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Consolidated Communications Reports Positive Broadband Net Adds for 2022 and Announces Fourth Quarter and Full Year 2022 Results

  • Consumer fiber broadband net add growth for FY 2022 was 2.6x FY 2021 growth1
  • Consumer fiber broadband revenue grew 37%1 in FY 2022 driven by fiber net adds and increased ARPU
  • Completed more than 400,000 Gigabit+ fiber upgrades for FY 2022 resulting in 1 million total Gig+ fiber locations or approximately 38% of the Company’s network
  • Closed on sale of Kansas assets for $82 million in Q4 resulting in net proceeds from strategic asset sales of over $600 million during 2022
  • Key leadership additions bring extensive fiber network and subscription based go-to-market expertise

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 2022.

“We gained strong momentum with our Fidium consumer broadband services during 2022 as we added 40,100 fiber subscribers1, more than double the prior year, and grew consumer fiber broadband revenue 37%1,” said Bob Udell, chief executive officer at Consolidated Communications. “Our team delivered another big build year with more than 400,000 fiber upgrades and the achievement of 1 million total fiber locations.”

“We will continue to drive penetrations and refine our go-to-market strategy as we deliver a superior fiber service and an industry-leading customer experience. With a newly aligned leadership team and fiber reaching almost 40% of our base, we are accelerating our growth plans across consumer, commercial and carrier during 2023, setting the Company up for year over year revenue and EBITDA growth in 2024.”

1 Normalized for the divestitures of the Company’s Ohio and Kansas assets, where applicable, which closed on Jan. 31, 2022 and Nov. 30, 2022, respectively. Refer to the tables contained in this press release for a reconciliation of all non-GAAP measures.

Fourth Quarter 2022 Results (compared to fourth quarter 2021 where applicable)

  • Revenue totaled $296.0 million, down 7.1%.
  • Revenue normalized totaled $288.3 million, down 5.2%1; Consumer fiber revenue was $24.0 million, up approximately 49%, up 51% normalized1, driven by strong operating metrics including 10,600 consumer fiber net adds1 and increased ARPU of 4.5%.
  • Commercial data services revenue was $56.7 million, down 1.4%; up 1.3% normalized1.
  • Carrier data-transport revenue was $33.8 million, up 3.3%; up 3.7% normalized1.
  • Subsidy revenue was $13.1 million, a decrease of $4.6 million, primarily reflecting CAF II step down and transition to the Rural Digital Opportunity Fund (“RDOF”) partly offset by the recognition of Texas High Cost Fund settlements related to prior years.
  • Other products and services revenue was $2.0 million, a decrease of $5.8 million, largely due to lower recognition of public private partnership construction projects.
  • Adjusted EBITDA was $101.7 million.
  • Total committed capital expenditures were $124.3 million driven by 60,700 fiber passings added and the timing of construction and CPE inventory purchases.
  • Extended the maturity of $250 million revolving credit facility from 2025 to 2027, subject to springing maturity, and enhanced financial flexibility under the revolver.

Operating expenses increased $4.7 million versus the prior year primarily due to marketing and advertising expenses related to higher professional fees for customer service and process improvement initiatives, as well as severance costs. These higher expenses were partly offset by lower video programming expenses and the divestiture of the Kansas City operations on Nov. 30.

Net interest expense was $33.2 million, a decrease of $4.9 million versus the prior year, primarily as a result of non-cash interest of $7.3 million in 2021 on the Searchlight note, which was converted to perpetual preferred stock in conjunction with the second stage closing of its investment in December 2021, partly offset by higher interest on the term loan. Notwithstanding the heightened interest rate environment, the Company is well positioned with 77% of its total debt at a fixed rate through July 2023, and 53% fixed thereafter. As of Dec. 31, 2022, the weighted average cost of debt was 6.48%.

Cash distributions from the Company’s wireless partnerships totaled $4.1 million in the fourth quarter of 2022, compared to $9.9 million in the fourth quarter of 2021, primarily due to timing of the close of the sale of the partnerships, coupled with Verizon’s accelerated capital investments which impacted the Company’s fourth quarter distributions.

Loss from continuing operations was ($40.8 million) in the fourth quarter of 2022 compared to income from continuing operations of $7.4 million in the fourth quarter of 2021. Net loss per share from continuing operations was ($0.46) in the fourth quarter of 2022 as compared to income per share from continuing operations of $0.05 in the fourth quarter of 2021. Adjusted diluted net income (loss) per share excludes certain items as outlined in the table provided in this release. Adjusted diluted net income (loss) per share from continuing operations was ($0.17) compared to $0.06 in the fourth quarter of 2021.

Full-Year 2022 Results (compared to full-year 2021 where applicable)

  • Revenue totaled $1.19 billion, down 7.1%.
  • Revenue normalized totaled $1.15 billion, down 6.3%.
  • Consumer fiber revenue was $82.0 million, up approximately 35%, up 37% normalized1, driven by strong operating metrics, including 40,100 consumer fiber net adds1 and increased ARPU of 2.1%.
  • Commercial data services revenue was $228.5 million, down 0.2%; up 1.4% normalized1.
  • Carrier data-transport revenue was $137.4 million, up 3.0%; up 0.7% normalized1.
  • Subsidy revenue was $33.4 million, a decrease of $36.4 million, primarily reflecting the previously discussed CAF II step down and transition to RDOF, partly offset by the recognition of Texas High Cost Fund settlements related to prior years.
  • Adjusted EBITDA was $413.6 million.
  • Total committed capital expenditures were $601.1 million.

Executive Management Team Realignment

The Company recently added three highly talented industry executives, including: Gaurav Juneja, president of consumer; Dan Stoll, president of commercial and carrier; and Fred Graffam, CFO. They collectively have decades of telecom experience at major service providers, as well as substantial experience leveraging fiber investments and driving market penetration which will help advance the Company’s strategy and return to growth.

Asset and Investment Sales

On Nov. 30, 2022, Consolidated completed the sale of its Kansas City assets for gross cash proceeds of $82 million, which will be invested in the business and used to support the Company’s FttP broadband growth plan. During the fourth quarter of 2022, the Company recognized an additional loss on sale of $16.8 million as a result of purchase price adjustments and an increase in net assets held for sale and estimated selling costs during the period.

The Company continues to actively review its portfolio for further monetization opportunities in support of its growth plan. Collectively during 2022, the Company closed on asset sales in excess of $600 million.

Capital Structure

On Nov. 22, 2022, the Company extended the maturity of its $250 million revolving credit facility (the “Revolver”) from 2025 to 2027, subject to springing maturity, and enhanced its financial flexibility under the Revolver. As a result, the Company has no maturities until 2027.

As of Dec. 31, 2022, the Company maintained liquidity with cash and short-term investments of approximately $414 million and $225 million of available borrowing capacity on the revolving credit facility, subject to certain covenants. The net leverage ratio for the trailing 12 months ended Dec. 31, 2022, was 4.18x.

2023 Outlook

The Company’s 2023 outlook includes another inflection point with nearly half of its service area being FttP by year end, which provides a significant addressable market opportunity to drive revenue and EBITDA growth in 2024.

Consolidated Communications is providing the following outlook for the full-year 2023.

  • Adjusted EBITDA is expected to be in a range of $310 million to $330 million.
  • Capital expenditures are expected to be in a range of $425 million to $445 million.
  • Cash interest expense is expected to be in a range of $145 million to $155 million.
  • Cash income taxes are expected to be below $10 million.

The Company’s Adjusted EBITDA guidance as compared to 2022 includes the impact of approximately $50 million resulting from 2022 asset sales including Kansas and the wireless partnerships, an expected $20 million reduction in legacy voice, approximately $10 million for fiber-to-the-tower contract pricing step downs in the carrier business, as well as increased marketing and sales expenses.

Fred Graffam, chief financial officer, commented, “With over $400 million of cash on our balance sheet at year end, coupled with availability under our $250 million Revolver, we are well positioned to continued executing on our fiber expansion and growth plan.”

Conference Call Information

Consolidated’s fourth quarter earnings conference call will be webcast today 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. A replay of the webcast, together with a transcript thereof, will be available on the website following the 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 more than 57,865 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,” “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 “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. 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 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, including year over year revenue and EBITDA growth in 2024. 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 public health threats, including the novel coronavirus (COVID-19) pandemic, on the Company’s business, results of operations, cash flows and stock price; 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; 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; our need for substantial capital expenditures for our operations; regulatory changes, including changes to subsidies, our need for continued receipt of support from various funds established under federal and state laws, such as network access and subsidies; rapid development and introduction of new technologies; intense competition in the telecommunications industry; shifts in our product mix; risks associated with our possible pursuit of or failure to consummate acquisitions or dispositions; disruptions in our networks and infrastructure; 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 or our ability to obtain necessary hardware, software and operational support from third party venders; losses of key management personnel and our ability to attract and retain highly qualified management and personnel in the future; our ability to enter into new, or renew existing, collective bargaining agreements with our employees; 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; increasing video content costs; the competitive impact of legislation and regulatory changes in the telecommunications industry; liability and compliance costs regarding environmental regulations and environmental, social, and governance (ESG) initiatives; 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 Form 10-K for the year ended December 31, 2021. 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.

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,

2022

2021

ASSETS
Current assets:
Cash and cash equivalents $

325,852

 

$

99,635

 

Short-term investments

87,951

 

110,801

 

Accounts receivable, net

119,675

 

133,362

 

Income tax receivable

1,670

 

1,134

 

Prepaid expenses and other current assets

62,996

 

56,831

 

Assets held for sale

 

26,052

 

Total current assets

598,144

 

427,815

 

 
Property, plant and equipment, net

2,234,122

 

2,019,444

 

Investments

10,297

 

10,799

 

Goodwill

929,570

 

1,013,243

 

Customer relationships, net

43,089

 

73,939

 

Other intangible assets

10,557

 

10,557

 

Assets of discontinued operations

 

98,779

 

Other assets

61,315

 

58,116

 

Total assets $

3,887,094

 

$

3,712,692

 

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

33,096

 

$

40,953

 

Advance billings and customer deposits

46,664

 

53,028

 

Accrued compensation

60,903

 

68,272

 

Accrued interest

18,201

 

17,819

 

Accrued expense

95,206

 

97,417

 

Current portion of long-term debt and finance lease obligations

12,834

 

7,959

 

Liabilities held for sale

 

97

 

Total current liabilities

266,904

 

285,545

 

 
Long-term debt and finance lease obligations

2,129,462

 

2,118,853

 

Deferred income taxes

274,309

 

194,458

 

Pension and other post-retirement obligations

123,644

 

214,671

 

Other long-term liabilities

47,326

 

62,789

 

Total liabilities

2,841,645

 

2,876,316

 

 
Series A Preferred Stock, par value $0.01 per share; 10,000,000 shares authorized, 456,343 and 434,266 shares outstanding as of December 31, 2022 and December 31, 2021, respectively; liquidation preference of $477,047 and $436,943 as of December 31, 2022 and December 31, 2021, respectively

328,680

 

288,576

 

 
Shareholders' equity:
Common stock, par value $0.01 per share; 150,000,000 shares authorized, 115,167,193 and 113,647,364 shares outstanding as of December 31, 2022 and December 31, 2021, respectively

1,152

 

1,137

 

Additional paid-in capital

720,442

 

740,746

 

Retained earnings (accumulated deficit)

(11,866

)

(141,599

)

Accumulated other comprehensive loss, net

(610

)

(59,571

)

Noncontrolling interest

7,651

 

7,087

 

Total shareholders' equity

716,769

 

547,800

 

Total liabilities, mezzanine equity and shareholders' equity $

3,887,094

 

$

3,712,692

 

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,

2022

2021

2022

2021

 
Net revenues $

295,976

 

$

318,480

 

$

1,191,263

 

$

1,282,233

 

Operating expenses:
Cost of services and products

133,652

 

137,832

 

546,661

 

569,629

 

Selling, general and administrative expenses

80,035

 

71,177

 

301,667

 

271,125

 

Loss on impairment of assets held for sale

 

 

131,698

 

5,704

 

Loss on disposal of assets

23,396

 

 

4,233

 

 

Depreciation and amortization

79,614

 

75,142

 

300,166

 

300,597

 

Income (loss) from operations

(20,721

)

34,329

 

(93,162

)

135,178

 

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

(33,236

)

(38,173

)

(124,978

)

(175,195

)

Loss on extinguishment of debt

 

 

 

(17,101

)

Change in fair value of contingent payment rights

 

13,143

 

 

(86,476

)

Other income, net

3,953

 

(3,156

)

13,378

 

1,335

 

Income (loss) from continuing operations before income taxes

(50,004

)

6,143

 

(204,762

)

(142,259

)

Income tax benefit

(9,244

)

(1,272

)

(27,058

)

(3,132

)

Income (loss) from continuing operations

(40,760

)

7,415

 

(177,704

)

(139,127

)

 
Discontinued operations:
Income from discontinued operations

839

 

10,030

 

23,467

 

41,845

 

Gain (loss) on sale of discontinued operations

(20

)

 

389,885

 

 

Income tax expense (benefit)

(4,974

)

2,485

 

94,999

 

9,411

 

Income from discontinued operations

5,793

 

7,545

 

318,353

 

32,434

 

 
Net income (loss)

(34,967

)

14,960

 

140,649

 

(106,693

)

Less: dividends on Series A preferred stock

10,352

 

2,677

 

40,104

 

2,677

 

Less: net income (loss) attributable to noncontrolling interest

171

 

(131

)

564

 

392

 

Net income (loss) attributable to common shareholders $

(45,490

)

$

12,414

 

$

99,981

 

$

(109,762

)

 
Net income (loss) per common share - basic and diluted:
Income (loss) from continuing operations $

(0.46

)

$

0.05

 

$

(1.90

)

$

(1.63

)

Income from discontinued operations

0.05

 

0.07

 

2.77

 

0.37

 

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

(0.41

)

$

0.12

 

$

0.87

 

$

(1.26

)

Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
 
 
Three Months Ended Year Ended
December 31, December 31,

2022

2021

2022

2021

OPERATING ACTIVITIES
Net income (loss) $

(34,967

)

$

14,960

 

$

140,649

 

$

(106,693

)

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

79,614

 

75,142

 

300,166

 

300,597

 

Deferred income taxes

(11,055

)

5,504

 

58,894

 

5,504

 

Cash distributions from wireless partnerships in excess of earnings

79

 

(150

)

5,697

 

1,195

 

Pension and post-retirement contributions in excess of expense

(5,214

)

(3,240

)

(29,205

)

(33,208

)

Non-cash, stock-based compensation

2,784

 

2,937

 

10,755

 

10,097

 

Amortization of deferred financing costs and discounts

1,856

 

2,501

 

7,331

 

15,622

 

Non-cash interest expense on convertible security interest

 

6,593

 

 

30,927

 

Loss on extinguishment of debt

 

 

 

17,101

 

(Gain) loss on change in fair value of contingent payment rights

 

(13,143

)

 

86,476

 

Loss on impairment of assets held for sale

 

 

131,698

 

5,704

 

(Gain) loss on sale of partnership interests

20

 

 

(389,885

)

 

Loss on disposal of assets

23,396

 

 

4,233

 

 

Other adjustments, net

191

 

(406

)

(367

)

3,226

 

Changes in operating assets and liabilities, net

(51,125

)

(67,810

)

(16,256

)

(17,681

)

Net cash provided by operating activities

5,579

 

22,888

 

223,710

 

318,867

 

INVESTING ACTIVITIES
Purchase of property, plant and equipment, net

(123,022

)

(140,858

)

(619,981

)

(480,346

)

Purchase of investments

(262,948

)

(20,801

)

(302,907

)

(175,764

)

Proceeds from sale of assets

1,661

 

3,343

 

22,918

 

3,469

 

Proceeds from business dispositions, net

79,781

 

 

105,823

 

 

Proceeds from sale and maturity of investments

175,859

 

65,000

 

327,419

 

66,198

 

Proceeds from sale of partnership interests, net

(6,601

)

 

482,966

 

 

Net cash provided by (used in) investing activities

(135,270

)

(93,316

)

16,238

 

(586,443

)

FINANCING ACTIVITIES
Proceeds from bond offering

 

 

 

400,000

 

Proceeds from issuance of long-term debt

 

 

 

150,000

 

Proceeds from issuance of common stock

 

75,000

 

 

75,000

 

Payment of finance lease obligations

(2,725

)

(1,900

)

(9,836

)

(6,365

)

Payment on long-term debt

 

 

 

(397,000

)

Payment of financing costs

(2,603

)

 

(2,603

)

(8,266

)

Share repurchases for minimum tax withholding

(1,178

)

(1,719

)

(1,292

)

(1,719

)

Net cash provided by (used in) financing activities

(6,506

)

71,381

 

(13,731

)

211,650

 

Net change in cash and cash equivalents

(136,197

)

953

 

226,217

 

(55,926

)

Cash and cash equivalents at beginning of period

462,049

 

98,682

 

99,635

 

155,561

 

Cash and cash equivalents at end of period $

325,852

 

$

99,635

 

$

325,852

 

$

99,635

 

Consolidated Communications Holdings, Inc.
Consolidated Revenue by Category
(Dollars in thousands)
(Unaudited)
 
 
Three Months Ended Year Ended
December 31, December 31,

2022

2021

2022

2021

Consumer:
Broadband (Data and VoIP) $

69,002

$

66,983

$

272,146

$

269,323

Voice services

34,314

39,518

144,853

160,698

Video services

11,876

15,371

54,153

65,114

115,192

121,872

471,152

495,135

Commercial:
Data services (includes VoIP)

56,662

57,444

228,466

228,931

Voice services

34,676

37,303

142,274

154,567

Other

10,320

11,408

43,100

40,032

101,658

106,155

413,840

423,530

Carrier:
Data and transport services

33,752

32,659

137,378

133,434

Voice services

3,685

4,088

14,772

17,183

Other

338

431

1,688

1,592

37,775

37,178

153,838

152,209

 
Subsidies

13,078

17,671

33,382

69,739

Network access

26,308

27,846

104,644

120,487

Other products and services

1,965

7,758

14,407

21,133

Total operating revenue $

295,976

$

318,480

$

1,191,263

$

1,282,233

Consolidated Communications Holdings, Inc.
Consolidated Revenue Trend by Category
(Dollars in thousands)
(Unaudited)
 
 
Three Months Ended
Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021
Consumer:
Broadband (Data and VoIP) $

69,002

$

69,641

$

67,592

$

65,911

$

66,983

Voice services

34,314

36,444

36,643

37,452

39,518

Video services

11,876

13,552

14,359

14,366

15,371

115,192

119,637

118,594

117,729

121,872

Commercial:
Data services (includes VoIP)

56,662

56,796

57,113

57,895

57,444

Voice services

34,676

35,484

35,775

36,339

37,303

Other

10,320

9,933

11,287

11,560

11,408

101,658

102,213

104,175

105,794

106,155

Carrier:
Data and transport services

33,752

33,878

36,263

33,485

32,659

Voice services

3,685

3,517

3,718

3,852

4,088

Other

338

605

354

391

431

37,775

38,000

40,335

37,728

37,178

 
Subsidies

13,078

7,187

6,534

6,583

17,671

Network access

26,308

27,277

24,846

26,213

27,846

Other products and services

1,965

2,305

3,906

6,231

7,758

Total operating revenue $

295,976

$

296,619

$

298,390

$

300,278

$

318,480

Consolidated Communications Holdings, Inc.
Reconciliation of Historical Revenue by Category to Normalized Revenue by Category
(Dollars in thousands)
(Unaudited)
 
 
Three Months Ended Three Months Ended
December 31, 2022 December 31, 2021
Historical Adjustments (1) Normalized Historical Adjustments (1) Normalized
Consumer:
Broadband (Data and VoIP) $

69,002

$

(1,138

)

$

67,864

$

66,983

$

(2,554

)

$

64,429

Voice services

34,314

(328

)

33,986

39,518

(972

)

38,546

Video services

11,876

(1,679

)

10,197

15,371

(3,089

)

12,282

115,192

(3,145

)

112,047

121,872

(6,615

)

115,257

Commercial:
Data services (includes VoIP)

56,662

(2,952

)

53,710

57,444

(4,444

)

53,000

Voice services

34,676

(818

)

33,858

37,303

(1,642

)

35,661

Other

10,320

(179

)

10,141

11,408

(305

)

11,103

101,658

(3,949

)

97,709

106,155

(6,391

)

99,764

Carrier:
Data and transport services

33,752

(171

)

33,581

32,659

(278

)

32,381

Voice services

3,685

(2

)

3,683

4,088

(5

)

4,083

Other

338

(3

)

335

431

 

431

37,775

(176

)

37,599

37,178

(283

)

36,895

 
Subsidies

13,078

 

13,078

17,671

(250

)

17,421

Network access

26,308

(303

)

26,005

27,846

(680

)

27,166

Other products and services

1,965

(121

)

1,844

7,758

(222

)

7,536

Total operating revenue $

295,976

$

(7,694

)

$

288,282

$

318,480

$

(14,441

)

$

304,039

 
Notes:
(1) These adjustments reflect the removal of operating revenues from 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 Historical Revenue by Category to Normalized Revenue by Category
(Dollars in thousands)
(Unaudited)
 
 
Year Ended Year Ended
December 31, 2022 December 31, 2021
Historical Adjustments (1) Normalized Historical Adjustments (1) Normalized
Consumer:
Broadband (Data and VoIP) $

272,146

$

(6,732

)

$

265,414

$

269,323

$

(10,763

)

$

258,560

Voice services

144,853

(2,067

)

142,786

160,698

(4,099

)

156,599

Video services

54,153

(9,684

)

44,469

65,114

(12,917

)

52,197

471,152

(18,483

)

452,669

495,135

(27,779

)

467,356

Commercial:
Data services (includes VoIP)

228,466

(15,355

)

213,111

228,931

(18,676

)

210,255

Voice services

142,274

(4,864

)

137,410

154,567

(7,052

)

147,515

Other

43,100

(1,039

)

42,061

40,032

(1,165

)

38,867

413,840

(21,258

)

392,582

423,530

(26,893

)

396,637

Carrier:
Data and transport services

137,378

(4,095

)

133,283

133,434

(1,035

)

132,399

Voice services

14,772

(14

)

14,758

17,183

(16

)

17,167

Other

1,688

(11

)

1,677

1,592

 

1,592

153,838

(4,120

)

149,718

152,209

(1,051

)

151,158

 
Subsidies

33,382

(49

)

33,333

69,739

(1,027

)

68,712

Network access

104,644

(1,715

)

102,929

120,487

(2,963

)

117,524

Other products and services

14,407

(490

)

13,917

21,133

(489

)

20,644

Total operating revenue $

1,191,263

$

(46,115

)

$

1,145,148

$

1,282,233

$

(60,202

)

$

1,222,031

 
Notes:
(1) These adjustments reflect the removal of operating revenues from 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 Income (Loss) from Continuing Operations to Adjusted EBITDA
(Dollars in thousands)
(Unaudited)
 
 
Three Months Ended Year Ended
December 31, December 31,

2022

2021

2022

2021

Income (loss) from continuing operations $

(40,760

)

$

7,415

 

$

(177,704

)

$

(139,127

)

Add (subtract):
Income tax benefit

(9,244

)

(1,272

)

(27,058

)

(3,132

)

Interest expense, net

33,236

 

38,173

 

124,978

 

175,195

 

Depreciation and amortization

79,614

 

75,142

 

300,166

 

300,597

 

EBITDA

62,846

 

119,458

 

220,382

 

333,533

 

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

11,902

 

3,616

 

29,656

 

14,771

 

Pension/OPEB benefit

(3,412

)

3,430

 

(12,309

)

(3,860

)

Loss on disposal of assets

23,396

 

 

4,233

 

 

Loss on extinguishment of debt

 

 

 

17,101

 

Loss on impairment

 

 

131,698

 

5,704

 

Change in fair value of contingent payment right

 

(13,143

)

 

86,476

 

Non-cash compensation (3)

2,784

 

2,937

 

10,755

 

10,097

 

Adjusted EBITDA from continuing operations

97,516

 

116,298

 

384,415

 

463,822

 

Investment distributions from discontinued operations

4,142

 

9,880

 

29,165

 

43,040

 

Adjusted EBITDA $

101,658

 

$

126,178

 

$

413,580

 

$

506,862

 

 
 
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 from Continuing Operations to Adjusted EBITDA Guidance
(Dollars in millions)
(Unaudited)
 
Year Ended
December 31, 2023
Range
Low High
Loss from continuing operations $

(123

)

$

(105

)

Add:
Income tax benefit

(43

)

(37

)

Interest expense, net

152

 

148

 

Depreciation and amortization

314

 

312

 

EBITDA

300

 

318

 

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

12

 

14

 

Pension/OPEB benefit

(12

)

(12

)

Non-cash compensation (3)

10

 

10

 

Adjusted EBITDA $

310

 

$

330

 

 
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, dividend income, integration 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 Total Net Debt to LTM Adjusted EBITDA Ratio
(Dollars in thousands)
(Unaudited)
 
 
December 31,

2022

Long-term debt and finance lease obligations:
Term loans, net of discount $8,699 $

991,176

 

6.50% Senior secured notes due 2028

750,000

 

5.00% Senior secured notes due 2028

400,000

 

Finance leases

35,746

 

Total debt as of December 31, 2022

2,176,922

 

Less: deferred debt issuance costs

(34,626

)

Less: cash, cash equivalents and short-term investments

(413,803

)

Total net debt as of December 31, 2022 $

1,728,493

 

 
Adjusted EBITDA for the year ended December 31, 2022 $

413,580

 

 
Total Net Debt to last 12 months Adjusted EBITDA 4.18x
Consolidated Communications Holdings, Inc.
Reconciliation of Income (Loss) Attributable to Common Shareholders from Continuing Operations to Adjusted Income (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,

2022

2021

2022

2021

Income (loss) from continuing operations $

(40,760

)

$

7,415

 

$

(177,704

)

$

(139,127

)

Less: dividends on Series A preferred stock

10,352

 

2,677

 

40,104

 

2,677

 

Less: net income (loss) attributable to noncontrolling interest

171

 

(131

)

564

 

392

 

Income (loss) attributable to common shareholders from continuing operations

(51,283

)

4,869

 

(218,372

)

(142,196

)

 
Adjustments to income (loss) attributable to common shareholders:
Dividends on Series A preferred stock

10,352

 

2,677

 

40,104

 

2,677

 

Integration and severance related costs, net of tax

1,498

 

511

 

3,081

 

2,865

 

Loss on impairment of assets held for sale

 

 

131,698

 

5,704

 

Loss on disposition of assets, net of tax

17,354

 

 

3,140

 

 

Loss on disposition of wireless spectrum licenses, net of tax

 

 

 

2,643

 

Loss on disposition of fixed wireless, net of tax

 

 

 

3,087

 

Loss on extinguishment of debt, net of tax

 

 

 

12,648

 

Change in fair value of contingent payment rights

 

(13,143

)

 

86,476

 

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

 

7,317

 

 

39,323

 

Non-cash interest expense for swaps, net of tax

(339

)

(282

)

(1,274

)

(964

)

Tax impact of non-deductible goodwill

2,931

 

 

(8,187

)

 

Change in deferred tax rate

(2,417

)

 

(3,062

)

 

Other, tax

622

 

1,663

 

622

 

1,663

 

Non-cash stock compensation, net of tax

2,065

 

2,172

 

7,977

 

7,468

 

Adjusted net income (loss) from continuing operations $

(19,217

)

$

5,784

 

$

(44,273

)

$

21,394

 

 
Weighted average number of common shares outstanding

111,929

 

100,024

 

111,754

 

87,293

 

 
Adjusted diluted net income (loss) per common share:
Adjusted net income (loss) from continuing operations $

(0.17

)

$

0.06

 

$

(0.40

)

$

0.25

 

Adjusted income from discontinued operations excluding gain on sale of partnership interests, net of tax

0.01

 

0.07

 

0.16

 

0.37

 

$

(0.16

)

$

0.13

 

$

(0.24

)

$

0.62

 

 
Notes:
Calculations above assume a 25.83% effective tax rate for the three months and year ended December 31, 2022 and 26.0% effective tax rate for the three months and year ended December 31, 2021.
Consolidated Communications Holdings, Inc.
Key Operating Metrics
(Unaudited)
 
 
December 31, September 30, June 30, March 31, December 31,

2022

2022

2022

2022

2021

Passings
Fiber Gig+ capable passings
Northern New England

561,905

 

531,035

 

451,414

 

341,010

 

291,921

 

All other markets

446,755

 

416,939

 

380,365

 

348,396

 

313,789

 

Total Fiber Gig+ capable (1)

1,008,660

 

947,974

 

831,779

 

689,406

 

605,710

 

 
DSL/Copper passings (2)(3)
Northern New England

1,174,295

 

1,205,165

 

1,284,786

 

1,395,190

 

1,444,279

 

All other markets

442,782

 

602,216

 

635,428

 

663,835

 

702,098

 

Total DSL/Copper (2)(3)

1,617,077

 

1,807,381

 

1,920,214

 

2,059,025

 

2,146,377

 

Total Passings

2,625,737

 

2,755,355

 

2,751,993

 

2,748,431

 

2,752,087

 

% Fiber Gig+ Coverage/Total Passings

38

%

34

%

30

%

25

%

22

%

 
Consumer Broadband Connections
Fiber Gig+ capable
Northern New England

45,258

 

38,778

 

31,050

 

24,882

 

20,032

 

All other markets

77,614

 

76,820

 

72,405

 

68,930

 

66,090

 

Total Fiber Gig+ capable connections

122,872

 

115,598

 

103,455

 

93,812

 

86,122

 

 
DSL/Copper (2)(3)
Northern New England

116,136

 

121,230

 

126,475

 

131,763

 

136,140

 

All other markets

128,450

 

145,084

 

151,283

 

154,575

 

162,302

 

Total DSL/Copper connections (2)(3)

244,586

 

266,314

 

277,758

 

286,338

 

298,442

 

Total Consumer Broadband Connections

367,458

 

381,912

 

381,213

 

380,150

 

384,564

 

 
Consumer Broadband Net Adds
Northern New England

1,386

 

2,483

 

880

 

473

 

(2,009

)

All other markets (2)(3)

(1,570

)

(1,784

)

183

 

(1,327

)

(4,088

)

Total Consumer Broadband Net Adds

(184

)

699

 

1,063

 

(854

)

(6,097

)

 
Consumer Broadband Penetration %
Fiber Gig+ capable
Northern New England

8

%

7

%

7

%

7

%

7

%

All other markets

17

%

18

%

19

%

20

%

21

%

Total Fiber Gig+ capable (3)

12

%

12

%

12

%

14

%

14

%

 
DSL/Copper (2)(3)
Northern New England

10

%

10

%

10

%

9

%

9

%

All other markets

29

%

24

%

24

%

23

%

23

%

Total DSL/Copper (2)(3)

15

%

15

%

14

%

14

%

14

%

Total Consumer Broadband Penetration %

14

%

14

%

14

%

14

%

14

%

 
Consumer Broadband Revenue by Service Type ($ in thousands)
Fiber Broadband Revenue (4) $

24,016

 

$

21,558

 

$

19,218

 

$

17,241

 

$

16,152

 

Copper and Other Broadband Revenue

44,986

 

48,083

 

48,374

 

48,670

 

50,831

 

Total Consumer Broadband Revenue by Service Type $

69,002

 

$

69,641

 

$

67,592

 

$

65,911

 

$

66,983

 

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

67.14

 

$

65.61

 

$

64.95

 

$

63.88

 

$

64.22

 

Copper Broadband ARPU $

53.55

 

$

53.87

 

$

52.36

 

$

50.78

 

$

50.65

 

 
Consumer Voice Connections (3)

276,779

 

294,441

 

306,458

 

316,634

 

328,849

 

 
Video Connections (3)

35,039

 

51,339

 

55,225

 

58,812

 

63,447

 

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

57,865

 

57,498

 

56,093

 

54,239

 

52,402

 

 
On-net buildings (3)

14,427

 

15,715

 

15,618

 

15,446

 

14,891

 

 
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, 2022, 403,000 of the target 400,000 passings for 2022 were upgraded to FttP and total fiber passings were ~1,009,000 or 38% 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.
(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 December 31, 2021 through September 30, 2022. Amounts have not been adjusted to reflect the sale.

 

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