TMCnet News
Cable ONE Reports Third Quarter 2017 ResultsCable One, Inc. (NYSE: CABO) (the "Company" or "Cable ONE") today reported financial and operating results for the quarter ended September 30, 2017. Third quarter 2017 highlights:
(1) Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EBITDA less capital expenditures are defined in the section of this press release entitled "Use of Non-GAAP Financial Metrics." Adjusted EBITDA and Adjusted EBITDA less capital expenditures are reconciled to net income, Adjusted EBITDA margin is reconciled to net profit margin and Adjusted EBITDA less capital expenditures is reconciled to net cash provided by operating activities. Refer to the "Reconciliations of Non-GAAP Measures" tables within this press release. "We are pleased with our progress on the integration of NewWave," said Julie Laulis, President and CEO of Cable ONE. "As we continue the process of making NewWave more closely resemble Cable ONE in terms of services and product offers, we believe establishing a unified operational approach will benefit our customers and associates while positioning us well for future growth." Third Quarter 2017 Financial Results Compared to Third Quarter 2016 Revenues increased $48.3 million, or 23.5%, due primarily to $47.5 million in revenues attributable to the NewWave operations. For the third quarter of 2017 and 2016, residential data revenues comprised 43.1% and 42.2% of total revenues and business services revenues comprised 13.9% and 12.4% of total revenues, respectively. Excluding the $47.5 million contribution from NewWave in the third quarter of 2017, revenues increased to $206.4 million from $205.5 million in the prior year quarter. The third quarter of 2017 was negatively impacted by an estimated $1.6 million loss in revenues from waived service offering charges associated with Hurricane Harvey. Operating expenses (excluding depreciation and amortization) were $91.9 million in the third quarter of 2017 and increased $16.3 million, or 21.5%, compared to the third quarter of 2016. Operating expenses as a percentage of revenues were 36.2% for the third quarter of 2017 compared to 36.8% for the year-ago quarter. Additional operating expenses attributable to the NewWave operations were $24.2 million for the third quarter of 2017. This increase was partially offset by a $4.8 million decrease in labor costs associated with the aforementioned change in accounting estimate for capitalized labor, a $0.9 million decrease in backbone and internet connectivity fees, a $0.7 million decrease in programming costs resulting from fewer video subscribers and a $0.7 million decrease in contract labor. Excluding the impact of the NewWave operations, operating expenses would have been $67.7 million in the third quarter of 2017, a decrease of $7.9 million, or 10.5%. Operating expenses as a percentage of revenues, excluding the impact of the NewWave operations, would have been 32.8% in the third quarter of 2017 compared to 36.8% in the third quarter of 2016. Selling, general and administrative expenses increased $3.2 million, or 6.5%, to $52.0 million. Selling, general and administrative expenses as a percentage of revenues were 20.5% and 23.7% for the third quarter of 2017 and 2016, respectively. Additional selling, general and administrative expenses attributable to the NewWave operations were $5.9 million for the third quarter of 2017. Increases in deferred compensation expenses of $1.1 million and insurance costs of $1.0 million were offset by decreases in acquisition-related costs of $2.0 million and marketing costs of $1.3 million, as well as a $1.4 million decrease in labor costs associated with the aforementioned change in accounting estimate for capitalized labor. Excluding the incremental expenses associated with the NewWave operations, selling, general and administrative expenses would have decreased $2.7 million, or 5.6%, to $46.1 million. Selling, general and administrative expenses as a percentage of revenues, excluding the impact of the NewWave operations, would have been 22.3% in the third quarter of 2017 compared to 23.7% in the third quarter of 2016. Depreciation and amortization increased $9.4 million, or 25.8%, including $12.2 million attributable to the NewWave operations. The increase was due primarily to new assets placed in service since the third quarter of 2016, including property, plant and equipment and amortized intangible assets acquired as part of the NewWave acquisition, partially offset by assets that became fully depreciated since the third quarter of 2016. As a percentage of revenues, depreciation and amortization expense was 18.0% for the third quarter of 2017 compared to 17.6% for the third quarter of 2016. The Company recognized a $2.5 million loss on disposal of assets, including $1.3 million associated with damage caused by Hurricane Harvey, in the third quarter of 2017. Interest expense increased $6.5 million, or 86.2%, due primarily to additional debt incurred to finance the NewWave acquisition. Net income increased $10.6 million, or 51.0%, to $31.5 million in the third quarter of 2017 compared to $20.9 million in the prior year quarter. Excluding the impact of the NewWave operations, net income would have been $28.7 million. Without both the NewWave operations and the change in accounting estimate for capitalized labor, net income would have increased 18.8% to $24.8 million in the third quarter of 2017. Excluding the NewWave operations, the change in accounting estimate for capitalized labor and the Hurricane Harvey impact, net income would have increased 26.4% to $26.4 million. Adjusted EBITDA was $115.5 million and $87.2 million for the third quarter of 2017 and 2016, respectively. Adjusted EBITDA growth of 32.5% in the third quarter of 2017 includes the positive impact of the NewWave operations and the aforementioned capitalized labor costs. Without the impact of the NewWave operations, Adjusted EBITDA would have been $98.0 million and Adjusted EBITDA growth would have been 12.4% for the third quarter of 2017. Excluding both the NewWave operations and the change in estimate for capitalized labor, Adjusted EBITDA would have been $91.8 million and Adjusted EBITDA growth would have been 5.3%. Excluding the NewWave operations, the change in estimate for capitalized labor, and the Hurricane Harvey impact, Adjusted EBITDA would have been $93.5 million and Adjusted EBITDA growth would have been 7.3%. Capital expenditures totaled $52.4 million and $26.3 million for the third quarter of 2017 and 2016, respectively. Adjusted EBITDA less capital expenditures for the third quarter of 2017 was $63.1 million, an increase of $2.2 million, or 3.6%, from the prior year quarter. Excluding the NewWave operations, capital expenditures would have been $38.4 million. Excluding both the NewWave operations and the change in estimate related to capitalized labor, capital expenditures would have been $32.2 million. Liquidity and Capital Resources At September 30, 2017, the Company had $118.7 million of cash and cash equivalents on hand, compared to $138.0 million at December 31, 2016. The Company's debt balance, excluding unamortized debt issuance costs, was $1.2 billion, which included $747.2 million of outstanding term loan borrowings in connection with the NewWave acquisition, at September 30, 2017 and $545.3 million at December 31, 2016. The Company also had $196.9 million available for borrowing under its revolving credit facility as of September 30, 2017. Conference Call Cable ONE will host a conference call with the financial community to discuss results for the third quarter of the 2017 fiscal year on Wednesday, November 8, 2017, at 11 a.m. Eastern Time (ET). Shareholders, analysts and other interested parties may register for the conference in advance at http://dpregister.com/10112665. Those unable to pre-register may join the call via the live audio webcast on the Cable ONE Investor Relations website or by dialing 1-844-378-6483 (Canada: 1-855-669-9657/International: 1-412-542-4178) shortly before 11 a.m. ET. A replay of the call will be available from Thursday, November 9, 2017, until Thursday, November 23, 2017, on the Cable ONE Investor Relations website. Additional Information Available on Website The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2017, which will be posted on the "SEC Filings" section of the Cable ONE Investor Relations website at ir.cableone.net when it is filed with the U.S. Securities and Exchange Commission (the "SEC"). Investors and others interested in more information about Cable ONE should consult our website, which is regularly updated with financial and other important information about the Company. Use of Non-GAAP Financial Metrics The Company uses certain measures that are not defined by generally accepted accounting principles in the United States ("GAAP") to evaluate various aspects of its business. Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EBITDA less capital expenditures are non-GAAP financial measures and should be considered in addition to, not as superior to, or as a substitute for, net income, net profit margin or net cash provided by operating activities reported in accordance with GAAP. Adjusted EBITDA and Adjusted EBITDA less capital expenditures are reconciled to net income, and Adjusted EBITDA margin is reconciled to net profit margin, in the "Reconciliations of Non-GAAP Measures" tables within this press release. Adjusted EBITDA less capital expenditures is also reconciled to net cash provided by operating activities in the "Reconciliations of Non-GAAP Measures" tables within this press release. "Adjusted EBITDA" is defined as net income plus interest expense, provision for income taxes, depreciation and amortization, equity-based compensation expense, severance expense, (gain) loss on deferred compensation, acquisition-related costs, (gain) loss on disposal of assets, other (income) expense, net, and other unusual operating expenses, as provided in the "Reconciliations of Non-GAAP Measures" tables within this press release. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of the Company's business as well as other non-cash or special items and is unaffected by the Company's capital structure or investment activities. This measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and the Company's cash cost of financing. These costs are evaluated through other financial measures. "Adjusted EBITDA margin" is defined as Adjusted EBITDA divided by total revenues. "Adjusted EBITDA less capital expenditures," when used as a liquidity measure, is calculated as net cash provided by operating activities excluding the impact of capital expenditures, interest expense, provision for income taxes, changes in operating assets and liabilities and other unusual operating expenses, as defined in the "Reconciliations of Non-GAAP Measures" tables within this press release. The Company uses Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EBITDA less capital expenditures to assess its performance, and it also uses Adjusted EBITDA less capital expenditures as an indicator of its ability to fund operations and make additional investments with internally-generated funds. In addition, Adjusted EBITDA generally correlates to the measure used in the leverage ratio calculation under the Company's credit facilities and outstanding 5.75% senior unsecured notes due 2022 to determine compliance with the covenants contained in the facilities and ability to take certain actions under the indenture governing the notes. For the purpose of calculating compliance with the leverage covenants in the Company's debt instruments, the Company uses a measure similar to Adjusted EBITDA, as presented. Adjusted EBITDA and capital expenditures are also significant performance measures used by the Company in its annual incentive compensation program. Adjusted EBITDA does not take into account cash used for mandatory debt service requirements or other non-discretionary expenditures, and thus does not represent residual funds available for discretionary uses. The Company believes Adjusted EBITDA and Adjusted EBITDA margin are useful to investors in evaluating the operating performance of the Company. The Company believes that Adjusted EBITDA less capital expenditures is useful to investors as it shows the Company's performance while taking into account cash outflows for capital expenditures and is one of several indicators of the Company's ability to service debt, make investments and/or return capital to its shareholders. Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA less capital expenditures and similar measures with similar titles are common measures used by investors, analysts and peers to compare performance in the Company's industry, although the Company's measures of Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EBITDA less capital expenditures may not be directly comparable to similarly titled measures reported by other companies. About Cable ONE Cable One, Inc. (NYSE: CABO) is the seventh-largest cable company in the United States. Serving nearly 800,000 residential and business customers in 21 states with high-speed internet, cable television and telephone service, Cable ONE provides consumers with a wide range of the latest products and services, including wireless internet service, high-definition programming and phone service with free, unlimited long-distance calling in the continental U.S. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This communication contains "forward-looking statements" that involve risks and uncertainties. These statements can be identified by the fact that they do not relate strictly to historical or current facts, but rather are based on current expectations, estimates, assumptions and projections about the cable industry and our business and financial results. Forward-looking statements often include words such as "anticipates," "estimates," "expects," "projects," "intends," "plans," "believes" and words and terms of similar substance in connection with discussions of future operating or financial performance. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. Our actual results may vary materially from those expressed or implied in our forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statement made by us or on our behalf. Important factors that could cause our actual results to differ materially from those in our forward-looking statements include government regulation, economic, strategic, political and social conditions and the following factors:
Any forward-looking statements made by us in this communication speak only as of the date on which they are made. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether as a result of new information, subsequent events or otherwise.
(1) Net income, Adjusted EBITDA and capital expenditures results for the third quarter of 2017 include NewWave operations. Net income and Adjusted EBITDA for the third quarter of 2017 include the favorable impact of a reduction in expense, and capital expenditures include the unfavorable impact in additional expenditures, of $6.2 million due to a change in accounting estimate related to capitalized labor costs. Without the contribution from NewWave operations, net income would have increased 37.3% to $28.7 million, Adjusted EBITDA would have increased 12.4% to $98.0 million and capital expenditures would have been $38.4 million. Excluding both the NewWave operations and the change in estimate related to capitalized labor, net income would have increased 18.8% to $24.8 million, Adjusted EBITDA would have increased 5.3% to $91.8 million and capital expenditures would have been $32.2 million.
(1) Average monthly per unit values represent the applicable residential service revenues divided by the corresponding average of the number of PSUs at the beginning and end of each period. (2) Average monthly per unit values represent business services revenues divided by the average of the number of business customer relationships at the beginning and end of each period. N/A Information not available. View source version on businesswire.com: http://www.businesswire.com/news/home/20171108005228/en/ |