
244,464
$
255,893
$
468,215
$
462,976 Share-based compensation 15,939 10,695 27,850 22,601
Restructuring expense (credits)
(4
)
(348
)
(536
)
667 Depreciation and amortization 213,929
221,088 432,829 435,373 Adjusted
operating cash flow
$
474,328
$
487,328
$
928,358
$
921,617
CONSOLIDATED FREE
CASH FLOW FROM CONTINUING OPERATIONS(a)
Six Months Ended June 30, 2015 2014 Net
cash provided by operating activities(b)
$
584,235
$
707,478
Add: excess tax benefits related to share-based awards
4,323
746
Less: capital expenditures(c)
(381,305)
(425,193)
Consolidated free cash flow from continuing operations
$
207,253
$
283,031
(a) See Non-GAAP Financial Measures on page 3 of this
release for a definition and discussion of AOCF and Free Cash Flow
from Continuing Operations. (b) The level of net cash provided by
operating activities will continue to depend on a number of
variables in addition to our operating performance, including the
amount and timing of our interest payments and other working
capital items. (c) See page 11 of this release for additional
details relating to capital expenditures.
CABLEVISION
SYSTEMS CORPORATION CONSOLIDATED RESULTS FROM CONTINUING
OPERATIONS (Dollars in thousands) (Unaudited)
REVENUES,
NET
Three Months Ended June 30, % 2015 2014 Change
Cable $ 1,481,144 $ 1,454,911 1.8 % Lightpath 91,040 88,030
3.4 % Other(a) 91,311 94,868
(3.7)
%
Eliminations(b) (10,102 ) (9,672 )
(4.4)
%
Total Cablevision $ 1,653,393 $
1,628,137 1.6 % Six
Months Ended June 30, % 2015 2014 Change Cable $ 2,932,682 $
2,872,059 2.1 % Lightpath 182,164 174,784 4.2 % Other(a) 173,091
176,350
(1.8)
%
Eliminations(b) (19,773 ) (19,470 )
(1.6)
%
Total Cablevision $ 3,268,164 $
3,203,723 2.0 % (a) Represents
revenues of Newsday, News 12 Networks, Cablevision Media Sales
Corporation and certain other entities. (b) Represents
inter-segment revenues.
CABLEVISION SYSTEMS CORPORATION
CONSOLIDATED RESULTS FROM CONTINUING
OPERATIONS
(Dollars in thousands)
(Unaudited)
ADJUSTED
OPERATING CASH FLOW AND OPERATING INCOME (LOSS)
Adjusted OperatingCash Flow
Operating Income (Loss) Three Months
Ended June 30, % Three Months Ended June 30, % 2015 2014
Change 2015 2014 Change Cable $ 462,697 $ 478,875
(3.4)
%
$ 268,609 $ 280,848
(4.4)
%
Lightpath 43,762 39,262 11.5 % 20,333 17,019 19.5 % Other(a)
(32,131 ) (30,809 )
(4.3)
%
(44,478
)
(41,974 )
(6.0)
%
Total Cablevision $ 474,328 $
487,328
(2.7)
%
$ 244,464 $ 255,893
(4.5)
%
Adjusted OperatingCash Flow Operating Income (Loss)
Six Months Ended June 30, % Six Months Ended June 30, % 2015 2014
Change 2015 2014 Change Cable $ 909,252 $ 921,907
(1.4)
%
520,708 530,469
(1.8)
%
Lightpath 87,157 77,745
12.1
% 39,608 34,483 14.9 % Other(a) (68,051 ) (78,035 ) 12.8 %
(92,101 ) (101,976 ) 9.7 %
Total Cablevision $
928,358 $ 921,617 0.7
% 468,215 462,976
1.1 % (a) Includes unallocated corporate
general and administrative costs and the operating results of
Newsday, News 12 Networks, Cablevision Media Sales Corporation, and
certain other entities.
CABLEVISION SYSTEMS CORPORATION
SUMMARY OF CABLE OPERATING
STATISTICS
(Unaudited)
CABLE
June 30,
2015
March 31,
2015
June 30,
2014
(in thousands) Total Customers(a) 3,117 3,112 3,165 Video
Customers 2,637 2,653 2,771 High-Speed Data Customers 2,781 2,767
2,779 Voice Customers 2,208 2,215 2,273
Serviceable Passings (in
thousands)(b) 5,067 5,055 5,052
Penetration Total
Customers to Serviceable Passings 61.5% 61.6% 62.7% Video Customers
to Serviceable Passings 52.0% 52.5% 54.8% High-Speed Data Customers
to Serviceable Passings 54.9% 54.7% 55.0% Voice Customers to
Serviceable Passings 43.6% 43.8% 45.0%
Revenues for the three months
ended(dollars in millions)
Video(c) $ 813 $ 801 $ 806 High-Speed Data 370 363 354 Voice
232 232 227 Advertising 36 31 41 Other(d) 30 25 27 Total Cable
Revenue $ 1,481 $ 1,452 $ 1,455
Average Monthly Cable Revenue per
Customer (“RPC”)(e)
$
158.52
$
155.34
$
152.72
(a) Represents the number of households/businesses that
receive at least one of the Company's services. (b) Includes
residential passings, as well as commercial establishments that
have connected to our cable distribution network. (c) Includes
equipment rental, DVR, franchise fees, video-on-demand and
pay-per-view revenue. (d) Includes installation revenue,
advertising sales commissions, home shopping and other product
offerings. (e) RPC is calculated by dividing average monthly Cable
GAAP revenue for the quarter by the average number of total
customers for the quarter.
CABLEVISION SYSTEMS
CORPORATION CAPITALIZATION AND LEVERAGE (Dollars in
thousands) (Unaudited)
CAPITALIZATION
June 30, 2015 Cash and cash equivalents $ 796,565
Credit facility debt $ 2,551,429 Senior notes and debentures
5,858,204 Collateralized indebtedness 1,127,541 Capital lease
obligations and notes payable 68,348 Debt $ 9,605,522
LEVERAGE
Debt $ 9,605,522 Less: Collateralized indebtedness of
unrestricted subsidiaries(a) 1,127,541 Cash and cash equivalents
796,565 Net debt $ 7,681,416 Leverage Ratios(b) Consolidated
net debt to AOCF leverage ratio(a)(c) 4.1x Restricted Group
leverage ratio (Credit Facility Test)(d)(e) 2.7x CSC Holdings notes
and debentures leverage ratio(e)(f) 3.0x Cablevision senior notes
leverage ratio(e)(g) 4.8x (a) Collateralized indebtedness is
excluded from the leverage calculation because it is viewed as a
forward sale of the stock of an unaffiliated company and the
Company's only obligation at maturity is to deliver, at its option,
the stock or its cash equivalent. (b) Leverage ratios are based on
face amount of outstanding debt. (c) AOCF is annualized based on
the second quarter 2015 results, as reported. (d) Reflects the net
debt to cash flow ratio as defined in the CSC Holdings’ credit
facility debt agreement (which excludes approximately $2.8 billion
of Cablevision’s senior notes and the debt and cash flows related
to CSC Holdings’ unrestricted subsidiaries). The annualized AOCF
(as defined) used in the Restricted Group leverage ratio was $1.933
billion. (e) Includes CSC Holdings’ guarantee of Newsday LLC’s $480
million senior secured credit facility. (f) Reflects the debt to
cash flow ratio applicable under CSC Holdings' senior notes and
debentures indentures (which excludes approximately $2.8 billion of
Cablevision’s senior notes and the debt and cash flows related to
CSC Holdings’ unrestricted subsidiaries). The annualized AOCF (as
defined) used in the CSC Holdings notes and debentures leverage
ratio was $1.931 billion. (g) Adjusts the debt to cash flow ratio
as calculated under the CSC Holdings notes and debentures leverage
ratio to include approximately $2.8 billion of Cablevision’s senior
notes plus $611 million of Cablevision’s senior notes that were
contributed to Newsday Holdings LLC.
CABLEVISION SYSTEMS CORPORATION
CAPITAL EXPENDITURES
(Dollars in thousands)
(Unaudited)
Three Months Ended June 30, 2015 2014
Customer premise equipment $ 60,215 $ 68,191 Scalable
infrastructure 61,581 72,030 Line extensions 6,244 7,428
Upgrade/rebuild 18,859 11,772 Support 39,098 47,834 Cable 185,997
207,255 Lightpath 23,062 26,097 Other(a) 5,615 5,766
Total
Cablevision $ 214,674 $ 239,118
Six Months Ended June 30, 2015 2014
Customer premise equipment $ 102,808 $ 124,995 Scalable
infrastructure 101,564 118,859 Line extensions 12,725 8,664
Upgrade/rebuild 31,000 19,391 Support 71,471 80,671 Cable 319,568
352,580 Lightpath 46,794 52,967 Other(a) 14,943 19,646
Total
Cablevision $ 381,305 $ 425,193 (a)
Other primarily includes Newsday, News 12 Networks,
Cablevision Media Sales Corporation and Corporate.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150807005302/en/
Cablevision Systems CorporationCharles SchuelerExecutive Vice
PresidentMedia and Community Relations516-803-1013orCindi
BuckwalterSenior Vice PresidentInvestor Relations516-803-2264
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