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Consolidated Communications Reports Transformational Second Quarter 2022 Results

August, 02, 2022
  • Achieved net-positive, total consumer broadband connections for first time in seven years. Added a record 9,600 fiber subscribers and achieved 3x fiber subscriber growth year over year.
  • Built fiber to record 142,300 new locations, tripled the Company’s fiber passings in six quarters. Consolidated now passes over 800,000 locations with fiber becoming one of the largest fiber-to-the-home providers in the U.S. based on locations.
  • Subsequent to the end of the quarter, announced $490 million agreement to sell wireless investments to Verizon to support the Company’s fiber expansion plan and pivot to a pure-play fiber company.
  • Announced over $600 million in aggregate divestitures of non-core assets over the last year.

Note: Cosolidated’s second quarter earnings conference call will be webcast on Aug. 2 at 8:30 am ET. The webcast and materials will be available on Consolidated’s Investor Relations website at http://ir.consolidated.com. The live conference call dial-in number for analysts and investors is 888-440-5977, conference ID 8956400 .

MATTOON, Ill.--(BUSINESS WIRE)-- Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) (the “Company” or “Consolidated”), a top 10 fiber provider in the U.S., today reported results for the second quarter 2022.

“In the second quarter, we added a record 9,600 net fiber subscribers, a three-fold increase from a year ago, and achieved total consumer net positive broadband connections for the first time in over seven years,” said Bob Udell, president and chief executive officer at Consolidated Communications. “These important milestones demonstrate strong execution on our strategic priorities. Our Gig+ fiber network and Fidium product now reaches 30% of passings, an improvement from 10% at the start of 2021.”

“Additionally, we reached an agreement with Verizon Wireless to sell our interests in five limited partnerships for $490 million in the aggregate, which will provide additional liquidity to fund our fiber expansion plan and bring FttP to 70% of our addressable market by 2025.”

Second Quarter 2022 Highlights and Results (compared to Second Quarter 2021)

  • Revenue totaled $298.4 million, generating Adjusted EBITDA of $107.5 million.
  • Consumer fiber revenue grew 28.0%, driven by more than 3x consumer fiber net adds.
  • Commercial data services revenue was $57.1 million, up 0.4%.
  • Carrier data-transport revenue grew $2.3 million or 6.8% aided by a $3.1 million one-time fiber build project.
  • Commercial other revenue increased $2.2 million driven primarily by higher equipment sales.
  • Subsidy revenue was $6.5 million, a decline of $10.9 million, primarily reflecting the transition to the Rural Digital Opportunity Fund (RDOF).
  • Total committed capital expenditures were $179.1 million driven by a record 142,300 fiber upgrades in the second quarter, which included acceleration of 40,000 fiber upgrades and preconstruction for future quarter fiber builds mitigating inflationary pressures.
  • Operating expenses were $211.4 million, down $2.9 million from a year ago. The primary drivers were a $4.8 million decline in video programming expense, a $3.0 million reduction in Universal Services Fees offset by $2.1 increase in fuel and travel expenses combined with one-time cost of $2.2 million related to the fiber build project sale previously noted.

Income from operations totaled $14.4 million, down from $30.0 million a year ago. The year-over-year decrease was primarily the result of a revenue decline of $22.0 million offset by lower operating expenses of $2.9 million and a decline in depreciation and amortization expense of $3.5 million.

Net interest expense was $30.2 million, a decrease of $15.3 million compared to a year ago, primarily as a result of non-cash interest of $10.9 million on the Searchlight note, which was converted to perpetual preferred stock in conjunction with the second stage closing of the Searchlight investment in December 2021. The remaining reduction in interest expense was primarily the result of the maturity of an interest swap agreement in July 2021.

Cash distributions from the Company’s wireless partnerships totaled $11.3 million, compared to $12.7 million a year ago.

GAAP net loss was ($1.5 million) compared to a net loss of ($55.1 million) for the same period a year ago. GAAP net loss per share was ($0.10) compared to a net loss of ($0.71) in the prior year. Adjusted diluted net income per share excludes certain items as outlined in the table provided in this release. Adjusted diluted net income per share was $0.01 compared to $0.09 a year ago.

Adjusted EBITDA was $107.5 million, compared to $126.7 million in the prior year.

Sale of Investments in Wireless Partnerships

The Company announced the sale of its limited partnership interests in five wireless partnerships to Cellco Partnership, d/b/a Verizon Wireless, for an aggregate price of $490 million. The sale transactions are expected to close by the end of 2022, subject to certain closing conditions and third-party purchase rights available to other partners in the partnership. The Company expects to use the net proceeds from the sale to support its fiber expansion plan.

2022 Outlook

“We are updating our 2022 outlook for adjusted EBITDA as a result of accelerated legacy revenue declines, inflationary pressures on utilities and fuel, and the timing of cash distributions from the sale of our wireless investments,” said Steve Childers, chief financial officer at Consolidated Communications. “Our updated capex outlook reflects primarily the pre-work associated with fiber expansion for 2023 and some inflationary cost pressures.”

Consolidated Communications provides updated guidance for the full-year 2022.

  • Adjusted EBITDA is expected to be in a range of $400 million to $410 million.
    Previous outlook was $410 million to $425 million.
  • Capital expenditures are expected to be in a range of $565 million to $585 million.
    Previous outlook was $475 million to $495 million.
  • Cash interest expense is expected to be in a range of $125 million to $129 million.
    Previous outlook was $123 million to $127 million.
  • Cash income taxes are expected to be in a range of $12 million to $17 million, an increase from previous outlook of $2 million to $4 million as a result of the estimated incremental state income taxes associated with the sale of the wireless investments.

About Consolidated Communications

Consolidated Communications Holdings, Inc. (NASDAQ: CNSL) is dedicated to moving people, businesses and communities forward by delivering the latest reliable communications solutions. Consumers, businesses and wireless and wireline carriers depend on Consolidated for a wide range of high-speed internet, data, phone, security, cloud and wholesale carrier solutions. With a network spanning 50,000 fiber route miles, Consolidated is a top 10 U.S. fiber provider, turning technology into solutions that are backed by exceptional customer support. Learn more at consolidated.com.

Use of Non-GAAP Financial Measures

This press release, as well as the conference call, includes disclosures regarding “EBITDA,” “adjusted EBITDA,” “total net debt to last 12 month adjusted EBITDA ratio” or “Net debt leverage ratio,” and “adjusted diluted net income (loss) per share,” 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.

We present adjusted EBITDA for several reasons. Management believes adjusted EBITDA is useful as a means to evaluate our ability to fund our estimated uses of cash (including interest on our debt). In addition, we have presented adjusted EBITDA to investors in the past because it is frequently used by investors, securities analysts and other interested parties in the evaluation of companies in our industry, and management believes presenting it here provides a measure of consistency in our financial reporting. Adjusted EBITDA, referred to as Available Cash in our credit agreement, is also a component 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. The definitions in these covenants and ratios are based on adjusted EBITDA after giving effect to specified charges. In addition, adjusted EBITDA provides our board of directors with meaningful information, with other data, assumptions and considerations, to measure our ability to service and repay debt. We present the related “total net debt to last 12 month adjusted EBITDA ratio” or “Net debt leverage ratio” principally to help investors understand how we measure leverage and facilitate comparisons by investors, security analysts and others. This ratio differs in certain respects from the similar ratio used in our credit agreement against comparable measures of certain other companies in our industry. 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. In addition, the ratio of total net debt to last 12-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 this ratio is useful as a means to evaluate our ability to incur additional indebtedness in the future.

We present the non-GAAP measure “adjusted diluted net income (loss) per share” because our net income (loss) and net income (loss) 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.

Forward-Looking Statements

Certain statements in this communication are forward-looking statements and are made pursuant to the safe harbor provisions of the Private 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 a number of factors related to our business, including the uncertainties relating to the impact of the novel coronavirus (COVID-19) pandemic on the Company’s business, results of operations, cash flows, stock price and employees; the possibility that any of the anticipated benefits of the strategic investment from Searchlight Capital Partners, L.P. or our refinancing of outstanding debt, including our senior secured credit facilities, or of the proposed sales of the limited partnership interests will not be realized; the ability to meet closing conditions to the proposed sales of the limited partnership interests on a timely basis or at all; the anticipated use of proceeds of the strategic investment or the proposed sales of the limited partnership interests; the outcome of any legal proceedings that may be instituted against the Company or its directors; economic and financial market conditions generally and economic conditions in our service areas; 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 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 or failure to consummate acquisitions or dispositions; 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; liability and compliance costs regarding environmental regulations; risks associated with discontinuing paying dividends on our common stock; and the potential for the rights of our series A preferred stock to negatively impact our cash flow. 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 Securities and Exchange Commission (“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 the Company 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.

 

Consolidated Communications Holdings, Inc.

Condensed Consolidated Balance Sheets

(Dollars in thousands, except share and per share amounts)

(Unaudited)

 

June 30,

December 31,

2022

 

2021

 

ASSETS
Current assets:
Cash and cash equivalents $

18,019

 

$

99,635

 

Short-term investments

25,005

 

110,801

 

Accounts receivable, net

117,479

 

133,362

 

Income tax receivable

2,733

 

1,134

 

Prepaid expenses and other current assets

56,928

 

56,831

 

Assets held for sale

95,922

 

26,052

 

Total current assets

316,086

 

427,815

 

 
Property, plant and equipment, net

2,101,127

 

2,019,444

 

Investments

107,514

 

109,578

 

Goodwill

929,570

 

1,013,243

 

Customer relationships, net

58,514

 

73,939

 

Other intangible assets

10,557

 

10,557

 

Other assets

62,349

 

58,116

 

Total assets $

3,585,717

 

$

3,712,692

 

 
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $

58,761

 

$

40,953

 

Advance billings and customer deposits

48,097

 

53,028

 

Accrued compensation

64,949

 

68,272

 

Accrued interest

17,902

 

17,819

 

Accrued expense

92,397

 

97,417

 

Current portion of long-term debt and finance lease obligations

9,539

 

7,959

 

Liabilities held for sale

4,856

 

97

 

Total current liabilities

296,501

 

285,545

 

 
Long-term debt and finance lease obligations

2,124,001

 

2,118,853

 

Deferred income taxes

186,183

 

194,458

 

Pension and other post-retirement obligations

195,587

 

214,671

 

Other long-term liabilities

49,132

 

62,789

 

Total liabilities

2,851,404

 

2,876,316

 

 
Series A Preferred Stock, par value $0.01 per share; 10,000,000 shares authorized, 436,943 and 434,266 shares outstanding as of June 30, 2022 and December 31, 2021, respectively; liquidation preference of $456,343 and $436,943 as of June 30, 2022 and December 31, 2021, respectively

307,976

 

288,576

 

 
Shareholders' equity:
Common stock, par value $0.01 per share; 150,000,000 shares authorized, 115,395,668 and 113,647,364 shares outstanding as of June 30, 2022 and December 31, 2021, respectively

1,154

 

1,137

 

Additional paid-in capital

726,247

 

740,746

 

Accumulated deficit

(258,978

)

(141,599

)

Accumulated other comprehensive loss, net

(49,491

)

(59,571

)

Noncontrolling interest

7,405

 

7,087

 

Total shareholders' equity

426,337

 

547,800

 

Total liabilities, mezzanine equity and shareholders' equity $

3,585,717

 

$

3,712,692

 

 

Consolidated Communications Holdings, Inc.

Condensed Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

(Unaudited)

 
 

Three Months Ended

Six Months Ended

June 30,

June 30,

2022

 

2021

 

2022

 

2021

 

 
Net revenues $

298,390

 

$

320,403

 

$

598,668

 

$

645,169

 

Operating expenses:
Cost of services and products

135,888

 

145,311

 

271,783

 

289,290

 

Selling, general and administrative expenses

75,510

 

68,998

 

148,795

 

135,848

 

Loss on impairment of assets held for sale

 

 

126,490

 

 

Depreciation and amortization

72,543

 

76,079

 

144,893

 

151,690

 

Income (loss) from operations

14,449

 

30,015

 

(93,293

)

68,341

 

Other income (expense):
Interest expense, net of interest income

(30,156

)

(45,431

)

(59,671

)

(93,846

)

Loss on extinguishment of debt

 

(5,121

)

 

(17,101

)

Change in fair value of contingent payment rights

 

(39,826

)

 

(97,414

)

Other income, net

12,920

 

10,687

 

24,325

 

22,961

 

Loss before income taxes

(2,787

)

(49,676

)

(128,639

)

(117,059

)

Income tax expense (benefit)

(1,275

)

5,413

 

(11,578

)

113

 

Net loss

(1,512

)

(55,089

)

(117,061

)

(117,172

)

Less: dividends on Series A preferred stock

9,802

 

 

19,400

 

 

Less: net income attributable to noncontrolling interest

203

 

267

 

318

 

283

 

 
Net loss attributable to common shareholders $

(11,517

)

$

(55,356

)

$

(136,779

)

$

(117,455

)

 
Net loss per basic and diluted common shares attributable to common shareholders $

(0.10

)

$

(0.71

)

$

(1.22

)

$

(1.51

)

 

Consolidated Communications Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

 
 

Three Months Ended

Six Months Ended

June 30,

June 30,

2022

 

 

2021

 

 

2022

 

 

2021

 

OPERATING ACTIVITIES
Net loss $

(1,512

)

$

(55,089

)

$

(117,061

)

$

(117,172

)

Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization

72,543

 

76,079

 

144,893

 

151,690

 

Cash distributions from wireless partnerships in excess of earnings

1,508

 

1,227

 

1,661

 

1,238

 

Pension and post-retirement contributions in excess of expense

(9,819

)

(9,443

)

(19,161

)

(18,213

)

Non-cash, stock-based compensation

2,833

 

2,493

 

5,032

 

3,943

 

Amortization of deferred financing costs and discounts

1,824

 

4,366

 

3,626

 

8,649

 

Non-cash interest expense on convertible security interest

 

8,229

 

 

16,104

 

Loss on extinguishment of debt

 

5,121

 

 

17,101

 

Loss on change in fair value of contingent payment rights

 

39,826

 

 

97,414

 

Loss on impairment of assets held for sale

 

 

126,490

 

 

Other adjustments, net

(207

)

4,099

 

(396

)

3,731

 

Changes in operating assets and liabilities, net

(7,225

)

10,433

 

(3,579

)

21,346

 

Net cash provided by operating activities

59,945

 

87,341

 

141,505

 

185,831

 

INVESTING ACTIVITIES
Purchase of property, plant and equipment, net

(176,434

)

(119,236

)

(332,914

)

(195,196

)

Purchase of investments

 

(89,967

)

(39,959

)

(89,967

)

Proceeds from sale of assets

1,720

 

65

 

1,794

 

89

 

Proceeds from business dispositions

 

 

26,042

 

 

Proceeds from sale and maturity of investments

60,800

 

 

126,554

 

1,198

 

Net cash used in investing activities

(113,914

)

(209,138

)

(218,483

)

(283,876

)

FINANCING ACTIVITIES
Proceeds from bond offering

 

 

 

400,000

 

Proceeds from issuance of long-term debt

 

 

 

150,000

 

Payment of finance lease obligations

(2,183

)

(1,338

)

(4,524

)

(2,936

)

Payment on long-term debt

 

 

 

(397,000

)

Payment of financing costs

 

(2,693

)

 

(8,266

)

Share repurchases for minimum tax withholding

 

 

(114

)

 

Net cash provided by (used in) financing activities

(2,183

)

(4,031

)

(4,638

)

141,798

 

Net change in cash and cash equivalents

(56,152

)

(125,828

)

(81,616

)

43,753

 

Cash and cash equivalents at beginning of period

74,171

 

325,142

 

99,635

 

155,561

 

Cash and cash equivalents at end of period $

18,019

 

$

199,314

 

$

18,019

 

$

199,314

 

 

Consolidated Communications Holdings, Inc.

Consolidated Revenue by Category

(Dollars in thousands)

(Unaudited)

 
 

Three Months Ended

Six Months Ended

June 30,

June 30,

2022

2021

2022

2021

Consumer:
Broadband (Data and VoIP) $

67,592

$

67,981

$

133,503

$

133,736

Voice services

36,643

40,173

74,095

80,593

Video services

14,359

16,799

28,725

33,580

118,594

124,953

236,323

247,909

Commercial:
Data services (includes VoIP)

57,113

56,871

115,008

113,942

Voice services

35,775

39,065

72,114

78,818

Other

11,287

9,091

22,847

18,419

104,175

105,027

209,969

211,179

Carrier:
Data and transport services

36,263

33,942

69,748

67,219

Voice services

3,718

4,396

7,570

8,922

Other

354

395

745

786

40,335

38,733

78,063

76,927

 
Subsidies

6,534

17,465

13,117

34,804

Network access

24,846

31,115

51,059

62,718

Other products and services

3,906

3,110

10,137

11,632

Total operating revenue $

298,390

$

320,403

$

598,668

$

645,169

 

Consolidated Communications Holdings, Inc.

Consolidated Revenue Trend by Category

(Dollars in thousands)

(Unaudited)

 
 

Three Months Ended

Q2 2022

Q1 2022

Q4 2021

Q3 2021

Q2 2021

Consumer:
Broadband (Data and VoIP) $

67,592

$

65,911

$

66,983

$

68,604

$

67,981

Voice services

36,643

37,452

39,518

40,587

40,173

Video services

14,359

14,366

15,371

16,163

16,799

118,594

117,729

121,872

125,354

124,953

Commercial:
Data services (includes VoIP)

57,113

57,895

57,444

57,545

56,871

Voice services

35,775

36,339

37,303

38,446

39,065

Other

11,287

11,560

11,408

10,205

9,091

104,175

105,794

106,155

106,196

105,027

Carrier:
Data and transport services

36,263

33,485

32,659

33,556

33,942

Voice services

3,718

3,852

4,088

4,173

4,396

Other

354

391

431

375

395

40,335

37,728

37,178

38,104

38,733

 
Subsidies

6,534

6,583

17,671

17,264

17,465

Network access

24,846

26,213

27,846

29,923

31,115

Other products and services

3,906

6,231

7,758

1,743

3,110

Total operating revenue $

298,390

$

300,278

$

318,480

$

318,584

$

320,403

 

Consolidated Communications Holdings, Inc.

Schedule of Adjusted EBITDA Calculation

(Dollars in thousands)

(Unaudited)

 

Three Months Ended

 

Six Months Ended

June 30,

 

June 30,

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss $

(1,512

)

$

(55,089

)

$

(117,061

)

$

(117,172

)

Add (subtract):
Income tax expense (benefit)

(1,275

)

5,413

 

(11,578

)

113

 

Interest expense, net

30,156

 

45,431

 

59,671

 

93,846

 

Depreciation and amortization

72,543

 

76,079

 

144,893

 

151,690

 

EBITDA

99,912

 

71,834

 

75,925

 

128,477

 

 
Adjustments to EBITDA (1):
Other, net (2)

6,326

 

8,748

 

11,836

 

10,436

 

Investment income (accrual basis)

(9,903

)

(11,439

)

(18,152

)

(20,995

)

Investment distributions (cash basis)

11,329

 

12,656

 

19,545

 

22,033

 

Pension/OPEB benefit

(2,964

)

(2,542

)

(5,947

)

(5,083

)

Loss on extinguishment of debt

 

5,121

 

 

17,101

 

Loss on impairment

 

 

126,490

 

 

Change in fair value of contingent payment rights

 

39,826

 

 

97,414

 

Non-cash compensation (3)

2,833

 

2,493

 

5,032

 

3,943

 

Adjusted EBITDA $

107,533

 

$

126,697

 

$

214,729

 

$

253,326

 

 
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.
Reconciliation of Net Loss to Adjusted EBITDA Guidance
(Dollars in millions)
(Unaudited)
 
 
Year Ended
December 31, 2022
Range
Low High
Net loss $

(151

)

$

(138

)

Add:
Income tax benefit

(15

)

(14

)

Interest expense, net

125

 

122

 

Depreciation and amortization

293

 

290

 

EBITDA

252

 

260

 

 
Adjustments to EBITDA (1):
Other, net (2)

23

 

25

 

Loss on impairment

126

 

126

 

Pension/OPEB benefit

(11

)

(11

)

Non-cash compensation (3)

10

 

10

 

Adjusted EBITDA $

400

 

$

410

 

 
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, cash distributions less equity earnings from our investments, dividend income, 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.

Total Net Debt to LTM Adjusted EBITDA Ratio

(Dollars in thousands)

(Unaudited)

 
 

June 30,

2022

 

Summary of Outstanding Debt:
Term loans, net of discount $9,513 $

990,362

 

6.50% Senior secured notes due 2028

750,000

 

5.00% Senior secured notes due 2028

400,000

 

Finance leases

28,092

 

Total debt as of June 30, 2022

2,168,454

 

Less deferred debt issuance costs

(34,914

)

Less cash on hand

(43,024

)

Total net debt as of June 30, 2022 $

2,090,516

 

 
Adjusted EBITDA for the 12 months ended June 30, 2022 $

468,265

 

 
Total Net Debt to last 12 months Adjusted EBITDA 4.46x
 

Consolidated Communications Holdings, Inc.

Adjusted Net Income and Net Income Per Share

(Dollars in thousands, except per share amounts)

(Unaudited)

 

Three Months Ended

Six Months Ended

June 30,

June 30,

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss $

(1,512

)

$

(55,089

)

$

(117,061

)

$

(117,172

)

Integration and severance related costs, net of tax

802

 

508

 

1,604

 

1,678

 

Loss on impairment of assets held for sale

 

 

126,490

 

 

Loss on disposition of wireless spectrum licenses, net of tax

 

2,641

 

 

2,641

 

Loss on disposition of fixed wireless, net of tax

 

3,085

 

 

3,085

 

Loss on extinguishment of debt, net of tax

 

3,785

 

 

12,639

 

Change in fair value of contingent payment rights

 

39,826

 

 

97,414

 

Non-cash interest expense for Searchlight note including amortization of discount and fees

 

10,861

 

 

21,062

 

Non-cash interest expense for swaps, net of tax

(310

)

(237

)

(605

)

(421

)

Tax impact of non-deductible goodwill

(392

)

 

(11,205

)

 

Non-cash stock compensation, net of tax

2,094

 

1,843

 

3,720

 

2,914

 

Adjusted net income $

683

 

$

7,223

 

$

2,944

 

$

23,840

 

Weighted average number of shares outstanding

111,697

 

78,029

 

111,694

 

78,029

 

Adjusted diluted net income per share $

0.01

 

$

0.09

 

$

0.03

 

$

0.31

 

 
Notes:
Calculations above assume a 26.07% effective tax rate for the quarter and six months ended June 30, 2022 and 26.10% effective tax rate for the quarter and six months ended June 30, 2021.
 

Consolidated Communications Holdings, Inc.

Key Operating Metrics

(Unaudited)

 

June 30,

March 31,

December 31,

September 30,

June 30,

2022

 

2022

2021

2021

2021

Passings
Fiber Gig+ capable passings
Northern New England

451,414

 

341,010

 

291,921

 

217,660

 

168,165

 

All other markets

380,365

 

348,396

 

313,789

 

276,500

 

228,958

 

Total Fiber Gig+ capable (1)

831,779

 

689,406

 

605,710

 

494,160

 

397,123

 

 
DSL/Copper passings (2)
Northern New England

1,284,786

 

1,395,190

 

1,444,279

 

1,518,540

 

1,568,035

 

All other markets

635,428

 

663,835

 

702,098

 

737,016

 

779,781

 

Total DSL/Copper (2)

1,920,214

 

2,059,025

 

2,146,377

 

2,255,556

 

2,347,816

 

Total Passings

2,751,993

 

2,748,431

 

2,752,087

 

2,749,716

 

2,744,939

 

% Fiber Gig+ Coverage/Total Passings

30

%

25

%

22

%

18

%

14

%

 
Consumer Broadband Connections
Fiber Gig+ capable
Northern New England

31,050

 

24,882

 

20,032

 

17,288

 

14,927

 

All other markets

72,405

 

68,930

 

66,090

 

64,251

 

62,594

 

Total Fiber Gig+ capable connections

103,455

 

93,812

 

86,122

 

81,539

 

77,521

 

 
DSL/Copper (2)
Northern New England

126,475

 

131,763

 

136,140

 

140,893

 

144,057

 

All other markets

151,283

 

154,575

 

162,302

 

168,229

 

171,902

 

Total DSL/Copper connections (2)

277,758

 

286,338

 

298,442

 

309,122

 

315,959

 

Total Consumer Broadband Connections

381,213

 

380,150

 

384,564

 

390,661

 

393,480

 

 
Consumer Broadband Net Adds
Northern New England

880

 

473

 

(2,009

)

(803

)

(1,887

)

All other markets (2)

183

 

(1,327

)

(4,088

)

(2,016

)

(2,635

)

Total Consumer Broadband Net Adds

1,063

 

(854

)

(6,097

)

(2,819

)

(4,522

)

 
Consumer Broadband Penetration %
Fiber Gig+ capable
Northern New England

7

%

7

%

7

%

8

%

9

%

All other markets

19

%

20

%

21

%

23

%

27

%

Total Fiber Gig+ capable

12

%

14

%

14

%

17

%

20

%

 
DSL/Copper (2)
Northern New England

10

%

9

%

9

%

9

%

9

%

All other markets

24

%

23

%

23

%

23

%

22

%

Total DSL/Copper (2)

14

%

14

%

14

%

14

%

13

%

Total Consumer Broadband Penetration %

14

%

14

%

14

%

14

%

14

%

 
Consumer Broadband Revenue by Service Type ($ in thousands)
Fiber Broadband Revenue $

19,218

 

$

17,241

 

$

16,152

 

$

15,423

 

$

15,013

 

Copper and Other Broadband Revenue

48,374

 

48,670

 

50,831

 

53,181

 

52,968

 

Total Consumer Broadband Revenue by Service Type $

67,592

 

$

65,911

 

$

66,983

 

$

68,604

 

$

67,981

 

 
Consumer Average Revenue Per Unit (ARPU)
Fiber Broadband ARPU $

64.95

 

$

63.88

 

$

64.22

 

$

64.64

 

$

65.83

 

Copper Broadband ARPU $

52.36

 

$

50.78

 

$

50.65

 

$

51.32

 

$

49.92

 

 
Consumer Voice Connections

306,458

 

316,634

 

328,849

 

341,135

 

352,835

 

 
Video Connections

55,225

 

58,812

 

63,447

 

66,971

 

70,795

 

 
Fiber route network miles (long-haul, metro and FttP)

56,093

 

54,239

 

52,402

 

50,405

 

48,727

 

 
On-net buildings

15,618

 

15,446

 

14,891

 

14,625

 

14,253

 

 
Notes:
(1) In Q1 2021, the Company launched a multi-year fiber build plan to upgrade 1.6 million passings by 2025 or 70% of our service area to fiber Gig+ capable services by 2025. As of June 30, 2022, 226,000 of the target 400,000 passings for 2022 were upgraded to FttP and total fiber passings were ~832,000 or 30% of the Company's service area.
(2) The sale of the non-core Ohio operations resulted in a reduction of approximately 5,658 DSL/Copper passings and 3,560 DSL/Copper broadband connections in the first quarter of 2022. Prior period amounts have not been adjusted to reflect the sale.
As of March 31, 2022, the net assets of our Kansas City operations are classified as held for sale. The Kansas City operations, which are included in All other markets above, include approximately 137,000 passings and approximately 10% consumer broadband penetration. Amounts above have not been adjusted to reflect the pending sale.

Tag: [Consolidated-Communications-Earnings]

Investor and Media Contact
Jennifer Spaude, Consolidated Communications
Phone: 507-386-3765
jennifer.spaude@consolidated.com

Source: Consolidated Communications

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