ENGLEWOOD, Colo.--(BUSINESS WIRE)--
WideOpenWest, Inc. (“WOW!” or the “Company”) (NYSE: WOW), a leading,
fully integrated provider of residential and commercial high-speed data,
video and telephony services to customers in the United States, today
announced financial and operating results for the third quarter ended
September 30, 2017.
Third Quarter 2017 Highlights
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WOW! added 2,400 high-speed data (HSD) RGUs in the third quarter; up
16,400 compared with the third quarter of 2016
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2017 Edge-Out Nodes now extend to 55,800 new homes passed; 2016
Edge-Out Nodes totaled 40,400 homes passed and have achieved over 30%
penetration
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Total Revenue of $297.8 million; Net Loss of $(2.1) million; Net Loss
per share of $(0.02)
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Adjusted EBITDA of $114.8 million; Adjusted Earnings Per Share of $0.37
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Successful debt refinancing facilitated a full redemption of all
10.25% Senior Notes; over $60 million in annualized Interest expense
savings; quarterly Interest expense declined 39% year over year
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Signed agreement to sell a portion of the Chicago Fiber Network to
Verizon for $225 million, expected to close in fourth quarter and
achieve pro forma leverage of approximately 5.0 times
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Business Services Subscription Revenue Including Acquisitions and
Dispositions grew 13.4% year-over-year
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WOW! announced its plans to complete the rollout of 1 gig services
throughout its digital footprint by early 2018
Financial Highlights (1)
For the third quarter ended September 30, 2017, WOW! reported Total
Revenue of $297.8 million, down $13.4 million, or 4.3%, over the same
period last year. The Company reported a Net Loss of $(2.1) million, a
year over year improvement of $18.2 million. Transaction Adjusted EBITDA
was $114.8 million, an increase of $3.3 million, or 3.0%, compared
with the third quarter ended September 30, 2016.
Total Revenue for the third quarter of 2017 declined 2.2%, from Total
Revenue including Acquisitions and Dispositions in the third quarter of
2016. WOW!’s internet centric strategic focus has led to strong growth
in internet-related revenue, as HSD subscription revenue for the third
quarter ended September 30, 2017 increased by $13.4 million, or 14.8%,
compared to third quarter of 2016, on a transaction adjusted basis.
“In the third quarter we returned to positive HSD RGU growth with 2,400
net additions,” said Steven Cochran, chief executive officer of WOW!
“The continued success and execution by our teams in growing business
services subscription revenues and expanding our Edge-Out homes passed
was well represented during the quarter. Our 2016 Edge-Out nodes have
achieved over 30% penetration with just over one year of activity in
these markets.”
“Year-over-year growth in Transaction Adjusted EBITDA of $3.3 million,
or 3.0%, is reflective of our efforts to drive growth in our most
profitable segments,” said Rich Fish, chief financial officer of WOW!
“This can be seen in the shift toward higher speed tier HSD RGUs, the
associated growth in HSD ARPU, and the 13.4% growth in Business Services
Subscription Revenue Including Acquisitions and Dispositions.”
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(1)
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Refer to “Non-GAAP Financial Measures and Operating Metrics,”
“Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures,”
and “Unaudited Transaction Adjusted Condensed Consolidated
Financial and Subscriber Information” in this Press Release for
definitions and information related to Adjusted EBITDA and
Transaction Adjusted financial and subscriber information,
reconciliation of such non-GAAP measures to GAAP measures and why
our management thinks it is beneficial to present such non-GAAP
measures.
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Revenue
On an actual basis, third quarter Total Revenue decreased 4.3% compared
with the third quarter of 2016. Total Revenue Including Acquisitions and
Dispositions decreased 2.2% to $297.8 million compared with the third
quarter of 2016, which was driven primarily by video and telephony RGU
losses and lower pass-through revenue related to the construction of the
Company’s wireless backhaul project, partially offset by increases in
ARPU and business services subscription revenue growth.
On an actual basis, Residential Subscription Revenue for the third
quarter of 2017 was down 4.7% compared with the third quarter of 2016.
Residential Subscription Revenue Including Acquisitions and Dispositions
decreased 2.8% compared with the third quarter of 2016 to $231.9
million. The largest contributor to the decline was video and telephony
RGU losses, partially offset by increases in ARPU.
On an actual basis, Business Services Subscription Revenue for the third
quarter of 2017 was up 7.6% compared with the third quarter of 2016.
Business Services Subscription Revenue Including Acquisitions and
Dispositions increased 13.4% to $29.6 million compared with the third
quarter of 2016.
Other Business Services Revenue totaled $9.6 million for the third
quarter of 2017, a decrease of 4.0% compared with the third quarter of
2016. The decline was driven by lower pass-through revenue related to
the construction of the Company’s wireless backhaul project which is
non-recurring in nature.
Other revenue totaled $26.7 million for the third quarter of 2017, a
decrease of 11.9% compared with the third quarter of 2016, primarily
driven by decreases in advertising revenues associated with a
non-political year and franchise fees, both of which are impacted by the
reduction in subscribers over the same period in 2016.
Costs and Expenses
Operating expenses, excluding depreciation and amortization, totaled
$153.2 million in the third quarter of 2017, a decrease of $13.9
million, or 8.3% compared with the third quarter of 2016. The decrease
is primarily due to reductions in Video programming costs, decreased
costs related to the Company’s network construction activities and
overall reductions in costs as a result of the disposition of the
Company’s Lawrence, Kansas system.
Selling, general, and administrative expenses were $38.1 million for the
third quarter of 2017, an increase of $5.5 million, or 16.9%, compared
with the third quarter of 2016. The increase is mainly due to a $5.2
million increase in employee related non-cash compensation cost and
third party professional fees, which was partially offset by the net
effect of the Company’s acquisitions and dispositions.
Net Income (Loss) and Net Loss per Share
Third quarter 2017 Net Loss was $(2.1) million, compared with Net Loss
of $(20.3) million in the third quarter of 2016. Third quarter 2017 Net
Loss per share was $(0.02), compared to Net Loss per share of $(0.31) in
the third quarter of 2016. The improvement in Net Loss is largely
attributed to a reduction in interest expense. The sequential decline
from the second quarter of 2017 Net Income of $5.0 million is
attributable to the Loss on early extinguishment of debt associated with
a full redemption of the 10.25% Senior Notes during the third quarter of
2017. Adjusted EPS for the third quarter of 2017 was $0.37.
Adjusted EBITDA
Third quarter 2017 Adjusted EBITDA was $114.8 million, up 3.0% from the
third quarter of 2016 on a Transaction Adjusted basis. Third quarter
2017 Adjusted EBITDA margin was 38.5%, representing an increase of over
190 basis points from the same period a year ago on a Transaction
Adjusted basis.
Customers
WOW! reported total subscribers of 776,400 as of September 30, 2017,
compared with 769,700 as of September 30, 2016, on a Transaction
Adjusted basis, a 0.9% increase. Total subscribers were sequentially
flat from 776,500 as of June 30, 2017, which reflects continued
aggressive competitive behavior in the Company’s markets associated with
brand building and the impact of Hurricane Irma in the southeast markets.
HSD RGUs totaled 730,000 as of September 30, 2017, representing a 16,400
increase over September 30, 2016, on a Transaction Adjusted basis, or
2.3%, and a sequential increase of 2,400 from 727,600 or 0.3%, as of
June 30, 2017.
Edge-Outs
As of September 30, 2017, WOW! has extended its network to 96,200 new
homes passed as part of the Company’s Edge-Out growth efforts started in
2016. Edge-Out projects begun in 2016 (“2016 Edge-Out Nodes”) passed
approximately 40,400 homes at September 30, 2017. The Company has 12,300
new customers on such nodes, which represents over 30% penetration with
an average of 414 days in active service. The penetration on such nodes
has increased from 23% at year-end 2016.
The Edge-Out projects begun in 2017 (“2017 Edge-Out Nodes”) passed
approximately 55,800 homes at September 30, 2017. WOW! has 10,400 new
customers on such nodes, which represents over 18% penetration with an
average of 136 days in active service.
Announced Sale of a Portion of Chicago Fiber
Network
On August 1, 2017, the Company entered into a definitive agreement to
sell a portion of its fiber network in the Company’s Chicago market to a
subsidiary of Verizon for $225.0 million in cash. The Company
anticipates the sale to be completed in the fourth quarter of 2017. In
addition, at the closing of the definitive agreement, the Company and
Verizon will enter into a new agreement pursuant to which the Company
will complete the build-out of the network in exchange for approximately
$50.0 million, which represented the estimated remaining build-out costs
to complete the network at the time the definitive agreement was entered
into. The $50.0 million will be payable as such network elements are
completed. The Company anticipates such network would be completed in
the second half of 2018.
Capital Expenditures
Capital expenditures totaling $72.3 million in the third quarter of 2017
were flat compared with the third quarter of 2016, on a reported basis,
and up from $71.5 million on a Transaction Adjusted basis. Strategic
capital expenditures, defined as Edge-Out capital expenditures and
business services capital expenditures dedicated to expansion of the
Company’s network, were $24.4 million for the three months ended
September 30, 2017, which represented a decrease of $4.7 million over
the three months ended September 30, 2016, as a result of a decline in
business services capital expenditures partially offset by an increase
in Edge-Out expenditures. Excluding strategic capital expenditures of
Edge-Outs and Business Services, capital expenditures in the third
quarter of 2017 totaled $47.9 million, which equates to 16.1% of total
reported revenues for the third quarter of 2017.
Free Cash Flow
Free cash flow for the three months ended September 30, 2017 was $(63.1)
million, representing an improvement of $14.8 million compared to the
three months ended September 30, 2016. The improvement in free cash flow
for the quarter on a year over year basis was driven primarily as a
result of a reduction in cash paid for interest of $19.1 million, which
was offset by an increase in the amount of cash paid to reduce net
working capital assets and liabilities totaling $10.6 million.
During the three months ended September 30, 2017, and included as
components of free cash flow, the Company paid $20.2 million in
connection with the debt refinancing completed during the quarter and
paid down accrued interest balances by $38.8 million.
Debt Refinancing
During the quarter, WOW! completed a refinancing of its Term B Loans, in
which Term B Loans were upsized by $230.5 million, pricing on the Term B
Loans was reduced by 25 basis points to LIBOR plus 325 basis points, and
revolver capacity was increased to $300 million. Combined with the
proceeds from the IPO and $180 million from the revolver, WOW! redeemed
all of its outstanding 10.25% Senior Notes. The annualized impact from
these transactions will result in over $60 million in interest savings.
Liquidity and Leverage
As of September 30, 2017, the total principal amount of debt outstanding
was approximately $2.46 billion. Cash and cash equivalents as of
September 30, 2017 was $36.4 million. WOW!’s undrawn revolver capacity
provides $112.1 million of additional liquidity. Senior Secured Net
Leverage and Total Net Leverage as of September 30, 2017 was 5.4x.
Conference Call
WOW! will host a conference call on Monday, November 13, 2017, at 5:00
p.m. Eastern to discuss the operating and financial results contained in
this press release. The conference call will be broadcast live on the
Company’s investor relations website at ir.wowway.com.
Those parties interested in participating via telephone can use the
conference call information as follows:
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Call Date:
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Monday, November 13, 2017
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Call Time:
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5:00 p.m. Eastern
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Dial In:
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(877) 541-5069
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Intn’l Dial In:
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(443) 842-7607
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Conf. ID:
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5498407
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A recording of the conference call will be available approximately two
hours after the completion of the call until December 13, 2017. The
dial-in number for this replay is (855) 859-2056.
The following unaudited condensed consolidated statements of operations
summarizes information in the Company’s Form 10-Q for the quarter ended
September 30, 2017, as filed on November 13, 2017, with the United
States Securities and Exchange Commission (“SEC”). For ease of use,
references in this release to “WOW!” means WideOpenWest, Inc. and its
subsidiaries.
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WideOpenWest Inc.
Condensed Consolidated Statements of Operations (Unaudited)
($ in millions, except for per share data)
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Three months ended
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Nine months ended
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September 30,
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September 30,
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2017
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2016
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2017
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2016
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Revenue
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Residential subscription
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$
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231.9
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$
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243.4
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$
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695.6
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$
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722.9
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Business services subscription
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29.6
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27.5
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86.4
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80.2
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Total subscription
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261.5
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270.9
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782.0
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803.1
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Other business services
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9.6
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10.0
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31.3
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31.8
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Other
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26.7
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30.3
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82.0
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86.1
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Total Revenue
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$
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297.8
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$
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311.2
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$
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895.3
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$
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921.0
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Costs and expenses
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Operating (excluding depreciation and amortization)
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$
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153.2
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$
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167.1
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$
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470.4
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$
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499.1
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Selling, general and administrative
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38.1
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32.6
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100.9
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86.2
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Depreciation and amortization
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49.0
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49.6
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150.1
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155.0
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Management fee to related party
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-
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0.4
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1.0
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1.3
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$
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240.3
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$
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249.7
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$
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722.4
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$
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741.6
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Income from operations
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$
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57.5
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$
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61.5
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$
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172.9
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$
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179.4
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Other income (expense)
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Interest expense
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(32.2
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)
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(52.9
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(122.0
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)
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(162.3
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Loss on early extinguishment of debt
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(26.1
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(28.1
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(32.1
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(30.6
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Gain on sale of assets
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-
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-
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38.4
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-
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Unrealized gain on derivative instruments, net
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-
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-
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-
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2.3
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Other income, net
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0.3
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1.9
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1.7
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2.0
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Income tax (expense) benefit
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(1.6
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(2.7
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16.4
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7.4
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Net Income (loss)
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$
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(2.1
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$
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(20.3
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)
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$
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75.3
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$
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(1.8
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Basic and diluted earnings (loss) per common shares
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Basic
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$
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(0.02
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|
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$
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(0.31
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$
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0.99
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$
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(0.03
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Diluted
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$
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(0.02
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)
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$
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(0.31
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$
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0.99
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$
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(0.03
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Weighted-average common shares outstanding
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Basic
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86,973,345
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66,525,044
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76,014,568
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65,605,874
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Diluted
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86,973,345
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66,525,044
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76,096,401
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65,605,874
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About WOW!
WOW! is one of the nation's leading providers of high-speed internet,
cable TV and phone serving communities in the U.S. Our operating
philosophy is to deliver an employee and customer experience that lives
up to its name. For more information, please visit www.wowway.com.
Forward-Looking Statements
This press release may 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. All
statements, other than statements of historical facts, included in this
release are forward-looking statements. Forward-looking statements
discuss our current expectations and projections relating to our
financial condition, results of operations, plans, objectives, future
performance and business. Forward-looking statements are not guarantees
of future performance and we caution you not to place undue reliance on
such statements. Forward-looking statements are generally identifiable
by the use of the words “may,” “will,” “should,” “expect,” “anticipate,”
“estimate,” “believe,” “intend,” “project,” “continue,” or the negative
of these words, or other similar words or terms. The forward-looking
statements included in this release are made as of the date hereof.
Except as required by law, we assume no obligation to publicly update
any forward-looking statement, even if new information becomes available
in the future or if experience or future changes make it clear that any
projected results expressed or implied in such statements will not be
realized. If we do update one or more forward-looking statements, no
inference should be made that we will make additional updates with
respect to those or other forward-looking statements. Actual results may
differ materially from those expected because of various risks and
uncertainties, many of which are beyond our control, including the wide
range of competition we face in our business; competitors that are
larger and possess more resources; dependence upon a business services
strategy; conditions in the economy, including potentially uncertain
economic conditions; our ability to secure new businesses as customers;
demand for our bundled broadband communications services may be lower
than we expect; our ability to respond to rapid technological change;
increases in programming and retransmission costs; a decline in
advertising revenues; the effects of regulatory changes in our business;
our substantial level of indebtedness; certain covenants in our debt
documents; programming exclusivity in favor of our competitors;
inability to obtain necessary hardware, software and operational
support; strain on business and resources from future acquisitions, or
the inability to identify suitable acquisitions; and other factors that
may be described from time to time in our filings with the SEC. All
forward-looking statements are expressly qualified in their entirety by
these cautionary statements.
Non-GAAP Financial Measures and Operating
Metrics
We have included certain non-GAAP financial measures in this release,
including Revenue Including Acquisitions and Dispositions, Residential
Subscription Revenue Including Acquisitions and Dispositions, Business
Services Subscription Revenue Including Acquisitions and Dispositions,
Adjusted EBITDA, Transaction Adjusted EBITDA, Transaction Adjusted
Capital Expenditures, Adjusted EPS and Free Cash Flow. The presentation
of these financial measures is not intended to be considered in
isolation or as a substitute for, or superior to, the financial
information prepared and presented in accordance with generally accepted
accounting principles in the United States of America (“GAAP”).
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.
Revenue Including Acquisitions and Dispositions, Residential
Subscription Revenue Including Acquisitions and Dispositions, Business
Services Subscription Revenue Including Acquisitions and Dispositions,
and Transaction Adjusted Capital Expenditures are included herein
because they are key metrics used by management and our Board of
Directors to assess our financial performance. We define Revenue
Including Acquisitions and Dispositions as revenue after giving effect
to certain acquisitions and divestitures made by WOW! We define
Residential Subscription Revenue Including Acquisitions and Dispositions
as Residential Subscription Revenue after giving effect to certain
acquisitions and divestitures made by WOW! We define Business Services
Subscription Revenue Including Acquisitions and Dispositions as Business
Services Subscription Revenue after giving effect to certain
acquisitions and divestitures made by WOW! We define Transaction
Adjusted Capital Expenditures as capital expenditures after giving
effect to certain acquisitions and divestitures made by WOW! We believe
that these non-GAAP measures are appropriate measures of operating
performance because they are meaningful to investors by showing how
certain acquisitions and divestitures might have affected our historical
financial statements. There are no Acquisitions and Dispositions
reflected in third quarter 2017 results.
The presentation of these measures is not made in accordance with GAAP
and our use of these terms herein varies from the use of similar terms
by other companies in our industry due to different methods of
calculation and therefore are not necessarily comparable. These non-GAAP
measures should not be considered as an alternative to revenue, capital
expenditures or any other performance measures derived in accordance
with GAAP as measures of operating performance.
Adjusted EBITDA is included herein because it is a key metric used by
management and our Board of Directors to assess our financial
performance. We believe that Adjusted EBITDA is an appropriate measure
of operating performance because it eliminates the impact of expenses
that do not relate to business performance, and that the presentation of
this measure enhances an investor's understanding of our financial
performance. Transaction Adjusted EBITDA makes certain additional
adjustments to the historical financial information that WOW! believes
is meaningful to investors by showing how certain acquisitions and
divestitures might have affected WOW!’s historical financial statements.
Adjusted EBITDA is defined by WOW! as net income (loss) before net
interest expense, income taxes, depreciation and amortization (including
impairments), gains (losses) realized and unrealized on derivative
instruments, management fees to related party, the write-up or write-off
of any asset, debt modification expenses, loss on early extinguishment
of debt, integration and restructuring expenses and all non-cash charges
and expenses (including equity based compensation expense) and certain
other income and expenses. Transaction Adjusted EBITDA represents
Adjusted EBITDA after giving effect to the impact of acquisitions and
dispositions that were completed during the relevant periods as if they
occurred at the beginning of the period presented. The presentation of
Adjusted EBITDA and Transaction Adjusted EBITDA is not made in
accordance with GAAP and our use of the terms Adjusted EBITDA and
Transaction Adjusted EBITDA may vary from others in our industry.
Adjusted EBITDA and Transaction 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. There are no
Transaction Adjustments reflected in the third quarter 2017 results.
Adjusted EBITDA and Transaction Adjusted EBITDA have important
limitations as an analytical tool. For example, Adjusted EBITDA and
Transaction Adjusted EBITDA:
-
exclude certain tax payments that may represent a reduction in cash
available to us;
-
do not reflect any cash capital expenditure requirements for the
assets being depreciated and amortized that may have to be replaced in
the future;
-
do not reflect changes in, or cash requirements for, our working
capital needs; and
-
do not reflect the significant interest expense, or the cash
requirements necessary to service interest or principal payments on
our debt.
Adjusted EPS is included herein because it is a key metric used by
management and our Board of Directors to assess our financial
performance. Adjusted EPS is a non-GAAP financial measure that
eliminates the effect of management fees to related party, loss on early
extinguishment of debt, gain (loss) on sale of assets, non-recurring
professional fees, M&A integration and restructuring expense, non-cash
stock compensation, and other (income) and expenses. We then add or
subtract an estimated incremental income tax effect applicable to those
items. We believe that this measurement is useful to investors as an
additional way to analyze the underlying trends in our business
consistently across the periods presented.
The presentation of Adjusted EPS is not made in accordance with GAAP and
our use of the term Adjusted EPS herein varies from the use of similar
terms by other companies in our industry due to different methods of
calculation and is not necessarily comparable. Adjusted EPS should not
be considered as an alternative to EPS or any other performance measures
derived in accordance with GAAP as measures of operating performance.
See “Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures”
and the accompanying tables below for a reconciliation of Adjusted
EBITDA to our net income (loss), which is the most directly comparable
GAAP financial measure and a reconciliation of Adjusted EPS to Diluted
Earnings Per Share, which is the most directly comparable GAAP financial
measure.
Free Cash Flow is included herein because it is a key metric used by
management and our Board of Directors to assess our financial
performance. We define Free Cash Flow as Net cash flows provided by
operating activities less Capital Expenditures. We believe that Free
Cash Flow is an appropriate measure of operating performance because it
is meaningful to investors because it presents the cash generated or
used by the business in a given period, and that the presentation of
this measure enhances an investor’s understanding of our financial
performance.
The presentation of Free Cash Flow is not made in accordance with GAAP
and our use of the term Free Cash Flow herein varies from the use of
similar terms by other companies in our industry due to different
methods of calculation and is not necessarily comparable. Free Cash Flow
should not be considered as an alternative to net income or any other
performance measures derived in accordance with GAAP as measures of
operating performance.
In addition, we use the following subscriber information in this release:
-
Homes Passed – We report homes passed as
the number of serviceable addresses, such as single residence homes,
apartments condominium units and businesses passed by our broadband
network and listed in our database.
-
Subscribers – Because we deliver multiple
services to our customers, we report the total number of customers
(“Total Customers”) as those who subscribe to at least one of our
high-speed data (“HSD”), video (“Video”) or telephony (“Telephony”)
services without regard to which or how many of those services they
subscribe. We report Video subscribers as the number of basic cable
subscribers, excluding customers who only subscribe to HSD or
Telephony services in this total. We define total Revenue Generating
Units (“RGUs”) as the sum of HSD subscribers, Video subscribers and
Telephony subscribers.
The unaudited Homes Passed and Subscriber information in this release is
presented on a Transaction Adjusted basis giving effect to our
acquisition of the operating assets of NuLink on September 9, 2016, and
our divestiture of the Lawrence, Kansas system on January 12, 2017, as
if such transactions had been completed at the beginning of the
respective periods presented herein. The unaudited Transaction Adjusted
Homes Passed and Subscriber information is for informational purposes
only and does not purport to represent what our subscriber information
would have been if such transactions had occurred at any date, nor does
such information purport to project subscribers or homes passed for any
future period.
Subscriber information for acquired entities is preliminary and subject
to adjustment until we have completed our review of such information and
determined that it is presented in accordance with our policies. 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.
Unaudited Reconciliations of GAAP Measures to
Non-GAAP Measures
The following table provides an unaudited reconciliation of our Net
Income (Loss) to Adjusted EBITDA for the periods indicated:
|
|
|
|
|
|
|
|
|
WideOpenWest, Inc.
Reconciliation of GAAP Measures to Non-GAAP Measures (Unaudited)
($ in millions, except for per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
|
2017
|
|
|
|
|
2016
|
|
|
|
|
2017
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
(2.1
|
)
|
|
|
$
|
(20.3
|
)
|
|
|
$
|
75.3
|
|
|
|
$
|
(1.8
|
)
|
|
Depreciation and amortization
|
|
|
|
49.0
|
|
|
|
|
49.6
|
|
|
|
|
150.1
|
|
|
|
|
155.0
|
|
|
Management fee to related party
|
|
|
|
-
|
|
|
|
|
0.4
|
|
|
|
|
1.0
|
|
|
|
|
1.3
|
|
|
Interest expense
|
|
|
|
32.2
|
|
|
|
|
52.9
|
|
|
|
|
122.0
|
|
|
|
|
162.3
|
|
|
Loss on early extinguishment of debt
|
|
|
|
26.1
|
|
|
|
|
28.1
|
|
|
|
|
32.1
|
|
|
|
|
30.6
|
|
|
Realized and unrealized gain on derivative instruments, net
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(2.3
|
)
|
|
Gain (loss) on sale of assets
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(38.4
|
)
|
|
|
|
-
|
|
|
Non-recurring professional fees, M&A integration and restructuring
expense
|
|
|
|
3.1
|
|
|
|
|
3.8
|
|
|
|
|
7.0
|
|
|
|
|
7.3
|
|
|
Non-cash stock compensation
|
|
|
|
5.2
|
|
|
|
|
0.4
|
|
|
|
|
8.3
|
|
|
|
|
0.5
|
|
|
Other income, net
|
|
|
|
(0.3
|
)
|
|
|
|
(1.9
|
)
|
|
|
|
(1.7
|
)
|
|
|
|
(2.0
|
)
|
|
Income tax (benefit) expense
|
|
|
|
1.6
|
|
|
|
|
2.7
|
|
|
|
|
(16.4
|
)
|
|
|
|
(7.4
|
)
|
|
Adjusted EBITDA (1)
|
|
|
$
|
114.8
|
|
|
|
$
|
115.7
|
|
|
|
$
|
339.3
|
|
|
|
$
|
343.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows provided by operating activities
|
|
|
|
9.2
|
|
|
|
|
(5.6
|
)
|
|
|
|
116.4
|
|
|
|
|
110.5
|
|
|
Less: Capital Expenditures
|
|
|
|
(72.3
|
)
|
|
|
|
(72.3
|
)
|
|
|
|
(224.3
|
)
|
|
|
|
(207.2
|
)
|
|
Free Cash Flow
|
|
|
$
|
(63.1
|
)
|
|
|
$
|
(77.9
|
)
|
|
|
$
|
(107.9
|
)
|
|
|
$
|
(96.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
|
|
|
|
|
|
Diluted loss per share
|
|
|
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on early extinguishment of debt
|
|
|
|
|
|
|
0.30
|
|
|
|
|
|
|
|
|
Non-recurring professional fees, M&A integration and restructuring
expense
|
|
|
|
|
|
|
0.04
|
|
|
|
|
|
|
|
|
Non-cash stock compensation
|
|
|
|
|
|
|
0.06
|
|
|
|
|
|
|
|
|
Income tax applicable to adjustments, net(2)
|
|
|
|
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
Adjusted Earnings Per Share (EPS)
|
|
|
|
|
|
$
|
0.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See “Unaudited Transaction Adjusted Condensed Consolidated
Financial and Subscriber Information” below for a reconciliation
of Adjusted EBITDA to Transaction Adjusted EBITDA for the
respective quarters ended giving effect the acquisition of NuLink
on September 9, 2016, and our divestiture of the Lawrence, Kansas,
system on January 12, 2017, as if such transactions had been
completed at the beginning of the respective periods presented
herein
|
|
|
|
(2) The income tax impacts are determined using the applicable
rates in the taxing jurisdictions in which expense or income
occurred and includes both current and deferred income tax expense
(benefit) based on the nature of the non-GAAP performance measure.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Transaction Adjusted Condensed
Consolidated Financial and Subscriber Information
The SEC requires that pro forma financial information be presented in a
registrant’s periodic filings when events occur for which disclosure
would be material to investors, including significant business
combinations or the disposition of a significant portion of the
business. The significance of an acquired or disposed business is
determined based on the “significant subsidiary” tests specified in
Regulation S-X, Article 11, Rule 1-02(w). Although the Company has made
certain acquisitions and divestitures, such transactions do not meet the
“significant subsidiary” tests and, accordingly, the Company’s
historical financial information as filed with the SEC does not contain
pro forma financial information relating to those transactions.
Nevertheless, we make certain adjustments in this release to the
historical financial and subscriber information of the Company
(“Transaction Adjusted”) as filed with the SEC because we believe such
information would be meaningful to investors by showing how such
transactions might have affected the Company’s historical financial
statements. The unaudited Transaction Adjusted financial and subscriber
information in this release has been prepared giving effect to our
acquisition of the operating assets of NuLink on September 9, 2016, and
our divestiture of the Lawrence, Kansas system on January 12, 2017, as
if such transactions had been completed at the beginning of the
respective periods presented herein. The unaudited Transaction Adjusted
financial and subscriber information is for informational purposes only
and does not purport to represent what our results of operations,
financial or subscriber information would have been if such transactions
had occurred at any date, nor does such information purport to project
the results of operations for any future period.
The unaudited Transaction Adjusted condensed consolidated financial and
subscriber information in this release was prepared based on NuLink’s
unaudited financial and subscriber information for the respective
periods presented. The historical unaudited financial and subscriber
information for the Lawrence, KS system was prepared based on our books
and records for the Lawrence, KS system for the perspective periods
presented. Such historical unaudited financial and subscriber
information has been adjusted to give a Transaction Adjusted effect to
events that are directly attributable to such transactions, factually
supportable and expected to have a continuing impact on the results. The
unaudited Transaction Adjusted financial information herein does not
reflect non-recurring charges that have been incurred in connection with
the transaction including legal fees, broker fees and accounting fees.
The following table provides an unaudited reconciliation of our
residential subscription revenue to residential subscription revenue
including Acquisitions and Dispositions, business services subscription
revenue to business services subscription revenue including Acquisitions
and Dispositions, Total Revenue to Total Revenue including Acquisitions
and Dispositions, Adjusted EBITDA to Transaction Adjusted EBITDA and
Capital Expenditures to Transaction Adjusted Capital Expenditures for
the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WideOpenWest, Inc.
Transaction Adjusted Condensed Consolidated Financial Information
(Unaudited)
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
|
2017
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Subscription Revenue
|
|
|
$
|
231.9
|
|
|
$
|
243.4
|
|
|
|
$
|
695.6
|
|
|
|
$
|
722.9
|
|
|
Acquisitions and Dispositions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Subscription related to the Lawrence system
|
|
|
|
-
|
|
|
|
(8.5
|
)
|
|
|
|
(1.1
|
)
|
|
|
|
(25.2
|
)
|
|
Residential Subscription related to NuLInk
|
|
|
|
-
|
|
|
|
3.7
|
|
|
|
|
-
|
|
|
|
|
13.5
|
|
|
Residential Subscription Revenue Including Acquisitions and
Dispositions
|
|
|
$
|
231.9
|
|
|
$
|
238.6
|
|
|
|
$
|
694.5
|
|
|
|
$
|
711.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Services Subscription Revenue
|
|
|
$
|
29.6
|
|
|
$
|
27.5
|
|
|
|
$
|
86.4
|
|
|
|
$
|
80.2
|
|
|
Acquisitions and Dispositions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Services Subscription related to the Lawrence system
|
|
|
|
-
|
|
|
|
(1.7
|
)
|
|
|
|
(0.3
|
)
|
|
|
|
(5.2
|
)
|
|
Business Services Subscription related to NuLInk
|
|
|
|
-
|
|
|
|
0.3
|
|
|
|
|
-
|
|
|
|
|
1.3
|
|
|
Business Services Subscription Including Acquisitions and
Dispositions
|
|
|
$
|
29.6
|
|
|
$
|
26.1
|
|
|
|
$
|
86.1
|
|
|
|
$
|
76.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue
|
|
|
$
|
297.8
|
|
|
$
|
311.2
|
|
|
|
$
|
895.3
|
|
|
|
$
|
921.0
|
|
|
Acquisitions and Dispositions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue related to the Lawrence system
|
|
|
|
-
|
|
|
|
(11.5
|
)
|
|
|
|
(1.5
|
)
|
|
|
|
(34.3
|
)
|
|
Revenue related to NuLink
|
|
|
|
-
|
|
|
|
4.7
|
|
|
|
|
-
|
|
|
|
|
17.1
|
|
|
Total Revenue Including Acquisitions and Dispositions
|
|
|
$
|
297.8
|
|
|
$
|
304.4
|
|
|
|
$
|
893.8
|
|
|
|
$
|
903.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
114.8
|
|
|
$
|
115.7
|
|
|
|
$
|
339.3
|
|
|
|
$
|
343.5
|
|
|
Transaction Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA related to the Lawrence system
|
|
|
|
-
|
|
|
|
(5.9
|
)
|
|
|
|
(1.0
|
)
|
|
|
|
(17.7
|
)
|
|
Adjusted EBITDA related to NuLink
|
|
|
|
-
|
|
|
|
1.7
|
|
|
|
|
-
|
|
|
|
|
5.8
|
|
|
Transaction Adjusted EBITDA
|
|
|
$
|
114.8
|
|
|
$
|
111.5
|
|
|
|
$
|
338.3
|
|
|
|
$
|
331.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
|
|
$
|
72.3
|
|
|
$
|
72.3
|
|
|
|
$
|
224.3
|
|
|
|
$
|
207.2
|
|
|
Transaction Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures related to the Lawrence system
|
|
|
|
-
|
|
|
|
(1.7
|
)
|
|
|
|
(0.1
|
)
|
|
|
|
(4.4
|
)
|
|
Capital expenditures related to NuLink
|
|
|
|
-
|
|
|
|
0.9
|
|
|
|
|
-
|
|
|
|
|
3.8
|
|
|
Transaction Adjusted Capital Expenditures
|
|
|
$
|
72.3
|
|
|
$
|
71.5
|
|
|
|
$
|
224.2
|
|
|
|
$
|
206.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides an unaudited reconciliation of our reported
subscriber information to Transaction Adjusted subscriber information as
of the end of each of the respective quarterly periods:
|
|
|
|
September 30,
|
|
June 30,
|
|
September 30,
|
|
|
|
|
2017
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Homes Passed
|
|
|
3,097,500
|
|
|
3,072,500
|
|
|
3,075,000
|
|
|
Transaction Adjustments:
|
|
|
|
|
Lawrence
|
|
|
-
|
|
|
-
|
|
|
(67,900
|
)
|
|
Transaction Adjusted Homes Passed
|
|
|
3,097,500
|
|
|
3,072,500
|
|
|
3,007,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Total Customers
|
|
|
776,400
|
|
|
776,500
|
|
|
800,800
|
|
|
Transaction Adjustments:
|
|
|
|
|
Lawrence
|
|
|
-
|
|
|
-
|
|
|
(31,100
|
)
|
|
Transaction Adjusted Total Customers
|
|
|
776,400
|
|
|
776,500
|
|
|
769,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported HSD Subscribers
|
|
|
730,000
|
|
|
727,600
|
|
|
742,000
|
|
|
Transaction Adjustments:
|
|
|
|
|
Lawrence
|
|
|
-
|
|
|
-
|
|
|
(28,400
|
)
|
|
Transaction Adjusted HSD Subscribers
|
|
|
730,000
|
|
|
727,600
|
|
|
713,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Video Subscribers
|
|
|
442,500
|
|
|
458,200
|
|
|
514,900
|
|
|
Transaction Adjustments:
|
|
|
|
|
Lawrence
|
|
|
-
|
|
|
-
|
|
|
(15,300
|
)
|
|
Transaction Adjusted Video Subscribers
|
|
|
442,500
|
|
|
458,200
|
|
|
499,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Telephony Subscribers
|
|
|
226,200
|
|
|
235,400
|
|
|
267,400
|
|
|
Transaction Adjustments:
|
|
|
|
|
Lawrence
|
|
|
-
|
|
|
-
|
|
|
(7,200
|
)
|
|
Transaction Adjusted Telephony Subscribers
|
|
|
226,200
|
|
|
235,400
|
|
|
260,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Total RGUs
|
|
|
1,398,700
|
|
|
1,421,200
|
|
|
1,524,300
|
|
|
Transaction Adjustments:
|
|
|
|
|
Lawrence
|
|
|
-
|
|
|
-
|
|
|
(50,900
|
)
|
|
Transaction Adjusted Total RGUs
|
|
|
1,398,700
|
|
|
1,421,200
|
|
|
1,473,400
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20171113006221/en/
Source: WideOpenWest, Inc.