Cable One(CABO) - 2024 Q4 - Annual Results

Financial & Operational Performance Cable One's 2024 financial performance saw revenue and net income declines, primarily due to non-cash MBI charges and ACP expiration, partially mitigated by reduced capital expenditures and stabilized residential data ARPU Q4 & Full Year 2024 Performance Summary In 2024, Cable One's revenue declined 5.9% to $1.58 billion, and net income fell sharply by 93.6% to $14.5 million, primarily due to non-cash charges related to its MBI investment. Despite lower revenue and profit, Adjusted EBITDA less capital expenditures grew by 4.0%, supported by a significant 22.8% reduction in capital spending. The company also took steps to improve its financial flexibility by increasing its revolving credit facility and amending its agreement with MBI Full Year 2024 vs. 2023 Financial Highlights | Metric | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $1,579.5 million | $1,678.1 million | (5.9)% | | Net Income | $14.5 million | $224.6 million | (93.6)% | | Adjusted EBITDA | $854.0 million | $916.9 million | (6.9)% | | Capital Expenditures | $286.4 million | $371.0 million | (22.8)% | | Adjusted EBITDA less Capital Expenditures | $567.6 million | $545.9 million | 4.0% | Q4 2024 vs. Q4 2023 Financial Highlights | Metric | Q4 2024 | Q4 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $387.2 million | $411.8 million | (6.0)% | | Net Income (Loss) | ($105.2 million) | $103.5 million | (201.7)% | | Adjusted EBITDA | $211.0 million | $226.9 million | (7.0)% | | Capital Expenditures | $71.9 million | $115.6 million | (37.8)% | | Adjusted EBITDA less Capital Expenditures | $139.1 million | $111.3 million | 25.0% | - CEO Julie Laulis noted that residential data ARPU stabilized in the second half of 2024. Excluding the effects of the Affordable Connectivity Program (ACP) expiration and a small acquisition, the residential data customer base grew by approximately 2,200 subscribers for the year[2] - In October 2024, the company increased its revolving credit facility borrowing capacity by $250.0 million, bringing the total to $1.25 billion[3] - The company amended its agreement with MBI in December 2024, deferring a put option and creating a new call option, which is expected to improve balance sheet flexibility and future leverage levels[4] Detailed Financial Analysis The company's financial performance was significantly impacted by non-cash charges related to its MBI investment. Both quarterly and full-year results show revenue declines driven by lower residential data ARPU and subscriber losses following the ACP expiration, while business data revenue provided a partial offset with modest growth Q4 2024 vs. Q4 2023 Analysis Q4 2024 revenue fell 6.0% YoY to $387.2 million, led by a 5.4% drop in residential data revenue due to lower ARPU and subscriber losses from the ACP expiration. The company recorded a net loss of $105.2 million, a significant reversal from the $103.5 million net income in Q4 2023. This loss was primarily driven by a $195.7 million unfavorable non-cash fair value adjustment and a $111.7 million impairment charge related to the MBI investment - Q4 residential data revenues decreased 5.4% YoY, primarily due to a 5.0% decrease in ARPU from targeted pricing and a reduction in subscribers driven by the expiration of the ACP[7] - Q4 business data revenues increased 2.3% YoY, mainly due to an increase in subscribers[7] - The significant net loss was primarily caused by a $195.7 million unfavorable change in the fair value of MBI options and a $111.7 million non-cash impairment of the MBI investment, partially offset by a $71.5 million gain on the MBI Amendment[8] - Adjusted EBITDA for Q4 2024 was $211.0 million, a decrease from $226.9 million in Q4 2023, with the margin slightly contracting to 54.5%[9] Full Year 2024 vs. Full Year 2023 Analysis For the full year 2024, revenue decreased 5.9% to $1.58 billion. Residential data revenue fell 5.5% due to a 4.9% ARPU decline and ACP-related subscriber losses. Net income plummeted 93.6% to $14.5 million, heavily impacted by a $174.2 million unfavorable non-cash fair value adjustment and a $111.7 million impairment charge concerning the MBI investment - Full-year residential data revenue decreased 5.5% due to a 4.9% decline in ARPU and subscriber losses from the ACP expiration[11] - Full-year business data revenue grew 2.6% due to an increase in subscribers[11] - The substantial decrease in net income was primarily due to a $174.2 million unfavorable change in the fair value of MBI options and a $111.7 million non-cash impairment of the MBI investment[12] - Adjusted EBITDA for the full year 2024 was $854.0 million, down from $916.9 million in 2023[13] Key Operating Statistics As of year-end 2024, total customers slightly decreased by 0.7% to 1.09 million. The company saw a significant 20.0% decline in residential video subscribers, while residential data subscribers fell by a modest 0.6%. Q4 residential data ARPU was $79.72, down 5.0% YoY, whereas residential video ARPU increased 7.4% to $154.44, likely due to rate adjustments Customer and Primary Service Units (PSUs) as of Dec 31 | Metric | 2024 (thousands) | 2023 (thousands) | % Change | | :--- | :--- | :--- | :--- | | Total Customers | 1,088.8 | 1,097.0 | (0.7)% | | Residential Data PSUs | 955.0 | 960.5 | (0.6)% | | Residential Video PSUs | 107.4 | 134.2 | (20.0)% | | Business Data PSUs | 100.2 | 98.8 | 1.4% | Average Revenue Per Unit (ARPU) - Q4 | Metric | Q4 2024 | Q4 2023 | % Change | | :--- | :--- | :--- | :--- | | Residential Data | $79.72 | $83.95 | (5.0)% | | Residential Video | $154.44 | $143.78 | 7.4% | | Business Services | $236.84 | $246.35 | (3.9)% | - Total passings (homes and businesses the company's network can serve) increased by 2.4% to over 2.84 million[51] - Data penetration (Data PSUs as a percentage of passings) decreased from 38.2% in 2023 to 37.1% in 2024[51] Financial Position & Capital Management The company managed its financial position by reducing total debt and significantly cutting capital expenditures, while enhancing liquidity through an increased revolving credit facility Liquidity and Capital Resources The company ended 2024 with $153.6 million in cash, a decrease from $190.3 million at the end of 2023. Total debt was slightly reduced to $3.62 billion. Key capital management activities included increasing the Revolver capacity to $1.25 billion, paying $67.9 million in dividends, and managing revolver borrowings in connection with the MBI Amendment Liquidity and Debt Position (as of Dec 31) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $153.6 million | $190.3 million | | Total debt | $3.62 billion | $3.68 billion | - The company increased its Revolver capacity by $250.0 million to $1.25 billion and had $937.0 million available for borrowing at year-end[16] - A total of $67.9 million in dividends were paid to stockholders during 2024[16] Capital Expenditures Total capital expenditures were significantly reduced by 22.8% to $286.4 million in 2024 from $371.0 million in 2023. The most substantial spending cuts were in scalable infrastructure (down 42.1%), upgrade/rebuild (down 50.0%), and commercial projects (down 46.0%), indicating a shift towards more disciplined capital allocation Capital Expenditures by Category (Full Year) | Category | 2024 (in thousands) | 2023 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Customer premise equipment | $59,876 | $62,066 | (3.5)% | | Commercial | $20,996 | $38,893 | (46.0)% | | Scalable infrastructure | $31,334 | $54,097 | (42.1)% | | Line extensions | $61,326 | $51,466 | 19.2% | | Upgrade/rebuild | $30,486 | $60,898 | (50.0)% | | Support capital | $82,336 | $103,608 | (20.5)% | | Total | $286,354 | $371,028 | (22.8)% | - Capital expenditures for Q4 2024 totaled $71.9 million, a 37.8% decrease compared to $115.6 million in Q4 2023[17] Consolidated Financial Statements The consolidated financial statements reveal a significant net loss in Q4 2024 and a sharp decline in full-year net income, primarily due to revenue decreases and substantial non-cash MBI-related charges, alongside stable operating cash flow and a slightly reduced asset base Statements of Operations (Income Statement) The company reported a net loss of $105.2 million for Q4 2024, a sharp decline from a $103.5 million net income in Q4 2023. For the full year, net income was $14.5 million, down 93.6% from $224.6 million in 2023. The decline was driven by a 5.9% drop in annual revenue to $1.58 billion and significant other expenses, including non-cash charges related to the MBI investment Full Year 2024 vs. 2023 Statement of Operations Highlights | (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Total Revenues | $1,579,542 | $1,678,081 | | Income from operations | $441,879 | $526,903 | | Net income | $14,480 | $224,622 | | Diluted EPS | $3.43 | $38.08 | Q4 2024 vs. Q4 2023 Statement of Operations Highlights | (in thousands) | Q4 2024 | Q4 2023 | | :--- | :--- | :--- | | Total Revenues | $387,213 | $411,815 | | Income from operations | $101,581 | $127,229 | | Net income (loss) | $(105,238) | $103,496 | | Diluted EPS | $(18.71) | $17.44 | Balance Sheets As of December 31, 2024, total assets stood at $6.53 billion, a slight decrease from $6.76 billion in the prior year, mainly due to a reduction in equity investments. Total liabilities decreased to $4.73 billion from $4.95 billion, driven by lower long-term debt and other noncurrent liabilities. Total stockholders' equity remained stable at approximately $1.80 billion Balance Sheet Summary (as of Dec 31) | (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Total Current Assets | $279,235 | $342,378 | | Total Assets | $6,525,895 | $6,759,510 | | Total Current Liabilities | $213,872 | $202,837 | | Total Liabilities | $4,729,863 | $4,950,240 | | Total Stockholders' Equity | $1,796,032 | $1,809,270 | Statements of Cash Flows For 2024, net cash provided by operating activities remained stable at $664.1 million. Net cash used in investing activities increased significantly to $564.4 million from $341.9 million in 2023, primarily due to a $295.2 million payment for the MBI Amendment. Net cash used in financing activities decreased to $136.3 million, reflecting lower debt repayments and the absence of stock repurchases compared to the prior year Cash Flow Summary (Full Year) | (in thousands) | 2024 | 2023 | | :--- | :--- | | Net cash provided by operating activities | $664,128 | $663,170 | | Net cash used in investing activities | $(564,445) | $(341,904) | | Net cash provided by (used in) financing activities | $(136,341) | $(346,127) | | Change in cash and cash equivalents | $(36,658) | $(24,861) | Supplementary Information This section details reconciliations for non-GAAP financial measures, highlights key forward-looking statements and associated risks, and provides essential corporate information about Cable One's operations Non-GAAP Financial Measures Reconciliation The company utilizes non-GAAP measures such as Adjusted EBITDA and Adjusted EBITDA less capital expenditures to evaluate performance. For the full year 2024, Adjusted EBITDA was $854.0 million, reconciled from a net income of $14.5 million by adding back items like interest, taxes, depreciation & amortization, and significant non-cash charges, including a $204.5 million equity method investment loss - The company defines "Adjusted EBITDA" as net income adjusted for interest, taxes, depreciation, amortization, equity-based compensation, and other special items to eliminate the impact of non-cash expenses and capital structure[22] Reconciliation of Net Income to Adjusted EBITDA (Full Year 2024) | (in thousands) | Amount | | :--- | :--- | | Net income | $14,480 | | Plus: Interest expense, net | $137,997 | | Plus: Income tax provision | $25,201 | | Plus: Depreciation and amortization | $341,754 | | Plus: Equity method investment loss, net | $204,496 | | Plus: Other adjustments | $129,562 | | Adjusted EBITDA | $853,986 | Reconciliation of Net Cash from Operations to Adjusted EBITDA less Capital Expenditures (Full Year 2024) | (in thousands) | Amount | | :--- | :--- | | Net cash provided by operating activities | $664,128 | | Less: Capital expenditures | $(286,354) | | Plus/Less: Adjustments for interest, taxes, working capital, etc. | $189,858 | | Adjusted EBITDA less capital expenditures | $567,632 | Forward-Looking Statements & Risk Factors This report contains forward-looking statements that are subject to numerous risks and uncertainties. The company highlights key risks including rising competition, the ability to adapt to technological changes, risks associated with acquisitions (particularly the MBI investment), potential for security breaches, and adverse economic conditions - Key risk factors identified by the company include: - Rising levels of competition - Changes in technology and ability to deploy new services - Risks related to acquisitions and strategic investments, including the MBI options - Integrity and security of network and information systems - Adverse economic conditions and inflation[32] Corporate Information Cable One, operating under the Sparklight® brand among others, is a major broadband communications provider serving over 1 million residential and business customers across 24 states. The company has scheduled a conference call for February 27, 2025, to discuss the fourth quarter and full-year 2024 results with the financial community - Cable One is a leading broadband provider serving more than 1 million customers in 24 states[29] - The company will host a conference call to discuss Q4 and full-year 2024 results on Thursday, February 27, 2025, at 5 p.m. Eastern Time[18]