Altice USA Reports Second Quarter 2024 Results

Growth in Fiber Customer Net Adds and Mobile Line Net Adds
Positive Trends in Customer Experience, Network, and Operations
Optimum Portfolio Evolution Roadmap to Deliver More Value to Customers
Recognized with Network Quality Rankings by PCMag®⁽¹⁾ and Ookla® Speedtest®⁽²⁾

NEW YORK--(BUSINESS WIRE)-- Altice USA (NYSE: ATUS) today reports results for the second quarter ended June 30, 2024.

Dennis Mathew, Altice USA Chairman and Chief Executive Officer, said: "In the second quarter our company achieved significant improvements in operational metrics and customer satisfaction, growth in our fiber, mobile, and B2B businesses, and continued stabilization of ARPU across our base. We elevated product and network quality, introduced refreshed go-to-market strategies, which are starting to gain traction, and launched Entertainment TV, Optimum's new low-cost internet TV package available exclusively on Optimum Stream, providing more choice and flexibility for customers. Looking ahead, we have an innovative roadmap of future product and experience enhancements that we are eager to bring to current and prospective customers this year and beyond, and we remain focused on advancing network and service quality, driving profitable customer relationships, and maintaining financial discipline.”

Second Quarter 2024 Financial Overview

• Total revenue of $2.2 billion (-3.6% year over year).
• Residential revenue of $1.8 billion (-4.4% year over year).
• Residential revenue per user (ARPU)⁽³⁾ of $135.95 (-1.1% or ($1.49) year over year).
• Business Services revenue of $369.3 million (+1.3% year over year).
• News and Advertising revenue of $105.3 million (-7.2% year over year).
• Net income attributable to stockholders of $15.4 million ($0.03/share on a diluted basis) in Q2 2024 and $78.3 million ($0.17/share on a diluted basis) in Q2 2023.
• Net cash flows from operating activities of $306.8 million in Q2 2024 compared to $438.8 million in Q2 2023.
• Adjusted EBITDA⁽⁴⁾ of $867.2 million (-5.9% year over year), and margin of 38.7%.
• Cash capital expenditures of $347.7 million (-26.6% year over year) and capital intensity⁽⁵⁾ of 15.5% (12.9% excluding FTTH and new builds). We have remained disciplined on capital spend in the first half of this year and now anticipate cash capital expenditures under $1.6 billion in full year 2024.
• Free Cash Flow (Deficit)⁽⁴⁾ of ($40.9) million, including $57 million of higher cash taxes in Q2 2024 year over year.

Second Quarter 2024 Key Operational Highlights

• Significant Growth in Net Promoter Scores (NPS) Driven by Improved Customer Experience (CX)
  • Transactional NPS (tNPS)⁽⁶⁾ grew +34 points in the last 2 years from Q2 2022 to Q2 2024.
• Continued CX Improvement with a Focus on Operations and Base Management:
  • >700k customers speed rightsized in the last 8 months.
  • ~1.7 million fewer inbound calls⁽⁷⁾ LTM Q2 2024.
  • ~235k fewer truck rolls⁽⁸⁾ LTM Q2 2024.
  • +56% increase in self-install rate⁽⁹⁾ Q2 2024.
  • Hyper-local go-to-market approach leveraging our brand platform, Where Local is Big Time, bringing the reach of a large national provider with the attention of a local business.
• Optimum Portfolio Evolution to Deliver More Value: Medium-Term Roadmap
  • Introduce Value Added Services to create new revenue streams with existing customers, including Direct-to-Consumer partnerships, Total Care and Mobile Device Protection, among others.
  • Continue enhancing the broadband experience: Grow fiber penetration, increase HFC broadband capacity, and enhance customer value and experience with speed rightsizing.
  • Increase customer stickiness by amplifying mobile across residential and business channels, and expanding the company's suite of smart devices and offerings.
  • Expand B2B product portfolio and Lightpath enterprise business by continuing to grow subscribers and ARPU.
  • Evolve the video business to give customers more options through innovative video packages, improved programming agreements, and the continued expansion of Optimum Stream.
    • Launched Entertainment TV in July 2024, Optimum's new low-cost internet TV package, available exclusively on Optimum Stream, and offering 80+ top-rated channels.
• Strong Fiber Net Adds Reaching 434k Fiber Customers, a +74% Increase in Total Fiber Customers Compared to Q2 2023
  • Fiber customer growth continued in Q2 2024 with +40k fiber net additions, driven by migrations of existing customers and fiber gross additions.
  • Penetration of the fiber network reached 15.3% at the end of Q2 2024, up from 9.4% at the end of Q2 2023.
• Mobile Line Net Adds of +33k in Q2 2024; 2.0x Acceleration Year Over Year; Reaching 385k Lines
  • Optimum Mobile line net additions of +33k in Q2 2024, compared to +16k in Q2 2023.
  • Mobile customer penetration of the broadband base was 5.8% at the end of Q2 2024, up from 3.8% at the end of Q2 2023.
• Total Broadband Primary Service Units (PSUs) Net Losses of -51k
  • Broadband net losses were -51k in Q2 2024, compared to -37k in Q2 2023.
  • Broadband subscriber net losses in the quarter were principally driven by seasonal university disconnects, continued competitive and macro pressures, and less activity in the low-income segment which is partially attributable to the impact of ACP sunsetting.
• Continued Progress in Building Quality Broadband Network Experiences
  • Externally recognized for network performance: In New York and New Jersey, Optimum Fiber was named the best and fastest Internet provider by PCMag®⁽¹⁾ and having the fastest and most reliable Internet speeds by Ookla® Speedtest®⁽²⁾.
  • Capital intensity⁽⁵⁾ of 15.5% in Q2 2024 compared to 20.4% in Q2 2023.
  • Fiber passings additions of +62k in Q2 2024, reaching 2.8 million fiber passings, and targeting approximately 3 million fiber passings by year-end 2024.
  • Total passings additions of +67k in Q2 2024, reaching 9.7 million total passings, and targeting over 175k additional passings in full year 2024.
  • Continued investment in network enhancements: Increasing broadband speeds, node splits at lower costs, and proactive network maintenance.

Balance Sheet Review as of June 30, 2024

• Net debt⁽¹⁰⁾ for CSC Holdings, LLC Restricted Group was $23,167 million at the end of Q2 2024, representing net leverage of 7.3x L2QA⁽¹¹⁾.
  • The weighted average cost of debt for CSC Holdings, LLC Restricted Group was 6.6% and the weighted average life of debt was 4.6 years.
• Net debt⁽¹⁰⁾ for Cablevision Lightpath LLC was $1,413 million at the end of Q2 2024, representing net leverage of 5.9x L2QA⁽¹¹⁾.
  • The weighted average cost of debt for Cablevision Lightpath LLC was 5.4% and the weighted average life of debt was 3.6 years.
• Consolidated net debt⁽¹⁰⁾ for Altice USA was $24,566 million, representing consolidated net leverage of 7.2x L2QA⁽¹¹⁾.
  • The weighted average cost of debt for consolidated Altice USA was 6.5% and the weighted average life of debt was 4.6 years.

Shares Outstanding

As of June 30, 2024, we had 460,583,380 combined shares of Class A and Class B common stock 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). We define Adjusted EBITDA margin as Adjusted EBITDA divided by total revenue.

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 our operating performance. 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 our 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 U.S. generally accepted accounting principles ("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 Free Cash Flow (defined as net cash flows from operating activities less cash capital expenditures) as a liquidity measure. We believe this measure is useful to investors in evaluating our ability to service our debt and make continuing investments with internally generated funds, although it may not be directly comparable to similar measures reported by other companies.

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. We operate Optimum Media, an advanced advertising and data business, which provides audience-based, multiscreen advertising solutions to local, regional and national businesses and advertising clients. We also offer hyper-local, national and international news through our News 12 and i24NEWS networks.

FORWARD-LOOKING STATEMENTS

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, our revenue streams, results of operations and liquidity, including Free Cash Flow; our strategy, objectives, prospects, trends, service and operational improvements, base management strategy, capital expenditure plans, broadband, fiber, video and mobile growth, product offerings and passings; 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, without limitation, 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, 2023 and subsequent Quarterly 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.

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Investor Relations
John Hsu: +1 917 405 2097 / john.hsu@alticeusa.com
Sarah Freedman: +1 631 660 8714 / sarah.freedman@alticeusa.com

Media Relations
Lisa Anselmo: +1 516 279 9461 / lisa.anselmo@alticeusa.com
Janet Meahan: +1 516 519 2353 / janet.meahan@alticeusa.com

Source: Altice USA

Released August 1, 2024