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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cable One Inc | NYSE:CABO | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-14.31 | -3.79% | 363.69 | 378.43 | 363.11 | 374.46 | 121,735 | 23:32:39 |
Cable One, Inc. (NYSE: CABO) (the “Company” or “Cable One”) today reported financial and operating results for the quarter ended June 30, 2023.
Three Months Ended June 30,
(dollars in thousands)
2023
2022
$ Change
% Change
Revenues
$
424,024
$
429,085
$
(5,061
)
(1.2
)
Net income
$
55,246
$
69,245
$
(13,999
)
(20.2
)
Net profit margin
13.0
%
16.1
%
Cash flows from operating activities
$
169,564
$
164,365
$
5,199
3.2
Adjusted EBITDA(1)
$
231,294
$
227,481
$
3,813
1.7
Adjusted EBITDA margin(1)
54.5
%
53.0
%
Capital expenditures
$
81,507
$
107,289
$
(25,782
)
(24.0
)
Adjusted EBITDA less capital expenditures(1)
$
149,787
$
120,192
$
29,595
24.6
“Our track record of generating robust cash flows from operating activities continued in the second quarter of 2023,” said Julie Laulis, President and CEO of Cable One. “And despite challenges associated with the current macroeconomic environment, our strategic focus on investing in a future-proof network and providing decades of superior local service to our customers in mostly rural communities gives us confidence in our long-term growth opportunities.”
Second Quarter 2023 Highlights:
(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.
(2)
On May 20, 2022, Cable One divested certain non-core assets (the "Divested Operations"). The results discussed and presented in the tables within this press release exclude the Divested Operations from the divestiture date.
Second Quarter 2023 Financial Results Compared to Second Quarter 2022
Revenues decreased $5.1 million, or 1.2%, to $424.0 million for the second quarter of 2023 due primarily to decreases in residential video and residential voice revenues, partially offset by an increase in residential data revenues. Year-over-year business services revenues increased slightly. Business services revenues for the second quarter of 2022 included $1.1 million from the Divested Operations.
Net income was $55.2 million in the second quarter of 2023 compared to $69.2 million in the prior year quarter. Net income for the second quarter of 2023 reflected interest expense of $43.2 million, an $11.1 million increase year-over-year. Net income for the second quarter of 2023 included a $6.8 million non-cash loss on fair value adjustment associated with the call and put options to acquire the remaining equity interests in Mega Broadband Investments Holdings LLC (the "MBI Net Option"). Net income for the second quarter of 2022 included a $6.3 million non-cash gain on fair value adjustment associated with the MBI Net Option fair value adjustment and $8.3 million in non-cash losses associated with the disposition of certain operations. Net profit margin was 13.0% in the second quarter of 2023 compared to 16.1% in the prior year quarter.
Adjusted EBITDA was $231.3 million and $227.5 million for the second quarter of 2023 and 2022, respectively. Adjusted EBITDA for the second quarter of 2023 reflected lower programming expenses as a result of video customer losses and decreased insurance costs. Adjusted EBITDA margin increased to 54.5% in the second quarter of 2023 from 53.0% in the prior year quarter.
Net cash provided by operating activities was $169.6 million in the second quarter of 2023 compared to $164.4 million in the second quarter of 2022, driven by an increase in Adjusted EBITDA, lower tax payments and the timing of working capital changes, partially offset by higher interest payments. Capital expenditures for the second quarter of 2023 totaled $81.5 million compared to $107.3 million for the second quarter of 2022. Adjusted EBITDA less capital expenditures for the second quarter of 2023 was $149.8 million compared to $120.2 million in the prior year quarter.
Liquidity and Capital Resources
At June 30, 2023, the Company had $160.7 million of cash and cash equivalents on hand compared to $215.2 million at December 31, 2022. The Company’s debt balance was approximately $3.8 billion at both June 30, 2023 and December 31, 2022. The Company had $438.0 million of borrowings and $562.0 million available for borrowing under its revolving credit facility as of June 30, 2023.
The Company paid $16.3 million in dividends to stockholders and repurchased 60,910 shares of its common stock at an aggregate cost of $41.4 million during the second quarter of 2023. The Company had $159.4 million of remaining share repurchase authorization as of June 30, 2023.
Conference Call
Cable One will host a conference call with the financial community to discuss results for the second quarter of 2023 on Thursday, August 3, 2023, at 5 p.m. Eastern Time (ET).
The conference call will be available via an audio webcast on the Cable One Investor Relations website at ir.cableone.net or by dialing 1-888-330-2398 (International: 1-240-789-2709) and using the access code 12023. Participants should register for the webcast or dial in for the conference call shortly before 5 p.m. ET.
A replay of the call will be available from August 3, 2023 until August 17, 2023 at ir.cableone.net.
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, 2023, 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 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, 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, net cash provided by operating activities or capital expenditures as a percentage of net income 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, (gain) loss on deferred compensation, acquisition-related costs, (gain) loss on asset sales and disposals, system conversion costs, (gain) loss on sales of businesses, equity method investment (income) loss, other (income) expense and other unusual items, 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 items, 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 agreement and the indenture governing the Company’s non-convertible senior unsecured notes to determine compliance with the covenants contained in the credit agreement and the ability to take certain actions under the indenture governing the non-convertible senior unsecured notes. Adjusted EBITDA, capital expenditures as a percentage of Adjusted EBITDA, and Adjusted EBITDA less capital expenditures are also significant performance measures used by the Company in its incentive compensation programs. 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 that 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 stockholders.
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.
About Cable One
Cable One, Inc. (NYSE:CABO) is a leading broadband communications provider committed to connecting customers and communities to what matters most. Through Sparklight® and the associated Cable One family of brands, the Company serves approximately 1.1 million residential and business customers in 24 states as of June 30, 2023. Powered by a fiber-rich network, the Cable One family of brands provide residential customers with a wide array of connectivity and entertainment services, including Gigabit speeds, advanced Wi-Fi and video. For businesses ranging from small and mid-market up to enterprise, wholesale and carrier, the Company offers scalable, cost-effective solutions that enable businesses of all sizes to grow, compete and succeed.
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, strategy, acquisitions and strategic investments, dividend policy, 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:
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.
CABLE ONE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended June 30,
Change
% Change
(dollars in thousands, except per share data)
2023
2022
Revenues
Residential data
$
246,840
$
233,330
$
13,510
5.8
%
Residential video
66,137
84,761
(18,624
)
(22.0
)%
Residential voice
9,507
10,715
(1,208
)
(11.3
)%
Business services
76,812
76,660
152
0.2
%
Other
24,728
23,619
1,109
4.7
%
Total Revenues
424,024
429,085
(5,061
)
(1.2
)%
Costs and Expenses:
Operating (excluding depreciation and amortization)
112,804
118,393
(5,589
)
(4.7
)%
Selling, general and administrative
86,173
90,787
(4,614
)
(5.1
)%
Depreciation and amortization
87,240
88,423
(1,183
)
(1.3
)%
(Gain) loss on asset sales and disposals, net
2,767
2,173
594
27.3
%
(Gain) loss on sales of businesses
—
8,253
(8,253
)
(100.0
)%
Total Costs and Expenses
288,984
308,029
(19,045
)
(6.2
)%
Income from operations
135,040
121,056
13,984
11.6
%
Interest expense
(43,218
)
(32,080
)
(11,138
)
34.7
%
Other income (expense), net
(2,112
)
8,066
(10,178
)
(126.2
)%
Income before income taxes and equity method investment income (loss), net
89,710
97,042
(7,332
)
(7.6
)%
Income tax provision
20,949
22,773
(1,824
)
(8.0
)%
Income before equity method investment income (loss), net
68,761
74,269
(5,508
)
(7.4
)%
Equity method investment income (loss), net
(13,515
)
(5,024
)
(8,491
)
169.0
%
Net income
$
55,246
$
69,245
$
(13,999
)
(20.2
)%
Net Income per Common Share:
Basic
$
9.76
$
11.64
$
(1.88
)
(16.2
)%
Diluted
$
9.36
$
11.11
$
(1.75
)
(15.8
)%
Weighted Average Common Shares Outstanding:
Basic
5,660,751
5,946,507
(285,756
)
(4.8
)%
Diluted
6,070,996
6,369,649
(298,653
)
(4.7
)%
Unrealized gain (loss) on cash flow hedges and other, net of tax
$
21,711
$
32,646
$
(10,935
)
(33.5
)%
Comprehensive income
$
76,957
$
101,891
$
(24,934
)
(24.5
)%
CABLE ONE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in thousands, except par values)
June 30, 2023
December 31, 2022
Assets
Current Assets:
Cash and cash equivalents
$
160,734
$
215,150
Accounts receivable, net
74,611
74,383
Prepaid and other current assets
79,598
57,172
Total Current Assets
314,943
346,705
Equity investments
1,192,861
1,195,221
Property, plant and equipment, net
1,736,269
1,701,755
Intangible assets, net
2,630,276
2,666,585
Goodwill
928,947
928,947
Other noncurrent assets
79,445
74,677
Total Assets
$
6,882,741
$
6,913,890
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities
$
146,953
$
164,518
Deferred revenue
28,213
23,706
Current portion of long-term debt
19,017
55,931
Total Current Liabilities
194,183
244,155
Long-term debt
3,731,928
3,752,591
Deferred income taxes
972,812
966,821
Other noncurrent liabilities
216,078
192,350
Total Liabilities
5,115,001
5,155,917
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; 6,175,399 shares issued; and 5,641,056 and 5,766,011 shares outstanding as of June 30, 2023 and December 31, 2022, respectively)
62
62
Additional paid-in capital
589,738
578,154
Retained earnings
1,704,241
1,624,406
Accumulated other comprehensive income (loss)
53,800
50,031
Treasury stock, at cost (534,343 and 409,388 shares held as of June 30, 2023 and December 31, 2022, respectively)
(580,101
)
(494,680
)
Total Stockholders' Equity
1,767,740
1,757,973
Total Liabilities and Stockholders' Equity
$
6,882,741
$
6,913,890
CABLE ONE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended June 30,
(in thousands)
2023
2022
Cash flows from operating activities:
Net income
$
55,246
$
69,245
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
87,240
88,424
Non-cash interest expense, net
2,274
2,397
Equity-based compensation
5,999
5,951
Change in deferred income taxes
1,354
5,794
(Gain) loss on asset sales and disposals, net
2,766
2,173
(Gain) loss on sales of businesses
—
8,254
Equity method investment (income) loss, net
13,515
5,024
Fair value adjustments
6,508
(5,989
)
Changes in operating assets and liabilities:
Accounts receivable, net
(28,462
)
(19,046
)
Prepaid and other current assets
8,852
6,189
Accounts payable and accrued liabilities
4,378
(6,272
)
Deferred revenue
3,859
(867
)
Other
6,035
3,088
Net cash provided by operating activities
169,564
164,365
Cash flows from investing activities:
Cash paid for debt and equity investments
(14,704
)
(12,402
)
Capital expenditures
(81,507
)
(107,289
)
Change in accrued expenses related to capital expenditures
(3,170
)
4,869
Proceeds from sales of property, plant and equipment
565
71
Proceeds from sales of operations
—
9,227
Net cash used in investing activities
(98,816
)
(105,524
)
Cash flows from financing activities:
Payment of debt issuance costs
(198
)
—
Payments on long-term debt
(54,719
)
(8,544
)
Repurchases of common stock
(41,368
)
(122,014
)
Payment of withholding tax for equity awards
(122
)
(45
)
Dividends paid to stockholders
(16,339
)
(16,426
)
Net cash used in financing activities
(112,746
)
(147,029
)
Change in cash and cash equivalents
(41,998
)
(88,188
)
Cash and cash equivalents, beginning of period
202,732
368,166
Cash and cash equivalents, end of period
$
160,734
$
279,978
Supplemental cash flow disclosures:
Cash paid for interest, net of capitalized interest
$
46,179
$
34,950
Cash paid for income taxes, net of refunds received
$
17,882
$
24,235
CABLE ONE, INC.
RECONCILIATIONS OF NON-GAAP MEASURES
(Unaudited)
Three Months Ended June 30,
(dollars in thousands)
2023
2022
$ Change
% Change
Net income
$
55,246
$
69,245
$
(13,999
)
(20.2
)%
Net profit margin
13.0
%
16.1
%
Plus: Interest expense
43,218
32,080
11,138
34.7
%
Income tax provision
20,949
22,773
(1,824
)
(8.0
)%
Depreciation and amortization
87,240
88,423
(1,183
)
(1.3
)%
Equity-based compensation
5,999
5,951
48
0.8
%
(Gain) loss on deferred compensation
—
(94
)
94
(100.0
)%
Acquisition-related costs
248
1,221
(973
)
(79.7
)%
(Gain) loss on asset sales and disposals, net
2,767
2,173
594
27.3
%
System conversion costs
—
498
(498
)
(100.0
)%
(Gain) loss on sales of businesses
—
8,253
(8,253
)
(100.0
)%
Equity method investment (income) loss, net
13,515
5,024
8,491
169.0
%
Other (income) expense, net
2,112
(8,066
)
10,178
(126.2
)%
Adjusted EBITDA
$
231,294
$
227,481
$
3,813
1.7
%
Adjusted EBITDA margin
54.5
%
53.0
%
Less: Capital expenditures
$
81,507
$
107,289
$
(25,782
)
(24.0
)%
Capital expenditures as a percentage of net income
147.5
%
154.9
%
Capital expenditures as a percentage of Adjusted EBITDA
35.2
%
47.2
%
Adjusted EBITDA less capital expenditures
$
149,787
$
120,192
$
29,595
24.6
%
Three Months Ended June 30,
(dollars in thousands)
2023
2022
$ Change
% Change
Net cash provided by operating activities
$
169,564
$
164,365
$
5,199
3.2
%
Capital expenditures
(81,507
)
(107,289
)
25,782
(24.0
)%
Interest expense
43,218
32,080
11,138
34.7
%
Non-cash interest expense
(2,274
)
(2,397
)
123
(5.1
)%
Income tax provision
20,949
22,773
(1,824
)
(8.0
)%
Changes in operating assets and liabilities
5,338
16,906
(11,568
)
(68.4
)%
Change in deferred income taxes
(1,354
)
(5,794
)
4,440
(76.6
)%
(Gain) loss on deferred compensation
—
(94
)
94
(100.0
)%
Acquisition-related costs
248
1,221
(973
)
(79.7
)%
System conversion costs
—
498
(498
)
(100.0
)%
Fair value adjustments
(6,508
)
5,989
(12,497
)
(208.7
)%
Other (income) expense, net
2,113
(8,066
)
10,179
(126.2
)%
Adjusted EBITDA less capital expenditures
$
149,787
$
120,192
$
29,595
24.6
%
CABLE ONE, INC.
OPERATING STATISTICS
(Unaudited)
As of June 30,
(in thousands, except percentages and ARPU data)
2023
2022
Change
% Change
Homes Passed
2,733.9
2,689.8
44.1
1.6
%
Residential Customers
998.8
1,024.7
(25.9
)
(2.5
)%
Data PSUs
960.1
963.6
(3.5
)
(0.4
)%
Video PSUs
149.2
208.1
(58.9
)
(28.3
)%
Voice PSUs
84.7
98.6
(13.9
)
(14.1
)%
Total residential PSUs
1,193.9
1,270.3
(76.4
)
(6.0
)%
Business Customers
102.2
101.7
0.5
0.5
%
Data PSUs
97.8
95.6
2.2
2.3
%
Video PSUs
9.0
12.5
(3.6
)
(28.5
)%
Voice PSUs
40.3
41.1
(0.8
)
(1.9
)%
Total business services PSUs
147.1
149.3
(2.2
)
(1.4
)%
Total Customers
1,101.0
1,126.4
(25.4
)
(2.3
)%
Total non-video
940.5
903.1
37.4
4.1
%
Percent of total
85.4
%
80.2
%
5.2
%
Data PSUs
1,057.9
1,059.3
(1.3
)
(0.1
)%
Video PSUs
158.1
220.6
(62.5
)
(28.3
)%
Voice PSUs
125.0
139.7
(14.7
)
(10.5
)%
Total PSUs
1,341.1
1,419.6
(78.5
)
(5.5
)%
Penetration
Data
38.7
%
39.4
%
(0.7
)%
Video
5.8
%
8.2
%
(2.4
)%
Voice
4.6
%
5.2
%
(0.6
)%
Share of Second Quarter Revenues
Residential data
58.2
%
54.4
%
3.8
%
Business services
18.1
%
17.9
%
0.2
%
Total
76.3
%
72.2
%
4.1
%
ARPU - Second Quarter
Residential data(1)
$
85.20
$
80.44
$
4.76
5.9
%
Residential video(1)
$
143.53
$
130.28
$
13.25
10.2
%
Residential voice(1)
$
36.71
$
35.52
$
1.19
3.4
%
Business services(2)
$
251.02
$
252.00
$
(0.98
)
(0.4
)%
______________________________Note: All totals, percentages and year-over-year changes are calculated using exact numbers. Minor differences may exist due to rounding.
(1)
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, except that for any PSUs added or subtracted as a result of an acquisition or divestiture occurring during the period, the associated ARPU values represent the applicable residential service revenues (excluding installation and activation fees) divided by the pro-rated average number of PSUs during such period.
(2)
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, except that for any business customer relationships added or subtracted as a result of an acquisition or divestiture occurring during the period, the associated ARPU values represent business services revenues divided by the pro-rated average number of business customer relationships during such period.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230803240294/en/
Trish Niemann Vice President, Communications Strategy 602-364-6372 patricia.niemann@cableone.biz Todd Koetje Chief Financial Officer investor_relations@cableone.biz
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