Consolidated Communications Reports Third Quarter 2016 Results

  • Grew commercial and carrier data and transport revenue by 5.2% year over year
  • Delivered another strong quarter of data connections led by growth in Metro Ethernet
  • Completed a refinancing reducing interest expense, extending maturities and increasing liquidity
  • Closed on the acquisition of fiber-based Champaign Telephone Company and the sale of our rural Iowa ILEC

MATTOON, Ill., Nov. 03, 2016 (GLOBE NEWSWIRE) -- Consolidated Communications Holdings, Inc. (Nasdaq:CNSL) (the "Company") reported results for the third quarter 2016.  

Third quarter financial summary:
  • Revenue was $191.5 million.
  • Net cash from operations was $58.1 million.
  • Adjusted EBITDA was $77.1 million.
  • Dividend payout ratio was 74.4%.

"I am pleased with the solid financial results for the quarter and the strong growth in our fiber-based commercial and carrier sales," said Bob Udell, President and Chief Executive Officer.  "We delivered another comfortable dividend payout ratio and our year-to-date payout of 69.2% is right on plan."

"During the third quarter, we closed on both the acquisition in Illinois of Champaign Telephone Company, a fiber-based business communications provider, and the sale of our rural independent local exchange company in Iowa," added Udell.  "These transactions strengthen our strategic focus on expanding our fiber footprint and delivering fiber-based products and services."

"Finally, in early October, we completed a refinancing of our secured bank facility.  This transaction is expected to improve our annual cash interest expenses by approximately $2.0 million.  In addition, it extended our maturities by three years and increased our revolver capacity to $110.0 million from $75.0 million.  We could not have been more pleased with the results of the transaction, and I would like to thank all of our investors and underwriters for their support," Udell concluded.   

Financial Results for the Third Quarter   
  • Total revenues were $191.5 million, compared to $194.0 million for the same period last year.  Growth in strategic revenues were offset by declines in legacy voice revenues, network access and subsidy step-downs from CAF II and Texas USF support.    
  • Income from operations was $22.7 million, compared to $13.6 million in the third quarter of 2015.  Included in the third quarter last year was $9.6 million of integration and severance charges tied to the Enventis synergy efforts and an early retirement offer made to, and accepted by, certain employees.   
  • Interest expense, net was $19.1 million compared to $19.2 million for the same period last year.     
  • Other income, net was $8.4 million, compared to $10.5 million for the same period in 2015.   
  • On a GAAP basis, net income and net income per share were $7.0 million and $0.14, respectively.  Adjusted diluted net income per share excludes certain items in the manner described in the table provided in this release.  Adjusted diluted net income per share was $0.16 for the current quarter, compared to $0.18 the same period last year. 
  • Cash distributions from our Verizon Wireless partnerships were $8.6 million compared to $20.0 million last year.  The third quarter of 2015 included a non-recurring cash distribution for the partnership owned towers that Verizon sold to American Tower.    
  • Adjusted EBITDA was $77.1 million compared to $89.4 million for the same period in 2015.  As mentioned above, the third quarter last year included non-recurring cash distributions from the Company's partnerships.
  • The total net debt to last 12-month adjusted EBITDA ratio was 4.34.

Financial Results for the Nine Months Ended September 30, 2016
  • Revenues were $567.3 million, net cash from operating activities was $173.6 million and adjusted EBITDA was $233.7 million.

Cash Available to Pay Dividends For the quarter, cash available to pay dividends, or CAPD, was $26.4 million, and the dividend payout ratio was 74.4%.  At September 30, 2016, cash and cash equivalents were $33.4 million.  Capital expenditures for the quarter were $31.9 million. 

Financial Guidance The Company is updating its full year 2016 guidance as outlined below.

 
         
      2016 Updated Guidance       2016 Original Guidance  
         
Cash Interest Expense   $72.0 million to $73.0 million   $73.0 million to $75.0 million
Cash Income Taxes   Less than $1.0 million   $1.0 million to $3.0 million
Capital Expenditures   $125.0 million to $130.0 million   $125.0 million to $130.0 million
         

Dividend PaymentsOn October 31, 2016, the Company's board of directors declared its next quarterly dividend of $0.38738 per common share, which is payable on February 1, 2017 to stockholders of record at the close of business on January 13, 2017.  This will represent the 46 th consecutive quarterly dividend paid by the Company. 

Conference Call Information  The Company will host a conference call today at 11:00 a.m. ET / 10:00 a.m. CT to discuss third 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 with conference ID 94247732.  A telephonic replay of the conference call will be available through November 10, 2016 and can be accessed by calling 1-855-859-2056.  

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.   

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