Altice USA Reports Third Quarter 2023 Results

Second Quarter of Improved Broadband Net Adds Year-over-Year

Acceleration in Mobile Line Net Adds, Achieving Third Quarter of Mobile Line Net Add Growth

Best Fiber Customer Growth Quarter, Ending Q3 at 295K Fiber Customers

NEW YORK--(BUSINESS WIRE)-- Altice USA (NYSE: ATUS) today reports results for the third quarter ended September 30, 2023.

Dennis Mathew, Altice USA Chairman and Chief Executive Officer, said: "The close of the third quarter marks one year since I joined Altice USA as CEO and it has been a year of transformation as we established and quickly began to execute against our core strategy of delivering the best customer experiences, best customer relationships, and best network, all with the best people.

I am pleased that in the third quarter we saw improvements across the business, including overall financial performance, broadband subscriber relationship trends, mobile net additions, fiber customer growth, customer satisfaction and operational metrics, among other areas. Specifically, for the second quarter in a row, we drove improved broadband net adds on a year-over-year basis, highlighting the progress we are making to strengthen our operations, compete effectively, and enhance the quality of our Optimum experiences. With our continued sharpened focus on leading with operational and financial discipline, we remain optimistic about our ability to return to sustainable broadband and cash flow growth."

Key Operational Highlights for the Quarter

• Year-over-Year (YoY) Improvement in Total Broadband Primary Service Units (PSUs)
  Broadband net losses were -31k in Q3 2023, compared to -43k in Q3 2022, representing a 13k improvement in broadband net add performance trends.
• Best Quarter for Fiber Net Adds; Reaches 295k Fiber Customers
  Fiber (FTTH) customer net additions were +45k in Q3 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 295k as of the end of Q3 2023.
• Optimum Mobile Net Add Growth of +24k is 5x Growth YoY; Reaches 288k Lines
  Optimum Mobile saw the third straight quarter of growth, adding +24k mobile net additions in Q3 2023 (+30k net additions excluding customers receiving free service⁽¹⁾), reaching 6.3% penetration of the Company's total broadband customer base, up from 5.1% penetration in Q3-22.
• Improved Customer Experience (CX) Leading to Higher Satisfaction Scores
  Optimum saw CX improvements across a variety of metrics including:

• +22pts improvement in tNPS⁽²⁾ in Q3-23 vs Q3-22⁽²⁾.

• +71% increase in self-install rate for qualified new customers in Q3-23 vs Q3-22⁽³⁾.

• ~300k fewer truck rolls last twelve months (LTM) as of Q3-23⁽⁴⁾.

• ~1.3 million fewer inbound calls LTM as of Q3-23⁽⁵⁾.

Driving Continued Progress in Building and Delivering Best-in-Class Network Experiences

• Fiber Rollout Continues
  Optimum added +61k new FTTH passings in the quarter, and 561k YTD, reaching 2.72 million passings.
• Optimum 8 Gig Internet Launched to Entire East Fiber Footprint
  Optimum 8 Gig symmetrical Fiber is available to all fiber passings in the Optimum East footprint, rolling out 8 Gig to majority of the fiber footprint earlier than planned, before year-end. At the end of Q3 2023, 47% of the Optimum East footprint had multi-Gig speeds available, up from 30% in Q2-23.
• Optimum Multi-Gig Offerings Pick Up Steam
  1 Gig broadband or higher speed tier sell-in to all new customers, where 1 Gig or higher services are available, was 46% in the quarter. Approximately 23% of the Residential broadband customer base currently take 1 Gig or higher speeds, representing a significant growth opportunity for the Company. 1 Gig or higher speeds are available to 95% of our total footprint.
• Continued Demand for Speed and Data Usage from Optimum Customers
  • Broadband speeds taken on average have nearly doubled in the past three years to 432 Mbps.
  • Broadband-only customer usage averaged 659 GB per month, which is 23% higher than the average usage of the entire customer base (535 GB per month). The top 10% of broadband residential customers are using approximately 2 TB per month.

• Continued New Build Activity to Drive Growth
  The Company continues its network edge-outs, and added +30k passings in Q3 2023 (+145k passings YTD), and continues to see strong momentum in growing customer penetration, typically reaching approximately 40% within one year of rollout in new-build areas.

Third Quarter Financial Overview

• Total Revenue was $2.32 billion, down -3.2% YoY
  This included Residential revenue decline of -3.4% YoY, Business Services revenue growth of +0.1% YoY and News & Advertising revenue decline of -10.8% YoY (or News & Advertising revenue growth of +4.9% YoY excluding political revenue).

• Residential Revenue⁽⁶⁾ was $1.83 billion, down -3.4% YoY
  Driven mostly due to the loss of higher ARPU video customers over the last year.

• Residential revenue per customer⁽⁷⁾ was $138.42
  Grew sequentially +$0.98 in Q3-23 vs Q2-23, and was down -0.6% YoY.

• Business Services Revenue was $366.9 million, grew +0.1% YoY
  This included Lightpath revenue growth of +2.3% YoY, and SMB / Other decline of -0.7% YoY.

• News and Advertising Revenue was $107.5 million, down -10.8% YoY
  Excluding political revenue, News & Advertising grew +4.9% YoY.

• Net income attributable to stockholders was $66.8 million ($0.15/share on a diluted basis)
• Net cash flows from operating activities were $474.5 million
• Adjusted EBITDA⁽⁸⁾ was $915.5 million
  Margin of 39.5%, and declined -4.1% YoY.
• Cash capital expenditures of $353.2 million
  Represented 15.2% of revenue (8.8% of revenue excluding FTTH and new builds) and down -28.4% YoY.
• Operating Free Cash Flow⁽⁸⁾ was $562.3 million
  Margin of 24.3%, and grew +22.0% YoY.
• Free Cash Flow⁽⁸⁾ was $121.3 million
  Decline of -10.6% YoY.

Balance Sheet Review as of September 30, 2023

• Net debt for CSC Holdings, LLC Restricted Group was $23,087 million at the end of Q3 2023⁽⁹⁾, representing net leverage of 6.7x Adjusted EBITDA on a Last Two Quarters Annualized (L2QA) basis. The weighted average cost of debt for CSC Holdings, LLC Restricted Group was 6.1% as of the end of Q3 2023 and the weighted average life was 5.0 years. The Company aims to return to a leverage target of 4.5x to 5.0x net debt / Adjusted EBITDA on an L2QA basis for its CSC Holdings, LLC debt silo over time.
• Net debt for Cablevision Lightpath LLC was $1,429 million at the end of Q3 2023⁽⁹⁾, representing net leverage of 5.8x L2QA. The weighted average cost of debt for Cablevision Lightpath LLC was 5.4% as of the end of Q3 2023 and the weighted average life was 4.3 years.
• Consolidated net debt for Altice USA was $24,499 million⁽⁹⁾, representing consolidated net leverage of 6.7x L2QA.

Shares Outstanding

As of September 30, 2023, the Company had 454,732,471 combined Class A and Class B shares outstanding.

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.

Numerical information is presented on a rounded basis using actual amounts. Minor differences in totals and percentage calculations may exist due to rounding.

About Altice USA

Altice USA (NYSE: ATUS) is one of the largest broadband communications and video services providers in the United States, delivering broadband, video, mobile, proprietary content and advertising services to approximately 4.8 million residential and business customers across 21 states through its Optimum brand. The Company operates a4, an advanced advertising and data business, which provides audience-based, multiscreen advertising solutions to local, regional and national businesses and advertising clients. Altice USA also offers hyper-local, national, international and business news through its News 12, Cheddar News and i24NEWS networks.

FORWARD-LOOKING STATEMENT

Certain statements in this earnings release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts contained in this earnings release, including, without limitation, those regarding our intentions, beliefs or current expectations concerning, among other things: our future financial conditions and performance, results of operations and liquidity; our strategy, objectives, prospects, service availability targets, customer penetration rates, capital expenditure plans, fiber deployment and network expansion and upgrade plans, and leverage targets; our ability to achieve operational performance improvements; and future developments in the markets in which we participate or are seeking to participate. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “anticipate”, “believe”, “could”, “estimate”, “expect”, “forecast”, “intend”, “may”, “plan”, “project”, “should”, “target”, or “will” or, in each case, their negative, or other variations or comparable terminology. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. To the extent that statements in this earnings release are not recitations of historical fact, such statements constitute forward-looking statements, which, by definition, involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements including risks referred to in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and reports on Form 10-Q. You are cautioned to not place undue reliance on Altice USA’s forward-looking statements. Any forward-looking statement speaks only as of the date on which it was made. Altice USA specifically disclaims any obligation to publicly update or revise any forward-looking statement, as of any future date.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231101849630/en/

Investor Relations
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

Source: Altice USA

Released November 1, 2023