Consolidated communications reports record fiber adds and third quarter 2022 results
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 third quarter 2022. “we achieved another record quarter with 12,100 fiber subscriber additions and are on track to complete at least 400,000 fiber location upgrades this year and reach 1 million total fiber locations,” said bob udell, chief executive officer at consolidated communications. “we remain committed to our five-year plan to bring fttp to 70% of our addressable market. fiber is our future and fidium is bringing meaningful benefits to consumers and communities as we deliver an industry-leading customer experience.” “in september, we closed on the sale of our wireless investments for $490 million in gross proceeds to fund our fiber expansion,” added udell. “we are executing on our growth plan and managing the build timeline and schedule well while working to secure new federal, state and local broadband partnership opportunities.” third quarter 2022 highlights and results (compared to third quarter 2021) revenue totaled $296.6 million, generating adjusted ebitda of $97.2 million. consumer fiber revenue grew approximately 40%, driven by more than 3x consumer fiber net adds and increased arpu. commercial data services revenue was $56.8 million, down 1.3%. carrier data-transport revenue was $33.9 million, up 1.0%. subsidy revenue was $7.2 million, a decline of $10.1 million, primarily reflecting caf ii step down and transition to the rural digital opportunity fund (rdof). total committed capital expenditures were $139.9 million driven by 116,000 fiber upgrades. operating expenses increased $7.5 million primarily due to marketing expenses related to the expansion of the company’s consumer fiber product and increased utility and fuel costs coupled with the non-recurrence of certain property tax rebates received in the third quarter of 2021. net interest expense was $32.1 million, a decrease of $11.1 million compared to a year ago, primarily as a result of non-cash interest of $10.9 million on the searchlight note, which was converted to perpetual preferred stock in conjunction with the second stage closing of its investment in december 2021. notwithstanding the heightened interest rate environment, the company is well positioned with 77% of its total debt at a fixed rate. at sept. 30, 2022, the weighted average cost of debt was 6.20%. cash distributions from the company’s wireless partnerships totaled $5.5 million, compared to $11.1 million a year ago, primarily due to verizon’s accelerated capital investments in the second quarter which impacted the company’s third quarter distributions. loss from continuing operations was ($7.3 million) compared to ($13.1 million) in the prior year. net loss per share from continuing operations was ($0.15) compared to ($0.14) in the prior year. 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 ($0.13) compared to $0.09 a year ago. adjusted ebitda was $97.2 million, compared to $127.4 million in the prior year. asset and investment sales on sept. 13, 2022, the company completed the sale of its limited partnership interests in five wireless partnerships to cellco partnership, d/b/a verizon wireless, for aggregate gross proceeds of $490 million. the proceeds from the sale will be invested in the business and used to support the company’s fiber to the premises (fttp) broadband growth plan. the sale is being treated as discontinued operations within the financial statements for all comparable periods. upon closing the transaction, the company recognized a pre-tax gain on the sale of $389.9 million. on mar. 3, 2022, consolidated announced an agreement to sell substantially all of its kansas city assets. the company currently expects net cash proceeds of approximately $90 million for the sale, subject to certain purchase price adjustments, closing conditions and customary regulatory approvals. the transaction is expected to close by year-end 2022. additionally, in the quarter the company recognized an impairment loss of $5.2 million due to changes in net assets held for sale. the company continues to actively review its portfolio for further monetization opportunities in support of its growth plan. during the quarter consolidated closed and recognized a pre-tax gain and proceeds from the sale of certain non-strategic communication towers and related equipment totaling $19.2 million. capital structure as of sept. 30, 2022, total liquidity was approximately $686 million, including cash and short-term investments of approximately $462 million and $224 million of available borrowing capacity on the revolving credit facility. the net leverage ratio for the trailing 12 months ended sept. 30, 2022, was 3.82x. the company has no maturities until 2027. 2022 outlook consolidated communications reaffirmed its guidance for the full-year 2022. adjusted ebitda is expected to be in a range of $400 million to $410 million. capital expenditures are expected to be in a range of $565 million to $585 million. cash interest expense is expected to be in a range of $125 million to $129 million. cash income taxes are expected to be in a range of $12 million to $17 million. conference call information consolidated’s third quarter earnings conference call will be webcast on nov. 1 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. 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 57,500 fiber route miles, consolidated is a top 10 u.s. fiber provider, turning technology into solutions that are backed by exceptional customer support. learn more at consolidated.com. use of non-gaap financial measures this press release, as well as the conference call, includes disclosures regarding “ebitda,” “adjusted ebitda,” “total net debt to last 12 month adjusted ebitda ratio” or “net debt leverage ratio,” and “adjusted diluted net income (loss) per share,” all of which are non-gaap financial measures and described in this section as not being in compliance with regulation s-x. accordingly, they should not be construed as alternatives to net cash from operating or investing activities, cash and cash equivalents, cash flows from operations, net income or net income per share as defined by gaap and are not, on their own, necessarily indicative of cash available to fund cash needs as determined in accordance with gaap. in addition, not all companies use identical calculations, and the non-gaap financial measures may not be comparable to other similarly titled measures of other companies. a reconciliation of the differences between these non-gaap financial measures and the most directly comparable financial measures presented in accordance with gaap is included in the tables that follow. adjusted ebitda is comprised of ebitda, adjusted for certain items as permitted or required by the lenders under our credit agreement in place at the end of each quarter in the periods presented. the tables that follow include an explanation of how adjusted ebitda is calculated for each of the periods presented with the reconciliation to net income. ebitda is defined as net earnings before interest expense, income taxes, depreciation and amortization on a historical basis. we present adjusted ebitda for several reasons. management believes adjusted ebitda is useful as a means to evaluate our ability to fund our estimated uses of cash (including interest on our debt). in addition, we have presented adjusted ebitda to investors in the past because it is frequently used by investors, securities analysts and other interested parties in the evaluation of companies in our industry, and management believes presenting it here provides a measure of consistency in our financial reporting. adjusted ebitda, referred to as available cash in our credit agreement, is also a component of the restrictive covenants and financial ratios contained in our credit agreement that requires us to maintain compliance with these covenants and limit certain activities, such as our ability to incur debt. the definitions in these covenants and ratios are based on adjusted ebitda after giving effect to specified charges. in addition, adjusted ebitda provides our board of directors with meaningful information, with other data, assumptions and considerations, to measure our ability to service and repay debt. we present the related “total net debt to last 12 month adjusted ebitda ratio” or “net debt leverage ratio” principally to help investors understand how we measure leverage and facilitate comparisons by investors, security analysts and others. this ratio differs in certain respects from the similar ratio used in our credit agreement against comparable measures of certain other companies in our industry. these measures differ in certain respects from the ratios used in our senior notes indenture. these non-gaap financial measures have certain shortcomings. in particular, adjusted ebitda does not represent the residual cash flows available for discretionary expenditures, since items such as debt repayment and interest payments are not deducted from such measure. in addition, the ratio of total net debt to last 12-month adjusted ebitda is subject to the risk that we may not be able to use the cash on the balance sheet to reduce our debt on a dollar-for-dollar basis. management believes this ratio is useful as a means to evaluate our ability to incur additional indebtedness in the future. we present the non-gaap measure “adjusted diluted net income (loss) per share” because our net income (loss) and net income (loss) per share are regularly affected by items that occur at irregular intervals or are non-cash items. we believe that disclosing these measures assists investors, securities analysts and other interested parties in evaluating both our company over time and the relative performance of the companies in our industry. forward-looking statements certain statements in this communication are forward-looking statements and are made pursuant to the safe harbor provisions of the private securities litigation reform act of 1995. these forward-looking statements reflect, among other things, our current expectations, plans, strategies, and anticipated financial results. there are a number of risks, uncertainties, and conditions that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements. these risks and uncertainties include a number of factors related to our business, including the uncertainties relating to the impact of the novel coronavirus (covid-19) pandemic on the company’s business, results of operations, cash flows, stock price and employees; the possibility that any of the anticipated benefits of the strategic investment from searchlight capital partners, l.p. or our refinancing of outstanding debt, including our senior secured credit facilities, or of the sales of the limited partnership interests will not be realized;; the anticipated use of proceeds of the strategic investment or the sales of the limited partnership interests; the outcome of any legal proceedings that may be instituted against the company or its directors; economic and financial market conditions generally and economic conditions in our service areas; various risks to the price and volatility of our common stock; changes in the valuation of pension plan assets; the substantial amount of debt and our ability to repay or refinance it or incur additional debt in the future; our need for a significant amount of cash to service and repay the debt restrictions contained in our debt agreements that limit the discretion of management in operating the business; regulatory changes, including changes to subsidies, rapid development and introduction of new technologies and intense competition in the telecommunications industry; risks associated with our possible pursuit of or failure to consummate acquisitions or dispositions; system failures; cyber-attacks, information or security breaches or technology failure of ours or of a third party; losses of large customers or government contracts; risks associated with the rights-of-way for the network; disruptions in the relationship with third party vendors; losses of key management personnel and the inability to attract and retain highly qualified management and personnel in the future; changes in the extensive governmental legislation and regulations governing telecommunications providers and the provision of telecommunications services; new or changing tax laws or regulations; telecommunications carriers disputing and/or avoiding their obligations to pay network access charges for use of our network; high costs of regulatory compliance; the competitive impact of legislation and regulatory changes in the telecommunications industry; liability and compliance costs regarding environmental regulations; risks associated with discontinuing paying dividends on our common stock; and the potential for the rights of our series a preferred stock to negatively impact our cash flow. a detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements are discussed in more detail in our filings with the securities and exchange commission (“sec”), including our reports on form 10-k and form 10-q. many of these circumstances are beyond our ability to control or predict. moreover, forward-looking statements necessarily involve assumptions on our part. these forward-looking statements generally are identified by the words “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” “plan,” “should,” “may,” “will,” “would,” “will be,” “will continue” or similar expressions. such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the company and its subsidiaries to be different from those expressed or implied in the forward-looking statements. all forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements that appear throughout this communication. furthermore, forward-looking statements speak only as of the date they are made. except as required under the federal securities laws or the rules and regulations of the sec, we disclaim any intention or obligation to update or revise publicly any forward-looking statements. you should not place undue reliance on forward-looking statements. tag: [consolidated-communications-earnings] 2022 2021 462,049 99,635 — 110,801 115,985 133,362 — 1,134 63,730 56,831 92,822 26,052 734,586 427,815 2,175,557 2,019,444 10,283 10,799 929,570 1,013,243 50,801 73,939 10,557 10,557 — 98,779 57,626 58,116 3,968,980 3,712,692 30,445 40,953 48,466 53,028 65,722 68,272 35,139 17,819 108,867 97,417 10,278 7,959 4,611 97 303,528 285,545 2,125,994 2,118,853 268,962 194,458 190,814 214,671 46,901 62,789 2,936,199 2,876,316 318,328 288,576 1,154 1,137 729,186 740,746 23,272 (141,599 ) (46,639 ) (59,571 ) 7,480 7,087 714,453 547,800 3,968,980 3,712,692 2022 2021 2022 2021 296,619 318,584 895,287 963,753 141,226 142,507 413,009 431,797 72,837 64,100 221,632 199,948 5,208 5,704 131,698 5,704 (19,163 ) — (19,163 ) — 75,659 73,765 220,552 225,455 20,852 32,508 (72,441 ) 100,849 (32,071 ) (43,176 ) (91,742 ) (137,022 ) — — — (17,101 ) — (2,205 ) — (99,619 ) 2,984 2,325 9,425 4,491 (8,235 ) (10,548 ) (154,758 ) (148,402 ) (978 ) 2,552 (17,814 ) (1,860 ) (7,257 ) (13,100 ) (136,944 ) (146,542 ) 4,744 11,020 22,628 31,815 389,905 — 389,905 — 94,715 2,401 99,973 6,926 299,934 8,619 312,560 24,889 292,677 (4,481 ) 175,616 (121,653 ) 10,352 — 29,752 — 75 240 393 523 282,250 (4,721 ) 145,471 (122,176 ) (0.15 ) (0.14 ) (1.45 ) (1.77 ) 2.60 0.09 2.72 0.30 2.45 (0.05 ) 1.27 (1.47 ) 2022 2021 2022 2021 292,677 (4,481 ) 175,616 (121,653 ) 75,659 73,765 220,552 225,455 81,775 4,949 69,949 4,975 3,957 107 5,618 1,345 (4,830 ) (11,755 ) (23,991 ) (29,968 ) 2,939 3,217 7,971 7,160 1,849 4,472 5,475 13,121 — 8,230 — 24,334 — — — 17,101 — 2,205 — 99,619 5,208 5,704 131,698 5,704 (389,905 ) — (389,905 ) — (19,163 ) — (19,163 ) — (162 ) (99 ) (558 ) 3,632 26,622 23,834 34,869 45,154 76,626 110,148 218,131 295,979 (164,045 ) (144,292 ) (496,959 ) (339,488 ) — (64,996 ) (39,959 ) (154,963 ) 19,463 37 21,257 126 — — 26,042 — 25,006 — 151,560 1,198 489,567 — 489,567 — 369,991 (209,251 ) 151,508 (493,127 ) — — — 400,000 — — — 150,000 (2,587 ) (1,529 ) (7,111 ) (4,465 ) — — — (397,000 ) — — — (8,266 ) — — (114 ) — (2,587 ) (1,529 ) (7,225 ) 140,269 444,030 (100,632 ) 362,414 (56,879 ) 18,019 199,314 99,635 155,561 462,049 98,682 462,049 98,682 2022 2021 2022 2021 69,641 68,604 203,144 202,340 36,444 40,587 110,539 121,180 13,552 16,163 42,277 49,743 119,637 125,354 355,960 373,263 56,796 57,545 171,804 171,487 35,484 38,446 107,598 117,264 9,933 10,205 32,780 28,624 102,213 106,196 312,182 317,375 33,878 33,556 103,626 100,775 3,517 4,173 11,087 13,095 605 375 1,350 1,161 38,000 38,104 116,063 115,031 7,187 17,264 20,304 52,068 27,277 29,923 78,336 92,641 2,305 1,743 12,442 13,375 296,619 318,584 895,287 963,753 69,641 67,592 65,911 66,983 68,604 36,444 36,643 37,452 39,518 40,587 13,552 14,359 14,366 15,371 16,163 119,637 118,594 117,729 121,872 125,354 56,796 57,113 57,895 57,444 57,545 35,484 35,775 36,339 37,303 38,446 9,933 11,287 11,560 11,408 10,205 102,213 104,175 105,794 106,155 106,196 33,878 36,263 33,485 32,659 33,556 3,517 3,718 3,852 4,088 4,173 605 354 391 431 375 38,000 40,335 37,728 37,178 38,104 7,187 6,534 6,583 17,671 17,264 27,277 24,846 26,213 27,846 29,923 2,305 3,906 6,231 7,758 1,743 296,619 298,390 300,278 318,480 318,584 2022 2021 2022 2021 (7,257 ) (13,100 ) (136,944 ) (146,542 ) (978 ) 2,552 (17,814 ) (1,860 ) 32,071 43,176 91,742 137,022 75,659 73,765 220,552 225,455 99,495 106,393 157,536 214,075 6,186 919 17,754 11,155 (2,950 ) (2,207 ) (8,897 ) (7,290 ) (19,163 ) — (19,163 ) — — — — 17,101 5,208 5,704 131,698 5,704 — 2,205 — 99,619 2,939 3,217 7,971 7,160 91,715 116,231 286,899 347,524 5,478 11,127 25,023 33,160 97,193 127,358 311,922 380,684 (151 ) (138 ) (15 ) (14 ) 125 122 293 290 252 260 23 25 126 126 (11 ) (11 ) 10 10 400 410 2022 990,767 750,000 400,000 28,975 2,169,742 (33,470 ) (462,049 ) 1,674,223 438,100 3.82 x 2022 2021 2022 2021 (7,257 ) (13,100 ) (136,944 ) (146,542 ) 10,352 — 29,752 — 75 240 393 523 (17,684 ) (13,340 ) (167,089 ) (147,065 ) 10,352 — 29,752 — — 674 1,604 2,353 5,208 5,704 131,698 5,704 (14,167 ) — (14,167 ) — — — — 2,641 — — — 3,085 — — — 12,639 — 2,205 — 99,619 — 10,944 — 32,006 (328 ) (261 ) (932 ) (682 ) 821 — (11,118 ) — (644 ) — (644 ) — 2,173 2,378 5,893 5,292 (14,269 ) 8,304 (25,003 ) 15,591 111,697 92,791 111,695 83,003 (0.13 ) 0.09 (0.22 ) 0.19 0.04 0.09 0.15 0.30 (0.09 ) 0.18 (0.07 ) 0.49 2022 2022 2022 2021 2021 531,035 451,414 341,010 291,921 217,660 416,939 380,365 348,396 313,789 276,500 947,974 831,779 689,406 605,710 494,160 1,205,165 1,284,786 1,395,190 1,444,279 1,518,540 602,216 635,428 663,835 702,098 737,016 1,807,381 1,920,214 2,059,025 2,146,377 2,255,556 2,755,355 2,751,993 2,748,431 2,752,087 2,749,716 34 % 30 % 25 % 22 % 18 % 38,778 31,050 24,882 20,032 17,288 76,820 72,405 68,930 66,090 64,251 115,598 103,455 93,812 86,122 81,539 121,230 126,475 131,763 136,140 140,893 145,084 151,283 154,575 162,302 168,229 266,314 277,758 286,338 298,442 309,122 381,912 381,213 380,150 384,564 390,661 2,483 880 473 (2,009 ) (803 ) (1,784 ) 183 (1,327 ) (4,088 ) (2,016 ) 699 1,063 (854 ) (6,097 ) (2,819 ) 7 % 7 % 7 % 7 % 8 % 18 % 19 % 20 % 21 % 23 % 12 % 12 % 14 % 14 % 17 % 10 % 10 % 9 % 9 % 9 % 24 % 24 % 23 % 23 % 23 % 15 % 14 % 14 % 14 % 14 % 14 % 14 % 14 % 14 % 14 % 21,558 19,218 17,241 16,152 15,423 48,083 48,374 48,670 50,831 53,181 69,641 67,592 65,911 66,983 68,604 65.61 64.95 63.88 64.22 64.64 53.87 52.36 50.78 50.65 51.32 294,441 306,458 316,634 328,849 341,135 51,339 55,225 58,812 63,447 66,971 57,498 56,093 54,239 52,402 50,405 15,715 15,618 15,446 14,891 14,625
