![]() | Exhibit 99.1 | |
Earnings Release | ||
• | Revenue growth +0.9% YoY in Q3 2019 to $2.44 billion, driven by Residential revenue growth of +0.5%, Business services revenue growth of +3.9% and News and Advertising revenue decline of -4.7%. |
• | Net income attributable to stockholders of $77 million in Q3 2019, or $0.12/share (from net income of $33 million in Q3 2018, or $0.04/share). |
• | Adjusted EBITDA(1) flat YoY at $1.07 billion, an Adjusted EBITDA margin of 43.8% in Q3 2019 (+0.7% YoY Adjusted EBITDA growth and 44.3% Adjusted EBITDA margin, each excluding mobile losses(2)). |
• | Free Cash Flow(1) declined 40% YoY in Q3 2019 to $166 million mainly reflecting higher investment in key growth initiatives and the timing of working capital outflow, partly offset by lower interest costs. |
• | FY 2019 revenue outlook updated: the company now expects revenue growth of approximately +2.5% YoY based on the initial contribution from Altice Mobile, having not yet launched handset sales online, which is expected to be a key driver of Altice USA's anticipated accelerated growth in 2020. Guidance for Adj. EBITDA margin, Capex, Free Cash Flow growth, and the company’s Leverage target, remain unchanged. |
• | Share repurchases of $487 million in Q3 2019 (totalling approximately $1.7 billion YTD through Q3 2019, exceeding the prior target for 2019). |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
($k) | 2019 | 2018 | 2019 | 2018 | ||||
Revenue | $2,438,662 | $2,417,801 | $7,286,310 | $7,111,668 | ||||
Net income (loss) attributable to Altice USA, Inc. stockholders | 77,239 | 32,553 | 138,607 | (194,253) | ||||
Adjusted EBITDA(1) | 1,068,368 | 1,070,525 | 3,180,471 | 3,056,981 | ||||
Capital Expenditures (cash) | 375,302 | 334,527 | 1,032,555 | 832,824 |
(1) | See “Reconciliation of Non-GAAP Measures” on page 7 of this release. |
(2) | Adjusted EBITDA growth of 0.7% excluding approximately $10.5m of losses related to Altice USA’s mobile business in the current period. |
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Earnings Release | ||
• | Altice One has supported resilient video customer trends, including in Q3 2019 adjusting for the estimated one-time impact of the OSS / BSS migration(3). Altice USA's ongoing network investment and Altice One’s advanced WiFi experience supported improved residential broadband trends as well in the quarter. Altice USA reached 492k unique Altice One customers as of Q3 2019 (approximately 15% of total video customers, up from 7% at the end of Q3 2018). |
• | Total unique Residential customer relationships grew +0.7% YoY in Q3 2019 and were flat compared to the prior quarter (vs. -5k net losses in Q3 2018) on a reported basis, supporting Residential revenue growth of 0.5% YoY. Adjusted for the impact of the OSS / BSS migration, unique Residential customer relationship net additions estimated to have been +8k. |
• | Residential Video RGU quarterly net losses of -32k in Q3 2019 (vs. -28k in Q3 2018) on a reported basis; adjusted for the impact of the OSS / BSS migration, video net additions estimated to have been -28k, in line with the prior year. |
• | Residential Broadband RGU quarterly net additions of +15k (vs. +14k in Q3 2018) on a reported basis; adjusted for the impact of the OSS / BSS migration, broadband net additions estimated to have been +24k, significantly ahead of the prior year. |
• | Residential ARPU per unique customer was flat (-0.1%) YoY at $143.63 in Q3 2019 due to timing of prior year rate event. |
• | Business services revenue growth of +3.9% YoY in Q3 2019 with growth in Enterprise & Carrier of +2.1% YoY and SMB +4.9% YoY. |
• | News and Advertising revenue decline of -4.7% YoY in Q3 2019 due to political advertising cycle (+7.4% growth ex-political), offset by revenues from Cheddar and Altice USA’s advanced advertising platform a4. |
• | Continued network investment is supporting increased demand for higher speed tiers and significant growth in data usage. The average broadband speed taken by Altice USA’s customer base has increased approximately fourfold in the past three years to 208 Mbps at the end of Q3 2019 (from 56Mbps at the end of Q3 2016) and average household data usage was over 290GB per month (growth over 20% YoY). |
• | Revenue growth of approximately +2.5% YoY. |
• | Adjusted EBITDA margin expansion (ex-mobile). |
• | Increased investment for the continued rollout of Altice One, FTTH, and new mobile network with annual Capex within a range of $1.3 billion to $1.4 billion. |
• | Free Cash Flow expected to exceed the $1.35 billion in FY 2018, including mobile-related costs. |
• | Year-end Leverage target 4.5x to 5.0x net debt / Adjusted EBITDA (L2A basis) |
• | Share repurchases of approximately $1.7 billion (approximately $1.7 billion buyback complete YTD through Q3 2019, exceeding prior target for repurchases of $1.5 billion). |
(3) | To illustrate underlying customer performance, Q3-19 net additions are shown both on a reported basis and adjusted for the estimated one-time impact of the migration of Suddenlink to Optimum’s OSS / BSS platforms since there was a temporary loss of gross additions during the period that both platforms were deactivated in the transition as planned. This impact is estimated by comparing daily results in the current period during the platforms transition, against results achieved in the prior year. |
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Earnings Release | ||
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Earnings Release | ||
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Earnings Release | ||
• | Reported revenue growth for Altice USA of +0.9% to $2.439 billion. |
• | Net income attributable to stockholders of $77 million in Q3 2019, or $0.12/share (from net income of $33 million in Q3 2018, or $0.04/share). |
• | Adjusted EBITDA flat (-0.2% YoY) to $1.068 billion, an Adjusted EBITDA margin of 43.8% in Q3 2019 (+0.7% YoY Adjusted EBITDA growth and 44.3% Adjusted EBITDA margin, each excluding mobile losses(2)). |
• | Cash capex for Altice USA was $375 million in Q3 2019, representing 15.4% of revenue (~11% excluding mobile and FTTH / new home build capex). |
• | Operating Free Cash Flow(4) declined -5.8% to $693 million, mostly reflecting increased investment in FTTH, new home build, DOCSIS 3.1 and mobile. Free Cash Flow(4) was $166 million in Q3 2019, partly impacted by the timing of working capital outflow related to the OSS / BSS migration which is expected to reverse in Q4 2019 (Free Cash Flow was $801m YTD through Q3 2019). |
• | Residential revenue increased +0.5%, supported by Residential customer relationship growth of +0.7% YoY and flat ARPU (-0.1% YoY). |
• | Business services revenue increased +3.9% with the SMB segment growing +4.9% and Enterprise & Carrier revenue growing +2.1%. Altice USA continues to have success with our managed services suite of products including security, Smart WiFi, and hosted voice services for both SMB and mid-market enterprise customers. The overall SMB customer base grew by 1.2% driven by increased demand for higher broadband speed tiers. |
• | News and Advertising revenue declined -4.7% YoY in Q3 2019 due to the political advertising cycle (+7.4% growth ex-political), offset by the growth of Cheddar and the growth of local and national multi-screen targeted advertising solutions provided by a4. |
• | Programming costs increased 3.7% due primarily to an increase in contractual programming rates, partially offset by the decrease in video customers. Programming costs per video customer are still expected to increase by high single digits going forward (6.1% in Q3 2019). |
• | Net debt at the end of the third quarter was $22.655 billion on a reported basis(5), an increase of $316 million from the end of the second quarter of 2019 reflecting $487 million of share repurchases, offset by free cash flow generation. This represents consolidated L2QA net leverage of 5.3x on a reported basis at the end of September 2019 (5.3x LTM). The year-end leverage target remains 4.5-5.0x net debt to EBITDA. |
• | Pro forma for the new $3 billion Term Loan B-5 and $1.25 billion additional 2030 senior notes, net debt was $22.605 billion(5), the blended weighted average cost of debt was 6.0%, and the blended weighted average life was 6.8 years at the end of September 2019. There are no maturities above $1.1 billion until 2025 (with no bond maturities in 2019 and 2020) and near-term maturities in the next three years could be covered by ~$2.5 billion revolving credit facility. |
(4) | Operating Free Cash Flow (“OpFCF”) defined as Adjusted EBITDA less cash capital expenditures. See “Reconciliation of Non-GAAP Measures” on page 7 of this release. |
(5) | Net debt, defined as debt less cash, and excluding finance leases and other notes. |
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Earnings Release | ||
Altice USA Consolidated Operating Results | |||||||
(In thousands, except per share data) | |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2019 | 2018 | 2019 | 2018 | ||||
Revenue: | |||||||
Video | $993,158 | $1,054,667 | $3,028,914 | $3,122,779 | |||
Broadband | 814,328 | 729,907 | 2,396,151 | 2,143,730 | |||
Telephony | 148,231 | 161,351 | 452,927 | 490,888 | |||
Business services and wholesale | 357,628 | 344,193 | 1,066,123 | 1,014,671 | |||
News and Advertising | 118,067 | 123,913 | 327,255 | 323,992 | |||
Mobile | 3,174 | — | 3,174 | — | |||
Other | 4,076 | 3,770 | 11,766 | 15,608 | |||
Total revenue | 2,438,662 | 2,417,801 | 7,286,310 | 7,111,668 | |||
Operating expenses: | |||||||
Programming and other direct costs | 820,896 | 790,533 | 2,452,875 | 2,373,021 | |||
Other operating expenses | 568,233 | 569,070 | 1,702,124 | 1,727,842 | |||
Restructuring and other expense | 12,381 | 16,587 | 39,090 | 29,865 | |||
Depreciation and amortization (including impairments) | 565,637 | 536,053 | 1,695,685 | 1,827,285 | |||
Operating income | 471,515 | 505,558 | 1,396,536 | 1,153,655 | |||
Other income (expense): | |||||||
Interest expense, net | (387,276) | (388,167) | (1,154,353) | (1,147,552) | |||
Gain (loss) on investments and sale of affiliate interests, net | 120,253 | 111,684 | 478,124 | (182,031) | |||
Gain (loss) on derivative contracts, net | (77,333) | (79,628) | (303,986) | 130,883 | |||
Loss on interest rate swap contracts | (11,163) | (19,554) | (61,735) | (64,405) | |||
Loss on extinguishment of debt and write-off of deferred financing costs | (503) | — | (159,599) | (41,616) | |||
Other income (expense), net | (226) | (186) | 66 | (12,473) | |||
Income (loss) before income taxes | 115,267 | 129,707 | 195,053 | (163,539) | |||
Income tax expense | (37,871) | (95,968) | (56,445) | (29,675) | |||
Net income (loss) | 77,396 | 33,739 | 138,608 | (193,214) | |||
Net income attributable to noncontrolling interests | (157) | (1,186) | (1) | (1,039) | |||
Net income (loss) attributable to Altice USA stockholders | $77,239 | $32,553 | $138,607 | $(194,253) | |||
Basic net income (loss) per share | $0.12 | $0.04 | $0.21 | $(0.26) | |||
Diluted net income (loss) per share | $0.12 | $0.04 | $0.21 | $(0.26) | |||
Basic weighted average common shares | 643,797 | 732,963 | 668,929 | 735,685 | |||
Diluted weighted average common shares | 646,006 | 732,963 | 669,855 | 735,685 |
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Earnings Release | ||
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||
2019 | 2018 | 2019 | 2018 | ||||
(in thousands) | |||||||
Net income (loss) | $77,396 | $33,739 | $138,608 | $(193,214) | |||
Income tax expense | 37,871 | 95,968 | 56,445 | 29,675 | |||
Other expense (income), net | 226 | 186 | (66) | 12,473 | |||
Loss on interest rate swap contracts | 11,163 | 19,554 | 61,735 | 64,405 | |||
Loss (gain) on derivative contracts, net | 77,333 | 79,628 | 303,986 | (130,883) | |||
Loss (gain) on investments and sales of affiliate interests, net | (120,253) | (111,684) | (478,124) | 182,031 | |||
Loss on extinguishment of debt and write-off of deferred financing costs | 503 | — | 159,599 | 41,616 | |||
Interest expense, net | 387,276 | 388,167 | 1,154,353 | 1,147,552 | |||
Depreciation and amortization | 565,637 | 536,053 | 1,695,685 | 1,827,285 | |||
Restructuring and other expense | 12,381 | 16,587 | 39,090 | 29,865 | |||
Share-based compensation | 18,835 | 12,327 | 49,160 | 46,176 | |||
Adjusted EBITDA | $1,068,368 | $1,070,525 | $3,180,471 | $3,056,981 | |||
Capital Expenditures (cash) | 375,302 | 334,527 | 1,032,555 | 832,824 | |||
Operating Free Cash Flow | $693,066 | $735,998 | $2,147,916 | $2,224,157 |
Net cash flows from operating activities | $541,023 | $611,019 | $1,833,987 | $1,770,262 | |||
Capital Expenditures (cash) | 375,302 | 334,527 | 1,032,555 | 832,824 | |||
Free Cash Flow | $165,721 | $276,492 | $801,432 | $937,438 |
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Earnings Release | ||
Customer Metrics (6) (in thousands, except per customer amounts) | Net increase (decrease) | ||||||||||||||||||
Q1-18 | Q2-18 | Q3-18 | Q4-18 | FY-18 | Q1-19 | Q2-19 | Q3-19 | Q3-19 | YTD-19 | ||||||||||
Homes passed (7) | 8,620.0 | 8,648.8 | 8,679.4 | 8,714.9 | 8,714.9 | 8,739.4 | 8,766.0 | 8,784.6 | 18.6 | 69.7 | |||||||||
Residential | 4,517.5 | 4,513.9 | 4,509.2 | 4,518.1 | 4,518.1 | 4,539.8 | 4,538.9 | 4,538.6 | (0.3) | 20.5 | |||||||||
SMB | 391.7 | 394.0 | 395.3 | 396.6 | 396.6 | 397.8 | 399.9 | 399.9 | 0.0 | 3.3 | |||||||||
Total Unique Customer Relationships (8) | 4,909.2 | 4,907.9 | 4,904.5 | 4,914.7 | 4,914.7 | 4,937.6 | 4,938.8 | 4,938.5 | (0.3) | 23.8 | |||||||||
Residential Customers: | |||||||||||||||||||
Video | 3,352.2 | 3,328.0 | 3,300.3 | 3,286.1 | 3,286.1 | 3,276.1 | 3,255.3 | 3,223.4 | (31.9) | (62.7) | |||||||||
Broadband | 4,069.6 | 4,079.1 | 4,093.3 | 4,115.4 | 4,115.4 | 4,152.3 | 4,165.4 | 4,180.3 | 14.9 | 64.9 | |||||||||
Telephony | 2,548.6 | 2,544.4 | 2,532.4 | 2,530.1 | 2,530.1 | 2,510.1 | 2,485.8 | 2,446.6 | (39.2) | (83.5) | |||||||||
Penetration of homes passed | 57.0% | 56.7% | 56.5% | 56.4% | 56.4% | 56.5% | 56.3% | 56.2% | |||||||||||
Residential ARPU ($) (9) | 140.43 | 141.00 | 143.77 | 143.22 | 142.11 | 143.33 | 145.02 | 143.63 |
(6) | Customer metrics have been adjusted to conform definitions between Suddenlink and Optimum in connection with the migration of Suddenlink to the Optimum OSS / BSS platforms. |
(7) | Homes passed represents the estimated number of single residence homes, apartments and condominium units passed by the cable distribution network in areas serviceable without further extending the transmission lines. In addition, it includes commercial establishments that have connected to our cable distribution network. Broadband services were not available to approximately 100 homes passed and telephony services were not available to approximately 500 homes passed. |
(8) | Customers represent each customer account (set up and segregated by customer name and address), weighted equally and counted as one customer, regardless of size, revenue generated, or number of boxes, units, or outlets. In calculating the number of customers, we count all customers other than inactive/disconnected customers. Free accounts are included in the customer counts along with all active accounts, but they are limited to a prescribed group. Most of these accounts are also not entirely free, as they typically generate revenue through pay-per-view or other pay services and certain equipment fees. Free status is not granted to regular customers as a promotion. In counting bulk Residential customers, such as an apartment building, we count each subscribing family unit within the building as one customer, but do not count the master account for the entire building as a customer. We count a bulk commercial customer, such as a hotel, as one customer, and do not count individual room units at that hotel. |
(9) | ARPU calculated by dividing the average monthly revenue for the respective quarter or annual periods derived from the sale of broadband, pay television and telephony services to Residential customers by the average number of total Residential customers for the same period. |
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Earnings Release | ||
Altice USA (CSC Holdings) In $m | Actual Principal Amount | Pro Forma Principal Amount | Coupon / Margin | Maturity |
Guaranteed Notes | 1,096 | 1,096 | 5.375% | 2023 |
Guaranteed Notes | 1,000 | 1,000 | 6.625% | 2025 |
Guaranteed Notes | 1,499 | 1,499 | 5.500% | 2026 |
Guaranteed Notes | 1,310 | 1,310 | 5.500% | 2027 |
Guaranteed Notes | 1,000 | 1,000 | 5.375% | 2028 |
Guaranteed Notes | 1,750 | 1,750 | 6.500% | 2029 |
Senior Notes | 500 | — | 8.000% | 2020 |
Senior Notes | 1,000 | 1,000 | 6.750% | 2021 |
Senior Notes | 1,241 | — | 5.125% | 2021 |
Senior Notes | 649 | 649 | 5.875% | 2022 |
Senior Notes | 750 | 750 | 5.250% | 2024 |
Senior Notes | 1,684 | 1,684 | 10.875% | 2025 |
Senior Notes | 618 | 618 | 7.750% | 2025 |
Senior Notes | 1,046 | 1,046 | 7.500% | 2028 |
Senior Notes | 1,000 | 2,250 | 5.750% | 2030 |
Legacy unexchanged Cequel Notes | 6 | 6 | ||
Term Loan | 2,933 | 2,933 | L+2.250% | 2025 |
Term Loan B-2 | 1,481 | — | L+2.500% | 2026 |
Term Loan B-3 | 1,269 | 1,269 | L+2.250% | 2026 |
Term Loan B-4 | 998 | — | L+3.000% | 2027 |
Term Loan B-5 | — | 3,000 | L+2.500% | 2027 |
Drawn RCF | — | — | L+2.250% | 2021,2024 |
Gross Debt Consolidated | 22,830 | 22,860 | ||
Finance leases and other notes | 158 | 158 | ||
Total Debt | 22,988 | 23,018 | ||
Total Cash | (175) | (255) | ||
Net Debt | 22,813 | 22,763 | ||
Undrawn RCF | 2,297 | 2,297 | ||
WACD (%) | 6.1% | 6.0% |
(10) | Pro forma for new $1.25 billion senior notes issued in October 2019 used to repay the CSC Holdings $1.24 billion senior notes and the new $3.0 billion Term loan used to repay the Term B-2 loan, Term B-4 loan and the $500 million Cablevision 8% Notes. |
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Earnings Release | ||
Actual | |
Gross Debt Consolidated(11) | $22,830 |
Cash | (175) |
Net Debt Consolidated | $22,655 |
LTM EBITDA | $4,286.6 |
L2QA EBITDA | $4,295.2 |
Net Leverage (LTM) | 5.3x |
Net Leverage (L2QA) | 5.3x |
Reconciliation to Financial Reported Debt | Actual |
Total Debenture and Loans from Financial Institutions (Carrying Amount) | $22,476 |
Unamortized Financing Costs | 207 |
Fair Value Adjustments | 147 |
Total Value of Debenture and Loans from Financial Institutions (Principal Amount) | 22,830 |
Finance leases and other notes | 158 |
Total Debt | 22,988 |
Cash | (175) |
Net Debt | $22,813 |
(11) | Excluding finance leases and other notes. |
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Earnings Release | ||