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Section 1: 8-K (FORM 8-K)

cabo20190219_8k.htm

 

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): February 27, 2019

 


 

Cable One, Inc.

 

(Exact name of registrant as specified in its charter)

 


 

Delaware

001-36863

13-3060083

(State or other jurisdiction of incorporation or organization)

(Commission File Number)

(IRS Employer Identification No.)

 

210 E. Earll Drive, Phoenix, Arizona

85012

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (602) 364-6000

 


 

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))

 

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

 

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 February 27, 2019, Cable One, Inc. issued a press release relating to its results for the fourth quarter and year ended December 31, 2018. A copy of this press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

The information contained in this Item 2.02 as well as in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

 

 

Item 9.01

Financial Statements and Exhibits.

 

 

Exhibit

 

Description

     

99.1

 

Press release issued by Cable One, Inc. on February 27, 2019.

 

 

 

 

SIGNATURE

 

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.

 

 

 

Cable One, Inc.

 

 

 

 

 

 

By:

/s/ Peter N. Witty

 

 

 

Name:

Peter N. Witty

 

 

 

Title:

Senior Vice President, General Counsel and Secretary

 

 

 

 

 

 

Date: February 27, 2019

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

ex_135219.htm

Exhibit 99.1

 

 

 

Cable ONE Reports Fourth Quarter and Full Year 2018 Results

 

February 27, 2019 Phoenix, Arizona (BUSINESS WIRE) Cable One, Inc. (NYSE: CABO) (the “Company” or “Cable ONE”) today reported financial and operating results for the quarter and year ended December 31, 2018.

 

Fourth Quarter 2018 Highlights:

 

 

Total revenues were $269.9 million in the fourth quarter of 2018 compared to $257.7 million in the fourth quarter of 2017, an increase of 4.7%. Residential data revenues increased 12.3% and business services revenues increased 10.3% year-over-year.

 

 

Net income was $42.0 million in the fourth quarter of 2018, a decrease of 70.9% year-over-year primarily as a result of a significant benefit from the Federal tax reform legislation enacted in the fourth quarter of 2017. Adjusted EBITDA(1) was $127.6 million, an increase of 8.8% year-over-year. Net profit margin was 15.6% and Adjusted EBITDA margin(1) was 47.3%.

 

 

Net cash provided by operating activities was $100.2 million in the fourth quarter of 2018, a decrease of 4.3% year-over-year. Adjusted EBITDA less capital expenditures(1) was $69.0 million in the fourth quarter of 2018, an increase of 3.4% year-over-year.

 

Full Year 2018 Highlights:

 

 

Total revenues were $1.1 billion in 2018 compared to $960.0 million in 2017, an increase of 11.7%. Residential data revenues increased 18.4% and business services revenues increased 19.0% year-over-year.

 

 

Net income was $164.8 million in 2018, a decrease of 29.9% year-over-year primarily as a result of the aforementioned Federal tax reform legislation. Adjusted EBITDA was $500.8 million, an increase of 12.9% year-over-year. Net profit margin was 15.4% and Adjusted EBITDA margin was 46.7%.

 

 

Net cash provided by operating activities was $407.8 million in 2018, an increase of 25.7% year-over-year. Adjusted EBITDA less capital expenditures was $283.1 million in 2018, an increase of 7.1% year-over-year.

 

Other Highlight:

 

 

In January 2019, the Company completed the acquisition of Clearwave Communications, a facilities-based service provider that owns and operates a high-capacity fiber network offering dense regional coverage in Southern Illinois (“Clearwave”).

 

(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 Measures.” 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 also reconciled to net cash provided by operating activities. Refer to the “Reconciliations of Non-GAAP Measures” tables within this press release.

 

Fourth Quarter 2018 Financial Results Compared to Fourth Quarter 2017

 

Revenues increased $12.2 million, or 4.7%, to $269.9 million for the fourth quarter of 2018, driven primarily by residential data and business services revenue growth, partially offset by decreases in residential video and voice revenues. For the fourth quarter of 2018 and 2017, residential data revenues comprised 46.8% and 43.7% of total revenues and business services revenues comprised 14.9% and 14.2% of total revenues, respectively.

 

1

 

 

Operating expenses (excluding depreciation and amortization) were $91.8 million in the fourth quarter of 2018 compared to $92.0 million in the fourth quarter of 2017. As a percentage of revenues, operating expenses were 34.0% for the fourth quarter of 2018 compared to 35.7% for the year-ago quarter.

 

Selling, general and administrative expenses were $57.6 million for the fourth quarter of 2018 and increased $2.4 million, or 4.4%, compared to the fourth quarter of 2017. The increase was primarily attributable to system conversion and acquisition-related costs incurred during the quarter and an increase in bonus expense. Selling, general and administrative expenses as a percentage of revenues were 21.4% for both the fourth quarter of 2018 and 2017.

 

Depreciation and amortization expense was $49.5 million for the fourth quarter of 2018 and increased $2.2 million, or 4.6%, compared to the fourth quarter of 2017. The increase was due primarily to new assets placed in service since the fourth quarter of 2017, partially offset by assets that became fully depreciated since the fourth quarter of 2017. The Company recognized $1.7 million and $3.8 million of net losses on asset disposals during the fourth quarter of 2018 and 2017, respectively.

 

Interest expense increased $1.8 million, or 13.5%, to $15.3 million, driven by an increase in interest rates year-over-year.

 

Income tax provision was $13.5 million in the fourth quarter of 2018 compared to an income tax benefit of $98.0 million in the prior year quarter. The year-over-year change was a result of Federal tax reform legislation enacted in the fourth quarter of 2017, which resulted in a reduction in statutory tax rates and a remeasurement of the Company’s deferred tax liability.

 

Net income was $42.0 million in the fourth quarter of 2018 compared to $144.3 million in the prior year quarter.

 

Adjusted EBITDA was $127.6 million and $117.3 million for the fourth quarter of 2018 and 2017, respectively, an increase of 8.8%. Capital expenditures totaled $58.6 million and $50.5 million for the fourth quarter of 2018 and 2017, respectively. Adjusted EBITDA less capital expenditures for the fourth quarter of 2018 was $69.0 million, an increase of $2.3 million, or 3.4%, from the prior year quarter.

 

Full Year 2018 Financial Results Compared to Full Year 2017

 

Revenues increased $112.3 million, or 11.7%, to $1.1 billion for 2018, driven primarily by residential data and business services revenue growth. For 2018 and 2017, residential data revenues comprised 46.0% and 43.4% of total revenues and business services revenues comprised 14.5% and 13.7% of total revenues, respectively. Full year results for 2017 include eight months of NewWave Communications (“NewWave”) operations, as the acquisition was completed on May 1, 2017.

 

Operating expenses (excluding depreciation and amortization) were $370.3 million in 2018 compared to $337.0 million in 2017. The increase in operating expenses attributable to the NewWave operations was $30.5 million. Excluding the impact of the NewWave operations, operating expenses increased $2.7 million, or 1.0%. The increase was due primarily to higher programming and repairs and maintenance costs. As a percentage of revenues, operating expenses were 34.5% for 2018 compared to 35.1% for 2017.

 

Selling, general and administrative expenses were $222.2 million for 2018 and increased $17.8 million, or 8.7%, compared to 2017. The increase in selling, general and administrative expenses attributable to the NewWave operations was $12.8 million, including $4.6 million for system conversion costs. Excluding the impact of the NewWave operations, selling, general and administrative expenses increased $5.0 million, or 2.7%. The increase was primarily attributable to higher insurance, marketing, rebranding and compensation expenses, partially offset by lower acquisition-related costs. Selling, general and administrative expenses as a percentage of revenues were 20.7% and 21.3% for 2018 and 2017, respectively.

 

Depreciation and amortization expense was $197.7 million for 2018 and increased $16.1 million, or 8.9%, compared to 2017. The increase was due primarily to additional depreciation and amortization from a full year of the NewWave operations.

 

2

 

 

The Company recorded $14.2 million and $0.6 million of net losses on asset disposals during 2018 and 2017, respectively. The prior year amount consisted of a $7.2 million net loss on asset disposals and a $6.6 million gain on the sale of a portion of the Company’s previous headquarters property. The year-over-year increase in the net loss on asset disposals was primarily attributable to a write-off of excess equipment and a higher amount of assets retired as new assets replaced them.

 

Interest expense increased $13.6 million, or 28.9%, to $60.4 million, driven by additional outstanding debt incurred to finance the NewWave acquisition and an increase in interest rates year-over-year.

 

Income tax provision was $47.2 million in 2018 compared to an income tax benefit of $45.0 million in 2017, which was a result of the 2017 Federal tax reform legislation.

 

Net income was $164.8 million in 2018 compared to $235.2 million in 2017.

 

Adjusted EBITDA was $500.8 million and $443.6 million for 2018 and 2017, respectively, an increase of 12.9%. Capital expenditures totaled $217.8 million and $179.4 million for 2018 and 2017, respectively. Adjusted EBITDA less capital expenditures for 2018 was $283.1 million, an increase of $18.8 million, or 7.1%, from the prior year.

 

Liquidity and Capital Resources

 

At December 31, 2018, the Company had $264.1 million of cash and cash equivalents on hand compared to $161.8 million at December 31, 2017. The Company’s debt balance was approximately $1.2 billion at both December 31, 2018 and 2017. The Company also had $195.9 million available for borrowing under its revolving credit facility as of December 31, 2018. The Company repurchased 38,814 shares for $26.6 million during 2018, including 4,786 shares repurchased in the fourth quarter for $4.0 million.

 

In January 2019, the Company borrowed $250.0 million of term loans maturing in 2026 to finance, in part, the Clearwave acquisition.

 

Conference Call

 

Cable ONE will host a conference call with the financial community to discuss results for the fourth quarter and full year 2018 on Wednesday, February 27, 2019, at 5 p.m. Eastern Time (ET).

 

Shareholders, analysts and other interested parties may register for the conference in advance at http://dpregister.com/10128581. 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 5 p.m. ET.

 

A replay of the call will be available from Wednesday, February 27, 2019 until Wednesday, March 13, 2019 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 consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the period ended December 31, 2018, 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 the Company’s website, which is regularly updated with financial and other important information about the Company.

 

Use of Non-GAAP Financial Measures

 

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.

 

3

 

 

“Adjusted EBITDA” is defined as net income plus interest expense, income tax provision (benefit), depreciation and amortization, equity-based compensation, severance expense, (gain) loss on deferred compensation, acquisition-related costs, (gain) loss on asset disposals, system conversion costs, rebranding costs, other (income) expense 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 debt 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, income tax provision (benefit), changes in operating assets and liabilities, change in deferred income taxes and other unusual operating expenses, as provided 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 calculations under the Company’s credit facilities and senior unsecured notes to determine compliance with the covenants contained in the credit facilities and ability to take certain actions under the indenture governing the notes. 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 a leading broadband communications provider serving more than 800,000 residential and business customers in 21 states. Cable ONE provides consumers with a wide array of connectivity and entertainment services, including high-speed internet and advanced Wi-Fi solutions, cable television and phone service. Cable ONE Business provides scalable and cost-effective products for businesses ranging in size from small to mid-market, in addition to enterprise, wholesale and carrier customers.

 

Contacts

 

Trish Niemann Steven Cochran
Corporate Communications Director Chief Financial Officer
602-364-6372 602-364-6210

 

4

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This communication may contain “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 Company’s industry, business, financial results and financial condition. Forward-looking statements often include words such as “will,” “should,” “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. The Company’s actual results may vary materially from those expressed or implied in its forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statement made by the Company or on its behalf. Important factors that could cause the Company’s actual results to differ materially from those in its forward-looking statements include government regulation, economic, strategic, political and social conditions and the following factors:

 

 

rising levels of competition from historical and new entrants in the Company’s markets;

 

recent and future changes in technology;

 

the Company’s ability to continue to grow its business services products;

 

increases in programming costs and retransmission fees;

 

the Company’s ability to obtain hardware, software and operational support from vendors;

 

the effects of any acquisitions by the Company;

 

risks that the Company’s rebranding may not produce the benefits expected;

 

adverse economic conditions;

 

the integrity and security of the Company’s network and information systems;

 

the impact of possible security breaches and other disruptions, including cyber-attacks;

 

the Company’s failure to obtain necessary intellectual and proprietary rights to operate its business and the risk of intellectual property claims and litigation against the Company;

 

the Company’s ability to retain key employees;

 

legislative or regulatory efforts to impose network neutrality and other new requirements on the Company’s data services;

 

additional regulation of the Company’s video and voice services;

 

the Company’s ability to renew cable system franchises;

 

increases in pole attachment costs;

 

changes in local governmental franchising authority and broadcast carriage regulations;

 

the potential adverse effect of the Company’s level of indebtedness on its business, financial condition or results of operations and cash flows;

 

the possibility that interest rates will rise, causing the Company’s obligations to service its variable rate indebtedness to increase significantly;

 

the Company’s ability to incur future indebtedness;

 

fluctuations in the Company’s stock price;

 

the Company’s ability to continue to pay dividends;

 

dilution from equity awards and potential stock issuances in connection with acquisitions;

 

provisions in the Company’s charter, by-laws and Delaware law that could discourage takeovers; and

  the other risks and uncertainties detailed from time to time in the Company’s filings with the SEC, including but not limited to its latest Annual Report on Form 10-K as filed with the SEC.

 

Any forward-looking statements made by the Company in this communication speak only as of the date on which they are made. The Company is under no obligation, and expressly disclaims any obligation, except as required by law, to update or alter its forward-looking statements, whether as a result of new information, subsequent events or otherwise.

 

5

 

 

CABLE ONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

   

Three Months Ended

December 31,

                 

(dollars in thousands, except per share and share data)

 

2018

   

2017

   

$ Change

   

% Change

 

Revenues:

 

Residential data

  $ 126,397     $ 112,556     $ 13,841       12.3 %

Residential video

    82,555       86,608       (4,053 )     (4.7 )%

Residential voice

    9,934       11,184       (1,250 )     (11.2 )%

Business services

    40,236       36,466       3,770       10.3 %

Advertising sales

    7,474       7,348       126       1.7 %

Other

    3,256       3,536       (280 )     (7.9 )%

Total Revenues

    269,852       257,698       12,154       4.7 %

Costs and Expenses:

                               

Operating (excluding depreciation and amortization)

    91,791       92,013       (222 )     (0.2 )%

Selling, general and administrative

    57,632       55,229       2,403       4.4 %

Depreciation and amortization

    49,506       47,350       2,156       4.6 %

Loss on asset disposals, net

    1,659       3,752       (2,093 )     (55.8 )%

Total Costs and Expenses

    200,588       198,344       2,244       1.1 %

Income from operations

    69,264       59,354       9,910       16.7 %

Interest expense

    (15,279 )     (13,457 )     (1,822 )     13.5 %

Other income, net

    1,485       425       1,060       249.4 %

Income before income taxes

    55,470       46,322       9,148       19.7 %

Income tax provision (benefit)

    13,462       (97,971 )     111,433       NM  

Net income

  $ 42,008     $ 144,293     $ (102,285 )     (70.9 )%
                                 

Net income per common share:

 

Basic

  $ 7.40     $ 25.38     $ (17.98 )     (70.8 )%

Diluted

  $ 7.34     $ 25.09     $ (17.75 )     (70.7 )%

Weighted average common shares outstanding:

 

Basic

    5,674,067       5,684,785       (10,718 )     (0.2 )%

Diluted

    5,723,528       5,750,420       (26,892 )     (0.5 )%
                                 

Other comprehensive income, net of tax

  $ 254     $ 89     $ 165       185.4 %

Comprehensive income

  $ 42,262     $ 144,382     $ (102,120 )     (70.7 )%

                    

NM = Not meaningful.

 

6

 

 

CABLE ONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

   

Year Ended December 31,

                 

(dollars in thousands, except per share and share data)

 

2018

    2017(1)    

$ Change

   

% Change

 

Revenues:

 

Residential data

  $ 492,816     $ 416,355     $ 76,461       18.4 %

Residential video

    343,344       332,536       10,808       3.3 %

Residential voice

    41,278       43,733       (2,455 )     (5.6 )%

Business services

    155,993       131,082       24,911       19.0 %

Advertising sales

    24,919       24,824       95       0.4 %

Other

    13,945       11,426       2,519       22.0 %

Total Revenues

    1,072,295       959,956       112,339       11.7 %

Costs and Expenses:

                               

Operating (excluding depreciation and amortization)

    370,269       337,040       33,229       9.9 %

Selling, general and administrative

    222,216       204,384       17,832       8.7 %

Depreciation and amortization

    197,731       181,619       16,112       8.9 %

Loss on asset disposals, net

    14,167       574       13,593       NM  

Total Costs and Expenses

    804,383       723,617       80,766       11.2 %

Income from operations

    267,912       236,339       31,573       13.4 %

Interest expense

    (60,415 )     (46,864 )     (13,551 )     28.9 %

Other income, net

    4,487       668       3,819       NM  

Income before income taxes

    211,984       190,143       21,841       11.5 %

Income tax provision (benefit)

    47,224       (45,028 )     92,252       NM  

Net income

  $ 164,760     $ 235,171     $ (70,411 )     (29.9 )%
                                 

Net income per common share

 

Basic

  $ 28.98     $ 41.40     $ (12.42 )     (30.0 )%

Diluted

  $ 28.77     $ 40.92     $ (12.15 )     (29.7 )%

Weighted average common shares outstanding:

 

Basic

    5,684,375       5,680,073       4,302       0.1 %

Diluted

    5,725,963       5,747,037       (21,074 )     (0.4 )%
                                 

Other comprehensive income, net of tax

  $ 256     $ 94     $ 162       172.3 %

Comprehensive income

  $ 165,016     $ 235,265     $ (70,249 )     (29.9 )%

                    

NM = Not meaningful.

(1) Results for 2017 include only eight months of NewWave operations.

 

7

 

 

CABLE ONE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(in thousands, except par value and share data)

 

December 31, 2018

   

December 31, 2017

 

Assets

 

Current Assets:

 

Cash and cash equivalents

  $ 264,113     $ 161,752  

Accounts receivable, net

    29,947       29,930  

Income taxes receivable

    10,713       21,331  

Prepaid and other current assets

    13,090       10,898  

Total Current Assets

    317,863       223,911  

Property, plant and equipment, net

    847,979       831,892  

Intangible assets, net

    953,851       965,745  

Goodwill

    172,129       172,129  

Other noncurrent assets

    11,412       10,955  

Total Assets

  $ 2,303,234     $ 2,204,632  
                 

Liabilities and Stockholders' Equity

 

Current Liabilities:

 

Accounts payable and accrued liabilities

  $ 94,134     $ 117,855  

Deferred revenue

    18,954       15,008  

Current portion of long-term debt

    20,625       14,375  

Total Current Liabilities

    133,713       147,238  

Long-term debt

    1,142,056       1,160,682  

Deferred income taxes

    242,127       207,154  

Other noncurrent liabilities

    9,980       13,111  

Total Liabilities

    1,527,876       1,528,185  
                 

Stockholders' Equity

 

Preferred stock ($0.01 par value; 4,000,000 shares authorized; none issued or outstanding)

    -       -  

Common stock ($0.01 par value; 40,000,000 shares authorized; 5,887,899 shares issued; and 5,703,402 and 5,731,442 shares outstanding as of December 31, 2018 and 2017, respectively)

    59       59  

Additional paid-in capital

    38,898       28,412  

Retained earnings

    850,292       728,386  

Accumulated other comprehensive loss

    (96 )     (352 )

Treasury stock, at cost (184,497 and 156,457 shares held as of December 31, 2018 and 2017, respectively)

    (113,795 )     (80,058 )

Total Stockholders' Equity

    775,358       676,447  

Total Liabilities and Stockholders' Equity

  $ 2,303,234     $ 2,204,632  

 

8

 

 

CABLE ONE, INC.

RECONCILIATIONS OF NON-GAAP MEASURES

(Unaudited)

 

     

Three Months Ended December 31,

                 

(dollars in thousands)

 

2018

   

2017

   

$ Change

   

% Change

 

Net income

  $ 42,008     $ 144,293     $ (102,285 )     (70.9 )%
                                   

Net profit margin

    15.6 %     56.0 %                
                                   

Plus:

Interest expense

    15,279       13,457       1,822       13.5 %
 

Income tax provision (benefit)

    13,462       (97,971 )     111,433       NM  
 

Depreciation and amortization

    49,506       47,350       2,156       4.6 %
 

Equity-based compensation

    3,224       2,822       402       14.2 %
 

Severance expense

    729       2,512       (1,783 )     (71.0 )%
 

(Gain) loss on deferred compensation

    (191 )     839       (1,030 )     (122.8 )%
 

Acquisition-related costs

    1,734       662       1,072       161.9 %
 

Loss on asset disposals, net

    1,659       3,752       (2,093 )     (55.8 )%
 

System conversion costs(1)

    1,135       -       1,135       NM  
 

Rebranding costs

    545       -       545       NM  
 

Other income, net

    (1,485 )     (425 )     (1,060 )     249.4 %

Adjusted EBITDA

  $ 127,605     $ 117,291     $ 10,314       8.8 %
                                   

Adjusted EBITDA margin

    47.3 %     45.5 %                
                                   

Less:

Capital expenditures

    58,596       50,533       8,063       16.0 %

Adjusted EBITDA less capital expenditures

  $ 69,009     $ 66,758     $ 2,251       3.4 %

                    

NM = Not meaningful.

(1) Comprised of $0.8 million of billing system conversion costs related to NewWave and $0.3 million of enterprise resource planning system (“ERP”) implementation costs.

 

   

Three Months Ended December 31,

                 

(dollars in thousands)

 

2018

   

2017

   

$ Change

   

% Change

 

Net cash provided by operating activities

  $ 100,152     $ 104,698     $ (4,546 )     (4.3 )%

Capital expenditures

    (58,596 )     (50,533 )     (8,063 )     16.0 %

Interest expense

    15,279       13,457       1,822       13.5 %

Amortization of debt issuance cost

    (1,075 )     (991 )     (84 )     8.5 %

Income tax provision (benefit)

    13,462       (97,971 )     111,433       NM  

Changes in operating assets and liabilities

    13,667       (2,531 )     16,198       NM  

Change in deferred income taxes

    (16,347 )     97,041       (113,388 )     NM  

(Gain) loss on deferred compensation

    (191 )     839       (1,030 )     (122.8 )%

Acquisition-related costs

    1,734       662       1,072       161.9 %

Severance expense

    729       2,512       (1,783 )     (71.0 )%

System conversion costs(1)

    1,135       -       1,135       NM  

Rebranding costs

    545       -       545       NM  

Other income, net

    (1,485 )     (425 )     (1,060 )     249.4 %

Adjusted EBITDA less capital expenditures

  $ 69,009     $ 66,758     $ 2,251       3.4 %

                    

NM = Not meaningful.

(1) Comprised of $0.8 million of billing system conversion costs related to NewWave and $0.3 million of ERP implementation costs.

 

9

 

 

CABLE ONE, INC.

RECONCILIATIONS OF NON-GAAP MEASURES

(Unaudited)

 

     

Year Ended December 31,

                 

(dollars in thousands)

 

2018

      2017(1)    

$ Change

   

% Change

 

Net income

  $ 164,760     $ 235,171     $ (70,411 )     (29.9 )%
                                   

Net profit margin

    15.4 %     24.5 %                
                                   

Plus:

Interest expense

    60,415       46,864       13,551       28.9 %
 

Income tax provision (benefit)

    47,224       (45,028 )     92,252       NM  
 

Depreciation and amortization

    197,731       181,619       16,112       8.9 %
 

Equity-based compensation

    10,486       10,743       (257 )     (2.4 )%
 

Severance expense

    2,347       5,652       (3,305 )     (58.5 )%
 

Loss on deferred compensation

    425       2,753       (2,328 )     (84.6 )%
 

Acquisition-related costs

    1,773       5,942       (4,169 )     (70.2 )%
 

Loss on asset disposals, net

    14,167       574       13,593       NM  
 

System conversion costs(2)

    5,037       -       5,037       NM  
 

Rebranding costs

    968       -       968       NM  
 

Other income, net

    (4,487 )     (668 )     (3,819 )     NM  

Adjusted EBITDA

  $ 500,846     $ 443,622     $ 57,224       12.9 %
                                   

Adjusted EBITDA margin

    46.7 %     46.2 %                
                                   

Less:

Capital expenditures

    217,766       179,363       38,403       21.4 %

Adjusted EBITDA less capital expenditures

  $ 283,080     $ 264,259     $ 18,821       7.1 %

                    

NM = Not meaningful.

(1) Results for 2017 include only eight months of NewWave operations.

(2) Comprised of $4.6 million of billing system conversion costs related to NewWave and $0.4 million of ERP implementation costs.

 

   

Year Ended December 31,

                 

(dollars in thousands)

 

2018

      2017(1)    

$ Change

   

% Change

 

Net cash provided by operating activities

  $ 407,769     $ 324,486     $ 83,283       25.7 %

Capital expenditures

    (217,766 )     (179,363 )     (38,403 )     21.4 %

Interest expense

    60,415       46,864       13,551       28.9 %

Amortization of debt issuance cost

    (4,163 )     (3,174 )     (989 )     31.2 %

Income tax provision (benefit)

    47,224       (45,028 )     92,252       NM  

Changes in operating assets and liabilities

    18,621       20,185       (1,564 )     (7.7 )%

Change in deferred income taxes

    (34,973 )     87,223       (122,196 )     NM  

Loss on deferred compensation

    425       2,753       (2,328 )     (84.6 )%

Acquisition-related costs

    1,773       5,942       (4,169 )     (70.2 )%

Severance expense

    2,347       5,652       (3,305 )     (58.5 )%

Write-off of debt issuance costs

    (110 )     (613 )     503       (82.1 )%

System conversion costs(2)

    5,037       -       5,037       NM  

Rebranding costs

    968       -       968       NM  

Other income, net

    (4,487 )     (668 )     (3,819 )     NM  

Adjusted EBITDA less capital expenditures

  $ 283,080     $ 264,259     $ 18,821       7.1 %

                    

NM = Not meaningful.

(1) Results for 2017 include only eight months of NewWave operations.

(2) Comprised of $4.6 million of billing system conversion costs related to NewWave and $0.4 million of ERP implementation costs.

 

10

 

 

CABLE ONE, INC.

OPERATING STATISTICS

(Unaudited)

 

   

As of December 31,

   

Year-Over-Year Change

 
   

2018

   

2017

   

Amount

   

%

 

Homes Passed (1)

    2,093,501       2,145,577       (52,076 )     (2.4 )%
                                 

Residential Customers

    734,250       731,011       3,239       0.4 %
                                 

Data PSUs

    600,716       584,854       15,862       2.7 %

Video PSUs

    310,475       346,712       (36,237 )     (10.5 )%

Voice PSUs

    99,070       110,013       (10,943 )     (9.9 )%

Total residential PSUs

    1,010,261       1,041,579       (31,318 )     (3.0 )%
                                 

Business Customers

    70,615       66,526       4,089       6.1 %
                                 

Data PSUs

    62,358       58,299       4,059       7.0 %

Video PSUs

    15,948       17,176       (1,228 )     (7.1 )%

Voice PSUs

    26,864       24,868       1,996       8.0 %

Total business services PSUs

    105,170       100,343       4,827       4.8 %
                                 

Total Customers

    804,865       797,537       7,328       0.9 %

Total non-video

    478,442       435,087       43,355       10.0 %

Percent of total

    59.4 %     54.6 %                
                                 

Data PSUs

    663,074       643,153       19,921       3.1 %

Video PSUs

    326,423       363,888       (37,465 )     (10.3 )%

Voice PSUs

    125,934       134,881       (8,947 )     (6.6 )%

Total PSUs

    1,115,431       1,141,922       (26,491 )     (2.3 )%
                                 

Penetration

 

Data

    31.7 %     30.0 %             1.7 %

Video

    15.6 %     17.0 %             (1.4 )%

Voice

    6.0 %     6.3 %             (0.3 )%
                                 

Share of Fourth Quarter Revenues

 

Residential data

    46.8 %     43.7 %             3.1 %

Business services

    14.9 %     14.2 %             0.7 %

Total

    61.7 %     57.9 %             3.8 %
                                 

ARPU - Fourth Quarter

 

Residential data (2)

  $ 69.90     $ 63.92     $ 5.98       9.4 %

Residential video (2)

  $ 88.20     $ 82.42     $ 5.78       7.0 %

Residential voice (2)

  $ 32.97     $ 33.69     $ (0.72 )     (2.1 )%

Business services (3)

  $ 186.71     $ 182.85     $ 3.86       2.1 %
                                 

Number of Employees

    2,224       2,310       (86 )     (3.7 )%

                    

(1)

Homes passed represents the estimated number of residential and business serviceable addresses within the Company's footprint. During the first quarter of 2018, the number of legacy Cable ONE homes passed was reduced by approximately 74,000 to adjust for duplicate and non-serviceable addresses.

(2)

Average monthly revenue per unit values represent the applicable quarterly residential service revenues (excluding installation and activation fees) divided by the corresponding average of the number of PSUs at the beginning and end of each period, divided by three.

(3)

Average monthly revenue per unit values represent quarterly business services revenues (excluding installation and activation fees) divided by the average of the number of business customer relationships at the beginning and end of each period, divided by three.

 

11

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