Consolidated Communications Holdings
Mar 1, 2018

Consolidated Communications Reports Fourth Quarter 2017 Results

MATTOON, Ill., March 01, 2018 (GLOBE NEWSWIRE) -- Consolidated Communications Holdings, Inc. (Nasdaq:CNSL) (the "Company") reported results for the fourth quarter 2017 and will hold a conference call and simultaneous webcast to discuss its results today at 11 a.m. ET.

Fourth quarter 2017 Consolidated Communications financial summary:

"2017 was a transformational year, one which has positioned the Company for future growth and opportunities," said Bob Udell, president and chief executive officer of Consolidated Communications. "In the first half of the year, we executed on our organic growth strategy and closed the FairPoint acquisition. In the second half, we completed our organizational alignment, while we launched integration projects and fast-start initiatives to leverage our expanded fiber network and minimize customer pain points. We are recognizing the immediate financial and capital structure benefits of the merger and are excited about 2018 as we invest and expand our fiber network to position ourselves for future broadband and business growth."

"Last week we announced plans to increase broadband speeds to more than 500,000 residents and small businesses across our Northern New England service area by the end of 2018," Udell added. "We have aggressive projects underway to expand our fiber network which will result in increased broadband speeds and improve network reliability."

"We are making great progress on our FairPoint integration and I am pleased to report we have completed the conversion of our ERP system and are now operating on a single, fully integrated platform for finance, supply chain and human resource functions," said Bob Udell.

Pro Forma Financial Results for the Fourth Quarter   

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

Full-Year Pro Forma 2017 Results

Cash Available to Pay Dividends, Capex

For the fourth quarter, cash available to pay dividends was $42.5 million, and the dividend payout ratio was 64.6 percent as compared to 78.2 percent in the fourth quarter a year ago.  At Dec. 31, 2017, cash and cash equivalents were $15.7 million.  Capital expenditures were $61.9 million for the fourth quarter. 

Financial Guidance

The Company is providing guidance for fiscal 2018 as follows:

     
     
($ in millions) 2017 Pro Forma
Results
 2018 Guidance
Cash interest expense1 $  112.9    $123 to $128
Cash income taxes/refund2 $  1.3    $1 to $3
Capital expenditures $  227.2   $235 to $245
     
(1) 2017 Pro Forma cash interest expense is based on actual interest expense incurred since the July 3rd closing of the Fairpoint acquisition and pro forma for January 1, 2017 through July 3rd, 2017 calculated as if the merger was in effect at January 1. 2017.
 
(2) Cash income taxes primarily include local and state income taxes as federal income taxes will be shielded by existing net operating losses and the benefit of The Tax Cuts and Jobs Act of 2017 tax reform legislation that was enacted in December, 2017.
 

Dividend Payments

On Feb. 23, 2018, the Company's board of directors declared a quarterly dividend of $0.38738 per common share, which is payable on May 1, 2018 to stockholders of record at the close of business on April 15, 2018.  This will represent the 51st consecutive quarterly dividend paid by the Company. 

Conference Call Information

The Company will host a conference call and webcast today at 11 a.m. ET / 10 a.m. CT to discuss fourth 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, conference ID 6091509.  A telephonic replay of the conference call will be available through March 9, 2018 and can be accessed by calling 1-855-859-2056, conference ID 6091509.  
 
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

 

Consolidated Communications Holdings, Inc. 
Condensed Consolidated Balance Sheets 
(Dollars in thousands, except share and per share amounts) 
(Unaudited) 
  December 31,   December 31,  
   2017     2016   
       
 ASSETS     
 Current assets:     
  Cash and cash equivalents $  15,657  $  27,077  
  Accounts receivable, net    121,528     56,216  
  Income tax receivable    21,846     21,616  
  Prepaid expenses and other current assets    33,318     28,292  
  Assets held for sale    21,310     -  
 Total current assets    213,659     133,201  
     
 Property, plant and equipment, net    2,037,606     1,055,186  
 Investments    108,858     106,221  
 Goodwill    1,038,032     756,877  
 Other intangible assets    306,783     31,612  
 Other assets    14,188     9,661  
 Total assets $  3,719,126  $  2,092,758  
       
 LIABILITIES AND SHAREHOLDERS' EQUITY     
 Current liabilities:     
  Accounts payable $  24,143  $  6,766  
  Advance billings and customer deposits    42,526     26,438  
  Dividends payable    27,418     19,605  
  Accrued compensation    49,770     16,971  
  Accrued interest    9,343     11,260  
  Accrued expense    72,041     54,123  
  Current portion of long-term debt and capital lease obligations    29,696     14,922  
  Liabilities held for sale    1,003     -   
 Total current liabilities    255,940     150,085  
     
 Long-term debt and capital lease obligations    2,311,514     1,376,754  
 Deferred income taxes    209,720     244,298  
 Pension and other post-retirement obligations    334,193     130,793  
 Other long-term liabilities    33,817     14,573  
 Total liabilities    3,145,184     1,916,503  
         
 Shareholders' equity:     
  Common stock, par value $0.01 per share; 100,000,000 shares     
    authorized, 70,777,354 and 50,612,362, shares outstanding     
    as of December 31, 2017 and December 31, 2016, respectively    708     506  
  Additional paid-in capital    615,662     217,725  
  Accumulated other comprehensive loss, net    (48,083)    (47,277) 
Noncontrolling interest   5,655     5,301  
Total shareholders' equity   573,942     176,255  
Total liabilities and shareholders' equity$  3,719,126  $  2,092,758  
       

 

Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
        
  Three Months Ended   Year Ended 
  December 31,   December 31, 
   2017     2016     2017     2016  
        
        
Net revenues$  356,360  $  175,919  $  1,059,574  $  743,177 
Operating expenses:       
Cost of services and products   155,752     76,663     446,065     322,792 
Selling, general and administrative       
  expenses   86,345     37,714     249,332     157,111 
Acquisition and other transaction costs   2,987     947     33,650     1,214 
Loss on impairment   -      -      -      610 
Depreciation and amortization   104,789     43,155     291,873     174,010 
Income from operations   6,487     17,440     38,654     87,440 
Other income (expense):       
Interest expense, net of interest income   (29,890)    (19,999)    (129,786)    (76,826)
Loss on extinguishment of debt   -      (6,559)    -      (6,559)
Other income, net   8,362     9,841     31,504     34,103 
Income (loss) before income taxes   (15,041)    723     (59,628)    38,158 
Income tax expense (benefit)   (115,065)    675     (124,927)    22,962 
Net income   100,024     48     65,299     15,196 
        
Less: net income attributable to noncontrolling interest   218     54     354     265 
        
Net income (loss) attributable to common shareholders$  99,806  $  (6) $  64,945  $  14,931 
        
Net income (loss) per basic and diluted common shares       
attributable to common shareholders$  1.41  $  -   $  1.07  $  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   Year Ended  
  December 31,   December 31,  
   2017     2016     2017     2016   
         
         
Net revenues$  356,360  $  379,848  $  1,460,620  $  1,567,620  
Operating expenses:        
Operating expenses (exclusive of depreciation        
and amortization)   240,354     256,119     974,730     1,060,148  
Other post employment benefit and pension expense   1,925     (38,901)    9,545     (210,884) 
Depreciation and amortization   104,789     106,846     418,365     429,874  
Income from operations   9,292     55,784     57,980     288,482  
Other income (expense):        
Interest expense, net of interest income   (29,890)    (29,301)    (119,512)    (117,285) 
Loss on extinguishment of debt   -     (6,559)    -     (6,559) 
Other income, net   8,362     9,793     31,823     34,399  
Income (loss) from before income taxes   (12,236)    29,717     (29,709)    199,037  
Income tax expense (benefit)   (113,943)    12,273     (120,840)    87,314  
Net Income   101,707     17,444     91,131     111,723  
Less: net income attributable to noncontrolling interest   218     54     354     265  
         
Net income attributable to common shareholders$  101,489  $  17,390  $  90,777  $  111,458  
         
Net income per basic and diluted common share        
attributable to common shareholders$  1.44  $  0.25  $  1.29  $  1.58  
         

 

Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
  (Dollars in thousands)
(Unaudited)
          
    Three Months Ended   Year Ended 
    December 31,   December 31, 
     2017     2016     2017     2016  
OPERATING ACTIVITIES        
 Net income $  100,024  $  48  $  65,299  $  15,196 
 Adjustments to reconcile net income to net cash provided by operating activities:        
 Depreciation and amortization    104,789     43,155     291,873     174,010 
 Deferred income taxes    (130,348)    12,870     (126,127)    20,863 
 Cash distributions from wireless partnerships in excess of/(less than) earnings    (522)    746     (1,411)    (504)
 Non-cash, stock-based compensation    447     351     2,766     3,017 
 Amortization of deferred financing    1,148     810     17,076     3,223 
 Loss on extinguishment of debt    -      6,559     -      6,559 
 Other adjustments, net    551     (1,937)    3,208     (920)
 Changes in operating assets and liabilities, net    8,714     (17,960)    (42,657)    (3,211)
   Net cash provided by operating activities    84,803     44,642     210,027     218,233 
INVESTING ACTIVITIES        
 Business acquisition, net of cash acquired    -      -      (862,385)    (13,422)
 Purchase of property, plant and equipment, net    (61,896)    (31,034)    (181,185)    (125,192)
 Proceeds from sale of assets    563     137     859     208 
 Proceeds from business dispositions    -      9,227     -      30,119 
   Net cash used in investing activities    (61,333)    (21,670)    (1,042,711)    (108,287)
FINANCING ACTIVITIES        
 Proceeds from issuance of long-term debt    21,000     905,750     1,052,325     936,750 
 Payment of capital lease obligations    (2,570)    (1,128)    (7,933)    (2,885)
 Payment on long-term debt    (21,587)    (903,225)    (111,337)    (943,050)
 Payment of financing costs    -      (9,912)    (16,732)    (9,912)
 Share repurchases for minimum tax withholding    (530)    (1,160)    (571)    (1,231)
 Dividends on common stock     (27,440)    (19,623)    (94,138)    (78,419)
 Other    -      -      (350)    -  
 Net cash provided by (used in) financing activities    (31,127)    (29,298)    821,264     (98,747)
Net change in cash and cash equivalents    (7,657)    (6,326)    (11,420)    11,199 
Cash and cash equivalents at beginning of period    23,314     33,403     27,077     15,878 
Cash and cash equivalents at end of period $  15,657  $  27,077  $  15,657  $  27,077 
          

 

Consolidated Communications Holdings, Inc. 
Consolidated Revenue by Category 
(Dollars in thousands) 
 (Unaudited)  
             
    Three Months Ended     Year Ended  
    December 31,     December 31,  
     2017    2016       2017    2016   
Commercial and carrier:            
Data and transport services (includes VoIP)     84,712    49,331       268,453    196,654  
Voice services     55,570    24,352       158,400    99,798  
Other     11,709    3,710       33,908    12,518  
      151,991    77,393       460,761    308,970  
Consumer:            
Broadband (VoIP and Data)     63,494    28,257       184,887    115,787  
Video services     22,637    22,622       91,371    94,117  
Voice services     54,148    13,039       136,478    55,275  
      140,279    63,918       412,736    265,179  
             
Equipment sales and service     -    5,354       -    43,137  
Subsidies     20,375    10,626       62,272    48,363  
Network access     40,243    15,097       110,196    63,751  
  Other products and services     3,472    3,531       13,609    13,777  
Total operating revenue     356,360    175,919       1,059,574    743,177  
             
Less operating revenues from divestitures     -    (5,354)      -    (47,236) 
Adjusted operating revenue  $  356,360 $  170,565    $  1,059,574 $  695,941  
             

 

Consolidated Communications Holdings, Inc. 
Pro Forma Consolidated Revenue by Category 
(Dollars in thousands) 
 (Unaudited)  
             
            
   Pro Forma, Three Months Ended   
   Q4 2017   Q3 2017   Q2 2017  Q1 2017 Q4 2016  
Commercial and carrier:            
Data and transport services (includes VoIP) $  84,712 $  84,226 $  83,786 $  83,366 $  83,552   
Voice services    55,570    55,688    57,607    57,847    59,049   
Other    11,709    13,366    13,562    12,238    11,875   
     151,991    153,280    154,955    153,451    154,476   
Consumer:            
Broadband (VoIP and Data)    63,494    64,254    63,831    63,025    63,298   
Video services    22,637    23,333    23,891    24,711    24,197   
Voice services    54,148    56,861    57,135    57,834    60,044   
     140,279    144,448    144,857    145,570    147,539   
             
Equipment sales and service    -    -    -    -    5,354   
Subsidies    20,375    20,933    22,890    25,268    22,806   
Network access    40,243    41,262    42,715    43,728    45,736   
  Other products and services    3,472    3,406    3,671    3,826    3,938   
Total operating revenue    356,360    363,329    369,088    371,843    379,849   
             
Less operating revenues from divestitures    -    -    -    -    (5,354)  
Adjusted operating revenue $  356,360 $  363,329 $  369,088 $  371,843 $  374,495   
             

 

Consolidated Communications Holdings, Inc.  
Schedule of Adjusted EBITDA Calculation  
(Dollars in thousands)  
(Unaudited)  
           
           
  Three Months Ended   Year Ended    
  December 31,   December 31,    
   2017     2016     2017     2016     
Net income$  100,024  $  48  $  65,299  $  15,196    
Add (subtract):          
  Income tax expense (benefit)   (115,065)    675     (124,927)    22,962    
  Interest expense, net   29,890     19,999     129,786     76,826    
  Depreciation and amortization   104,789     43,155     291,873     174,010    
EBITDA   119,638     63,877     362,031     288,994    
           
Adjustments to EBITDA (1):          
Other, net (2)   11,854     (73)    47,536     5,141    
Investment income (accrual basis)   (8,681)    (8,336)    (31,749)    (32,972)   
Investment distributions (cash basis)   7,972     8,926     29,993     32,144    
Pension/OPEB expense   1,925     717     3,527     2,876    
Loss on extinguishment of debt   -      6,559     -      6,559    
Non-cash compensation (3)   447     351     2,766     3,017    
           
Adjusted EBITDA$  133,155  $  72,021  $  414,104  $  305,759    
           
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
  Three Months Ended   Year Ended 
  December 31,   December 31, 
   2017     2016     2017     2016  
Net income$  101,707  $  17,444  $  91,131  $  111,723 
Add (subtract):       
  Income tax expense (benefit)   (113,943)    12,273     (120,840)    87,314 
  Interest expense, net   29,890     29,301     119,512     117,285 
  Depreciation and amortization   104,789     106,846     418,365     429,874 
EBITDA   122,443     165,864     508,168     746,196 
        
Adjustments to EBITDA (1):       
Other, net (2)   9,049     2,557     14,499     9,026 
Investment income (accrual basis)   (8,681)    (8,336)    (31,749)    (32,972)
Investment distributions (cash basis)   7,972     8,926     29,993     32,144 
Pension/OPEB expense   1,925     (38,901)    9,545     (210,884)
Loss on extinguishment of debt   -      6,559     -      6,559 
Non-cash compensation (3)   447     1,641     5,752     9,308 
        
Adjusted EBITDA$  133,155  $  138,310  $  536,208  $  559,377 
        
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    Year Ended   Year Ended   
  December 31, 2017    December 31, 2017   December 31, 2017   
         
Adjusted EBITDA$  133,155   $  414,104  $  536,208  (a)  
         
 - Cash interest expense    (28,812)     (94,932)    (112,874)  
 - Capital expenditures   (61,896)     (181,185)    (227,200)  
 - Cash income (taxes)/refund   16      (953)    (1,298)  
         
Cash available to pay dividends$  42,463   $  137,034  $  194,836   
         
Dividends Paid$  27,440   $  94,138  $  109,763   
Payout Ratio 64.6%   68.7%  56.3%  
         
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) 
    
  December 31,   
Summary of Outstanding Debt:  2017    
Term loans, net of discount $8,344$  1,813,069   
Revolving loan   22,000   
Senior unsecured notes due 2022, net of discount $3,669   496,331   
Capital leases   23,890   
Total debt as of December 31, 2017$  2,355,290   
Less deferred debt issuance costs   (14,080)  
Less cash on hand   (15,657)  
Total net debt as of December 31, 2017$  2,325,553   
    
Pro Forma Adjusted EBITDA for the   
twelve months ended December 31, 2017$  536,208 (a)
    
Total Net Debt to last twelve months   
Adjusted EBITDA - Pro Forma 4.34x   
    
(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   Year Ended  
  December 31,   December 31,  
   2017     2016     2017     2016   
Net income$  100,024  $  48  $  65,299  $  15,196  
Transaction and severance related costs, net of tax   4,503     909     25,902     3,902  
Storm costs, net of tax   1,931     -     1,931     -  
Amortization of commitment fee, net of tax   -     715     7,819     715  
Ticking fees on committed financing, net of tax   -     -     10,966     -  
Tax on non-deductible transaction related costs   1,102     -     3,443     -  
Deferred tax related to acquisition   -     -     5,205     -  
Loss on extinguishment of debt, net of tax   -     4,014     -     4,014  
Reversal of legal settlement, net of tax   -     (750)    -     (750) 
Impairment charge for sale of Iowa ILEC, net of tax   -     -     -     373  
Non-cash stock compensation, net of tax   272     215     1,682     1,846  
Divestiture related, tax (1)   -     1,455     -     8,770  
Change in deferred tax rate, tax   -     (1,533)    5,404     (1,533) 
Change in deferred tax rate, federal tax reform   (112,910)    -     (112,910)    -  
Other, tax   2,580     472     2,580     817  
Adjusted net income (loss)$  (2,498) $  5,545  $  17,321  $  33,350  
         
Weighted average number of shares outstanding   70,516     50,326     60,373     50,301  
Adjusted diluted net income per share$  (0.04) $  0.11  $  0.29  $  0.66  
         
Notes:        
Calculations above assume a 39.2% effective tax rate for the three months and year ended December 31, 2017 and a 38.8% effective tax rate for the three months and year ended December 31, 2016. 
         
Net income per share has been impacted by approximately $0.11 for the three months ended December 31, 2017 and $0.23 for the year ended December 31, 2017 due to increased depreciation and amortization associated with the preliminary valuation of the FairPoint assets. 
         
(1) Includes sale of stock in Iowa ILEC and non deductible goodwill for equipment business. 

 

Consolidated Communications Holdings, Inc. 
Key Operating Statistics 
(Unaudited) 
             
         Pro Forma   
    December 31,  September 30, % Change   December 31,  % Change  
     2017     2017   in Qtr   2016   YOY 
             
Voice Connections(1)   972,178   990,162  (1.8%)  1,047,028  (7.1%) 
             
Data and Internet Connections(1)   783,682   783,945  (0.0%)  780,027  0.5% 
             
Video Connections   103,313   105,480  (2.1%)  113,665  (9.1%) 
             
Business and Broadband as % of total revenue(2) 74.7%  74.2% 0.7%  71.2% 4.9% 
             
Fiber route network miles (long-haul and metro) 35,984   35,749  0.7%  35,282  2.0% 
             
On-net buildings  9,062   8,782  3.2%  8,121  11.6% 
             
Consumer Customers  671,300   683,519  (1.8%)  711,880  (5.7%) 
             
Consumer ARPU $69.66  $70.44  (1.1%) $69.08  0.8% 
             
             
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. 
             

 

Consolidated Communications Holdings, Inc. 
Key Operating Statistics 
(Unaudited) 
                   
                   
       Pro Forma 
   Q4 2017  Q3 2017   Q2 2017   Q1 2017   Q4 2016   Q3 2016   Q2 2016   Q1 2016  
                   
Voice Connections  972,178   990,162   1,012,467   1,028,231   1,047,028   1,066,778  1,091,537  1,109,972  
                   
Data and Internet Connections  783,682   783,945   784,619   782,533   780,027   780,021  773,999  770,920  
                   
Video Connections   103,313   105,480   107,279   109,981   113,665   116,365  119,362  122,511  
                   
Business and Broadband as % of total revenue(1) 74.7%  74.2%  74.3%  73.7%  71.2%  74.6% 73.3% 72.9% 
                   
Fiber route network miles (long-haul and metro) 35,984   35,749   35,592   35,550   35,282   35,100  (2) (2) 
                   
On-net buildings  9,062   8,782   8,555   8,215   8,121   8,000  (2) (2) 
                   
Consumer Customers  671,300   683,519   696,136   700,154   711,880   723,906  (2) (2) 
                   
Consumer ARPU $69.66  $70.44  $69.36  $69.30  $69.08  $69.17      
                   
                   
Notes:                 
        
(1) Business and Broadband revenue % includes: commercial/carrier, equipment sales and service, directory, consumer broadband and special access.  
(2) Metric for FairPoint isn't available for Q1 or Q2 2016, therefore, we are unable to provide a pro forma metric for these reporting periods.