Press Release

April, 29, 2021 – MATTOON, Ill.–(BUSINESS WIRE)– Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) (the “Company” or “Consolidated”) reported results for the first quarter 2021.

“Our first-quarter results demonstrate we’re delivering on our fiber growth plans as we upgraded approximately 46,000 passings to Gig+ FTTP and are sustaining an eight-quarter track record of year-over-year broadband revenue growth,” said Bob Udell, president and chief executive officer at Consolidated Communications. “The fast start to the year demonstrates our team’s strong execution of our fiber-first strategy.”

“We are on track to close on the final stage of the Searchlight investment following FCC and state approvals which are expected in the third quarter 2021,” added Udell. “Our fiber expansion plan is fully funded and we are embarking on the Company’s most important growth and transformation period yet as we bring highly competitive, gigabit broadband services to at least 70% of our footprint by 2025.”

Financial Results for the First Quarter

  • Revenue totaled $324.8 million, a decline of 0.3% compared to the first quarter 2020.
    • Broadband revenue increased 2.6% or $1.7 million.
    • Video services revenue declined $2.3 million reflecting our strategy change to streaming Over-The-Top services bundled with broadband services.
    • Voice services revenue declined $4.2 million or 4.7% across all customer channels.
    • Subsidies declined $1.1 million primarily due to reductions in support from Texas High Cost Funds.
    • Other Products and Services revenue increased $6.2 million. Non-recurring revenue associated with network builds for public-private partnerships totaled $6.5 million.
  • Operating expenses increased $5.3 million or 2.6% compared to the same period last year. First quarter operating expenses included $8 million in expense related to public-private partnership network builds and initial fiber expansion costs.
  • Income from operations totaled $38.3 million in the first quarter, an increase of $974,000 or 2.6%. The year-over-year change was primarily due to a decline in depreciation and amortization expense of $7.1 million, partially offset by an increase of $5.3 million in operating expenses and slightly lower revenue.
  • Net interest expense was $48.4 million, an increase of $16.3 million, as a result of the recapitalization of the balance sheet associated with the Oct. 2, 2020 refinancing, the receipt of the $350 million Searchlight strategic investment and additional borrowings during the quarter. Interest expense increased $5.6 million due to the higher mix of senior notes in the Company’s external debt and additional borrowings under the Company’s credit agreement during the quarter. Non-cash interest on the Searchlight note combined with amortization of deferred financing costs and the discount totaled $10.2 million. The Company expects to continue to make payment in kind (PIK) interest payments on the Searchlight note.
  • At March 31, 2021, the Company recognized a non-cash loss of $57.6 million related to a change in the fair value of the Searchlight contingent payment obligations.
  • Cash distributions from the Company’s wireless partnerships totaled $9.4 million, a decline of $700,000 from a year ago.
  • Other income, net was $12.3 million compared to $15.2 million in the first quarter 2020. The change was primarily due to lower income from the Company’s minority interest in wireless partnerships, a gain of $3.7 million on an asset sale in the first quarter of 2020 offset by a decrease in non-operating pension/OPEB expense of $1.9 million.
  • On a GAAP basis, net loss was $62.1 million, compared to net income of $15.6 million for the same period a year ago. GAAP net loss per share was ($0.80). Adjusted diluted net income (loss) per share excludes certain items as outlined in the table provided in this release. Adjusted diluted net income per share was $0.21 in the first quarter of 2021, compared to $0.23 in the first quarter of 2020.
  • Adjusted EBITDA was $126.6 million, a decrease 3.8% from the first quarter 2020 primarily due to certain expenses associated with the startup of the fiber expansion plans.
  • The total net debt leverage ratio was 3.41x with $325.1 million cash and cash equivalents.
  • Capital expenditures totaled $76 million in the first quarter, compared to $42.4 million in the first quarter of 2020, driven by the Company’s fiber build expansion plan and investment in digital transformation technology.

On April 26, 2021, Consolidated’s shareholders approved the issuance to Searchlight of additional shares of common stock equal to 20% or more of the Company’s outstanding common stock. Those shares are issuable to Searchlight pursuant to a contingent payment right, which is convertible upon receipt of FCC and certain state regulatory approvals. FCC approval is also required for the closing of the second stage of the transaction and the investment by Searchlight of its remaining $75 million investment. The Company has received Hart-Scott-Rodino approval of the transaction.

2021 Outlook

Consolidated Communications affirmed its previous outlook for 2021 which is outlined below.

  • Capital expenditures are expected to be in a range of $400 million to $420 million, reflecting a higher level of spending to support the fiber expansion plan.
  • Adjusted EBITDA is expected to be in a range of $500 million to $510 million, reflecting the start-up and acceleration of the Company’s growth plan.
  • Cash interest expense is expected to be in a range of $130 million to $135 million, and was updated on April 5, 2021, with the Company’s announcement of a repricing of its term loan.
  • Cash income taxes are expected to be in a range of $2 million to $4 million.

Conference Call

Consolidated’s first-quarter 2021 earnings conference call will be webcast live today at 10 a.m. ET. The webcast and materials will be available on the Investor Relations section of the Company’s website at http://ir.consolidated.com. The live conference call dial-in number for analysts and investors is 833-794-0898, conference ID 7369367. A telephonic replay of the conference call will be available through May 6 and can be accessed by calling 800-585-8367, enter ID 7369367.

Press Release

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