Consolidated Communications Announces Fourth Quarter and Full Year 2023 Financial Results
Consolidated Communications Holdings, Inc. reported its fourth-quarter and full-year 2023 results, showcasing revenue of $275.2 million and $1.11 billion, respectively. The company experienced a net loss of ($58.6 million) in Q4 2023 and ($294.4 million) for the full year. Despite a decrease in expenses, the net interest expense increased by $8.4 million due to higher interest on the term loan. Consolidated is set to be acquired by Searchlight and BCI in a $3.1 billion all-cash transaction, leading to the company becoming private by Q1 2025.
Positive
Revenue for Q4 2023 was $275.2 million, with consumer revenue at $113.9 million and consumer fiber revenue at $37.9 million.
Total consumer broadband net adds were 6,998, generating consumer broadband revenue of $76.5 million.
Commercial data services revenue stood at $54.5 million, while carrier data-transport revenue reached $31.7 million.
The company reported a net loss of ($58.6 million) in Q4 2023, with adjusted EBITDA at $86.7 million.
Total committed capital expenditures were $91.5 million, with a decrease in costs due to various factors like divestiture and cost-saving initiatives.
Net interest expense rose by $8.4 million compared to the previous year, primarily due to higher interest on the term loan.
Consolidated is set to be acquired by Searchlight and BCI in an all-cash transaction worth approximately $3.1 billion, leading to the company becoming private by Q1 2025.
The reported net loss of Consolidated Communications Holdings, Inc. for both the fourth quarter and the full year of 2023 is a significant figure that merits attention. The increase in net loss from the previous year, despite a reduction in operational costs, suggests that the company is facing substantial challenges. The rise in net interest expense due to higher interest on term loans indicates a more expensive debt profile, which could impact future profitability and cash flows. The net debt leverage ratio of 6.73x is notably high, potentially indicating a leveraged capital structure that may concern investors regarding the company's financial stability.
Furthermore, the capital expenditures of $511.8 million, primarily driven by new fiber passings, reflect the company's investment in infrastructure to potentially drive future growth. However, the relatively low liquidity with cash and short-term investments of approximately $4.8 million, against a backdrop of substantial capital commitments, raises questions about the company's ability to sustain such high levels of investment without further increasing debt or diluting equity.
Consolidated's focus on expanding its fiber network, as evidenced by the 49,132 new fiber passings, is in line with the industry's shift towards high-speed broadband services. The increase in consumer broadband net adds and the corresponding revenue growth in this segment highlight a growing customer base and market demand for fiber-optic internet services. This strategic direction could position Consolidated favorably in a competitive market, provided they can manage the associated costs and convert these investments into long-term revenue streams.
The pending acquisition of Consolidated by Searchlight and BCI is a transformative event that will take the company private. The approval by 75% of disinterested shareholders is a strong endorsement of the transaction. However, the anticipated closing by the first quarter of 2025 suggests a lengthy regulatory process, during which market conditions and the company's performance could alter the transaction's perceived benefits. The fact that the transaction is not subject to a financing condition is noteworthy, as it implies confidence in the funding structure and reduces the risk of deal failure due to financing issues.
03/05/2024 - 08:00 AM
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 fourth quarter and full year 2023.
Fourth Quarter 2023 Results
Revenue totaled $275.2 million
Overall consumer revenue was $113.9 million
Consumer fiber revenue was $37.9 million
Total consumer broadband net adds were 6,998
Consumer broadband revenue was $76.5 million
Commercial data services revenue was $54.5 million
Carrier data-transport revenue was $31.7 million
Net loss was ($58.6 million ). Adjusted EBITDA was $86.7 million
Total committed capital expenditures were $91.5 million
Cost of services and products and selling, general and administrative expenses collectively decreased $12.6 million versus the prior year largely due to the divestiture of the Kansas City operations on Nov. 30, 2022, lower video programming costs, lower advertising expense, lower access expense and a reduction in salaries driven by the cost savings initiative.
Net interest expense was $41.6 million , an increase of $8.4 million versus the prior year, primarily as a result of higher interest on the term loan. The Company had 77% of its total debt at a fixed rate through September 2026. As of Dec. 31, 2023, the weighted average cost of debt was 7.04% .
Net loss in the fourth quarter of 2023 was ($58.6 million ) compared to net loss of ($45.5 million ) in the fourth quarter of 2022, which included $5.8 million of income from discontinued operations. Net loss per share was ($0.52 ) in the fourth quarter of 2023 as compared to net loss per share of ($0.41 ) in the fourth quarter of 2022. Adjusted diluted net income (loss) per share excludes certain items as outlined in the table provided in this release. Adjusted diluted net loss per share from continuing operations was ($0.26 ) compared to ($0.17 ) in the fourth quarter of 2022.
Capital Expenditures
Total committed capital expenditures were $91.5 million , driven by 49,132 new fiber passings, fourth quarter fiber adds, and reflect the usage of existing inventory for install and build activity.
Full-Year 2023 Results
Revenue totaled $1.11 billion
Overall consumer revenue was $451.0 million
Consumer fiber revenue was $127.7 million
Total consumer broadband net adds were 25,761
Consumer broadband revenue was $290.8 million
Commercial data services revenue was $214.7 million
Carrier data-transport revenue was $127.2 million
Net loss was ($294.4 million ). Adjusted EBITDA was $319.2 million
Total committed capital expenditures were $511.8 million
Capital Structure
As of Dec. 31, 2023, the Company maintained liquidity with cash and short-term investments of approximately $4.8 million and $214 million of available borrowing capacity on the revolving credit facility, subject to certain covenants. The net debt leverage ratio for the trailing 12 months ended Dec. 31, 2023, was 6.73x.
Pending Transaction
As previously announced, on Oct. 16, 2023, Consolidated entered into an agreement to be acquired by Searchlight and BCI in an all-cash transaction with an enterprise value of approximately $3.1 billion , including the assumption of debt. On Jan. 31, 2024, at a special meeting of shareholders, approximately 75% of disinterested shareholders voted to approve the proposal to adopt the merger agreement and approve the pending transaction. The transaction will result in Consolidated becoming a private company and is expected to close by the first quarter of 2025, subject to customary closing conditions, including receipt of regulatory approvals. The transaction is not subject to a financing condition. Following the closing of the transaction, shares of Consolidated common stock will no longer be traded or listed on any public securities exchange.
In light of the transaction, Consolidated will not host an earnings conference call.
About Consolidated Communications
Consolidated Communications Holdings, Inc . (Nasdaq: CNSL) is dedicated to moving people, businesses and communities forward by delivering the most reliable fiber 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 over 60,000 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 includes disclosures regarding “EBITDA,” “adjusted EBITDA,” “Net debt leverage ratio,” “adjusted diluted net income (loss) per share,” and “Normalized revenue,” all of which are non-GAAP financial measures. 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 these non-GAAP financial measures to 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 (loss) from continuing operations. EBITDA is defined as income (loss) from continuing operations 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 “Net debt leverage ratio” principally to help investors understand how we measure leverage and facilitate comparisons by investors, security analysts and others. Total net debt is defined as the current and long-term portions of debt and finance lease obligations less cash, cash equivalents and short-term investments, deferred debt issuance costs and discounts on debt. Our Net debt leverage ratio differs in certain respects from the similar ratio used in our credit agreement or 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 Net debt leverage ratio 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 press release, including those relating to the current expectations, plans, strategies, and the timeline for consummating the take private transaction with Searchlight and BCI by the first quarter of 2025, 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, including: significant competition in all parts of our business and among our customer channels; our ability to adapt to rapid technological changes; shifts in our product mix that may result in a decline in operating profitability; continued receipt of support from various funds established under federal and state laws; disruptions in our networks and infrastructure and any related service delays or disruptions could cause us to lose customers and incur additional expenses; cyber-attacks may lead to unauthorized access to confidential customer, personnel and business information that could adversely affect our business; our operations require substantial capital expenditures and our business, financial condition, results of operations and liquidity may be impacted if funds for capital expenditures are not available when needed; our ability to obtain and maintain necessary rights-of-way for our networks; our ability to obtain necessary hardware, software and operational support from third-party vendors; substantial video content costs continue to rise; our ability to enter into new collective bargaining agreements or renew existing agreements; our ability to attract and/or retain certain key management and other personnel in the future; risks associated with acquisitions and the realization of anticipated benefits from such acquisitions; increasing attention to, and evolving expectations for, environmental, social and governance initiatives; unfavorable changes in financial markets could affect pension plan investments; weak economic conditions; the risk that the proposed transaction may not be completed in a timely manner or at all; the possibility that any or all of the various conditions to the consummation of the proposed transaction may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals); the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive transaction agreement relating to the proposed transaction, including in circumstances which would require the Company to pay a termination fee; the effect of the announcement or pendency of the proposed transaction on the Company’s ability to attract, motivate or retain key executives and employees, its ability to maintain relationships with its customers, suppliers and other business counterparties, or its operating results and business generally; risks related to the proposed transaction diverting management’s attention from the Company’s ongoing business operations; the amount of costs, fees and expenses related to the proposed transaction; the risk that the Company’s stock price may decline significantly if the proposed transaction is not consummated; the risk of shareholder litigation in connection with the proposed transaction, including resulting expense or delay; and the other risk factors described in Part I, Item 1A of Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023 and the other risk factors identified from time to time in the Company’s other filings with the SEC. Filings with the SEC are available on the SEC’s website at http://www.sec.gov . 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. 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 press release. Furthermore, undue reliance should not be placed on forward-looking statements, which are based on the information currently available to us and speak only as of the date they are made. Except as required under federal securities laws or the rules and regulations of the Securities and Exchange Commission, we disclaim any intention or obligation to update or revise publicly any forward-looking statements.
Tag: [Consolidated-Communications-Earnings]
Consolidated Communications Holdings, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
(Unaudited)
December 31,
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
4,765
$
325,852
Short-term investments
—
87,951
Accounts receivable, net
121,194
119,675
Income tax receivable
2,880
1,670
Prepaid expenses and other current assets
56,843
62,996
Assets held for sale
70,473
—
Total current assets
256,155
598,144
Property, plant and equipment, net
2,449,009
2,234,122
Investments
8,887
10,297
Goodwill
814,624
929,570
Customer relationships, net
18,616
43,089
Other intangible assets
10,557
10,557
Other assets
70,578
61,315
Total assets
$
3,628,426
$
3,887,094
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
60,073
$
33,096
Advance billings and customer deposits
44,478
46,664
Accrued compensation
58,151
60,903
Accrued interest
18,694
18,201
Accrued expense
114,022
95,206
Current portion of long-term debt and finance lease obligations
18,425
12,834
Liabilities held for sale
3,402
—
Total current liabilities
317,245
266,904
Long-term debt and finance lease obligations
2,134,916
2,129,462
Deferred income taxes
210,648
274,309
Pension and other post-retirement obligations
137,616
123,644
Other long-term liabilities
48,637
47,326
Total liabilities
2,849,062
2,841,645
Series A Preferred Stock, par value $0.01 per share; 10,000,000 shares authorized, 434,266 and 456,343 shares outstanding as of December 31, 2023 and December 31, 2022, respectively; liquidation preference of $520,957 and $477,047 as of December 31, 2023 and December 31, 2022, respectively
372,590
328,680
Shareholders' equity:
Common stock, par value $0.01 per share; 150,000,000 shares authorized, 116,172,568 and 115,167,193 shares outstanding as of December 31, 2023 and December 31, 2022, respectively
1,162
1,152
Additional paid-in capital
681,757
720,442
Accumulated deficit
(262,380
)
(11,866
)
Accumulated other comprehensive loss, net
(21,872
)
(610
)
Noncontrolling interest
8,107
7,651
Total shareholders' equity
406,774
716,769
Total liabilities, mezzanine equity and shareholders' equity
$
3,628,426
$
3,887,094
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,
2023
2022
2023
2022
Net revenues
$
275,178
$
295,976
$
1,110,120
$
1,191,263
Operating expenses:
Cost of services and products
120,539
133,652
511,866
546,661
Selling, general and administrative expenses
80,575
80,035
340,252
301,667
Transaction costs
11,797
—
13,783
—
Loss on impairment of assets held for sale
—
—
77,755
131,698
Loss (gain) on disposal of assets
(2,900
)
23,396
9,480
4,233
Depreciation and amortization
78,321
79,614
315,162
300,166
Income (loss) from operations
(13,154
)
(20,721
)
(158,178
)
(93,162
)
Other income (expense):
Interest expense, net of interest income
(41,630
)
(33,236
)
(151,964
)
(124,978
)
Other, net
(3,200
)
3,953
8,477
13,378
Loss from continuing operations before income taxes
(57,984
)
(50,004
)
(301,665
)
(204,762
)
Income tax benefit
(10,699
)
(9,244
)
(51,607
)
(27,058
)
Loss from continuing operations
(47,285
)
(40,760
)
(250,058
)
(177,704
)
Discontinued operations:
Income from discontinued operations
—
839
—
23,467
Gain (loss) on sale of discontinued operations
—
(20
)
—
389,885
Income tax expense (benefit)
—
(4,974
)
—
94,999
Income from discontinued operations
—
5,793
—
318,353
Net income (loss)
(47,285
)
(34,967
)
(250,058
)
140,649
Less: dividends on Series A preferred stock
11,314
10,352
43,910
40,104
Less: net income attributable to noncontrolling interest
15
171
456
564
Net income (loss) attributable to common shareholders
$
(58,614
)
$
(45,490
)
$
(294,424
)
$
99,981
Net income (loss) per common share - basic and diluted:
Loss from continuing operations
$
(0.52
)
$
(0.46
)
$
(2.60
)
$
(1.90
)
Income from discontinued operations
—
0.05
—
2.77
Net income (loss) per basic and diluted common shares attributable to common shareholders
$
(0.52
)
$
(0.41
)
$
(2.60
)
$
0.87
Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
OPERATING ACTIVITIES
Net income (loss)
$
(47,285
)
$
(34,967
)
$
(250,058
)
$
140,649
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
78,321
79,614
315,162
300,166
Deferred income tax expense (benefit)
(11,395
)
(11,055
)
(56,092
)
58,894
Cash distributions from wireless partnerships in excess of earnings
—
79
—
5,697
Pension and post-retirement contributions less than (in excess) of expense
3,414
(5,214
)
(5,827
)
(29,205
)
Non-cash, stock-based compensation
2,165
2,784
7,613
10,755
Amortization of deferred financing costs and discounts
2,429
1,856
8,051
7,331
Loss on impairment of assets held for sale
—
—
77,755
131,698
Loss (gain) on sale of partnership interests
—
20
—
(389,885
)
Loss (gain) on disposal of assets
(2,900
)
23,396
9,480
4,233
Other adjustments, net
574
191
(1,673
)
(367
)
Changes in operating assets and liabilities, net
(13,329
)
(51,125
)
10,176
(16,256
)
Net cash provided by operating activities
11,994
5,579
114,587
223,710
INVESTING ACTIVITIES
Purchase of property, plant and equipment, net
(90,838
)
(123,022
)
(515,035
)
(619,981
)
Purchase of investments
—
(262,948
)
—
(302,907
)
Proceeds (disbursements) from sale of assets
(135
)
1,661
5,954
22,918
Proceeds from business dispositions, net
—
79,781
—
105,823
Proceeds from sale and maturity of investments
—
175,859
91,623
327,419
Proceeds from sale of partnership interests, net
—
(6,601
)
—
482,966
Net cash provided by (used in) investing activities
(90,973
)
(135,270
)
(417,458
)
16,238
FINANCING ACTIVITIES
Payment of finance lease obligations
(4,079
)
(2,725
)
(15,338
)
(9,836
)
Payment of financing costs
(500
)
(2,603
)
(500
)
(2,603
)
Share repurchases for minimum tax withholding
(1,294
)
(1,178
)
(2,378
)
(1,292
)
Net cash used in financing activities
(5,873
)
(6,506
)
(18,216
)
(13,731
)
Net change in cash and cash equivalents
(84,852
)
(136,197
)
(321,087
)
226,217
Cash and cash equivalents at beginning of period
89,617
462,049
325,852
99,635
Cash and cash equivalents at end of period
$
4,765
$
325,852
$
4,765
$
325,852
Consolidated Communications Holdings, Inc.
Consolidated Revenue by Category
(Dollars in thousands)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Consumer:
Broadband (Data and VoIP)
$
76,458
$
69,002
$
290,847
$
272,146
Voice services
29,935
34,314
125,166
144,853
Video services
7,460
11,876
34,957
54,153
113,853
115,192
450,970
471,152
Commercial:
Data services (includes VoIP)
54,473
56,662
214,707
228,466
Voice services
31,217
34,676
127,909
142,274
Other
10,521
10,320
39,883
43,100
96,211
101,658
382,499
413,840
Carrier:
Data and transport services
31,713
33,752
127,248
137,378
Voice services
2,868
3,685
15,588
14,772
Other
243
338
1,168
1,688
34,824
37,775
144,004
153,838
Subsidies
6,902
13,078
27,888
33,382
Network access
22,217
26,308
90,250
104,644
Other products and services
1,171
1,965
14,509
14,407
Total operating revenue
$
275,178
$
295,976
$
1,110,120
$
1,191,263
Consolidated Communications Holdings, Inc.
Consolidated Revenue Trend by Category
(Dollars in thousands)
(Unaudited)
Three Months Ended
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Q4 2022
Consumer:
Broadband (Data and VoIP)
$
76,458
$
75,089
$
71,339
$
67,961
$
69,002
Voice services
29,935
31,616
31,352
32,263
34,314
Video services
7,460
8,541
9,362
9,594
11,876
113,853
115,246
112,053
109,818
115,192
Commercial:
Data services (includes VoIP)
54,473
53,870
53,230
53,134
56,662
Voice services
31,217
31,825
32,236
32,631
34,676
Other
10,521
9,228
10,378
9,756
10,320
96,211
94,923
95,844
95,521
101,658
Carrier:
Data and transport services
31,713
31,388
31,224
32,923
33,752
Voice services
2,868
4,090
4,263
4,367
3,685
Other
243
262
313
350
338
34,824
35,740
35,800
37,640
37,775
Subsidies
6,902
6,878
7,072
7,036
13,078
Network access
22,217
20,842
22,747
24,444
26,308
Other products and services
1,171
10,025
1,646
1,667
1,965
Total operating revenue
$
275,178
$
283,654
$
275,162
$
276,126
$
295,976
Consolidated Communications Holdings, Inc.
Reconciliation of Historical Revenue by Category to Normalized Revenue by Category
(Dollars in thousands)
(Unaudited)
Three Months Ended
Year Ended
December 31, 2022
December 31, 2022
Historical
Adjustments (1)
Normalized
Historical
Adjustments (1)
Normalized
Consumer:
Broadband (Data and VoIP)
$
69,002
$
(1,138
)
$
67,864
$
272,146
$
(6,732
)
$
265,414
Voice services
34,314
(328
)
33,986
144,853
(2,067
)
142,786
Video services
11,876
(1,679
)
10,197
54,153
(9,684
)
44,469
115,192
(3,145
)
112,047
471,152
(18,483
)
452,669
Commercial:
Data services (includes VoIP)
56,662
(2,952
)
53,710
228,466
(15,355
)
213,111
Voice services
34,676
(818
)
33,858
142,274
(4,864
)
137,410
Other
10,320
(179
)
10,141
43,100
(1,039
)
42,061
101,658
(3,949
)
97,709
413,840
(21,258
)
392,582
Carrier:
Data and transport services
33,752
(171
)
33,581
137,378
(4,095
)
133,283
Voice services
3,685
(2
)
3,683
14,772
(14
)
14,758
Other
338
(3
)
335
1,688
(11
)
1,677
37,775
(176
)
37,599
153,838
(4,120
)
149,718
Subsidies
13,078
—
13,078
33,382
(49
)
33,333
Network access
26,308
(303
)
26,005
104,644
(1,715
)
102,929
Other products and services
1,965
(121
)
1,844
14,407
(490
)
13,917
Total operating revenue
$
295,976
$
(7,694
)
$
288,282
$
1,191,263
$
(46,115
)
$
1,145,148
Notes:
(1) These adjustments reflect the removal of operating revenues for divestitures. We completed the sale of the Company's Ohio and Kansas assets on January 31, 2022 and November 30, 2022, respectively.
Consolidated Communications Holdings, Inc.
Reconciliation of Loss from Continuing Operations to Adjusted EBITDA
(Dollars in thousands)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Loss from continuing operations
$
(47,285
)
$
(40,760
)
$
(250,058
)
$
(177,704
)
Add (subtract):
Income tax benefit
(10,699
)
(9,244
)
(51,607
)
(27,058
)
Interest expense, net
41,630
33,236
151,964
124,978
Depreciation and amortization
78,321
79,614
315,162
300,166
EBITDA
61,967
62,846
165,461
220,382
Adjustments to EBITDA (1):
Other, net (2)
20,697
11,902
57,534
29,656
Pension/OPEB benefit
4,751
(3,412
)
1,356
(12,309
)
Loss (gain) on disposal of assets
(2,900
)
23,396
9,480
4,233
Loss on impairment
—
—
77,755
131,698
Non-cash compensation (3)
2,165
2,784
7,613
10,755
Adjusted EBITDA from continuing operations
86,680
97,516
319,199
384,415
Investment distributions from discontinued operations
—
4,142
—
29,165
Adjusted EBITDA
$
86,680
$
101,658
$
319,199
$
413,580
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 Loss Attributable to Common Shareholders from Continuing Operations to Adjusted Loss from Continuing Operations and Calculation of Adjusted Diluted Net Income (Loss) Per Common Share
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Loss from continuing operations
$
(47,285
)
$
(40,760
)
$
(250,058
)
$
(177,704
)
Less: dividends on Series A preferred stock
11,314
10,352
43,910
40,104
Less: net income attributable to noncontrolling interest
15
171
456
564
Loss attributable to common shareholders from continuing operations
(58,614
)
(51,283
)
(294,424
)
(218,372
)
Adjustments to loss attributable to common shareholders:
Dividends on Series A preferred stock
11,314
10,352
43,910
40,104
Integration and severance related costs, net of tax
9,551
1,498
26,604
3,081
Loss on impairment of assets held for sale
—
—
77,755
131,698
Loss (gain) on disposition of assets, net of tax
(2,141
)
17,354
6,999
3,140
Non-cash pension settlement charge, net of tax
4,727
—
4,727
—
Non-cash interest expense for swaps, net of tax
—
(339
)
(732
)
(1,274
)
Tax impact of non-deductible goodwill
2,618
2,931
—
(8,187
)
Change in deferred tax rate
112
(2,417
)
112
(3,062
)
Other, tax
1,749
622
1,749
622
Non-cash stock compensation, net of tax
1,598
2,065
5,621
7,977
Adjusted net loss from continuing operations
$
(29,086
)
$
(19,217
)
$
(127,679
)
$
(44,273
)
Weighted average number of common shares outstanding
113,338
111,929
113,096
111,754
Adjusted diluted net income (loss) per common share:
Adjusted net loss from continuing operations
$
(0.26
)
$
(0.17
)
$
(1.13
)
$
(0.40
)
Adjusted income from discontinued operations excluding gain on sale of partnership interests, net of tax
—
0.01
—
0.16
$
(0.26
)
$
(0.16
)
$
(1.13
)
$
(0.24
)
Notes:
Calculations above assume a 26.17% effective tax rate for the three months and year ended December 31, 2023 and 25.83% effective tax rate for the three months and year ended December 31, 2022.
Consolidated Communications Holdings, Inc.
Reconciliation of Total Net Debt to LTM Adjusted EBITDA Ratio
(Dollars in thousands)
(Unaudited)
December 31,
2023
Long-term debt and finance lease obligations:
Term loans, net of discount $7,017
$
992,858
6.50% Senior secured notes due 2028
750,000
5.00% Senior secured notes due 2028
400,000
Finance leases
39,240
Total debt as of December 31, 2023
2,182,098
Less: deferred debt issuance costs
(28,757
)
Less: cash, cash equivalents and short-term investments
(4,765
)
Total net debt as of December 31, 2023
$
2,148,576
Adjusted EBITDA for the 12 months ended December 31, 2023
$
319,199
Total Net Debt to last 12 months Adjusted EBITDA
6.73x
Consolidated Communications Holdings, Inc.
Key Operating Metrics
(Unaudited)
2022
2023
Q1
Q2
Q3
Q4
FY
Q1
Q2
Q3
Q4
FY
Passings
Total Fiber Gig+ Capable Passings (1)(5)(6)
689,406
831,779
947,974
1,008,660
1,008,660
1,062,518
1,119,956
1,187,076
1,236,208
1,236,208
Total DSL/Copper Passings (2)(3)(5)(6)
2,059,025
1,920,214
1,807,381
1,617,077
1,617,077
1,564,889
1,509,875
1,447,539
1,401,535
1,401,535
Total Passings (1)(2)(3)(5)(6)
2,748,431
2,751,993
2,755,355
2,625,737
2,625,737
2,627,407
2,629,831
2,634,615
2,637,743
2,637,743
% Fiber Gig+ Coverage/Total Passings
25
%
30
%
34
%
38
%
38
%
40
%
43
%
45
%
47
%
47
%
Consumer Broadband Connections
Fiber Gig+ Capable (3)
93,812
103,455
115,598
122,872
122,872
135,209
153,860
175,748
195,195
195,195
DSL/Copper (2)(3)
286,338
277,758
266,314
244,586
244,586
234,653
222,969
210,473
198,024
198,024
Total Consumer Broadband Connections (2)(3)
380,150
381,213
381,912
367,458
367,458
369,862
376,829
386,221
393,219
393,219
Consumer Broadband Net Adds
Total Fiber Gig+ Capable Net Adds (7)
7,690
9,643
12,143
10,599
40,075
12,337
18,651
21,888
19,447
72,323
DSL/Copper Net Adds (7)
(8,544
)
(8,580
)
(11,444
)
(10,783
)
(39,351
)
(9,933
)
(11,684
)
(12,496
)
(12,449
)
(46,562
)
Total Consumer Broadband Net Adds (7)
(854
)
1,063
699
(184
)
724
2,404
6,967
9,392
6,998
25,761
Consumer Broadband Penetration %
Fiber Gig+ Capable (on fiber passings)
13.6
%
12.4
%
12.2
%
12.2
%
12.2
%
12.7
%
13.7
%
14.8
%
15.8
%
15.8
%
DSL/Copper (on DSL/copper passings)
13.9
%
14.5
%
14.7
%
15.1
%
15.1
%
15.0
%
14.8
%
14.5
%
14.1
%
14.1
%
Total Consumer Broadband Penetration %
13.8
%
13.9
%
13.9
%
14.0
%
14.0
%
14.1
%
14.3
%
14.7
%
14.9
%
14.9
%
Consumer Average Revenue Per Unit (ARPU)
Fiber Gig+ Capable
$
63.88
$
64.95
$
65.61
$
67.14
$
65.42
$
67.51
$
68.29
$
68.78
$
68.14
$
66.90
DSL/Copper
$
50.78
$
52.36
$
53.87
$
53.55
$
53.36
$
53.21
$
55.88
$
57.18
$
56.27
$
55.83
Churn
Fiber Consumer Broadband Churn (7)
0.9
%
1.1
%
1.2
%
1.1
%
1.1
%
1.0
%
1.3
%
1.3
%
1.2
%
1.2
%
DSL/Copper Consumer Broadband Churn (7)
1.3
%
1.6
%
1.8
%
1.7
%
1.6
%
1.5
%
1.7
%
2.0
%
2.0
%
1.8
%
Consumer Broadband Revenue ($ in thousands)
Fiber Broadband Revenue (4)
$
17,242
$
19,218
$
21,558
$
24,016
$
82,034
$
26,136
$
29,613
$
34,004
$
37,916
$
127,668
Copper and Other Broadband Revenue
48,669
48,374
48,083
44,986
190,112
41,825
41,726
41,085
38,542
163,179
Total Consumer Broadband Revenue
$
65,911
$
67,592
$
69,641
$
69,002
$
272,146
$
67,961
$
71,339
$
75,089
$
76,458
$
290,847
Consumer Voice Connections (3)
316,634
306,458
294,441
276,779
276,779
267,509
258,680
249,081
239,587
239,587
Video Connections (3)
58,812
55,225
51,339
35,039
35,039
32,426
28,934
26,158
21,900
21,900
Fiber route network miles (long-haul, metro and FttP)
54,239
56,093
57,498
57,865
57,865
57,569
58,836
59,915
60,438
60,438
On-net buildings (3)
15,446
15,618
15,715
14,427
14,427
14,520
14,735
14,928
15,105
15,105
Notes:
(1) In Q1 2021, the Company launched a multi-year fiber build plan to upgrade 1.6 million passings or 70% of our service area to fiber Gig+ capable services. As of December 31, 2023, 227,548 passings for 2023 were upgraded to FttP and total fiber passings were 1,236,208 or 47% 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.
(3) The sale of the net assets of our Kansas City operations in the fourth quarter of 2022 resulted in a reduction of approximately 135,144 DSL/Copper passings, 3,325 fiber broadband connections, 10,945 DSL/Copper broadband connections, 6,670 consumer voice connections, 13,425 video connections and 1,415 on-net buildings. Prior period amounts have not been adjusted to reflect the sale.
(4) Fiber broadband revenue includes revenue from our Kansas City operations of approximately $0.3 million for the quarter ended December 31, 2022 and approximately $0.5 million for each of the quarters ended March 31, 2022 through September 30, 2022. Amounts have not been adjusted to reflect the sale.
(5) Passings counts are estimates of single family units, multi-dwelling units, and multi-tenant units within consumer, small business and enterprise. These counts are based upon the information available at this time and are subject to updates as additional information becomes available.
(6) When a passing is both fiber and DSL/Copper capable it is counted as a fiber passing.
(7) Consumer Broadband net adds and churn have been normalized to reflect the divestitures of our Kansas City and Ohio operations.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240304282812/en/
Investor and Media Contacts
Philip Kranz, Investor Relations
+1 217-238-8480
Philip.kranz@consolidated.com
Jennifer Spaude, Media Relations
+1 507-386-3765
Jennifer.spaude@consolidated.com
Source: Consolidated Communications
Consolidated Communications Holdings, Inc.'s revenue for Q4 2023 was $275.2 million.
Consolidated Communications Holdings, Inc. reported a net loss of ($58.6 million) in Q4 2023.
Consolidated Communications Holdings, Inc. is set to be acquired by Searchlight and BCI in an all-cash transaction with an enterprise value of approximately $3.1 billion, leading to the company becoming private by Q1 2025.