AP NEWS

Cable ONE Reports Second Quarter 2018 Results

August 9, 2018

PHOENIX--(BUSINESS WIRE)--Aug 9, 2018--Cable One, Inc. (NYSE: CABO) (the “Company” or “Cable ONE”) today reported financial and operating results for the quarter ended June 30, 2018.

Second Quarter 2018 Highlights:

Net income was $43.8 million in the second quarter of 2018, an increase of 57.2% year-over-year. Adjusted EBITDA (1) was $127.1 million, an increase of 12.2% year-over-year. Net profit margin was 16.3% and Adjusted EBITDA margin (1) was 47.4%. Net income and Adjusted EBITDA results for the second quarter of 2018 include a full quarter of NewWave Communications (“NewWave”) operations, while the comparable results for the second quarter of 2017 include only two months of NewWave operations. Excluding the contributions from NewWave operations, net income would have increased 57.1% year-over-year to $40.5 million and Adjusted EBITDA would have increased 6.2% to $108.4 million year-over-year. In addition, net profit margin would have been 18.4% and Adjusted EBITDA margin would have been 49.4%. Net cash provided by operating activities was $101.9 million, an increase of 93.7% year-over-year. Adjusted EBITDA less capital expenditures (1) was $77.3 million, an increase of 6.1% compared to the second quarter of 2017. Total revenues were $268.4 million in the second quarter of 2018 compared to $241.0 million in the second quarter of 2017. Excluding the $49.0 million and $32.2 million contributions from NewWave operations in the second quarter of 2018 and 2017, respectively, total revenues would have been $219.4 million and $208.8 million, an increase of 5.1% year-over-year. Residential data revenues increased 18.3% and business services revenues increased 18.4% year-over-year. Excluding the contributions from NewWave operations, residential data revenues increased 11.1% and business services revenues increased 11.3% compared to the second quarter of 2017. Common stock repurchases totaled 30,717 shares, or $20.3 million, during the second quarter of 2018.

(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.

Second Quarter 2018 Financial Results Compared to Second Quarter 2017

Revenues increased $27.4 million, or 11.4%, to $268.4 million for the second quarter of 2018 due primarily to the additional month of revenues attributable to the NewWave operations in the current quarter. For the second quarter of 2018 and 2017, residential data revenues comprised 45.6% and 42.9% of total revenues and business services revenues comprised 14.3% and 13.5% of total revenues, respectively. Excluding the contributions from NewWave operations, revenues increased to $219.4 million, or 5.1%, from $208.8 million in the prior year quarter.

Operating expenses (excluding depreciation and amortization) were $91.8 million in the second quarter of 2018 and increased $7.7 million, or 9.2%, compared to the second quarter of 2017 primarily as a result of the additional month of NewWave operations. Operating expenses as a percentage of revenues were 34.2% for the second quarter of 2018 compared to 34.9% for the year-ago quarter. Operating expenses attributable to the NewWave operations were $23.6 million for the second quarter of 2018. Excluding the expenses associated with the NewWave operations, operating expenses would have been $68.1 million in the second quarter of 2018 compared to $68.0 million in the second quarter of 2017. Operating expenses as a percentage of revenues, excluding the impact of the NewWave operations, would have been 31.1% in the second quarter of 2018 compared to 32.6% in the second quarter of 2017.

Selling, general and administrative expenses were $54.2 million for the second quarter of 2018 and increased $3.2 million, or 6.3%, compared to the second quarter of 2017. Selling, general and administrative expenses as a percentage of revenues were 20.2% and 21.1% for the second quarter of 2018 and 2017, respectively. Selling, general and administrative expenses attributable to the NewWave operations were $7.8 million for the second quarter of 2018, an increase of $3.0 million from the second quarter of 2017. Excluding the expenses associated with the NewWave operations, selling, general and administrative expenses would have been $46.4 million compared to $46.1 million in the prior year quarter. Increases in marketing expenses and medical insurance expenses were offset by a decrease in acquisition-related costs. Selling, general and administrative expenses as a percentage of revenues, excluding the impact of the NewWave operations, would have been 21.1% in the second quarter of 2018 and 22.1% in the second quarter of 2017.

Depreciation and amortization expense was $49.0 million for the second quarter of 2018 and increased $1.0 million, or 2.1%, compared to the second quarter of 2017. The increase was due primarily to new assets placed in service since the second quarter of 2017 and the additional month of depreciation and amortization on property, plant and equipment and finite-lived intangible assets acquired as part of the NewWave acquisition, partially offset by assets that became fully depreciated since the second quarter of 2017. Depreciation and amortization expense related to the NewWave operations was $12.3 million for the second quarter of 2018 compared to $7.9 million for the second quarter of 2017. As a percentage of revenues, depreciation and amortization expense was 18.3% for the second quarter of 2018 compared to 19.9% for the second quarter of 2017.

We recognized a $2.7 million net loss on asset disposals during the second quarter of 2018 compared to a $0.5 million net loss on asset disposals during the second quarter of 2017.

Interest expense increased $3.2 million, or 26.9%, to $15.0 million due primarily to additional outstanding debt incurred on May 1, 2017 to finance the NewWave acquisition.

Income tax provision decreased $4.7 million, or 26.9%, to $12.8 million in the second quarter of 2018 as a result of the 2017 Federal tax reform legislation.

Net income increased $15.9 million, or 57.2%, to $43.8 million in the second quarter of 2018 compared to $27.9 million in the prior year quarter. Excluding the contribution from NewWave operations, net income would have been $40.5 million for the second quarter of 2018 and $25.8 million for the second quarter of 2017.

Adjusted EBITDA was $127.1 million and $113.3 million for the second quarter of 2018 and 2017, respectively. The year-over-year Adjusted EBITDA growth of 12.2% includes an additional month of NewWave operations in the current quarter. Excluding the contributions from NewWave operations, Adjusted EBITDA would have been $108.4 million and $102.0 million for the second quarter of 2018 and 2017, respectively, and year-over-year Adjusted EBITDA growth would have been 6.2%.

Capital expenditures totaled $49.8 million and $40.5 million for the second quarter of 2018 and 2017, respectively. Adjusted EBITDA less capital expenditures for the second quarter of 2018 was $77.3 million, an increase of $4.5 million, or 6.1%, from the prior year quarter. Excluding NewWave operations, capital expenditures would have been $42.6 million for the second quarter of 2018 and $35.5 million for the second quarter of 2017.

Liquidity and Capital Resources

At June 30, 2018, the Company had $203.5 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 June 30, 2018 and December 31, 2017. The Company also had $196.9 million available for borrowing under its revolving credit facility as of June 30, 2018. The Company repurchased 30,717 shares for $20.3 million during the second quarter of 2018.

Conference Call

Cable ONE will host a conference call with the financial community to discuss results for the second quarter of 2018 on Thursday, August 9, 2018, at 11 a.m. Eastern Time (ET).

Shareholders, analysts and other interested parties may register for the conference in advance at http://dpregister.com/10121805. 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, August 9, 2018, until Thursday, August 23, 2018, 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 condensed consolidated financial statements and notes thereto contained in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2018, which is posted on the “SEC Filings” section of the Cable ONE Investor Relations website at ir.cableone.net. 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 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.

“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 disposal of assets, system conversion 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, changes in operating assets and liabilities, the 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 (NYSE: CABO) is among the 10 largest cable companies in the United States and a leading broadband communications provider. Serving residential and business customers in 21 states, Cable ONE provides consumers with a wide array of communications 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.

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 cable industry and our business and financial results. 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. 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:

uncertainties as to our ability and the amount of time necessary to realize the expected synergies and other benefits of the acquisition of NewWave; our ability to integrate NewWave’s operations into our own in an efficient and effective manner; rising levels of competition from historical and new entrants in our markets; recent and future changes in technology; our ability to continue to grow our business services product; increases in programming costs and retransmission fees; our ability to obtain hardware, software and operational support from vendors; the effects of any new significant acquisitions by us; adverse economic conditions; the integrity and security of our network and information systems; the impact of possible security breaches and other disruptions, including cyber-attacks; our failure to obtain necessary intellectual and proprietary rights to operate our business and the risk of intellectual property claims and litigation against us; our ability to retain key employees; changing and additional regulation of our data, video and voice services, including legislative and regulatory efforts to impose new legal requirements on our data services; our ability to renew cable system franchises; increases in pole attachment costs; changes in local government franchising authority and broadcast carriage regulations; the potential adverse effect of our indebtedness on our business, financial condition or results of operations and cash flows; the possibility that interest rates will rise, causing our obligations to service our variable rate indebtedness to increase significantly; our ability to incur future indebtedness; fluctuations in our stock price; our ability to continue to pay dividends; dilution from equity awards and potential stock issuances in connection with acquisitions; provisions in our charter, by-laws and Delaware law that could discourage takeovers; changes in our estimates of the impact of the 2017 Federal tax reform legislation; changes in GAAP or other applicable accounting policies; the outcome of our efforts to complete the remediation of the material weakness in our internal control over financial reporting related to the NewWave billing system by the end of 2018; and the other risks and uncertainties detailed in the section titled “ Risk Factors ” in our latest Annual Report on Form 10-K as filed with the U.S. Securities and Exchange Commission (the “SEC”).

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, and expressly disclaim any obligation, to update or alter our forward-looking statements, whether as a result of new information, subsequent events or otherwise.

This article has been truncated. You can see the rest of this article by visiting http://www.businesswire.com/news/home/20180809005142/en.

AP RADIO
Update hourly