CABO 8-K
Cable One, Inc. (CABO)
8-K
2023-11-02
For: 2023-11-02
View Original
Added on
April 06, 2026
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 2, 2023
_________________________________________________________
(Exact Name of Registrant as Specified in Its Charter)
_________________________________________________________
| (State or Other Jurisdiction of Incorporation or Organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||
Registrant’s Telephone Number, Including Area Code: (602 ) 364-6000
Not applicable
(Former name or former address, if changed since last report.)
_________________________________________________________
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(s) | Name of Each Exchange on Which Registered | ||||||||||||
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 o
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. o
Item 2.02 Results of Operations and Financial Condition.
On November 2, 2023 , Cable One, Inc. (the “Company”) issued a press release related to its results for the third quarter of 2023. A copy of the press release is furnished as Exhibit 99.1 and is incorporated by reference into this Item 2.02.
The information contained in this Item 2.02, as well as in Exhibit 99.1, is furnished and shall not be deemed to be “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 into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
| Exhibit No. | Description | |||||||
| 99.1 | Press release issued by Cable One, Inc., dated November 2, 2023. | |||||||
| 104 | The cover page of this Current Report on Form 8-K, formatted in Inline XBRL. | |||||||
SIGNATURES
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: | Chief Legal and Administrative Officer | ||||||||||
Date: | |||||||||||
Exhibit 99.1
Cable One Reports Third Quarter 2023 Results
November 2, 2023 – PHOENIX – (BUSINESS WIRE) – Cable One, Inc. (NYSE: CABO) (the “Company” or “Cable One”) today reported financial and operating results for the quarter ended September 30, 2023.
| Three Months Ended September 30, | |||||||||||||||||||||||
| (dollars in thousands) | 2023 | 2022 | $ Change | % Change | |||||||||||||||||||
| Revenues | $ | 420,348 | $ | 424,718 | $ | (4,370) | (1.0) | % | |||||||||||||||
| Net income | $ | 39,472 | $ | 70,607 | $ | (31,135) | (44.1) | % | |||||||||||||||
| Net profit margin | 9.4% | 16.6% | |||||||||||||||||||||
| Cash flows from operating activities | $ | 180,152 | $ | 216,708 | $ | (36,556) | (16.9) | % | |||||||||||||||
Adjusted EBITDA(1) | $ | 230,000 | $ | 224,620 | $ | 5,380 | 2.4 | % | |||||||||||||||
Adjusted EBITDA margin(1) | 54.7% | 52.9% | |||||||||||||||||||||
| Capital expenditures | $ | 77,815 | $ | 100,515 | $ | (22,700) | (22.6) | % | |||||||||||||||
Adjusted EBITDA less capital expenditures(1) | $ | 152,185 | $ | 124,105 | $ | 28,080 | 22.6 | % | |||||||||||||||
“Our high margin data services product lines continue to perform admirably, with residential data services revenues growing 5.8% year-over-year,” said Julie Laulis, Cable One President and CEO. “Coupled with a reduction in capital expenditures in the third quarter enabled by multiple years of efficient capital investment and significant network capacity, our free cash flow conversion was robust, even in a subdued growth environment.”
Third Quarter 2023 Highlights:
•Net income was $39.5 million in the third quarter of 2023 compared to $70.6 million in the third quarter of 2022. Adjusted EBITDA was $230.0 million in the third quarter of 2023 compared to $224.6 million in the third quarter of 2022. Net profit margin was 9.4% and Adjusted EBITDA margin was 54.7%.
•Net cash provided by operating activities was $180.2 million in the third quarter of 2023 compared to $216.7 million in the third quarter of 2022. Adjusted EBITDA less capital expenditures was $152.2 million in the third quarter of 2023 compared to $124.1 million in the third quarter of 2022.
•Total revenues were $420.3 million in the third quarter of 2023 compared to $424.7 million in the third quarter of 2022. Year-over-year, residential data revenues increased 5.8%.
•Residential data average monthly revenue per unit (“ARPU”) was $85.69 for the third quarter of 2023, an increase of $5.23, or 6.5%, from the prior year quarter.
•The Company repurchased 23,875 shares of its common stock at an aggregate cost of $16.5 million, representing 0.4% of outstanding shares at the beginning of the quarter, and paid $16.7 million in dividends during the third quarter of 2023. The Company had $143.1 million of remaining share repurchase authorization as of September 30, 2023.
•The Company repaid $50.0 million under its revolving credit facility (the "Revolver") during the third quarter of 2023, bringing total repayments under the Revolver to $100.0 million during 2023.
(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.
1
Third Quarter 2023 Financial Results Compared to Third Quarter 2022
Revenues decreased $4.4 million, or 1.0%, to $420.3 million for the third quarter of 2023 due primarily to decreases in residential video and residential voice revenues, partially offset by an increase in residential data and other revenues.
Net income was $39.5 million in the third quarter of 2023 compared to $70.6 million in the prior year quarter. Net income for the third quarter of 2023 reflected interest expense of $43.4 million, a $7.0 million increase year-over-year. Net income for the third quarter of 2023 included a $23.9 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 third quarter of 2022 included a $2.8 million non-cash gain on fair value adjustment associated with the MBI Net Option fair value adjustment. Net income for the third quarter of 2023 also included an $8.4 million net loss from our pro rata share of earnings in equity method investments compared to minimal earnings in the third quarter of 2022. Net profit margin was 9.4% in the third quarter of 2023 compared to 16.6% in the prior year quarter.
Adjusted EBITDA was $230.0 million and $224.6 million for the third quarter of 2023 and 2022, respectively. Adjusted EBITDA for the third quarter of 2023 reflected lower programming and franchise expenses as a result of video customer losses. Adjusted EBITDA margin increased to 54.7% in the third quarter of 2023 from 52.9% in the prior year quarter.
Net cash provided by operating activities was $180.2 million in the third quarter of 2023 compared to $216.7 million in the third quarter of 2022. The decrease was driven by the timing of working capital changes along with higher income tax and interest payments, partially offset by an increase in Adjusted EBITDA. Capital expenditures for the third quarter of 2023 totaled $77.8 million compared to $100.5 million for the third quarter of 2022. Adjusted EBITDA less capital expenditures for the third quarter of 2023 was $152.2 million compared to $124.1 million in the prior year quarter.
Liquidity and Capital Resources
At September 30, 2023, the Company had $239.6 million of cash and cash equivalents on hand compared to $215.2 million at December 31, 2022. The Company’s debt balance was approximately $3.7 billion and $3.8 billion at September 30, 2023 and December 31, 2022, respectively. The Company had $388.0 million of borrowings and $612.0 million available for borrowing under its Revolver as of September 30, 2023.
The Company paid $16.7 million in dividends to stockholders and repurchased 23,875 shares of its common stock at an aggregate cost of $16.5 million during the third quarter of 2023. The Company had $143.1 million of remaining share repurchase authorization as of September 30, 2023.
The Company repaid $50.0 million under its Revolver during the third quarter of 2023, bringing total repayments under the Revolver to $100.0 million during 2023.
2
The Company's capital expenditures by category for the three months ended September 30, 2023 and 2022 were as follows (in thousands):
| Three Months Ended September 30, | |||||||||||
| 2023 | 2022 | ||||||||||
Customer premise equipment(1) | $ | 10,635 | $ | 26,177 | |||||||
Commercial(2) | 8,760 | 8,515 | |||||||||
Scalable infrastructure(3) | 4,711 | 10,750 | |||||||||
Line extensions(4) | 13,058 | 10,195 | |||||||||
Upgrade/rebuild(5) | 11,744 | 24,877 | |||||||||
Support capital(6) | 28,907 | 20,001 | |||||||||
| Total | $ | 77,815 | $ | 100,515 | |||||||
(1)Customer premise equipment includes costs incurred at customer locations, including installation costs and customer premise equipment (e.g., modems and set-top boxes).
(2)Commercial includes costs related to securing business services customers and PSUs, including small and medium-sized businesses and enterprise customers.
(3)Scalable infrastructure includes costs not related to customer premise equipment to secure growth of new customers and PSUs or provide service enhancements (e.g., headend equipment).
(4)Line extensions include network costs associated with entering new service areas (e.g., fiber/coaxial cable, amplifiers, electronic equipment, make-ready and design engineering).
(5)Upgrade/rebuild includes costs to modify or replace existing fiber/coaxial cable networks, including betterments.
(6)Support capital includes costs associated with the replacement or enhancement of non-network assets due to technological and physical obsolescence (e.g., non-network equipment, land, buildings and vehicles) and capitalized internal labor costs not associated with customer installation activities.
Conference Call
Cable One will host a conference call with the financial community to discuss results for the third quarter of 2023 on Thursday, November 2, 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 November 2, 2023 until November 16, 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 September 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.
3
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 and contract termination costs, (gain) loss on deferred compensation, acquisition-related costs, (gain) loss on asset sales and disposals, system conversion costs, 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 more than one million residential and business customers in 24 states as of September 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.
Contacts
Trish Niemann | Todd Koetje | |||||||
Vice President, Communications Strategy | Chief Financial Officer | |||||||
602-364-6372 | ||||||||
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, 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:
•rising levels of competition from historical and new entrants in the Company’s markets;
•recent and future changes in technology, and the Company's ability to develop, deploy and operate new technologies, service offerings and customer service platforms;
•the Company’s ability to continue to grow its residential data and business services revenues and customer base;
•increases in programming costs and retransmission fees;
•the Company’s ability to obtain hardware, software and operational support from vendors;
•risks that the Company may fail to realize the benefits anticipated as a result of the Company's purchase of the remaining interests in Hargray Acquisition Holdings, LLC that the Company did not already own;
•risks relating to existing or future acquisitions and strategic investments by the Company;
•risks that the implementation of the Company’s new enterprise resource planning system disrupts business operations;
•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;
•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 continue to rise, causing the Company’s obligations to service its variable rate indebtedness to increase significantly;
•the transition away from London Interbank Offered Rate and the adoption of alternative reference rates;
•risks associated with the Company’s convertible indebtedness;
•the Company’s ability to continue to pay dividends;
•provisions in the Company’s charter, by-laws and Delaware law that could discourage takeovers and limit the judicial forum for certain disputes;
•adverse economic conditions, labor shortages, supply chain disruptions, changes in rates of inflation and the level of move activity in the housing sector;
•pandemics, epidemics or disease outbreaks, such as the COVID-19 pandemic, have, and may continue to, disrupt the Company's business and operations, which could materially affect the Company's business, financial condition, results of operations and cash flows;
•lower demand for the Company's residential data and business services products;
•fluctuations in the Company’s stock price;
•dilution from equity awards, convertible indebtedness and potential future convertible debt and stock issuances;
•damage to the Company’s reputation or brand image;
•the Company’s ability to retain key employees (whom we refer to as associates);
•the Company’s ability to incur future indebtedness;
•provisions in the Company’s charter that could limit the liabilities for directors; and
•the other risks and uncertainties detailed from time to time in the Company’s filings with the SEC, including but not limited to those described under "Risk Factors" in 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.
5
CABLE ONE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended September 30, | Change | % Change | ||||||||||||||||||||||||
| (dollars in thousands, except per share data) | 2023 | 2022 | ||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||
| Residential data | $ | 247,420 | $ | 233,834 | $ | 13,586 | 5.8 | % | ||||||||||||||||||
| Residential video | 62,295 | 80,525 | (18,230) | (22.6) | % | |||||||||||||||||||||
| Residential voice | 9,080 | 10,494 | (1,414) | (13.5) | % | |||||||||||||||||||||
| Business services | 75,575 | 75,847 | (272) | (0.4) | % | |||||||||||||||||||||
| Other | 25,978 | 24,018 | 1,960 | 8.2 | % | |||||||||||||||||||||
| Total Revenues | 420,348 | 424,718 | (4,370) | (1.0) | % | |||||||||||||||||||||
| Costs and Expenses: | ||||||||||||||||||||||||||
| Operating (excluding depreciation and amortization) | 109,682 | 120,487 | (10,805) | (9.0) | % | |||||||||||||||||||||
| Selling, general and administrative | 92,726 | 86,018 | 6,708 | 7.8 | % | |||||||||||||||||||||
| Depreciation and amortization | 82,918 | 87,222 | (4,304) | (4.9) | % | |||||||||||||||||||||
| (Gain) loss on asset sales and disposals, net | 2,492 | 2,952 | (460) | (15.6) | % | |||||||||||||||||||||
| Total Costs and Expenses | 287,818 | 296,679 | (8,861) | (3.0) | % | |||||||||||||||||||||
| Income from operations | 132,530 | 128,039 | 4,491 | 3.5 | % | |||||||||||||||||||||
| Interest expense | (43,384) | (36,389) | (6,995) | 19.2 | % | |||||||||||||||||||||
| Other income (expense), net | (20,536) | 834 | (21,370) | NM | ||||||||||||||||||||||
| Income before income taxes and equity method investment income (loss), net | 68,610 | 92,484 | (23,874) | (25.8) | % | |||||||||||||||||||||
| Income tax provision | 20,694 | 21,891 | (1,197) | (5.5) | % | |||||||||||||||||||||
| Income before equity method investment income (loss), net | 47,916 | 70,593 | (22,677) | (32.1) | % | |||||||||||||||||||||
| Equity method investment income (loss), net | (8,444) | 14 | (8,458) | NM | ||||||||||||||||||||||
| Net income | $ | 39,472 | $ | 70,607 | $ | (31,135) | (44.1) | % | ||||||||||||||||||
| Net Income per Common Share: | ||||||||||||||||||||||||||
| Basic | $ | 7.03 | $ | 12.10 | $ | (5.07) | (41.9) | % | ||||||||||||||||||
| Diluted | $ | 6.81 | $ | 11.53 | $ | (4.72) | (40.9) | % | ||||||||||||||||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||||||||||||
| Basic | 5,611,278 | 5,836,731 | (225,453) | (3.9) | % | |||||||||||||||||||||
| Diluted | 6,026,285 | 6,261,257 | (234,972) | (3.8) | % | |||||||||||||||||||||
| Unrealized gain (loss) on cash flow hedges and other, net of tax | $ | 18,569 | $ | 47,251 | $ | (28,682) | (60.7) | % | ||||||||||||||||||
| Comprehensive income | $ | 58,041 | $ | 117,858 | $ | (59,817) | (50.8) | % | ||||||||||||||||||
NM = Not meaningful.
6
CABLE ONE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (dollars in thousands, except par values) | September 30, 2023 | December 31, 2022 | ||||||||||||
| Assets | ||||||||||||||
| Current Assets: | ||||||||||||||
| Cash and cash equivalents | $ | 239,632 | $ | 215,150 | ||||||||||
| Accounts receivable, net | 86,331 | 74,383 | ||||||||||||
| Prepaid and other current assets | 68,417 | 57,172 | ||||||||||||
| Total Current Assets | 394,380 | 346,705 | ||||||||||||
| Equity investments | 1,127,185 | 1,195,221 | ||||||||||||
| Property, plant and equipment, net | 1,747,474 | 1,701,755 | ||||||||||||
| Intangible assets, net | 2,612,119 | 2,666,585 | ||||||||||||
| Goodwill | 928,947 | 928,947 | ||||||||||||
| Other noncurrent assets | 101,670 | 74,677 | ||||||||||||
| Total Assets | $ | 6,911,775 | $ | 6,913,890 | ||||||||||
| Liabilities and Stockholders' Equity | ||||||||||||||
| Current Liabilities: | ||||||||||||||
| Accounts payable and accrued liabilities | $ | 171,970 | $ | 164,518 | ||||||||||
| Deferred revenue | 27,260 | 23,706 | ||||||||||||
| Current portion of long-term debt | 19,019 | 55,931 | ||||||||||||
| Total Current Liabilities | 218,249 | 244,155 | ||||||||||||
| Long-term debt | 3,679,618 | 3,752,591 | ||||||||||||
| Deferred income taxes | 974,344 | 966,821 | ||||||||||||
| Other noncurrent liabilities | 236,831 | 192,350 | ||||||||||||
| Total Liabilities | 5,109,042 | 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 5,616,921 and 5,766,011 shares outstanding as of September 30, 2023 and December 31, 2022, respectively) | 62 | 62 | ||||||||||||
| Additional paid-in capital | 599,973 | 578,154 | ||||||||||||
| Retained earnings | 1,727,014 | 1,624,406 | ||||||||||||
| Accumulated other comprehensive income (loss) | 72,369 | 50,031 | ||||||||||||
| Treasury stock, at cost (558,478 and 409,388 shares held as of September 30, 2023 and December 31, 2022, respectively) | (596,685) | (494,680) | ||||||||||||
| Total Stockholders' Equity | 1,802,733 | 1,757,973 | ||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 6,911,775 | $ | 6,913,890 | ||||||||||
7
CABLE ONE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended September 30, | ||||||||||||||
| (in thousands) | 2023 | 2022 | ||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net income | $ | 39,472 | $ | 70,607 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation and amortization | 82,918 | 87,222 | ||||||||||||
| Non-cash interest expense, net | 2,213 | 2,354 | ||||||||||||
| Equity-based compensation | 10,235 | 5,860 | ||||||||||||
| Change in deferred income taxes | (4,362) | 2,890 | ||||||||||||
| (Gain) loss on asset sales and disposals, net | 2,492 | 2,952 | ||||||||||||
| Equity method investment (income) loss, net | 8,444 | (14) | ||||||||||||
| Fair value adjustments | 25,421 | 2,704 | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Accounts receivable, net | (11,720) | 12,125 | ||||||||||||
| Prepaid and other current assets | 12,096 | (7,629) | ||||||||||||
| Accounts payable and accrued liabilities | 16,864 | 31,826 | ||||||||||||
| Deferred revenue | (953) | 498 | ||||||||||||
| Other | (2,968) | 5,313 | ||||||||||||
| Net cash provided by operating activities | 180,152 | 216,708 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Cash paid for debt and equity investments | (816) | (2,000) | ||||||||||||
| Capital expenditures | (77,815) | (100,515) | ||||||||||||
| Change in accrued expenses related to capital expenditures | 8,609 | (1,110) | ||||||||||||
| Proceeds from sales of property, plant and equipment | 360 | 3,290 | ||||||||||||
| Proceeds from sales of equity investments | 56,730 | — | ||||||||||||
| Net cash used in investing activities | (12,932) | (100,335) | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Payments on long-term debt | (55,039) | (8,542) | ||||||||||||
| Repurchases of common stock | (16,495) | (115,322) | ||||||||||||
| Payment of withholding tax for equity awards | (89) | (105) | ||||||||||||
| Dividends paid to stockholders | (16,699) | (16,663) | ||||||||||||
| Net cash used in financing activities | (88,322) | (140,632) | ||||||||||||
| Change in cash and cash equivalents | 78,898 | (24,259) | ||||||||||||
| Cash and cash equivalents, beginning of period | 160,734 | 279,978 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 239,632 | $ | 255,719 | ||||||||||
| Supplemental cash flow disclosures: | ||||||||||||||
| Cash paid for interest, net of capitalized interest | $ | 35,000 | $ | 26,259 | ||||||||||
| Cash paid for income taxes, net of refunds received | $ | 15,037 | $ | (5,696) | ||||||||||
8
CABLE ONE, INC.
RECONCILIATIONS OF NON-GAAP MEASURES
(Unaudited)
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| (dollars in thousands) | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||
| Net income | $ | 39,472 | $ | 70,607 | $ | (31,135) | (44.1) | % | ||||||||||||||||||
| Net profit margin | 9.4% | 16.6% | ||||||||||||||||||||||||
| Plus: Interest expense | 43,384 | 36,389 | 6,995 | 19.2 | % | |||||||||||||||||||||
| Income tax provision | 20,694 | 21,891 | (1,197) | (5.5) | % | |||||||||||||||||||||
| Depreciation and amortization | 82,918 | 87,222 | (4,304) | (4.9) | % | |||||||||||||||||||||
| Equity-based compensation | 10,235 | 5,860 | 4,375 | 74.7 | % | |||||||||||||||||||||
| Severance and contract termination costs | 1,217 | — | 1,217 | NM | ||||||||||||||||||||||
| (Gain) loss on deferred compensation | — | (45) | 45 | (100.0) | % | |||||||||||||||||||||
| Acquisition-related costs | 409 | 281 | 128 | 45.6 | % | |||||||||||||||||||||
| (Gain) loss on asset sales and disposals, net | 2,492 | 2,952 | (460) | (15.6) | % | |||||||||||||||||||||
| System conversion costs | 199 | 311 | (112) | (36.0) | % | |||||||||||||||||||||
| Equity method investment (income) loss, net | 8,444 | (14) | 8,458 | NM | ||||||||||||||||||||||
| Other (income) expense, net | 20,536 | (834) | 21,370 | NM | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 230,000 | $ | 224,620 | $ | 5,380 | 2.4 | % | ||||||||||||||||||
| Adjusted EBITDA margin | 54.7% | 52.9% | ||||||||||||||||||||||||
| Less: Capital expenditures | $ | 77,815 | $ | 100,515 | $ | (22,700) | (22.6) | % | ||||||||||||||||||
| Capital expenditures as a percentage of net income | 197.1% | 142.4% | ||||||||||||||||||||||||
| Capital expenditures as a percentage of Adjusted EBITDA | 33.8% | 44.7% | ||||||||||||||||||||||||
| Adjusted EBITDA less capital expenditures | $ | 152,185 | $ | 124,105 | $ | 28,080 | 22.6 | % | ||||||||||||||||||
NM = Not meaningful.
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| (dollars in thousands) | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||
| Net cash provided by operating activities | $ | 180,152 | $ | 216,708 | $ | (36,556) | (16.9) | % | ||||||||||||||||||
| Capital expenditures | (77,815) | (100,515) | 22,700 | (22.6) | % | |||||||||||||||||||||
| Interest expense | 43,384 | 36,389 | 6,995 | 19.2 | % | |||||||||||||||||||||
| Non-cash interest expense | (2,213) | (2,354) | 141 | (6.0) | % | |||||||||||||||||||||
| Income tax provision | 20,694 | 21,891 | (1,197) | (5.5) | % | |||||||||||||||||||||
| Changes in operating assets and liabilities | (13,319) | (42,133) | 28,814 | (68.4) | % | |||||||||||||||||||||
| Change in deferred income taxes | 4,362 | (2,890) | 7,252 | NM | ||||||||||||||||||||||
| (Gain) loss on deferred compensation | — | (45) | 45 | (100.0) | % | |||||||||||||||||||||
| Acquisition-related costs | 409 | 281 | 128 | 45.6 | % | |||||||||||||||||||||
| Severance and contract termination costs | 1,217 | — | 1,217 | NM | ||||||||||||||||||||||
| System conversion costs | 199 | 311 | (112) | (36.0) | % | |||||||||||||||||||||
| Fair value adjustments | (25,421) | (2,704) | (22,717) | NM | ||||||||||||||||||||||
| Other (income) expense, net | 20,536 | (834) | 21,370 | NM | ||||||||||||||||||||||
| Adjusted EBITDA less capital expenditures | $ | 152,185 | $ | 124,105 | $ | 28,080 | 22.6 | % | ||||||||||||||||||
NM = Not meaningful.
9
CABLE ONE, INC.
OPERATING STATISTICS
(Unaudited)
| As of September 30, | ||||||||||||||||||||||||||
| (in thousands, except percentages and ARPU data) | 2023 | 2022 | Change | % Change | ||||||||||||||||||||||
| Homes Passed | 2,754.4 | 2,693.7 | 60.7 | 2.3 | % | |||||||||||||||||||||
| Residential Customers | 994.6 | 1,020.0 | (25.4) | (2.5) | % | |||||||||||||||||||||
| Data PSUs | 958.8 | 965.4 | (6.6) | (0.7) | % | |||||||||||||||||||||
| Video PSUs | 140.5 | 190.3 | (49.9) | (26.2) | % | |||||||||||||||||||||
| Voice PSUs | 81.7 | 95.0 | (13.3) | (14.0) | % | |||||||||||||||||||||
| Total residential PSUs | 1,181.0 | 1,250.7 | (69.8) | (5.6) | % | |||||||||||||||||||||
| Business Customers | 102.7 | 102.1 | 0.6 | 0.6 | % | |||||||||||||||||||||
| Data PSUs | 98.6 | 96.4 | 2.2 | 2.3 | % | |||||||||||||||||||||
| Video PSUs | 8.4 | 11.8 | (3.3) | (28.2) | % | |||||||||||||||||||||
| Voice PSUs | 40.0 | 41.0 | (1.1) | (2.6) | % | |||||||||||||||||||||
| Total business services PSUs | 147.0 | 149.2 | (2.2) | (1.5) | % | |||||||||||||||||||||
| Total Customers | 1,097.3 | 1,122.1 | (24.8) | (2.2) | % | |||||||||||||||||||||
| Total non-video | 946.1 | 916.9 | 29.2 | 3.2 | % | |||||||||||||||||||||
| Percent of total | 86.2 | % | 81.7 | % | 4.5 | % | ||||||||||||||||||||
| Data PSUs | 1,057.4 | 1,061.8 | (4.4) | (0.4) | % | |||||||||||||||||||||
| Video PSUs | 148.9 | 202.1 | (53.2) | (26.3) | % | |||||||||||||||||||||
| Voice PSUs | 121.6 | 136.0 | (14.4) | (10.6) | % | |||||||||||||||||||||
| Total PSUs | 1,327.9 | 1,399.9 | (72.0) | (5.1) | % | |||||||||||||||||||||
| Penetration | ||||||||||||||||||||||||||
| Data | 38.4 | % | 39.4 | % | (1.0) | % | ||||||||||||||||||||
| Video | 5.4 | % | 7.5 | % | (2.1) | % | ||||||||||||||||||||
| Voice | 4.4 | % | 5.0 | % | (0.6) | % | ||||||||||||||||||||
| Share of Third Quarter Revenues | ||||||||||||||||||||||||||
| Residential data | 58.9 | % | 55.1 | % | 3.8 | % | ||||||||||||||||||||
| Business services | 18.0 | % | 17.9 | % | 0.1 | % | ||||||||||||||||||||
| Total | 76.8 | % | 72.9 | % | 3.9 | % | ||||||||||||||||||||
| ARPU - Third Quarter | ||||||||||||||||||||||||||
Residential data(1) | $ | 85.69 | $ | 80.46 | $ | 5.23 | 6.5 | % | ||||||||||||||||||
Residential video(1) | $ | 143.27 | $ | 134.47 | $ | 8.80 | 6.5 | % | ||||||||||||||||||
Residential voice(1) | $ | 36.34 | $ | 36.08 | $ | 0.26 | 0.7 | % | ||||||||||||||||||
Business services(2) | $ | 245.90 | $ | 248.19 | $ | (2.29) | (0.9) | % | ||||||||||||||||||
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.
10