- Delivered a solid quarter of financial results with a
strong payout ratio
- Refinanced term debt saving approximately $5.0 million
per year in interest while extending maturities to
2020
- Generated strong net broadband adds of 3,454 in the
quarter and 12,082 for the year
- Increased data, video and internet revenues by 5.2% in
2013 led by strong Metro Ethernet sales
Consolidated Communications Holdings, Inc. (Nasdaq:CNSL) reported
results for the fourth quarter and full year 2013.
Fourth quarter financial summary, including the impact of a net
$2.2 million unfavorable subsidy adjustment as described below:
- Revenue was $148.0 million.
- Net cash from continuing operations was $43.9 million.
- Adjusted EBITDA was $70.0 million.
- Dividend payout ratio was 64.4%.
"The fourth quarter capped off another strong year for the
Company," said Bob Currey, Chairman and Chief Executive Officer.
"We delivered a comfortable payout ratio and increased our
broadband subscribers by 3,454 for the quarter and 12,082 for the
year. Growth in Metro Ethernet and wireless backhaul continues to
be solid. We installed fiber to 96 new wireless tower sites
bringing the total for the year to 210."
"We generated solid financial results, which included a record
distribution from our wireless partnerships totaling $10.5 million
and the achievement of another $0.8 million in annualized synergies
from the SureWest acquisition. Our integration continues to go well
and we are on schedule to complete the final phase of billing in
the third quarter of 2014," Currey concluded.
During the quarter, the Company recognized a net $2.2 million
unfavorable subsidy adjustment to both revenue and adjusted EBITDA
primarily related to the universal service fund for the California
market. A new annual certification for high cost support that
should have been filed by SureWest in 2012 did not get completed
until early 2013. The FCC took the unprecedented action to not
provide any of the funding versus simply issuing a late filing fee.
The Company has appealed the decision and remains optimistic the
decision will be reversed in 2014.
Operating Statistics at December 31, 2013, Compared to
December 31, 2012.
|
Period Ended December 31, |
|
|
|
2013 |
2012 |
Increase/(decrease) |
% |
|
|
|
|
|
Data connections |
255,239 |
247,633 |
7,606 |
3.1% |
Video connections |
110,613 |
106,137 |
4,476 |
4.2% |
ILEC access lines |
256,805 |
268,597 |
(11,792) |
(4.4%) |
Voice connections (non-ILEC) |
123,433 |
129,729 |
(6,296) |
(4.9%) |
Total connections |
746,090 |
752,096 |
(6,006) |
(0.8%) |
"On December 23, 2013, we closed a successful refinancing of our
$910.0 million of term debt," said Steve Childers, Chief Financial
Officer. "The terms of the deal resulted in approximately $5
million in annual interest savings, extended our maturities out to
December of 2020 and increased our revolver capacity to $75.0
million from $50.0 million."
Cash Available to Pay Dividends
For the quarter, cash available to pay dividends, or CAPD, was
$24.1 million, and the dividend payout ratio was 64.4%. At
December 31, 2013, cash and cash equivalents were $5.6
million. The Company made capital expenditures of $26.8
million during the quarter.
Financial Highlights for the Fourth Quarter Ended
December 31, 2013
- Revenues were $148.0 million, compared to $153.8 million for
continuing operations in the fourth quarter of 2012. Excluding
the net $2.2 million unfavorable subsidy adjustment, revenues were
$150.2 million. Increases in data and video revenues were more
than offset by declines in subsidies and network access
revenues.
- Income from operations was $22.2 million, compared to $20.2
million in the fourth quarter of 2012. The increase was
primarily due to synergy realization from the SureWest acquisition
and efficiency improvements.
- Interest expense, net was $19.8 million, compared to $20.5
million for the same period last year. The improvement was
mostly attributable to $100.0 million of interest rate swaps that
matured on September 30, 2013 and were replaced at lower
rates.
- Other income, net was $10.8 million, compared to $9.4 million
for the same period in 2012. Cash distributions from our
Verizon Wireless partnerships were $10.5 million compared to $9.4
million for the fourth quarter of 2012.
- Net income attributable to common stockholders was $3.1
million, compared to $2.1 million in the same period of
2012. The current period included a non-cash $7.7 million loss
on the extinguishment of debt as the result of our successful
refinancing. The fourth quarter of 2012 included both a
non-cash loss on the extinguishment of debt for $4.5 million and a
non-cash impairment charge for continuing operations of $1.2
million. "Adjusted net income attributable to common
stockholders" excludes certain items in the manner described in the
table provided in this release and was $9.2 million, compared to
$8.0 million in the same quarter of 2012.
- Diluted net income per common share was $0.08 compared to $0.05
in the fourth quarter of 2012. "Adjusted diluted net income
per share" excludes certain items in the manner described in the
table provided in this release and was $0.23 compared to $0.20 for
the prior year period.
- Net cash provided by operating activities of continuing
operations was $43.9 million, compared to $49.0 million for the
fourth quarter in 2012.
- Adjusted EBITDA was $70.0 million compared to $73.2 million for
continuing operations in the same period in 2012. Excluding
the unfavorable subsidy adjustment, adjusted EBITDA would have been
$72.2 million in the current period.
- The total net debt to last twelve month adjusted EBITDA
coverage ratio was 4.25 times to one.
Financial Highlights for the Twelve Months Ended
December 31, 2013
- Revenues from continuing operations were $601.6 million,
compared to $605.8 million on a pro forma basis for
2012. Excluding the $2.2 million unfavorable subsidy
adjustment, revenue would have been $603.8 million for
2013.
- Net income attributable to common stockholders was $30.8
million, compared to $5.6 million in the prior year
period. The increase is primarily due to synergy realization
from the SureWest acquisition, transaction related costs that
reduced income in the 2012 period and growth in our wireless
partnerships.
- Adjusted EBITDA was $286.5 million, which represented a $15.4
million increase, or 5.7%, versus $271.1 million, on a pro forma
basis, for the same period in 2012. Excluding the unfavorable
subsidy adjustment, adjusted EBITDA would have been $288.7 million
for 2013.
Financial Guidance
The Company is providing the following full year guidance:
|
2014
Guidance |
2013
Results |
|
|
|
Cash Interest Expense |
$75.0 million to $78.0 million |
$81.9 million |
Cash Income Taxes |
$10.0 million to $15.0 million |
$1.0 million |
Capital Expenditures |
$97.0 million to $103.0 million |
$107.4 million |
Dividend Payments
On February 21, 2014, the Company's board of directors declared
its next quarterly dividend of $0.38738 per common share, which is
payable on May 1, 2014 to stockholders of record at the close of
business on April 15, 2014. This will represent the 35th
consecutive quarterly dividend paid by the Company.
Conference Call Information
The Company will host a conference call today at 11:00 a.m.
Eastern Time / 10:00 a.m. Central Time to discuss fourth quarter
and full year earnings and developments with respect to the
Company. The call is being webcast and archived on the
"Investor Relations" section of the Company's website at
http://www.consolidated.com. If you do not have internet
access, the conference call dial-in number is 1-877-374-3981 with
pass code 42290476. International parties can access the call
by dialing 1-253-237-1158. A telephonic replay of the
conference call will also be available starting three hours after
completion of the call until March 6, 2014 at midnight Eastern
Time. To hear the replay, parties in the United States and
Canada should call 1-855-859-2056 and international parties should
call 1-404-537-3406.
Use of Non-GAAP Financial Measures
This press release, as well as the conference call, includes
disclosures regarding "EBITDA", "adjusted EBITDA", "cash available
to pay dividends" and the related "dividend payout ratio", "total
net debt to last twelve month adjusted EBITDA coverage ratio",
"adjusted diluted net income per share" and "adjusted net income
attributable to common stockholders", all of which are non-GAAP
financial measures and described in this section as not being in
compliance with Regulation S-X. Accordingly, they should not
be construed as alternatives to net cash from operating or
investing activities, cash and cash equivalents, cash flows from
operations, net income or net income per share as defined by GAAP
and are not, on their own, necessarily indicative of cash available
to fund cash needs as determined in accordance with GAAP. In
addition, not all companies use identical calculations, and the
non-GAAP financial measures may not be comparable to other
similarly titled measures of other companies. A reconciliation
of the differences between these non-GAAP financial measures and
the most directly comparable financial measures presented in
accordance with GAAP is included in the tables that follow.
Adjusted EBITDA is comprised of EBITDA, adjusted for certain
items as permitted or required by the lenders under the credit
facility in place at the end of each quarter in the periods
presented. The tables that follow include an explanation of
how adjusted EBITDA is calculated for each of the periods presented
with the reconciliation to net income. EBITDA is defined as
net earnings before interest expense, income taxes, depreciation
and amortization on a historical basis.
Cash available to pay dividends represents adjusted EBITDA plus
cash interest income less (1) cash interest expense, (2) capital
expenditures and (3) cash income taxes; this calculation differs in
certain respects from the similar calculation used in the credit
agreement.
We present adjusted EBITDA, cash available to pay dividends and
the related dividend payout ratio for several
reasons. Management believes adjusted EBITDA, cash available
to pay dividends and the dividend payout ratio are useful as a
means to evaluate our ability to fund our estimated uses of cash
(including interest on our debt) and pay dividends. In addition, we
have presented adjusted EBITDA, cash available to pay dividends and
the dividend payout ratio to investors in the past because they are
frequently used by investors, securities analysts and other
interested parties in the evaluation of companies in our industry,
and management believes presenting them here provides a measure of
consistency in our financial reporting. Adjusted EBITDA and cash
available to pay dividends, referred to as Available Cash in our
credit agreement, are also components of the restrictive covenants
and financial ratios contained in the credit agreement that
requires us to maintain compliance with these covenants and limit
certain activities, such as our ability to incur debt and to pay
dividends. The definitions in these covenants and ratios are
based on adjusted EBITDA and cash available to pay dividends after
giving effect to specified charges. In addition, adjusted
EBITDA, cash available to pay dividends and the dividend payout
ratio provide our board of directors with meaningful information to
determine, with other data, assumptions and considerations, our
dividend policy and our ability to pay dividends under the
restrictive covenants in the credit agreement and to measure our
ability to service and repay debt. We present the related
"total net debt to last twelve month adjusted EBITDA coverage
ratio" principally to put other non-GAAP measures in context and
facilitate comparisons by investors, security analysts and others;
this ratio differs in certain respects from the similar ratio used
in our credit agreement. These measures differ in material
respects from the ratios used in our Senior Notes
indenture.
These non-GAAP financial measures have certain
shortcomings. In particular, adjusted EBITDA does not
represent the residual cash flows available for discretionary
expenditures, since items such as debt repayment and interest
payments are not deducted from such measure. Similarly, while
we may generate cash available to pay dividends, we are not
required to use any such cash to pay dividends, and the payment of
any dividends is subject to declaration by our board of directors,
compliance with applicable law and the terms of our credit
agreement. Because adjusted EBITDA is a component of the
dividend payout ratio and the ratio of total net debt to last
twelve month adjusted EBITDA, these measures are also subject to
the material limitations discussed above. In addition, the
ratio of total net debt to last twelve month adjusted EBITDA is
subject to the risk that we may not be able to use the cash on the
balance sheet to reduce our debt on a dollar-for-dollar basis.
Management believes these ratios are useful as a means to evaluate
our ability to incur additional indebtedness in the
future.
We present the non-GAAP measures adjusted diluted net income per
share and adjusted diluted net income attributable to common
stockholders because our net income and net income per share are
regularly affected by items that occur at irregular intervals or
are non-cash items. We believe that disclosing these measures
assists investors, securities analysts and other interested parties
in evaluating both our company over time and the relative
performance of the companies in our industry.
Certain prior year GAAP amounts have been modified to give
effect to pro forma events that are directly attributable to the
acquisition of SureWest Communications (the "Acquisition") and
factually supportable and are expected to have a continuing impact.
The unaudited Pro forma financial information, which has been
prepared for the periods presented, gives effect to the Acquisition
as if it had occurred on January 1, 2012.
We have also presented various Adjusted Pro Forma financial
information as if the acquisition had occurred as of January 1,
2012 in order to provide a better view of the combined Company's
period over period performance. In calculating the unaudited
Adjusted Pro Forma financial information, we did not adjust certain
items to give effect to the Acquisition as if it had occurred on
January 1, 2012, as required by Rule 3-05 of Regulation S-X.
About Consolidated
Consolidated Communications Holdings, Inc. is a leading
communications provider within its six state operations of
California, Illinois, Kansas, Missouri, Pennsylvania and Texas.
Headquartered in Mattoon, IL, the Company has been providing
services in many of its markets for over a century. With one of the
highest quality networks in the industry, the Company offers a wide
range of communications services, including IP-based digital and
high definition television, high speed internet, Voice over IP,
carrier access, directory publishing and local and long distance
service.
Safe Harbor
Any statements other than statements of historical facts,
including statements about management's beliefs and expectations,
are forward-looking statements and should be evaluated as such.
These statements are made on the basis of management's views and
assumptions regarding future events and business performance. Words
such as "estimate," "believe," "anticipate," "expect," "intend,"
"plan, "target," "project," "should," "may," "will" and similar
expressions are intended to identify forward-looking statements.
Forward-looking statements (including oral representations) involve
risks and uncertainties that may cause actual results to differ
materially from any future results, performance or achievements
expressed or implied by such statements. These risks and
uncertainties include the ability of Consolidated Communications
Holdings, Inc. (the "Company") to successfully integrate the
operations of SureWest Communications ("SureWest") and
realize the synergies from the acquisition, as well as a number of
other factors related to the businesses of the Company, including
various risks to stockholders of not receiving dividends and risks
to the Company's ability to pursue growth opportunities if the
Company continues to pay dividends according to the current
dividend policy; various risks to the price and volatility of the
Company's common stock; the substantial amount of debt and the
Company's ability to repay or refinance it or incur additional debt
in the future; the Company's need for a significant amount of cash
to service and repay the debt and to pay dividends on the Company's
common stock; changes in the valuation of pension plan assets;
restrictions contained in the Company's 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; changes in content costs, which have
been substantial and continue to increase; risks associated with
the Company's possible pursuit of acquisitions; economic conditions
in the Company's service areas; system failures; 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;
telecommunications carriers disputing and/or avoiding their
obligations to pay network access charges for use of the Company's
network; high costs of regulatory compliance; the competitive
impact of legislation and regulatory changes on the
telecommunications industry; and liability and compliance costs
regarding environmental regulations. These and other risks and
uncertainties are discussed in more detail in the Company's filings
with the Securities and Exchange Commission, including our reports
on Form 10-K and Form 10-Q.
Many of these risks are beyond management's ability to control
or predict. All forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in
their entirety by the cautionary statements and risk factors
contained in this communication and the Company's filings with the
Securities and Exchange Commission. Because of these risks,
uncertainties and assumptions, you should not place undue reliance
on these forward-looking statements. 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 Securities and Exchange Commission, we do not
undertake any obligation to update or review any forward-looking
information, whether as a result of new information, future events
or otherwise.
– Tables Follow –
Consolidated
Communications Holdings, Inc. |
Condensed Consolidated
Balance Sheets |
(Dollars in thousands, except
par value) |
(Unaudited) |
|
December
31, |
December
31, |
|
2013 |
2012 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 5,551 |
$ 17,854 |
Accounts receivable, net |
52,033 |
57,957 |
Income tax receivable |
9,796 |
12,020 |
Deferred income taxes |
7,960 |
9,000 |
Prepaid expenses and other current
assets |
12,380 |
11,269 |
Assets of discontinued
operations |
-- |
1,189 |
Total current assets |
87,720 |
109,289 |
Property, plant and equipment, net |
885,362 |
907,672 |
Investments |
113,099 |
109,750 |
Goodwill |
603,446 |
603,446 |
Other intangible assets |
40,084 |
49,530 |
Deferred debt issuance costs, net and other
assets |
17,667 |
13,800 |
Total assets |
$ 1,747,378 |
$ 1,793,487 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 4,885 |
$ 14,954 |
Advance billings and customer
deposits |
25,934 |
27,654 |
Dividends payable |
15,520 |
15,463 |
Accrued compensation |
22,252 |
21,912 |
Accrued expense |
38,697 |
47,225 |
Current portion of long-term debt and
capital lease obligations |
9,751 |
9,596 |
Current portion of derivative
liability |
660 |
3,164 |
Liabilities of discontinued
operations |
-- |
4,209 |
Total current liabilities |
117,699 |
144,177 |
Long-term debt and capital lease
obligations |
1,212,134 |
1,208,248 |
Deferred income taxes |
179,859 |
137,501 |
Pension and other post-retirement
obligations |
75,754 |
156,710 |
Other long-term liabilities |
9,593 |
10,746 |
Total liabilities |
1,595,039 |
1,657,382 |
|
|
|
Shareholders' equity: |
|
|
Common stock, par value $0.01 per share;
100,000,000 shares authorized, 40,065,246 and 39,877,998,
shares outstanding as of December 31, 2013 and 2012,
respectively |
401 |
399 |
Additional paid in capital |
148,433 |
177,315 |
Accumulated other comprehensive loss,
net |
(1,000) |
(45,784) |
Noncontrolling interest |
4,505 |
4,175 |
Total shareholders' equity |
152,339 |
136,105 |
Total liabilities and shareholders'
equity |
$ 1,747,378 |
$ 1,793,487 |
|
|
Consolidated
Communications Holdings, Inc. |
Condensed Consolidated
Statements of Income |
(Dollars in thousands, except
per share amounts) |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended |
Twelve Months
Ended |
|
December
31, |
December
31, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Net revenues |
$ 147,956 |
$ 153,844 |
$ 601,577 |
$ 477,877 |
Operating expenses: |
|
|
|
|
Cost of services and
products |
55,678 |
57,414 |
222,452 |
175,929 |
Selling, general and
administrative expenses |
35,029 |
35,626 |
135,414 |
108,163 |
Financing and other transaction
costs |
64 |
891 |
776 |
20,800 |
Impairment of intangible
assets |
-- |
1,236 |
-- |
1,236 |
Depreciation and
amortization |
34,968 |
38,510 |
139,274 |
120,332 |
Income from operations |
22,217 |
20,167 |
103,661 |
51,417 |
Other income (expense): |
|
|
|
|
Interest expense, net of interest
income |
(19,838) |
(20,487) |
(85,767) |
(72,604) |
Loss on extinguishment of
debt |
(7,657) |
(4,455) |
(7,657) |
(4,455) |
Other income, net |
10,787 |
9,380 |
37,239 |
31,268 |
Income from continuing operations
before income taxes |
5,509 |
4,605 |
47,476 |
5,626 |
Income tax expense |
2,293 |
1,827 |
17,512 |
661 |
Income from continuing
operations |
3,216 |
2,778 |
29,964 |
4,965 |
Discontinued operations, net of
tax: |
|
|
|
|
Income (loss) from discontinued
operations, net of tax |
-- |
(553) |
(156) |
1,206 |
Gain on sale of discontinued
operations, net of tax |
-- |
-- |
1,333 |
-- |
|
-- |
(553) |
1,177 |
1,206 |
|
|
|
|
|
Net income |
3,216 |
2,225 |
31,141 |
6,171 |
Less: net income attributable to
noncontrolling interest |
76 |
165 |
330 |
531 |
|
|
|
|
|
Net income attributable to common
shareholders |
$ 3,140 |
$ 2,060 |
$ 30,811 |
$ 5,640 |
|
|
|
|
|
Net income per common share - basic and
diluted |
|
|
|
|
Income from continuing operations |
$ 0.08 |
$ 0.07 |
$ 0.73 |
$ 0.12 |
Discontinued operations, net of tax |
-- |
(0.02) |
0.03 |
0.03 |
Net income per basic and diluted common
share attributable to common shareholders |
$ 0.08 |
$ 0.05 |
$ 0.76 |
$ 0.15 |
|
|
Consolidated
Communications Holdings, Inc. |
Condensed Consolidated
Statements of Cash Flows |
(Dollars in thousands) |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended |
Twelve Months
Ended |
|
December 31, |
December 31, |
|
2013 |
2012 |
2013 |
2012 |
OPERATING ACTIVITIES |
|
|
|
|
Net income |
$ 3,216 |
$ 2,225 |
$ 31,141 |
$ 6,171 |
Income from discontinued operations, net
of tax |
-- |
553 |
(1,177) |
(1,206) |
Net income from continuing
operations |
3,216 |
2,778 |
29,964 |
4,965 |
Adjustments to reconcile net income to
cash provided by operating activities: |
|
|
|
|
Depreciation and amortization |
34,968 |
38,510 |
139,274 |
120,332 |
Intangible asset impairment |
-- |
1,236 |
-- |
1,236 |
Deferred income taxes |
15,791 |
1,414 |
16,045 |
(757) |
Cash distributions from wireless
partnerships in excess of/(less than) earnings |
47 |
365 |
(2,949) |
(1,309) |
Non- cash stock-based compensation |
794 |
664 |
3,028 |
2,348 |
Amortization of deferred financing |
506 |
488 |
2,209 |
6,360 |
Loss on extinguishment of debt |
7,657 |
4,455 |
7,657 |
4,455 |
Other adjustments, net |
179 |
(548) |
1,788 |
(332) |
Changes in operating assets and
liabilities, net |
(19,264) |
(330) |
(28,486) |
(17,566) |
Net cash provided by continuing
operations |
43,894 |
49,032 |
168,530 |
119,732 |
Net cash provided by (used in)
discontinued operations |
(179) |
2,283 |
(4,174) |
3,483 |
Net cash provided by operating
activities |
43,715 |
51,315 |
164,356 |
123,215 |
INVESTING ACTIVITIES |
|
|
|
|
Business acquisition, net of cash
acquired |
-- |
(8,325) |
-- |
(385,346) |
Purchase of property, plant and
equipment, net |
(26,779) |
(26,675) |
(107,363) |
(76,998) |
Purchase of investments |
(165) |
(6,728) |
(403) |
(6,728) |
Proceeds from sale of assets |
219 |
509 |
330 |
924 |
Other |
-- |
-- |
-- |
(314) |
Net cash used by continuing
operations |
(26,725) |
(41,219) |
(107,436) |
(468,462) |
Net cash provided by (used in)
discontinued operations |
-- |
-- |
2,331 |
(97) |
Net cash used in investing
activities |
(26,725) |
(41,219) |
(105,105) |
(468,559) |
FINANCING ACTIVITIES |
|
|
|
|
Proceeds on bond offering |
-- |
-- |
-- |
298,035 |
Proceeds on issuance of long-term
debt |
932,450 |
509,850 |
989,450 |
544,850 |
Payment of capital lease obligation |
(148) |
(88) |
(516) |
(228) |
Payment on long-term debt |
(927,031) |
(503,438) |
(990,961) |
(510,038) |
Payment of financing costs |
(6,576) |
(5,469) |
(6,576) |
(18,616) |
Distribution to noncontrolling
interest |
-- |
(1,850) |
-- |
(1,850) |
Repurchase and retirement of common
stock |
(887) |
(559) |
(887) |
(559) |
Dividends on common stock |
(15,538) |
(15,463) |
(62,064) |
(54,100) |
Net cash provided by (used in) financing
activities |
(17,730) |
(17,017) |
(71,554) |
257,494 |
Net change in cash and cash equivalents |
(740) |
(6,921) |
(12,303) |
(87,850) |
Cash and cash equivalents at beginning of
period |
6,291 |
24,775 |
17,854 |
105,704 |
Cash and cash equivalents at end of
period |
$ 5,551 |
$ 17,854 |
$ 5,551 |
$ 17,854 |
|
|
Consolidated
Communications Holdings, Inc. |
Consolidated Revenue by
Category |
(Dollars in thousands) |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended |
Twelve Months
Ended |
|
December
31, |
December
31, |
|
|
|
|
Adjusted Pro
Forma |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Operating Revenues |
|
|
|
|
Local calling services |
$ 26,568 |
$ 26,751 |
$ 106,491 |
$ 110,468 |
Network access services |
26,974 |
29,780 |
112,448 |
120,983 |
Subsidies |
11,418 |
13,875 |
52,002 |
51,122 |
Long distance services |
4,679 |
4,995 |
19,315 |
21,481 |
Data, video and internet services |
67,951 |
66,929 |
270,014 |
256,761 |
Other services |
10,366 |
11,514 |
41,307 |
44,964 |
Total operating revenue |
$ 147,956 |
$ 153,844 |
$ 601,577 |
$ 605,779 |
|
|
Consolidated
Communications Holdings, Inc. |
Schedule of Adjusted
EBITDA Calculation |
(Dollars in thousands) |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended |
Twelve Months
Ended |
|
December
31, |
December
31, |
|
|
|
|
Adjusted Pro
Forma |
|
2013 |
2012 |
2013 |
2012 |
Net income from continuing operations |
$ 3,216 |
$ 2,778 |
$ 29,964 |
$ 706 |
Add (subtract): |
|
|
|
|
Income tax expense (benefit) |
2,293 |
1,827 |
17,512 |
(1,222) |
Interest expense, net |
19,838 |
20,487 |
85,767 |
81,747 |
Depreciation and amortization |
34,968 |
38,510 |
139,274 |
155,746 |
EBITDA |
60,315 |
63,602 |
272,517 |
236,977 |
|
|
|
|
|
Adjustments to EBITDA (1): |
|
|
|
|
Other, net (2) |
(1,652) |
(442) |
(23,872) |
(1,452) |
Investment distributions (3) |
10,517 |
9,382 |
34,833 |
29,217 |
Non-cash compensation (4) |
794 |
663 |
3,028 |
6,387 |
Adjusted EBITDA |
$ 69,974 |
$ 73,205 |
$ 286,506 |
$ 271,129 |
|
|
|
|
|
Footnotes for Adjusted
EBITDA: |
(1) These adjustments reflect those
required or permitted by the lenders under the credit
agreement. |
(2) Other, net includes the equity
earnings from our investments, dividend income, income attributable
to noncontrolling interests in subsidiaries, transaction related
costs and certain miscellaneous items. |
(3) Includes all cash dividends and
other cash distributions received from our investments. |
(4) Represents compensation expenses in
connection with our Restricted Share Plan, which because of the
non-cash nature of the expenses are excluded from adjusted
EBITDA. |
|
|
Consolidated
Communications Holdings, Inc. |
Cash Available to Pay
Dividends |
(Dollars in thousands) |
(Unaudited) |
|
|
|
|
Three Months Ended December
31, 2013 |
Twelve Months Ended December
31, 2013 |
Adjusted EBITDA |
$ 69,974 |
$ 286,506 |
|
|
|
- Cash interest expense |
(19,094) |
(81,908) |
- Capital expenditures |
(26,779) |
(107,363) |
- Cash income taxes |
16 |
(960) |
Cash available to pay dividends |
$ 24,117 |
$ 96,275 |
|
|
|
Dividends Paid |
$ 15,538 |
$ 62,064 |
Payout Ratio |
64.4% |
64.5% |
|
|
|
* The above calculation excludes
the principal payments on the amortization of our debt. |
|
|
|
|
Consolidated
Communications Holdings, Inc. |
Total Net Debt to LTM
Adjusted EBITDA Ratio |
(Dollars in thousands) |
(Unaudited) |
|
|
Summary of Outstanding Debt |
|
Term loan, net of discount $4,537 |
$ 905,463 |
Drawn on $75.0 million revolver |
13,000 |
Senior unsecured notes, net of discount of
$1,699 |
298,301 |
Capital leases |
5,121 |
Total debt as of December 31, 2013 |
$ 1,221,885 |
Less cash on hand |
(5,551) |
Total net debt as of December 31, 2013 |
$ 1,216,334 |
|
|
Adjusted EBITDA for the last |
|
twelve months ended December 31,
2013 |
$ 286,506 |
|
|
Total Net Debt to last twelve months |
|
Adjusted EBITDA |
4.25x |
|
|
Consolidated
Communications Holdings, Inc. |
Adjusted Net Income and
Per Share Attributable to Common Stockholders |
(in thousands, except per share
amounts) |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended |
Twelve Months
Ended |
|
December
31, |
December
31, |
December
31, |
December
31, |
|
2013 |
2012 |
2013 |
2012 |
Net income attributable to common
shareholders |
$ 3,140 |
$ 2,060 |
$ 30,811 |
$ 5,640 |
Transaction and severance related costs, net
of tax |
636 |
1,024 |
3,454 |
22,135 |
Acquisition related tax adjustments |
-- |
-- |
-- |
883 |
Impairment, net of tax |
-- |
1,738 |
-- |
2,371 |
Loss on extinguishment of debt, net of
tax |
4,472 |
2,649 |
4,832 |
3,614 |
Gain on the sale of discontinued operations,
net of tax |
-- |
-- |
(1,333) |
-- |
Refinancing fee charges, net of tax |
510 |
165 |
551 |
226 |
Non-cash stock compensation, net of tax |
464 |
394 |
1,911 |
1,904 |
Adjusted net income attributable to common
stockholders |
$ 9,222 |
$ 8,030 |
$ 40,226 |
$ 36,773 |
|
|
|
|
|
Weighted average number of shares
outstanding |
39,790 |
39,684 |
39,764 |
34,652 |
Adjusted diluted net income per share |
$ 0.23 |
$ 0.20 |
$ 1.01 |
$ 1.06 |
|
|
|
|
|
Calculations above assume a 41.6
and 40.5 percent effective tax rate for the three months ended
December 31, 2013 and 2012, respectively. |
The assumed effective tax rates
for the twelve months ended December 31, 2013 and 2012, are 36.9
and 18.9 percent, respectively. |
The gain on the sale of
discontinued operations had an effective tax rate of 39.9% for the
twelve months ended December 31, 2013. |
|
|
Consolidated
Communications Holdings, Inc. |
Key Operating
Statistics |
(Unaudited) |
|
|
|
|
|
|
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
|
2013 |
2013 |
2013 |
2013 |
2012 |
ILEC access lines |
|
|
|
|
|
Residential |
147,247 |
148,811 |
150,711 |
152,644 |
153,855 |
Business |
109,558 |
110,794 |
111,870 |
113,211 |
114,742 |
Total local access lines |
256,805 |
259,605 |
262,581 |
265,855 |
268,597 |
Quarterly change |
(1.1%) |
(1.1%) |
(1.2%) |
(1.0%) |
(0.9%) |
|
|
|
|
|
|
Voice Connections [1] |
|
|
|
|
|
Residential |
73,219 |
74,588 |
76,101 |
77,515 |
78,811 |
Business |
50,214 |
49,830 |
50,013 |
50,351 |
50,918 |
Total voice connections |
123,433 |
124,418 |
126,114 |
127,866 |
129,729 |
Quarterly change |
(0.8%) |
(1.3%) |
(1.4%) |
(1.4%) |
(1.3%) |
|
|
|
|
|
|
Data and Internet Connections
[2] |
255,239 |
252,516 |
251,306 |
250,350 |
247,633 |
Quarterly change |
1.1% |
0.5% |
0.4% |
1.1% |
0.3% |
Res. penetration of marketable homes |
30.3% |
30.2% |
30.3% |
30.3% |
30.2% |
|
|
|
|
|
|
Video Connections [2] |
110,613 |
109,882 |
109,083 |
107,475 |
106,137 |
Quarterly change |
0.7% |
0.7% |
1.5% |
1.3% |
0.9% |
Res. penetration of marketable homes |
20.5% |
20.5% |
20.7% |
20.5% |
20.3% |
|
|
|
|
|
|
Total Connections |
746,090 |
746,421 |
749,084 |
751,546 |
752,096 |
Quarterly change |
(0.0%) |
(0.4%) |
(0.3%) |
(0.1%) |
(0.3%) |
|
|
|
|
|
|
Network Stats - Marketable
Homes |
|
|
|
|
|
Fiber homes |
201,720 |
199,826 |
197,355 |
195,962 |
194,895 |
HFC homes |
94,559 |
94,540 |
94,534 |
94,433 |
94,418 |
Copper homes |
399,547 |
399,547 |
399,547 |
399,547 |
399,547 |
Total |
695,826 |
693,913 |
691,436 |
689,942 |
688,860 |
|
|
|
|
|
|
Data marketable homes |
683,398 |
681,485 |
679,008 |
677,514 |
676,432 |
% of total marketable homes |
98% |
98% |
98% |
98% |
98% |
Video marketable homes |
530,834 |
528,921 |
526,444 |
524,950 |
524,019 |
% of total marketable homes |
76% |
76% |
76% |
76% |
76% |
|
|
|
|
|
|
Note: The figures in the
table, excluding ILEC access lines, do not include SureWest
business subscribers. |
|
|
|
|
|
|
[1] These include voice lines
outside the ILECs and Voice-over-IP inside the ILECs. |
[2] These connections are both
residential and business (excluding SureWest business
subscribers). They include services both inside and outside
the ILECs. |
CONTACT: Company Contact:
Matt Smith
VP of Investor Relations & Treasurer
217-258-2959
matthew.smith@consolidated.com
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