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Industry Overview - The Zacks Cable Television industry is adapting to challenges from cord-cutting by focusing on bundled offerings and on-demand programming to remain relevant in the evolving media landscape [1] - Companies are leveraging their broadband infrastructure to meet changing consumer preferences while balancing traditional cable services with new streaming options [1][2] - The industry is capital-intensive and heavily regulated, requiring ongoing investment in technology and infrastructure to maintain competitiveness [2] Trends Impacting the Industry - The shift towards skinny bundles and original content is driving growth, as cable companies adapt their business models to meet consumer preferences for digital and subscription services [3] - High-speed internet demand is a key catalyst for growth, with increasing internet speeds fueling demand for high-quality video and binge viewing [4] - The traditional pay-TV industry is maturing, facing challenges from rising programming costs and the proliferation of streaming services [5] Advertising and Market Performance - Softness in advertising demand due to inflation and higher interest rates is impacting business growth, as marketers shift focus to digital mediums for better measurement and personalization [6] - The Zacks Cable Television industry has underperformed compared to the broader Zacks Consumer Discretionary sector and the S&P 500, declining 8.7% over the past year [10] Valuation and Earnings Outlook - The industry is currently trading at an EV/EBITDA of 7.06X, significantly lower than the S&P 500's 19.28X, indicating potential undervaluation [11] - Analysts show optimism regarding the earnings growth potential of the industry, as indicated by positive earnings outlooks for constituent companies [9] Company Highlights - Rogers Communication is benefiting from mobile phone and internet subscriber additions, with significant investments planned for 5G infrastructure [12] - Liberty Global is capitalizing on increasing internet speed demand and the acquisition of Sunrise Communications, which is expected to drive revenue growth [15] - Cable One is experiencing strong demand for broadband offerings, with a significant portion of its sales coming from high-speed tiers [18]

Cable One, Inc. (NYSE:CABO) Q2 2024 Results Conference Call August 1, 2024 5:00 PM ET Company Participants Jordan Morkert - Vice President-Investor Relations Julia Laulis - Chief Executive Officer Todd Koetje - Chief Financial Officer Conference Call Participants Greg Williams - TD Cowen Sebastiano Petti - JPMorgan Frank Louthan - Raymond James Kohulan Paramaguru - BNP Paribas Craig Moffett - MoffettNathanson Brandon Nispel - KeyBanc Capital Markets Operator Hello, and thank you for standing by. My name is ...

For the quarter ended June 2024, Cable One (CABO) reported revenue of $394.46 million, down 7% over the same period last year. EPS came in at $8.16, compared to $10.43 in the year-ago quarter. The reported revenue represents a surprise of -1.69% over the Zacks Consensus Estimate of $401.23 million. With the consensus EPS estimate being $10.36, the EPS surprise was -21.24%. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street ...

Cable One (CABO) came out with quarterly earnings of $8.16 per share, missing the Zacks Consensus Estimate of $10.36 per share. This compares to earnings of $10.43 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -21.24%. A quarter ago, it was expected that this telecommunications company would post earnings of $10.78 per share when it actually produced earnings of $8.11, delivering a surprise of -24.77%. Over the last four qu ...

Revenue Performance - For the first six months of 2024, total revenues decreased by 7.0% to $394.461 million compared to $424.024 million in 2023[111] - Total revenues for the three months ended June 30, 2024, were $394.5 million, a decrease of $29.6 million or 7.0% compared to $424.0 million for the same period in 2023[120] - Total revenues for the six months ended June 30, 2024, were $798.8 million, a decrease of $47.1 million or 5.6% compared to $845.9 million for the same period in 2023[129] Customer Metrics - Approximately 1,063,000 customers subscribed to data services, with a significant focus on growing higher-margin residential and business data services[98][100] - Total residential PSUs decreased by 39.3 thousand, or 3.3%, from 1,193.9 thousand in June 2023 to 1,154.7 thousand in June 2024[120] - Total customer relationships decreased by 5.3 thousand, or 0.5%, from 1,101.0 thousand in June 2023 to 1,095.7 thousand in June 2024[120] Income and Profitability - The company experienced a decline in net income by 13.8%, from $55.246 million in 2023 to $47.649 million in 2024[111] - Net income for the three months ended June 30, 2024, was $47.6 million, down from $55.2 million in the same period in 2023[127] - Net income for the six months ended June 30, 2024, was $95.0 million, down from $112.7 million in 2023[137] Expenses and Cost Management - Operating expenses (excluding depreciation and amortization) were $105.8 million, a decrease of $7.0 million, or 6.2%, compared to the same period in 2023[123] - Operating expenses (excluding depreciation and amortization) were $212.4 million, a decrease of $12.6 million or 5.6% compared to the prior year[131] - Selling, general and administrative expenses increased by $4.6 million, or 5.3%, to $90.8 million for the three months ended June 30, 2024[124] EBITDA - Adjusted EBITDA for the first half of 2024 was $212.372 million, reflecting an 8.2% decrease from $231.294 million in the same period of 2023[111] - Adjusted EBITDA for the six months ended June 30, 2024, was $212.4 million, a decrease of $18.9 million or 8.2% compared to $231.3 million in 2023[143] Capital Expenditures - Capital expenditures decreased by 12.2% to $71.592 million in 2024, down from $81.507 million in 2023[111] - Capital expenditures for the six months ended June 30, 2024, totaled $137.5 million, a decrease from $177.6 million in the same period of 2023[166] Debt and Financing - The company amended its Credit Agreement to increase the Revolving Credit Facility by $500 million to $1 billion and extended its maturity to February 2028[154] - As of June 30, 2024, the company had approximately $1.76 billion in outstanding term loans and $238 million in borrowings under the Revolving Credit Facility[157] - The company completed an offering of $650 million in Senior Notes due 2030, bearing interest at 4.00% per annum[158] Shareholder Returns - A quarterly dividend of $2.95 per share was approved, resulting in a total distribution of $17.1 million during the second quarter of 2024[152] - The company had $143.1 million remaining under the share repurchase authorization as of June 30, 2024, with a total of 646,244 shares repurchased at an aggregate cost of $556.9 million since going public[151]

[Cable One Q2 2024 Earnings Release](index=1&type=section&id=Cable%20One%20Reports%20Second%20Quarter%202024%20Results) [Financial and Operating Highlights](index=1&type=section&id=Financial%20and%20Operating%20Highlights) Cable One's Q2 2024 results showed year-over-year declines in revenue and net income amid market challenges Q2 2024 Key Financial Metrics (vs. Q2 2023) | Metric | Q2 2024 | Q2 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $394.5M | $424.0M | ($29.6M) | (7.0)% | | Net Income | $47.6M | $55.2M | ($7.6M) | (13.8)% | | Adjusted EBITDA | $212.4M | $231.3M | ($18.9M) | (8.2)% | | Capital Expenditures | $71.6M | $81.5M | ($9.9M) | (12.2)% | | Adj. EBITDA less CapEx | $140.8M | $149.8M | ($9.0M) | (6.0)% | - Residential data primary service units (PSUs) decreased by approximately **4,200** sequentially, with about **4,000** of the decline attributed to the expiration of the Affordable Connectivity Program (ACP)[2](index=2&type=chunk) - Business data PSUs showed growth, increasing by **500** sequentially[2](index=2&type=chunk) - CEO Julie Laulis stated that despite challenges, underlying fundamentals for residential and business data additions and retention maintained positive momentum, with connects and disconnects improving year-over-year for the second consecutive quarter[1](index=1&type=chunk) [Detailed Financial Performance](index=1&type=section&id=Detailed%20Financial%20Performance) The company's revenue, net income, and Adjusted EBITDA declined, driven by weakness in residential segments [Revenue Analysis](index=1&type=section&id=Revenue%20Analysis) Total revenues decreased by 7.0% year-over-year, led by declines in residential data and video services Revenue by Segment (Q2 2024 vs. Q2 2023) | Revenue Segment | Q2 2024 (in thousands) | Q2 2023 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Residential data | $230,404 | $246,840 | (6.7)% | | Residential video | $57,178 | $66,137 | (13.5)% | | Business data | $56,687 | $55,792 | 1.6% | | **Total Revenues** | **$394,461** | **$424,024** | **(7.0)%** | - The decrease in residential data revenues was primarily due to a **6.9% decrease** in average revenue per unit[3](index=3&type=chunk) - The decrease in residential video revenues was mainly caused by a decline in video subscribers[3](index=3&type=chunk) - The increase in business data revenues was driven by a growth in business data subscribers[3](index=3&type=chunk) [Profitability Analysis](index=1&type=section&id=Profitability%20Analysis) Net income and Adjusted EBITDA fell due to lower revenue and a severance charge, despite some cost reductions - Net income decreased to **$47.6 million** from $55.2 million in the prior year quarter[2](index=2&type=chunk)[4](index=4&type=chunk) - Adjusted EBITDA decreased to **$212.4 million** from $231.3 million year-over-year[2](index=2&type=chunk)[4](index=4&type=chunk) Profitability Margins | Margin | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net Profit Margin | 12.1% | 13.0% | | Adjusted EBITDA Margin | 53.8% | 54.5% | - The year-over-year decrease in net income was influenced by lower revenues, a **$5.5 million** severance charge, an **$8.5 million** reduction in programming costs, and a **$7.7 million** gain from C-band spectrum relocation funding[4](index=4&type=chunk) [Liquidity and Capital Resources](index=2&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a solid liquidity position, reduced total debt, and decreased capital expenditures - The company held **$201.5 million** in cash and cash equivalents at the end of the quarter, compared to $190.3 million at December 31, 2023[6](index=6&type=chunk) - Total debt was reduced to **$3.57 billion** from $3.68 billion at the end of 2023[6](index=6&type=chunk) Capital Expenditures by Category (Q2 2024 vs. Q2 2023) | Category | Q2 2024 (in thousands) | Q2 2023 (in thousands) | | :--- | :--- | :--- | | Customer premise equipment | $15,411 | $13,061 | | Line extensions | $18,372 | $10,758 | | Support capital | $18,094 | $25,059 | | **Total** | **$71,592** | **$81,507** | [Shareholder Returns and Capital Allocation](index=1&type=section&id=Shareholder%20Returns%20and%20Capital%20Allocation) The company returned capital to shareholders through dividends and continued its debt repayment strategy - The company paid **$17.1 million** in dividends to stockholders during the second quarter[3](index=3&type=chunk)[6](index=6&type=chunk) - A total of **$50.0 million** was repaid under the revolving credit facility during the quarter, with an additional **$50.0 million** repaid in July 2024[3](index=3&type=chunk)[6](index=6&type=chunk) [Operating Statistics](index=11&type=section&id=Operating%20Statistics) The total customer base saw a slight decline, with data PSU growth offset by video and voice subscriber losses Customer and PSU Statistics (as of June 30, 2024 vs. 2023) | Metric (in thousands) | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Customers | 1,101.0 | 1,106.3 | (0.5)% | | Total Data PSUs | 1,057.9 | 1,053.1 | 0.5% | | Total Video PSUs | 158.1 | 190.2 | (20.3)% | | Total Voice PSUs | 125.0 | 138.4 | (10.7)% | Average Revenue Per Unit (ARPU) - Q2 | Service | ARPU | % Change YoY | | :--- | :--- | :--- | | Residential data | $85.20 | (6.9)% | | Residential video | $143.53 | 8.7% | | Business services | $251.02 | (2.6)% | - Data penetration of homes passed decreased by **0.9%** to **38.7%**[30](index=30&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) The unaudited statements detail the company's financial position, operations, and cash flows for the quarter [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported revenues of $394.5 million and net income of $47.6 million for the second quarter Q2 2024 Statement of Operations Highlights (in thousands) | Line Item | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Total Revenues | $394,461 | $424,024 | | Income from operations | $110,137 | $135,040 | | Net income | $47,649 | $55,246 | | Diluted EPS | $8.16 | $9.36 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets stood at $6.83 billion, with total liabilities of $4.86 billion as of June 30, 2024 Balance Sheet Summary (in thousands) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $338,746 | $342,378 | | Total Assets | $6,827,641 | $6,846,933 | | Total Current Liabilities | $187,465 | $202,837 | | Total Liabilities | $4,864,017 | $4,973,788 | | Total Stockholders' Equity | $1,963,624 | $1,873,145 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations was $155.5 million, with cash used for investing and financing activities Q2 Cash Flow Summary (in thousands) | Cash Flow Activity | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $155,548 | $169,564 | | Net cash used in investing activities | ($92,766) | ($98,816) | | Net cash used in financing activities | ($71,997) | ($112,746) | | **Change in cash and cash equivalents** | **($9,215)** | **($41,998)** | [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) The report provides non-GAAP metrics like Adjusted EBITDA to supplement GAAP-based performance analysis - The company defines "Adjusted EBITDA" as net income adjusted for items like interest, taxes, depreciation, amortization, equity-based compensation, and other special items to better reflect core operational performance[12](index=12&type=chunk) - "Adjusted EBITDA less capital expenditures" is used as an indicator of the company's ability to fund operations and make investments with internally generated funds[14](index=14&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (Q2 2024, in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $47,649 | | Plus: Interest expense, net | $34,964 | | Plus: Income tax provision | $17,774 | | Plus: Depreciation and amortization | $85,314 | | Plus: Other adjustments | $26,671 | | **Adjusted EBITDA** | **$212,372** | [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section cautions that the report contains forward-looking statements subject to various risks - The report contains forward-looking statements based on current expectations and projections, which are inherently uncertain[19](index=19&type=chunk) - Key risk factors listed include rising competition, technological changes, increases in programming costs, regulatory changes, and adverse economic conditions[19](index=19&type=chunk) - The company expressly disclaims any obligation to update or alter its forward-looking statements, except as required by law[20](index=20&type=chunk)

The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on August 1. On the other hand, if they miss, the stock may move lower. Zacks Consensus Estimate Revenues are expected to be $401.23 million, down 5.4% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 2.07% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reass ...

Financial Data and Key Metrics Changes - Total revenues for Q1 2024 were $404.3 million, down from $421.9 million in Q1 2023, primarily due to losses in video subscribers [50] - Net income decreased to $47.3 million in Q1 2024 from $57.4 million in Q1 2023, with the prior year benefiting from a non-cash gain [30] - Adjusted EBITDA for Q1 2024 was $217.1 million, representing a 53.7% margin compared to $228.8 million and a 54.2% margin in the prior year [30] - Adjusted EBITDA less capital expenditures increased by $18.5 million or 13.9% to $151.2 million in Q1 2024 [11] Business Line Data and Key Metrics Changes - Residential data revenues decreased by $6.9 million or 2.8% year-over-year, driven by a 2.7% decrease in average revenue per unit [29] - Business data revenues grew by over $2 million or 3.7% compared to Q1 2023 [68] - Selling, general and administrative expenses increased to $90.4 million in Q1 2024 from $86.7 million in the prior year, with SG&A as a percentage of revenue rising to 22.4% [51] Market Data and Key Metrics Changes - The company added approximately 6,900 new residential subscribers sequentially, marking eight consecutive months of growth [24] - The aggregate fourth quarter annualized 2023 adjusted EBITDA of select companies in the investment portfolio was $613 million, representing a 24% growth compared to the previous year [7] Company Strategy and Development Direction - The company is focusing on enhancing network infrastructure and capitalizing on organic growth opportunities while also exploring strategic acquisitions [52] - The strategy includes targeting value-conscious customers and responding aggressively to competition, which has led to increased customer connects and reduced churn [46][24] - Investments of over $1 billion in network infrastructure over the last three years are aimed at exceeding customer needs for reliability and performance [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory moving forward despite ARPU declines, anticipating improvements as promotional pricing rolls off [65][82] - The company is optimistic about sustaining momentum in residential broadband customer growth and generating strong free cash flow [49] - Management acknowledged the competitive pressures but highlighted the effectiveness of their strategies in maintaining customer satisfaction and growth [24][46] Other Important Information - The company distributed $16.8 million in dividends and repaid $54.8 million of debt in Q1 2024 [31] - Capital expenditures for Q1 were $65.9 million, significantly lower than the previous year, with expectations to keep total CapEx below $300 million for the year [69] Q&A Session Summary Question: What is the outlook for ARPU declines? - Management indicated that ARPU declines are expected to ameliorate as promotional pricing rolls off and customer upgrades occur [65][82] Question: How are subscriber trends developing? - Subscriber growth is attributed to increased connects and reduced churn, with significant growth in competitive markets [93][24] Question: What are the implications of the new strategy on ARPU? - The new strategy targeting value-conscious customers has led to lower initial ARPU, but management believes these customers will be long-term value-accretive [105][106] Question: When will residential revenues stabilize? - Management did not provide specific guidance but expressed confidence that current strategies will lead to positive revenue growth in the future [97][98]

U N C O N S O L I D A T E D I N V E S T M E N T S S U M M A R Y ( M AY 2 , 2 0 2 4 ) | --- | --- | --- | --- | --- | |---------|--------------------------------------------------------------------------------|----------------------------|---------------------------------------------------------------|----------------------------------------| | Company | March 31, 2024 Book Value ($mm) | March 31, 2024 % Ownership | Investment Month(s) | $1,331mm (3) | | | | $566 45% | November 2020 | LQA Q4 2023 Revenue | | ...