Altice USA Reports Fourth Quarter and Full Year 2023 Results

Improved Financial Trends Across Revenue, Adjusted EBITDA, and Customer ARPU in 2H-23

Acceleration in Fiber Customer Net Adds and Mobile Line Net Adds

Positive Trends in Customer Experience, Network, and Operations

NEW YORK--(BUSINESS WIRE)-- Altice USA (NYSE: ATUS) today reports results for the fourth quarter and full year ended December 31, 2023.

Dennis Mathew, Altice USA Chairman and Chief Executive Officer, said: "2023 marked the beginning of a transformative journey for Optimum as we drove significant improvements across every area of our business by acting with operational and financial discipline. In the second half of 2023 we drove improvements in year-over-year trends across revenue, adjusted EBITDA and customer ARPU. We drove capital intensity down throughout the year, generated positive free cash flow in the full year, and proactively managed our debt maturity profile. I’m also proud of the notable achievements across our operations to improve customer experience, invest in quality networks and expansion to fuel broadband, and enhance our base management and go-to-market efforts to set the foundation for growth. We are well positioned as we enter 2024 and I am confident that we’re on the right path to return to sustainable long-term customer, revenue and adjusted EBITDA growth over time.”

Fourth Quarter and Full Year Financial Overview

• Total Revenue was $2.3 billion Q4-23 (-2.9%YoY), and $9.24 billion FY-23 (-4.3% YoY)
  Marking improvement in revenue declines year-over-year compared to -6.0% Q4-22 YoY and -4.4% FY-22 YoY.
• Residential Revenue⁽¹⁾ was $1.79 billion in Q4-23 (-2.8% YoY), and $7.27 billion in FY-23 (-4.4% YoY). Driven mostly due to the loss of higher ARPU video customers over the last year.
• Residential revenue per user (ARPU)⁽²⁾ was $136.01 in Q4-23 and $136.80 in FY-23.
  ARPU grew +0.1% in Q4-23 YoY or +$0.15, and was down -1.5% YoY in FY-23. Showing improvement in year-over-year ARPU compared to -2.1% Q4-22 YoY and -2.2% FY-22 YoY.
• Business Services Revenue was $372.0 million in Q4-23 (+1.0% YoY), and $1.47 billion in FY-23 (-0.5% YoY). This included Lightpath revenue growth of +9.2% in Q4-23 and +2.1% in FY-23 YoY, and SMB / Other decline of -1.9% in Q4-23 and -1.4% FY-23 YoY.
• News and Advertising Revenue was $128.1 million in Q4-23 (-15.7% YoY) and $447.7 million in FY-23 (-13.9% YoY). Excluding political advertising revenue, News and Advertising grew +8.9% in Q4-23 YoY and was down -1.7% FY-23 YoY.
• Net income (loss) attributable to stockholders was ($117.8) million (($0.26)/share on a diluted basis) in Q4-23 and $53.2 million ($0.12/share on a diluted basis) in FY-23.
• Net cash flows from operating activities were $496.2 million in Q4-23 and $1,826.4 million in FY-23.
• Adjusted EBITDA⁽³⁾ was $903.3 million in Q4-23 and $3.61 billion in FY-23
  Q4-23 Margin of 39.2%, and declined -1.1% YoY. FY-23 Margin of 39.1%, and declined -6.7% YoY. Demonstrating improvement in Adjusted EBITDA declines year-over-year compared to -15.7% Q4-22 and -12.7% FY-22 YoY.
• Cash capital expenditures of $295.2 million in Q4-23 and $1.70 billion in FY-23
  Q4-23 capital intensity was 12.8% (7.9% excluding FTTH and new builds) and improved by decline of -45.6% YoY. FY-23 capital intensity was 18.5% (10.5% excluding FTTH and new builds) and improved by decline of -10.9% YoY. The Company expects to continue to invest in key growth initiatives, with anticipated cash capex of approximately $1.6 billion to $1.7 billion in FY 2024.
• Operating Free Cash Flow⁽³⁾ was $608.0 million in Q4-23 and $1.90 billion in FY-23
  Q4-23 Margin of 26.4%, and grew +64.3% YoY. FY-23 Margin of 20.6% and declined -2.5% YoY.
• Free Cash Flow⁽³⁾ was $201.0 million in Q4-23 and $121.6 million in FY-23
  Driven by a step down in cash capital spend in the back half of the year.

Key Operational Highlights for the Fourth Quarter and Full Year

• Strong Fiber Net Adds; Reaching 341k Fiber Customers
  Fiber customer net additions were +46k in Q4 2023, Optimum's best quarter for fiber net adds, and added +170k customers in FY 2023. Fiber customer net adds were driven by both higher fiber gross additions and increased migrations of existing customers. Penetration of the fiber network reached 12.5% at the end of FY-23, up from 8.0% penetration at the end of FY-22.
• Accelerated Optimum Mobile Net Add Growth +34k in Q4-23; 8.2x Growth YoY; Reaching 322k Lines
  Optimum Mobile saw the fourth straight quarter of accelerated growth, reaching 7.1% penetration of the Company's total broadband customer base, up from 5.2% penetration in Q4-22.
• Total Broadband Primary Service Units (PSUs) net losses of -27k
  Broadband net losses were -27k in Q4 2023, compared to -9k in Q4 2022. In Q4-23 Optimum saw additional competitive pressure during the holiday season in addition to a continued low move environment. The Optimum strategy positions us well to improve subscriber trends over time.
• Improved Customer Experience (CX) Leading to Higher Satisfaction Scores
  Optimum saw CX improvements year-over-year across a variety of metrics including:
  • +21pts improvement in tNPS⁽⁴⁾ Q4-23.
  • +68% increase in self-install rate⁽⁵⁾ Q4-23.
  • ~300k fewer truck rolls⁽⁶⁾ FY-23.
  • ~1.7 million fewer inbound calls⁽⁷⁾ FY-23.
• Continued Progress in Building Best-in-Class Broadband Network Experiences
  • 8 Gig symmetrical speeds launched across Optimum East Fiber footprint.
  • 93% of Optimum West upgraded to DOCSIS 3.1 as of the end of FY-23.
  • Grew total passings +165k, reaching 9.6 million total passings at the end of FY-23 and continues to see strong momentum in growing customer penetration, typically reaching approximately 40% within one year of rollout in new-build areas.
  • Grew fiber passings +576k, reaching 2.7 million fiber passings at the end of FY-23.

Proactive Focus on Debt Maturity Profile

• In January 2024, CSC Holdings issued $2.050 billion of senior guaranteed notes due 2029 at an interest rate of 11.750% which will mature on January 31, 2029. The proceeds from these notes were used to repay the outstanding balance of Term Loan B and Incremental Term B-3 loans, as well as pay the fees, costs and expenses associated with these transactions.
• Also in January 2024, the company notified the holders of the 5.250% senior notes due 2024 with the intent to redeem these notes in full (in accordance with the terms of the indenture). The company expects to drawdown $750 million under the revolving credit facility to repay these notes on February 28, 2024.

Balance Sheet Review as of December 31, 2023

• Net debt for CSC Holdings, LLC Restricted Group was $23,020 million at the end of Q4 2023⁽⁸⁾, representing net leverage of 6.8x 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 Q4 2023 and the weighted average life was 4.7 years.
  • Pro forma for January 2024 refinancing activity⁽⁹⁾ discussed above, the weighted average cost of debt for CSC Holdings, LLC Restricted Group was 6.6% as of the end of Q4 2023 and the weighted average life was 5.1 years.
  • 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 $1,421 million at the end of Q4 2023⁽⁸⁾, 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 Q4 2023 and the weighted average life was 4.1 years.
• Consolidated net debt for Altice USA was $24,422 million⁽⁸⁾, representing consolidated net leverage of 6.7x L2QA.

Shares Outstanding

As of December 31, 2023, the Company had 455,997,406 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, impairments and other operating items (such as significant legal settlements and contractual payments for terminated employees).

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.

Consolidated Net Debt as of December 31, 2023⁽⁹⁾

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 4.7 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 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, trends, service and operational improvements, base management strategy, capital expenditure plans, fiber and mobile growth, 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/20240214021015/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 February 14, 2024