solidated munications (CNSL) - 2024 Q2 - Quarterly Report

Merger and Acquisition - The company entered into a Merger Agreement on October 15, 2023, with a cash consideration of $4.70 per share for its common stock[15]. - The merger is expected to close in late Q4 2024 or early Q1 2025, subject to regulatory approvals[18]. - The Merger Agreement was approved by the board of directors and stockholders, with the transaction expected to close in late Q4 2024 or early Q1 2025[111]. - The Loan Agreement with Searchlight requires maintaining a maximum consolidated first lien leverage ratio in the event the Merger Agreement is terminated[60]. Financial Performance - Total operating revenues for the six months ended June 30, 2024, were$543.38 million, a slight decrease from $551.29 million in the same period of 2023[28]. - The Company reported a net loss of$54.8 million for the three months ended June 30, 2024, compared to a net loss of $108.1 million for the same period in 2023[36]. - Basic and diluted earnings per share (EPS) for the three months ended June 30, 2024, were$(0.58), while for the same period in 2023, it was $(1.05)[36]. - The diluted EPS for the six months ended June 30, 2024, was$(1.00), compared to $(1.47) for the same period in 2023[36]. - Adjusted EBITDA increased by$7.3 million (9%) to $84.2 million for the three months ended June 30, 2024, compared to$76.9 million in the same period in 2023[119]. - Adjusted EBITDA for the six months ended June 30, 2024, was $172.6 million, compared to$152.3 million for the same period in 2023[164]. Revenue Breakdown - The company reported broadband revenue of $161.29 million for the six months ended June 30, 2024, up from$139.30 million in the same period of 2023[28]. - The company’s voice services revenue decreased to $56.30 million for the six months ended June 30, 2024, from$63.62 million in the prior year[28]. - Broadband services revenues increased by $10.1 million (14$22.0 million (16%) for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023[123]. - Total voice connections decreased by 14% as of June 30, 2024, compared to the same period in 2023, reflecting a shift towards alternative communication services[105]. - Video services revenues decreased by $6.1 million (65$9.1 million (48%) during the three and six months ended June 30, 2024, respectively, primarily due to the planned discontinuance of video services[126]. Expenses and Costs - Total operating expenses were $290.3 million for the three months ended June 30, 2024, a decrease of$79.9 million (22%) compared to the same period in 2023[117]. - Selling, general and administrative costs increased by $9.8 million (15.0$12.5 million (10.0%) during the three and six months ended June 30, 2024, respectively, due to increased professional fees[141]. - Interest expense increased by $7.2 million (20.0$15.8 million (25.0%) during the three and six months ended June 30, 2024, respectively, primarily due to increased variable interest rates[157]. Debt and Financing - Long-term debt as of June 30, 2024, was $2.27 billion, with a fair value of$2.06 billion[48]. - The Company repaid $397.0 million of Term Loans using proceeds from the issuance of$400.0 million 5.00% Senior Notes due 2028[52]. - The weighted-average interest rate on outstanding borrowings under the credit facility was 9.00% as of June 30, 2024, compared to 8.96% as of December 31, 2023[54]. - The Company completed an offering of $750.0 million aggregate principal amount of 6.50$400.0 million aggregate principal amount of 5.00% Senior Notes, with net proceeds used to repay $397.0 million of Term Loans[181]. Assets and Liabilities - As of June 30, 2024, the Company had a net working capital deficit of$75.3 million, an increase of $14.2 million compared to December 31, 2023[185]. - The present value of minimum remaining lease commitments was approximately$42.2 million, with $20.6 million due within the next twelve months[184]. - The Company had approximately$75.2 million available on its revolving credit facility and $80.0 million undrawn under the Term Loan Agreement as of June 30, 2024[186]. Taxation - The effective tax rate for the three months ended June 30, 2024, was 16.2$4.9 million, with a net amount of $4.7 million that could impact the effective tax rate if recognized[90]. - The company recorded an increase of$6.1 million in current tax expense for the three months ended June 30, 2024, related to the write-down of noncash goodwill not deductible for tax purposes[92]. Operational Initiatives - The company plans to upgrade approximately 1.6 million passings to enable multi-Gig capable services, with 150,000 homes targeted for upgrade in 2024[41]. - The company is focused on enhancing its commercial product offerings and driving fiber connectivity to meet business customer needs[103]. - The company launched Fidium Fiber, offering symmetrical speeds from 50 Mbps to 2 Gbps, and expanded Fidium@Work for small businesses in February 2023[102]. - The company initiated a business simplification and cost savings initiative in July 2023, which included workforce reduction and facility consolidation[106]. Cash Flow and Investments - Net cash used in operating activities was $2.5 million during the six months ended June 30, 2024, a decrease of$69.9 million compared to the same period in 2023[166]. - Capital expenditures were $183.6 million during the six months ended June 30, 2024, down from$280.9 million in the same period in 2023, focusing on fiber projects and broadband network expansion[167]. - The company expects to fund future operating requirements from cash flows, existing cash, proceeds from asset sales, and potential borrowings under its credit facility[166].