Cable One(CABO) - 2019 Q3 - Quarterly Report

PART I: FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive income, statements of stockholders' equity, and statements of cash flows, along with their accompanying notes, for the periods ended September 30, 2019 Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity as of September 30, 2019, and December 31, 2018 | (dollars in thousands) | September 30, 2019 | December 31, 2018 | | :--------------------- | :----------------- | :---------------- | | Assets: | | | | Total Current Assets | $196,118 | $317,863 | | Total Assets | $2,608,327 | $2,303,234 | | Liabilities: | | | | Total Current Liabilities | $153,179 | $133,713 | | Total Liabilities | $1,833,568 | $1,527,876 | | Stockholders' Equity: | | | | Total Stockholders' Equity | $774,759 | $775,358 | Condensed Consolidated Statements of Operations and Comprehensive Income This section outlines the company's financial performance, presenting revenues, costs, operating income, net income, and earnings per share for the three and nine months ended September 30, 2019 and 2018 | (dollars in thousands, except per share data) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :-------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenues | $284,991 | $268,268 | $849,246 | $802,443 | | Total Costs and Expenses | 204,858 | 204,949 | 627,302 | 603,795 | | Income from operations | 80,133 | 63,319 | 221,944 | 198,648 | | Net income | $49,835 | $38,314 | $124,969 | $122,752 | | Net Income per Common Share: | | | | | | Basic | $8.77 | $6.75 | $22.01 | $21.58 | | Diluted | $8.68 | $6.70 | $21.81 | $21.44 | Condensed Consolidated Statements of Stockholders' Equity This section details changes in stockholders' equity, including net income, deferred losses on cash flow hedges, equity-based compensation, and dividends paid for the periods presented | (dollars in thousands) | Balance at June 30, 2019 | Net Income | Deferred loss on cash flow hedges | Equity-based compensation | Dividends paid | Balance at Sep 30, 2019 | | :--------------------- | :----------------------- | :--------- | :-------------------------------- | :------------------------ | :------------- | :---------------------- | | Total Stockholders' Equity | $762,908 | $49,835 | $(28,066) | $3,058 | $(12,848) | $774,759 | | (dollars in thousands) | Balance at Dec 31, 2018 | Lease accounting standard adoption | Net Income | Deferred loss on cash flow hedges | Equity-based compensation | Dividends paid | Balance at Sep 30, 2019 | | :--------------------- | :---------------------- | :--------------------------------- | :--------- | :-------------------------------- | :------------------------ | :------------- | :---------------------- | | Total Stockholders' Equity | $775,358 | $8 | $124,969 | $(91,105) | $9,161 | $(35,667) | $774,759 | Condensed Consolidated Statements of Cash Flows This section presents the cash inflows and outflows from operating, investing, and financing activities, showing the overall change in cash and cash equivalents | (in thousands) | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $335,185 | $307,617 | | Net cash used in investing activities | $(527,622) | $(155,603) | | Net cash provided by (used in) financing activities | $74,172 | $(76,865) | | Increase (decrease) in cash and cash equivalents | $(118,265) | $75,149 | | Cash and cash equivalents, end of period | $145,848 | $236,901 | Notes to the Condensed Consolidated Financial Statements This section provides detailed explanatory notes supporting the condensed consolidated financial statements, offering further insights into the company's accounting policies and financial activities 1. Description of Business and Basis of Presentation Cable One, Inc. is a fully integrated provider of data, video, and voice services to residential and business subscribers across 21 U.S. states, serving 821,079 customers as of September 30, 2019. The company completed the acquisition of Clearwave in January 2019 for $358.8 million and entered into an agreement to acquire Fidelity Communications for $525.9 million, which closed in October 2019. The financial statements are unaudited and prepared in accordance with GAAP for interim information - Cable One, Inc. provides data, video, and voice services to 821,079 residential and business customers in 21 U.S. states as of September 30, 2019[20] - On January 8, 2019, the Company acquired Delta Communications, L.L.C. ("Clearwave") for $358.8 million in cash[21] - On March 31, 2019, the Company entered into a definitive agreement to acquire Fidelity Communications Co. for a base purchase price of $525.9 million in cash, which was completed on October 1, 2019[22] - The Company adopted ASU No. 2016-02, Leases (Topic 842), effective January 1, 2019, recording ROU assets of $14.9 million and lease liabilities of $13.3 million upon adoption[32][33] 2. Clearwave Acquisition The company acquired Clearwave on January 8, 2019, for $358.8 million, funded by cash and debt. This acquisition provides a premier fiber network, enhances business services, and offers a platform for replicating Clearwave's strategy. Goodwill of $185.9 million was recognized, and Clearwave contributed $19.9 million in revenue and $3.6 million in net income for the period from acquisition to September 30, 2019 - Clearwave acquisition completed on January 8, 2019, for $358.8 million, funded by cash and incremental term B loan borrowings[43] - The acquisition provides a premier fiber network, enhances business services, and offers a platform to replicate Clearwave's strategy[43] | Item | Preliminary Purchase Price Allocation (in thousands) | | :--------------------------------- | :----------------------------------- | | Total Assets Acquired | $217,223 | | Total Liabilities Assumed | $44,278 | | Net assets acquired | $172,945 | | Purchase price consideration | $358,830 | | Goodwill recognized | $185,885 | - Clearwave contributed $19.9 million in revenues and $3.6 million in net income from January 8, 2019, to September 30, 2019[48] 3. Revenues This section provides a detailed breakdown of the company's revenues by product line for the three and nine months ended September