WOW(US:WOW)2024-05-07 11:05PART I. Financial Information Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Q1 2024, including balance sheets, operations, equity, and cash flows Condensed Consolidated Balance Sheets As of March 31, 2024, total assets were $1,536.0 million and total stockholders' equity was $244.6 million Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $111.9 | $110.2 | | Total Assets | $1,536.0 | $1,514.7 | | Total Current Liabilities | $169.1 | $169.6 | | Total Liabilities | $1,291.4 | $1,256.5 | | Total Stockholders' Equity | $244.6 | $258.2 | Condensed Consolidated Statements of Operations For Q1 2024, total revenue was $161.5 million, resulting in a net loss of $15.0 million, a significant improvement from the $38.0 million net loss in Q1 2023 Condensed Consolidated Statement of Operations (in millions, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenue | $161.5 | $172.2 | | Operating Expenses | $67.5 | $78.1 | | Selling, General & Administrative | $36.4 | $85.5 | | Income (Loss) from Operations | $5.2 | $(36.9) | | Net Loss | $(15.0) | $(38.0) | | Basic & Diluted Loss Per Share | $(0.18) | $(0.46) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased to $244.6 million in Q1 2024, driven by a net loss and treasury stock purchases, partially offset by stock-based compensation - Total stockholders' equity decreased by $13.6 million during Q1 2024, from $258.2 million to $244.6 million15 - Key changes included a $15.0 million net loss, $1.6 million for share purchases, and a $3.0 million addition from stock-based compensation15 Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities was $33.2 million in Q1 2024, leading to a net decrease in cash of $4.2 million and an ending balance of $19.2 million Summary of Cash Flows (in millions) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $33.2 | $32.6 | | Net Cash used in Investing Activities | $(72.5) | $(60.1) | | Net Cash from Financing Activities | $35.1 | $17.7 | | Net Decrease in Cash | $(4.2) | $(9.8) | | Cash at End of Period | $19.2 | $21.2 | Notes to the Condensed Consolidated Financial Statements The notes provide detailed explanations of accounting policies and financial statement line items, including revenue, debt, and significant prior-year patent settlement accruals Revenue by Service Offering (in millions) | Service | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Residential HSD | $86.9 | $86.8 | | Residential Video | $29.3 | $39.2 | | Residential Telephony | $4.8 | $5.6 | | Business Subscription | $28.0 | $27.8 | | Other | $12.5 | $12.8 | | Total Revenue | $161.5 | $172.2 | - In Q1 2024, the company entered into five separate pay-fixed interest rate swap agreements, each with a notional amount of $100 million, to hedge approximately 52% of its term loan variable rate exposure6465 - A patent infringement claim from Sprint was settled in April 2023, resulting in a $46.8 million expense accrual included in SG&A for the quarter ended March 31, 20237071 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2024 financial performance, emphasizing the 'broadband first' strategy, a 6% revenue decrease, and an improved net loss of $15.0 million - The company's core strategy is 'broadband first,' focusing on HSD as the greatest opportunity for profitability77 - In Q1 2024, approximately 92% of new residential connections were for HSD only, an increase from 88% in Q1 202378 Subscriber Trends | Metric | March 31, 2023 | March 31, 2024 | | :--- | :--- | :--- | | Homes Passed | 1,885,700 | 1,948,500 | | Total Subscribers | 527,300 | 500,700 | | HSD RGUs | 508,700 | 489,700 | | Video RGUs | 117,100 | 79,300 | Results of Operations Total revenue for Q1 2024 decreased by 6% to $161.5 million, while operating expenses fell and SG&A expenses dropped significantly due to the absence of a prior-year litigation settlement - Total subscription revenue decreased by $10.4 million (7%) due to a reduction in Video and HSD RGUs, partially offset by ARPU increases from rate hikes95 - Operating expenses decreased by $10.6 million (14%), largely due to an $8.9 million reduction in programming costs corresponding to the decline in Video subscribers98 - SG&A expenses decreased by $49.1 million (57%), primarily due to the absence of the patent litigation settlement expense recorded in Q1 2023100 - Interest expense increased by $6.1 million (41%) due to a higher overall debt balance, higher interest rates, and the impact of new derivative instruments102 Liquidity and Capital Resources As of March 31, 2024, the company had $19.2 million in cash and $4.3 million available credit, with $33.2 million cash from operations and increased capital expenditures - As of March 31, 2024, the company had $19.2 million in cash and cash equivalents and $4.3 million of available borrowing capacity under its Revolving Credit Facility109110 Capital Expenditures Breakdown (in millions) | Category | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Scalable infrastructure | $32.6 | $17.9 | | Customer premise equipment | $18.6 | $16.2 | | Line extensions | $11.1 | $16.0 | | Support capital and other | $10.2 | $10.1 | | Total | $72.5 | $60.2 | | Included in total - Greenfields | $43.1 | $20.2 | Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate fluctuations on its variable-rate debt, mitigated by swaps, with a 1% SOFR change impacting annual interest expense by $4.5 million - The company's main market risk is from fluctuating interest rates on its variable-rate debt118 - As of March 31, 2024, after considering interest rate swaps, approximately 48% of the Senior Secured Credit Facility is still variable rate debt118 - A hypothetical 100 basis point (1%) change in SOFR would result in an annual interest expense change of approximately $4.5 million118 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes in internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2024121 - There were no changes in internal control over financial reporting during Q1 2024122 PART II. Other Information Legal Proceedings The company refers to Note 13 for details on legal proceedings, including the significant patent infringement settlement with Sprint from Q1 2023 - For details on legal proceedings, the report refers to Note 13 – Commitments and Contingencies125 Risk Factors There have been no material changes to the risk factors set forth in the 2023 Annual Report on Form 10-K - There have been no material changes to the risk factors set forth in the 2023 Annual Report on Form 10-K126 Unregistered Sales of Equity Securities and Use of Proceeds The company purchased 339,891 shares in Q1 2024 for employee tax withholding on vested restricted stock awards, not as part of a public buyback - During Q1 2024, the company purchased 339,891 of its own shares. These were not part of a buyback program but were shares withheld from employees to cover taxes on vested restricted stock awards127 Defaults Upon Senior Securities The company reported no defaults upon senior securities - None128 Mine Safety Disclosures This item is not applicable to the company - Not applicable129 Other Information No directors or Section 16 officers adopted, amended, or terminated any Rule 10b5-1 trading plans or other arrangements during Q1 2024 - No directors or Section 16 officers amended, adopted, or terminated any Rule 10b5-1 trading arrangements during Q1 2024130 Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate documents, Sarbanes-Oxley certifications, and iXBRL financial statements - The report lists filed exhibits, including Sarbanes-Oxley certifications (31.1, 31.2, 32.1) and iXBRL data (101, 104)131