Press Release

Cable One Reports Fourth Quarter and Full Year 2019 Results

Company Release - 2/27/2020 4:15 PM ET

PHOENIX--(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, 2019.

Cable One completed the acquisition of Clearwave Communications (“Clearwave”) on January 8, 2019 and the acquisition of Fidelity Communications Co.’s data, video and voice business and certain related assets (collectively, “Fidelity”) on October 1, 2019. The results discussed below and presented in the tables within this press release include Clearwave and Fidelity operations for the periods since the completion of their respective acquisitions.

Fourth Quarter 2019 Highlights:

  • Total revenues were $318.8 million in the fourth quarter of 2019 compared to $269.9 million in the fourth quarter of 2018, an increase of 18.1%. Residential data revenues increased 18.9% and business services revenues increased 41.6% year-over-year.
  • Net income was $53.6 million in the fourth quarter of 2019, an increase of 27.6% year-over-year. Adjusted EBITDA(1) was $158.3 million, an increase of 24.0% year-over-year. Net profit margin was 16.8% and Adjusted EBITDA margin(1) was 49.7%.
  • Net cash provided by operating activities was $156.6 million in the fourth quarter of 2019, an increase of 56.3% year-over-year. Adjusted EBITDA less capital expenditures(1) was $72.3 million in the fourth quarter of 2019 compared to $69.0 million in the fourth quarter of 2018.
  • Residential data primary service units (“PSUs”) grew by over 94,000, or 15.7%, year-over-year and by nearly 76,000, or 12.3%, sequentially. Business services PSUs grew by nearly 24,000, or 22.4%, year-over-year and by nearly 14,000, or 12.0%, sequentially.

Full Year 2019 Highlights:

  • Total revenues were $1.2 billion in 2019 compared to $1.1 billion in 2018, an increase of 8.9%. Residential data revenues increased 11.0% and business services revenues increased 31.1% year-over-year.
  • Net income was $178.6 million in 2019, an increase of 8.4% year-over-year. Adjusted EBITDA was $569.0 million, an increase of 13.6% year-over-year. Net profit margin was 15.3% and Adjusted EBITDA margin was 48.7%.
  • Net cash provided by operating activities was $491.7 million in 2019, an increase of 20.6% year-over-year. Adjusted EBITDA less capital expenditures was $306.6 million in 2019, an increase of 8.3% year-over-year.
(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 2019 Financial Results Compared to Fourth Quarter 2018

Revenues increased $48.9 million, or 18.1%, to $318.8 million for the fourth quarter of 2019, including $39.4 million from Clearwave and Fidelity operations. The remaining increase was driven primarily by organic residential data and business services revenue growth. For the fourth quarter of 2019 and 2018, residential data revenues comprised 47.1% and 46.8% of total revenues and business services revenues comprised 17.9% and 14.9% of total revenues, respectively.

Operating expenses (excluding depreciation and amortization) were $103.4 million in the fourth quarter of 2019 compared to $91.8 million in the fourth quarter of 2018. Operating expenses as a percentage of revenues were 32.5% for the fourth quarter of 2019 compared to 34.0% for the year-ago quarter. The increase in operating expenses was primarily attributable to $12.6 million of additional expenses related to Clearwave and Fidelity operations. Operating expenses as a percentage of revenues, excluding the impact of Clearwave and Fidelity operations, were also 32.5% for the fourth quarter of 2019 compared to 34.0% for the fourth quarter of 2018.

Selling, general and administrative expenses were $64.7 million for the fourth quarter of 2019 and increased $7.1 million, or 12.3%, compared to the fourth quarter of 2018. Selling, general and administrative expenses as a percentage of revenues were 20.3% and 21.4% for the fourth quarter of 2019 and 2018, respectively. The increase in selling, general and administrative expenses was primarily attributable to $6.5 million of additional expenses related to Clearwave and Fidelity operations. Selling, general and administrative expenses as a percentage of revenues, excluding the impact of Clearwave and Fidelity operations, were 20.8% and 21.4% for the fourth quarter of 2019 and 2018, respectively.

Depreciation and amortization expense was $59.3 million for the fourth quarter of 2019 and increased $9.8 million, or 19.7%, including $11.9 million attributable to Clearwave and Fidelity operations. As a percentage of revenues, depreciation and amortization expense was 18.6% for the fourth quarter of 2019 compared to 18.3% for the fourth quarter of 2018. The Company recognized $2.8 million and $1.7 million of net losses on asset disposals during the fourth quarter of 2019 and 2018, respectively.

Interest expense increased $3.8 million, or 24.6%, to $19.0 million, driven primarily by additional outstanding debt incurred in connection with the Clearwave and Fidelity acquisitions and interest rate swap settlements, partially offset by lower interest rates.

Other income of $1.3 million and $1.5 million in the fourth quarter of 2019 and 2018, respectively, consisted primarily of interest and investment income.

The income tax provision was $17.2 million in the fourth quarter of 2019 compared to $13.5 million in the prior year quarter. The effective tax rate was 24.3% for both the fourth quarter of 2019 and 2018.

Net income was $53.6 million in the fourth quarter of 2019 compared to $42.0 million in the prior year quarter.

Adjusted EBITDA was $158.3 million and $127.6 million for the fourth quarter of 2019 and 2018, respectively, an increase of 24.0%. Capital expenditures for the fourth quarter of 2019 totaled $86.0 million, including capital expenditures for Clearwave and Fidelity operations, compared to $58.6 million for the fourth quarter of 2018. Adjusted EBITDA less capital expenditures for the fourth quarter of 2019 was $72.3 million compared to $69.0 million in the prior year quarter.

Full Year 2019 Financial Results Compared to Full Year 2018

Revenues increased $95.7 million, or 8.9%, to $1.2 billion for 2019, driven primarily by $59.3 million from Clearwave and Fidelity operations as well as organic residential data and business services revenue growth, partially offset by a decrease in residential video revenues. For 2019 and 2018, residential data revenues comprised 46.9% and 46.0% of total revenues and business services revenues comprised 17.5% and 14.5% of total revenues, respectively.

Operating expenses (excluding depreciation and amortization) were $388.6 million for 2019 and increased $18.3 million, or 4.9%, compared to 2018. Operating expenses as a percentage of revenues were 33.3% for 2019 compared to 34.5% for 2018. The increase in operating expenses attributable to Clearwave and Fidelity operations was $15.4 million. Excluding the expenses associated with Clearwave and Fidelity operations, operating expenses were $373.1 million for 2019, an increase of $2.9 million, or 0.8%, compared to 2018. The increase was due primarily to higher regulatory costs resulting from certain passthrough fees that were historically reported on a net basis, partially offset by lower programming expenses. Operating expenses as a percentage of revenues, excluding the impact of Clearwave and Fidelity operations, were 33.7% for 2019 compared to 34.5% for 2018.

Selling, general and administrative expenses increased $22.9 million, or 10.3%, to $245.1 million. Selling, general and administrative expenses as a percentage of revenues were 21.0% and 20.7% for 2019 and 2018, respectively. The increase in selling, general and administrative expenses attributable to Clearwave and Fidelity operations was $9.8 million. Excluding the expenses associated with Clearwave and Fidelity operations, selling, general and administrative expenses increased $13.1 million, or 5.9%, to $235.3 million due primarily to acquisition-related and rebranding costs incurred during 2019. Selling, general and administrative expenses as a percentage of revenues, excluding the impact of Clearwave and Fidelity operations, were 21.2% for 2019 compared to 20.7% for 2018.

Depreciation and amortization expense increased $19.0 million, or 9.6%, including a $21.0 million increase attributable to Clearwave and Fidelity operations. As a percentage of revenues, depreciation and amortization expense was 18.6% for 2019 compared to 18.4% for 2018.

The Company recognized a net loss on asset disposals of $7.2 million in 2019 compared to $14.2 million in 2018. In 2019, the Company recognized a gain on the sale of a non-operating property that housed its former headquarters, while the prior year included more asset disposals.

Interest expense increased $11.3 million, or 18.7%, to $71.7 million, driven primarily by additional outstanding debt incurred in connection with the Clearwave and Fidelity acquisitions and interest rate swap settlements, partially offset by lower interest rates on variable rate term loans, including loans used to redeem $450.0 million of higher rate senior unsecured notes in the second quarter of 2019 (the “Note Redemption”).

The Company recognized other expense of $4.9 million during 2019, consisting primarily of a $6.5 million call premium related to the Note Redemption and $4.9 million of debt issuance cost write-offs and expenses associated with financing transactions, partially offset by interest and investment income. The Company recognized other income of $4.5 million during 2018, consisting primarily of interest and investment income.

The income tax provision increased $8.0 million, or 17.0%, due primarily to an increase in taxable income of $21.8 million, or 10.3%. The Company’s effective tax rate was 23.6% and 22.3% for 2019 and 2018, respectively.

Net income was $178.6 million in 2019 compared to $164.8 million in 2018.

Adjusted EBITDA was $569.0 million and $500.8 million for 2019 and 2018, respectively, an increase of 13.6%. Capital expenditures totaled $262.4 million and $217.8 million for 2019 and 2018, respectively. Adjusted EBITDA less capital expenditures for 2019 was $306.6 million, an increase of $23.5 million, or 8.3%, from the prior year.

Liquidity and Capital Resources

At December 31, 2019, the Company had $125.3 million of cash and cash equivalents on hand compared to $264.1 million at December 31, 2018. The Company’s debt balance was $1.8 billion and $1.2 billion at December 31, 2019 and December 31, 2018, respectively. The Company also had $343.3 million available for borrowing under its revolving credit facility as of December 31, 2019. The Company repurchased 5,984 shares for $5.1 million during the first quarter of 2019.

The Company paid $48.5 million in dividends to stockholders during 2019, including $12.9 million during the fourth quarter.

Conference Call

Cable One will host a conference call with the financial community to discuss results for the fourth quarter and full year 2019 on Thursday, February 27, 2020, at 5 p.m. Eastern Time (ET).

Shareholders, analysts and other interested parties may register for the conference in advance at http://dpregister.com/10138555. 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, February 27, 2020 until Thursday, March 12, 2020 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, 2019, 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, 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.

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 Sparklight® 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.

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 Annual Report on Form 10-K for the period ended December 31, 2019 to be filed with the SEC:

  • 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 and strategic investments by the Company;
  • risks that the Company’s rebranding may not produce the benefits expected;
  • damage to the Company’s reputation or brand image;
  • risks that the implementation of the Company’s new enterprise resource planning system disrupts business operations;
  • 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 restrictions the terms of the Company’s indebtedness place on its business and corporate actions;
  • 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 and strategic investments;
  • 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.

CABLE ONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

 

Three Months Ended December 31,

 

 

(dollars in thousands, except per share data)

2019

 

2018

 

$ Change

 

% Change

 

Revenues:

 

Residential data

$

150,285

$

126,397

 

$

23,888

18.9%

 

Residential video

 

86,356

 

82,578

 

 

3,778

4.6%

 

Residential voice

 

12,938

 

9,934

 

 

3,004

30.2%

 

Business services

 

56,936

 

40,213

 

 

16,723

41.6%

 

Other

 

12,236

 

10,730

 

 

1,506

14.0%

 

Total Revenues

 

318,751

 

269,852

 

 

48,899

18.1%

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

Operating (excluding depreciation and amortization)

 

103,448

 

91,791

 

 

11,657

12.7%

 

Selling, general and administrative

 

64,713

 

57,632

 

 

7,081

12.3%

 

Depreciation and amortization

 

59,271

 

49,506

 

 

9,765

19.7%

 

Loss on asset disposals, net

 

2,812

 

1,659

 

 

1,153

69.5%

 

Total Costs and Expenses

 

230,244

 

200,588

 

 

29,656

14.8%

 

Income from operations

 

88,507

 

69,264

 

 

19,243

27.8%

 

Interest expense

 

(19,038)

 

(15,279)

 

 

(3,759)

24.6%

 

Other income, net

 

1,341

 

1,485

 

 

(144)

(9.7)%

 

Income before income taxes

 

70,810

 

55,470

 

 

15,340

27.7%

 

Income tax provision

 

17,197

 

13,462

 

 

3,735

27.7%

 

Net income

$

53,613

$

42,008

 

$

11,605

27.6%

 

 

Net Income per Common Share:

 

Basic

$

9.43

$

7.40

 

$

2.03

27.4%

 

Diluted

$

9.32

$

7.34

 

$

1.98

27.0%

 

Weighted Average Common Shares Outstanding:

 

Basic

5,685,840

5,674,067

 

11,773

0.2%

 

Diluted

5,751,970

5,723,528

 

28,442

0.5%

 

 

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

$

23,043

$

254

 

$

22,789

NM

 

Comprehensive income

$

76,656

$

42,262

 

$

34,394

81.4%

 

______

 

NM = Not meaningful.

CABLE ONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

 

Year Ended December 31,

 

(dollars in thousands, except per share data)

2019

 

2018

 

$ Change

 

% Change

Revenues:

Residential data

$

547,240

$

492,816

 

$

54,424

 

11.0%

Residential video

 

335,190

 

343,384

 

 

(8,194)

 

(2.4)%

Residential voice

 

43,521

 

41,278

 

 

2,243

 

5.4%

Business services

 

204,500

 

155,952

 

 

48,548

 

31.1%

Other

 

37,546

 

38,865

 

 

(1,319)

 

(3.4)%

Total Revenues

 

1,167,997

 

1,072,295

 

 

95,702

 

8.9%

Costs and Expenses:

 

 

 

 

 

 

 

 

 

Operating (excluding depreciation and amortization)

 

388,552

 

370,269

 

 

18,283

 

4.9%

Selling, general and administrative

 

245,120

 

222,216

 

 

22,904

 

10.3%

Depreciation and amortization

 

216,687

 

197,731

 

 

18,956

 

9.6%

Loss on asset disposals, net

 

7,187

 

14,167

 

 

(6,980)

 

(49.3)%

Total Costs and Expenses

 

857,546

 

804,383

 

 

53,163

 

6.6%

Income from operations

 

310,451

 

267,912

 

 

42,539

 

15.9%

Interest expense

 

(71,729)

 

(60,415)

 

 

(11,314)

 

18.7%

Other income (expense), net

 

(4,907)

 

4,487

 

 

(9,394)

 

(209.4)%

Income before income taxes

 

233,815

 

211,984

 

 

21,831

 

10.3%

Income tax provision

 

55,233

 

47,224

 

 

8,009

 

17.0%

Net income

$

178,582

$

164,760

 

$

13,822

 

8.4%

 

Net Income per Common Share:

Basic

$

31.45

$

28.98

 

$

2.47

 

8.5%

Diluted

$

31.12

$

28.77

 

$

2.35

 

8.2%

Weighted Average Common Shares Outstanding:

Basic

5,678,990

 

5,684,375

 

(5,385)

 

(0.1)%

Diluted

5,737,856

 

5,725,963

 

11,893

 

0.2%

 

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

$

(68,062)

$

256

 

$

(68,318)

 

NM

Comprehensive income

$

110,520

$

165,016

 

$

(54,496)

 

(33.0)%

______

NM = Not meaningful.

CABLE ONE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(dollars in thousands, except par values)

December 31, 2019

 

December 31, 2018

Assets

Current Assets:

Cash and cash equivalents

$

125,271

$

264,113

Accounts receivable, net

 

38,452

 

29,947

Income taxes receivable

 

2,146

 

10,713

Prepaid and other current assets

 

15,619

 

13,090

Total Current Assets

 

181,488

 

317,863

Property, plant and equipment, net

 

1,201,271

 

847,979

Intangible assets, net

 

1,312,381

 

953,851

Goodwill

 

429,597

 

172,129

Other noncurrent assets

 

27,094

 

11,412

Total Assets

$

3,151,831

$

2,303,234

 

Liabilities and Stockholders' Equity

Current Liabilities:

Accounts payable and accrued liabilities

$

136,993

$

94,134

Deferred revenue

 

23,640

 

18,954

Current portion of long-term debt

 

28,909

 

20,625

Total Current Liabilities

 

189,542

 

133,713

Long-term debt

 

1,711,937

 

1,142,056

Deferred income taxes

 

303,314

 

242,127

Other noncurrent liabilities

 

105,469

 

9,980

Total Liabilities

 

2,310,262

 

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 5,715,377 and 5,703,402 shares outstanding as of December 31, 2019 and 2018, respectively)

 

59

 

59

Additional paid-in capital

 

51,198

 

38,898

Retained earnings

 

980,355

 

850,292

Accumulated other comprehensive loss

 

(68,158)

 

(96)

Treasury stock, at cost (172,522 and 184,497 shares held as of December 31, 2019 and 2018, respectively)

 

(121,885)

 

(113,795)

Total Stockholders' Equity

 

841,569

 

775,358

Total Liabilities and Stockholders' Equity

$

3,151,831

$

2,303,234

 

 

CABLE ONE, INC.

RECONCILIATIONS OF NON-GAAP MEASURES

(Unaudited)

Three Months Ended December 31,

 

(dollars in thousands)

2019

 

2018

 

$ Change

 

% Change

Net income

$

53,613

 

$

42,008

 

$

11,605

 

27.6%

Net profit margin

 

16.8%

 

 

15.6%

 

 

 

 

 

 

Plus:

Interest expense

$

19,038

 

$

15,279

 

$

3,759

 

24.6%

Income tax provision

 

17,197

 

 

13,462

 

 

3,735

 

27.7%

Depreciation and amortization

 

59,271

 

 

49,506

 

 

9,765

 

19.7%

Equity-based compensation

 

3,139

 

 

3,224

 

 

(85)

 

(2.6)%

Severance expense

 

-

 

 

729

 

 

(729)

 

(100.0)%

(Gain) loss on deferred compensation

 

106

 

 

(191)

 

 

297

 

(155.5)%

Acquisition-related costs

 

2,268

 

 

1,734

 

 

534

 

30.8%

Loss on asset disposals, net

 

2,812

 

 

1,659

 

 

1,153

 

69.5%

System conversion costs

 

1,541

 

 

1,135

 

 

406

 

35.8%

 

Rebranding costs

 

636

 

 

545

 

 

91

 

16.7%

Other income, net

 

(1,341)

 

 

(1,485)

 

 

144

 

(9.7)%

Adjusted EBITDA

$

158,280

 

$

127,605

 

$

30,675

 

24.0%

Adjusted EBITDA margin

 

49.7%

 

 

47.3%

 

 

 

 

 

 

Less:

Capital expenditures

$

86,028

 

$

58,596

 

$

27,432

 

46.8%

Capital expenditures as a percentage of net income

 

160.5%

 

 

139.5%

 

 

 

 

 

Capital expenditures as a percentage of Adjusted EBITDA

54.4%

 

 

45.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA less capital expenditures

$

72,252

 

$

69,009

 

$

3,243

 

4.7%

 

 

 

Three Months Ended December 31,

 

(dollars in thousands)

2019

 

2018

 

$ Change

 

% Change

Net cash provided by operating activities

$

156,556

 

$

100,152

 

$

56,404

 

56.3%

Capital expenditures

 

(86,028)

 

 

(58,596)

 

 

(27,432)

 

46.8%

Interest expense

 

19,038

 

 

15,279

 

 

3,759

 

24.6%

Amortization of debt issuance costs

 

(1,119)

 

 

(1,075)

 

 

(44)

 

4.1%

Income tax provision

 

17,197

 

 

13,462

 

 

3,735

 

27.7%

Changes in operating assets and liabilities

 

(9,300)

 

 

13,667

 

 

(22,967)

 

(168.0)%

Decrease in deferred income taxes

 

(27,299)

 

 

(16,347)

 

 

(10,952)

 

67.0%

(Gain) loss on deferred compensation

 

106

 

 

(191)

 

 

297

 

(155.5)%

Acquisition-related costs

 

2,268

 

 

1,734

 

 

534

 

30.8%

Severance expense

 

-

 

 

729

 

 

(729)

 

(100.0)%

 

Write-off of debt issuance costs

 

(3)

 

 

-

 

 

(3)

 

NM

System conversion costs

 

1,541

 

 

1,135

 

 

406

 

35.8%

 

Rebranding costs

 

636

 

 

545

 

 

91

 

16.7%

Other income, net

 

(1,341)

 

 

(1,485)

 

 

144

 

(9.7)%

Adjusted EBITDA less capital expenditures

$

72,252

 

$

69,009

 

$

3,243

 

4.7%

 

NM = Not meaningful.

 

 

CABLE ONE, INC.

RECONCILIATIONS OF NON-GAAP MEASURES

(Unaudited)

 

Year Ended December 31,

(dollars in thousands)

2019

 

2018

 

$ Change

 

% Change

Net income

$

178,582

 

$

164,760

 

$

13,822

 

8.4%

Net profit margin

 

15.3%

 

 

15.4%

 

 

 

 

 

 

Plus:

Interest expense

 

71,729

 

60,415

 

11,314

18.7%

Income tax provision

 

55,233

 

47,224

 

8,009

17.0%

Depreciation and amortization

 

216,687

 

197,731

 

18,956

9.6%

Equity-based compensation

 

12,300

 

10,486

 

1,814

17.3%

Severance expense

 

215

 

2,347

 

(2,132)

(90.8)%

Loss on deferred compensation

 

400

 

425

 

(25)

(5.9)%

Acquisition-related costs

 

9,590

 

1,773

 

7,817

NM

Loss on asset disposals, net

 

7,187

 

14,167

 

(6,980)

(49.3)%

System conversion costs

 

4,828

 

5,037

 

(209)

(4.1)%

 

Rebranding costs

 

7,294

 

968

 

6,326

NM

Other income (expense), net

 

4,907

 

(4,487)

 

9,394

(209.4)%

Adjusted EBITDA

$

568,952

 

$

500,846

 

$

68,106

 

13.6%

Adjusted EBITDA margin

 

48.7%

 

 

46.7%

 

 

 

 

 

 

Less:

Capital expenditures

 

262,352

 

217,766

 

44,586

20.5%

Capital expenditures as a percentage of net income

 

146.9%

 

 

132.2%

 

 

 

 

 

Capital expenditures as a percentage of Adjusted EBITDA

 

46.1%

 

 

43.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA less capital expenditures

$

306,600

 

$

283,080

 

$

23,520

 

8.3%

 

NM = Not meaningful.

 

 

Year Ended December 31,

(dollars in thousands)

2019

 

2018

 

$ Change

 

% Change

Net cash provided by operating activities

$

491,741

 

$

407,769

 

$

83,972

 

20.6%

Capital expenditures

 

(262,352)

 

(217,766)

 

(44,586)

20.5%

Interest expense

 

71,729

 

60,415

 

11,314

18.7%

Amortization of debt issuance costs

 

(4,646)

 

(4,163)

 

(483)

11.6%

Income tax provision

 

55,233

 

47,224

 

8,009

17.0%

Changes in operating assets and liabilities

 

(18,118)

 

18,621

 

(36,739)

(197.3)%

Decrease in deferred income taxes

 

(50,011)

 

(34,973)

 

(15,038)

43.0%

Loss on deferred compensation

 

400

 

425

 

(25)

(5.9)%

Acquisition-related costs

 

9,590

 

1,773

 

7,817

NM

Severance expense

 

215

 

2,347

 

(2,132)

(90.8)%

 

Write-off of debt issuance costs

 

(4,210)

 

(110)

 

(4,100)

NM

System conversion costs

 

4,828

 

5,037

 

(209)

(4.1)%

 

Rebranding costs

 

7,294

 

968

 

6,326

NM

Other income (expense), net

 

4,907

 

(4,487)

 

9,394

(209.4)%

Adjusted EBITDA less capital expenditures

$

306,600

 

$

283,080

 

$

23,520

 

8.3%

 

NM = Not meaningful.

 

CABLE ONE, INC.

OPERATING STATISTICS

(Unaudited)

 

 

As of December 31,

 

Change

(in thousands, except percentages, ARPU and employee data)

2019

 

2018

 

Amount

 

%

Homes Passed

2,326

2,094

233

11.1%

 

Residential Customers

822

 

734

 

88

 

12.0%

 

 

 

 

 

 

 

 

 

Data PSUs

695

601

94

15.7%

Video PSUs

298

310

(12)

(3.9)%

Voice PSUs

105

99

6

5.7%

Total residential PSUs

1,098

1,010

88

8.7%

 

Business Customers

85

 

71

 

14

 

20.2%

 

Data PSUs

78

62

16

25.8%

Video PSUs

16

16

(0)

(1.5)%

Voice PSUs

35

27

8

28.8%

Total business services PSUs

129

105

24

22.4%

 

Total Customers

907

 

805

 

102

 

12.7%

Total non-video

592

478

113

23.6%

Percent of total

65.2%

59.4%

 

 

 

 

Data PSUs

773

663

110

16.6%

Video PSUs

314

326

(12)

(3.8)%

Voice PSUs

139

126

13

10.7%

Total PSUs

1,227

1,115

111

10.0%

 

Penetration

Data

33.2%

31.7%

 

1.5%

Video

13.5%

15.6%

 

(2.1)%

Voice

6.0%

6.0%

 

0.0%

 

Share of Fourth Quarter Revenues

Residential data

47.1%

46.8%

 

0.3%

Business services

17.9%

14.9%

 

3.0%

Total

65.0%

61.7%

 

3.3%

 

ARPU - Fourth Quarter

Residential data(1)

$

71.72

 

$

69.90

 

$

1.82

2.6%

Residential video(1)

$

94.30

 

$

88.22

 

$

6.08

6.9%

Residential voice(1),(2)

$

40.52

 

$

32.97

 

$

7.55

22.9%

Business services(2), (3)

$

224.41

 

$

189.40

$

35.01

18.5%

 

Number of Employees

2,751

 

2,224

 

527

 

23.7%

___________________

Note:

All totals, percentages and year-over-year changes are calculated using exact numbers. Minor differences may exist due to rounding.

(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 fourth quarter of 2019 would have been $35.67 and $220.66, 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.

 

Trish Niemann
Senior Director, Corporate Communications
602-364-6372
patricia.niemann@cableone.biz

Steven Cochran
Chief Financial Officer
investor_relations@cableone.biz

Source: Cable One, Inc.