- Total second quarter revenue of $2.07 billion
- Net loss of $5.32 billion, includes a goodwill impairment of
$5.45 billion
- Second quarter Adjusted EBITDA1 of $882 million
- Net broadband unit losses of 71,000
- Realized a $160 million annualized transformation program
EBITDA benefit in second quarter; expecting a $200 million
annualized exit-rate transformation EBITDA benefit at year-end
2019
- Reducing 2019 Adjusted EBITDA guidance range to $3.35 billion
to $3.42 billion; reducing 2020 transformation benefit target
- Company maintains liquidity of $786 million as of June 30,
2019
Frontier Communications Corporation (NASDAQ:FTR) today reported
financial results for the second quarter ended June 30, 2019.
“We continue to strive to optimize our business by leveraging
our best assets for future growth while managing the segments of
our business in secular decline by executing on cost efficiency
programs and selective capital investment. Although we achieved
second quarter Adjusted EBITDA of $882 million, we continue to be
challenged by ongoing revenue declines, content cost escalations,
higher labor costs, and other pressures across the business,” said
Dan McCarthy, President and CEO.
“The reduction in 2019 guidance reflects pressures on the
business and planned incremental investments in both Consumer and
Commercial during the second half of the year,” Mr. McCarthy
continued. “The expense-reduction initiatives of the transformation
program have resulted in an annualized EBITDA benefit of $160
million in the second quarter. We now expect to attain in-year
EBITDA benefits of $110 million to $150 million in 2019, as
compared to our prior target of $50 million to $100 million. That
said, we are reducing our target of $500 million in annualized
EBITDA benefits exiting 2020 to a range of $200 million to $250
million largely because of challenges in achieving targets for
improvements in revenue and customer trends. We continue to
anticipate a 2019 exit-rate of $200 million in annualized EBITDA
benefits, driven almost entirely by cost reductions rather than
revenue improvements.”
Consolidated Results
Consolidated revenue for the second quarter of 2019 was $2.07
billion, as compared with $2.10 billion in the first quarter.
Within second quarter consolidated revenue, Consumer revenue was
$1.05 billion, Commercial revenue was $922 million, and subsidy
revenue was $95 million.
Net loss for the second quarter of 2019 was $5.32 billion,
representing a net loss per common share of $51.07. Net loss
included a $5.45 billion goodwill impairment or $4.93 billion net
of tax, a $384 million loss on the anticipated sale of operations
and assets in Washington, Oregon, Idaho, and Montana, and $31
million of restructuring expenses. The impairment reflects, among
other things, our expectation of continued revenue declines because
of pressures on the business, reduced expectations for the
transformation program, the long-term sustainability of our capital
structure, a lower outlook for our overall industry, and the
cumulative impact of all these factors on business trends going
forward. Our goodwill balance as of June 30, 2019 is $276 million,
and further impairments are possible as a result of ongoing reviews
of the business and operations.
Second quarter Adjusted EBITDA was $882 million, representing an
Adjusted EBITDA margin2 of 42.7%. This compares with Adjusted
EBITDA of $873 million in the first quarter of 2019. The benefits
from our transformation program yielded a $26 million sequential
increase. The second quarter also had approximately $10 million of
net benefits related to some expenses being lower than originally
estimated or accrued as well as the deferral of certain investments
and expenses including delays in anticipated staffing. Offsetting
these benefits was the impact of a $34 million sequential decline
in revenue.
Net cash provided from operating activities for the second
quarter of 2019 was $575 million and operating free cash flow3 was
$300 million. For the four-quarter period ended June 30, 2019, net
cash provided from operating activities was $1,746 million and
operating free cash flow was $592 million.
Consumer Business Highlights
- Revenue of $1.05 billion. The sequential decline was driven by
customer losses.
- Customer churn of 2.14%, an increase from the first quarter of
2019. The level of second quarter churn was impacted by
seasonality, an elevated level of rolloff of bill credits offered
to customers in 2017, and ongoing industry pressure.
- Consumer fiber broadband net losses were 10,000 and consumer
copper broadband net losses were 46,000, in each case reflecting
seasonality and increased churn. Both Consumer fiber broadband and
Consumer copper broadband revenue declined sequentially, reversing
the trend in the first quarter. Broadband accounts for more than
40% of Consumer revenue.
- Average Revenue Per Customer (ARPC) of $88.68, a sequential
decrease largely reflecting video customer declines.
Commercial Business Highlights
- Revenue of $922 million.
- Total commercial customers of 390,000 compared with 400,000
during the first quarter of 2019.
- Commercial wholesale revenue declined 0.5% sequentially, with
the decline in legacy circuits and voice being nearly offset by the
increase in Ethernet and other services. Wholesale represents
slightly more than half of Commercial revenue. Wireless backhaul,
one element of wholesale revenue, represents less than 3% of total
company revenue, and continued revenue declines are expected.
- Commercial SME revenue declined 1.8% sequentially largely
driven by the ongoing decline in voice services. Voice revenue
accounts for approximately half of SME revenue.
Capital Structure
As previously announced, the Finance Committee of the Board of
Directors is evaluating Frontier’s capital structure. This includes
considering, evaluating and negotiating capital markets and/or
financing transactions and/or strategic alternatives. Frontier
remains committed to reducing debt and improving its leverage
profile.
Developments include the following:
- As of June 30, 2019, Frontier’s leverage ratio4 was
4.69:1.
- On May 28, 2019 we entered into a definitive agreement to sell
operations and all associated assets in Washington, Oregon, Idaho,
and Montana for $1.352 billion in cash at closing.
- Three new directors were elected to our Board on June 6,
2019.
- As of June 30, 2019, the company had total liquidity5 of $786
million.
Guidance
Guidance for 2019 is being updated.
- Adjusted EBITDA of $3.35 billion to $3.42 billion, which
includes an anticipated $110 million to $150 million benefit from
the transformation program during 2019
- Capital expenditures – Approximately $1.20 billion, plus up to
an additional $15 million in capital to prepare for the announced
divestiture
- Cash taxes – Less than $25 million
- Cash pension/OPEB – Approximately $175 million; Cash
pension/OPEB contribution has been $77 million through June 30,
2019
- Cash interest expense – Approximately $1.475 billion
- Operating free cash flow – $290 million to $360 million
The company does not intend to provide any further commentary
regarding its financial outlook going forward, and this includes
making any further revisions to guidance.
Divestiture Announced
As previously announced, the company has entered into a
definitive agreement to sell operations and all associated assets
in Washington, Oregon, Idaho, and Montana.
- Received early termination of Hart-Scott-Rodino Act waiting
period
- Federal Communication Commission and required state
applications filed
- Approval process proceeding as planned
- Second quarter revenue was $152 million
Non-GAAP Financial Measures
Frontier uses certain non-GAAP financial measures in evaluating
its performance, including EBITDA, EBITDA margin, Adjusted EBITDA,
Adjusted EBITDA margin, operating free cash flow, adjusted
operating expenses, and leverage ratio, each of which is described
below. Management uses these non-GAAP financial measures internally
to (i) assist in analyzing Frontier's underlying financial
performance from period to period, (ii) analyze and evaluate
strategic and operational decisions, (iii) establish criteria for
compensation decisions, and (iv) assist in the understanding of
Frontier's ability to generate cash flow and, as a result, to plan
for future capital and operational decisions. Management believes
that the presentation of these non-GAAP financial measures provides
useful information to investors regarding Frontier’s financial
condition and results of operations because these measures, when
used in conjunction with related GAAP financial measures (i)
provide a more comprehensive view of Frontier’s core operations and
ability to generate cash flow, (ii) provide investors with the
financial analytical framework upon which management bases
financial, operational, compensation, and planning decisions and
(iii) present measurements that investors and rating agencies have
indicated to management are useful to them in assessing Frontier
and its results of operations.
A reconciliation of these measures to the most comparable
financial measures calculated and presented in accordance with GAAP
is included in the accompanying tables. These non-GAAP financial
measures are not measures of financial performance or liquidity
under GAAP, nor are they alternatives to GAAP measures and they may
not be comparable to similarly titled measures of other
companies.
EBITDA is defined as net income (loss) less income tax expense
(benefit), interest expense, investment and other income (loss),
pension settlement costs, gains/losses on extinguishment of debt,
and depreciation and amortization. EBITDA margin is calculated by
dividing EBITDA by total revenue.
Adjusted EBITDA is defined as EBITDA, as described above,
adjusted to exclude, certain pension/OPEB expenses, restructuring
costs and other charges, stock-based compensation expense, goodwill
impairment charges, and certain other non-recurring items. Adjusted
EBITDA margin is calculated by dividing adjusted EBITDA by total
revenue.
Management uses EBITDA, EBITDA margin, adjusted EBITDA and
adjusted EBITDA margin to assist it in comparing performance from
period to period and as measures of operational performance.
Management believes that these non-GAAP measures provide useful
information for investors in evaluating Frontier’s operational
performance from period to period because they exclude depreciation
and amortization expenses related to investments made in prior
periods and are determined without regard to capital structure or
investment activities. By excluding capital expenditures, debt
repayments and dividends, among other factors, these non-GAAP
financial measures have certain shortcomings. Management
compensates for these shortcomings by utilizing these non-GAAP
financial measures in conjunction with the comparable GAAP
financial measures.
Adjusted net income (loss) attributable to Frontier common
shareholders is defined as net income (loss) attributable to
Frontier common shareholders and excludes, restructuring costs and
other charges, pension settlement costs, goodwill impairment
charges, certain income tax items and the income tax effect of
these items, and certain other non-recurring items. Adjusting for
these items allows investors to better understand and analyze
Frontier’s financial performance over the periods presented.
Management defines operating free cash flow, a non-GAAP
measure, as net cash provided from operating activities less
capital expenditures. Management uses operating free cash flow to
assist it in comparing liquidity from period to period and to
obtain a more comprehensive view of Frontier’s core operations and
ability to generate cash flow. Management believes that this
non-GAAP measure is useful to investors in evaluating cash
available to service debt and pay dividends. This non-GAAP
financial measure has certain shortcomings; it does not represent
the residual cash flow available for discretionary expenditures, as
items such as debt repayments and preferred stock dividends are not
deducted in determining such measure. Management compensates for
these shortcomings by utilizing this non-GAAP financial measure in
conjunction with the comparable GAAP financial measure.
Adjusted operating expenses is defined as operating expenses
adjusted to exclude depreciation and amortization, restructuring
and other charges, goodwill impairment charges, certain
pension/OPEB expenses, stock-based compensation expense, and
certain other non-recurring items. Investors have indicated that
this non-GAAP measure is useful in evaluating Frontier’s
performance.
Leverage ratio is calculated as net debt (total debt less cash
and cash equivalents) divided by Adjusted EBITDA for the most
recent four quarters. Investors have indicated that this non-GAAP
measure is useful in evaluating Frontier’s debt levels.
The information in this press release should be read in
conjunction with the financial statements and footnotes contained
in Frontier’s documents filed with the U.S. Securities and Exchange
Commission.
Conference Call and Webcast
Frontier will host a conference call today at 4:30 P.M. Eastern
time. Management will present prepared remarks. There will not be a
question and answer session. In connection with the conference call
and as a convenience to investors, Frontier furnished today, under
cover of a Current Report on Form 8-K, additional materials
regarding second quarter 2019 results. The conference call will be
webcast and may be accessed in the Webcasts & Presentations
section of Frontier's Investor Relations website at
www.frontier.com/ir.
A telephonic replay of the conference call will be available in
the Webcasts & Presentations section of Frontier's Investor
Relations website at www.frontier.com/ir.
About Frontier Communications
Frontier Communications Corporation (NASDAQ: FTR) is a leader in
providing communications services to urban, suburban, and rural
communities in 29 states. Frontier offers a variety of services to
residential customers over its fiber-optic and copper networks,
including video, high-speed internet, advanced voice, and Frontier
Secure® digital protection solutions. Frontier Business offers
communications solutions to small, medium, and enterprise
businesses. More information about Frontier is available at
www.frontier.com.
Forward-Looking Statements
This earnings release contains "forward-looking statements,"
related to future events. Forward-looking statements address
Frontier’s expected future business, financial performance, and
financial condition, and contain words such as "expect,"
"anticipate," "intend," "plan," "believe," "seek," "see," "may,"
"will," "would," or "target." Forward-looking statements by their
nature address matters that are, to different degrees, uncertain.
For Frontier, particular uncertainties that could cause actual
results to be materially different than those expressed in such
forward-looking statements include: declines in revenue from
Frontier’s voice services, switched and non-switched access and
video and data services that it cannot stabilize or offset with
increases in revenue from other products and services; Frontier’s
ability to successfully implement strategic initiatives, including
our transformation program; competition from cable, wireless and
wireline carriers, satellite, and OTT companies, and the risk that
Frontier will not respond on a timely or profitable basis;
Frontier’s ability to successfully adjust to changes in the
communications industry, including the effects of technological
changes and competition on its capital expenditures, products and
service offerings; risks related to disruptions in Frontier’s
networks, infrastructure and information technology that may result
in customer loss and/or incurrence of additional expenses; the
impact of potential information technology or data security
breaches or other cyber attacks or other disruptions; Frontier’s
ability to retain or attract new customers and to maintain
relationships with customers, employees or suppliers; Frontier’s
ability to hire or retain key personnel; Frontier’s ability to
realize anticipated benefits from recent acquisitions; Frontier’s
ability to dispose of certain assets or asset groups on terms that
are attractive to it, or at all; Frontier’s ability to effectively
manage its operations, operating expenses, capital expenditures,
debt service requirements and cash paid for income taxes and
liquidity; Frontier’s ability to defend against litigation and
potentially unfavorable results from current pending and future
litigation; adverse changes in the credit markets, which could
impact the availability and cost of financing; Frontier’s ability
to repay or refinance its debt through, among other things,
accessing the capital markets, notes repurchases and/or
redemptions, tender offers and exchange offers; adverse changes in
the ratings given to Frontier’s debt securities by nationally
accredited ratings organizations; covenants in Frontier’s
indentures and credit agreements that may limit Frontier’s
operational and financial flexibility as well as its ability to
access the capital markets in the future; the effects of state
regulatory requirements that could limit Frontier’s ability to
transfer cash among its subsidiaries or dividend funds up to the
parent company; the effects of governmental legislation and
regulation on Frontier’s business; the impact of regulatory,
investigative and legal proceedings and legal compliance risks;
government infrastructure projects that impact capital
expenditures; continued reductions in switched access revenue as a
result of regulation, competition or technology substitutions; the
effects of changes in the availability of federal and state
universal service funding or other subsidies to Frontier and its
competitors; Frontier’s ability to meet its remaining CAF II
funding obligations and the risk of penalties or obligations to
return certain CAF II funds; Frontier’s ability to obtain future
subsidies, including participation in the proposed RDOF program;
Frontier’s ability to effectively manage service quality and meet
mandated service quality metrics; the effects of changes in
accounting policies or practices; the impact of current and
potential future impairment charges with respect to goodwill or
other intangible assets; the effects of changes in income tax
rates, tax laws, regulations or rulings, or federal or state tax
assessments, including the risk that such changes may benefit
Frontier’s competitors more than it, as well as potential future
decreases in the value of Frontier’s deferred tax assets; the
effects of increased medical expenses and pension and
postemployment expenses; Frontier’s ability to successfully
renegotiate union contracts; changes in pension plan assumptions,
interest rates, discount rates, regulatory rules and/or the value
of Frontier’s pension plan assets, which could require Frontier to
make increased contributions to its pension plans; the effects of
changes in both general and local economic conditions in the
markets that Frontier serves; the effects of severe weather events
or other natural or man-made disasters, which may increase
operating and capital expenses or adversely impact customer
revenue; and the risks and other factors contained in Frontier’s
filings with the U.S. Securities and Exchange Commission, including
its reports on Forms 10-K and 10-Q. These risks and uncertainties
may cause actual future results to be materially different than
those expressed in such forward-looking statements. Frontier has no
obligation to update or revise these forward-looking statements and
does not undertake to do so.
____________________________
1 Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Measures”
for a description of this measure and its calculation. See Schedule
A on page 13 for a reconciliation to net income/(loss).
2 Adjusted EBITDA margin is a non-GAAP measure of performance,
calculated as Adjusted EBITDA, divided by total revenue. See
“Non-GAAP Measures” on page 5 for a description of this measure and
its calculation. See Schedule A on page 13 for a reconciliation of
EBITDA to net loss.
3 Operating free cash flow is a non-GAAP measure of liquidity
derived from net cash provided from operating activities. See
“Non-GAAP Measures” on page 5 for a description of this measure and
its calculation and Schedule A on page 13 for a reconciliation to
net cash provided from operating activities.
4 Leverage ratio is calculated as net debt (total debt less cash
and cash equivalents) divided by Adjusted EBITDA for the most
recent four quarters. See Schedule C on page 15 for its
calculation.
5 Total liquidity is calculated as revolver borrowing
availability ($850M in borrowing capacity, less outstanding
borrowings of $250 million and letters of credit of $81 million
issued under the revolver), plus cash and cash equivalents of $267
million.
Frontier Communications Corporation Unaudited
Consolidated Financial Data For the quarter ended For
the six months ended ($ in millions and shares in thousands, except
per share amounts) June 30, 2019 March 31, 2019 June 30, 2018 June
30, 2019 June 30, 2018
Statement of Operations Data
Revenue
$
2,067
$
2,101
$
2,162
$
4,168
$
4,361
Operating expenses: Network access expenses
318
338
369
656
741
Network related expenses
445
456
478
901
961
Selling, general and administrative expenses
445
456
460
901
929
Depreciation and amortization
454
484
486
938
991
Goodwill impairment
5,449
-
-
5,449
-
Loss on disposal of Northwest Operations
384
-
-
384
-
Restructuring costs and other charges
31
28
2
59
6
Total operating expenses
7,526
1,762
1,795
9,288
3,628
Operating income (loss)
(5,459
)
339
367
(5,120
)
733
-
Investment and other income (loss), net
(9
)
(9
)
5
(18
)
13
Pension settlement costs
-
-
25
-
25
Gain (Loss) on early extinguishment of debt
-
(20
)
-
(20
)
33
Interest expense
383
379
385
762
759
Income (Loss) before income taxes
(5,851
)
(69
)
(38
)
(5,920
)
(5
)
Income tax expense (benefit)
(534
)
18
(20
)
(516
)
(7
)
Net income (loss)
(5,317
)
(87
)
(18
)
(5,404
)
2
Less: Dividends on preferred stock
-
-
54
-
107
Net loss attributable to Frontier common shareholders
$
(5,317
)
$
(87
)
$
(72
)
$
(5,404
)
$
(105
)
Weighted average shares outstanding - basic and diluted
104,118
103,885
78,026
103,987
77,685
Basic and diluted net loss per common share
$
(51.07
)
$
(0.84
)
$
(0.92
)
$
(51.97
)
$
(1.35
)
Other Financial Data: Capital expenditures
$
275
$
305
$
321
$
580
$
618
Dividends declared - Preferred stock
$
-
$
-
$
54
$
-
$
107
Frontier Communications Corporation Unaudited
Consolidated Financial Data
For the quarter ended
For the six months ended
June 30, 2019
March 31, 2019
June 30, 2018
June 30, 2019
June 30, 2018
(
$ in millions)
Selected
Statement of Operations Data Revenue: Data and Internet
services
$
963
$
967
$
973
$
1,930
$
1,958
Voice services
629
650
682
1,279
1,384
Video services
260
268
270
528
550
Other
120
124
140
244
275
Customer revenue
1,972
2,009
2,065
3,981
4,167
Subsidy revenue
95
92
97
187
194
Total revenue
$
2,067
$
2,101
$
2,162
$
4,168
$
4,361
Other Financial Data Revenue: Consumer
$
1,050
$
1,077
$
1,095
$
2,127
$
2,223
Commercial
922
932
970
1,854
1,944
Customer revenue
1,972
2,009
2,065
3,981
4,167
Subsidy revenue
95
92
97
187
194
Total revenue
$
2,067
$
2,101
$
2,162
$
4,168
$
4,361
Frontier Communications Corporation Unaudited
Consolidated Financial and Operating Data
For the quarter ended
For the six months ended
June 30, 2019
March 31, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Customers (in thousands)
4,292
4,395
4,667
4,292
4,667
Consumer customer metrics Customers (in thousands)
3,902
3,995
4,237
3,902
4,237
Net customer additions (losses)
(93
)
(65
)
(86
)
(158
)
(160
)
Average monthly consumer revenue per customer
$
88.68
$
89.14
$
85.28
$
88.94
$
85.79
Customer monthly churn
2.14
%
1.99
%
1.95
%
2.07
%
1.94
%
Commercial customer metrics Customers (in thousands)
390
400
430
390
430
Broadband subscriber metrics (in thousands) Broadband
subscribers
3,626
3,697
3,863
3,626
3,863
Net subscriber additions (losses)
(71
)
(38
)
(32
)
(109
)
(75
)
Video (excl. DISH) subscriber metrics (in thousands)
Video subscribers
738
784
902
738
902
Net subscriber additions (losses)
(46
)
(54
)
(32
)
(100
)
(60
)
Video - DISH subscriber metrics (in thousands) DISH
subscribers
190
198
219
190
219
Net subscriber additions (losses)
(8
)
(7
)
(8
)
(16
)
(16
)
Employees
19,872
20,439
21,718
19,872
21,718
Frontier Communications Corporation Condensed
Consolidated Balance Sheet Data (Unaudited)
(
$ in millions) June 30, 2019 December
31, 2018
ASSETS Current
assets: Cash and cash equivalents
$
267
$
354
Accounts receivable, net
674
723
Assets held for sale
1,405
-
Other current assets
268
253
Total current assets
2,614
1,330
Property, plant and equipment, net
12,999
14,187
Other assets
1,952
8,142
Total assets
$
17,565
$
23,659
LIABILITIES AND EQUITY
Current liabilities: Long-term debt due within one year
$
440
$
814
Liabilities held for sale
134
-
Accounts payable and other current liabilities
1,726
1,747
Total current liabilities
2,300
2,561
Deferred income taxes and other liabilities
2,679
3,140
Long-term debt
16,357
16,358
Equity (deficit)
(3,771
)
1,600
Total liabilities and equity (deficit)
$
17,565
$
23,659
Frontier Communications Corporation Unaudited
Consolidated Cash Flow Data For the six months ended
(
$ in millions) June 30, 2019 June 30,
2018
Cash flows provided from (used by) operating
activities: Net income (loss)
$
(5,404
)
$
2
Adjustments to reconcile net income (loss) to net cash provided
from (used by) operating activities: Depreciation and amortization
938
991
(Gain) Loss on extinguishment of debt
20
(33
)
Pension settlement costs
-
25
Stock-based compensation expense
7
9
Amortization of deferred financing costs
15
17
Other adjustments
1
(20
)
Deferred income taxes
(519
)
(9
)
Goodwill impairment
5,449
-
Loss on disposal of Northwest Operations
384
-
Change in accounts receivable
(1
)
37
Change in accounts payable and other liabilities
(14
)
(72
)
Change in prepaid expenses, income taxes, and other assets
(19
)
(24
)
Net cash provided from operating activities
857
923
Cash flows provided from (used by) investing
activities: Capital expenditures
(580
)
(618
)
Proceeds on sale of assets
74
11
Other
1
(10
)
Net cash used by investing activities
(505
)
(617
)
Cash flows provided from (used by) financing
activities: Long-term debt payments
(1,999
)
(1,714
)
Proceeds from long-term debt borrowings
1,650
1,600
Proceeds from revolving debt
450
-
Repayment of revolving debt
(475
)
-
Financing costs paid
(44
)
(39
)
Dividends paid on preferred stock
-
(53
)
Premium paid to retire debt
-
(17
)
Finance lease obligation payments
(17
)
(17
)
Other
(4
)
(8
)
Net cash used by financing activities
(439
)
(248
)
Decrease in cash, cash equivalents, and restricted cash
(87
)
58
Cash, cash equivalents, and restricted cash at January 1,
404
376
Cash, cash equivalents, and restricted cash at June
30,
$
317
$
434
Supplemental cash flow information: Cash paid
(received) during the period for: Interest
$
712
$
716
Income tax payments, net
$
5
$
5
SCHEDULE A Frontier Communications Corporation
Reconciliation of Non-GAAP Financial Measures For the
quarter ended For the six months ended (
$ in
millions) June 30, 2019 March 31, 2019 June 30, 2018 June
30, 2019 June 30, 2018
EBITDA
Net income (loss)
$
(5,317
)
$
(87
)
$
(18
)
$
(5,404
)
$
2
Add back (subtract): Income tax expense (benefit)
(534
)
18
(20
)
(516
)
(7
)
Interest expense
383
379
385
762
759
Investment and other (income) loss, net
9
9
(5
)
18
(13
)
Pension settlement costs
-
-
25
-
25
(Gain) Loss on extinguishment of debt
-
20
-
20
(33
)
Operating income (loss)
(5,459
)
339
367
(5,120
)
733
Depreciation and amortization
454
484
486
938
991
EBITDA
$
(5,005
)
$
823
$
853
$
(4,182
)
$
1,724
Add back: Pension/OPEB expense
19
20
23
39
45
Restructuring costs and other charges
31
28
2
59
6
Stock-based compensation expense
4
3
5
7
9
Storm-related insurance proceeds
-
(1
)
-
(1
)
-
Work stoppage costs
-
-
1
-
8
Goodwill impairment
5,449
-
-
5,449
-
Loss on disposal of Northwest Operations
384
# #
-
# #
-
384
-
Adjusted EBITDA
$
882
$
873
$
884
$
1,755
$
1,792
EBITDA margin
-242.1
%
39.1
%
39.5
%
-100.3
%
39.5
%
Adjusted EBITDA margin
42.7
%
41.6
%
40.9
%
42.1
%
41.1
%
Free Cash Flow Net cash
provided from operating activities
$
575
$
282
$
672
$
857
$
923
Capital expenditures
(275
)
(305
)
(321
)
(580
)
(618
)
Operating free cash flow
$
300
$
(23
)
$
351
$
277
$
305
SCHEDULE B Frontier Communications Corporation
Reconciliation of Non-GAAP Financial Measures
For the quarter ended
For the six months ended
June 30, 2019
March 31, 2019
June 30, 2018
June 30, 2019
June 30, 2018
(
$ in millions, except per share
amounts)
Net Income (Loss)
Basic Earnings (Loss) Per
Share
Net Income (Loss)
Basic Earnings (Loss) Per
Share
Net Income (Loss)
Basic Earnings (Loss) Per
Share
Net Income (Loss)
Basic Earnings (Loss) Per
Share
Net Income (Loss)
Basic Earnings (Loss) Per
Share
Net loss attributable to Frontier common shareholders
$
(5,317
)
$
(51.07
)
$
(87
)
$
(0.84
)
$
(72
)
$
(0.92
)
$
(5,404
)
$
(51.97
)
$
(105
)
$
(1.35
)
Restructuring costs and other charges
31
28
2
59
6
Pension settlement costs
-
-
25
-
25
(Gain) Loss on extinguishment of debt
-
20
-
20
(33
)
Goodwill impairment
5,449
-
-
5,449
-
Loss on disposal of Northwest Operations
384
-
-
384
-
Storm-related insurance proceeds
-
(1
)
-
(1
)
-
Work stoppage costs
-
-
1
-
8
Certain other tax items (1)
87
30
(12
)
117
(8
)
Income tax effect on above items: Restructuring costs and other
charges
(8
)
(5
)
-
(13
)
(1
)
Pension settlement costs
-
-
(6
)
-
(6
)
(Gain) Loss on extinguishment of debt
-
(4
)
-
(4
)
9
Goodwill impairment
(524
)
-
-
(524
)
-
Work stoppage costs
-
-
-
-
(2
)
$
5,419
$
52.05
$
68
$
0.65
$
10
$
0.12
$
5,487
$
52.77
$
(2
)
$
(0.03
)
Adjusted net income (loss) attributable to Frontier common
shareholders(2)
$
102
$
0.98
$
(19
)
$
(0.18
)
$
(62
)
$
(0.80
)
$
83
$
0.80
$
(107
)
$
(1.38
)
(1) Includes impact arising from federal research and development
credits, changes in certain deferred tax balances, state tax law
changes, state filing method change, and the net impact of
uncertain tax positions.
(2) Adjusted net income (loss)
attributable to Frontier common shareholders may not sum due to
rounding.
SCHEDULE C Frontier Communications Corporation
Reconciliation of Non-GAAP Financial Measures
For the quarter ended
For the six months ended
(
$ in millions)
June 30, 2019
March 31, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Adjusted Operating Expenses
Total operating expenses
$
7,526
$
1,762
$
1,795
$
9,288
$
3,628
Subtract: Depreciation and amortization
454
484
486
938
991
Goodwill impairment
5,449
-
-
5,449
-
Loss on disposal of Northwest Operations
384
-
-
384
-
Pension/OPEB expense
19
20
23
39
45
Restructuring costs and other charges
31
28
2
59
6
Stock-based compensation expense
4
3
5
7
9
Storm-related insurance proceeds
-
(1
)
-
(1
)
-
Work stoppage costs
-
-
1
-
8
Adjusted operating expenses
$
1,185
$
1,228
$
1,278
$
2,413
$
2,569
For the quarter ended June 30, 2019
Leverage Ratio Numerator Long-term debt
$
16,357
Long-term debt due within one year
440
Cash and cash equivalents
(267
)
$
16,530
Denominator Adjusted EBITDA - last 4 quarters
$
3,528
Leverage Ratio 4.69x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190806005926/en/
INVESTOR CONTACT: Luke Szymczak
Vice President (203) 614-5044 luke.szymczak@ftr.com
MEDIA CONTACTS: Javier Mendoza Vice
President (562) 305-2345 javier.mendoza@ftr.com or Brigid Smith
Assistant Vice President (203) 614-5042
brigid.smith@ftr.com
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