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Consolidated Communications Reports Fourth Quarter 2018 Results

February 21, 2019 8:01 AM

MATTOON, Ill., Feb. 21, 2019 (GLOBE NEWSWIRE) -- Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) (the “Company”) reported results for the fourth quarter 2018 and will hold a conference call and simultaneous webcast to discuss its results and developments today at 10 a.m. ET.

Fourth quarter 2018 Consolidated Communications financial summary:

“2018 was a very productive year where we made great progress improving service levels and advancing our business and broadband strategy across our newly acquired markets,” said Bob Udell, president and chief executive officer of Consolidated Communications. “I am very pleased with our commercial growth and our progress in expanding our fiber network, including our upgrade of more than 500,000 or one-third of the broadband passings across Northern New England.”

“For 2019, we are focused on growing market share as we ramp up marketing in Northern New England and continue to make success-based, fiber investments in the business improving the customer experience,” said Udell.

Financial Results for the Fourth Quarter

Full-Year 2018 Results

Cash Available to Pay Dividends, Capex

For the fourth quarter, cash available to pay dividends was $40.4 million. The dividend payout ratio was 68.3 percent for the quarter and 67.4 percent for the year. At Dec. 31, 2018, cash and cash equivalents were $9.6 million. Capital expenditures were $58.1 million for the fourth quarter and $244.8 million for the year.

Financial Guidance

The Company is providing guidance for fiscal year 2019 as follows:

2018 Results 2019 Guidance
Cash interest expense $128.1M $135M to $140M
Cash income taxes1 $1.0M $1M to $3M
Capital expenditures $244.8M $210M to $220M
(1) Cash income taxes primarily include local and state income taxes as federal income taxes will be shielded by existing net operating losses.

Dividend Payments

The Company’s board of directors declared a quarterly dividend of $0.38738 per common share, which is payable on May 1, 2019 to stockholders of record at the close of business on April 15, 2019. This will represent the 55th consecutive quarterly dividend paid by the Company.

Conference Call Information

Consolidated Communications will host a conference call and webcast today at 10 a.m. ET / 9 a.m. CT to discuss fourth quarter earnings and developments with respect to the Company. The live webcast and replay can be accessed from the Investor Relations section of the Company’s website at http://ir.consolidated.com. The live conference call dial-in number is 1-877-374-3981, conference ID 5858129. A telephonic replay of the conference call will be available through Feb. 28, 2019 and can be accessed by calling 1-855-859-2056, conference ID 5858129. About Consolidated Communications

Consolidated Communications Holdings, Inc. (NASDAQ: CNSL) is a leading broadband and business communications provider serving consumers, businesses, and wireless and wireline carriers across rural and metro communities and a 23-state service area. Leveraging an advanced fiber network spanning 37,000 fiber route miles, Consolidated Communications offers a wide range of communications solutions, including: high-speed Internet, data, phone, security, managed services, cloud services and wholesale, carrier solutions. From our first connection 125 years ago, Consolidated is dedicated to turning technology into solutions, connecting people and enriching how they work and live. Visit www.consolidated.com for more information.

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 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.

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 our 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 our 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 our 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 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. 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.

Preliminary Pro Forma Results

Estimated pro forma results of operations presented herein gives effect to the acquisition of FairPoint Communications, Inc. as if it had occurred on Jan. 1, 2016. The estimated pro forma results include certain accounting adjustments related to the acquisition that are expected to have a continuing impact on the combined results, including adjustments for depreciation and amortization of the acquired tangible and intangible assets, interest expense on the debt incurred to complete the acquisition and to repay certain existing indebtedness of FairPoint, the exclusion of certain acquisition related costs and the tax impact of these pro forma adjustments. These adjustments and the related results are based on a preliminary valuation of the estimated fair value of the net assets acquired, which is subject to change upon the final assessment and such changes could be material. The estimated pro forma information is not intended to represent or be indicative of the results of the combined company that would have been obtained had the acquisition been completed as of the dates presented and should not be taken as representative of the future consolidated results of the combined company.

Safe Harbor

The Securities and Exchange Commission (“SEC”) encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. Certain statements in this communication are forward-looking statements and are made pursuant to the safe harbor provisions of the 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 our ability to successfully integrate FairPoint Communications, Inc.’s operations and realize the synergies from the integration, as well as a number of factors related to our business, including economic and financial market conditions generally and economic conditions in our service areas; various risks to stockholders of not receiving dividends and risks to our ability to pursue growth opportunities if we continue to pay dividends according to the current dividend policy; 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 and to pay dividends on our common stock; 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 acquisitions; 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; and liability and compliance costs regarding environmental regulations. 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 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 Consolidated Communications Holdings, Inc. 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.

Company Contact

Lisa Hood, Consolidated CommunicationsPhone: (844)-909-CNSL (2675) [email protected]

– Tables to follow –

Consolidated Communications Holdings, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
(Unaudited)
December 31, December 31,
2018 2017
ASSETS
Current assets:
Cash and cash equivalents$ 9,599 $ 15,657
Accounts receivable, net 133,136 121,528
Income tax receivable 11,072 21,846
Prepaid expenses and other current assets 44,336 33,318
Assets held for sale - 21,310
Total current assets 198,143 213,659
Property, plant and equipment, net 1,927,126 2,037,606
Investments 110,853 108,858
Goodwill 1,035,274 1,038,032
Customer relationships, net 228,959 293,300
Other intangible assets 11,483 13,483
Other assets 23,423 14,188
Total assets$ 3,535,261 $ 3,719,126
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable$ 32,502 $ 24,143
Advance billings and customer deposits 47,724 42,526
Dividends payable 27,579 27,418
Accrued compensation 64,459 49,770
Accrued interest 9,232 9,343
Accrued expense 71,650 72,041
Current portion of long-term debt and capital lease obligations 30,468 29,696
Liabilities held for sale - 1,003
Total current liabilities 283,614 255,940
Long-term debt and capital lease obligations 2,303,585 2,311,514
Deferred income taxes 188,129 209,720
Pension and other post-retirement obligations 314,134 334,193
Other long-term liabilities 30,145 33,817
Total liabilities 3,119,607 3,145,184
Shareholders' equity:
Common stock, par value $0.01 per share; 100,000,000 shares
authorized, 71,187,301 and 70,777,354, shares outstanding
as of December 31, 2018 and December 31, 2017, respectively 712 708
Additional paid-in capital 513,070 615,662
Accumulated deficit (50,834) -
Accumulated other comprehensive loss, net (53,212) (48,083)
Noncontrolling interest 5,918 5,655
Total shareholders' equity 415,654 573,942
Total liabilities and shareholders' equity$ 3,535,261 $ 3,719,126

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,
2018 2017 2018 2017
Net revenues$ 344,750 $ 356,360 $ 1,399,074 $ 1,059,574
Operating expenses:
Cost of services and products 154,656 155,453 611,872 445,998
Selling, general and administrative
expenses 82,433 86,159 333,605 249,141
Acquisition and other transaction costs 197 2,987 1,960 33,650
Depreciation and amortization 103,909 104,789 432,668 291,873
Income from operations 3,555 6,972 18,969 38,912
Other income (expense):
Interest expense, net of interest income (35,499) (29,890) (134,578) (129,786)
Other income, net 11,069 7,877 40,911 31,246
Loss before income taxes (20,875) (15,041) (74,698) (59,628)
Income tax benefit (6,877) (115,065) (24,127) (124,927)
Net income (loss) (13,998) 100,024 (50,571) 65,299
Less: net income (loss) attributable to noncontrolling interest (19) 218 263 354
Net income (loss) attributable to common shareholders$ (13,979) $ 99,806 $ (50,834) $ 64,945
Net income (loss) per basic and diluted common shares
attributable to common shareholders$ (0.20) $ 1.41 $ (0.73) $ 1.07

Consolidated Communications Holdings, Inc.
Pro Forma Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
Pro Forma Pro Forma
Three Months Ended Year Ended
December 31, December 31,
2018 2017 2018 2017
Net revenues$ 344,750 $ 356,360 $ 1,399,074 $ 1,460,620
Operating expenses:
Operating expenses (exclusive of depreciation
and amortization) 237,286 241,794 947,437 981,329
Depreciation and amortization 103,909 104,789 432,668 418,365
Income from operations 3,555 9,777 18,969 60,926
Other income (expense):
Interest expense, net of interest income (35,499) (29,890) (134,578) (119,510)
Other income, net 11,069 7,877 40,911 28,875
Loss before income taxes (20,875) (12,236) (74,698) (29,709)
Income tax benefit (6,877) (113,943) (24,127) (120,840)
Net income (loss) (13,998) 101,707 (50,571) 91,131
Less: net income (loss) attributable to noncontrolling interest (19) 218 263 354
Net income (loss) attributable to common shareholders$ (13,979) $ 101,489 $ (50,834) $ 90,777
Net income (loss) per basic and diluted common share
attributable to common shareholders$ (0.20) $ 1.44 $ (0.73) $ 1.29

Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2018 2017 2018 2017
OPERATING ACTIVITIES
Net income (loss)$ (13,998) $ 100,024 $ (50,571) $ 65,299
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 103,909 104,789 432,668 291,873
Deferred income taxes (23,203) (130,348) (26,008) (126,127)
Cash distributions from wireless partnerships less than earnings (160) (522) (194) (1,411)
Non-cash, stock-based compensation 1,365 447 5,119 2,766
Amortization of deferred financing 1,199 1,148 4,721 17,076
Other adjustments, net 2,251 551 6,066 3,208
Changes in operating assets and liabilities, net 21,922 8,714 (14,480) (42,657)
Net cash provided by operating activities 93,285 84,803 357,321 210,027
INVESTING ACTIVITIES
Business acquisition, net of cash acquired - - - (862,385)
Purchase of property, plant and equipment, net (58,051) (61,896) (244,816) (181,185)
Proceeds from sale of assets 485 563 2,125 859
Proceeds from business disposition - - 20,999 -
Proceeds from sale of investments - - 233 -
Net cash used in investing activities (57,566) (61,333) (221,459) (1,042,711)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 53,001 21,000 189,588 1,052,325
Payment of capital lease obligations (3,165) (2,570) (12,755) (7,933)
Payment on long-term debt (51,588) (21,587) (207,938) (111,337)
Payment of financing costs - - - (16,732)
Share repurchases for minimum tax withholding (593) (530) (593) (571)
Dividends on common stock (27,601) (27,440) (110,222) (94,138)
Other - - - (350)
Net cash provided by (used in) financing activities (29,946) (31,127) (141,920) 821,264
Net change in cash and cash equivalents 5,773 (7,657) (6,058) (11,420)
Cash and cash equivalents at beginning of period 3,826 23,314 15,657 27,077
Cash and cash equivalents at end of period$9,599 $15,657 $9,599 $15,657

Consolidated Communications Holdings, Inc.
Consolidated Revenue by Category
(Dollars in thousands)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2018 2017 2018 2017
Commercial and carrier:
Data and transport services (includes VoIP)$88,152 $86,145 $349,413 $274,221
Voice services 49,301 54,137 202,875 152,632
Other 16,389 11,709 56,395 33,908
153,842 151,991 608,683 460,761
Consumer:
Broadband (VoIP and Data) 63,598 63,052 253,119 183,634
Video services 21,649 22,646 88,338 91,406
Voice services 47,597 54,581 202,032 137,696
132,844 140,279 543,489 412,736
Subsidies 17,948 20,375 83,371 62,272
Network access 37,382 40,243 152,582 110,196
Other products and services 2,734 3,472 10,949 13,609
Total operating revenue 344,750 356,360 1,399,074 1,059,574
Less operating revenues from divestitures - (1,355) (3,337) (2,784)
$ 344,750 $ 355,005 $ 1,395,737 $ 1,056,790

Consolidated Communications Holdings, Inc.
Consolidated Revenue by Category
(Dollars in thousands)
(Unaudited)
Three Months Ended
Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017
Commercial and carrier:
Data and transport services (includes VoIP)$ 88,152 $ 87,633 $ 87,603 $ 86,025 $ 86,145
Voice services 49,301 50,091 51,322 52,161 54,137
Other 16,389 13,906 14,237 11,863 11,709
153,842 151,630 153,162 150,049 151,991
Consumer:
Broadband (VoIP and Data) 63,598 63,865 62,545 63,111 63,052
Video services 21,649 21,790 22,065 22,834 22,646
Voice services 47,597 50,757 51,616 52,062 54,581
132,844 136,412 136,226 138,007 140,279
Subsidies 17,948 19,189 20,979 25,255 20,375
Network access 37,382 38,147 37,338 39,715 40,243
Other products and services 2,734 2,686 2,516 3,013 3,472
Total operating revenue 344,750 348,064 350,221 356,039 356,360
Less operating revenues from divestitures - (466) (1,417) (1,454) (1,355)
$ 344,750 $ 347,598 $ 348,804 $ 354,585 $ 355,005

Consolidated Communications Holdings, Inc.
Schedule of Adjusted EBITDA Calculation
(Dollars in thousands)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2018 2017 2018 2017
Net income (loss)$ (13,998) $ 100,024 $ (50,571) $ 65,299
Add (subtract):
Income tax benefit (6,877) (115,065) (24,127) (124,927)
Interest expense, net 35,499 29,890 134,578 129,786
Depreciation and amortization 103,909 104,789 432,668 291,873
EBITDA 118,533 119,638 492,548 362,031
Adjustments to EBITDA (1):
Other, net (2) 11,552 11,854 34,599 47,536
Investment income (accrual basis) (10,597) (8,681) (39,596) (31,749)
Investment distributions (cash basis) 10,263 7,972 39,078 29,993
Pension/OPEB expense 1,249 1,925 5,546 3,527
Non-cash compensation (3) 1,365 447 5,119 2,766
Adjusted EBITDA$ 132,365 $ 133,155 $ 537,294 $ 414,104
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.
Schedule of Pro Forma Adjusted EBITDA Calculation
(Dollars in thousands)
(Unaudited)
Pro Forma Pro Forma
Three Months Ended Year Ended
December 31, December 31,
2018 2017 2018 2017
Net income (loss)$ (13,998) $ 101,707 $ (50,571) $ 91,131
Add (subtract):
Income tax benefit (6,877) (113,943) (24,127) (120,840)
Interest expense, net 35,499 29,890 134,578 119,510
Depreciation and amortization 103,909 104,789 432,668 418,365
EBITDA 118,533 122,443 492,548 508,166
Adjustments to EBITDA (1):
Other, net (2) 11,552 9,049 34,599 14,499
Investment income (accrual basis) (10,597) (8,681) (39,596) (31,749)
Investment distributions (cash basis) 10,263 7,972 39,078 29,993
Pension/OPEB expense 1,249 1,925 5,546 9,545
Non-cash compensation (3) 1,365 447 5,119 5,752
Adjusted EBITDA$ 132,365 $ 133,155 $ 537,294 $ 536,206
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.
Cash Available to Pay Dividends
(Dollars in thousands)
(Unaudited)
Three Months Ended Year Ended
December 31, 2018 December 31, 2018
Adjusted EBITDA$ 132,365 $ 537,294
- Cash interest expense (33,809) (128,081)
- Capital expenditures (58,051) (244,816)
- Cash income taxes (97) (940)
Cash available to pay dividends$ 40,408 $ 163,457
Dividends Paid$ 27,601 $ 110,222
Payout Ratio 68.3% 67.4%
Note: The above calculation excludes the principal payments on our debt.

Consolidated Communications Holdings, Inc.
Total Net Debt to LTM Adjusted EBITDA Ratio
(Dollars in thousands)
(Unaudited)
December 31,
Summary of Outstanding Debt: 2018
Term loans, net of discount $6,994$ 1,796,068
Revolving loan 22,000
Senior unsecured notes due 2022, net of discount $2,991 497,009
Capital leases 30,362
Total debt as of December 31, 2018$ 2,345,439
Less deferred debt issuance costs (11,386)
Less cash on hand (9,599)
Total net debt as of December 31, 2018$ 2,324,454
Adjusted EBITDA for the
year ended December 31, 2018$ 537,294
Total Net Debt to last twelve months
Adjusted EBITDA 4.33x

Consolidated Communications Holdings, Inc.
Adjusted Net Income and Net Income Per Share
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2018 2017 2018 2017
Net income (loss)$ (13,998) $ 100,024 $ (50,571) $ 65,299
Transaction and severance related costs, net of tax 7,590 4,503 23,986 25,902
Storm costs, net of tax 282 1,931 1,768 1,931
Local switching support settlement, net of tax - - (2,978) -
Non-cash interest expense for swaps, net of tax 1,051 (440) 3,480 666
Tax on non-deductible transaction related costs - 1,102 - 3,443
Tax related to acquisition - - 1,062 5,205
Divestiture related, tax (1) - - 767 -
Change in deferred tax rate, tax (2,763) - (2,763) 5,404
Change in deferred tax rate, federal tax reform (772) (112,910) (5,169) (112,910)
Other, tax 1,340 2,580 1,340 2,580
Amortization of commitment fee, net of tax - - - 7,819
Ticking fees on committed financing, net of tax - - - 10,966
Non-cash stock compensation, net of tax 1,020 272 3,824 1,682
Adjusted net income (loss)$ (6,250) $ (2,938) $ (25,254) $ 17,987
Weighted average number of shares outstanding 70,658 70,516 70,613 60,373
Adjusted diluted net income (loss) per share$ (0.09) $ (0.04) $ (0.36) $ 0.30
Notes:
(1) Includes sale of Virginia properties on July 31, 2018.
Calculations above assume a 25.3% effective tax rate for the three months and year ended December 31, 2018 and 39.2% effective tax rate for the three months and year ended December 31, 2017.
Net income per share has been impacted by approximately $0.22 for the year ended December 31, 2018 due to increased depreciation and amortization associated with the valuation of the FairPoint assets.

Consolidated Communications Holdings, Inc.
Key Operating Statistics
(Unaudited)
December 31, September 30, % Change December 31, % Change
2018 2018 in Qtr 2017 (2) YOY
Voice Connections902,414 921,896 (2.1%) 967,965 (6.8%)
Data and Internet Connections778,970 781,912 (0.4%) 780,794 (0.2%)
Video Connections 93,065 95,889 (2.9%) 103,313 (9.9%)
Business and Broadband as % of total revenue (1)76.2% 75.2% 1.3% 74.8% 1.8%
Fiber route network miles (long-haul and metro)36,944 36,814 0.4% 35,962 2.7%
On-net buildings10,424 10,041 3.8% 9,062 15.0%
Consumer Customers628,649 641,845 (2.1%) 666,872 (5.7%)
Consumer ARPU$70.44 $70.70 (0.4%) $69.69 1.1%
Notes:
(1) Business and Broadband revenue % includes: commercial/carrier, equipment sales and service, directory, consumer broadband and special access.
(2) The sale of our local exchange carrier in Virginia resulted in a reduction of approximately 4,110 voice connections, 2,900 data and Internet connections and 4,340 consumer customers in the third quarter of 2018. Prior period amounts have been adjusted to reflect the sale.

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Source: Consolidated Communications Holdings, Inc.

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