Consolidated Communications Announces Second Quarter Financial Results; Delivers 93% Growth in Consumer Fiber Net Adds

Rhea-AI Summary

Consolidated Communications Holdings, a top 10 fiber provider in the U.S. (Nasdaq: CNSL) reported second-quarter results for 2023. The company added 18,651 fiber net adds, grew consumer fiber broadband revenue by 58%, increased ARPU by 5.1%, and upgraded 57,438 locations to fiber Gigabit+ speeds. They also entered an agreement to sell non-core Washington assets for gross proceeds of $73 million and announced business simplification and cost-cutting initiatives expected to generate annualized cost savings of over $30 million.

Positive

• Increased consumer fiber broadband revenue by 58%
• Grew consumer fiber net adds by 190% compared to the first quarter
• Expected annualized cost savings of over $30 million from business simplification and cost-cutting initiatives
• Entered agreement to sell non-core Washington assets for gross proceeds of $73 million

Negative

• Net loss of ($119.0 million)
• Revenue totaled $275.2 million, down 7.8% or 3.0% normalized1
• Net loss per share was ($1.05) in the second quarter of 2023
• Adjusted EBITDA was $76.9 million

• Added 18,651 fiber net adds, an increase from 9,643 fiber net adds a year ago
• Grew consumer fiber broadband revenue 58%¹ and increased ARPU 5.1%
• Upgraded 57,438 locations to fiber Gigabit+ speeds; FttP coverage to approach approximately 50% of addressable market by year end
• Entered agreement to sell non-core Washington assets for gross proceeds of $73 million
• Announced business simplification and cost cutting initiatives that are expected to generate annualized cost savings of more than $30 million

MATTOON, Ill.--(BUSINESS WIRE)-- Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) (the “Company” or “Consolidated”), a top 10 fiber provider in the U.S., today reported results for the second quarter of 2023.

“With an improved go-to-market strategy, we have great momentum, as evidenced by 18,651 consumer fiber net adds in the second quarter and nearly 7,000 overall consumer broadband net adds, representing 190% growth versus the first quarter,” said Bob Udell, president and chief executive officer at Consolidated. “We carried this momentum into July by adding nearly 7,300 consumer fiber subscribers in the month.”

Udell added, “As we move into the second half of the year, we’ll continue to build upon a fiber-first strategy across our consumer, commercial and carrier channels as we generate long-term revenue growth and deliver the most reliable services for our customers. We expect that our business simplification and cost savings initiatives will contribute over $30 million on an annualized basis to improve EBITDA and margins starting in the second half of 2023.”

____________________

¹ Q2 2022 normalized for the divestitures of the Company’s Kansas assets, where applicable, which closed on Nov. 30, 2022. Refer to the tables contained in this press release for a reconciliation of all non-GAAP measures.

Second Quarter 2023 Results (compared to second quarter 2022 where applicable)

• Revenue totaled $275.2 million, down 7.8% or 3.0% normalized¹.
• Consumer fiber revenue was $29.6 million, up approximately 54% or 58% normalized¹, driven by strong operating metrics including 18,651 consumer fiber net adds and increased ARPU of 5.1%.
• Consumer broadband revenue was $71.3 million, up 5.5% or 8.4% normalized¹.
• Commercial data services revenue was $53.2 million, down 6.8% or up 0.5% normalized¹.
• Carrier data-transport revenue was $31.2 million, down 13.9% or 5.1% normalized¹.
• Other products and services revenue was $1.6 million, a decrease of $2.3 million, largely due to lower recognition of public private partnership construction projects.
• Net loss was ($119.0 million). Adjusted EBITDA was $76.9 million.
• Total committed capital expenditures were $164.4 million.

Operating expenses decreased $0.9 million versus the prior year driven by lower video programming costs and network access expense, in addition to the impact of the divestiture of the Kansas City operations on Nov. 30, 2022. The decline was mitigated by higher marketing and advertising expenses to drive growth and additional costs related to professional fees for customer service and process improvement initiatives.

Net interest expense was $36.9 million, an increase of $6.7 million versus the prior year, primarily as a result of higher interest on the term loan. The Company entered into a new three-year interest rate swap agreement for $500 million of its term loan debt, commencing upon the termination of its previous swap agreement. Including the new swap agreement, the Company has 77% of its total debt at a fixed rate through September 2026. As of June 30, 2023, the weighted average cost of debt was 6.72%.

Net loss in the second quarter of 2023, which includes an impairment loss of $77.8 million recorded in relation to the Washington assets held for sale, was ($119.0 million) compared to ($11.5 million) in the second quarter of 2022, which included $9.1 million of income from discontinued operations. Net loss per share was ($1.05) in the second quarter of 2023 as compared to ($0.10) in the second quarter of 2022. Adjusted diluted net income (loss) per share excludes certain items as outlined in the table provided in this release. Adjusted diluted net loss per share from continuing operations was ($0.28) compared to ($0.08) in the second quarter of 2022.

Capital Expenditures

Total committed capital expenditures were $164.4 million, driven by 57,438 new fiber passings added in the quarter, record second quarter fiber adds, seasonal infrastructure projects and pre-committed inventory purchases in support of future install and build activity.

Business Simplification and Cost Savings Initiatives

The Company has initiated a significant business simplification and cost savings initiative to further align and focus as a fiber-first provider, better serve its communities, generate efficiencies and drive improved margins. These actions are estimated to result in an annualized benefit of more than $30 million commencing in the second half of 2023.

Washington Divestiture

The Company entered into an agreement to sell its Washington assets for gross proceeds of $73 million, subject to the finalization of certain working capital and other post-closing purchase price adjustments, to Palisade Infrastructure in an all-cash transaction. This was a result of the Company’s ongoing strategic asset review and focus on its fiber expansion plans in its core regions. The transaction is expected to close in the second half of 2024. In the quarter, the Company recognized an impairment loss of $77.8 million associated with this transaction.

Capital Structure

As of June 30, 2023, the Company maintained liquidity with cash and short-term investments of approximately $203 million and $215 million of available borrowing capacity on the revolving credit facility, subject to certain covenants. The net leverage ratio for the trailing 12 months ended June 30, 2023, was 5.55x. The Company continues to balance its fiber build and growth initiatives with the timing of governmental broadband partnerships and its liquidity, which is being enhanced through recent actions, including cost savings initiatives and the sale of non-core assets.

Proposal by Searchlight Capital Partners

Discussions continue between the Special Committee of the Board of Directors and Searchlight Capital Partners regarding the non-binding proposal announced on April 13, 2023.

2023 Outlook

Consolidated Communications updated its guidance for capital expenditures and reaffirmed its guidance for all other metrics 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 approximately $495 million. Previous capital outlook was $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.

Conference Call Information

Consolidated’s second 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 nearly 59,000 fiber route miles, Consolidated is a top 10 U.S. fiber provider, turning technology into solutions that are backed by exceptional customer support. Learn more at consolidated.com.

Use of Non-GAAP Financial Measures

This press release, as well as the conference call, includes disclosures regarding “EBITDA,” “adjusted EBITDA,” “total net debt to last 12 month adjusted EBITDA ratio” or “Net debt leverage ratio,” “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 press release, including those relating to the current expectations, plans, strategies, anticipated financial results, contributions to EBITDA and margins as a result of business simplification and cost savings initiatives, and the timeline for and anticipated benefits related to the closing of the sale of certain Washington non-core assets in the second half of 2024, are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect, among other things, our current expectations, plans, strategies and anticipated financial results. There are a number of risks, uncertainties and conditions that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements, including: significant competition in all parts of our business and among our customer channels; our ability to adapt to rapid technological changes; shifts in our product mix that may result in a decline in operating profitability; public health threats, including the COVID-19 pandemic; continued receipt of support from various funds established under federal and state laws; disruptions in our networks and infrastructure and any related service delays or disruptions could cause us to lose customers and incur additional expenses; cyber-attacks may lead to unauthorized access to confidential customer, personnel and business information that could adversely affect our business; our operations require substantial capital expenditures and our business, financial condition, results of operations and liquidity may be impacted if funds for capital expenditures are not available when needed; our ability to obtain and maintain necessary rights-of-way for our networks; our ability to obtain necessary hardware, software and operational support from third-party vendors; substantial video content costs continue to rise; our ability to enter into new collective bargaining agreements or renew existing agreements; our ability to attract and/or retain certain key management and other personnel in the future; risks associated with acquisitions and the realization of anticipated benefits from such acquisitions; increasing attention to, and evolving expectations for, environmental, social and governance initiatives; unfavorable changes in financial markets could affect pension plan investments; weak economic conditions, and the other risk factors described in Part I, Item 1A of Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022. Many of these circumstances are beyond our ability to control or predict. Moreover, forward-looking statements necessarily involve assumptions on our part. These forward-looking statements generally are identified by the words “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” “plan,” “should,” “may,” “will,” “would,” “will be,” “will continue” or similar expressions. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements that appear throughout this press release. Furthermore, undue reliance should not be placed on forward-looking statements, which are based on the information currently available to us and speak only as of the date they are made. Except as required under federal securities laws or the rules and regulations of the Securities and Exchange Commission, we disclaim any intention or obligation to update or revise publicly any forward-looking statements.

Tag: [Consolidated-Communications-Earnings]

Consolidated Communications Holdings, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
(Unaudited)
		June 30,				December 31,
		2023				2022
ASSETS
Current assets:
Cash and cash equivalents		$	202,578			$	325,852
Short-term investments			—				87,951
Accounts receivable, net			100,827				119,675
Income tax receivable			6,811				1,670
Prepaid expenses and other current assets			60,138				62,996
Assets held for sale			68,997				—
Total current assets			439,351				598,144
Property, plant and equipment, net			2,390,071				2,234,122
Investments			9,095				10,297
Goodwill			814,624				929,570
Customer relationships, net			29,772				43,089
Other intangible assets			10,557				10,557
Other assets			65,942				61,315
Total assets		$	3,759,412			$	3,887,094
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	50,306			$	33,096
Advance billings and customer deposits			45,625				46,664
Accrued compensation			55,585				60,903
Accrued interest			18,175				18,201
Accrued expense			126,220				95,206
Current portion of long-term debt and finance lease obligations			16,821				12,834
Liabilities held for sale			3,297				—
Total current liabilities			316,029				266,904
Long-term debt and finance lease obligations			2,135,344				2,129,462
Deferred income taxes			241,873				274,309
Pension and other post-retirement obligations			120,756				123,644
Other long-term liabilities			46,172				47,326
Total liabilities			2,860,174				2,841,645
Series A Preferred Stock, par value $0.01 per share; 10,000,000 shares authorized, 477,047 and 456,343 shares outstanding as of June 30, 2023 and December 31, 2022, respectively; liquidation preference of $498,338 and $477,047 as of June 30, 2023 and December 31, 2022, respectively			349,971				328,680
Shareholders' equity:
Common stock, par value $0.01 per share; 150,000,000 shares authorized, 116,610,525 and 115,167,193 shares outstanding as of June 30, 2023 and December 31, 2022, respectively			1,167				1,152
Additional paid-in capital			701,287				720,442
Accumulated deficit			(157,223	)			(11,866	)
Accumulated other comprehensive loss, net			(3,919	)			(610	)
Noncontrolling interest			7,955				7,651
Total shareholders' equity			549,267				716,769
Total liabilities, mezzanine equity and shareholders' equity		$	3,759,412			$	3,887,094

Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2023				2022				2023				2022
Net revenues		$	275,162			$	298,390			$	551,288			$	598,668
Operating expenses:
Cost of services and products			126,967				135,888				258,905				271,783
Selling, general and administrative expenses			83,565				75,510				164,849				148,795
Loss on impairment of assets held for sale			77,755				—				77,755				126,490
Loss on disposal of assets			2,384				—				5,688				—
Depreciation and amortization			79,538				72,543				157,237				144,893
Income (loss) from operations			(95,047	)			14,449				(113,146	)			(93,293	)
Other income (expense):
Interest expense, net of interest income			(36,903	)			(30,156	)			(70,763	)			(59,671	)
Other income, net			5,410				3,099				8,168				6,441
Loss from continuing operations before income taxes			(126,540	)			(12,608	)			(175,741	)			(146,523	)
Income tax benefit			(18,448	)			(2,017	)			(30,688	)			(16,836	)
Loss from continuing operations			(108,092	)			(10,591	)			(145,053	)			(129,687	)
Discontinued operations:
Income from discontinued operations			—				9,821				—				17,884
Income tax expense			—				742				—				5,258
Income from discontinued operations			—				9,079				—				12,626
Net loss			(108,092	)			(1,512	)			(145,053	)			(117,061	)
Less: dividends on Series A preferred stock			10,704				9,802				21,291				19,400
Less: net income attributable to noncontrolling interest			161				203				304				318
Net loss attributable to common shareholders		$	(118,957	)		$	(11,517	)		$	(166,648	)		$	(136,779	)
Net income (loss) per common share - basic and diluted:
Loss from continuing operations		$	(1.05	)		$	(0.18	)		$	(1.47	)		$	(1.33	)
Income from discontinued operations			—				0.08				—				0.11
Net loss per basic and diluted common shares attributable to common shareholders		$	(1.05	)		$	(0.10	)		$	(1.47	)		$	(1.22	)

Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2023				2022				2023				2022
OPERATING ACTIVITIES
Net loss		$	(108,092	)		$	(1,512	)		$	(145,053	)		$	(117,061	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			79,538				72,543				157,237				144,893
Deferred income taxes			(19,020	)			(1,266	)			(31,259	)			(11,826	)
Cash distributions from wireless partnerships in excess of earnings			—				1,508				—				1,661
Pension and post-retirement contributions in excess of expense			(2,676	)			(9,819	)			(5,537	)			(19,161	)
Non-cash, stock-based compensation			2,388				2,833				3,187				5,032
Amortization of deferred financing costs and discounts			1,874				1,824				3,721				3,626
Loss on impairment of assets held for sale			77,755				—				77,755				126,490
Loss on disposal of assets			2,384				—				5,688				—
Other adjustments, net			(2,443	)			(207	)			(2,861	)			(396	)
Changes in operating assets and liabilities, net			(19,475	)			(5,959	)			4,441				8,247
Net cash provided by operating activities			12,233				59,945				67,319				141,505
INVESTING ACTIVITIES
Purchase of property, plant and equipment, net			(150,034	)			(176,434	)			(280,860	)			(332,914	)
Purchase of investments			—				—				—				(39,959	)
Proceeds from sale of assets			6,509				1,720				6,801				1,794
Proceeds from business dispositions, net			—				—				—				26,042
Proceeds from sale and maturity of investments			90,000				60,800				91,623				126,554
Net cash used in investing activities			(53,525	)			(113,914	)			(182,436	)			(218,483	)
FINANCING ACTIVITIES
Payment of finance lease obligations			(4,007	)			(2,183	)			(7,121	)			(4,524	)
Share repurchases for minimum tax withholding			—				—				(1,036	)			(114	)
Net cash used in financing activities			(4,007	)			(2,183	)			(8,157	)			(4,638	)
Net change in cash and cash equivalents			(45,299	)			(56,152	)			(123,274	)			(81,616	)
Cash and cash equivalents at beginning of period			247,877				74,171				325,852				99,635
Cash and cash equivalents at end of period		$	202,578			$	18,019			$	202,578			$	18,019

Consolidated Communications Holdings, Inc.
Consolidated Revenue by Category
(Dollars in thousands)
(Unaudited)
		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2023			2022			2023			2022
Consumer:
Broadband (Data and VoIP)		$	71,339		$	67,592		$	139,300		$	133,503
Voice services			31,352			36,643			63,615			74,095
Video services			9,362			14,359			18,956			28,725
			112,053			118,594			221,871			236,323
Commercial:
Data services (includes VoIP)			53,230			57,113			106,364			115,008
Voice services			32,236			35,775			64,867			72,114
Other			10,378			11,287			20,134			22,847
			95,844			104,175			191,365			209,969
Carrier:
Data and transport services			31,224			36,263			64,147			69,748
Voice services			4,263			3,718			8,630			7,570
Other			313			354			663			745
			35,800			40,335			73,440			78,063
Subsidies			7,072			6,534			14,108			13,117
Network access			22,747			24,846			47,191			51,059
Other products and services			1,646			3,906			3,313			10,137
Total operating revenue		$	275,162		$	298,390		$	551,288		$	598,668

Consolidated Communications Holdings, Inc.
Consolidated Revenue Trend by Category
(Dollars in thousands)
(Unaudited)
		Three Months Ended
		Q2 2023			Q1 2023			Q4 2022			Q3 2022			Q2 2022
Consumer:
Broadband (Data and VoIP)		$	71,339		$	67,961		$	69,002		$	69,641		$	67,592
Voice services			31,352			32,263			34,314			36,444			36,643
Video services			9,362			9,594			11,876			13,552			14,359
			112,053			109,818			115,192			119,637			118,594
Commercial:
Data services (includes VoIP)			53,230			53,134			56,662			56,796			57,113
Voice services			32,236			32,631			34,676			35,484			35,775
Other			10,378			9,756			10,320			9,933			11,287
			95,844			95,521			101,658			102,213			104,175
Carrier:
Data and transport services			31,224			32,923			33,752			33,878			36,263
Voice services			4,263			4,367			3,685			3,517			3,718
Other			313			350			338			605			354
			35,800			37,640			37,775			38,000			40,335
Subsidies			7,072			7,036			13,078			7,187			6,534
Network access			22,747			24,444			26,308			27,277			24,846
Other products and services			1,646			1,667			1,965			2,305			3,906
Total operating revenue		$	275,162		$	276,126		$	295,976		$	296,619		$	298,390

Consolidated Communications Holdings, Inc.
Reconciliation of Historical Revenue by Category to Normalized Revenue by Category
(Dollars in thousands)
(Unaudited)
		Three Months Ended										Six Months Ended
		June 30, 2022										June 30, 2022
		Historical			Adjustments(1)				Normalized			Historical			Adjustments(1)				Normalized
Consumer:
Broadband (Data and VoIP)		$	67,592		$	(1,788	)		$	65,804		$	133,503		$	(3,836	)		$	129,667
Voice services			36,643			(541	)			36,102			74,095			(1,237	)			72,858
Video services			14,359			(2,696	)			11,663			28,725			(5,406	)			23,319
			118,594			(5,025	)			113,569			236,323			(10,479	)			225,844
Commercial:
Data services (includes VoIP)			57,113			(4,140	)			52,973			115,008			(8,369	)			106,639
Voice services			35,775			(1,337	)			34,438			72,114			(2,792	)			69,322
Other			11,287			(286	)			11,001			22,847			(587	)			22,260
			104,175			(5,763	)			98,412			209,969			(11,748	)			198,221
Carrier:
Data and transport services			36,263			(3,352	)			32,911			69,748			(3,640	)			66,108
Voice services			3,718			(4	)			3,714			7,570			(9	)			7,561
Other			354			(2	)			352			745			(3	)			742
			40,335			(3,358	)			36,977			78,063			(3,652	)			74,411
Subsidies			6,534			—				6,534			13,117			(49	)			13,068
Network access			24,846			(430	)			24,416			51,059			(938	)			50,121
Other products and services			3,906			(106	)			3,800			10,137			(187	)			9,950
Total operating revenue		$	298,390		$	(14,682	)		$	283,708		$	598,668		$	(27,053	)		$	571,615
Notes:
(1) These adjustments reflect the removal of operating revenues for divestitures. We completed the sale of the Company's Ohio and Kansas assets on January 31, 2022 and November 30, 2022, respectively.

Consolidated Communications Holdings, Inc.
Reconciliation of Loss from Continuing Operations to Adjusted EBITDA
(Dollars in thousands)
(Unaudited)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2023				2022				2023				2022
Loss from continuing operations		$	(108,092	)		$	(10,591	)		$	(145,053	)		$	(129,687	)
Add (subtract):
Income tax benefit			(18,448	)			(2,017	)			(30,688	)			(16,836	)
Interest expense, net			36,903				30,156				70,763				59,671
Depreciation and amortization			79,538				72,543				157,237				144,893
EBITDA			(10,099	)			90,091				52,259				58,041
Adjustments to EBITDA (1):
Other, net (2)			5,441				6,244				15,471				11,568
Pension/OPEB benefit			(931	)			(2,964	)			(2,072	)			(5,947	)
Loss on disposal of assets			2,384				—				5,688				—
Loss on impairment			77,755				—				77,755				126,490
Non-cash compensation (3)			2,388				2,833				3,187				5,032
Adjusted EBITDA from continuing operations			76,938				96,204				152,288				195,184
Investment distributions from discontinued operations			—				11,329				—				19,545
Adjusted EBITDA		$	76,938			$	107,533			$	152,288			$	214,729
Notes:
(1) These adjustments reflect those required or permitted by the lenders under our credit agreement.
(2) Other, net includes income attributable to noncontrolling interests, acquisition and non-recurring related costs, and certain miscellaneous items.
(3) Represents compensation expenses in connection with our Restricted Share Plan, which because of the non-cash nature of the expenses are excluded from adjusted EBITDA.

Consolidated Communications Holdings, Inc.
Reconciliation of Loss Attributable to Common Shareholders from Continuing Operations to Adjusted Loss from Continuing Operations and Calculation of Adjusted Diluted Net Income (Loss) Per Common Share
(Dollars in thousands, except per share amounts)
(Unaudited)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2023				2022				2023				2022
Loss from continuing operations		$	(108,092	)		$	(10,591	)		$	(145,053	)		$	(129,687	)
Less: dividends on Series A preferred stock			10,704				9,802				21,291				19,400
Less: net income attributable to noncontrolling interest			161				203				304				318
Loss attributable to common shareholders from continuing operations			(118,957	)			(20,596	)			(166,648	)			(149,405	)
Adjustments to loss attributable to common shareholders:
Dividends on Series A preferred stock			10,704				9,802				21,291				19,400
Integration and severance related costs, net of tax			1,314				802				3,962				1,604
Loss on impairment of assets held for sale			77,755				—				77,755				126,490
Loss on disposition of assets, net of tax			1,761				—				4,202				—
Non-cash interest expense for swaps, net of tax			(293	)			(310	)			(631	)			(605	)
Tax impact of non-deductible goodwill			(5,901	)			(392	)			(5,901	)			(11,205	)
Non-cash stock compensation, net of tax			1,764				2,094				2,354				3,720
Adjusted net loss from continuing operations		$	(31,853	)		$	(8,600	)		$	(63,616	)		$	(10,001	)
Weighted average number of common shares outstanding			113,050				111,697				112,995				111,694
Adjusted diluted net income (loss) per common share:
Adjusted net loss from continuing operations		$	(0.28	)		$	(0.08	)		$	(0.56	)		$	(0.09	)
Adjusted income from discontinued operations, net of tax			—				0.08				—				0.11
		$	(0.28	)		$	0.00			$	(0.56	)		$	0.02
Notes:
Calculations above assume a 26.13% effective tax rate for the three and six months ended June 30, 2023 and 26.07% effective tax rate for the three and six months ended June 30, 2022.

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)
		June 30,
		2023
Long-term debt and finance lease obligations:
Term loans, net of discount $7,868		$	992,007
6.50% Senior secured notes due 2028			750,000
5.00% Senior secured notes due 2028			400,000
Finance leases			41,894
Total debt as of June 30, 2023			2,183,901
Less: deferred debt issuance costs			(31,736	)
Less: cash, cash equivalents and short-term investments			(202,578	)
Total net debt as of June 30, 2023		$	1,949,587
Adjusted EBITDA for the 12 months ended June 30, 2023		$	351,139
Total Net Debt to last 12 months Adjusted EBITDA			5.55x

Consolidated Communications Holdings, Inc.
Key Operating Metrics
(Unaudited)
		2021																				2022																				2023
		Q1				Q2				Q3				Q4				FY				Q1				Q2				Q3				Q4				FY				Q1				Q2
Passings
Total Fiber Gig+ Capable Passings (1)(5)(6)			320,806				397,123				494,160				605,710				605,710				689,406				831,779				947,974				1,008,660				1,008,660				1,062,518				1,119,956
Total DSL/Copper Passings (2)(3)(5)(6)			2,421,292				2,347,816				2,255,556				2,146,377				2,146,377				2,059,025				1,920,214				1,807,381				1,617,077				1,617,077				1,564,889				1,509,875
Total Passings (1)(2)(3)(5)(6)			2,742,098				2,744,939				2,749,716				2,752,087				2,752,087				2,748,431				2,751,993				2,755,355				2,625,737				2,625,737				2,627,407				2,629,831
% Fiber Gig+ Coverage/Total Passings			12	%			14	%			18	%			22	%			22	%			25	%			30	%			34	%			38	%			38	%			40	%			43	%
Consumer Broadband Connections
Fiber Gig+ Capable (3)			74,495				77,521				81,539				86,122				86,122				93,812				103,455				115,598				122,872				122,872				135,209				153,860
DSL/Copper (2)(3)			323,507				315,959				309,122				298,442				298,442				286,338				277,758				266,314				244,586				244,586				234,653				222,969
Total Consumer Broadband Connections (2)(3)			398,002				393,480				390,661				384,564				384,564				380,150				381,213				381,912				367,458				367,458				369,862				376,829
Consumer Broadband Net Adds
Total Fiber Gig+ Capable Net Adds (7)			3,885				3,026				4,018				4,583				15,512				7,690				9,643				12,143				10,599				40,075				12,337				18,651
DSL/Copper Net Adds (7)			(7,240	)			(7,548	)			(6,837	)			(10,680	)			(32,305	)			(8,544	)			(8,580	)			(11,444	)			(10,783	)			(39,351	)			(9,933	)			(11,684	)
Total Consumer Broadband Net Adds (7)			(3,355	)			(4,522	)			(2,819	)			(6,097	)			(16,793	)			(854	)			1,063				699				(184	)			724				2,404				6,967
Consumer Broadband Penetration %
Fiber Gig+ Capable (on fiber passings)			23.2	%			19.5	%			16.5	%			14.2	%			14.2	%			13.6	%			12.4	%			12.2	%			12.2	%			12.2	%			12.7	%			13.7	%
DSL/Copper (on DSL/copper passings)			13.4	%			13.5	%			13.7	%			13.9	%			13.9	%			13.9	%			14.5	%			14.7	%			15.1	%			15.1	%			15.0	%			14.8	%
Total Consumer Broadband Penetration %			14.5	%			14.3	%			14.2	%			14.0	%			14.0	%			13.8	%			13.9	%			13.9	%			14.0	%			14.0	%			14.1	%			14.3	%
Consumer Average Revenue Per Unit (ARPU)
Fiber Gig+ Capable		$	64.87			$	65.83			$	64.64			$	64.22			$	64.55			$	63.88			$	64.95			$	65.61			$	67.14			$	65.42			$	67.51			$	68.29
DSL/Copper		$	47.72			$	49.92			$	51.32			$	50.65			$	50.06			$	50.78			$	52.36			$	53.87			$	53.55			$	53.36			$	53.21			$	55.88
Churn
Fiber Consumer Broadband Churn (7)			1.3	%			1.7	%			1.4	%			1.0	%			1.3	%			0.9	%			1.1	%			1.2	%			1.1	%			1.1	%			1.0	%			1.3	%
DSL/Copper Consumer Broadband Churn (7)			1.4	%			1.6	%			1.9	%			2.0	%			1.7	%			1.3	%			1.6	%			1.8	%			1.7	%			1.6	%			1.5	%			1.7	%
Consumer Broadband Revenue ($ in thousands)
Fiber Broadband Revenue (4)		$	14,120			$	15,010			$	15,422			$	16,150			$	60,702			$	17,242			$	19,218			$	21,558			$	24,016			$	82,034			$	26,136			$	29,613
Copper and Other Broadband Revenue			51,633				52,967				53,182				50,833				208,615				48,669				48,374				48,083				44,986				190,112				41,825				41,726
Total Consumer Broadband Revenue		$	65,753			$	67,977			$	68,604			$	66,983			$	269,317			$	65,911			$	67,592			$	69,641			$	69,002			$	272,146			$	67,961			$	71,339
Consumer Voice Connections (3)			362,384				352,835				341,135				328,849				328,849				316,634				306,458				294,441				276,779				276,779				267,509				258,680
Video Connections (3)			73,986				70,795				66,971				63,447				63,447				58,812				55,225				51,339				35,039				35,039				32,426				28,934
Fiber route network miles (long-haul, metro and FttP)			47,364				48,727				50,405				52,402				52,402				54,239				56,093				57,498				57,865				57,865				57,569				58,836
On-net buildings (3)			13,910				14,253				14,625				14,981				14,981				15,446				15,618				15,715				14,427				14,427				14,520				14,735
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 June 30, 2023, 111,296 of the targeted 225,000 passings for 2023 were upgraded to FttP and total fiber passings were ~1,119,956 or 43% 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 March 31, 2021 through September 30, 2022. Amounts have not been adjusted to reflect the sale.
(5) Passings counts are estimates of single family units, multi-dwelling units, and multi-tenant units within consumer, small business and enterprise. These counts are based upon the information available at this time and are subject to updates as additional information becomes available.
(6) When a passing is both fiber and DSL/Copper capable it is counted as a fiber passing.
(7) Consumer Broadband net adds and churn have been normalized to reflect the divestitures of our Kansas City and Ohio operations.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230807949036/en/

Investor and Media Contacts

Philip Kranz, Investor Relations

+1 217-238-8480

Philip.kranz@consolidated.com

Jennifer Spaude, Media Relations

+1 507-386-3765

Jennifer.spaude@consolidated.com

Source: Consolidated Communications

FAQ

How many fiber net adds did Consolidated Communications Holdings have in the second quarter of 2023?

Consolidated Communications Holdings added 18,651 fiber net adds in the second quarter of 2023.

What was the increase in consumer fiber broadband revenue for Consolidated Communications Holdings in the second quarter of 2023?

Consumer fiber broadband revenue for Consolidated Communications Holdings increased by 58% in the second quarter of 2023.

What were the total revenue and net loss for Consolidated Communications Holdings in the second quarter of 2023?

The total revenue for Consolidated Communications Holdings in the second quarter of 2023 was $275.2 million, and the net loss was ($119.0 million).

What cost-saving initiatives did Consolidated Communications Holdings announce in the second quarter of 2023?

Consolidated Communications Holdings announced business simplification and cost-cutting initiatives that are expected to generate annualized cost savings of more than $30 million.

What agreement did Consolidated Communications Holdings enter into in the second quarter of 2023?

Consolidated Communications Holdings entered an agreement to sell non-core Washington assets for gross proceeds of $73 million in the second quarter of 2023.