Cable One(CABO) - 2025 Q2 - Quarterly Report

PART I: FINANCIAL INFORMATION This section provides Cable One, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Condensed Consolidated Financial Statements This section presents Cable One, Inc.'s unaudited condensed consolidated financial statements, highlighting a significant net loss due to asset impairment charges Condensed Consolidated Balance Sheets This section presents the company's balance sheets, showing a decrease in total assets and stockholders' equity, and a significant increase in current long-term debt Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | |:---|:---|:---| | Total Assets | $5,773,584 | $6,525,895 | | Total Liabilities | $4,436,190 | $4,729,863 | | Total Stockholders' Equity | $1,337,394 | $1,796,032 | | Current portion of long-term debt | $593,573 | $18,712 | - Total assets decreased by $752.3 million, and total stockholders' equity decreased by $458.6 million from December 31, 2024, to June 30, 2025[15] - The current portion of long-term debt significantly increased from $18.7 million at December 31, 2024, to $593.6 million at June 30, 2025[15] Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) This section details the company's operating results, reporting a significant net loss for the quarter and six months, primarily due to substantial asset impairment charges Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |:---|:---|:---|:---|:---| | Revenues | $381,072 | $394,461 | $761,673 | $798,774 | | Total Costs and Expenses | $870,395 | $284,324 | $1,155,321 | $568,775 | | Income (loss) from operations | $(489,323) | $110,137 | $(393,648) | $229,999 | | Net income (loss) | $(437,976) | $38,152 | $(435,369) | $75,502 | | Basic Net Income (Loss) per Common Share | $(77.70) | $6.79 | $(77.26) | $13.44 | | Diluted Net Income (Loss) per Common Share | $(77.70) | $6.58 | $(77.26) | $13.04 | - The company reported a net loss of $438.0 million for the three months ended June 30, 2025, compared to a net income of $38.2 million in the prior year, primarily due to $586.0 million in asset impairments[16] - Revenues decreased by 3.4% for the three months ended June 30, 2025, and by 4.6% for the six months ended June 30, 2025, compared to the respective prior year periods[16] Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in stockholders' equity, primarily reflecting a decrease due to net loss and unrealized losses on cash flow hedges Changes in Stockholders' Equity (in thousands) | Metric | Balance at Dec 31, 2024 | Net Loss (H1 2025) | Unrealized Gain (Loss) on Hedges (H1 2025) | Dividends Paid (H1 2025) | Balance at June 30, 2025 | |:---|:---|:---|:---|:---|:---|\ | Total Stockholders' Equity | $1,796,032 | $(435,369) | $(25,094) | $(17,232) | $1,337,394 | - Total stockholders' equity decreased by $458.6 million from December 31, 2024, to June 30, 2025, primarily due to the net loss and unrealized losses on cash flow hedges[21] Condensed Consolidated Statements of Cash Flows This section presents the company's cash flow activities, showing a decrease in operating cash flow and changes in investing and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change | % Change | |:---|:---|:---|:---|:---|\ | Net cash provided by operating activities | $261,274 | $320,298 | $(59,024) | (18.4)% | | Net cash used in investing activities | $(130,593) | $(162,738) | $32,145 | (19.8)% | | Net cash used in financing activities | $(131,436) | $(146,331) | $14,895 | (10.2)% | | Change in cash and cash equivalents | $(755) | $11,229 | $(11,984) | (106.7)% | | Cash and cash equivalents, end of period | $152,876 | $201,518 | $(48,642) | (24.1)% | - Net cash provided by operating activities decreased by 18.4% year-over-year, primarily due to unfavorable changes in working capital and a decrease in Adjusted EBITDA[24][170] - Net cash used in investing activities decreased by 19.8% due to the absence of a prior-year equity investment, proceeds from an equity investment sale, and reduced capital expenditures[24][171] - Net cash used in financing activities decreased by 10.2%, mainly attributable to the suspension of the company's dividend, partially offset by higher debt repayments[24][172] Notes to the Condensed Consolidated Financial Statements This section provides detailed notes supporting the condensed consolidated financial statements, offering further context on various accounts and transactions Note 1. Description of Business and Basis of Presentation This note describes Cable One's business as a broadband provider in 24 U.S. states and its single reportable segment structure - Cable One, Inc. is a fully integrated provider of data, video, and voice services to residential and business customers in 24 Western, Midwestern, and Southern U.S. states[27] - As of June 30, 2025, the company served approximately 1.1 million residential and business customers, including 1,031,000 data, 102,000 video, and 99,000 voice subscribers[27] - The company operates as a single reportable segment, with the chief operating decision maker reviewing performance and allocating resources on a consolidated basis[32] - The company adopted ASU 2023-09 (Income Taxes) in 2025 and ASU 2023-07 (Segment Reporting) retrospectively in Q4 2024[34][35] Note 2. Revenues This note details revenues by product line, showing overall declines driven by residential video and voice, despite a modest increase in business data Revenues by Product Line (in thousands) | Product Line | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |:---|:---|:---|:---|:---|\ | Residential Data | $229,336 | $230,404 | $454,457 | $466,223 | | Residential Video | $48,158 | $57,178 | $98,962 | $117,536 | | Residential Voice | $6,733 | $8,203 | $13,777 | $16,763 | | Business Data | $57,385 | $56,687 | $114,678 | $113,328 | | Business Other | $16,515 | $18,663 | $33,399 | $37,849 | | Other | $22,945 | $23,326 | $46,400 | $47,075 | | Total Revenues | $381,072 | $394,461 | $761,673 | $798,774 | - Total revenues decreased by 3.4% for the three months and 4.6% for the six months ended June 30, 2025, compared to the prior year periods[37] - Residential video and voice revenues experienced significant declines, while business data revenues showed a modest increase[37] Note 3. Segment Reporting This note confirms the company operates as a single reportable segment, with the CEO reviewing consolidated net income for performance and resource allocation - The company operates as a single reportable segment, with the CEO (CODM) reviewing consolidated net income (loss) for performance monitoring and resource allocation[42] Significant Expense Categories (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |:---|:---|:---|:---|:---|\ | Direct product costs | $(46,473) | $(51,349) | $(94,910) | $(104,270) | | Labor costs | $(61,382) | $(63,580) | $(122,487) | $(127,141) | | Other items | $(711,193) | $(241,380) | $(979,645) | $(491,861) | Note 4. Operating Assets and Liabilities This note provides details on accounts receivable, prepaid assets, and other noncurrent assets, highlighting changes in their balances Accounts Receivable, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | |:---|:---|:---|\ | Trade receivables | $46,432 | $43,352 | | Other receivables | $13,982 | $17,310 | | Less: Allowance for credit losses | $(2,888) | $(2,920) | | Total accounts receivable, net | $57,526 | $57,742 | Prepaid and Other Current Assets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | |:---|:---|:---|\ | Prepaid repairs and maintenance | $14,934 | $4,801 | | Interest rate swap asset | $14,170 | $17,659 | | Total prepaid and other current assets | $76,976 | $67,862 | Other Noncurrent Assets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | |:---|:---|:---|\ | Interest rate swap asset | $16,825 | $46,200 | | New MBI Net Option | $64,180 | $84,120 | | Total other noncurrent assets | $129,995 | $178,429 | - Prepaid and other current assets increased by $9.1 million, primarily due to higher prepaid repairs and maintenance[45] - Other noncurrent assets decreased by $48.4 million, mainly due to a reduction in the New MBI Net Option value and interest rate swap asset[46] Note 5. Equity Investments This note details equity investments, showing a decrease in total value, a gain from an equity investment sale, and significant equity method losses Equity Investments (in thousands) | Investment Type | June 30, 2025 Carrying Value | December 31, 2024 Carrying Value | |:---|:---|:---|\ | Total cost method investments | $116,253 | $123,412 | | Total equity method investments | $614,460 | $692,400 | | Total equity investments | $730,713 | $815,812 | - Total equity investments decreased by $85.1 million from December 31, 2024, to June 30, 2025[53] - The company divested an equity investment in March 2025 for $10.7 million cash proceeds, recognizing a $3.2 million gain[48][55] - The MBI agreement was amended in December 2024, reinstating the Call Option, amending the Put Option, requiring a $250 million upfront cash payment, and providing for $100 million of new MBI debt[50] - Equity method investment loss, net, was $77.9 million for the six months ended June 30, 2025, primarily from Clearwave Fiber ($77.5 million loss, including $28.0 million impairment) and MBI ($3.3 million loss), partially offset by Nextlink ($2.9 million income)[55] Note 6. Property, Plant and Equipment This note outlines the net property, plant, and equipment, which remained relatively stable, with a slight increase in depreciation and amortization expense Property, Plant and Equipment, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | |:---|:---|:---|\ | Property, plant and equipment, gross | $3,748,663 | $3,719,943 | | Less: Accumulated depreciation and amortization | $(1,968,494) | $(1,929,988) | | Property, plant and equipment, net | $1,780,169 | $1,789,955 | - Net property, plant, and equipment remained relatively stable, decreasing slightly by $9.8 million from December 31, 2024, to June 30, 2025[56] - Depreciation and amortization expense for property, plant, and equipment was $140.5 million for the six months ended June 30, 2025, a slight increase from $137.9 million in the prior year[56] Note 7. Goodwill and Intangible Assets This note details significant non-cash impairment charges for indefinite-lived intangible assets and goodwill, triggered by a decline in the company's stock price - During Q2 2025, a decline in the company's common stock price triggered interim impairment assessments for indefinite-lived intangible assets and goodwill[57] - The company recognized non-cash impairment charges totaling $586.0 million, consisting of $497.2 million for franchise agreements and $88.8 million for goodwill[58] Goodwill and Intangible Assets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | |:---|:---|:---|\ | Goodwill | $840,826 | $929,609 | | Indefinite-Lived Intangible Assets (Franchise agreements) | $1,605,000 | $2,102,233 | | Total intangible assets, net | $2,004,503 | $2,532,855 | - Goodwill decreased by $88.8 million and franchise agreements decreased by $497.2 million due to impairment charges[59] Note 8. Debt This note provides details on the company's debt, including a decrease in total debt, a significant increase in the current portion, and compliance with all debt covenants Long-Term Debt (in thousands) | Metric | June 30, 2025 | December 31, 2024 | |:---|:---|:---|\ | Senior Credit Facilities | $1,943,808 | $2,042,221 | | Senior Notes | $633,107 | $650,000 | | Convertible Notes | $920,000 | $920,000 | | Total debt | $3,500,023 | $3,616,664 | | Current portion of long-term debt | $(593,573) | $(18,712) | | Total long-term debt | $2,883,909 | $3,571,536 | - Total debt decreased by $116.6 million from December 31, 2024, to June 30, 2025[62] - The current portion of long-term debt increased significantly to $593.6 million, primarily due to the 2026 Notes maturing in March 2026[62] - The company repaid $85.0 million of Revolving Credit Facility borrowings and voluntarily prepaid $4.4 million of Term Loan B-4 during the six months ended June 30, 2025[64] - A $3.9 million gain on extinguishments of debt was recognized from repurchasing $16.9 million of Senior Notes for $13.0 million[68] - The company was in compliance with all debt covenants as of June 30, 2025[81] Note 9. Interest Rate Swaps This note describes the company's interest rate swap agreements used to manage variable rate debt, noting a decrease in the swap asset and an unrealized loss on hedges - The company uses two interest rate swap agreements with a total notional amount of $1.2 billion to manage the risk of fluctuations in variable rate SOFR debt[83] Interest Rate Swap Asset (in thousands) | Metric | June 30, 2025 | December 31, 2024 | |:---|:---|:---|\ | Current portion | $14,170 | $17,659 | | Noncurrent portion | $16,825 | $46,200 | | Total interest rate swap asset | $30,995 | $63,859 | - The total interest rate swap asset decreased by $32.9 million from December 31, 2024, to June 30, 2025[83] - An unrealized loss on cash flow hedges, net of tax, of $25.1 million was recognized for the six months ended June 30, 2025, compared to a $17.6 million gain in the prior year, due to a decline in forward interest rates[84][155] Note 10. Fair Value Measurements This note presents the fair value of financial assets and liabilities, including money market investments, interest rate swaps, and various debt instruments Fair Value of Financial Assets and Liabilities (in thousands, June 30, 2025) | Asset/Liability | Fair Value Hierarchy | Carrying Amount | Fair Value | |:---|:---|:---|:---|\ | Money market investments | Level 1 | $68,137 | $68,137 | | Interest rate swap asset | Level 2 | $30,995 | $30,995 | | New MBI Net Option | Level 3 | $64,180 | $64,180 | | Term loans | Level 2 | $1,715,808 | $1,661,099 | | Revolving Credit Facility | Level 2 | $228,000 | $223,440 | | Senior Notes | Level 2 | $633,107 | $497,939 | | Convertible Notes | Level 2 | $920,000 | $810,808 | - The fair value of the New MBI Net Option (Level 3) decreased to $64.2 million at June 30, 2025, from $84.1 million at December 31, 2024[86] - Fair values of term loans, Revolving Credit Facility, Senior Notes, and Convertible Notes are estimated based on market prices for similar instruments (Level 2)[86] Note 11. Stockholders' Equity This note details stockholders' equity, including remaining share repurchase authorization and the practice of withholding shares for tax purposes - The company had $143.1 million of remaining share repurchase authorization under its Share Repurchase Program as of June 30, 2025[91] - No common stock was repurchased under the Share Repurchase Program during the six months ended June 30, 2025, or 2024[91] - Shares are withheld from employees upon vesting of equity awards to cover statutory minimum withholding taxes[92] Note 12. Equity-Based Compensation This note outlines equity-based compensation expense, which increased significantly, primarily due to Restricted Stock awards and accelerated expensing provisions Equity-Based Compensation Expense (in thousands) | Award Type | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change | % Change | |:---|:---|:---|:---|:---|\ | Restricted Stock | $21,106 | $14,169 | $6,937 | 49.0% | | SARs | $253 | $407 | $(154) | (37.8)% | | Total | $21,359 | $14,576 | $6,783 | 46.5% | - Total equity-based compensation expense increased by 46.5% for the six months ended June 30, 2025, primarily driven by Restricted Stock awards[95] - New RSU grants beginning in 2025 contain retirement eligibility provisions, resulting in accelerated expensing for eligible associates[94] - Unrecognized compensation expense related to Restricted Stock was $44.0 million as of June 30, 2025, expected to be recognized over a weighted average period of 1.5 years[96] Note 13. Income Taxes This note presents the income tax provision (benefit) and effective tax rate, showing a significant tax benefit due to asset impairments Income Tax Provision (Benefit) and Effective Tax Rate | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |:---|:---|:---|:---|:---|\ | Income tax (provision) benefit (in thousands) | $117,575 | $(14,069) | $117,372 | $(31,646) | | Effective tax rate | (22.0)% | 18.9% | (24.7)% | 20.9% | - The company reported an income tax benefit of $117.4 million for the six months ended June 30, 2025, compared to a provision of $31.6 million in the prior year[99] - The effective tax rate decreased significantly to (24.7)% for the six months ended June 30, 2025, from 20.9% in the prior year, primarily due to the asset impairments recognized in Q2 2025[99] Note 14. Other Income and Expense This note details other income and expense, primarily driven by a non-cash loss on the New MBI Net Option fair value adjustment, partially offset by gains Other Income (Expense), Net (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |:---|:---|:---|:---|:---|\ | Old MBI Net Option fair value adjustment | $0 | $(8,410) | $0 | $(15,610) | | New MBI Net Option fair value adjustment | $(15,270) | $0 | $(19,940) | $0 | | C-band spectrum relocation funding | $0 | $7,669 | $0 | $7,669 | | Gain on sale of equity investment | $0 | $0 | $3,199 | $0 | | Gain on extinguishments of debt | $3,856 | $0 | $3,856 | $0 | | Other income (expense), net | $(11,372) | $(641) | $(12,784) | $(7,756) | - Other expense, net, was $12.8 million for the six months ended June 30, 2025, primarily due to a $19.9 million non-cash loss on fair value adjustment for the New MBI Net Option[100] - This was partially offset by a $3.9 million gain on extinguishments of debt and a $3.2 million gain on the sale of an equity investment[100] Note 15. Net Income (Loss) Per Common Share This note reports a significant basic and diluted net loss per common share for the six months, a decrease from prior year net income Net Income (Loss) Per Common Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |:---|:---|:---|:---|:---|\ | Basic | $(77.70) | $6.79 | $(77.26) | $13.44 | | Diluted | $(77.70) | $6.58 | $(77.26) | $13.04 | - The company reported a basic and diluted net loss per common share of $(77.26) for the six months ended June 30, 2025, a significant decrease from net income per share in the prior year[103] - An immaterial error was identified in the diluted EPS calculation for the year ended December 31, 2024, which should have been $2.57 instead of $3.43[103] Note 16. Commitments and Contingencies This note states no material changes to contractual obligations, and no existing legal claims are expected to materially affect financial condition - No material changes to contractual obligations were reported since the 2024 Form 10-K, with the exception of debt payments[106] - The company is subject to various legal proceedings and extensive industry regulations, but no existing claims are expected to have a material adverse effect on its financial condition or results of operations[108][109] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, focusing on data services growth, significant net loss from impairments, and strategic broadband investments Overview This overview describes Cable One as a broadband provider in non-metropolitan U.S. markets, focusing on high-margin data services and infrastructure investments - Cable One is a leading broadband communications provider serving non-metropolitan, secondary, and tertiary markets in 24 U.S. states[114] - As of June 30, 2025, the company served approximately 1.1 million residential and business customers out of 2.9 million passings[114] - The company's strategy focuses on growing higher-margin residential data (59.7% of H1 2025 revenues) and business data (15.1% of H1 2025 revenues) services, while de-emphasizing residential video (13.0% of H1 2025 revenues) and residential voice[114][115] - Significant investments are being made in infrastructure, including increasing fiber density, expanding footprint, and deploying DOCSIS 3.1 and 4.0 to enhance network capacity and speeds[117][118][119] Results of Operations This section analyzes the company's operating results, highlighting key performance measures, subscriber trends, and revenue changes Key Performance Measures Summary This summary presents key financial metrics, including a net loss due to asset impairments and a decrease in Adjusted EBITDA Key Performance Measures (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change | % Change | |:---|:---|:---|:---|:---|\ | Revenues | $381,072 | $394,461 | $(13,389) | (3.4)% | | Net income (loss) | $(437,976) | $38,152 | $(476,128) | NM | | Adjusted EBITDA | $203,214 | $212,372 | $(9,158) | (4.3)% | | Capital expenditures | $68,374 | $71,592 | $(3,218) | (4.5)% | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change | % Change | |:---|:---|:---|:---|:---|\ | Revenues | $761,673 | $798,774 | $(37,101) | (4.6)% | | Net income (loss) | $(435,369) | $75,502 | $(510,871) | NM | | Adjusted EBITDA | $405,927 | $429,425 | $(23,498) | (5.5)% | | Capital expenditures | $139,504 | $137,479 | $2,025 | 1.5% | - The company reported a net loss for both the three and six months ended June 30, 2025, primarily due to $586.0 million in non-cash asset impairment charges[122] - Adjusted EBITDA decreased by 4.3% for the three months and 5.5% for the six months ended June 30, 2025[122] Primary Service Units ("PSUs") and Customer Counts This section details subscriber trends, showing a decrease in total PSUs driven by residential services, while business customer relationships and passings increased Primary Service Units (PSUs) and Customer Counts (in thousands) | Metric | As of June 30, 2025 | As of June 30, 2024 | Change | % Change | |:---|:---|:---|:---|:---|\ | Residential data PSUs | 932.0 | 963.2 | (31.2) | (3.2)% | | Residential video PSUs | 96.2 | 118.8 | (22.5) | (19.0)% | | Residential voice PSUs | 62.1 | 72.7 | (10.6) | (14.6)% | | Total residential PSUs | 1,090.4 | 1,154.7 | (64.3) | (5.6)% | | Business data PSUs | 99.3 | 99.6 | (0.3) | (0.3)% | | Total PSUs | 1,233.0 | 1,300.4 | (67.4) | (5.2)% | | Residential customer relationships | 955.8 | 992.9 | (37.1) | (3.7)% | | Business customer relationships | 104.7 | 102.8 | 1.8 | 1.8% | | Passings | 2,870.5 | 2,809.2 | 61.4 | 2.2% | - Total PSUs decreased by 5.2% year-over-year, driven by declines in residential data, video, and voice services[123] - Business customer relationships increased by 1.8%, while passings grew by 2.2%[123] Use of Nonfinancial Metrics and ARPU This section explains the use of nonfinancial metrics and ARPU to monitor operating performance, noting increases in residential data and video ARPU - The company uses nonfinancial metrics such as passings, PSUs, and customer relationships, along with Average Revenue Per Unit (ARPU), to measure and monitor operating performance[124][127] ARPU by Service Offering (Three Months Ended June 30) | Service | 2025 | 2024 | $ Change | % Change | |:---|:---|:---|:---|:---|\ | Residential data | $81.23 | $79.36 | $1.87 | 2.4% | | Residential video | $162.52 | $155.95 | $6.57 | 4.2% | | Residential voice | $35.41 | $36.75 | $(1.34) | (3.6)% | | Business services | $234.93 | $244.52 | $(9.59) | (3.9)% | - Residential data ARPU increased by 2.4%, and residential video ARPU increased by 4.2% for the three months ended June 30, 2025[129] Comparison of Three Months Ended June 30, 2025 to Three Months Ended June 30, 2024 This comparison highlights revenue declines, increased SG&A, and a significant net loss primarily due to $586.0 million in asset impairments Revenue Changes (Three Months Ended June 30, 2025 vs 2024) | Product Line | $ Change (in thousands) | % Change | |:---|:---|:---|\ | Residential data | $(1,068) | (0.5)% | | Residential video | $(9,020) | (15.8)% | | Residential voice | $(1,470) | (17.9)% | | Business data | $698 | 1.2% | | Business other | $(2,148) | (11.5)% | | Total revenues | $(13,389) | (3.4)% | - Operating expenses (excluding depreciation and amortization) decreased by $3.5 million (3.3%) due to lower programming and franchise costs[133] - Selling, general and administrative expenses increased by $1.2 million (1.4%), primarily due to a $5.0 million increase in billing system conversion costs[134] - Asset impairments totaled $586.0 million, consisting of non-cash impairments related to indefinite-lived franchise agreements ($497.2 million) and goodwill ($88.8 million)[136] - Net loss was $438.0 million, compared to net income of $38.2 million in the prior year, driven largely by the asset impairments[141] Comparison of Six Months Ended June 30, 2025 to Six Months Ended June 30, 2024 This comparison shows overall revenue declines, increased SG&A, and a substantial net loss primarily driven by $586.0 million in non-cash asset impairments Revenue Changes (Six Months Ended June 30, 2025 vs 2024) | Product Line | $ Change (in thousands) | % Change | |:---|:---|:---|\ | Residential data | $(11,766) | (2.5)% | | Residential video | $(18,574) | (15.8)% | | Residential voice | $(2,986) | (17.8)% | | Business data | $1,350 | 1.2% | | Business other | $(4,450) | (11.8)% | | Total revenues | $(37,101) | (4.6)% | - Operating expenses (excluding depreciation and amortization) decreased by $10.2 million (4.8%) due to lower programming and franchise costs[146] - Selling, general and administrative expenses increased by $6.3 million (3.4%), primarily due to an $8.6 million increase in billing system conversion costs[147] - Net loss was $435.4 million, compared to net income of $75.5 million in the prior year, driven largely by the $586.0 million in non-cash asset impairments[149][154] Use of Adjusted EBITDA This section defines Adjusted EBITDA as a non-GAAP measure for performance assessment and debt covenant compliance, noting its decrease for the periods - Adjusted EBITDA is a non-GAAP financial measure used to assess performance, determine compliance with debt covenants, and in incentive compensation programs[157][158] Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change | % Change | |:---|:---|:---|:---|:---|\ | Adjusted EBITDA | $203,214 | $212,372 | $(9,158) | (4.3)% | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change | % Change | |:---|:---|:---|:---|:---|\ | Adjusted EBITDA | $405,927 | $429,425 | $(23,498) | (5.5)% | - Adjusted EBITDA decreased by 4.3% for the three months and 5.5% for the six months ended June 30, 2025[160][162] Financial Condition: Liquidity and Capital Resources This section assesses the company's liquidity and capital resources, including cash balances, credit facilities, and strategic financial decisions like dividend suspension Liquidity This section confirms adequate liquidity from cash, credit facilities, and operating cash flows, noting the suspension of quarterly cash dividends to support debt repayment - The company believes existing cash balances, Senior Credit Facilities, and operating cash flows will provide adequate liquidity for ongoing operations, capital expenditures, potential acquisitions, debt repayment, and share repurchases over the next 12 months[164][168] - The estimated Call Price or Put Price for the remaining equity interests in MBI is between $460 million and $510 million, with MBI's total net indebtedness estimated at $845 million to $895 million[167] - The company suspended its quarterly cash dividend in Q2 2025, saving approximately $67 million annually, to reallocate funds to debt repayment, refinancing support, and organic growth initiatives[174] - The 'One Big Beautiful Bill Act' (OBBBA), enacted July 4, 2025, is anticipated to reduce current income tax liabilities, with its impact on future financial results currently being assessed[175] Financing Activity This section details financing activities, including debt repayments, available borrowing capacity, a gain on debt extinguishment, and the use of interest rate swaps - The company repaid $85.0 million of Revolving Credit Facility borrowings and voluntarily prepaid $4.4 million of Term Loan B-4 during the six months ended June 30, 2025[178] - As of June 30, 2025, $228.0 million was outstanding under the Revolving Credit Facility, with $1.02 billion of available borrowing capacity[178] - A $3.9 million gain was recognized from repurchasing $16.9 million of Senior Notes for $13.0 million during the three months ended June 30, 2025[180] - The company utilizes two interest rate swap agreements with a total notional amount of $1.2 billion to convert variable rate SOFR indebtedness to a fixed rate, recognizing $10.3 million in income from these swaps during the six months ended June 30, 2025[185] - The company was in compliance with all debt covenants as of June 30, 2025[184] Capital Expenditures This section outlines capital expenditures by category, showing a slight increase in total spending, primarily funded by cash on hand and operating cash flows Capital Expenditures by Category (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |:---|:---|:---|:---|:---|\ | Customer premise equipment | $11,104 | $15,411 | $27,673 | $19,040 | | Commercial | $5,499 | $2,955 | $10,676 | $11,190 | | Scalable infrastructure | $7,211 | $9,472 | $16,393 | $18,006 | | Line extensions | $17,366 | $18,372 | $31,887 | $33,634 | | Upgrade/rebuild | $4,261 | $7,288 | $7,660 | $15,519 | | Support capital | $22,933 | $18,094 | $45,215 | $40,090 | | Total | $68,374 | $71,592 | $139,504 | $137,479 | - Total capital expenditures for the six months ended June 30, 2025, increased by 1.5% to $139.5 million[188] - Capital expenditures are primarily funded by cash on hand and cash flows from operating activities[188] Contractual Obligations and Contingent Commitments This section reports no material changes to contractual obligations and contingent commitments since the 2024 Form 10-K, except for debt payments - No material changes to contractual obligations and contingent commitments were reported since the 2024 Form 10-K, except for debt payments[189] Off-Balance Sheet Arrangements This section confirms the company has no off-balance sheet arrangements or financing arrangements with special-purpose entities - The company does not have any off-balance sheet arrangements or financing arrangements with special-purpose entities[190] Critical Accounting Policies and Estimates This section discusses critical accounting policies and estimates, focusing on impairment assessments for indefinite-lived intangible assets and goodwill Impairment Assessments This section details the $586.0 million non-cash impairment charges for franchise agreements and goodwill, triggered by a decline in the company's stock price - A triggering event occurred in Q2 2025, due to a decline in the company's common stock price, requiring interim impairment assessments of indefinite-lived intangible assets and goodwill[193] - A non-cash impairment charge of $497.2 million was recognized for indefinite-lived franchise agreements, driven by reduced estimated future cash flows and an increased discount rate[195] - A non-cash goodwill impairment charge of $88.8 million was recognized, as the implied fair value of goodwill fell below its carrying value[196] - Future impairments may occur if estimated future cash flows decline, discount rates increase, or the stock price significantly decreases[197] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details market risk exposure, primarily interest rate fluctuations affecting fixed-rate debt, with no material changes reported - No material changes to the market risk disclosures were reported from the 2024 Form 10-K[199] - Changes in interest rates could impact the fair market value of the company's fixed-rate Senior Notes and Convertible Notes[200] Fair Market Value of Fixed-Rate Debt (in thousands, as of June 30, 2025) | Instrument | Aggregate Principal Amount | Fair Market Value | |:---|:---|:---|\ | Senior Notes | $633,107 | $497,939 | | 2026 Notes | $575,000 | $544,800 | | 2028 Notes | $345,000 | $266,000 | Item 4. Controls and Procedures This section confirms effective disclosure controls and procedures, reporting no material changes in internal control over financial reporting Disclosure Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures - The company's CEO and CFO concluded that the disclosure controls and procedures were effective as of June 30, 2025[202] Changes in Internal Control Over Financial Reporting This section reports no material changes in internal control over financial reporting during the quarter - No change in the company's internal control over financial reporting materially affected, or is reasonably likely to materially affect, internal control over financial reporting during the quarter ended June 30, 2025[203] PART II: OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, and other corporate information Item 1. Legal Proceedings This section states that there are no legal proceedings to report - None[206] Item 1A. Risk Factors This section highlights new risk factors, including significant impairment of intangible assets and goodwill, and the critical CEO transition - The company recognized $586.0 million in non-cash impairment charges for indefinite-lived franchise agreements ($497.2 million) and goodwill ($88.8 million) in Q2 2025, reducing their carrying values[208] - Further impairments of intangible assets or goodwill could occur if fair values decline in future periods, adversely impacting earnings and total assets[208] - The successful identification, hiring, and transition to a new CEO is critical, as the current CEO is retiring by December 31, 2025, and this transition could impact business strategies and operations[209] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports minimal share repurchases during the quarter, with a remaining authorization of $143.1 million under the Share Repurchase Program - The company had $143.1 million of remaining share repurchase authorization under its Share Repurchase Program as of June 30, 2025[210] - Only 2 shares were purchased during the three months ended June 30, 2025, primarily for tax withholding related to equity awards[210] Item 3. Defaults Upon Senior Securities This section indicates that there were no defaults upon senior securities - None[211] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company - Not applicable[212] Item 5. Other Information This section details the adoption of the Cable One, Inc. 2025 Executive Severance Plan, providing benefits for eligible executives upon qualifying termination events - The Board approved the adoption of the Cable One, Inc. 2025 Executive Severance Plan, effective July 29, 2025[215] - The Plan provides severance benefits to eligible executives whose employment terminates upon a 'Qualifying Event' (e.g., termination without Cause or voluntary resignation for Good Reason), excluding change-in-control transactions[216] - Benefits include lump sum cash payments (base salary, target annual bonus), accelerated vesting of outstanding equity awards (granted prior to Jan 1, 2026), and health care coverage premiums[217] - Benefits are contingent on the participant releasing claims against the company and complying with non-compete, non-solicitation, and other restrictive covenants[218] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including key agreements and certifications - Key exhibits include the Retirement Agreement and General Release of Claims for Julia M. Laulis (Exhibit 10.1) and the Cable One, Inc. 2025 Executive Severance Plan (Exhibit 10.2)[220] SIGNATURES This section contains the official signatures of the company's principal executive and financial officers, certifying the report - The report is signed by Julia M. Laulis, Chair of the Board, President and Chief Executive Officer, and Todd M. Koetje, Chief Financial Officer, on July 31, 2025[224]