Cable One(CABO) - 2024 Q2 - Quarterly Results

Cable One Q2 2024 Earnings Release Financial and Operating Highlights 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] - Business data PSUs showed growth, increasing by 500 sequentially[2] - 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] Detailed Financial Performance The company's revenue, net income, and Adjusted EBITDA declined, driven by weakness in residential segments Revenue Analysis 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] - The decrease in residential video revenues was mainly caused by a decline in video subscribers[3] - The increase in business data revenues was driven by a growth in business data subscribers[3] Profitability Analysis 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][4] - Adjusted EBITDA decreased to $212.4 million from $231.3 million year-over-year[2][4] 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] Liquidity and Capital Resources 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] - Total debt was reduced to $3.57 billion from $3.68 billion at the end of 2023[6] 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 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][6] - 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][6] Operating Statistics 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] Consolidated Financial Statements The unaudited statements detail the company's financial position, operations, and cash flows for the quarter Condensed Consolidated Statements of Operations 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 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 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 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] - "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] 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 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] - Key risk factors listed include rising competition, technological changes, increases in programming costs, regulatory changes, and adverse economic conditions[19] - The company expressly disclaims any obligation to update or alter its forward-looking statements, except as required by law[20]