Consolidated Communications Reports Record Fiber Adds and Third Quarter 2022 Results

Rhea-AI Summary

Consolidated Communications (CNSL) reported strong growth in fiber subscribers, adding 12,100 new users and achieving 3x year-over-year growth. The company upgraded 116,000 locations, approaching 1 million in total fiber locations. The recent sale of its wireless investments to Verizon generated $490 million, fueling its fiber expansion. For Q3 2022, revenue was $296.6 million with an Adjusted EBITDA of $97.2 million. Consumer fiber revenue soared by 40%, but net loss per share from continuing operations was ($0.15). The company maintains a solid liquidity position of approximately $686 million.

Positive

• 12,100 new fiber subscribers added, achieving 3x growth year-over-year.
• Revenue increased to $296.6 million, up from the previous year.
• Adjusted EBITDA at $97.2 million, reflecting operational strength.
• Consumer fiber revenue grew by approximately 40%.
• Sale of wireless investments generated $490 million to fund fiber expansion.

Negative

• Net loss per share from continuing operations was ($0.15), slightly worse than previous year.
• Adjusted EBITDA decreased to $97.2 million from $127.4 million in the prior year.
• Commercial data services revenue fell by 1.3% to $56.8 million.
• Subsidy revenue declined by $10.1 million primarily due to CAF II step down.

• Added 12,100 fiber subscribers and achieved 3x fiber subscriber growth year over year leading to positive net broadband adds for the second consecutive quarter.
• Upgraded 116,000 locations; total Gig+ fiber locations nearing 1 million.
• Closed on sale of wireless investments to Verizon generating $490 million in gross proceeds to support the Company’s fiber expansion plan.

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]

Consolidated Communications Holdings, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
(Unaudited)
		September 30,				December 31,
		2022				2021
ASSETS
Current assets:
Cash and cash equivalents		$	462,049			$	99,635
Short-term investments			—				110,801
Accounts receivable, net			115,985				133,362
Income tax receivable			—				1,134
Prepaid expenses and other current assets			63,730				56,831
Assets held for sale			92,822				26,052
Total current assets			734,586				427,815
Property, plant and equipment, net			2,175,557				2,019,444
Investments			10,283				10,799
Goodwill			929,570				1,013,243
Customer relationships, net			50,801				73,939
Other intangible assets			10,557				10,557
Assets of discontinued operations			—				98,779
Other assets			57,626				58,116
Total assets		$	3,968,980			$	3,712,692
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	30,445			$	40,953
Advance billings and customer deposits			48,466				53,028
Accrued compensation			65,722				68,272
Accrued interest			35,139				17,819
Accrued expense			108,867				97,417
Current portion of long-term debt and finance lease obligations			10,278				7,959
Liabilities held for sale			4,611				97
Total current liabilities			303,528				285,545
Long-term debt and finance lease obligations			2,125,994				2,118,853
Deferred income taxes			268,962				194,458
Pension and other post-retirement obligations			190,814				214,671
Other long-term liabilities			46,901				62,789
Total liabilities			2,936,199				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 September 30, 2022 and December 31, 2021, respectively; liquidation preference of $466,695 and $436,943 as of September 30, 2022 and December 31, 2021, respectively			318,328				288,576
Shareholders' equity:
Common stock, par value $0.01 per share; 150,000,000 shares authorized, 115,395,668 and 113,647,364 shares outstanding as of September 30, 2022 and December 31, 2021, respectively			1,154				1,137
Additional paid-in capital			729,186				740,746
Retained earnings (accumulated deficit)			23,272				(141,599	)
Accumulated other comprehensive loss, net			(46,639	)			(59,571	)
Noncontrolling interest			7,480				7,087
Total shareholders' equity			714,453				547,800
Total liabilities, mezzanine equity and shareholders' equity		$	3,968,980			$	3,712,692

Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2022				2021				2022				2021
Net revenues		$	296,619			$	318,584			$	895,287			$	963,753
Operating expenses:
Cost of services and products			141,226				142,507				413,009				431,797
Selling, general and administrative expenses			72,837				64,100				221,632				199,948
Loss on impairment of assets held for sale			5,208				5,704				131,698				5,704
Gain on disposal of assets			(19,163	)			—				(19,163	)			—
Depreciation and amortization			75,659				73,765				220,552				225,455
Income (loss) from operations			20,852				32,508				(72,441	)			100,849
Other income (expense):
Interest expense, net of interest income			(32,071	)			(43,176	)			(91,742	)			(137,022	)
Loss on extinguishment of debt			—				—				—				(17,101	)
Change in fair value of contingent payment rights			—				(2,205	)			—				(99,619	)
Other income, net			2,984				2,325				9,425				4,491
Loss from continuing operations before income taxes			(8,235	)			(10,548	)			(154,758	)			(148,402	)
Income tax expense (benefit)			(978	)			2,552				(17,814	)			(1,860	)
Loss from continuing operations			(7,257	)			(13,100	)			(136,944	)			(146,542	)
Discontinued operations:
Income from discontinued operations			4,744				11,020				22,628				31,815
Gain on sale of discontinued operations			389,905				—				389,905				—
Income tax expense			94,715				2,401				99,973				6,926
Income from discontinued operations			299,934				8,619				312,560				24,889
Net income (loss)			292,677				(4,481	)			175,616				(121,653	)
Less: dividends on Series A preferred stock			10,352				—				29,752				—
Less: net income attributable to noncontrolling interest			75				240				393				523
Net income (loss) attributable to common shareholders		$	282,250			$	(4,721	)		$	145,471			$	(122,176	)
Net income (loss) per common share - basic and diluted
Loss from continuing operations		$	(0.15	)		$	(0.14	)		$	(1.45	)		$	(1.77	)
Income from discontinued operations			2.60				0.09				2.72				0.30
Net income (loss) per basic and diluted common shares attributable to common shareholders		$	2.45			$	(0.05	)		$	1.27			$	(1.47	)

Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2022				2021				2022				2021
OPERATING ACTIVITIES
Net income (loss)		$	292,677			$	(4,481	)		$	175,616			$	(121,653	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			75,659				73,765				220,552				225,455
Deferred income taxes			81,775				4,949				69,949				4,975
Cash distributions from wireless partnerships in excess of earnings			3,957				107				5,618				1,345
Pension and post-retirement contributions in excess of expense			(4,830	)			(11,755	)			(23,991	)			(29,968	)
Non-cash, stock-based compensation			2,939				3,217				7,971				7,160
Amortization of deferred financing costs and discounts			1,849				4,472				5,475				13,121
Non-cash interest expense on convertible security interest			—				8,230				—				24,334
Loss on extinguishment of debt			—				—				—				17,101
Loss on change in fair value of contingent payment rights			—				2,205				—				99,619
Loss on impairment of assets held for sale			5,208				5,704				131,698				5,704
Gain on sale of partnership interests			(389,905	)			—				(389,905	)			—
Gain on disposal of assets			(19,163	)			—				(19,163	)			—
Other adjustments, net			(162	)			(99	)			(558	)			3,632
Changes in operating assets and liabilities, net			26,622				23,834				34,869				45,154
Net cash provided by operating activities			76,626				110,148				218,131				295,979
INVESTING ACTIVITIES
Purchase of property, plant and equipment, net			(164,045	)			(144,292	)			(496,959	)			(339,488	)
Purchase of investments			—				(64,996	)			(39,959	)			(154,963	)
Proceeds from sale of assets			19,463				37				21,257				126
Proceeds from business dispositions			—				—				26,042				—
Proceeds from sale and maturity of investments			25,006				—				151,560				1,198
Proceeds from sale of partnership interests			489,567				—				489,567				—
Net cash provided by (used in) investing activities			369,991				(209,251	)			151,508				(493,127	)
FINANCING ACTIVITIES
Proceeds from bond offering			—				—				—				400,000
Proceeds from issuance of long-term debt			—				—				—				150,000
Payment of finance lease obligations			(2,587	)			(1,529	)			(7,111	)			(4,465	)
Payment on long-term debt			—				—				—				(397,000	)
Payment of financing costs			—				—				—				(8,266	)
Share repurchases for minimum tax withholding			—				—				(114	)			—
Net cash provided by (used in) financing activities			(2,587	)			(1,529	)			(7,225	)			140,269
Net change in cash and cash equivalents			444,030				(100,632	)			362,414				(56,879	)
Cash and cash equivalents at beginning of period			18,019				199,314				99,635				155,561
Cash and cash equivalents at end of period		$	462,049			$	98,682			$	462,049			$	98,682

Consolidated Communications Holdings, Inc.
Consolidated Revenue by Category
(Dollars in thousands)
(Unaudited)
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2022			2021			2022			2021
Consumer:
Broadband (Data and VoIP)		$	69,641		$	68,604		$	203,144		$	202,340
Voice services			36,444			40,587			110,539			121,180
Video services			13,552			16,163			42,277			49,743
			119,637			125,354			355,960			373,263
Commercial:
Data services (includes VoIP)			56,796			57,545			171,804			171,487
Voice services			35,484			38,446			107,598			117,264
Other			9,933			10,205			32,780			28,624
			102,213			106,196			312,182			317,375
Carrier:
Data and transport services			33,878			33,556			103,626			100,775
Voice services			3,517			4,173			11,087			13,095
Other			605			375			1,350			1,161
			38,000			38,104			116,063			115,031
Subsidies			7,187			17,264			20,304			52,068
Network access			27,277			29,923			78,336			92,641
Other products and services			2,305			1,743			12,442			13,375
Total operating revenue		$	296,619		$	318,584		$	895,287		$	963,753

Consolidated Communications Holdings, Inc.
Consolidated Revenue Trend by Category
(Dollars in thousands)
(Unaudited)
		Three Months Ended
		Q3 2022			Q2 2022			Q1 2022			Q4 2021			Q3 2021
Consumer:
Broadband (Data and VoIP)		$	69,641		$	67,592		$	65,911		$	66,983		$	68,604
Voice services			36,444			36,643			37,452			39,518			40,587
Video services			13,552			14,359			14,366			15,371			16,163
			119,637			118,594			117,729			121,872			125,354
Commercial:
Data services (includes VoIP)			56,796			57,113			57,895			57,444			57,545
Voice services			35,484			35,775			36,339			37,303			38,446
Other			9,933			11,287			11,560			11,408			10,205
			102,213			104,175			105,794			106,155			106,196
Carrier:
Data and transport services			33,878			36,263			33,485			32,659			33,556
Voice services			3,517			3,718			3,852			4,088			4,173
Other			605			354			391			431			375
			38,000			40,335			37,728			37,178			38,104
Subsidies			7,187			6,534			6,583			17,671			17,264
Network access			27,277			24,846			26,213			27,846			29,923
Other products and services			2,305			3,906			6,231			7,758			1,743
Total operating revenue		$	296,619		$	298,390		$	300,278		$	318,480		$	318,584

Consolidated Communications Holdings, Inc.
Schedule of Adjusted EBITDA Calculation
(Dollars in thousands)
(Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2022				2021				2022				2021
Loss from continuing operations		$	(7,257	)		$	(13,100	)		$	(136,944	)		$	(146,542	)
Add (subtract):
Income tax expense (benefit)			(978	)			2,552				(17,814	)			(1,860	)
Interest expense, net			32,071				43,176				91,742				137,022
Depreciation and amortization			75,659				73,765				220,552				225,455
EBITDA			99,495				106,393				157,536				214,075
Adjustments to EBITDA (1):
Other, net (2)			6,186				919				17,754				11,155
Pension/OPEB benefit			(2,950	)			(2,207	)			(8,897	)			(7,290	)
Gain on disposal of assets			(19,163	)			—				(19,163	)			—
Loss on extinguishment of debt			—				—				—				17,101
Loss on impairment			5,208				5,704				131,698				5,704
Change in fair value of contingent payment right			—				2,205				—				99,619
Non-cash compensation (3)			2,939				3,217				7,971				7,160
Adjusted EBITDA from continuing operations			91,715				116,231				286,899				347,524
Investment distributions from discontinued operations			5,478				11,127				25,023				33,160
Adjusted EBITDA		$	97,193			$	127,358			$	311,922			$	380,684
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 Net Loss to Adjusted EBITDA Guidance
(Dollars in millions)
(Unaudited)
	Year Ended
	December 31, 2022
	Range
	Low				High
Net loss	$	(151	)		$	(138	)
Add:
Income tax benefit		(15	)			(14	)
Interest expense, net		125				122
Depreciation and amortization		293				290
EBITDA		252				260
Adjustments to EBITDA (1):
Other, net (2)		23				25
Loss on impairment		126				126
Pension/OPEB benefit		(11	)			(11	)
Non-cash compensation (3)		10				10
Adjusted EBITDA	$	400			$	410
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, cash distributions less equity earnings from our investments, dividend income, 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.
Total Net Debt to LTM Adjusted EBITDA Ratio
(Dollars in thousands)
(Unaudited)
		September 30,
		2022
Summary of Outstanding Debt:
Term loans, net of discount $9,108		$	990,767
6.50% Senior secured notes due 2028			750,000
5.00% Senior secured notes due 2028			400,000
Finance leases			28,975
Total debt as of September 30, 2022			2,169,742
Less deferred debt issuance costs			(33,470	)
Less cash on hand			(462,049	)
Total net debt as of September 30, 2022		$	1,674,223
Adjusted EBITDA for the 12 months ended September 30, 2022		$	438,100
Total Net Debt to last 12 months Adjusted EBITDA			3.82	x

Consolidated Communications Holdings, Inc.
Adjusted Net Income and Net Income Per Share
(Dollars in thousands, except per share amounts)
(Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2022				2021				2022				2021
Loss from continuing operations		$	(7,257	)		$	(13,100	)		$	(136,944	)		$	(146,542	)
Less: dividends on Series A preferred stock			10,352				—				29,752				—
Less: net income attributable to noncontrolling interest			75				240				393				523
Loss attributable to common shareholders from continuing operations			(17,684	)			(13,340	)			(167,089	)			(147,065	)
Adjustments to loss attributable to common shareholders:
Dividends on Series A preferred stock			10,352				—				29,752				—
Integration and severance related costs, net of tax			—				674				1,604				2,353
Loss on impairment of assets held for sale			5,208				5,704				131,698				5,704
Gain on disposition of tower assets, net of tax			(14,167	)			—				(14,167	)			—
Loss on disposition of wireless spectrum licenses, net of tax			—				—				—				2,641
Loss on disposition of fixed wireless, net of tax			—				—				—				3,085
Loss on extinguishment of debt, net of tax			—				—				—				12,639
Change in fair value of contingent payment rights			—				2,205				—				99,619
Non-cash interest expense for Searchlight note including amortization of discount and fees			—				10,944				—				32,006
Non-cash interest expense for swaps, net of tax			(328	)			(261	)			(932	)			(682	)
Tax impact of non-deductible goodwill			821				—				(11,118	)			—
Change in deferred tax rate			(644	)			—				(644	)			—
Non-cash stock compensation, net of tax			2,173				2,378				5,893				5,292
Adjusted net income (loss) from continuing operations		$	(14,269	)		$	8,304			$	(25,003	)		$	15,591
Weighted average number of common shares outstanding			111,697				92,791				111,695				83,003
Adjusted diluted net income (loss) per common share:
Adjusted net income (loss) from continuing operations		$	(0.13	)		$	0.09			$	(0.22	)		$	0.19
Adjusted income from discontinued operations excluding gain on sale of partnership interests, net of tax			0.04				0.09				0.15				0.30
		$	(0.09	)		$	0.18			$	(0.07	)		$	0.49
Notes:
Calculations above assume a 26.07% effective tax rate for the quarter and nine months ended September 30, 2022 and 26.10% effective tax rate for the quarter and nine months ended September 30, 2021.

Consolidated Communications Holdings, Inc.
Key Operating Metrics
(Unaudited)
		September 30,				June 30,				March 31,				December 31,				September 30,
		2022				2022				2022				2021				2021
Passings
Fiber Gig+ capable passings
Northern New England			531,035				451,414				341,010				291,921				217,660
All other markets			416,939				380,365				348,396				313,789				276,500
Total Fiber Gig+ capable (1)			947,974				831,779				689,406				605,710				494,160
DSL/Copper passings (2)
Northern New England			1,205,165				1,284,786				1,395,190				1,444,279				1,518,540
All other markets			602,216				635,428				663,835				702,098				737,016
Total DSL/Copper (2)			1,807,381				1,920,214				2,059,025				2,146,377				2,255,556
Total Passings			2,755,355				2,751,993				2,748,431				2,752,087				2,749,716
% Fiber Gig+ Coverage/Total Passings			34	%			30	%			25	%			22	%			18	%
Consumer Broadband Connections
Fiber Gig+ capable
Northern New England			38,778				31,050				24,882				20,032				17,288
All other markets			76,820				72,405				68,930				66,090				64,251
Total Fiber Gig+ capable connections			115,598				103,455				93,812				86,122				81,539
DSL/Copper (2)
Northern New England			121,230				126,475				131,763				136,140				140,893
All other markets			145,084				151,283				154,575				162,302				168,229
Total DSL/Copper connections (2)			266,314				277,758				286,338				298,442				309,122
Total Consumer Broadband Connections			381,912				381,213				380,150				384,564				390,661
Consumer Broadband Net Adds
Northern New England			2,483				880				473				(2,009	)			(803	)
All other markets (2)			(1,784	)			183				(1,327	)			(4,088	)			(2,016	)
Total Consumer Broadband Net Adds			699				1,063				(854	)			(6,097	)			(2,819	)
Consumer Broadband Penetration %
Fiber Gig+ capable
Northern New England			7	%			7	%			7	%			7	%			8	%
All other markets			18	%			19	%			20	%			21	%			23	%
Total Fiber Gig+ capable			12	%			12	%			14	%			14	%			17	%
DSL/Copper (2)
Northern New England			10	%			10	%			9	%			9	%			9	%
All other markets			24	%			24	%			23	%			23	%			23	%
Total DSL/Copper (2)			15	%			14	%			14	%			14	%			14	%
Total Consumer Broadband Penetration %			14	%			14	%			14	%			14	%			14	%
Consumer Broadband Revenue by Service Type ($ in thousands)
Fiber Broadband Revenue		$	21,558			$	19,218			$	17,241			$	16,152			$	15,423
Copper and Other Broadband Revenue			48,083				48,374				48,670				50,831				53,181
Total Consumer Broadband Revenue by Service Type		$	69,641			$	67,592			$	65,911			$	66,983			$	68,604
Consumer Average Revenue Per Unit (ARPU)
Fiber Broadband ARPU		$	65.61			$	64.95			$	63.88			$	64.22			$	64.64
Copper Broadband ARPU		$	53.87			$	52.36			$	50.78			$	50.65			$	51.32
Consumer Voice Connections			294,441				306,458				316,634				328,849				341,135
Video Connections			51,339				55,225				58,812				63,447				66,971
Fiber route network miles (long-haul, metro and FttP)			57,498				56,093				54,239				52,402				50,405
On-net buildings			15,715				15,618				15,446				14,891				14,625
Notes:
(1) In Q1 2021, the Company launched a multi-year fiber build plan to upgrade 1.6 million passings by 2025 or 70% of our service area to fiber Gig+ capable services by 2025. As of September 30, 2022, 342,200 of the target 400,000 passings for 2022 were upgraded to FttP and total fiber passings were ~948,000 or 34% 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.
As of March 31, 2022, the net assets of our Kansas City operations are classified as held for sale. The Kansas City operations, which are included in All other markets above, include approximately 137,000 passings and approximately 10% consumer broadband penetration. Amounts above have not been adjusted to reflect the pending sale.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221031005683/en/

Jennifer Spaude, Consolidated Communications

Phone: 507-386-3765

jennifer.spaude@consolidated.com

Source: Consolidated Communications

FAQ

What were Consolidated Communications' fiber subscriber additions in Q3 2022?

Consolidated Communications added 12,100 new fiber subscribers in Q3 2022.

What was Consolidated Communications' total revenue for Q3 2022?

The total revenue for Consolidated Communications in Q3 2022 was $296.6 million.

What are the Adjusted EBITDA results for CNSL in Q3 2022?

CNSL reported an Adjusted EBITDA of $97.2 million for Q3 2022.

How much did Consolidated Communications generate from the sale of wireless investments?

Consolidated Communications generated $490 million in gross proceeds from the sale of its wireless investments to Verizon.

What is the outlook for Consolidated Communications' Adjusted EBITDA in 2022?

Consolidated Communications expects its Adjusted EBITDA for 2022 to be between $400 million and $410 million.