Consolidated Communications Holdings
Consolidated Communications Holdings, Inc. (Form: 8-K, Received: 05/03/2018 08:02:07)
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________

Form 8-K
_____________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): May 3, 2018  

Consolidated Communications Holdings, Inc.
(Exact Name of Registrant as Specified in Charter)

Delaware 000-51446 02-0636095
(State or Other Jurisdiction of Incorporation) (Commission File Number) (I.R.S. Employer Identification Number)

 

121 South 17th Street, Mattoon, Illinois 61938-3987
(Address of Principal Executive Offices) (Zip Code)

(217) 235-3311
(Registrant's telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

  [ ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  [ ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
  [ ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  [ ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [   ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

 
 

Item 2.02. Results of Operations and Financial Condition.

On May 3, 2018, Consolidated Communications Holdings, Inc. issued a press release to report its results of operations and financial condition as of and for the quarter ended March 31, 2018.  A copy of this press release is included as Exhibit 99.1 to this Form 8-K and incorporated into this Item 2.02 by reference.

The information in this Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

Item 9.01. Financial Statements and Exhibits.

(d)  Exhibits

No.   Description
     
99.1   Press Release dated May 3, 2018


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

  Consolidated Communications Holdings, Inc.
     
   
Date: May 3, 2018 By:  /s/ Steven L. Childers        
    Steven L. Childers
    Chief Financial Officer
   

EXHIBIT 99.1

Consolidated Communications Reports First Quarter 2018 Results

MATTOON, Ill., May 03, 2018 (GLOBE NEWSWIRE) --  Consolidated Communications Holdings, Inc. (Nasdaq:CNSL) (the “Company”) reported results for the first quarter 2018 and will hold a conference call and simultaneous webcast to discuss its results today at 10 a.m. ET.

First quarter 2018 Consolidated Communications financial summary:

“We had a strong start to 2018 and I’m pleased with the quarter which supports the declaration of our 52 nd consecutive quarterly dividend,” said Bob Udell, president and chief executive officer of Consolidated Communications. “We increased our fiber connections for wireless carriers under contract by 13 percent year over year, a notable increase with sales in first quarter exceeding full year 2017 results. We are pleased to realize another quarter of 1.4 percent growth in commercial and carrier data and transport revenue. While the majority of this growth is from our legacy properties, we see additional upside opportunity as we implement our proven playbook in the former FairPoint markets.”

“We are executing well on our integration and fast start initiatives associated with the acquisition,” added Udell. “Our plan and strategy of investing and expanding our fiber network is working as we upgrade broadband speeds and enhance our product offerings, bringing more competitive solutions to our customers.”

Pro Forma Financial Results for the First 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 first quarter, cash available to pay dividends was $44.3 million, and the dividend payout ratio was 61.9 percent compared to 80.5 percent in the first quarter a year ago. At March 31, 2018, cash and cash equivalents were $11.1 million.  Capital expenditures were $60.8 million for the first quarter. 

Financial Guidance

The Company affirmed its 2018 guidance as follows:

($ in millions)   2017 Pro Forma
Results
  2018 Guidance
Cash interest expense 1   $112.9   $123 to $128
Cash income taxes/refund 2   $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 3, 2017 closing of the Fairpoint acquisition and pro forma for Jan. 1, 2017 through July 3, 2017 calculated as if the merger was in effect at Jan. 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 April 30, 2018, the Company’s board of directors declared a quarterly dividend of $0.38738 per common share, which is payable on Aug. 1, 2018 to stockholders of record at the close of business on July 15, 2018. This will represent the 52 nd consecutive quarterly dividend paid by the Company. 

Conference Call Information

The Company will host a conference call and webcast today at 10 a.m. ET / 9 a.m. CT to discuss first 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 3788326. A telephonic replay of the conference call will be available through May 10, 2018 and can be accessed by calling 1-855-859-2056, conference ID 3788326.  
 
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)
   March 31,    December 31,
     2018        2017  
       
ASSETS      
Current assets:      
Cash and cash equivalents $ 11,140     $ 15,657  
Accounts receivable, net   134,095       121,528  
Income tax receivable   21,892       21,846  
Prepaid expenses and other current assets   40,202       33,318  
Assets held for sale   21,524       21,310  
Total current assets   228,853       213,659  
               
Property, plant and equipment, net   2,019,399       2,037,606  
Investments   107,114       108,858  
Goodwill   1,032,912       1,038,032  
Other intangible assets   292,560       306,783  
Other assets   28,026       14,188  
Total assets $ 3,708,864     $ 3,719,126  
               
 LIABILITIES AND SHAREHOLDERS' EQUITY              
Current liabilities:              
Accounts payable $ 21,014     $ 24,143  
Advance billings and customer deposits   43,629       42,526  
Dividends payable   27,602       27,418  
Accrued compensation   53,689       49,770  
Accrued interest   17,689       9,343  
Accrued expense   77,331       72,041  
Current portion of long-term debt and capital lease obligations   31,554       29,696  
Liabilities held for sale   1,083       1,003  
Total current liabilities   273,591       255,940  
               
Long-term debt and capital lease obligations   2,317,398       2,311,514  
Deferred income taxes   214,447       209,720  
Pension and other post-retirement obligations   326,825       334,193  
Other long-term liabilities   32,500       33,817  
Total liabilities   3,164,761       3,145,184  
               
Shareholders' equity:              
Common stock, par value $0.01 per share; 100,000,000 shares              
authorized, 71,252,576 and 70,777,354, shares outstanding              
as of March 31, 2018 and December 31, 2017, respectively   713       708  
Additional paid-in capital   591,092       615,662  
Accumulated deficit   (11,298 )     -  
Accumulated other comprehensive loss, net   (42,159 )     (48,083 )
Noncontrolling interest   5,755       5,655  
Total shareholders' equity   544,103       573,942  
Total liabilities and shareholders' equity $ 3,708,864     $ 3,719,126  
               


Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
         
   Three Months Ended  
   March 31,  
     2018        2017    
         
         
Net revenues $ 356,039     $ 169,935    
Operating expenses:                
Cost of services and products   152,916       71,032    
Selling, general and administrative                
expenses   85,618       36,300    
Acquisition and other transaction costs   731       1,329    
Depreciation and amortization   107,899       42,195    
Income from operations   8,875       19,079    
Other income (expense):        
Interest expense, net of interest income   (32,716 )     (29,671 )  
Other income, net   8,395       4,713    
Loss before income taxes   (15,446 )     (5,879 )  
Income tax benefit   (4,248 )     (2,174 )  
Net loss   (11,198 )     (3,705 )  
         
Less: net income (loss) attributable to noncontrolling interest   100       (20 )  
         
Net loss attributable to common shareholders $ (11,298 )   $ (3,685 )  
         
Net loss per basic and diluted common shares        
attributable to common shareholders $ (0.16 )   $ (0.07 )  
         


Consolidated Communications Holdings, Inc.
Pro Forma Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
         
   Pro Forma  
   Three Months Ended  
   March 31,  
     2018        2017    
         
         
Net revenues $ 356,039     $ 371,843    
Operating expenses:        
Operating expenses (exclusive of depreciation        
and amortization)   239,265       255,270    
Depreciation and amortization   107,899       105,441    
Income from operations   8,875       11,132    
Other income (expense):        
Interest expense, net of interest income   (32,716 )     (28,544 )  
Other income, net   8,395       3,462    
Loss before income taxes   (15,446 )     (13,950 )  
Income tax benefit   (4,248 )     (5,402 )  
Net loss   (11,198 )     (8,548 )  
Less: net income (loss) attributable to noncontrolling interest   100       (20 )  
         
Net loss attributable to common shareholders $ (11,298 )   $ (8,528 )  
         
Net loss per basic and diluted common share        
attributable to common shareholders $ (0.16 )   $ (0.12 )  
         


Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
  (Dollars in thousands)
(Unaudited)
             
       Three Months Ended  
       March 31,  
         2018        2017    
OPERATING ACTIVITIES          
  Net loss   $ (11,198 )   $ (3,705 )  
  Adjustments to reconcile net loss to net cash provided by operating activities:          
  Depreciation and amortization     107,899       42,195    
  Deferred income taxes     2       22    
  Cash distributions from wireless partnerships in excess of earnings     1,862       523    
  Non-cash, stock-based compensation     678       538    
  Amortization of deferred financing     1,161       4,400    
  Other adjustments, net     2,340       (4 )  
  Changes in operating assets and liabilities, net     (11,902 )     7,749    
  Net cash provided by operating activities     90,842       51,718    
INVESTING ACTIVITIES          
  Purchase of property, plant and equipment, net     (60,808 )     (29,025 )  
  Proceeds from sale of assets     144       43    
  Distributions from investments     233       -    
  Net cash used in investing activities     (60,431 )     (28,982 )  
FINANCING ACTIVITIES          
  Proceeds from issuance of long-term debt     27,000       7,000    
  Payment of capital lease obligations     (2,923 )     (1,289 )  
  Payment on long-term debt     (31,588 )     (9,250 )  
  Share repurchases for minimum tax withholding     -       (41 )  
  Dividends on common stock     (27,417 )     (19,604 )  
  Net cash used in financing activities     (34,928 )     (23,184 )  
Net change in cash and cash equivalents     (4,517 )     (448 )  
Cash and cash equivalents at beginning of period     15,657       27,077    
Cash and cash equivalents at end of period   $ 11,140     $ 26,629    
             


Consolidated Communications Holdings, Inc.
Consolidated Revenue by Category
(Dollars in thousands)
 (Unaudited)
                 
       Three Months Ended      
       March 31,      
         2018      2017      
Commercial and carrier:                
Data and transport services (includes VoIP)     $ 86,025   $ 50,904      
Voice services       52,161     22,026      
Other       11,863     3,902      
        150,049     76,832      
Consumer:                
Broadband (VoIP and Data)       63,111     28,393      
Video services       22,834     23,104      
Voice services       52,062     13,042      
        138,007     64,539      
                 
Subsidies       25,255     10,572      
Network access       39,715     14,553      
Other products and services       3,013     3,439      
Total operating revenue     $ 356,039   $ 169,935      
                 


Consolidated Communications Holdings, Inc.
Pro Forma Consolidated Revenue by Category
(Dollars in thousands)
 (Unaudited)
                       
                     
     Pro Forma, Three Months Ended  
     Q1 2018    Q4 2017    Q3 2017    Q2 2017   Q1 2017  
Commercial and carrier:                      
Data and transport services (includes VoIP)   $ 86,025   $ 86,145   $ 85,644   $ 85,213   $ 84,856  
Voice services     52,161     54,137     54,270     56,180     56,357  
Other     11,863     11,709     13,366     13,562     12,238  
      150,049     151,991     153,280     154,955     153,451  
Consumer:                      
Broadband (VoIP and Data)     63,111     63,052     63,893     63,576     62,830  
Video services     22,834     22,646     23,342     23,900     24,719  
Voice services     52,062     54,581     57,213     57,381     58,021  
      138,007     140,279     144,448     144,857     145,570  
                       
Subsidies     25,255     20,375     20,933     22,890     25,268  
Network access     39,715     40,243     41,262     42,715     43,728  
Other products and services     3,013     3,472     3,406     3,671     3,826  
Total operating revenue   $ 356,039   $ 356,360   $ 363,329   $ 369,088   $ 371,843  
                       


Consolidated Communications Holdings, Inc.
Schedule of Adjusted EBITDA Calculation
(Dollars in thousands)
(Unaudited)
           
   Three Months Ended    
   March 31,    
     2018        2017      
Net loss $ (11,198 )   $ (3,705 )    
Add (subtract):          
Income tax benefit   (4,248 )     (2,174 )    
Interest expense, net   32,716       29,671      
Depreciation and amortization   107,899       42,195      
EBITDA   125,169       65,987      
           
Adjustments to EBITDA (1):          
Other, net (2)   6,152       3,540      
Investment income (accrual basis)   (7,789 )     (5,278 )    
Investment distributions (cash basis)   9,470       5,644      
Pension/OPEB expense   1,372       693      
Non-cash compensation (3)   678       538      
Adjusted EBITDA $ 135,052     $ 71,124      
           
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  
   Three Months Ended  
   March 31,  
     2018        2017    
Net loss $ (11,198 )   $ (8,548 )  
Add (subtract):        
Income tax benefit   (4,248 )     (5,402 )  
Interest expense, net   32,716       28,544    
Depreciation and amortization   107,899       105,441    
EBITDA   125,169       120,035    
         
Adjustments to EBITDA (1):        
Other, net (2)   6,152       2,119    
Investment income (accrual basis)   (7,789 )     (5,278 )  
Investment distributions (cash basis)   9,470       5,644    
Pension/OPEB expense   1,372       3,790    
Non-cash compensation (3)   678       2,172    
Adjusted EBITDA $ 135,052     $ 128,482    
         
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)
   
    Three Months Ended  
 
    March 31, 2018  
 
   
Adjusted EBITDA $   135,052  
   
 - Cash interest expense      (29,900 )
 - Capital expenditures     (60,808 )
 - Cash income (taxes)/refund     (72 )
   
Cash available to pay dividends $   44,272  
   
Dividends Paid $   27,417  
Payout Ratio   61.9%  
   
Note:  The above calculation excludes the principal payments on our debt  
   
   

 

Consolidated Communications Holdings, Inc.
Total Net Debt to LTM Adjusted EBITDA Ratio
(Dollars in thousands)
(Unaudited)
     
   March 31,  
Summary of Outstanding Debt:    2018    
Term loans, net of discount $8,010 $ 1,808,815    
Revolving loan   22,000    
Senior unsecured notes due 2022, net of discount $3,504   496,496    
Capital leases   35,058    
Total debt as of March 31, 2018 $ 2,362,369    
Less deferred debt issuance costs   (13,417 )  
Less cash on hand   (11,140 )  
Total net debt as of March 31, 2018 $ 2,337,812    
     
Pro Forma Adjusted EBITDA for the    
twelve months ended March 31, 2018 $ 542,778   (a)
     
Total Net Debt to last twelve months    
Adjusted EBITDA - Pro Forma   4.31x    
     
(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  
   March 31,  
     2018        2017    
Net loss $ (11,198 )   $ (3,705 )  
Transaction and severance related costs, net of tax   4,804       2,063    
Storm costs, net of tax   2,213       -    
Local switching support settlement, net of tax   (2,941 )     -    
Non-cash interest expense for swaps, net of tax   1,739       25    
Amortization of commitment fee, net of tax   -       2,160    
Ticking fees on committed financing, net of tax   -       4,892    
Non-cash stock compensation, net of tax   500       331    
Adjusted net income (loss) $ (4,883 )   $ 5,766    
         
Weighted average number of shares outstanding   70,598       50,410    
Adjusted diluted net income (loss) per share $ (0.07 )   $ 0.11    
         
Notes:        
Calculations above assume a 26.2% and 38.4% effective tax rate for the three months ended March 31, 2018 and 2017, respectively.
         
Net income per share has been impacted by approximately ($0.11) for the three months ended March 31, 2018 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    
       March 31,    December 31,   % Change     March 31,   % Change 
         2018        2017     in Qtr      2017     YOY
                       
Voice Connections     955,419       972,178     (1.7%)       1,028,231     (7.1%)  
                       
Data and Internet Connections     785,230       783,682     0.2%       782,533     0.3%  
                       
Video Connections     100,570       103,313     (2.7%)       109,981     (8.6%)  
                       
Business and Broadband as % of total revenue (1)   73.2%       74.7%     (2.0%)       73.7%     (0.7%)  
                       
Fiber route network miles (long-haul and metro)   36,294       35,984     0.9%       35,550     2.1%  
                       
On-net buildings     9,356       9,062     3.2%       8,215     13.9%  
                       
Consumer Customers     661,758       671,300     (1.4%)       700,154     (5.5%)  
                       
Consumer ARPU   $69.52     $69.66     (0.2%)     $69.30     0.3%  
                       
                       
Notes:                    
(1) Business and Broadband revenue % includes: commercial/carrier, equipment sales and service, directory, consumer broadband and special access.