Delivers Best Fiber Customer Growth Quarter,
Ending Q2 at 250K Fiber Customers Optimum Now the Nation’s
Largest 8 Gig Internet Provider
Altice USA (NYSE: ATUS) today reports results for the second
quarter ended June 30, 2023.
Dennis Mathew, Altice USA Chairman and Chief Executive
Officer, said: "I am pleased with the progress we are making as
we act with discipline and focus to execute on our mission for
Optimum to be the connectivity provider of choice across all the
communities we serve. In the second quarter we achieved sustainable
operational and financial improvements across the business, with
significant achievements in our customer experience and field
operations translating into higher customer satisfaction metrics
and reduced call volume and service visits. Our focus on creating
better experiences for our customers while driving down costs
resulted in stronger broadband net add performance in the quarter
compared to the prior year. Our best-in-class products and networks
continued with the launch of our 8 Gig symmetrical Fiber Internet
service, cementing Optimum as the nation’s largest 8 Gig internet
provider. Our strategy to provide the best products, the best
networks, and the best customer and employee experiences, through
operational execution and financial discipline, is leading to
better trends across the business, and I am optimistic that the
achievements in the quarter are leading indicators of a return to
sustainable broadband and cash flow growth."
Key Financial Highlights
- Total Revenue declined -5.6% YoY in Q2 2023 to $2.32
billion, including Residential revenue decline of -5.7% YoY,
Business Services revenue decline of -1.9% YoY and News &
Advertising revenue decline of -14.8% YoY.
- Net income attributable to stockholders was $78.3
million in Q2 2023 ($0.17/share on a diluted basis) compared to
$106.2 million in Q2 2022 ($0.23/share on a diluted basis).
- Net cash flows from operating activities were $438.8
million in Q2 2023, compared to $676.3 million in Q2 2022.
- Adjusted EBITDA(1) declined -8.5% YoY in Q2 2023 to
$921.7 million, with a margin of 39.7%.
- Cash capital expenditures of $473.4 million in Q2 2023
represented 20.4% of revenue (11.4% of revenue excluding
fiber-to-the-home (FTTH) and new builds) and were down -2.4%
YoY.
- Operating Free Cash Flow(1) decreased -14.1% YoY to
$448.3 million in Q2 2023.
- Free Cash Flow (Deficit)(1) was ($34.6) million in Q2
2023.
Q2-23 Summary Financials
Three Months Ended June 30,
Six Months Ended June 30,
(in thousands)
2023
2022
2023
2022
Revenue
$2,324,274
$2,463,014
$4,618,252
$4,884,911
Net income attributable to Altice USA,
Inc.
stockholders
78,300
106,174
104,165
302,725
Adjusted
EBITDA(1)
921,742
1,007,068
1,790,133
1,998,798
Capital Expenditures
(cash)
473,445
485,126
1,056,342
877,497
Revenue Growth and Adjusted EBITDA
Detail
Q2-23
Total Revenue YoY
(5.6)%
Residential Revenue(2)
YoY
(5.7)%
Business Services Revenue
YoY
(1.9)%
excluding Sprint early termination
revenue(3)
(1.3)%
News & Advertising Revenue
YoY
(14.8)%
excluding political
revenue
(8.4)%
Adjusted EBITDA
YoY
(8.5)%
Adjusted EBITDA
Margin
39.7%
Key Operational
Highlights
- Total Broadband Primary Service Units (PSUs): Quarterly
broadband net losses were -37k in Q2 2023, compared to -39k
broadband net losses in Q2 2022.
- Total Fiber Broadband PSUs: Quarterly Fiber (FTTH)
broadband net additions were +40k in Q2 2023, our best quarter for
fiber net adds. Fiber broadband net adds were driven by both higher
fiber gross additions and increased migrations of existing
customers. Total fiber broadband customers reached 250k as of the
end of Q2 2023.
- Optimum Mobile has approximately 264k mobile lines as of
the end of Q2 2023, adding +16k mobile net additions in Q2 2023
(+35k net additions excluding customers receiving free service(4)),
reaching 5.8% penetration of the Company's total broadband customer
base.
- Residential revenue(2) declined -5.7% YoY in Q2 2023 to
$1.84 billion.
- Residential revenue per customer relationship(5)
declined -2.8% YoY in Q2 2023 to $137.44, mostly due to the loss of
higher ARPU video customers.
- Business Services revenue of $364.7 million was down
-1.9% YoY in Q2 2023. SMB / Other revenue was down -2.0% YoY in Q2
2023. Lightpath revenue was down -1.4% YoY in Q2 2023. Lightpath
revenue decline is driven by Sprint early termination revenue(2) in
the prior period of approximately $2.3 million; excluding this
early termination revenue, Lightpath revenue would have grown +1.1%
in Q2 2023.
- News and Advertising revenue was down -14.8% YoY to
$113.5 million in Q2 2023, or down -8.4% excluding political
revenue.
Customer Metrics (in thousands,
except per customer amounts)
Q1-22
Q2-22
Q3-22
Q4-22
FY-22
Q1-23
Q2-23
Total
Passings(6)
9,304.9
9,363.1
9,414.9
9,463.8
9,463.8
9,512.2
9,578.6
Total Passings additions
41.6
58.2
51.8
48.8
200.5
48.4
66.4
Total Customer
Relationships(7)(8)
Residential
4,612.1
4,564.2
4,514.7
4,498.5
4,498.5
4,472.4
4,429.5
SMB
382.9
383.1
382.5
381.2
381.2
380.9
381.0
Total Unique Customer
Relationships
4,995.0
4,947.3
4,897.2
4,879.7
4,879.7
4,853.3
4,810.5
Residential net additions
(losses)
(20.7)
(47.9)
(49.5)
(16.2)
(134.3)
(26.1)
(42.9)
Business Services net additions
(losses)
1.0
0.2
(0.6)
(1.3)
(0.7)
(0.3)
0.1
Total customer net additions
(losses)
(19.8)
(47.7)
(50.1)
(17.5)
(135.0)
(26.4)
(42.7)
Residential PSUs
Broadband
4,373.2
4,333.6
4,290.6
4,282.9
4,282.9
4,263.7
4,227.0
Video
2,658.7
2,574.2
2,491.8
2,439.0
2,439.0
2,380.5
2,312.2
Telephony
1,951.5
1,886.9
1,818.9
1,764.1
1,764.1
1,703.5
1,640.8
Broadband net additions
(losses)
(13.0)
(39.6)
(43.0)
(7.7)
(103.3)
(19.2)
(36.8)
Video net additions
(losses)
(73.6)
(84.5)
(82.4)
(52.8)
(293.2)
(58.6)
(68.3)
Telephony net additions
(losses)
(53.7)
(64.7)
(68.0)
(54.8)
(241.1)
(60.6)
(62.7)
Residential ARPU
($)(5)
139.00
141.36
139.24
135.86
138.83
135.32
137.44
SMB PSUs
Broadband
350.4
350.7
350.2
349.1
349.1
349.0
349.1
Video
102.6
101.0
99.1
97.3
97.3
95.3
93.7
Telephony
216.8
215.3
214.0
212.3
212.3
210.0
208.0
Broadband net additions
(losses)
1.1
0.3
(0.5)
(1.1)
(0.2)
(0.1)
0.1
Video net additions
(losses)
(1.6)
(1.6)
(1.9)
(1.8)
(6.9)
(2.0)
(1.6)
Telephony net additions
(losses)
(2.0)
(1.6)
(1.3)
(1.7)
(6.5)
(2.3)
(2.0)
Total Mobile Lines
Mobile ending
lines
198.3
231.3
236.1
240.3
240.3
247.9
264.2
Mobile ending lines excluding
free service(4)
190.0
195.5
202.7
208.7
208.7
223.3
257.9
Mobile line net
additions
11.9
33.0
4.8
4.1
53.8
7.6
16.3
Mobile line net additions ex-free
service(4)
3.6
5.5
7.2
6.0
22.3
14.6
34.6
Fiber (FTTH) Customer Metrics
(in thousands)
Q1-22
Q2-22
Q3-22
Q4-22
FY-22
Q1-23
Q2-23
FTTH Total
Passings(9)
1,316.6
1,587.1
1,908.2
2,158.7
2,158.7
2,373.0
2,659.5
FTTH Total Passing additions
145.7
270.4
321.2
250.5
987.8
214.2
286.6
FTTH
Residential
80.4
103.7
134.2
170.0
170.0
207.2
245.9
FTTH
SMB
0.6
0.7
1.2
1.7
1.7
2.7
3.9
FTTH Total customer
relationships(10)
81.0
104.4
135.3
171.7
171.7
209.9
249.7
FTTH Residential net
additions
11.1
23.3
30.5
35.8
100.7
37.2
38.6
FTTH SMB net
additions
0.2
0.2
0.4
0.6
1.4
0.9
1.2
FTTH Total customer net
additions
11.3
23.5
30.9
36.4
102.1
38.1
39.8
Fiber Rollout, Multi-Gig Fiber Internet
and Network Expansion Update
- Fiber (FTTH) rollout update: As of Q2 2023, the Company
has 2.66 million FTTH passings, adding +287k new FTTH passings in
the quarter.
- Launch of Optimum 8 Gbps (8 Gig) Symmetrical Fiber.
Optimum 8 Gig Fiber is available to 1.7 million passings at the end
of Q2 2023. Last year the Company also introduced both Optimum 5
Gbps (5 Gig) and 2 Gbps (2 Gig) Fiber Internet, with symmetrical
data speeds up to 5 Gig and 2 Gig respectively in certain portions
of its footprint. At the end of Q2 2023, 72% of the Company’s fiber
passings in the Optimum East footprint had multi-Gig speeds
available to them (1 Gig symmetric speeds are available to 100% of
the Company's entire fiber footprint).
- 1 Gbps (1 Gig) broadband or higher speed sell-in to all new
customers, where 1 Gig or higher services are available, was 39% in
Q2 2023. Approximately 21% of the Residential broadband
customer base currently take 1 Gig or higher speeds, representing a
significant growth opportunity for the Company.
- Broadband speeds taken on average have nearly doubled in
the past three years to 421 Mbps in Q2 2023.
- Broadband-only customer usage averaged 619 GB per month
in Q2 2023, which is 23% higher than the average usage of the
entire customer base (501 GB per month).
- New build activity update: The Company has been
accelerating the pace of its network edge-outs, adding +66k
passings in Q2 2023 (+115k passings LTM). The Company continues to
see strong momentum in growing customer penetration, typically
reaching approximately 40% within a year of rollout in new-build
areas.
Balance Sheet Review as of June 30,
2023
- Net debt for CSC Holdings, LLC Restricted Group was
$23,150 million at the end of Q2 2023(11), representing net
leverage of 6.8x Adjusted EBITDA on a last twelve month (LTM)
basis. The weighted average cost of debt for CSC Holdings, LLC
Restricted Group was 6.1% as of the end of Q2 2023 and the weighted
average life was 5.2 years. The Company expects to return to a
leverage target of 4.5x to 5.0x net debt / Adjusted EBITDA on a
Last 2 Quarters Annualized (L2QA) basis for its CSC Holdings, LLC
debt silo over time.
- Net debt for Cablevision Lightpath LLC was $1,410
million at the end of Q2 2023(11), representing net leverage of
5.9x LTM. The weighted average cost of debt for Cablevision
Lightpath LLC was 5.4% as of the end of Q2 2023 and the weighted
average life was 4.6 years.
- Consolidated net debt for Altice USA was $24,543
million(11), representing consolidated net leverage of 6.7x
LTM.
Successful Pricing of New Senior
Guaranteed Notes
In April 2023, CSC Holdings issued $1.0 billion in aggregate
principal amount of senior guaranteed notes that bear interest at a
rate of 11.250% and mature on May 15, 2028. The Company used the
proceeds to repay outstanding borrowings drawn under the Revolving
Credit Facility.
Shares Outstanding
As of June 30, 2023, the Company had 454,729,330 combined Class
A and Class B shares outstanding.
Altice USA Consolidated
Operating Results
(In thousands, except per
share data)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Revenue:
Broadband
$
965,865
$
1,002,680
$
1,922,910
$
1,988,197
Video
775,138
841,549
1,545,739
1,683,436
Telephony
76,069
84,621
153,750
169,855
Mobile(6)
18,147
16,863
33,673
31,805
Residential revenue(6)
1,835,219
1,945,713
3,656,072
3,873,293
Business services and wholesale(6)
364,704
371,613
728,345
739,243
News and Advertising
113,465
133,250
212,202
247,925
Other(6)
10,886
12,438
21,633
24,450
Total
revenue
2,324,274
2,463,014
4,618,252
4,884,911
Operating expenses:
Programming and other direct
costs
762,280
819,011
1,533,999
1,647,804
Other operating
expenses
656,128
673,464
1,307,373
1,315,370
Restructuring expense and other operating
items
5,178
2,673
34,850
6,051
Depreciation and amortization (including
impairments)
418,705
446,125
834,917
881,474
Operating income
481,983
521,741
907,113
1,034,212
Other income (expense):
Interest expense, net
(406,709
)
(310,213
)
(795,987
)
(613,575
)
Gain (loss) on investments, net
—
(325,601
)
192,010
(476,374
)
Gain (loss) on derivative contracts,
net
—
219,114
(166,489
)
320,188
Gain on interest rate swap contracts,
net
61,165
39,868
46,736
163,015
Gain on extinguishment of debt and
write-off of deferred financing costs
—
—
4,393
—
Other income (loss), net
(1,570
)
2,521
8,635
4,951
Income before income taxes
134,869
147,430
196,411
432,417
Income tax expense
(48,725
)
(33,890
)
(79,097
)
(116,736
)
Net
income
86,144
113,540
117,314
315,681
Net income attributable to noncontrolling
interests
(7,844
)
(7,366
)
(13,149
)
(12,956
)
Net income attributable to Altice USA
stockholders
$
78,300
$
106,174
$
104,165
$
302,725
Basic net income per share
$
0.17
$
0.23
$
0.23
$
0.67
Diluted net income per share
$
0.17
$
0.23
$
0.23
$
0.67
Basic weighted average common
shares
454,688
453,230
454,687
453,230
Diluted weighted average common
shares
454,688
453,230
455,139
453,230
Altice USA Consolidated
Statements of Cash Flows (in thousands)
(Unaudited)
Six Months Ended June 30,
2023
2022
Cash flows from operating activities:
Net income
$
117,314
$
315,681
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization (including
impairments)
834,917
881,474
Loss (gain) on investments
(192,010
)
476,374
Loss (gain) on derivative contracts,
net
166,489
(320,188
)
Gain on extinguishment of debt and
write-off of deferred financing costs
(4,393
)
—
Amortization of deferred financing costs
and discounts (premiums) on indebtedness
18,359
41,150
Share-based compensation
13,253
77,061
Deferred income taxes
(113,402
)
(57,720
)
Decrease in right-of-use assets
22,925
22,139
Provision for doubtful accounts
43,946
36,839
Other
9,188
(321
)
Change in operating assets and
liabilities, net of effects of acquisitions and dispositions:
Accounts receivable, trade
(10,611
)
(790
)
Prepaid expenses and other assets
(58,842
)
6,689
Amounts due from and due to affiliates
31,213
(6,057
)
Accounts payable and accrued
liabilities
(22,816
)
(1,527
)
Deferred revenue
6,649
(1,906
)
Interest rate swap contracts
(6,492
)
(192,344
)
Net cash provided by operating
activities
855,687
1,276,554
Cash flows from investing activities:
Capital expenditures
(1,056,342
)
(877,497
)
Other, net
(1,578
)
(610
)
Net cash used in investing activities
(1,057,920
)
(878,107
)
Cash flows from financing activities:
Proceeds from long-term debt
1,900,000
460,000
Repayment of debt
(1,739,493
)
(758,861
)
Proceeds from derivative contracts in
connection with the settlement of collateralized debt
38,902
—
Principal payments on finance lease
obligations
(76,100
)
(62,221
)
Other, net
(7,974
)
—
Net cash provided by (used in) financing
activities
115,335
(361,082
)
Net increase (decrease) in cash and cash
equivalents
(86,898
)
37,365
Effect of exchange rate changes on cash
and cash equivalents
548
(110
)
Net increase (decrease) in cash and cash
equivalents
(86,350
)
37,255
Cash, cash equivalents and restricted cash
at beginning of year
305,751
195,975
Cash, cash equivalents and restricted cash
at end of period
$
219,401
$
233,230
Reconciliation of Non-GAAP Financial Measures: We define
Adjusted EBITDA, which is a non-GAAP financial measure, as net
income (loss) excluding income taxes, non-operating income or
expenses, gain (loss) on extinguishment of debt and write-off of
deferred financing costs, gain (loss) on interest rate swap
contracts, gain (loss) on derivative contracts, gain (loss) on
investments and sale of affiliate interests, interest expense, net,
depreciation and amortization, share-based compensation,
restructuring expense and other operating items (such as
significant legal settlements, contractual payments for terminated
employees, and impairments).
Adjusted EBITDA eliminates the significant non-cash depreciation
and amortization expense that results from the capital-intensive
nature of our business and from intangible assets recognized from
acquisitions, as well as certain non-cash and other operating items
that affect the period-to-period comparability of our operating
performance. In addition, Adjusted EBITDA is unaffected by our
capital and tax structures and by our investment activities.
We believe Adjusted EBITDA is an appropriate measure for
evaluating the operating performance of the Company. Adjusted
EBITDA and similar measures with similar titles are common
performance measures used by investors, analysts and peers to
compare performance in our industry. Internally, we use revenue and
Adjusted EBITDA measures as important indicators of our business
performance and evaluate management’s effectiveness with specific
reference to these indicators. We believe Adjusted EBITDA provides
management and investors a useful measure for period-to-period
comparisons of our core business and operating results by excluding
items that are not comparable across reporting periods or that do
not otherwise relate to the Company’s ongoing operating results.
Adjusted EBITDA should be viewed as a supplement to and not a
substitute for operating income (loss), net income (loss), and
other measures of performance presented in accordance with GAAP.
Since Adjusted EBITDA is not a measure of performance calculated in
accordance with GAAP, this measure may not be comparable to similar
measures with similar titles used by other companies.
We also use Operating Free Cash Flow (defined as Adjusted EBITDA
less cash capital expenditures), and Free Cash Flow (defined as net
cash flows from operating activities less cash capital
expenditures) as indicators of the Company’s financial performance.
We believe these measures are two of several benchmarks used by
investors, analysts and peers for comparison of performance in the
Company’s industry, although they may not be directly comparable to
similar measures reported by other companies.
Reconciliation of net income to
Adjusted EBITDA and Operating Free Cash Flow (unaudited):
(in thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Net income
$
86,144
$
113,540
$
117,314
$
315,681
Income tax expense
48,725
33,890
79,097
116,736
Other loss (income), net
1,570
(2,521
)
(8,635
)
(4,951
)
Gain on interest rate swap contracts,
net
(61,165
)
(39,868
)
(46,736
)
(163,015
)
Loss (gain) on derivative contracts,
net
—
(219,114
)
166,489
(320,188
)
Loss (gain) on investments
—
325,601
(192,010
)
476,374
Gain on extinguishment of debt and
write-off of deferred financing costs
—
—
(4,393
)
—
Interest expense, net
406,709
310,213
795,987
613,575
Depreciation and amortization
418,705
446,125
834,917
881,474
Restructuring expense and other operating
items
5,178
2,673
34,850
6,051
Share-based compensation
15,876
36,529
13,253
77,061
Adjusted EBITDA
921,742
1,007,068
1,790,133
1,998,798
Capital Expenditures (cash)
473,445
485,126
1,056,342
877,497
Operating Free Cash Flow
$
448,297
$
521,942
$
733,791
$
1,121,301
Reconciliation of net cash flow from
operating activities to Free Cash Flow (unaudited):
Net cash flows from operating
activities
$
438,841
$
676,335
$
855,687
$
1,276,554
Capital Expenditures
(cash)
473,445
485,126
1,056,342
877,497
Free Cash Flow
(Deficit)
$
(34,604
)
$
191,209
$
(200,655
)
$
399,057
Consolidated Net Debt as of June 30,
2023(11)
CSC Holdings, LLC Restricted
Group (in $m)
Principal Amount
Coupon / Margin
Maturity
Drawn
RCF
$825
SOFR+2.350%
2025(12)
Term
Loan
1,528
L+2.250%(13)
2025
Term Loan
B-3
524
L+2.250%(13)
2026
Term Loan
B-5
2,903
L+2.500%(13)
2027
Term Loan
B-6
1,997
SOFR+4.500%
2028(14)
Guaranteed
Notes
1,310
5.500%
2027
Guaranteed
Notes
1,000
5.375%
2028
Guaranteed
Notes
1,000
11.250%
2028
Guaranteed
Notes
1,750
6.500%
2029
Guaranteed
Notes
1,100
4.125%
2030
Guaranteed
Notes
1,000
3.375%
2031
Guaranteed
Notes
1,500
4.500%
2031
Senior
Notes
750
5.250%
2024
Senior
Notes
1,046
7.500%
2028
Legacy unexchanged Cequel
Notes
4
7.500%
2028
Senior
Notes
2,250
5.750%
2030
Senior
Notes
2,325
4.625%
2030
Senior
Notes
500
5.000%
2031
CSC Holdings, LLC Restricted
Group Gross Debt
23,312
CSC Holdings, LLC Restricted
Group Cash
(162)
CSC Holdings, LLC Restricted
Group Net Debt
$23,150
CSC Holdings, LLC Restricted
Group Undrawn
RCF
$1,511
Cablevision Lightpath LLC (in
$m)
Principal Amount
Coupon / Margin
Maturity
Drawn
RCF
$—
SOFR+3.360%
2025
Term
Loan
585
SOFR+3.360%
2027
Senior Secured
Notes
450
3.875%
2027
Senior
Notes
415
5.625%
2028
Cablevision Lightpath Gross
Debt
1,450
Cablevision Lightpath
Cash
(40)
Cablevision Lightpath Net
Debt
$1,410
Cablevision Lightpath Undrawn
RCF
$100
Net Leverage Schedules as of June 30,
2023 (in $m)
CSC Holdings Restricted
Group(15)
Cablevision Lightpath
LLC
CSC Holdings
Consolidated(16)
Altice USA
Consolidated
Gross Debt
Consolidated(17)
$23,312
$1,450
$24,762
$24,762
Cash
(162)
(40)
(219)
(219)
Net Debt
Consolidated(11)
$23,150
$1,410
$24,543
$24,543
LTM
EBITDA
$3,413
$241
$3,658
$3,658
L2QA
EBITDA
$3,338
$245
$3,580
$3,580
Net Leverage (LTM)
6.8x
5.9x
6.7x
6.7x
Net Leverage (L2QA)
6.9x
5.7x
6.9x
6.9x
WACD
(%)
6.1%
5.4%
6.0%
6.0%
Reconciliation to Financial Reported
Debt
Actual
Total Debenture and Loans from
Financial Institutions (Carrying
Amount)
$24,694
Unamortized financing costs, discounts and
fair value adjustments, net of unamortized
premiums
68
Gross Debt
Consolidated(17)
24,762
Finance leases and other
notes
421
Total
Debt
25,183
Cash
(219)
Net
Debt
$24,964
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802665702/en/
Investor Relations Nick Brown: +1 917 589 9983 /
nick.brown@alticeusa.com Sarah Freedman: +1 631 660 8714 /
sarah.freedman@alticeusa.com
Communications Lisa Anselmo: +1 516 279 9461 /
lisa.anselmo@alticeusa.com Janet Meahan: +1 516 519 2353 /
janet.meahan@alticeusa.com
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