Cable One, Inc. (NYSE: CABO) (the “Company” or “Cable One”)
today provided preliminary estimated results for the quarter ended
September 30, 2020. The Company is making this announcement because
the same information will be provided to potential investors in
connection with a proposed offering of debt securities.
Preliminary Estimated Financial Results for the Quarter Ended
September 30, 2020
- The Company expects revenues to be in the range of $333 million
to $339 million.
- The Company expects net income to be in the range of $62
million to $66 million.
- The Company expects Adjusted EBITDA(1) to be in the range of
$170 million to $174 million.
(1)
Adjusted EBITDA is defined in the section
of this press release entitled “Use of Non-GAAP Financial
Measures”. Refer to the “Reconciliation of Non-GAAP Measure” table
within this press release for a reconciliation of Adjusted EBITDA
to net income.
Residential Data Subscriber Information for the Quarter Ended
September 30, 2020
- Residential data subscribers grew by approximately 26,000 on a
sequential basis during the quarter ended September 30, 2020, which
included approximately 5,000 subscribers from the Company’s
acquisition of Valu-Net LLC on July 1, 2020.
Conference Call
As previously announced, Cable One will host a conference call
with the financial community to discuss its final results for the
third quarter of 2020 on Thursday, November 5, 2020, at 5 p.m.
Eastern Time (ET). The conference call will be available via a live
audio webcast on the Cable One Investor Relations website at
ir.cableone.net or by dialing 1-844-378-6483 (Canada:
1-855-669-9657 or International: 1-412-542-4178). Participants
should register for the webcast or dial in for the conference call
shortly before 5 p.m. ET. Cable One will issue a press release
reporting its final results for the third quarter after market
close on Thursday, November 5, 2020.
Note Regarding Preliminary Estimated Financial
Results
The Company’s preliminary estimates of the consolidated
financial data included in this press release are based solely on
information available to it as of the date hereof and are
inherently uncertain and subject to change. The Company has
provided a range for the preliminary estimated financial data
included in this press release because its closing procedures for
the third quarter of 2020 are not yet complete. The Company’s
preliminary estimates contained in this press release are
forward-looking statements. The Company’s actual results remain
subject to the completion of management’s final review and the
Company’s other closing procedures. Accordingly, you should not
place undue reliance on this preliminary financial data, which may
differ materially from the actual results for the third
quarter.
These preliminary estimates are not a comprehensive statement of
the Company’s consolidated financial results for the third quarter
of 2020, and should not be viewed as a substitute for full
financial statements prepared in accordance with GAAP (as defined
below). In addition, these preliminary estimates for the third
quarter of 2020 are not necessarily indicative of the results to be
achieved in any future period. The Company’s actual financial
results for the third quarter of 2020 may differ from these
preliminary estimates due to the completion of its financial
closing procedures, final adjustments and other developments that
may arise between the date hereof and the time that financial
information for the third quarter of 2020 is finalized.
The preliminary financial data included in this press release
have been prepared by, and are the responsibility of, the Company’s
management. The Company’s independent registered public accounting
firm has not audited, reviewed, examined, compiled nor applied
agreed-upon procedures with respect to this preliminary financial
data, nor has it expressed any opinion or any other form of
assurance with respect thereto.
Use of Non-GAAP Financial Measures
The Company uses Adjusted EBITDA, a measure that is not defined
by generally accepted accounting principles in the United States
(“GAAP”), to evaluate various aspects of its business. Adjusted
EBITDA is a non-GAAP financial measure and should be considered in
addition to, not as superior to, or as a substitute for, net income
reported in accordance with GAAP. See the “Reconciliation of
Non-GAAP Measure” table within this press release for a
reconciliation of Adjusted EBITDA to net income.
“Adjusted EBITDA” is defined as net income plus interest
expense, income tax provision (benefit), depreciation and
amortization, equity-based compensation, severance expense, (gain)
loss on deferred compensation, acquisition-related costs, (gain)
loss on asset sales and disposals, system conversion costs,
rebranding costs, other (income) expense and other unusual
expenses, as provided in the “Reconciliation of Non-GAAP Measure”
table within this press release. As such, it eliminates the
significant non-cash depreciation and amortization expense that
results from the capital-intensive nature of the Company’s business
as well as other non-cash or special items and is unaffected by the
Company’s capital structure or investment activities. This measure
is limited in that it does not reflect the periodic costs of
certain capitalized tangible and intangible assets used in
generating revenues and the Company’s cash cost of debt financing.
These costs are evaluated through other financial measures.
The Company uses Adjusted EBITDA to assess its performance. In
addition, Adjusted EBITDA generally correlates to the measure used
in the leverage ratio calculations under the Company’s credit
facilities to determine compliance with the covenants contained in
the Company’s credit agreement. Adjusted EBITDA is also a
significant performance measure used by the Company in its annual
incentive compensation program. Adjusted EBITDA does not take into
account cash used for mandatory debt service requirements or other
non-discretionary expenditures, and thus does not represent
residual funds available for discretionary uses.
The Company believes that Adjusted EBITDA is useful to investors
in evaluating the operating performance of the Company. Adjusted
EBITDA and similar measures with similar titles are common measures
used by investors, analysts and peers to compare performance in the
Company’s industry, although the Company’s measure of Adjusted
EBITDA may not be directly comparable to similarly titled measures
reported by other companies.
About Cable One
Cable One, Inc. (NYSE: CABO) is a leading broadband
communications provider serving more than 900,000 residential and
business customers in 21 states through its Sparklight® and
Clearwave™ brands. Sparklight provides consumers with a wide array
of connectivity and entertainment services, including high-speed
internet and advanced Wi-Fi solutions, cable television and phone
service. Sparklight Business and Clearwave provide scalable and
cost-effective products for businesses ranging in size from small
to mid-market, in addition to enterprise, wholesale and carrier
customers.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
This communication contains “forward-looking statements” that
involve risks and uncertainties. These statements can be identified
by the fact that they do not relate strictly to historical or
current facts, but rather are based on current expectations,
estimates, assumptions and projections about the Company’s
industry, business, strategy, acquisitions and strategic
investments, dividend policy, financial results and financial
condition as well as anticipated impacts from the COVID-19 pandemic
on the Company and future responses. Forward-looking statements
often include words such as “will,” “should,” “anticipates,”
“estimates,” “expects,” “projects,” “intends,” “plans,” “believes”
and words and terms of similar substance in connection with
discussions of future operating or financial performance. As with
any projection or forecast, forward-looking statements are
inherently susceptible to uncertainty and changes in circumstances.
The Company’s actual results may vary materially from those
expressed or implied in its forward-looking statements.
Accordingly, undue reliance should not be placed on any
forward-looking statement made by the Company or on its behalf.
Important factors that could cause the Company’s actual results to
differ materially from those in its forward-looking statements
include government regulation, economic, strategic, political and
social conditions and the following factors, which are discussed in
the Company’s latest Annual Report on Form 10-K, Form 10-Q for the
quarterly period ended March 31, 2020 (“First Quarter 2020 Form
10-Q”) and the Form 10-Q for the quarterly period ended June 30,
2020 (together with the First Quarter 2020 Form 10-Q, the “2020
Form 10-Qs”) as filed with the SEC:
- the duration and severity of the COVID-19 pandemic and its
effects on its business, financial condition, results of operations
and cash flows;
- rising levels of competition from historical and new entrants
in its markets;
- recent and future changes in technology;
- its ability to continue to grow its business services
products;
- increases in programming costs and retransmission fees;
- its ability to obtain hardware, software and operational
support from vendors;
- the effects of any acquisitions and strategic investments by
the Company;
- risks relating to the Company’s initial minority ownership
position in Mega Broadband Investments Holdings LLC (“MBI”),
including its ability to appoint only a minority of members of the
board of managers of MBI, the fact that the managers of MBI will
not owe the same fiduciary duties to the Company that directors of
a corporation would owe to stockholders, and the limited category
of transactions for which the Company’s consent will be needed
under MBI’s operating agreement;
- uncertainties related to the exercise of the call option or the
put option in the MBI investment, including the Company’s ability
to finance the purchase of the remaining membership interests in
MBI on terms acceptable to the Company or at all;
- risks that its rebranding may not produce the benefits
expected;
- damage to its reputation or brand image;
- risks that the implementation of its new enterprise resource
planning system disrupts business operations;
- adverse economic conditions;
- the integrity and security of its network and information
systems;
- the impact of possible security breaches and other disruptions,
including cyber-attacks;
- its failure to obtain necessary intellectual and proprietary
rights to operate its business and the risk of intellectual
property claims and litigation against the Company;
- its ability to retain key employees (who the Company refers to
as associates);
- legislative or regulatory efforts to impose network neutrality
and other new requirements on its data services;
- additional regulation of its video and voice services;
- its ability to renew cable system franchises;
- increases in pole attachment costs;
- changes in local governmental franchising authority and
broadcast carriage regulations;
- the potential adverse effect of its level of indebtedness on
its business, financial condition or results of operations and cash
flows;
- the restrictions the terms of its indebtedness place on its
business and corporate actions;
- the possibility that interest rates will rise, causing its
obligations to service its variable rate indebtedness to increase
significantly;
- its ability to incur future indebtedness;
- fluctuations in the Company’s stock price;
- the Company’s ability to continue to pay dividends;
- provisions in the Company’s charter, by-laws and Delaware law
that could discourage takeovers and limit the judicial forum for
certain disputes and the liabilities for directors; and
- the other risks and uncertainties detailed from time to time in
the Company’s filings with the SEC, including but not limited to
its latest Annual Report on Form 10-K and the 2020 Form 10-Qs.
Any forward-looking statements made by the Company in this
communication speak only as of the date on which they are made. The
Company is under no obligation, and expressly disclaims any
obligation, except as required by law, to update or alter its
forward-looking statements, whether as a result of new information,
subsequent events or otherwise.
Reconciliation of Non-GAAP Measure
The following table presents a reconciliation of the Company’s
preliminary estimated Adjusted EBITDA to preliminary estimated net
income, the most comparable GAAP financial measure, for the three
months ended September 30, 2020 and 2019, respectively.
For the three months ended
September 30,
2020*
2019*
Low
High
(unaudited)
(estimated)
(actual)
(in
millions)
Net income
$
62
$
66
$
50
Plus: Interest expense
18
18
16
Income tax provision
16
16
16
Depreciation and amortization
71
71
49
Equity-based compensation
4
4
3
Severance expense
-
-
0
Loss on deferred compensation
0
0
0
Acquisition-related costs
1
1
1
Loss on asset sales and disposals, net
2
2
2
System conversion costs
0
0
1
Rebranding costs
1
1
3
Other income, net
(3
)
(3
)
(2
)
Adjusted EBITDA
$
170
$
174
$
140
__________________
*Amounts may not sum due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201026005549/en/
Trish Niemann Senior Director, Corporate Communications
602-364-6372 patricia.niemann@cableone.biz
Steven Cochran Senior Vice President and Chief Financial Officer
investor_relations@cableone.biz
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