Continued to Grow Penetration Rates in Expansion Markets
Third Quarter 2024 Highlights (1)
- Total Revenue of
$158.0 million , a decrease of$15.1 million , or 8.7%, compared to the third quarter of 2023 - HSD Revenue totaled
$107.5 million , a decrease of$2.3 million , or 2.1%, compared to the third quarter of 2023 - Net Loss was
$22.4 million for the quarter endedSeptember 30, 2024 - Adjusted EBITDA of
$77.3 million , an increase of$6.4 million , or 9.0%, compared to the third quarter of 2023 - Net loss of 4,400 HSD RGUs for the quarter ended
September 30, 2024 , including 1,900 related to the discontinuation of the Affordable Connectivity Program - Passed approximately 1,700 new homes in Greenfield and Edge-out markets in the third quarter of 2024
- On
October 11, 2024 , closed on$200.0 million new super-priority term loan
"During the third quarter we demonstrated the strength of our strategy in our expansion markets where we increased penetration rates to higher levels and grew ARPU," said
"Securing the new
Revenue
Total Revenue was
Total Subscription Revenue for the quarter ended
Other Business Services Revenue totaled
Other Revenue totaled
(1) |
Refer to "Non-GAAP Financial Measures" "Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures," and "Subscriber Information" in this Press Release for definitions and information related to Adjusted EBITDA, Adjusted EBITDA margin and reconciliation of non-GAAP measures to the closest comparable GAAP measures and why our management thinks it is beneficial to present such non-GAAP measures. |
Costs and Expenses
Operating Expenses (excluding Depreciation and Amortization) totaled
Net Loss
Net Loss for the quarter ended
Adjusted EBITDA
Adjusted EBITDA for the quarter ended
Subscribers
WOW! reported Total Subscribers of approximately 490,500 as of
Market Expansion
Market Expansion projects passed an additional 1,700 homes for the quarter ended
At
Capital Expenditures
Capital Expenditures totaled
Liquidity and Leverage
On
As of
Acquisition Proposal Update
On
Full Year 2024 Guidance
|
|
FY 2024 |
HSD Revenue |
|
|
Total Revenue |
|
|
Adjusted EBITDA |
|
|
|
|
|
HSD net additions |
|
(19,500 - 16,500) |
Webcast
WOW! will host a webcast and conference call on
Call Date: |
|
|
Call Time: |
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|
Dial In: |
(800) 715-9871 |
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International: |
(646) 307-1963 |
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Conf. ID: |
2688718 |
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A replay of the call will be available on the investor relations website.
CONSOLIDATED BALANCE SHEETS (unaudited) |
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||||||
|
|
|
|
|
||
|
|
2024 |
|
2023 |
||
|
|
(in millions, except share data) |
||||
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
21.6 |
|
$ |
23.4 |
Accounts receivable—trade, net of allowance for doubtful accounts of |
|
|
34.0 |
|
|
38.8 |
Accounts receivable—other, net |
|
|
3.5 |
|
|
9.5 |
Prepaid expenses and other |
|
|
39.8 |
|
|
38.5 |
Total current assets |
|
|
98.9 |
|
|
110.2 |
Right-of-use lease assets—operating |
|
|
20.1 |
|
|
20.1 |
Property, plant and equipment, net |
|
|
823.8 |
|
|
830.4 |
Franchise operating rights |
|
|
278.3 |
|
|
278.3 |
|
|
|
225.1 |
|
|
225.1 |
Intangible assets subject to amortization, net |
|
|
0.7 |
|
|
1.0 |
Other non-current assets |
|
|
47.2 |
|
|
49.6 |
Total assets |
|
$ |
1,494.1 |
|
$ |
1,514.7 |
Liabilities and stockholders' equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable—trade |
|
$ |
45.5 |
|
$ |
59.5 |
Accrued interest |
|
|
1.5 |
|
|
1.6 |
Current portion of long-term lease liability—operating |
|
|
4.5 |
|
|
4.3 |
Accrued liabilities and other |
|
|
76.6 |
|
|
60.0 |
Current portion of long-term debt and finance lease obligations |
|
|
17.9 |
|
|
18.8 |
Current portion of unearned service revenue |
|
|
24.8 |
|
|
25.4 |
Total current liabilities |
|
|
170.8 |
|
|
169.6 |
Long-term debt and finance lease obligations, net of debt issuance costs —less current portion |
|
|
955.1 |
|
|
915.7 |
Long-term lease liability—operating |
|
|
17.8 |
|
|
18.0 |
Deferred income taxes, net |
|
|
102.5 |
|
|
125.7 |
Other non-current liabilities |
|
|
31.3 |
|
|
27.5 |
Total liabilities |
|
|
1,277.5 |
|
|
1,256.5 |
Commitments and contingencies |
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
Preferred stock, |
|
|
— |
|
|
— |
Common stock,
|
|
|
1.0 |
|
|
1.0 |
Additional paid-in capital |
|
|
400.1 |
|
|
391.8 |
Retained earnings (accumulated deficit) |
|
|
(27.9) |
|
|
20.3 |
respectively |
|
|
(156.6) |
|
|
(154.9) |
Total stockholders' equity |
|
|
216.6 |
|
|
258.2 |
Total liabilities and stockholders' equity |
|
$ |
1,494.1 |
|
$ |
1,514.7 |
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED (unaudited) |
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|
|
Three months ended |
|
Nine months ended |
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|
|
|
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|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
|
|
(in millions, except for share data) |
||||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
HSD |
|
$ |
107.5 |
|
$ |
109.8 |
|
$ |
318.7 |
|
$ |
321.7 |
Video |
|
|
28.0 |
|
|
38.9 |
|
|
90.6 |
|
|
122.6 |
Telephony |
|
|
10.5 |
|
|
11.6 |
|
|
32.2 |
|
|
35.8 |
Total subscription services revenue |
|
|
146.0 |
|
|
160.3 |
|
|
441.5 |
|
|
480.1 |
Other business services |
|
|
4.5 |
|
|
5.4 |
|
|
14.8 |
|
|
15.7 |
Other |
|
|
7.5 |
|
|
7.4 |
|
|
22.0 |
|
|
22.1 |
Total revenue |
|
|
158.0 |
|
|
173.1 |
|
|
478.3 |
|
|
517.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating (excluding depreciation and amortization) |
|
|
62.6 |
|
|
75.6 |
|
|
194.7 |
|
|
229.3 |
Selling, general and administrative |
|
|
37.9 |
|
|
37.5 |
|
|
112.1 |
|
|
166.6 |
Depreciation and amortization |
|
|
55.2 |
|
|
49.4 |
|
|
160.3 |
|
|
141.6 |
Impairment losses on intangibles |
|
|
— |
|
|
131.7 |
|
|
— |
|
|
259.8 |
|
|
|
155.7 |
|
|
294.2 |
|
|
467.1 |
|
|
797.3 |
Income (loss) from operations |
|
|
2.3 |
|
|
(121.1) |
|
|
11.2 |
|
|
(279.4) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(31.6) |
|
|
(18.9) |
|
|
(70.4) |
|
|
(51.1) |
Other income, net |
|
|
0.4 |
|
|
(0.1) |
|
|
0.9 |
|
|
1.9 |
Loss from operations before provision for income tax |
|
|
(28.9) |
|
|
(140.1) |
|
|
(58.3) |
|
|
(328.6) |
Income tax benefit |
|
|
6.5 |
|
|
35.6 |
|
|
10.1 |
|
|
84.4 |
Net loss |
|
$ |
(22.4) |
|
$ |
(104.5) |
|
$ |
(48.2) |
|
$ |
(244.2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per common share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.27) |
|
$ |
(1.29) |
|
$ |
(0.59) |
|
$ |
(2.99) |
Diluted |
|
$ |
(0.27) |
|
$ |
(1.29) |
|
$ |
(0.59) |
|
$ |
(2.99) |
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
82,053,403 |
|
|
80,888,537 |
|
|
81,782,166 |
|
|
81,797,740 |
Diluted |
|
|
82,053,403 |
|
|
80,888,537 |
|
|
81,782,166 |
|
|
81,797,740 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
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|
||||||
|
|
Nine Months Ended |
||||
|
|
|
||||
|
|
2024 |
|
2023 |
||
|
|
(in millions) |
||||
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(48.2) |
|
$ |
(244.2) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
158.0 |
|
|
141.3 |
Deferred income taxes |
|
|
(23.1) |
|
|
(86.7) |
Provision for doubtful accounts |
|
|
7.3 |
|
|
8.5 |
Loss on sale of operating assets, net |
|
|
2.3 |
|
|
0.3 |
Amortization of debt issuance costs and discount |
|
|
1.3 |
|
|
1.3 |
Change in fair value of derivative instruments |
|
|
10.9 |
|
|
— |
Impairment losses on intangibles |
|
|
— |
|
|
259.8 |
Non-cash compensation |
|
|
8.3 |
|
|
13.9 |
Other non-cash items |
|
|
(0.2) |
|
|
0.1 |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Receivables and other operating assets |
|
|
4.4 |
|
|
(16.7) |
Payables and accruals |
|
|
11.8 |
|
|
12.8 |
Net cash provided by operating activities |
|
$ |
132.8 |
|
$ |
90.4 |
Cash flows from investing activities: |
|
|
|
|
|
|
Capital expenditures |
|
$ |
(164.1) |
|
$ |
(188.3) |
Other investing activities |
|
|
0.2 |
|
|
0.2 |
Net cash used in investing activities |
|
$ |
(163.9) |
|
$ |
(188.1) |
Cash flows from financing activities: |
|
|
|
|
|
|
Proceeds from issuance of long-term debt |
|
$ |
44.0 |
|
$ |
160.0 |
Payments on long-term debt and finance lease obligations |
|
|
(14.9) |
|
|
(24.5) |
Reimbursement of finance lease payments |
|
|
1.7 |
|
|
— |
Purchase of shares |
|
|
(1.5) |
|
|
(46.2) |
Net cash provided by financing activities |
|
$ |
29.3 |
|
$ |
89.3 |
Decrease in cash and cash equivalents |
|
|
(1.8) |
|
|
(8.4) |
Cash and cash equivalents, beginning of period |
|
|
23.4 |
|
|
31.0 |
Cash and cash equivalents, end of period |
|
$ |
21.6 |
|
$ |
22.6 |
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
Cash paid during the periods for interest, net |
|
$ |
61.0 |
|
$ |
48.5 |
Cash received during the periods for interest rate swap |
|
$ |
2.9 |
|
$ |
— |
Cash paid during the periods for income taxes |
|
$ |
0.9 |
|
$ |
10.9 |
Cash received during the periods for refunds of income taxes |
|
$ |
0.3 |
|
$ |
4.9 |
Non-cash operating activities: |
|
|
|
|
|
|
Operating lease additions |
|
$ |
3.2 |
|
$ |
8.0 |
Non-cash investing and financing activities: |
|
|
|
|
|
|
Finance lease additions |
|
$ |
8.1 |
|
$ |
9.6 |
Excise tax payable |
|
$ |
0.2 |
|
$ |
— |
Capital expenditures within accounts payable and accruals |
|
$ |
25.7 |
|
$ |
36.2 |
About
WOW! is one of the nation's leading broadband providers, with an efficient and high-performing network that passes nearly 2 million residential, business and wholesale consumers. WOW! provides services in 19 markets, primarily in the Midwest and Southeast, including
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release, including statements related to any future events or potential transactions, that are not historical facts contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent our goals, beliefs, plans and expectations about our prospects for the future and other future events. Forward-looking statements include all statements that are not historical fact and can be identified by terms such as "may," "intend," "might," "will," "should," "could," "would," "anticipate," "expect," "believe," "estimate," "plan," "project," "predict," "potential," or the negative of these terms. Although these forward-looking statements reflect our good-faith belief and reasonable judgment based on current information, these statements are qualified by important factors, many of which are beyond our control that could cause our actual results to differ materially from those in the forward-looking statements. These factors and other risks that could cause our actual results to differ materially include all matters relating to the acquisition proposal (including any response by the Company to such proposal, any further actions that may be taken by
Non-GAAP Financial Measures
The Company has included certain non-GAAP financial measures in this release, including Adjusted EBITDA and Adjusted EBITDA margin. These terms, as defined herein, are not intended to be considered in isolation, as a substitute for, or superior to, the financial information prepared and presented in accordance with generally accepted accounting principles in
We believe that these non-GAAP measures enhance an investor's understanding of our financial performance. We believe that these non-GAAP measures are useful financial metrics to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business. We believe that these non-GAAP measures provide investors with useful information for assessing the comparability between periods of our ability to generate cash from operations sufficient to pay taxes, to service debt and to undertake Capital Expenditures. We use these non-GAAP measures for business planning purposes and in measuring our performance relative to that of our competitors. We believe these non-GAAP measures are measures commonly used by investors to evaluate our performance and that of our competitors.
Adjusted EBITDA eliminates the impact of expenses that do not relate to overall business performance and is defined by WOW! as net income (loss) before interest expense, income taxes, depreciation and amortization (including impairments), impairment losses on intangibles and goodwill, write-off of any asset, loss on early extinguishment of debt, integration and restructuring expenses and all non‑cash charges and expenses (including stock compensation expense) and certain other income and expenses. Adjusted EBITDA should not be considered as an alternative to net income (loss), operating income or any other performance measures derived in accordance with GAAP as measures of operating performance, operating cash flows or liquidity.
Refer to "Reconciliations of GAAP Measures to Non-GAAP Measures" and the accompanying tables below for a reconciliation of Adjusted EBITDA to Net Income and Adjusted EBITDA margin to Net Profit margin which are the most directly comparable corresponding GAAP financial measures.
Subscriber Information
The Company uses the terms defined below throughout this release.
Homes passed are reported as the number of serviceable addresses, such as single residence homes, apartments and condominium units, and businesses passed by our broadband network and listed in our database.
We deliver multiple services to our customers, as such we report Total Subscribers as the number of Subscribers who receive at least one of our HSD, Video or Telephony services, without regard to which or how many services they subscribe. We define each of the individual HSD Subscribers, Video Subscribers and Telephony Subscribers as a Revenue Generating Unit ("RGU").
While we take appropriate steps to ensure subscriber information is presented on a consistent and accurate basis at any given balance sheet date, we periodically review our policies in light of the variability we may encounter across our different markets due to the nature and pricing of products and services and billing systems. Accordingly, we may from time to time make appropriate adjustments to our subscriber information based on such reviews.
|
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|
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The following table provides a reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin to Net (Loss) Income and Net Profit Margin for the periods presented: |
||||||||||||
|
||||||||||||
|
|
Three months ended |
|
Nine months ended |
||||||||
|
|
|
|
|
||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
|
|
(in millions) |
||||||||||
Net loss |
|
$ |
(22.4) |
|
$ |
(104.5) |
|
$ |
(48.2) |
|
$ |
(244.2) |
Net Profit Margin |
|
|
(14.2) % |
|
|
(60.4) % |
|
|
(10.1) % |
|
|
(47.2) % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: Depreciation and amortization |
|
|
55.2 |
|
|
49.4 |
|
|
160.3 |
|
|
141.6 |
Impairment losses on intangibles |
|
|
— |
|
|
131.7 |
|
|
— |
|
|
259.8 |
Interest expense |
|
|
31.6 |
|
|
18.9 |
|
|
70.4 |
|
|
51.1 |
Non-recurring professional fees, M&A integration and restructuring expense |
|
|
17.4 |
|
|
7.4 |
|
|
34.9 |
|
|
22.9 |
Patent litigation settlement |
|
|
— |
|
|
— |
|
|
— |
|
|
45.4 |
Non-cash stock compensation |
|
|
2.4 |
|
|
3.5 |
|
|
8.3 |
|
|
13.9 |
Other income, net |
|
|
(0.4) |
|
|
0.1 |
|
|
(0.9) |
|
|
(1.9) |
Income tax benefit |
|
|
(6.5) |
|
|
(35.6) |
|
|
(10.1) |
|
|
(84.4) |
Adjusted EBITDA |
|
$ |
77.3 |
|
$ |
70.9 |
|
$ |
214.7 |
|
$ |
204.2 |
Adjusted EBITDA Margin |
|
|
48.9 % |
|
|
41.0 % |
|
|
44.9 % |
|
|
39.4 % |
Capital Expenditures and Subscriber Information (unaudited) |
||||||||||||
|
||||||||||||
The following table provides additional information regarding our Capital Expenditures for the periods presented: |
||||||||||||
|
||||||||||||
|
|
Three months ended |
|
Nine months ended |
||||||||
|
|
|
|
|
||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
|
|
(in millions) |
||||||||||
Scalable infrastructure |
|
$ |
7.8 |
|
$ |
15.1 |
|
$ |
58.2 |
|
$ |
44.7 |
Customer premise equipment |
|
|
20.0 |
|
|
16.3 |
|
|
54.4 |
|
|
48.3 |
Line extensions |
|
|
5.6 |
|
|
18.4 |
|
|
24.9 |
|
|
57.1 |
Support capital and other |
|
|
7.1 |
|
|
14.7 |
|
|
26.6 |
|
|
38.2 |
Total |
|
$ |
40.5 |
|
$ |
64.5 |
|
$ |
164.1 |
|
$ |
188.3 |
Capital expenditures included in total related to: |
|
|
|
|
|
|
|
|
|
|
|
|
Greenfields |
|
$ |
6.5 |
|
$ |
28.0 |
|
$ |
59.8 |
|
$ |
71.2 |
Edge-outs |
|
$ |
0.5 |
|
$ |
2.1 |
|
$ |
4.9 |
|
$ |
10.0 |
Business services |
|
$ |
3.6 |
|
$ |
2.8 |
|
$ |
10.5 |
|
$ |
10.4 |
The following table provides an unaudited summary of our subscriber information: |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2023 |
|
2024 |
|
2024 |
|
2024 |
Homes Passed |
|
1,905,600 |
|
1,932,200 |
|
1,948,500 |
|
1,956,700 |
|
1,952,200 |
Total Subscribers |
|
517,400 |
|
504,100 |
|
500,700 |
|
495,200 |
|
490,500 |
HSD RGUs |
|
503,400 |
|
490,100 |
|
489,700 |
|
485,000 |
|
480,600 |
Video RGUs |
|
100,800 |
|
90,800 |
|
79,300 |
|
71,600 |
|
66,300 |
Telephony RGUs |
|
82,700 |
|
79,500 |
|
77,700 |
|
75,700 |
|
73,700 |
Total RGUs |
|
686,900 |
|
660,400 |
|
646,700 |
|
632,300 |
|
620,600 |
Additional Information Available on Website:
The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company's Quarterly Report on Form 10-Q for the quarter ended
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