Consolidated Communications Holdings
Nov 2, 2017

Consolidated Communications Reports Third Quarter 2017 Results

MATTOON, Ill., Nov. 02, 2017 (GLOBE NEWSWIRE) -- Consolidated Communications Holdings, Inc. (Nasdaq:CNSL) (the "Company") reported results for the third quarter 2017.  The Company will hold a conference call and simultaneous webcast to discuss its results today at 11 a.m. (ET).

Third quarter 2017 Consolidated Communications financial summary:

"We are focused on executing on our FairPoint integration and identifying opportunities for organic growth across all markets," said Bob Udell, president and chief executive officer of Consolidated Communications.  "Results from these activities include growing Metro Ethernet service revenues by 10 percent on a pro forma basis, and staying focused on integration activities to enable us to achieve our two-year, $55 million synergy target. We have already recognized approximately $20.0 million in cumulative run rate synergies as of the end of the third quarter."

"We are realizing the financial benefits of the business combination with FairPoint," Udell added.  "In addition to synergies and improvement to our leverage ratio, we have significantly improved our dividend coverage and we are excited to have just declared our 50th consecutive dividend to our shareholders."

"While Hurricane Harvey and Irma impacted our Texas and Florida service areas this quarter, our customers experienced only minor service disruptions due to the resiliency of our network and employees," said Bob Udell. "I want to take this opportunity to commend our team of skilled employees and thank them for their work in preparing for the storms and their post storm recovery execution as they quickly restored service to the impacted areas."

Pro Forma Financial Results for the Third Quarter   

The pro forma results give effect to the FairPoint acquisition as if it had occurred as of Jan. 1, 2016.

Cash Available to Pay Dividends, Capex

For the third quarter, cash available to pay dividends was $47.8 million, and the dividend payout ratio was 57.4 percent.  At Sept. 30, 2017, cash and cash equivalents were $23.3 million.  Capital expenditures were $61.2 million for the third quarter. 

Financial Guidance

The Company affirms its 2017 financial guidance which was provided with second quarter earnings. The guidance presented in the following table, includes FairPoint as if it was part of the Company the full 2017 fiscal year.   

   2016 Results        
 ($ in millions)  CNSL FRPCombined   2017 Pro Forma Guidance 
 Cash interest expense1$70.6$77.2 $147.8   $111 to $116
 Cash income taxes/refund2$(0.2)$1.3 $1.1   $2 to $4
 Capital expenditures$125.2$117.1 $242.3   $230 to $235
             
 (1) Pro Forma interest expense is based on the legacy CNSL debt structure plus the $935.0 million incremental term loan issued under our credit agreement for the acquisition of FairPoint at a rate of Libor, plus 3.00% coupon with a 1.00% Libor floor. 2017 cash interest guidance does not include ticking fees or commitment fees.
  
 (2) Cash income taxes primarily include local and state income taxes and federal income taxes will be shielded by net operating losses.

Dividend Payments

On Oct. 30, 2017, the Company's board of directors declared a quarterly dividend of $0.38738 per common share, which is payable on Feb. 1, 2018 to stockholders of record at the close of business on Dec. 15, 2017.  This will represent the 50th consecutive quarterly dividend paid by the Company. 

Conference Call Information

The Company will host a conference call today at 11 a.m. ET / 10 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 96573974.  A telephonic replay of the conference call will be available through Nov 9, 2017 and can be accessed by calling 1-855-859-2056, conference ID:  96573974.  
 
About Consolidated Communications 

Consolidated Communications Holdings, Inc. (NASDAQ:CNSL) is a leading broadband and business communications provider serving consumers, businesses of all sizes, and wireless companies and carriers, across a 24-state service area.  Leveraging its advanced fiber optic network spanning more than 36,000 fiber route miles, Consolidated Communications offers a wide range of communications solutions, including: data, voice, video, managed services, cloud computing and wireless backhaul.  Headquartered in Mattoon, Ill., Consolidated Communications has been providing services in many of its markets for more than a century.

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.

Preliminary Pro Forma Results                                                                                 

Estimated pro forma results of operations presented herein gives effect to the acquisition of FairPoint Communications, Inc. as if it had occurred on Jan. 1, 2016. The estimated pro forma results include certain accounting adjustments related to the acquisition that are expected to have a continuing impact on the combined results, including adjustments for depreciation and amortization of the acquired tangible and intangible assets acquired, interest expense on the debt incurred to complete the acquisition and to repay certain existing indebtedness of FairPoint, the exclusion of certain acquisition related costs and the tax impact of these pro forma adjustments.  These adjustments and the related results are based on a preliminary valuation of the estimated fair value of the net assets acquired, which is subject to change upon the final assessment and such changes could be material.  The estimated pro forma information is not intended to represent or be indicative of the results of the combined company that would have been obtained had the acquisition been completed as of the dates presented and should not be taken as representative of the future consolidated results of the combined company.

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 communication 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 our ability to successfully integrate FairPoint Communications, Inc.'s operations and realize the synergies from the integration, as well as 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 stockholders 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 our 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; cyber-attacks, information or security breaches or technology failure of ours or of a third party; 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; new or changing tax laws or regulations; 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 SEC, 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 communication.  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 SEC, 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.

Company Contact                                                                      

Lisa Hood, Consolidated Communications
Phone:  (844)-909-CNSL (2675)
Lisa.hood@consolidated.com

— Tables to follow —

 

Consolidated Communications Holdings, Inc. 
Condensed Consolidated Balance Sheets 
(Dollars in thousands, except share and per share amounts) 
(Unaudited) 
  September 30,   December 31,  
 2017 2016 
     
 ASSETS     
 Current assets:     
  Cash and cash equivalents $  23,314  $  27,077  
  Accounts receivable, net    120,844     56,216  
  Income tax receivable    23,494     21,616  
  Prepaid expenses and other current assets    33,852     28,292  
  Assets held for sale    21,406     -  
 Total current assets    222,910     133,201  
     
 Property, plant and equipment, net    2,058,418     1,055,186  
 Investments    108,268     106,221  
 Goodwill    1,042,285     756,877  
 Other intangible assets    318,487     31,612  
 Other assets    10,857     9,661  
 Total assets $  3,761,225  $  2,092,758  
     
 LIABILITIES AND SHAREHOLDERS' EQUITY     
 Current liabilities:     
  Accounts payable $  14,154  $  6,766  
  Advance billings and customer deposits    45,086     26,438  
  Dividends payable    27,440     19,605  
  Accrued compensation    43,477     16,971  
  Accrued interest    17,183     11,260  
  Accrued expense    75,672     54,123  
  Current portion of long-term debt and capital lease obligations    28,824     14,922  
  Liabilities held for sale    1,075     -   
 Total current liabilities    252,911     150,085  
     
 Long-term debt and capital lease obligations    2,311,247     1,376,754  
 Deferred income taxes    321,355     244,298  
 Pension and other post-retirement obligations    340,067     130,793  
 Other long-term liabilities    33,996     14,573  
 Total liabilities    3,259,576     1,916,503  
     
 Shareholders' equity:     
  Common stock, par value $0.01 per share; 100,000,000 shares     
    authorized, 70,836,042 and 50,612,362, shares outstanding     
    as of September 30, 2017 and December 31, 2016, respectively    708     506  
  Additional paid-in capital    578,218     217,725  
  Accumulated deficit    (34,861)    -   
  Accumulated other comprehensive loss, net    (47,853)    (47,277) 
Noncontrolling interest   5,437     5,301  
Total shareholders' equity   501,649     176,255  
Total liabilities and shareholders' equity$  3,761,225  $  2,092,758  
     

 

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,  
 2017 2016 2017 2016 
         
         
 Net revenues $  363,329  $  191,541  $  703,214  $  567,258  
 Operating expenses:         
   Cost of services and products    145,323     85,646     287,090     246,129  
   Selling, general and administrative         
     expenses    94,459     39,917     166,210     119,398  
  Acquisition and other transaction costs    27,139     18     30,663     266  
  Loss on impairment    -      -      -      610  
  Depreciation and amortization    104,406     43,224     187,084     130,855  
 Income (loss) from operations    (7,998)    22,736     32,167     70,000  
 Other income (expense):         
   Interest expense, net of interest income    (36,307)    (19,075)    (99,896)    (56,827) 
   Other income, net    9,622     8,419     23,142     24,262  
 Income (loss) before income taxes    (34,683)    12,080     (44,587)    37,435  
 Income tax expense (benefit)    (6,289)    4,991     (9,862)    22,287  
 Net income (loss)    (28,394)    7,089     (34,725)    15,148  
         
 Less: net income attributable to noncontrolling interest    54     77     136     211  
         
 Net income (loss) attributable to common shareholders $  (28,448) $  7,012  $  (34,861) $  14,937  
         
 Net income (loss) per basic and diluted common shares        
   attributable to common shareholders$  (0.41) $  0.14  $  (0.62) $  0.29  
         

 

Consolidated Communications Holdings, Inc. 
Pro Forma Condensed Consolidated Statements of Operations 
(Dollars in thousands, except per share amounts) 
(Unaudited) 
         
  Pro Forma   Pro Forma  
  Three Months Ended   Nine Months Ended  
  September 30,   September 30,  
 2017 2016 2017 2016 
         
         
 Net revenues $  363,329  $  398,682  $  1,104,260  $  1,187,772  
 Operating expenses:         
  Operating expenses (exclusive of depreciation    238,214     266,805     734,373     804,313  
  and amortization)         
  Other post employment benefit and pension expense    1,734     (66,984)    7,623     (172,267) 
  Depreciation and amortization    104,406     106,915     313,576     323,028  
 Income from operations    18,975     91,946     48,688     232,698  
 Other income (expense):         
   Interest expense, net of interest income    (30,139)    (29,432)    (89,622)    (87,984) 
   Other income, net    9,622     8,510     23,461     24,606  
 Income (loss) from before income taxes    (1,542)    71,024     (17,473)    169,320  
 Income tax expense (benefit)    (914)    28,569     (6,897)    75,041  
 Net Income (loss)    (628)    42,455     (10,576)    94,279  
 Less: net income attributable to noncontrolling interest    54     77     136     211  
         
 Net income (loss) attributable to common shareholders $  (682) $  42,378  $  (10,712) $  94,068  
         
Net income (loss) per basic and diluted common share        
   attributable to common shareholders$  (0.01) $  0.60  $  (0.15) $  1.34  
         

 

Consolidated Communications Holdings, Inc. 
Condensed Consolidated Statements of Cash Flows 
  (Dollars in thousands) 
(Unaudited) 
           
    Three Months Ended   Nine Months Ended  
    September 30,   September 30,  
     2017 2016 2017 2016 
OPERATING ACTIVITIES         
 Net income (loss) $  (28,394) $  7,089  $  (34,725) $  15,148  
 Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
         
 Depreciation and amortization    104,406     43,224     187,084     130,855  
 Deferred income taxes    4,199     469     4,221     7,993  
 Cash distributions from wireless partnerships in
excess of/(less than) earnings
    (953)    (97)    (889)    (1,250) 
 Non-cash, stock-based compensation    889     862     2,319     2,666  
 Amortization of deferred financing    7,119     815     15,928     2,413  
 Other adjustments, net    359     382     2,657     1,017  
 Changes in operating assets and liabilities, net    (55,934)    5,342     (51,371)    14,749  
    Net cash provided by operating activities    31,691     58,086     125,224     173,591  
INVESTING ACTIVITIES         
 Business acquisition, net of cash acquired    (862,385)    (13,422)    (862,385)    (13,422) 
 Purchase of property, plant and equipment, net    (61,228)    (31,887)    (119,289)    (94,158) 
 Proceeds from sale of assets    195     20,913     296     20,963  
    Net cash used in investing activities    (923,418)    (24,396)    (981,378)    (86,617) 
FINANCING ACTIVITIES         
 Proceeds from issuance of long-term debt    1,008,325     24,000     1,031,325     31,000  
 Payment of capital lease obligations    (2,370)    (945)    (5,363)    (1,757) 
 Payment on long-term debt    (62,250)    (28,275)    (89,750)    (39,825) 
 Payment of financing costs    (16,732)    -      (16,732)    -   
 Share repurchases for minimum tax withholding    -      -      (41)    (71) 
 Dividends on common stock     (27,441)    (19,622)    (66,698)    (58,796) 
 Other    (350)    -      (350)    -   
 Net cash provided by (used in) financing activities    899,182     (24,842)    852,391     (69,449) 
Net change in cash and cash equivalents    7,455     8,848     (3,763)    17,525  
Cash and cash equivalents at beginning of period    15,859     24,555     27,077     15,878  
Cash and cash equivalents at end of period $  23,314  $  33,403  $  23,314  $  33,403  
           

 

Consolidated Communications Holdings, Inc. 
Consolidated Revenue by Category 
(Dollars in thousands) 
 (Unaudited)  
             
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
   2017  2016   2017  2016 
Commercial and carrier:            
Data and transport services (includes VoIP)  $  84,226 $  49,653    $  183,741 $  147,323  
Voice services     55,688    25,098       102,830    75,446  
Other     13,366    3,481       22,199    8,808  
      153,280    78,232       308,770    231,577  
Consumer:            
Broadband (VoIP, Data and Video)     87,587    51,363       190,127    159,025  
Voice services     56,861    13,717       82,330    42,236  
      144,448    65,080       272,457    201,261  
             
Equipment sales and service     -    17,695       -    37,783  
Subsidies     20,933    11,681       41,897    37,737  
Network access     41,262    15,536       69,953    48,654  
  Other products and services     3,406    3,317       10,137    10,246  
Total operating revenue     363,329    191,541       703,214    567,258  
             
Less operating revenues from divestitures   -    (18,702)    -    (41,882) 
Adjusted operating revenue  $  363,329 $  172,839    $  703,214 $  525,376  
             

 

Consolidated Communications Holdings, Inc. 
Pro Forma Consolidated Revenue by Category 
(Dollars in thousands) 
 (Unaudited)  
             
            
   Pro Forma, Three Months Ended   
   Q3 2017   Q2 2017  Q1 2017 Q4 2016 Q3 2016  
Commercial and carrier:            
Data and transport services (includes VoIP) $  84,226 $  83,786 $  83,366 $  83,552  $  84,270   
Voice services    55,688    57,607    57,847    59,049     60,847   
Other    13,366    13,562    12,238    11,875     11,811   
     153,280    154,955    153,451    154,476     156,928   
Consumer:            
Broadband (VoIP, Data and Video)    87,587    87,722    87,736    87,495     86,867   
Voice services    56,861    57,135    57,834    60,044     63,345   
     144,448    144,857    145,570    147,539     150,212   
             
Equipment sales and service    -    -    -    5,354     17,695   
Subsidies    20,933    22,890    25,268    22,806     23,164   
Network access    41,262    42,715    43,728    45,736     46,962   
  Other products and services    3,406    3,671    3,826    3,938     3,721   
Total operating revenue    363,329    369,088    371,843    379,849     398,682   
             
Less operating revenues from divestitures  -  -  -    (5,354)    (18,702)  
Adjusted operating revenue $  363,329 $  369,088 $  371,843 $  374,495  $  379,980   
             

 

Consolidated Communications Holdings, Inc. 
Schedule of Adjusted EBITDA Calculation 
(Dollars in thousands) 
(Unaudited) 
         
         
  Three Months Ended   Nine Months Ended  
  September 30,   September 30,  
 2017 2016 2017 2016 
Net income (loss)$  (28,394) $  7,089  $  (34,725) $  15,148  
Add (subtract):        
  Income tax expense (benefit)   (6,289)    4,991     (9,862)    22,287  
  Interest expense, net   36,307     19,075     99,896     56,827  
  Depreciation and amortization   104,406     43,224     187,084     130,855  
EBITDA   106,030     74,379     242,393     225,117  
         
Adjustments to EBITDA (1):        
Other, net (2)   29,645     1,273     35,682     5,214  
Investment income (accrual basis)   (9,594)    (8,735)    (23,068)    (24,636) 
Investment distributions (cash basis)   8,641     8,638     22,021     23,218  
Pension/OPEB expense   1,746     720     1,602     2,159  
Non-cash compensation (3)   889     862     2,319     2,666  
         
Adjusted EBITDA$  137,357  $  77,137  $  280,949  $  233,738  
         
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. 
Schedule of Pro Forma Adjusted EBITDA Calculation 
(Dollars in thousands) 
(Unaudited) 
           
 Pro Forma Pro Forma Pro Forma 
 Three Months Ended Nine Months Ended Last Twelve 
 September 30, September 30, Months Ended 
 2017 2016 2017 2016 September 30, 2017 
Net income (loss)$  (628) $  42,455  $  (10,576) $  94,279  $  6,868  
Add (subtract):          
  Income tax expense (benefit)   (914)    28,569     (6,897)    75,041     5,376  
  Interest expense, net   30,139     29,432     89,622     87,984     118,923  
  Depreciation and amortization   104,406     106,915     313,576     323,028     420,422  
EBITDA   133,003     207,371     385,725     580,332     551,589  
           
Adjustments to EBITDA (1):          
Other, net (2)   2,672     1,266     5,449     6,469     8,006  
Investment income (accrual basis)   (9,594)    (8,735)    (23,068)    (24,636)    (31,404) 
Investment distributions (cash basis)   8,641     8,638     22,021     23,218     30,947  
Pension/OPEB expense   1,746     (66,708)    7,621     (171,983)    (31,280) 
Loss on extinguishment of debt   -      -      -      -      6,559  
Non-cash compensation (3)   889     1,945     5,305     7,667     6,946  
           
Adjusted EBITDA$  137,357  $  143,777  $  403,053  $  421,067  $  541,363  
           
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.   
Cash Available to Pay Dividends    
(Dollars in thousands)    
(Unaudited)    
         
      Pro Forma  
 Three Months Ended  Nine Months Ended Nine Months Ended  
 September 30, 2017  September 30, 2017 September 30, 2017  
         
Adjusted EBITDA$  137,357   $  280,949  $  403,053  (a)  
         
 - Cash interest expense    (28,267)     (63,420)    (84,062)  
 - Capital expenditures   (61,228)     (119,289)    (165,304)  
 - Cash income (taxes)/refund   (60)     (969)    (1,314)  
         
Cash available to pay dividends$  47,802   $  97,271  $  152,373   
         
Dividends Paid$  27,441   $  66,698  $  82,323   
Payout Ratio 57.4%   68.6%  54.0%  
         
Note:  The above calculation excludes the principal payments on our debt    
         
(a) Full benefit of targeted synergies of $55.0 million are not yet fully reflected in Pro Forma Adjusted EBITDA.  
         


Consolidated Communications Holdings, Inc. 
Total Net Debt to LTM Adjusted EBITDA Ratio 
(Dollars in thousands) 
(Unaudited) 
    
 September 30,  
Summary of Outstanding Debt:2017  
Term loans, net of discount $8,676$  1,817,324   
Revolving loan   18,000   
Senior unsecured notes due 2022, net of discount $3,831   496,169   
Capital leases   23,313   
Total debt as of September 30, 2017$  2,354,806   
Less deferred debt issuance costs   (14,735)  
Less cash on hand   (23,314)  
Total net debt as of September 30, 2017$  2,316,757   
    
Pro Forma Adjusted EBITDA for the last    
twelve months ended September 30, 2017$  541,363 (a)
    
Total Net Debt to last twelve months   
Adjusted EBITDA - Pro Forma 4.28x   
    
(a) Full benefit of targeted synergies of $55.0 million are not yet fully reflected in Pro Forma Adjusted EBITDA. 
    

 

Consolidated Communications Holdings, Inc. 
Adjusted Net Income and Net Income Per Share  
Dollars in thousands, except per share amounts) 
(Unaudited) 
         
         
 Three Months Ended Nine Months Ended 
 September 30, September 30, 
 2017 2016 2017 2016  
Net income (loss)$  (28,394) $  7,089 $  (34,725) $  15,148 
Transaction and severance related costs, net of tax   17,039     606    21,320     1,985 
Amortization of commitment fee, net of tax   3,378     -    7,791     - 
Ticking fees on committed financing, net of tax   187     -    10,926     - 
Tax on non-deductible transaction related costs   2,341     -    2,341     - 
Deferred tax related to acquisition   5,205     -    5,205     - 
Impairment charge for sale of Iowa ILEC, net of tax   -     -    -     248 
Deferred tax related to asset held for sale   -     -    -     7,524 
Non-cash stock compensation, net of tax   514     506    1,405     1,082 
Adjusted net income $  270  $  8,201 $  14,263  $  25,987 
         
Weighted average number of shares outstanding   69,830     50,294    56,955     50,292 
Adjusted diluted net income per share$  -  $  0.16 $  0.25  $  0.52 
         
Notes:        
Calculations above assume a 42.2% and 41.3% effective tax rate for the three months ended and 39.4% and 59.4% for the nine months ended September 30, 2017 and 2016, respectively. 
         
Net income per share has been impacted by approximately $0.09 for the three months ended September 30, 2017 due to increased depreciation and amortization associated with the preliminary valuation of the FairPoint assets. 
  

 

Consolidated Communications Holdings, Inc. 
Key Operating Statistics 
(Unaudited) 
             
     Pro Forma   Pro Forma   
   September 30, June 30, % Change September 30, % Change 
   2017 2017 in Qtr 2016 YOY 
             
Voice Connections(1)   990,162   1,012,467  (2.2%)  1,066,778  (7.2%) 
             
Data and Internet Connections(1)   783,945   784,619  (0.1%)  780,021  0.5% 
             
Video Connections   105,480   107,279  (1.7%)  116,365  (9.4%) 
             
Business and Broadband as % of total revenue(2) 74.2%   74.3%  (0.1%)  74.6%  (0.5%) 
             
Fiber route network miles (long-haul and metro) 35,749   35,592  0.4%  35,100  1.8% 
             
On-net buildings  8,782   8,555  2.7%  8,000  9.8% 
             
Consumer Customers  683,519   696,136  (1.8%)  723,906  (5.6%) 
             
Consumer ARPU  $70.44   $69.36  1.6%  $69.17  1.8% 
             
             
Notes:           
(1) The acquisition of FairPoint Communications, Inc. resulted in an increase of 546,492 voice connections and 301,000 data connections in the third quarter 2017. 
 
(2) Business and Broadband revenue % includes: commercial/carrier, equipment sales and service, directory, consumer broadband and special access.