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

cabo20191031_8k.htm
false 0001632127 0001632127 2019-11-07 2019-11-07

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): November 7, 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)

(I.R.S. 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))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Trading Symbol

 

Name of Each Exchange on Which Registered

Common Stock, par value $0.01

 

CABO

 

New York Stock Exchange

 

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 November 7, 2019, Cable One, Inc. (the “Company”) issued a press release related to its unaudited results for the third quarter of 2019. 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 is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 7.01     Regulation FD Disclosure.

 

On November 7, 2019, the Company posted on its website presentation materials to be used by the Company at various meetings with institutional investors or analysts commencing after the filing of this Current Report on Form 8-K. A copy of such materials is furnished as Exhibit 99.2 to this Current Report on Form 8-K. These materials may be amended or updated at any time and from time to time through another Current Report on Form 8-K, a later Company filing, a later posting on the Company’s website or other means.

 

The information contained in this Item 7.01 as well as in Exhibit 99.2 is furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and such information shall not be deemed to be incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01 Financial Statements and Exhibits.

  

Exhibit

 

 

Description

 

 

99.1

 

Press release issued by Cable One, Inc. on November 7, 2019.

99.2

 

Cable One, Inc. presentation materials.

104

 

The cover page of this Current Report on Form 8-K, formatted in Inline XBRL.

 

 

 

 

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: November 7, 2019

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

ex_162378.htm

Exhibit 99.1

 

 

 

Cable ONE Reports Third Quarter 2019 Results

 

November 7, 2019 Phoenix, Arizona (BUSINESS WIRE) Cable One, Inc. (NYSE: CABO) (the “Company” or “Cable ONE”) today reported financial and operating results for the quarter ended September 30, 2019.

 

Third Quarter 2019 Highlights:

 

 

Total revenues were $285.0 million in the third quarter of 2019 compared to $268.3 million in the third quarter of 2018, an increase of 6.2%. Residential data revenues increased 8.2% and business services revenues increased 28.0% year-over-year.

 

 

Net income was $49.8 million in the third quarter of 2019, an increase of 30.1% year-over-year. Adjusted EBITDA(1) was $140.0 million, an increase of 14.1% year-over-year. Net profit margin was 17.5% and Adjusted EBITDA margin(1) was 49.1%.

 

 

Net cash provided by operating activities was $122.7 million in the third quarter of 2019, an increase of 10.5% year-over-year. Adjusted EBITDA less capital expenditures(1) was $74.1 million in the third quarter of 2019 compared to $54.4 million in the third quarter of 2018.

 

 

Residential data primary service units (“PSUs”) grew by nearly 21,000, or 3.5%, year-over-year and by nearly 6,400, or 1.0%, sequentially.

 

Other Highlights:

 

 

On October 1, 2019, the Company completed the acquisition of the data, video and voice business and certain related assets of Fidelity Communications Co. (collectively, “Fidelity”) for a base purchase price of $525.9 million in cash, subject to customary adjustments. The transaction was financed with cash on hand and the net proceeds from the $450.0 million delayed draw term loan established in the second quarter of 2019.

 

(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.

 

Third Quarter 2019 Financial Results Compared to Third Quarter 2018

 

Revenues increased $16.7 million, or 6.2%, to $285.0 million for the third quarter of 2019, including a $7.0 million contribution from Clearwave Communications (“Clearwave”) operations, which was acquired in January 2019. The remaining increase was driven primarily by organic residential data and business services revenue growth, partially offset by decreases in residential video and advertising sales revenues. For the third quarter of 2019 and 2018, residential data revenues comprised 47.1% and 46.3% of total revenues and business services revenues comprised 17.8% and 14.7% of total revenues, respectively.

 

Operating expenses (excluding depreciation and amortization) were $94.9 million in the third quarter of 2019 compared to $92.0 million in the third quarter of 2018. The increase was primarily attributable to additional expenses related to Clearwave operations, higher regulatory costs resulting from certain passthrough fees that were historically reported on a net basis and higher compensation and rent expenses, partially offset by lower programming expenses. As a percentage of revenues, operating expenses were 33.3% for the third quarter of 2019 compared to 34.3% for the year-ago quarter.

 

Selling, general and administrative expenses were $58.9 million for the third quarter of 2019 and decreased $0.6 million, or 1.0%, compared to the third quarter of 2018. The decrease was primarily attributable to lower marketing expenses, professional fees and general and workers’ compensation insurance costs, partially offset by higher rebranding expenses and acquisition-related costs as well as additional expenses related to Clearwave operations. Selling, general and administrative expenses as a percentage of revenues were 20.7% and 22.2% for the third quarter of 2019 and 2018, respectively.

 

1

 

 

Depreciation and amortization expense was $48.7 million for the third quarter of 2019 and decreased $1.7 million, or 3.3%, compared to the third quarter of 2018. The decrease was due primarily to assets that became fully depreciated since the third quarter of 2018, partially offset by new assets placed in service since the third quarter of 2018 and additional depreciation and amortization related to Clearwave operations. The Company recognized $2.4 million and $3.1 million of net losses on asset disposals during the third quarter of 2019 and 2018, respectively.

 

Interest expense increased $0.6 million, or 4.0%, to $16.1 million, driven primarily by additional outstanding debt and interest rate swap settlements, partially offset by lower interest rates on variable rate term loans, including loans used to redeem the Company’s higher rate senior unsecured notes in the second quarter of 2019.

 

Other income of $1.6 million and $1.5 million in the third quarter of 2019 and 2018, respectively, consisted primarily of interest and investment income.

 

Income tax provision was $15.8 million in the third quarter of 2019 compared to $11.0 million in the prior year quarter. The effective tax rate was 24.1% and 22.4% for the third quarter of 2019 and 2018, respectively. The increase in the effective tax rate primarily related to a decrease in income tax benefits attributable to state effective tax rate changes, partially offset by an increase in income tax benefits attributable to equity-based compensation awards.

 

Net income was $49.8 million in the third quarter of 2019 compared to $38.3 million in the prior year quarter.

 

Adjusted EBITDA was $140.0 million and $122.7 million for the third quarter of 2019 and 2018, respectively, an increase of 14.1%. Capital expenditures totaled $65.8 million and $68.3 million for the third quarter of 2019 and 2018, respectively. Adjusted EBITDA less capital expenditures for the third quarter of 2019 was $74.1 million compared to $54.4 million in the prior year quarter.

 

Liquidity and Capital Resources

 

At September 30, 2019, the Company had $145.8 million of cash and cash equivalents on hand compared to $264.1 million at December 31, 2018. The Company’s debt balance was approximately $1.3 billion and $1.2 billion at September 30, 2019 and December 31, 2018, respectively. The Company also had $343.3 million available for borrowing under its revolving credit facility as of September 30, 2019.

 

The Company paid $12.8 million in dividends to stockholders during the third quarter of 2019.

 

Conference Call

 

Cable ONE will host a conference call with the financial community to discuss results for the third quarter of 2019 on Thursday, November 7, 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/10135869. 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 Thursday, November 7, 2019 until Thursday, November 21, 2019 on the Cable ONE Investor Relations website.

 

Additional Information

 

The information in this press release should be read in conjunction with the condensed consolidated financial statements and notes thereto contained in the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2019 (the “Third Quarter 2019 Form 10-Q”), 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.

 

2

 

 

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, Adjusted EBITDA less capital expenditures and capital expenditures as a percentage of Adjusted EBITDA 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, capital expenditures as a percentage of net income 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, Adjusted EBITDA margin is reconciled to net profit margin and capital expenditures as a percentage of Adjusted EBITDA is reconciled to capital expenditures as a percentage of net income. Adjusted EBITDA less capital expenditures is also reconciled to net cash provided by operating activities. These reconciliations are included in the “Reconciliations of Non-GAAP Measures” tables within this press release.

 

“Adjusted EBITDA” is defined as net income plus interest expense, income tax provision, 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 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, changes in operating assets and liabilities, change in deferred income taxes and other unusual expenses, as provided in the “Reconciliations of Non-GAAP Measures” tables within this press release.

 

“Capital expenditures as a percentage of Adjusted EBITDA” is defined as capital expenditures divided by Adjusted EBITDA.

 

The Company uses Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA less capital expenditures and capital expenditures as a percentage of Adjusted EBITDA 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 to determine compliance with the covenants contained in the credit agreement. 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, Adjusted EBITDA margin and capital expenditures as a percentage of Adjusted EBITDA 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, capital expenditures as a percentage of Adjusted EBITDA 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, Adjusted EBITDA less capital expenditures and capital expenditures as a percentage of Adjusted EBITDA may not be directly comparable to similarly titled measures reported by other companies.

 

3

 

 

About Cable ONE

 

Cable One, Inc. (NYSE: CABO) is a leading broadband communications provider serving more than 900,000 residential and business customers in 21 states through its SparklightTM and Clearwave brands. Sparklight 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. Sparklight Business and Clearwave provide 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                                             [email protected]

[email protected]

 

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, which are discussed in the Company’s latest Annual Report on Form 10-K as filed with the SEC and the Third Quarter 2019 Form 10-Q to be filed with the SEC:

 

 

the effect of the Fidelity transaction on the Company’s ability to retain and hire key personnel and to maintain relationships with customers, suppliers and other business partners;

 

risks related to management’s attention being diverted from the Company’s ongoing business operations;

 

uncertainties as to the Company’s ability and the amount of time necessary to realize the expected synergies and other benefits of the Fidelity transaction;

 

the Company’s ability to integrate Fidelity’s operations into its own;

 

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 new significant 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 and the Third Quarter 2019 Form 10-Q to be 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

September 30,

                 

(dollars in thousands, except per share data)

 

2019

   

2018

   

$ Change

   

% Change

 

Revenues:

 

Residential data

  $ 134,320     $ 124,089     $ 10,231       8.2 %

Residential video

    80,999       84,583       (3,584 )     (4.2 )%

Residential voice

    10,254       10,169       85       0.8 %

Business services

    50,662       39,567       11,095       28.0 %

Advertising sales

    5,054       6,288       (1,234 )     (19.6 )%

Other

    3,702       3,572       130       3.6 %

Total Revenues

    284,991       268,268       16,723       6.2 %

Costs and Expenses:

                               

Operating (excluding depreciation and amortization)

    94,898       91,956       2,942       3.2 %

Selling, general and administrative

    58,861       59,439       (578 )     (1.0 )%

Depreciation and amortization

    48,737       50,414       (1,677 )     (3.3 )%

Loss on asset disposals, net

    2,362       3,140       (778 )     (24.8 )%

Total Costs and Expenses

    204,858       204,949       (91 )     (0.0 )%

Income from operations

    80,133       63,319       16,814       26.6 %

Interest expense

    (16,079 )     (15,460 )     (619 )     4.0 %

Other income, net

    1,582       1,503       79       5.3 %

Income before income taxes

    65,636       49,362       16,274       33.0 %

Income tax provision

    15,801       11,048       4,753       43.0 %

Net income

  $ 49,835     $ 38,314     $ 11,521       30.1 %
                                 

Net Income per Common Share:

 

Basic

  $ 8.77     $ 6.75     $ 2.02       29.9 %

Diluted

  $ 8.68     $ 6.70     $ 1.98       29.6 %

Weighted Average Common Shares Outstanding:

 

Basic

    5,682,167       5,674,224       7,943       0.1 %

Diluted

    5,741,666       5,717,575       24,091       0.4 %
                                 

Deferred gain (loss) on cash flow hedges and other, net of tax

  $ (28,066 )   $ 1     $ (28,067 )     NM  

Comprehensive income

  $ 21,769     $ 38,315     $ (16,546 )     (43.2 )%

  

NM = Not meaningful.

 

 

6

 

 

CABLE ONE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(dollars in thousands, except par values)

 

September 30, 2019

   

December 31, 2018

 

Assets

 

Current Assets:

 

Cash and cash equivalents

  $ 145,848     $ 264,113  

Accounts receivable, net

    30,931       29,947  

Income taxes receivable

    1,761       10,713  

Prepaid and other current assets

    17,578       13,090  

Total Current Assets

    196,118       317,863  

Property, plant and equipment, net

    997,145       847,979  

Intangible assets, net

    1,030,993       953,851  

Goodwill

    358,014       172,129  

Other noncurrent assets

    26,057       11,412  

Total Assets

  $ 2,608,327     $ 2,303,234  
                 

Liabilities and Stockholders' Equity

 

Current Liabilities:

 

Accounts payable and accrued liabilities

  $ 113,397     $ 94,134  

Deferred revenue

    22,567       18,954  

Current portion of long-term debt

    17,215       20,625  

Total Current Liabilities

    153,179       133,713  

Long-term debt

    1,278,110       1,142,056  

Deferred income taxes

    267,797       242,127  

Other noncurrent liabilities

    134,482       9,980  

Total Liabilities

    1,833,568       1,527,876  
                 

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 5,709,593 and 5,703,402 shares outstanding as of September 30, 2019 and December 31, 2018, respectively)

    59       59  

Additional paid-in capital

    48,059       38,898  

Retained earnings

    939,602       850,292  

Accumulated other comprehensive loss

    (91,201 )     (96 )

Treasury stock, at cost (178,306 and 184,497 shares held as of September 30, 2019 and December 31, 2018, respectively)

    (121,760 )     (113,795 )

Total Stockholders' Equity

    774,759       775,358  

Total Liabilities and Stockholders' Equity

  $ 2,608,327     $ 2,303,234  

 

7

 

 

CABLE ONE, INC.

RECONCILIATIONS OF NON-GAAP MEASURES

(Unaudited)

 

     

Three Months Ended

September 30,

                 

(dollars in thousands)

 

2019

   

2018

   

$ Change

   

% Change

 

Net income

  $ 49,835     $ 38,314     $ 11,521       30.1 %

Net profit margin

    17.5 %     14.3 %                
                                   

Plus:

Interest expense

  $ 16,079     $ 15,460     $ 619       4.0 %
 

Income tax provision

    15,801       11,048       4,753       43.0 %
 

Depreciation and amortization

    48,737       50,414       (1,677 )     (3.3 )%
 

Equity-based compensation

    3,058       2,418       640       26.5 %
 

Severance expense

    37       1,111       (1,074 )     (96.7 )%
 

Loss on deferred compensation

    41       100       (59 )     (59.0 )%
 

Acquisition-related costs

    1,228       10       1,218       NM  
 

Loss on asset disposals, net

    2,362       3,140       (778 )     (24.8 )%
 

System conversion costs

    1,114       1,735       (621 )     (35.8 )%
 

Rebranding costs

    3,246       423       2,823       NM  
 

Other income, net

    (1,582 )     (1,503 )     (79 )     5.3 %

Adjusted EBITDA

  $ 139,956     $ 122,670     $ 17,286       14.1 %

Adjusted EBITDA margin

    49.1 %     45.7 %                
                                   

Less:

Capital expenditures

  $ 65,836     $ 68,302     $ (2,466 )     (3.6 )%

Capital expenditures as a percentage of net income

    132.1 %     178.3 %                
Capital expenditures as a percentage of Adjusted EBITDA     47.0 %     55.7 %                
                                   

Adjusted EBITDA less capital expenditures

  $ 74,120     $ 54,368     $ 19,752       36.3 %

 

 

NM = Not meaningful.

 
 

 

   

Three Months Ended

September 30,

           

(dollars in thousands)

 

2019

   

2018

   

$ Change

   

% Change

Net cash provided by operating activities

  $ 122,691     $ 111,015     $ 11,676       10.5 %

Capital expenditures

    (65,836 )     (68,302 )     2,466       (3.6 )%

Interest expense

    16,079       15,460       619       4.0 %

Amortization of debt issuance cost

    (1,118 )     (1,076 )     (42 )     3.9 %

Income tax provision

    15,801       11,048       4,753       43.0 %

Changes in operating assets and liabilities

    (6,516 )     (6,586 )     70       (1.1 )%

Change in deferred income taxes

    (11,065 )     (9,067 )     (1,998 )     22.0 %

Loss on deferred compensation

    41       100       (59 )     (59.0 )%

Acquisition-related costs

    1,228       10       1,218       NM  

Severance expense

    37       1,111       (1,074 )     (96.7 )%

System conversion costs

    1,114       1,735       (621 )     (35.8 )%

Rebranding costs

    3,246       423       2,823       NM  

Other income, net

    (1,582 )     (1,503 )     (79 )     5.3 %

Adjusted EBITDA less capital expenditures

  $ 74,120     $ 54,368     $ 19,752       36.3 %
   

NM = Not meaningful.

 

 

8

 

 

CABLE ONE, INC.

OPERATING STATISTICS

(Unaudited)

 

   

As of September 30,

   

Year-Over-Year Change

 
   

2019

   

2018

   

Amount

   

%

 

Homes Passed

    2,139,971       2,089,306       50,665       2.4 %
                                 

Residential Customers

    743,946       730,252       13,694       1.9 %
                                 

Data PSUs

    618,983       598,001       20,982       3.5 %

Video PSUs

    283,303       312,564       (29,261 )     (9.4 )%

Voice PSUs

    91,097       101,443       (10,346 )     (10.2 )%

Total residential PSUs

    993,383       1,012,008       (18,625 )     (1.8 )%
                                 

Business Customers

    77,133       70,927       6,206       8.7 %
                                 

Data PSUs

    70,155       62,798       7,357       11.7 %

Video PSUs

    14,760       16,357       (1,597 )     (9.8 )%

Voice PSUs

    29,998       26,529       3,469       13.1 %

Total business services PSUs

    114,913       105,684       9,229       8.7 %
                                 

Total Customers

    821,079       801,179       19,900       2.5 %

Total non-video

    523,016       472,367       50,649       10.7 %

Percent of total

    63.7 %     59.0 %                
                                 

Data PSUs

    689,138       660,799       28,339       4.3 %

Video PSUs

    298,063       328,921       (30,858 )     (9.4 )%

Voice PSUs

    121,095       127,972       (6,877 )     (5.4 )%

Total PSUs

    1,108,296       1,117,692       (9,396 )     (0.8 )%
                                 

Penetration

 

Data

    32.2 %     31.6 %             0.6 %

Video

    13.9 %     15.7 %             (1.8 )%

Voice

    5.7 %     6.1 %             (0.4 )%
                                 

Share of Third Quarter Revenues

 

Residential data

    47.1 %     46.3 %             0.8 %

Business services

    17.8 %     14.7 %             3.1 %

Total

    64.9 %     61.0 %             3.9 %
                                 

ARPU - Third Quarter

 

Residential data(1)

  $ 72.09     $ 68.83     $ 3.26       4.7 %

Residential video(1)

  $ 93.42     $ 88.45     $ 4.97       5.6 %

Residential voice(1), (2)

  $ 36.85     $ 32.95     $ 3.90       11.8 %

Business services(2), (3)

  $ 219.92     $ 187.69     $ 32.23       17.2 %
                                 
Number of Employees     2,300       2,249       51       2.3 %
   

(1)

Average monthly revenue per unit (“ARPU”) 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.

(2)

The increases in residential voice and business services ARPU from the prior year were partially a result of certain passthrough fees that were historically reported on a net basis. Residential voice and business services ARPU for the third quarter of 2019 would have been $33.11 and $215.83, respectively, if reported on a comparable basis.

(3)

ARPU values represent quarterly business services revenues divided by the average of the number of business customer relationships at the beginning and end of each period, divided by three.

 

9

 

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Section 3: EX-99.2 (EXHIBIT 99.2)

Image Exhibit

Exhibit 99.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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