Consolidated Communications Holdings, Inc. (CNSL) Q1 2010 Earnings Call May 6, 2010 11:00 am ET Executives Matt Smith - Treasurer and Director of Finance Bob Currey - President and CEO Steve Childers - SVP and CFO Analysts Dave Coleman - RBC Capital Markets Barry Sine - Capstone Investments Frank Louthan - Raymond James Mike Levine - Oppenheimer Todd Rosenbluth - Standard & Poor's Presentation Operator
In addition, during this call, we will discuss certain non-GAAP financial measures. Our earnings release for this quarter's results, which has been posted to the Investor Relations section of our website contains reconciliations of these measures to their nearest GAAP equivalent.I will now turn the call over to Bob, who will provide an overview of our financial and operating results. Steve Childers will then provide a more detailed review of the financials. Bob? Bob Currey Thanks, Matt and good morning everyone. I am pleased that you joined us today as we review our results for the first quarter. Let me start by providing some financial and operating highlights and then I will turn it over to Steve for detailed review of our financials. The first quarter of 2010 was another solid quarter for us. Revenue was $98.3 million and adjusted EBITDA was $47.1 million. Excluding the impact from the sale of our telemarketing business, revenue was down 2% year-over-year, while adjusted EBITDA increased by 4%. In addition, we increased our cash available to pay dividends to $18 million, resulting in a very comfortable payout ratio of 64%. These financial results reflect our continued success in growing our broadband customers, controlling expenses and improving our margins. Operationally, our products and marketing efforts resonated well with our customers, as we delivered strong broadband growth with DSL subscriber additions of 2,000 and IPTV adds of 1,800. This broadband performance represents a 13% increase year-over-year. We ended the quarter with over 102,000 DSL customers or 42% of our total access lines. We continue to see strong growth in IPTV customers with 25,000 subs at the end of March. After passing an additional 6,000 homes in the quarter, we can now serve a total of 194,000 households and have a current penetration rate of 13%.
ILEC line losses improved again this quarter and were better than our internal projections. We lost 2,500 lines in the quarter; that's compared to 4,500 in the first quarter of 2009 or reflecting a 44% improvement.Our line loss over the last 12 months was 5.8%, compared to 8.1% in the same period last year. We are continuing to see our products and promotional bundles coupled with the best service in our markets, provide a significant competitive edge. For the second quarter in a row, we also grew our CLEC access line equivalents. As you will recall, our Pennsylvania-based CLEC is business only and the back to back periods of growth are an encouraging sign that the economy has bottomed out and is beginning to rebound. This was also the second quarter in a row where we were able to grow our total connections, after a difficult stretch of both competitive and economic challenges. We increased our total connections year-over-year and had a strong first quarter of 1,800 adds. From a competitive standpoint we continue to view ourselves as leaders in our market. We have high quality products and services at competitive prices and our operational performance reflects our ability to take market share. We don't underestimate our competition, but we do understand our markets and feel good about our position. Finally, I think recent events in the industry warrant a few comments on M&A. As we have stated before, we continue to believe consolidation makes sense in this industry. We recently completed the integration of North Pittsburgh. We will stay focused on delivering solid operational and financial performance, so that we will be well positioned to look at strategic opportunities that may present themselves. So with that I will turn the call over to Steve for the financial review. Steve Childers Thanks, Bob and good morning to everyone. We are again pleased to report solid financial results for the quarter. This morning I will review our results and confirm our 2010 guidance. Read the rest of this transcript for free on seekingalpha.com