Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): March 5, 2024

CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Delaware	000-51446	02-0636095
(State of Incorporation)	(Commission File Number)	(IRS employer identification no.)


2116 South 17th Street
Mattoon, Illinois		61938-5973
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (217) 235-3311

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock – $0.01 par value	CNSL	The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

On March 5, 2024, Consolidated Communications Holdings, Inc. issued a press release to announce its financial results as of and for the quarter and full year ended December 31, 2023. A copy of the press release is included as Exhibit 99.1 to this Form 8-K and incorporated into this Item 2.02 by reference.

The information in this Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits


Ex No.		Description

99.1		Press release dated March 5, 2024
104		Cover Page Interactive Data File (formatted as Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Date: March 5, 2024
	Consolidated Communications Holdings, Inc.

	By:	/s/ Fred A. Graffam III
		Name: Fred A. Graffam III
		Title: Chief Financial Officer

Exhibit 99.1

Consolidated Communications Announces

Fourth Quarter and Full Year 2023 Financial Results

MATTOON, Ill. – Mar. 5, 2024 – Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) (the “Company” or “Consolidated”), a top 10 fiber provider in the U.S., today reported results for the fourth quarter and full year 2023.

Fourth Quarter 2023 Results

●

Revenue totaled $275.2 million

●

Overall consumer revenue was $113.9 million

●

Consumer fiber revenue was $37.9 million

●

Total consumer broadband net adds were 6,998

●

Consumer broadband revenue was $76.5 million

●

Commercial data services revenue was $54.5 million

●

Carrier data-transport revenue was $31.7 million

●

Net loss was ($58.6 million). Adjusted EBITDA was $86.7 million

●

Total committed capital expenditures were $91.5 million

Cost of services and products and selling, general and administrative expenses collectively decreased $12.6 million versus the prior year largely due to the divestiture of the Kansas City operations on Nov. 30, 2022, lower video programming costs, lower advertising expense, lower access expense and a reduction in salaries driven by the cost savings initiative.

Net interest expense was $41.6 million, an increase of $8.4 million versus the prior year, primarily as a result of higher interest on the term loan. The Company had 77% of its total debt at a fixed rate through September 2026. As of Dec. 31, 2023, the weighted average cost of debt was 7.04%.

Net loss in the fourth quarter of 2023 was ($58.6 million) compared to net loss of ($45.5 million) in the fourth quarter of 2022, which included $5.8 million of income from discontinued operations. Net loss per share was ($0.52) in the fourth quarter of 2023 as compared to net loss per share of ($0.41) in the fourth 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 ($0.26) compared to ($0.17) in the fourth quarter of 2022.

Capital Expenditures

Total committed capital expenditures were $91.5 million, driven by 49,132 new fiber passings, fourth quarter fiber adds, and reflect the usage of existing inventory for install and build activity.

Page 1 of 15

Full-Year 2023 Results

●

Revenue totaled $1.11 billion

●

Overall consumer revenue was $451.0 million

●

Consumer fiber revenue was $127.7 million

●

Total consumer broadband net adds were 25,761

●

Consumer broadband revenue was $290.8 million

●

Commercial data services revenue was $214.7 million

●

Carrier data-transport revenue was $127.2 million

●

Net loss was ($294.4 million). Adjusted EBITDA was $319.2 million

●

Total committed capital expenditures were $511.8 million

Capital Structure

As of Dec. 31, 2023, the Company maintained liquidity with cash and short-term investments of approximately $4.8 million and $214 million of available borrowing capacity on the revolving credit facility, subject to certain covenants. The net debt leverage ratio for the trailing 12 months ended Dec. 31, 2023, was 6.73x.

Pending Transaction

As previously announced, on Oct. 16, 2023, Consolidated entered into an agreement to be acquired by Searchlight and BCI in an all-cash transaction with an enterprise value of approximately $3.1 billion, including the assumption of debt. On Jan. 31, 2024, at a special meeting of shareholders, approximately 75% of disinterested shareholders voted to approve the proposal to adopt the merger agreement and approve the pending transaction. The transaction will result in Consolidated becoming a private company and is expected to close by the first quarter of 2025, subject to customary closing conditions, including receipt of regulatory approvals. The transaction is not subject to a financing condition. Following the closing of the transaction, shares of Consolidated common stock will no longer be traded or listed on any public securities exchange.

In light of the transaction, Consolidated will not host an 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 over 60,000 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 includes disclosures regarding “EBITDA,” “adjusted EBITDA,” “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.

Page 2 of 15

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 “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 Net debt leverage ratio 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, and the timeline for consummating the take private transaction with Searchlight and BCI by the first quarter of 2025, 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; 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

Page 3 of 15

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; the risk that the proposed transaction may not be completed in a timely manner or at all; the possibility that any or all of the various conditions to the consummation of the proposed transaction may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals); the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive transaction agreement relating to the proposed transaction, including in circumstances which would require the Company to pay a termination fee; the effect of the announcement or pendency of the proposed transaction on the Company’s ability to attract, motivate or retain key executives and employees, its ability to maintain relationships with its customers, suppliers and other business counterparties, or its operating results and business generally; risks related to the proposed transaction diverting management’s attention from the Company’s ongoing business operations; the amount of costs, fees and expenses related to the proposed transaction; the risk that the Company’s stock price may decline significantly if the proposed transaction is not consummated; the risk of shareholder litigation in connection with the proposed transaction, including resulting expense or delay; 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, 2023 and the other risk factors identified from time to time in the Company’s other filings with the SEC. Filings with the SEC are available on the SEC’s website at http://www.sec.gov. 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.

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

# # #

Page 4 of 15

Condensed Consolidated Balance Sheets

(Dollars in thousands, except share and per share amounts)

(Unaudited)


	December 31,		December 31,
	2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	4,765	$	325,852
Short-term investments		—		87,951
Accounts receivable, net		121,194		119,675
Income tax receivable		2,880		1,670
Prepaid expenses and other current assets		56,843		62,996
Assets held for sale		70,473		—
Total current assets		256,155		598,144

Property, plant and equipment, net		2,449,009		2,234,122
Investments		8,887		10,297
Goodwill		814,624		929,570
Customer relationships, net		18,616		43,089
Other intangible assets		10,557		10,557
Other assets		70,578		61,315
Total assets	$	3,628,426	$	3,887,094

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	60,073	$	33,096
Advance billings and customer deposits		44,478		46,664
Accrued compensation		58,151		60,903
Accrued interest		18,694		18,201
Accrued expense		114,022		95,206
Current portion of long-term debt and finance lease obligations		18,425		12,834
Liabilities held for sale		3,402		—
Total current liabilities		317,245		266,904

Long-term debt and finance lease obligations		2,134,916		2,129,462
Deferred income taxes		210,648		274,309
Pension and other post-retirement obligations		137,616		123,644
Other long-term liabilities		48,637		47,326
Total liabilities		2,849,062		2,841,645

Series A Preferred Stock, par value $0.01 per share; 10,000,000 shares authorized, 434,266 and 456,343 shares outstanding as of December 31, 2023 and December 31, 2022, respectively; liquidation preference of $520,957 and $477,047 as of December 31, 2023 and December 31, 2022, respectively		372,590		328,680

Shareholders' equity:
Common stock, par value $0.01 per share; 150,000,000 shares authorized, 116,172,568 and 115,167,193 shares outstanding as of December 31, 2023 and December 31, 2022, respectively		1,162		1,152
Additional paid-in capital		681,757		720,442
Accumulated deficit		(262,380)		(11,866)
Accumulated other comprehensive loss, net		(21,872)		(610)
Noncontrolling interest		8,107		7,651
Total shareholders' equity		406,774		716,769
Total liabilities, mezzanine equity and shareholders' equity	$	3,628,426	$	3,887,094

Page 5 of 15

Consolidated Communications Holdings, Inc.

Condensed Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

(Unaudited)


	Three Months Ended				Year Ended
	December 31,				December 31,
	2023		2022		2023		2022

Net revenues	$	275,178	$	295,976	$	1,110,120	$	1,191,263
Operating expenses:
Cost of services and products		120,539		133,652		511,866		546,661
Selling, general and administrative expenses		80,575		80,035		340,252		301,667
Transaction costs		11,797		—		13,783		—
Loss on impairment of assets held for sale		—		—		77,755		131,698
Loss (gain) on disposal of assets		(2,900)		23,396		9,480		4,233
Depreciation and amortization		78,321		79,614		315,162		300,166
Income (loss) from operations		(13,154)		(20,721)		(158,178)		(93,162)
Other income (expense):
Interest expense, net of interest income		(41,630)		(33,236)		(151,964)		(124,978)
Other, net		(3,200)		3,953		8,477		13,378
Loss from continuing operations before income taxes		(57,984)		(50,004)		(301,665)		(204,762)
Income tax benefit		(10,699)		(9,244)		(51,607)		(27,058)
Loss from continuing operations		(47,285)		(40,760)		(250,058)		(177,704)

Discontinued operations:
Income from discontinued operations		—		839		—		23,467
Gain (loss) on sale of discontinued operations		—		(20)		—		389,885
Income tax expense (benefit)		—		(4,974)		—		94,999
Income from discontinued operations		—		5,793		—		318,353

Net income (loss)		(47,285)		(34,967)		(250,058)		140,649
Less: dividends on Series A preferred stock		11,314		10,352		43,910		40,104
Less: net income attributable to noncontrolling interest		15		171		456		564
Net income (loss) attributable to common shareholders	$	(58,614)	$	(45,490)	$	(294,424)	$	99,981

Net income (loss) per common share - basic and diluted:
Loss from continuing operations	$	(0.52)	$	(0.46)	$	(2.60)	$	(1.90)
Income from discontinued operations		—		0.05		—		2.77
Net income (loss) per basic and diluted common shares attributable to common shareholders	$	(0.52)	$	(0.41)	$	(2.60)	$	0.87

Page 6 of 15

Consolidated Communications Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Year Ended
	December 31,				December 31,
	2023		2022		2023		2022
OPERATING ACTIVITIES
Net income (loss)	$	(47,285)	$	(34,967)	$	(250,058)	$	140,649
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		78,321		79,614		315,162		300,166
Deferred income tax expense (benefit)		(11,395)		(11,055)		(56,092)		58,894
Cash distributions from wireless partnerships in excess of earnings		—		79		—		5,697
Pension and post-retirement contributions less than (in excess) of expense		3,414		(5,214)		(5,827)		(29,205)
Non-cash, stock-based compensation		2,165		2,784		7,613		10,755
Amortization of deferred financing costs and discounts		2,429		1,856		8,051		7,331
Loss on impairment of assets held for sale		—		—		77,755		131,698
Loss (gain) on sale of partnership interests		—		20		—		(389,885)
Loss (gain) on disposal of assets		(2,900)		23,396		9,480		4,233
Other adjustments, net		574		191		(1,673)		(367)
Changes in operating assets and liabilities, net		(13,329)		(51,125)		10,176		(16,256)
Net cash provided by operating activities		11,994		5,579		114,587		223,710
INVESTING ACTIVITIES
Purchase of property, plant and equipment, net		(90,838)		(123,022)		(515,035)		(619,981)
Purchase of investments		—		(262,948)		—		(302,907)
Proceeds (disbursements) from sale of assets		(135)		1,661		5,954		22,918
Proceeds from business dispositions, net		—		79,781		—		105,823
Proceeds from sale and maturity of investments		—		175,859		91,623		327,419
Proceeds from sale of partnership interests, net		—		(6,601)		—		482,966
Net cash provided by (used in) investing activities		(90,973)		(135,270)		(417,458)		16,238
FINANCING ACTIVITIES
Payment of finance lease obligations		(4,079)		(2,725)		(15,338)		(9,836)
Payment of financing costs		(500)		(2,603)		(500)		(2,603)
Share repurchases for minimum tax withholding		(1,294)		(1,178)		(2,378)		(1,292)
Net cash used in financing activities		(5,873)		(6,506)		(18,216)		(13,731)
Net change in cash and cash equivalents		(84,852)		(136,197)		(321,087)		226,217
Cash and cash equivalents at beginning of period		89,617		462,049		325,852		99,635
Cash and cash equivalents at end of period	$	4,765	$	325,852	$	4,765	$	325,852

Page 7 of 15

Consolidated Communications Holdings, Inc.

Consolidated Revenue by Category

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Year Ended
	December 31,				December 31,
	2023		2022		2023		2022
Consumer:
Broadband (Data and VoIP)	$	76,458	$	69,002	$	290,847	$	272,146
Voice services		29,935		34,314		125,166		144,853
Video services		7,460		11,876		34,957		54,153
		113,853		115,192		450,970		471,152
Commercial:
Data services (includes VoIP)		54,473		56,662		214,707		228,466
Voice services		31,217		34,676		127,909		142,274
Other		10,521		10,320		39,883		43,100
		96,211		101,658		382,499		413,840
Carrier:
Data and transport services		31,713		33,752		127,248		137,378
Voice services		2,868		3,685		15,588		14,772
Other		243		338		1,168		1,688
		34,824		37,775		144,004		153,838

Subsidies		6,902		13,078		27,888		33,382
Network access		22,217		26,308		90,250		104,644
Other products and services		1,171		1,965		14,509		14,407
Total operating revenue	$	275,178	$	295,976	$	1,110,120	$	1,191,263

Page 8 of 15

Consolidated Communications Holdings, Inc.

Consolidated Revenue Trend by Category

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	Q4 2023		Q3 2023		Q2 2023		Q1 2023		Q4 2022
Consumer:
Broadband (Data and VoIP)	$	76,458	$	75,089	$	71,339	$	67,961	$	69,002
Voice services		29,935		31,616		31,352		32,263		34,314
Video services		7,460		8,541		9,362		9,594		11,876
		113,853		115,246		112,053		109,818		115,192
Commercial:
Data services (includes VoIP)		54,473		53,870		53,230		53,134		56,662
Voice services		31,217		31,825		32,236		32,631		34,676
Other		10,521		9,228		10,378		9,756		10,320
		96,211		94,923		95,844		95,521		101,658
Carrier:
Data and transport services		31,713		31,388		31,224		32,923		33,752
Voice services		2,868		4,090		4,263		4,367		3,685
Other		243		262		313		350		338
		34,824		35,740		35,800		37,640		37,775

Subsidies		6,902		6,878		7,072		7,036		13,078
Network access		22,217		20,842		22,747		24,444		26,308
Other products and services		1,171		10,025		1,646		1,667		1,965
Total operating revenue	$	275,178	$	283,654	$	275,162	$	276,126	$	295,976

Page 9 of 15

Consolidated Communications Holdings, Inc.

Reconciliation of Historical Revenue by Category to Normalized Revenue by Category

(Dollars in thousands)

(Unaudited)


	Three Months Ended						Year Ended
	December 31, 2022						December 31, 2022
	Historical		Adjustments⁽¹⁾		Normalized		Historical		Adjustments⁽¹⁾		Normalized
Consumer:
Broadband (Data and VoIP)	$	69,002	$	(1,138)	$	67,864	$	272,146	$	(6,732)	$	265,414
Voice services		34,314		(328)		33,986		144,853		(2,067)		142,786
Video services		11,876		(1,679)		10,197		54,153		(9,684)		44,469
		115,192		(3,145)		112,047		471,152		(18,483)		452,669
Commercial:
Data services (includes VoIP)		56,662		(2,952)		53,710		228,466		(15,355)		213,111
Voice services		34,676		(818)		33,858		142,274		(4,864)		137,410
Other		10,320		(179)		10,141		43,100		(1,039)		42,061
		101,658		(3,949)		97,709		413,840		(21,258)		392,582
Carrier:
Data and transport services		33,752		(171)		33,581		137,378		(4,095)		133,283
Voice services		3,685		(2)		3,683		14,772		(14)		14,758
Other		338		(3)		335		1,688		(11)		1,677
		37,775		(176)		37,599		153,838		(4,120)		149,718

Subsidies		13,078		—		13,078		33,382		(49)		33,333
Network access		26,308		(303)		26,005		104,644		(1,715)		102,929
Other products and services		1,965		(121)		1,844		14,407		(490)		13,917
Total operating revenue	$	295,976	$	(7,694)	$	288,282	$	1,191,263	$	(46,115)	$	1,145,148

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.

Page 10 of 15

Consolidated Communications Holdings, Inc.

Reconciliation of Loss from Continuing Operations to Adjusted EBITDA

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Year Ended
	December 31,				December 31,
	2023		2022		2023		2022
Loss from continuing operations	$	(47,285)	$	(40,760)	$	(250,058)	$	(177,704)
Add (subtract):
Income tax benefit		(10,699)		(9,244)		(51,607)		(27,058)
Interest expense, net		41,630		33,236		151,964		124,978
Depreciation and amortization		78,321		79,614		315,162		300,166
EBITDA		61,967		62,846		165,461		220,382

Adjustments to EBITDA (1):
Other, net (2)		20,697		11,902		57,534		29,656
Pension/OPEB benefit		4,751		(3,412)		1,356		(12,309)
Loss (gain) on disposal of assets		(2,900)		23,396		9,480		4,233
Loss on impairment		—		—		77,755		131,698
Non-cash compensation (3)		2,165		2,784		7,613		10,755
Adjusted EBITDA from continuing operations		86,680		97,516		319,199		384,415
Investment distributions from discontinued operations		—		4,142		—		29,165
Adjusted EBITDA	$	86,680	$	101,658	$	319,199	$	413,580

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.

Page 11 of 15

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				Year Ended
	December 31,				December 31,
	2023		2022		2023		2022
Loss from continuing operations	$	(47,285)	$	(40,760)	$	(250,058)	$	(177,704)
Less: dividends on Series A preferred stock		11,314		10,352		43,910		40,104
Less: net income attributable to noncontrolling interest		15		171		456		564
Loss attributable to common shareholders from continuing operations		(58,614)		(51,283)		(294,424)		(218,372)

Adjustments to loss attributable to common shareholders:
Dividends on Series A preferred stock		11,314		10,352		43,910		40,104
Integration and severance related costs, net of tax		9,551		1,498		26,604		3,081
Loss on impairment of assets held for sale		—		—		77,755		131,698
Loss (gain) on disposition of assets, net of tax		(2,141)		17,354		6,999		3,140
Non-cash pension settlement charge, net of tax		4,727		—		4,727		—
Non-cash interest expense for swaps, net of tax		—		(339)		(732)		(1,274)
Tax impact of non-deductible goodwill		2,618		2,931		—		(8,187)
Change in deferred tax rate		112		(2,417)		112		(3,062)
Other, tax		1,749		622		1,749		622
Non-cash stock compensation, net of tax		1,598		2,065		5,621		7,977
Adjusted net loss from continuing operations	$	(29,086)	$	(19,217)	$	(127,679)	$	(44,273)

Weighted average number of common shares outstanding		113,338		111,929		113,096		111,754

Adjusted diluted net income (loss) per common share:
Adjusted net loss from continuing operations	$	(0.26)	$	(0.17)	$	(1.13)	$	(0.40)
Adjusted income from discontinued operations excluding gain on sale of partnership interests, net of tax		—		0.01		—		0.16
	$	(0.26)	$	(0.16)	$	(1.13)	$	(0.24)

Notes:

Calculations above assume a 26.17% effective tax rate for the three months and year ended December 31, 2023 and 25.83% effective tax rate for the three months and year ended December 31, 2022.

Page 12 of 15

Consolidated Communications Holdings, Inc.

Reconciliation of Total Net Debt to LTM Adjusted EBITDA Ratio

(Dollars in thousands)

(Unaudited)


	December 31,
	2023
Long-term debt and finance lease obligations:
Term loans, net of discount $7,017	$	992,858
6.50% Senior secured notes due 2028		750,000
5.00% Senior secured notes due 2028		400,000
Finance leases		39,240
Total debt as of December 31, 2023		2,182,098
Less: deferred debt issuance costs		(28,757)
Less: cash, cash equivalents and short-term investments		(4,765)
Total net debt as of December 31, 2023	$	2,148,576

Adjusted EBITDA for the 12 months ended December 31, 2023	$	319,199

Total Net Debt to last 12 months Adjusted EBITDA		6.73x

Page 13 of 15

Consolidated Communications Holdings, Inc.

Key Operating Metrics

(Unaudited)


	2022										2023
	Q1		Q2		Q3		Q4		FY		Q1		Q2		Q3		Q4		FY
Passings
Total Fiber Gig+ Capable Passings ^(1)(5)(6)		689,406		831,779		947,974		1,008,660		1,008,660		1,062,518		1,119,956		1,187,076		1,236,208		1,236,208
Total DSL/Copper Passings ^(2)(3)(5)(6)		2,059,025		1,920,214		1,807,381		1,617,077		1,617,077		1,564,889		1,509,875		1,447,539		1,401,535		1,401,535
Total Passings ^{(1)(2)(3)(5)(6)}		2,748,431		2,751,993		2,755,355		2,625,737		2,625,737		2,627,407		2,629,831		2,634,615		2,637,743		2,637,743
% Fiber Gig+ Coverage/Total Passings		25%		30%		34%		38%		38%		40%		43%		45%		47%		47%

Consumer Broadband Connections
Fiber Gig+ Capable ⁽³⁾		93,812		103,455		115,598		122,872		122,872		135,209		153,860		175,748		195,195		195,195
DSL/Copper ⁽²⁾⁽³⁾		286,338		277,758		266,314		244,586		244,586		234,653		222,969		210,473		198,024		198,024
Total Consumer Broadband Connections⁽²⁾⁽³⁾		380,150		381,213		381,912		367,458		367,458		369,862		376,829		386,221		393,219		393,219

Consumer Broadband Net Adds
Total Fiber Gig+ Capable Net Adds⁽⁷⁾		7,690		9,643		12,143		10,599		40,075		12,337		18,651		21,888		19,447		72,323
DSL/Copper Net Adds ⁽⁷⁾		(8,544)		(8,580)		(11,444)		(10,783)		(39,351)		(9,933)		(11,684)		(12,496)		(12,449)		(46,562)
Total Consumer Broadband Net Adds ⁽⁷⁾		(854)		1,063		699		(184)		724		2,404		6,967		9,392		6,998		25,761

Consumer Broadband Penetration %
Fiber Gig+ Capable (on fiber passings)		13.6%		12.4%		12.2%		12.2%		12.2%		12.7%		13.7%		14.8%		15.8%		15.8%
DSL/Copper (on DSL/copper passings)		13.9%		14.5%		14.7%		15.1%		15.1%		15.0%		14.8%		14.5%		14.1%		14.1%
Total Consumer Broadband Penetration %		13.8%		13.9%		13.9%		14.0%		14.0%		14.1%		14.3%		14.7%		14.9%		14.9%

Consumer Average Revenue Per Unit (ARPU)
Fiber Gig+ Capable	$	63.88	$	64.95	$	65.61	$	67.14	$	65.42	$	67.51	$	68.29	$	68.78	$	68.14	$	66.90
DSL/Copper	$	50.78	$	52.36	$	53.87	$	53.55	$	53.36	$	53.21	$	55.88	$	57.18	$	56.27	$	55.83

Churn
Fiber Consumer Broadband Churn⁽⁷⁾		0.9%		1.1%		1.2%		1.1%		1.1%		1.0%		1.3%		1.3%		1.2%		1.2%
DSL/Copper Consumer Broadband Churn ⁽⁷⁾		1.3%		1.6%		1.8%		1.7%		1.6%		1.5%		1.7%		2.0%		2.0%		1.8%

Consumer Broadband Revenue ($ in thousands)
Fiber Broadband Revenue ⁽⁴⁾	$	17,242	$	19,218	$	21,558	$	24,016	$	82,034	$	26,136	$	29,613	$	34,004	$	37,916	$	127,668
Copper and Other Broadband Revenue		48,669		48,374		48,083		44,986		190,112		41,825		41,726		41,085		38,542		163,179
Total Consumer Broadband Revenue	$	65,911	$	67,592	$	69,641	$	69,002	$	272,146	$	67,961	$	71,339	$	75,089	$	76,458	$	290,847

Consumer Voice Connections⁽³⁾		316,634		306,458		294,441		276,779		276,779		267,509		258,680		249,081		239,587		239,587

Video Connections ⁽³⁾		58,812		55,225		51,339		35,039		35,039		32,426		28,934		26,158		21,900		21,900

Fiber route network miles (long-haul, metro and FttP)		54,239		56,093		57,498		57,865		57,865		57,569		58,836		59,915		60,438		60,438

On-net buildings ⁽³⁾		15,446		15,618		15,715		14,427		14,427		14,520		14,735		14,928		15,105		15,105

Page 14 of 15

Notes:

(1)

In Q1 2021, the Company launched a multi-year fiber build plan to upgrade 1.6 million passings or 70% of our service area to fiber Gig+ capable services. As of December 31, 2023, 227,548 passings for 2023 were upgraded to FttP and total fiber passings were 1,236,208 or 47% 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.

(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, 2022 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.

Page 15 of 15

Document and Entity Information	Mar. 05, 2024
Document and Entity Information [Abstract]
Document Type	8-K
Document Period End Date	Mar. 05, 2024
Entity File Number	000-51446
Entity Registrant Name	CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	02-0636095
Entity Address, Address Line One	2116 South 17th Street
Entity Address, City or Town	Mattoon
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	61938-5973
City Area Code	217
Local Phone Number	235-3311
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock – $0.01 par value
Trading Symbol	CNSL
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0001304421
Amendment Flag	false