Commercial and carrier data and transport revenue grew 2.3 percent year over year
Ethernet revenues increased 6.8 percent year over year
Completed upgrades to 500,000 broadband passings across Northern New England
Declared 55th consecutive quarterly dividend
MATTOON, Ill., Feb. 21, 2019 (GLOBE NEWSWIRE) -- Consolidated Communications Holdings, Inc. (NASDAQ:CNSL) (the "Company") reported results for the fourth quarter 2018 and will hold a conference call and simultaneous webcast to discuss its results and developments today at 10 a.m. ET.
Net cash from operating activities was $93.3 million
Adjusted EBITDA was $132.4 million
Dividend payout ratio was 68.3 percent
"2018 was a very productive year where we made great progress improving service levels and advancing our business and broadband strategy across our newly acquired markets," said Bob Udell, president and chief executive officer of Consolidated Communications. "I am very pleased with our commercial growth and our progress in expanding our fiber network, including our upgrade of more than 500,000 or one-third of the broadband passings across Northern New England."
"For 2019, we are focused on growing market share as we ramp up marketing in Northern New England and continue to make success-based, fiber investments in the business improving the customer experience," said Udell.
Financial Results for the Fourth Quarter
Revenues were $344.8 million, compared to $356.4 million for the fourth quarter of 2017, a decrease of $11.6 million in the recent quarter. Commercial and carrier data and transport service revenue increased 2.3 percent or $2 million on a comparable basis, with Ethernet revenue growth of 6.8 percent being the catalyst. Business system sales and special construction projects contributed an additional $4.7 million to the fourth quarter 2018 revenues. Consumer Broadband revenue was up $500,000 from a year ago in spite of normal seasonality in the Northern New England region. Voice services revenue declined $11.8 million across all customer channels. Subsidies decreased $2.4 million during the quarter primarily due to the final CAF step down in transitional revenues, and network switched and special access revenues declined $2.9 million.
Income from operations was $3.6 million compared to $7.0 million in the fourth quarter of 2017. The change was primarily due to the declines in revenues described above, offset by reductions in operating expense of $8.2 million.
Interest expense, net was $35.5 million, compared to $29.9 million for the same period last year. The increase was due to increases in LIBOR and non-cash expense associated with interest rate hedge agreements put in place to maintain our fixed debt target of 75 percent. As of Dec. 31, 2018, our weighted average cost of debt was approximately 5.6 percent.
Cash distributions from the Company's wireless partnerships were $10.3 million for the fourth quarter compared to $8.0 million for the prior year period.
Other income, net was $11.1 million, compared to $7.9 million in the fourth quarter of 2017, mainly due to increased income from the Company's minority interest in wireless partnerships.
On a GAAP basis, net loss was $14.0 million and GAAP net loss per share was ($0.20). Adjusted diluted net loss per share excludes certain items as outlined in the table provided in this release. Adjusted diluted net loss per share was ($0.09) in the fourth quarter, compared to ($0.04) in the fourth quarter of 2017.
Adjusted EBITDA was $132.4 million compared to $133.2 million in the year ago quarter.
The total net debt to last 12-month adjusted EBITDA ratio was 4.3x.
Full-Year 2018 Results
For the full year 2018, operating revenue totaled $1.4 billion, down 4.2 percent from pro forma fiscal year 2017. The decline was primarily due to continued erosion of legacy voice services and access revenues as well as the step down in CAF II transitional funding support.
Net cash from operating activities was $357.3 million.
Adjusted EBITDA was $537.3 million for fiscal year 2018, up $1.1 million from pro forma fiscal year 2017.
Cash Available to Pay Dividends, Capex
For the fourth quarter, cash available to pay dividends was $40.4 million. The dividend payout ratio was 68.3 percent for the quarter and 67.4 percent for the year. At Dec. 31, 2018, cash and cash equivalents were $9.6 million. Capital expenditures were $58.1 million for the fourth quarter and $244.8 million for the year.
Financial Guidance
The Company is providing guidance for fiscal year 2019 as follows:
2018 Results
2019 Guidance
Cash interest expense
$128.1M
$135M to $140M
Cash income taxes1
$1.0M
$1M to $3M
Capital expenditures
$244.8M
$210M to $220M
(1) Cash income taxes primarily include local and state income taxes as federal income taxes will be shielded by existing net operating losses.
Dividend Payments
The Company's board of directors declared a quarterly dividend of $0.38738 per common share, which is payable on May 1, 2019 to stockholders of record at the close of business on April 15, 2019. This will represent the 55th consecutive quarterly dividend paid by the Company.
Conference Call Information
Consolidated Communications will host a conference call and webcast today at 10 a.m. ET / 9 a.m. CT to discuss fourth quarter earnings and developments with respect to the Company. The live webcast and replay can be accessed from the Investor Relations section of the Company's website at http://ir.consolidated.com. The live conference call dial-in number is 1-877-374-3981, conference ID 5858129. A telephonic replay of the conference call will be available through Feb. 28, 2019 and can be accessed by calling 1-855-859-2056, conference ID 5858129.
About Consolidated Communications
Consolidated Communications Holdings, Inc. (NASDAQ:CNSL) is a leading broadband and business communications provider serving consumers, businesses, and wireless and wireline carriers across rural and metro communities and a 23-state service area. Leveraging an advanced fiber network spanning 37,000 fiber route miles, Consolidated Communications offers a wide range of communications solutions, including: high-speed Internet, data, phone, security, managed services, cloud services and wholesale, carrier solutions. From our first connection 125 years ago, Consolidated is dedicated to turning technology into solutions, connecting people and enriching how they work and live. Visit www.consolidated.com for more information.
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, 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.
(Dollars in thousands, except share and per share amounts)
(Unaudited)
December 31,
December 31,
2018
2017
ASSETS
Current assets:
Cash and cash equivalents
$
9,599
$
15,657
Accounts receivable, net
133,136
121,528
Income tax receivable
11,072
21,846
Prepaid expenses and other current assets
44,336
33,318
Assets held for sale
-
21,310
Total current assets
198,143
213,659
Property, plant and equipment, net
1,927,126
2,037,606
Investments
110,853
108,858
Goodwill
1,035,274
1,038,032
Customer relationships, net
228,959
293,300
Other intangible assets
11,483
13,483
Other assets
23,423
14,188
Total assets
$
3,535,261
$
3,719,126
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
32,502
$
24,143
Advance billings and customer deposits
47,724
42,526
Dividends payable
27,579
27,418
Accrued compensation
64,459
49,770
Accrued interest
9,232
9,343
Accrued expense
71,650
72,041
Current portion of long-term debt and capital lease obligations
30,468
29,696
Liabilities held for sale
-
1,003
Total current liabilities
283,614
255,940
Long-term debt and capital lease obligations
2,303,585
2,311,514
Deferred income taxes
188,129
209,720
Pension and other post-retirement obligations
314,134
334,193
Other long-term liabilities
30,145
33,817
Total liabilities
3,119,607
3,145,184
Shareholders' equity:
Common stock, par value $0.01 per share; 100,000,000 shares
authorized, 71,187,301 and 70,777,354, shares outstanding
as of December 31, 2018 and December 31, 2017, respectively
712
708
Additional paid-in capital
513,070
615,662
Accumulated deficit
(50,834
)
-
Accumulated other comprehensive loss, net
(53,212
)
(48,083
)
Noncontrolling interest
5,918
5,655
Total shareholders' equity
415,654
573,942
Total liabilities and shareholders' equity
$
3,535,261
$
3,719,126
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,
2018
2017
2018
2017
Net revenues
$
344,750
$
356,360
$
1,399,074
$
1,059,574
Operating expenses:
Cost of services and products
154,656
155,453
611,872
445,998
Selling, general and administrative
expenses
82,433
86,159
333,605
249,141
Acquisition and other transaction costs
197
2,987
1,960
33,650
Depreciation and amortization
103,909
104,789
432,668
291,873
Income from operations
3,555
6,972
18,969
38,912
Other income (expense):
Interest expense, net of interest income
(35,499
)
(29,890
)
(134,578
)
(129,786
)
Other income, net
11,069
7,877
40,911
31,246
Loss before income taxes
(20,875
)
(15,041
)
(74,698
)
(59,628
)
Income tax benefit
(6,877
)
(115,065
)
(24,127
)
(124,927
)
Net income (loss)
(13,998
)
100,024
(50,571
)
65,299
Less: net income (loss) attributable to noncontrolling interest
(19
)
218
263
354
Net income (loss) attributable to common shareholders
$
(13,979
)
$
99,806
$
(50,834
)
$
64,945
Net income (loss) per basic and diluted common shares
attributable to common shareholders
$
(0.20
)
$
1.41
$
(0.73
)
$
1.07
Consolidated Communications Holdings, Inc.
Pro Forma Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
Pro Forma
Pro Forma
Three Months Ended
Year Ended
December 31,
December 31,
2018
2017
2018
2017
Net revenues
$
344,750
$
356,360
$
1,399,074
$
1,460,620
Operating expenses:
Operating expenses (exclusive of depreciation
and amortization)
237,286
241,794
947,437
981,329
Depreciation and amortization
103,909
104,789
432,668
418,365
Income from operations
3,555
9,777
18,969
60,926
Other income (expense):
Interest expense, net of interest income
(35,499
)
(29,890
)
(134,578
)
(119,510
)
Other income, net
11,069
7,877
40,911
28,875
Loss before income taxes
(20,875
)
(12,236
)
(74,698
)
(29,709
)
Income tax benefit
(6,877
)
(113,943
)
(24,127
)
(120,840
)
Net income (loss)
(13,998
)
101,707
(50,571
)
91,131
Less: net income (loss) attributable to noncontrolling interest
(19
)
218
263
354
Net income (loss) attributable to common shareholders
$
(13,979
)
$
101,489
$
(50,834
)
$
90,777
Net income (loss) per basic and diluted common share
attributable to common shareholders
$
(0.20
)
$
1.44
$
(0.73
)
$
1.29
Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2018
2017
2018
2017
OPERATING ACTIVITIES
Net income (loss)
$
(13,998
)
$
100,024
$
(50,571
)
$
65,299
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
103,909
104,789
432,668
291,873
Deferred income taxes
(23,203
)
(130,348
)
(26,008
)
(126,127
)
Cash distributions from wireless partnerships less than earnings
(160
)
(522
)
(194
)
(1,411
)
Non-cash, stock-based compensation
1,365
447
5,119
2,766
Amortization of deferred financing
1,199
1,148
4,721
17,076
Other adjustments, net
2,251
551
6,066
3,208
Changes in operating assets and liabilities, net
21,922
8,714
(14,480
)
(42,657
)
Net cash provided by operating activities
93,285
84,803
357,321
210,027
INVESTING ACTIVITIES
Business acquisition, net of cash acquired
-
-
-
(862,385
)
Purchase of property, plant and equipment, net
(58,051
)
(61,896
)
(244,816
)
(181,185
)
Proceeds from sale of assets
485
563
2,125
859
Proceeds from business disposition
-
-
20,999
-
Proceeds from sale of investments
-
-
233
-
Net cash used in investing activities
(57,566
)
(61,333
)
(221,459
)
(1,042,711
)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt
53,001
21,000
189,588
1,052,325
Payment of capital lease obligations
(3,165
)
(2,570
)
(12,755
)
(7,933
)
Payment on long-term debt
(51,588
)
(21,587
)
(207,938
)
(111,337
)
Payment of financing costs
-
-
-
(16,732
)
Share repurchases for minimum tax withholding
(593
)
(530
)
(593
)
(571
)
Dividends on common stock
(27,601
)
(27,440
)
(110,222
)
(94,138
)
Other
-
-
-
(350
)
Net cash provided by (used in) financing activities
(29,946
)
(31,127
)
(141,920
)
821,264
Net change in cash and cash equivalents
5,773
(7,657
)
(6,058
)
(11,420
)
Cash and cash equivalents at beginning of period
3,826
23,314
15,657
27,077
Cash and cash equivalents at end of period
$
9,599
$
15,657
$
9,599
$
15,657
Consolidated Communications Holdings, Inc.
Consolidated Revenue by Category
(Dollars in thousands)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2018
2017
2018
2017
Commercial and carrier:
Data and transport services (includes VoIP)
$
88,152
$
86,145
$
349,413
$
274,221
Voice services
49,301
54,137
202,875
152,632
Other
16,389
11,709
56,395
33,908
153,842
151,991
608,683
460,761
Consumer:
Broadband (VoIP and Data)
63,598
63,052
253,119
183,634
Video services
21,649
22,646
88,338
91,406
Voice services
47,597
54,581
202,032
137,696
132,844
140,279
543,489
412,736
Subsidies
17,948
20,375
83,371
62,272
Network access
37,382
40,243
152,582
110,196
Other products and services
2,734
3,472
10,949
13,609
Total operating revenue
344,750
356,360
1,399,074
1,059,574
Less operating revenues from divestitures
-
(1,355
)
(3,337
)
(2,784
)
$
344,750
$
355,005
$
1,395,737
$
1,056,790
Consolidated Communications Holdings, Inc.
Consolidated Revenue by Category
(Dollars in thousands)
(Unaudited)
Three Months Ended
Q4 2018
Q3 2018
Q2 2018
Q1 2018
Q4 2017
Commercial and carrier:
Data and transport services (includes VoIP)
$
88,152
$
87,633
$
87,603
$
86,025
$
86,145
Voice services
49,301
50,091
51,322
52,161
54,137
Other
16,389
13,906
14,237
11,863
11,709
153,842
151,630
153,162
150,049
151,991
Consumer:
Broadband (VoIP and Data)
63,598
63,865
62,545
63,111
63,052
Video services
21,649
21,790
22,065
22,834
22,646
Voice services
47,597
50,757
51,616
52,062
54,581
132,844
136,412
136,226
138,007
140,279
Subsidies
17,948
19,189
20,979
25,255
20,375
Network access
37,382
38,147
37,338
39,715
40,243
Other products and services
2,734
2,686
2,516
3,013
3,472
Total operating revenue
344,750
348,064
350,221
356,039
356,360
Less operating revenues from divestitures
-
(466
)
(1,417
)
(1,454
)
(1,355
)
$
344,750
$
347,598
$
348,804
$
354,585
$
355,005
Consolidated Communications Holdings, Inc.
Schedule of Adjusted EBITDA Calculation
(Dollars in thousands)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2018
2017
2018
2017
Net income (loss)
$
(13,998
)
$
100,024
$
(50,571
)
$
65,299
Add (subtract):
Income tax benefit
(6,877
)
(115,065
)
(24,127
)
(124,927
)
Interest expense, net
35,499
29,890
134,578
129,786
Depreciation and amortization
103,909
104,789
432,668
291,873
EBITDA
118,533
119,638
492,548
362,031
Adjustments to EBITDA (1):
Other, net (2)
11,552
11,854
34,599
47,536
Investment income (accrual basis)
(10,597
)
(8,681
)
(39,596
)
(31,749
)
Investment distributions (cash basis)
10,263
7,972
39,078
29,993
Pension/OPEB expense
1,249
1,925
5,546
3,527
Non-cash compensation (3)
1,365
447
5,119
2,766
Adjusted EBITDA
$
132,365
$
133,155
$
537,294
$
414,104
Notes:
(1) These adjustments reflect those required or permitted by the lenders under our credit agreement.
(2) Other, net includes income attributable to noncontrolling interests, acquisition and non-recurring related costs, and certain miscellaneous items.
(3) Represents compensation expenses in connection with our Restricted Share Plan, which because of the non-cash nature of the expenses are excluded from adjusted EBITDA.
Consolidated Communications Holdings, Inc.
Schedule of Pro Forma Adjusted EBITDA Calculation
(Dollars in thousands)
(Unaudited)
Pro Forma
Pro Forma
Three Months Ended
Year Ended
December 31,
December 31,
2018
2017
2018
2017
Net income (loss)
$
(13,998
)
$
101,707
$
(50,571
)
$
91,131
Add (subtract):
Income tax benefit
(6,877
)
(113,943
)
(24,127
)
(120,840
)
Interest expense, net
35,499
29,890
134,578
119,510
Depreciation and amortization
103,909
104,789
432,668
418,365
EBITDA
118,533
122,443
492,548
508,166
Adjustments to EBITDA (1):
Other, net (2)
11,552
9,049
34,599
14,499
Investment income (accrual basis)
(10,597
)
(8,681
)
(39,596
)
(31,749
)
Investment distributions (cash basis)
10,263
7,972
39,078
29,993
Pension/OPEB expense
1,249
1,925
5,546
9,545
Non-cash compensation (3)
1,365
447
5,119
5,752
Adjusted EBITDA
$
132,365
$
133,155
$
537,294
$
536,206
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
Year Ended
December 31, 2018
December 31, 2018
Adjusted EBITDA
$
132,365
$
537,294
- Cash interest expense
(33,809
)
(128,081
)
- Capital expenditures
(58,051
)
(244,816
)
- Cash income taxes
(97
)
(940
)
Cash available to pay dividends
$
40,408
$
163,457
Dividends Paid
$
27,601
$
110,222
Payout Ratio
68.3
%
67.4
%
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)
December 31,
Summary of Outstanding Debt:
2018
Term loans, net of discount $6,994
$
1,796,068
Revolving loan
22,000
Senior unsecured notes due 2022, net of discount $2,991
497,009
Capital leases
30,362
Total debt as of December 31, 2018
$
2,345,439
Less deferred debt issuance costs
(11,386
)
Less cash on hand
(9,599
)
Total net debt as of December 31, 2018
$
2,324,454
Adjusted EBITDA for the
year ended December 31, 2018
$
537,294
Total Net Debt to last twelve months
Adjusted EBITDA
4.33x
Consolidated Communications Holdings, Inc.
Adjusted Net Income and Net Income Per Share
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2018
2017
2018
2017
Net income (loss)
$
(13,998
)
$
100,024
$
(50,571
)
$
65,299
Transaction and severance related costs, net of tax
7,590
4,503
23,986
25,902
Storm costs, net of tax
282
1,931
1,768
1,931
Local switching support settlement, net of tax
-
-
(2,978
)
-
Non-cash interest expense for swaps, net of tax
1,051
(440
)
3,480
666
Tax on non-deductible transaction related costs
-
1,102
-
3,443
Tax related to acquisition
-
-
1,062
5,205
Divestiture related, tax (1)
-
-
767
-
Change in deferred tax rate, tax
(2,763
)
-
(2,763
)
5,404
Change in deferred tax rate, federal tax reform
(772
)
(112,910
)
(5,169
)
(112,910
)
Other, tax
1,340
2,580
1,340
2,580
Amortization of commitment fee, net of tax
-
-
-
7,819
Ticking fees on committed financing, net of tax
-
-
-
10,966
Non-cash stock compensation, net of tax
1,020
272
3,824
1,682
Adjusted net income (loss)
$
(6,250
)
$
(2,938
)
$
(25,254
)
$
17,987
Weighted average number of shares outstanding
70,658
70,516
70,613
60,373
Adjusted diluted net income (loss) per share
$
(0.09
)
$
(0.04
)
$
(0.36
)
$
0.30
Notes:
(1) Includes sale of Virginia properties on July 31, 2018.
Calculations above assume a 25.3% effective tax rate for the three months and year ended December 31, 2018 and 39.2% effective tax rate for the three months and year ended December 31, 2017.
Net income per share has been impacted by approximately $0.22 for the year ended December 31, 2018 due to increased depreciation and amortization associated with the valuation of the FairPoint assets.
Consolidated Communications Holdings, Inc.
Key Operating Statistics
(Unaudited)
December 31,
September 30,
% Change
December 31,
% Change
2018
2018
in Qtr
2017 (2)
YOY
Voice Connections
902,414
921,896
(2.1%)
967,965
(6.8%)
Data and Internet Connections
778,970
781,912
(0.4%)
780,794
(0.2%)
Video Connections
93,065
95,889
(2.9%)
103,313
(9.9%)
Business and Broadband as % of total revenue (1)
76.2%
75.2%
1.3%
74.8%
1.8%
Fiber route network miles (long-haul and metro)
36,944
36,814
0.4%
35,962
2.7%
On-net buildings
10,424
10,041
3.8%
9,062
15.0%
Consumer Customers
628,649
641,845
(2.1%)
666,872
(5.7%)
Consumer ARPU
$70.44
$70.70
(0.4%)
$69.69
1.1%
Notes:
(1) Business and Broadband revenue % includes: commercial/carrier, equipment sales and service, directory, consumer broadband and special access.
(2) The sale of our local exchange carrier in Virginia resulted in a reduction of approximately 4,110 voice connections, 2,900 data and Internet connections and 4,340 consumer customers in the third quarter of 2018. Prior period amounts have been adjusted to reflect the sale.
