0001437749-23-004393.txt : 20230223 0001437749-23-004393.hdr.sgml : 20230223 20230223161536 ACCESSION NUMBER: 0001437749-23-004393 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 20230223 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20230223 DATE AS OF CHANGE: 20230223 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Cable One, Inc. CENTRAL INDEX KEY: 0001632127 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 133060083 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-36863 FILM NUMBER: 23659806 BUSINESS ADDRESS: STREET 1: 210 E. EARLL DRIVE CITY: PHOENIX STATE: AZ ZIP: 85012 BUSINESS PHONE: 602-364-6000 MAIL ADDRESS: STREET 1: 210 E. EARLL DRIVE CITY: PHOENIX STATE: AZ ZIP: 85012 8-K 1 cabo20221107_8k.htm FORM 8-K cabo20221107_8k.htm
false 0001632127 0001632127 2023-02-23 2023-02-23
 
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): February 23, 2023
 

 
Cable One, Inc.
 
(Exact Name of Registrant as Specified in Its Charter)
 

 
Delaware
001-36863
13-3060083
(State or Other Jurisdiction of
Incorporation or Organization)
(Commission File Number)
(I.R.S. Employer Identification No.)
 
210 E. Earll Drive, Phoenix, Arizona
85012
(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
Common Stock, par value $0.01 per share
 
CABO
 
New York Stock Exchange
 
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
 
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. ☐
 
 

 
Item 2.02
Results of Operations and Financial Condition.
 
On February 23, 2023, Cable One, Inc. (the “Company”) issued a press release related to its results for the quarter and year ended December 31, 2022. 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
 
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:
Senior Vice President, General Counsel and Secretary
 
 
Date: February 23, 2023
 
 
EX-99.1 2 ex_443829.htm EXHIBIT 99.1 ex_443829.htm
 

Exhibit 99.1

 

logo.jpg
 

Cable One Reports Fourth Quarter and Full Year 2022 Results

 

February 23, 2023  PHOENIX (BUSINESS WIRE) – Cable One, Inc. (NYSE: CABO) (the “Company” or “Cable One”) today reported financial and operating results for the quarter and year ended December 31, 2022. As previously disclosed, Cable One contributed certain fiber operations to Clearwave Fiber on January 1, 2022; divested certain other operations during the second quarter of 2022; and acquired certain operations during 2021.(1) These transactions impacted the year-over-year changes reflected in the Company’s 2022 revenues and other financial results for the fourth quarter and full year periods.

 

Fourth Quarter 2022 Highlights:

 

 

Total revenues were $425.5 million in the fourth quarter of 2022 compared to $432.6 million in the fourth quarter of 2021. Year-over-year, residential data revenues increased 5.7% and business services revenues decreased 11.4%. Revenues for the fourth quarter of 2022 included $4.9 million from CableAmerica(1) operations. Revenues for the fourth quarter of 2021 included $16.1 million from operations that were contributed to Clearwave Fiber(1) and from the Divested Operations(1), of which a substantial majority consisted of business services revenues.

 

 

Net loss was $77.2 million in the fourth quarter of 2022 compared to net income of $64.8 million in the fourth quarter of 2021, a decrease of 219.1% year-over-year. The Company recognized a $128.8 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 ("MBI") during the fourth quarter of 2022. Net profit margin was negative 18.1% in the fourth quarter of 2022.

 

  Adjusted EBITDA(2) was $233.2 million in the fourth quarter of 2022 compared to $225.3 million in the prior year quarter, an increase of 3.5% year-over-year. Adjusted EBITDA margin(2) was 54.8% in the fourth quarter of 2022.

 

 

Net cash provided by operating activities was $168.2 million in the fourth quarter of 2022 compared to $174.1 million in the fourth quarter of 2021. Adjusted EBITDA less capital expenditures(2) was $126.4 million in the fourth quarter of 2022 compared to $115.4 million in the prior year quarter.

 

 

Residential data primary service units (“PSUs”) grew by approximately 6,000, or 0.7%, year-over-year. Approximately 8,700 residential data PSUs were contributed to Clearwave Fiber.

 

 

The Company repurchased 61,425 shares of its common stock at an aggregate cost of $46.3 million and paid $16.5 million in dividends during the fourth quarter of 2022.

 

Full Year 2022 Highlights:

 

 

Total revenues were $1.7 billion in 2022 compared to $1.6 billion in 2021. Residential data revenues increased 11.8% and business services revenues decreased 1.1% year-over-year. Revenues from the Acquired Operations in 2022 increased by $96.8 million year-over-year. Revenues for 2021 included $22.5 million from non-Hargray operations that were contributed to Clearwave Fiber, consisting of business services revenues.

 

 

Net income was $234.1 million in 2022 compared to $291.8 million in 2021, a decrease of 19.8% year-over-year. Net profit margin was 13.7% for 2022.

 

  Adjusted EBITDA was $911.9 million in 2022 compared to $839.3 million in 2021, an increase of 8.6% year-over-year. Adjusted EBITDA margin was 53.4% for 2022.

 

 

Net cash provided by operating activities was $738.0 million in 2022, an increase of 4.8% year-over-year. Adjusted EBITDA less capital expenditures was $497.8 million in 2022, an increase of 11.3% compared to 2021.

 

 

The Company repurchased 294,062 shares of its common stock at an aggregate cost of $353.3 million and paid $66.3 million in dividends during 2022.

 

Other Highlight:
 
 

On February 22, 2023, the Company opportunistically amended, upsized and extended certain existing credit facilities totaling approximately $2.0 billion with a core group of its lenders, most notably achieving extended maturities, enhanced liquidity and improved strategic flexibility at comparable costs to the existing facilities.

 


(1) Cable One acquired the remaining equity interests in Hargray Acquisition Holdings, LLC, a data, video and voice services provider ("Hargray"), that it did not already own (the “Hargray Acquisition”) on May 3, 2021 and acquired certain assets and assumed certain liabilities from Cable America Missouri, LLC, a data, video and voice services provider ("CableAmerica"), on December 30, 2021 (collectively, the "Acquired Operations"). Cable One contributed certain fiber operations to Clearwave Fiber LLC, a joint venture amongst Cable One and certain unaffiliated third-party investors ("Clearwave Fiber"), on January 1, 2022 (the "Clearwave Fiber Contribution"). During the second quarter of 2022, Cable One divested its Tallahassee, Florida system and certain other non-core assets (collectively, the "Divested Operations"). The results discussed and presented in the tables within this press release include Hargray operations for the period since the May 3, 2021 acquisition date and CableAmerica operations for the period since the December 30, 2021 acquisition date and exclude the fiber operations contributed to Clearwave Fiber for the period since the January 1, 2022 contribution date and the Divested Operations from their respective divestiture dates.

(2)

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

 

Fourth Quarter 2022 Financial Results Compared to Fourth Quarter 2021

 

Revenues decreased $7.1 million, or 1.6%, to $425.5 million for the fourth quarter of 2022. The decrease was due primarily to the contribution of operations to Clearwave Fiber and the disposition of the Divested Operations during 2022 that collectively generated $16.1 million of revenues in the prior year quarter, predominantly consisting of business services revenues, and decreases in residential video and residential voice revenues. The decrease was partially offset by increases in higher margin residential data and business services revenues from continuing operations and the addition of CableAmerica operations.

 

Operating expenses (excluding depreciation and amortization) were $112.6 million for the fourth quarter of 2022 and decreased $7.3 million, or 6.1%, compared to the fourth quarter of 2021. The decrease in operating expenses was primarily attributable to $11.7 million of lower programming and franchise fees as a result of video customer losses, partially offset by higher health insurance costs and rent expense. Operating expenses as a percentage of revenues were 26.5% and 27.7% for the fourth quarter of 2022 and 2021, respectively.

 

Selling, general and administrative expenses were $85.7 million for the fourth quarter of 2022 and decreased $9.2 million, or 9.7%, compared to the fourth quarter of 2021. The decrease in selling, general and administrative expenses was primarily attributable to decreases in labor and other compensation-related costs, marketing costs, maintenance costs and system conversion costs, partially offset by higher software costs. Selling, general and administrative expenses as a percentage of revenues were 20.1% and 21.9% for the fourth quarter of 2022 and 2021, respectively.

 

Depreciation and amortization expense was $86.9 million for the fourth quarter of 2022 and decreased $6.1 million, or 6.5%, compared to the fourth quarter of 2021. The decrease in depreciation and amortization expense was primarily due to lower expenses resulting from the Clearwave Fiber Contribution. Depreciation and amortization expense as a percentage of revenues was 20.4% and 21.5% for the fourth quarter of 2022 and 2021, respectively.

 

Interest expense was $39.2 million for the fourth quarter of 2022 and increased $8.7 million, or 28.7%, compared to the fourth quarter of 2021. The increase was driven primarily by higher interest rates.

 

Other expense, net, was $122.9 million for the fourth quarter of 2022 and consisted primarily of a $128.8 million non-cash loss on fair value adjustment associated with the call and put options to acquire the remaining equity interests in MBI, partially offset by interest and investment income. Other expense, net, of $3.4 million for the fourth quarter of 2021 consisted primarily of an $8.9 million non-cash loss on fair value adjustment associated with the call and put options to acquire the remaining equity interests in MBI, partially offset by interest and investment income and a non-cash mark-to-market investment gain.

 

Income tax provision was $40.2 million and $23.6 million for the fourth quarter of 2022 and 2021, respectively. The increase was due primarily to a $22.9 million deferred income tax expense in the current year due to a revaluation of the existing net deferred tax liability as a result of the adoption of unitary filing position for state income tax purposes upon Hargray's integration into Cable One.

 

Net loss was $77.2 million in the fourth quarter of 2022, driven by the $128.8 million non-cash loss on fair value adjustment discussed above, compared to net income of $64.8 million in the prior year quarter.

 

Adjusted EBITDA was $233.2 million and $225.3 million for the fourth quarter of 2022 and 2021, respectively. Capital expenditures for the fourth quarter of 2022 totaled $106.8 million compared to $109.9 million for the fourth quarter of 2021. Adjusted EBITDA less capital expenditures for the fourth quarter of 2022 was $126.4 million compared to $115.4 million in the prior year quarter.

 

2

 

Full Year 2022 Financial Results Compared to Full Year 2021

 

Revenues increased $100.2 million, or 6.2%, to $1.7 billion for 2022. The year-over-year increase was driven primarily by increased revenues from the Acquired Operations and residential data services, and business services revenue growth from operations not contributed to Clearwave Fiber, partially offset by the contribution of operations to Clearwave Fiber and the disposition of the Divested Operations during 2022, and decreases in residential video and residential voice revenues. Revenues from the Acquired Operations in 2022 increased by $96.8 million year-over-year. Revenues for 2021 included $22.5 million from non-Hargray operations that were contributed to Clearwave Fiber, consisting of business services revenues. For 2022 and 2021, residential data revenues comprised 54.8% and 52.0% of total revenues, respectively, and business services revenues comprised 17.9% and 19.2% of total revenues, respectively.

 

Operating expenses (excluding depreciation and amortization) were $470.9 million for 2022 and increased $15.6 million, or 3.4%, compared to 2021. The increase in operating expenses was primarily attributable to $28.0 million of additional expenses related to the Acquired Operations and increases in labor and other compensation-related costs, fuel costs, health insurance costs and professional fees, partially offset by a $26.6 million reduction in programming and franchise fees as a result of video customer losses and lower rent expense. Operating expenses as a percentage of revenues were 27.6% and 28.4% for 2022 and 2021, respectively.

 

Selling, general and administrative expenses were $350.3 million for 2022 and increase$3.3 million, or 0.9%, compared to 2021. The increase in selling, general and administrative expenses was primarily attributable to increases in professional fees, bad debt expense, software costs and health insurance costs, partially offset by decreases in acquisition-related costs and system conversion costs. Selling, general and administrative expenses as a percentage of revenues were 20.5% and 21.6% for 2022 and 2021, respectively.

 

Depreciation and amortization expense was $350.5 million for 2022 and increased $11.4 million, or 3.4%, compared to 2021. Depreciation and amortization expense as a percentage of revenues was 20.5% and 21.1% for 2022 and 2021, respectively.

 

The Company recognized a non-cash gain of $22.1 million associated with the Clearwave Fiber Contribution and a $8.3 million non-cash loss associated with the dispositions of its Tallahassee, Florida system and certain other non-core assets during 2022.

 

Interest expense was $137.7 million for 2022 and increased $24.3 million, or 21.4%, compared to 2021. The increase was driven primarily by additional outstanding debt and higher interest rates.

 

Other expense, net, was $25.9 million for 2022 and consisted primarily of a $40.7 million non-cash loss on fair value adjustment associated with the call and put options to acquire the remaining equity interests in MBI, partially offset by interest and investment income. Other expense, net, was $6.0 million for 2021 and consisted primarily of a $50.3 million non-cash loss on fair value adjustment associated with the MBI options and debt issuance cost write-offs, partially offset by a $33.4 million non-cash gain on fair value adjustment associated with the existing investment in Hargray upon the Hargray Acquisition, interest and investment income and a non-cash mark-to-market investment gain.

 

Income tax provision was $126.3 million and $45.8 million for 2022 and 2021, respectively, and the Company's effective tax rate was 33.7% and 13.6% for 2022 and 2021, respectively. The increase in the effective tax rate was due primarily to a $35.4 million income tax benefit from the reversal of a pre-existing deferred tax liability on the Hargray investment in the prior year that did not recur in the current year and a $22.9 million deferred income tax expense in the current year due to a revaluation of the existing net deferred tax liability as a result of the adoption of unitary filing position for state income tax purposes upon Hargray's integration into Cable One.

 

Net income was $234.1 million for 2022 compared to $291.8 million for 2021.

 

Adjusted EBITDA was $911.9 million and $839.3 million for 2022 and 2021, respectively. Capital expenditures for 2022 totaled $414.1 million compared to $391.9 million for 2021. Adjusted EBITDA less capital expenditures for 2022 was $497.8 million compared to $447.4 million in 2021.

 

3

 

Liquidity and Capital Resources

 

At December 31, 2022, the Company had $215.2 million of cash and cash equivalents on hand compared to $388.8 million at December 31, 2021. The Company’s debt balance was $3.8 billion and $3.9 billion at December 31, 2022 and 2021, respectively. The Company had $500.0 million available for borrowing under its revolving credit facility as of December 31, 2022.

 

The Company paid $16.5 million in dividends to stockholders and repurchased 61,425 shares of its common stock at an aggregate cost of $46.3 million during the fourth quarter of 2022. During 2022, the Company paid $66.3 million in dividends and repurchased 294,062 shares of its common stock at an aggregate cost of $353.3 million. The Company had $241.8 million of remaining share repurchase authorization as of December 31, 2022.

 

On February 22, 2023, the Company amended and restated its credit agreement (the "New Credit Agreement") to, among other things, (i) increase the aggregate principal amount of commitments under its revolving credit facility by $500.0 million to $1.0 billion; (ii) extend the scheduled maturity of its revolving credit facility from October 2025 to February 2028; (iii) upsize its $625.0 million term loan maturing in 2027 (the "Term Loan B-3") by $150.0 million to $775.0 million; (iv) extend the scheduled maturities of its $250.0 million term loan maturing in 2027 (the "Term Loan B-2") and the Term Loan B-3 from October 2027 to October 2029; and (v) transition the benchmark interest rate for its revolving credit facility, the Term Loan B-2 and the Term Loan B-3 from the London Interbank Offered Rate ("LIBOR") to the Secured Overnight Financing Rate plus a 10 basis point credit spread adjustment by March 1, 2023. The variable interest rate spread on the Company's revolving credit facility remained unchanged while the fixed spreads on the Term Loan B-2 and the Term Loan B-3 increased from 2.00% to 2.25%. Except as described above, the New Credit Agreement did not make any material changes to the principal terms of its revolving credit facility or its term loans. Upon the effectiveness of the New Credit Agreement, the Company drew $488.0 million under its revolving credit facility and, together with the net proceeds from the upsized Term Loan B-3, repaid all $638.3 million aggregate principal amount of its outstanding term "A-2" loan tranche that was scheduled to mature on October 30, 2025. 

 

Conference Call

 

Cable One will host a conference call with the financial community to discuss results for the fourth quarter and full year 2022 on Thursday, February 23, 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 1-844-200-6205 (International: 1-929-526-1599) and using the access code 455731. 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 February 23, 2023 until March 9, 2023 at ir.cableone.net.

 

Additional Information Available on Website

 

The information in this press release should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the period ended December 31, 2022 (the "2022 Form 10-K"), 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.

 

4

 

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 (loss), net profit margin, net cash provided by operating activities or capital expenditures as a percentage of net income (loss) reported in accordance with GAAP. Adjusted EBITDA and Adjusted EBITDA less capital expenditures are reconciled to net income (loss), 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 (loss). 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 (loss) plus interest expense, income tax provision, depreciation and amortization, equity-based compensation, (gain) loss on deferred compensation, acquisition-related costs, (gain) loss on asset sales and disposals, system conversion costs, rebranding costs, (gain) loss on sales of businesses, 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 and capital expenditures as a percentage of Adjusted EBITDA 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.

 

5

 

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 1.1 million residential and business customers in 24 states. 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

investor_relations@cableone.biz

patricia.niemann@cableone.biz

 

 

6

 

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 2022 Form 10-K to be filed with the SEC:

 

 

rising levels of competition from historical and new entrants in the Company’s markets;

 

recent and future changes in technology, 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 Hargray Acquisition;

 

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 LIBOR 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;
 

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;

 

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 and in its subsequent filings 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.

 

7

 

CABLE ONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

   

Three Months Ended December 31,

                 

(dollars in thousands, except per share data)

 

2022

   

2021

   

$ Change

   

% Change

 

Revenues:

                               

Residential data

  $ 237,247     $ 224,529     $ 12,718       5.7 %

Residential video

    75,256       86,943       (11,687 )     (13.4 )%

Residential voice

    9,991       12,284       (2,293 )     (18.7 )%

Business services

    76,287       86,061       (9,774 )     (11.4 )%

Other

    26,734       22,771       3,963       17.4 %

Total Revenues

    425,515       432,588       (7,073 )     (1.6 )%

Costs and Expenses:

                               

Operating (excluding depreciation and amortization)

    112,617       119,879       (7,262 )     (6.1 )%

Selling, general and administrative

    85,739       94,898       (9,159 )     (9.7 )%

Depreciation and amortization

    86,898       92,980       (6,082 )     (6.5 )%

(Gain) loss on asset sales and disposals, net

    1,584       3,515       (1,931 )     (54.9 )%

Total Costs and Expenses

    286,838       311,272       (24,434 )     (7.8 )%

Income from operations

    138,677       121,316       17,361       14.3 %

Interest expense

    (39,164 )     (30,426 )     (8,738 )     28.7 %

Other income (expense), net

    (122,873 )     (3,418 )     (119,455 )     NM  

Income (loss) before income taxes and equity method investment income (loss), net

    (23,360 )     87,472       (110,832 )     (126.7 )%

Income tax provision

    40,167       23,636       16,531       69.9 %

Income (loss) before equity method investment income (loss), net

    (63,527 )     63,836       (127,363 )     (199.5 )%

Equity method investment income (loss), net

    (13,683 )     999       (14,682 )     NM  

Net income (loss)

  $ (77,210 )   $ 64,835     $ (142,045 )     (219.1 )%
                                 

Net Income (Loss) per Common Share:

                               

Basic

  $ (13.38 )   $ 10.76     $ (24.14 )     (224.3 )%

Diluted

  $ (13.38 )   $ 10.54     $ (23.92 )     (226.9 )%

Weighted Average Common Shares Outstanding:

                               

Basic

    5,769,537       6,024,689       (255,152 )     (4.2 )%

Diluted

    5,769,537       6,460,356       (690,819 )     (10.7 )%
                                 

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

  $ (4,475 )   $ 8,936     $ (13,411 )     (150.1 )%

Comprehensive income (loss)

  $ (81,685 )   $ 73,771     $ (155,456 )     (210.7 )%

 


NM = Not meaningful.

 

8

 

CABLE ONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

 

   

Year Ended December 31,

                 

(dollars in thousands, except per share data)

 

2022

   

2021

   

$ Change

   

% Change

 

Revenues:

                               

Residential data

  $ 934,564     $ 835,725     $ 98,839       11.8 %

Residential video

    325,200       339,707       (14,507 )     (4.3 )%

Residential voice

    43,096       47,519       (4,423 )     (9.3 )%

Business services

    305,286       308,767       (3,481 )     (1.1 )%

Other

    97,897       74,118       23,779       32.1 %

Total Revenues

    1,706,043       1,605,836       100,207       6.2 %

Costs and Expenses:

                               

Operating (excluding depreciation and amortization)

    470,916       455,352       15,564       3.4 %

Selling, general and administrative

    350,310       347,058       3,252       0.9 %

Depreciation and amortization

    350,462       339,025       11,437       3.4 %

(Gain) loss on asset sales and disposals, net

    9,199       7,829       1,370       17.5 %

(Gain) loss on sales of businesses, net

    (13,833 )     -       (13,833 )     NM  

Total Costs and Expenses

    1,167,054       1,149,264       17,790       1.5 %

Income from operations

    538,989       456,572       82,417       18.1 %

Interest expense

    (137,713 )     (113,449 )     (24,264 )     21.4 %

Other income (expense), net

    (25,913 )     (6,002 )     (19,911 )     NM  

Income before income taxes and equity method investment income (loss), net

    375,363       337,121       38,242       11.3 %

Income tax provision

    126,332       45,765       80,567       176.0 %

Income before equity method investment income (loss), net

    249,031       291,356       (42,325 )     (14.5 )%

Equity method investment income (loss), net

    (14,913 )     468       (15,381 )     NM  

Net income

  $ 234,118     $ 291,824     $ (57,706 )     (19.8 )%
                                 

Net Income per Common Share:

                               

Basic

  $ 39.73     $ 48.49     $ (8.76 )     (18.1 )%

Diluted

  $ 38.06     $ 46.49     $ (8.43 )     (18.1 )%

Weighted Average Common Shares Outstanding:

                               

Basic

    5,892,077       6,017,778       (125,701 )     (2.1 )%

Diluted

    6,314,148       6,387,354       (73,206 )     (1.1 )%
                                 

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

  $ 132,826     $ 57,888     $ 74,938       129.5 %

Comprehensive income

  $ 366,944     $ 349,712     $ 17,232       4.9 %

 


NM = Not meaningful. 

 

9

 

CABLE ONE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(dollars in thousands, except par values)

 

December 31, 2022

   

December 31, 2021

 

Assets

               

Current Assets:

               

Cash and cash equivalents

  $ 215,150     $ 388,802  

Accounts receivable, net

    72,715       56,253  

Income taxes receivable

    1,668       24,193  

Prepaid and other current assets

    57,172       31,705  

Total Current Assets

    346,705       500,953  

Equity investments

    1,195,221       727,565  

Property, plant and equipment, net

    1,701,755       1,854,104  

Intangible assets, net

    2,666,585       2,861,137  

Goodwill

    928,947       967,913  

Other noncurrent assets

    74,677       42,322  

Total Assets

  $ 6,913,890     $ 6,953,994  
                 

Liabilities and Stockholders' Equity

               

Current Liabilities:

               

Accounts payable and accrued liabilities

  $ 164,518     $ 203,387  

Deferred revenue

    23,706       26,851  

Current portion of long-term debt

    55,931       38,837  

Total Current Liabilities

    244,155       269,075  

Long-term debt

    3,752,591       3,799,500  

Deferred income taxes

    966,821       854,156  

Interest rate swap liability

    -       81,627  

Other noncurrent liabilities

    192,350       156,541  

Total Liabilities

    5,155,917       5,160,899  
                 

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 5,766,011 and 6,046,362 shares outstanding as of December 31, 2022 and 2021, respectively)

    62       62  

Additional paid-in capital

    578,154       555,640  

Retained earnings

    1,624,406       1,456,543  

Accumulated other comprehensive income (loss)

    50,031       (82,795 )

Treasury stock, at cost (409,388 and 129,037 shares held as of December 31, 2022 and 2021, respectively)

    (494,680 )     (136,355 )

Total Stockholders' Equity

    1,757,973       1,793,095  

Total Liabilities and Stockholders' Equity

  $ 6,913,890     $ 6,953,994  

 

10

 

CABLE ONE, INC.

RECONCILIATIONS OF NON-GAAP MEASURES

(Unaudited)

 

   

Three Months Ended December 31,

                 

(dollars in thousands)

 

2022

   

2021

   

$ Change

   

% Change

 

Net income (loss)

  $ (77,210 )   $ 64,835     $ (142,045 )     (219.1 )%

Net profit margin

    (18.1 )%     15.0 %                
                                 

Plus: Interest expense

  $ 39,164     $ 30,426     $ 8,738       28.7 %

Income tax provision

    40,167       23,636       16,531       69.9 %

Depreciation and amortization

    86,898       92,980       (6,082 )     (6.5 )%

Equity-based compensation

    5,498       5,220       278       5.3 %

(Gain) loss on deferred compensation

    51       69       (18 )     (26.1 )%

Acquisition-related costs

    424       803       (379 )     (47.2 )%

(Gain) loss on asset sales and disposals, net

    1,584       3,515       (1,931 )     (54.9 )%

System conversion costs

    83       1,364       (1,281 )     (93.9 )%

Equity method investment (income) loss, net

    13,683       (999 )     14,682       NM  

Other (income) expense, net

    122,873       3,418       119,455       NM  

Adjusted EBITDA

  $ 233,215     $ 225,267     $ 7,948       3.5 %

Adjusted EBITDA margin

    54.8 %     52.1 %                
                                 

Less: Capital expenditures

  $ 106,843     $ 109,910     $ (3,067 )     (2.8 )%

Capital expenditures as a percentage of net income (loss)

    (138.4 )%     169.5 %                

Capital expenditures as a percentage of Adjusted EBITDA

    45.8 %     48.8 %                
                                 

Adjusted EBITDA less capital expenditures

  $ 126,372     $ 115,357     $ 11,015       9.5 %

 


NM = Not meaningful.

 

   

Three Months Ended December 31,

                 

(dollars in thousands)

 

2022

   

2021

   

$ Change

   

% Change

 

Net cash provided by operating activities

  $ 168,247     $ 174,055     $ (5,808 )     (3.3 )%

Capital expenditures

    (106,843 )     (109,910 )     3,067       (2.8 )%

Interest expense

    39,164       30,426       8,738       28.7 %

Non-cash interest expense

    (2,394 )     (2,427 )     33       (1.4 )%

Income tax provision

    40,167       23,636       16,531       69.9 %

Changes in operating assets and liabilities

    28,926       27,873       1,053       3.8 %

Change in deferred income taxes

    (35,906 )     (27,313 )     (8,593 )     31.5 %

(Gain) loss on deferred compensation

    51       69       (18 )     (26.1 )%

Acquisition-related costs

    424       803       (379 )     (47.2 )%

System conversion costs

    83       1,364       (1,281 )     (93.9 )%

Fair value adjustments

    (128,420 )     (6,637 )     (121,783 )     NM  

Other (income) expense, net

    122,873       3,418       119,455       NM  

Adjusted EBITDA less capital expenditures

  $ 126,372     $ 115,357     $ 11,015       9.5 %

 


NM = Not meaningful. 

 

11

 

CABLE ONE, INC.

RECONCILIATIONS OF NON-GAAP MEASURES

(Unaudited)

 

   

Year Ended December 31,

                 

(dollars in thousands)

 

2022

   

2021

   

$ Change

   

% Change

 

Net income

  $ 234,118     $ 291,824     $ (57,706 )     (19.8 )%

Net profit margin

    13.7 %     18.2 %                
                                 

Plus: Interest expense

    137,713       113,449       24,264       21.4 %

Income tax provision

    126,332       45,765       80,567       176.0 %

Depreciation and amortization

    350,462       339,025       11,437       3.4 %

Equity-based compensation

    22,514       20,054       2,460       12.3 %

(Gain) loss on deferred compensation

    (154 )     174       (328 )     (188.5 )%

Acquisition-related costs

    3,208       10,770       (7,562 )     (70.2 )%

(Gain) loss on asset sales and disposals, net

    9,199       7,829       1,370       17.5 %

System conversion costs

    1,466       4,831       (3,365 )     (69.7 )%

Rebranding costs

    -       70       (70 )     (100.0 )%

(Gain) loss on sales of businesses, net

    (13,833 )     -       (13,833 )     NM  

Equity method investment (income) loss, net

    14,913       (468 )     15,381       NM  

Other (income) expense, net

    25,913       6,002       19,911       NM  

Adjusted EBITDA

  $ 911,851     $ 839,325     $ 72,526       8.6 %

Adjusted EBITDA margin

    53.4 %     52.3 %                
                                 

Less: Capital expenditures

    414,095       391,934       22,161       5.7 %

Capital expenditures as a percentage of net income

    176.9 %     134.3 %                

Capital expenditures as a percentage of Adjusted EBITDA

    45.4 %     46.7 %                
                                 

Adjusted EBITDA less capital expenditures

  $ 497,756     $ 447,391     $ 50,365       11.3 %

 


NM = Not meaningful.

 

   

Year Ended December 31,

                 

(dollars in thousands)

 

2022

   

2021

   

$ Change

   

% Change

 

Net cash provided by operating activities

  $ 738,040     $ 704,341     $ 33,699       4.8 %

Capital expenditures

    (414,095 )     (391,934 )     (22,161 )     5.7 %

Interest expense

    137,713       113,449       24,264       21.4 %

Non-cash interest expense

    (9,518 )     (9,157 )     (361 )     3.9 %

Income tax provision

    126,332       45,765       80,567       176.0 %

Changes in operating assets and liabilities

    (2,371 )     8,825       (11,196 )     (126.9 )%

Change in deferred income taxes

    (68,378 )     (28,993 )     (39,385 )     135.8 %

(Gain) loss on deferred compensation

    (154 )     174       (328 )     (188.5 )%

Acquisition-related costs

    3,208       10,770       (7,562 )     (70.2 )%

Write-off of debt issuance costs

    -       (2,131 )     2,131       (100.0 )%

System conversion costs

    1,466       4,831       (3,365 )     (69.7 )%

Rebranding costs

    -       70       (70 )     (100.0 )%

Fair value adjustment

    (40,400 )     (48,027 )     7,627       (15.9 )%

Gain on step acquisition

    -       33,406       (33,406 )     (100.0 )%

Other (income) expense, net

    25,913       6,002       19,911       NM  

Adjusted EBITDA less capital expenditures

  $ 497,756     $ 447,391     $ 50,365       11.3 %

 


NM = Not meaningful. 

 

12

 

CABLE ONE, INC.

OPERATING STATISTICS

(Unaudited)

 

   

As of December 31,

   

Change

 

(in thousands, except percentages and ARPU data)

 

2022

   

2021

   

Amount

   

%

 

Homes Passed

    2,704.3       2,727.2       (22.9 )     (0.8 )%
                                 

Residential Customers

    1,010.2       1,046.9       (36.7 )     (3.5 )%
                                 

Data PSUs

    963.7       957.4       6.4       0.7 %

Video PSUs

    171.2       246.9       (75.7 )     (30.7 )%

Voice PSUs

    91.3       105.3       (14.0 )     (13.3 )%

Total residential PSUs

    1,226.3       1,309.6       (83.3 )     (6.4 )%
                                 

Business Customers

    101.6       105.1       (3.5 )     (3.4 )%
                                 

Data PSUs

    96.6       97.3       (0.7 )     (0.7 )%

Video PSUs

    10.3       13.8       (3.5 )     (25.1 )%

Voice PSUs

    40.8       44.0       (3.2 )     (7.3 )%

Total business services PSUs

    147.7       155.1       (7.3 )     (4.7 )%
                                 

Total Customers

    1,111.7       1,151.9       (40.2 )     (3.5 )%

Total non-video

    927.2       869.5       57.7       6.6 %

Percent of total

    83.4 %     75.5 %                
                                 

Data PSUs

    1,060.4       1,054.7       5.7       0.5 %

Video PSUs

    181.5       260.7       (79.2 )     (30.4 )%

Voice PSUs

    132.1       149.3       (17.2 )     (11.5 )%

Total PSUs

    1,374.0       1,464.6       (90.6 )     (6.2 )%
                                 

Penetration

                               

Data

    39.2 %     38.7 %             0.5 %

Video

    6.7 %     9.6 %             (2.8 )%

Voice

    4.9 %     5.5 %             (0.6 )%
                                 

Share of Fourth Quarter Revenues

                               

Residential data

    55.8 %     51.9 %             3.9 %

Business services

    17.9 %     19.9 %             (2.0 )%

Total

    73.7 %     71.8 %             1.9 %
                                 

ARPU - Fourth Quarter

                               

Residential data(1)

  $ 81.71     $ 79.32     $ 2.39       3.0 %

Residential video(1)

  $ 138.56     $ 113.47     $ 25.09       22.1 %

Residential voice(1)

  $ 35.69     $ 38.51     $ (2.82 )     (7.3 )%

Business services(2),(3)

  $ 249.78     $ 276.32     $ (26.54 )     (9.6 )%

 


Note:

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

(1)

Average monthly revenue per unit (“ARPU”) values represent the applicable quarterly residential service revenues (excluding installation and activation fees) divided by the corresponding average of the number of PSUs at the beginning and end of each period, divided by three, 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.

(3) The decrease in business services ARPU was due primarily to a disproportionately large number of higher ARPU enterprise customers being divested in the Clearwave Fiber Contribution.

 

13
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Document And Entity Information
Feb. 23, 2023
Document Information [Line Items]  
Entity, Registrant Name Cable One, Inc.
Document, Type 8-K
Document, Period End Date Feb. 23, 2023
Entity, Incorporation, State or Country Code DE
Entity, File Number 001-36863
Entity, Tax Identification Number 13-3060083
Entity, Address, Address Line One 210 E. Earll Drive
Entity, Address, City or Town Phoenix
Entity, Address, State or Province AZ
Entity, Address, Postal Zip Code 85012
City Area Code 602
Local Phone Number 364-6000
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock
Trading Symbol CABO
Security Exchange Name NYSE
Entity, Emerging Growth Company false
Amendment Flag false
Entity, Central Index Key 0001632127
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