Part I. Financial Information Item 1. Financial Statements Frontier Communications Parent, Inc.'s unaudited Q1 2024 consolidated financial statements detail key financial performance and position Consolidated Balance Sheets Consolidated Balance Sheet Summary ($ in millions) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,296 | $1,125 | | Short-term investments | $225 | $1,075 | | Total current assets | $2,081 | $2,781 | | Property, plant and equipment, net | $14,296 | $13,933 | | Total assets | $20,197 | $20,693 | | Liabilities & Equity | | | | Total current liabilities | $1,940 | $2,275 | | Long-term debt | $11,240 | $11,246 | | Total liabilities | $14,938 | $15,414 | | Total equity | $5,259 | $5,279 | | Total liabilities and equity | $20,197 | $20,693 | Consolidated Statements of Income Consolidated Income Statement Summary ($ in millions, except per-share amounts) | Account | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenue | $1,462 | $1,440 | | Total operating expenses | $1,372 | $1,297 | | Operating income | $90 | $143 | | Interest expense | ($199) | ($141) | | Investment and other income, net | $112 | $2 | | Net income | $1 | $3 | | Basic EPS | $0.00 | $0.01 | | Diluted EPS | $0.00 | $0.01 | Consolidated Statements of Cash Flows Consolidated Cash Flow Summary ($ in millions) | Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided from operating activities | $335 | $389 | | Net cash provided from (used by) investing activities | $186 | ($304) | | Net cash (used by) provided from financing activities | ($423) | $725 | | Increase in cash, cash equivalents, and restricted cash | $98 | $810 | - Capital expenditures decreased significantly to $666 million in Q1 2024 from $1,154 million in Q1 202322 - Financing activities used $423 million in cash in Q1 2024, a sharp contrast to the $750 million in net proceeds from long-term debt borrowings in Q1 202322 Notes to Consolidated Financial Statements Revenue by Category ($ in millions) | Category | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Data and Internet services | $947 | $862 | | Voice services | $321 | $356 | | Video services | $94 | $117 | | Other | $84 | $83 | | Subsidy and other revenue | $16 | $22 | | Total revenue | $1,462 | $1,440 | Revenue by Customer Type ($ in millions) | Customer Type | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Consumer | $787 | $761 | | Business and wholesale | $659 | $657 | | Subsidy and other revenue | $16 | $22 | | Total revenue | $1,462 | $1,440 | - On April 14, 2024, the company detected unauthorized third-party access to its IT environment, likely a cybercrime group, causing operational disruption and access to personally identifiable information, though no material financial impact is expected125 - Restructuring charges in Q1 2024 were $34 million, primarily for severance, employee costs, and pension/OPEB enhancements related to a voluntary separation program, a significant increase from $8 million in Q1 20238889 - Investment and other income was $112 million in Q1 2024, largely due to a $74 million pension remeasurement gain and a $9 million OPEB remeasurement gain resulting from a voluntary separation plan91 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's strategic fiber deployment, Q1 2024 financial performance, liquidity, and a cyber incident Business Overview and Cyber Incident - The company's strategy focuses on four priorities: fiber deployment, fiber penetration, improving customer experience, and operational efficiency152 - Q1 2024 achievements include adding 322,000 fiber passings, reaching 6.8 million total fiber locations, and adding 88,000 fiber broadband customers154 - A cyber incident was detected on April 14, 2024, where a third party, likely a cybercrime group, gained unauthorized access to the IT environment and personally identifiable information; the company believes the incident is contained and not expected to materially impact financial results153 Results of Operations Key Customer Metrics (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Fiber Broadband | | | | | Consumer Customers (thousands) | 1,963 | 1,659 | 18% | | Consumer Net Additions (thousands) | 85 | 84 | 1% | | Consumer ARPU | $65.18 | $61.44 | 6% | | Copper Broadband | | | | | Consumer Customers (thousands) | 771 | 987 | (22)% | | Consumer Net Losses (thousands) | (51) | (56) | (9)% | | Consumer ARPU | $56.16 | $48.88 | 15% | Revenue by Technology (YoY, $ in millions) | Technology | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Fiber | $805 | $729 | 10% | | Copper | $641 | $689 | (7)% | | Total Revenue from Customers | $1,446 | $1,418 | 2% | - Operating income decreased by $53 million (37%) YoY, primarily due to higher depreciation and amortization (+18%), increased restructuring costs (+325%), and higher SG&A expenses (+3%)156157202 - Cost of service decreased by $20 million (4%) YoY, driven by lower video content costs from customer declines and non-renewal of certain content agreements204 Liquidity and Capital Resources - As of March 31, 2024, total liquidity was approximately $2.585 billion, consisting of $1.296 billion in cash, $225 million in short-term investments, $500 million in available Variable Funding Notes, and $564 million in available revolving credit facility capacity219 - Cash flow from operations decreased by $54 million YoY to $335 million for Q1 2024, mainly due to changes in pension/OPEB liabilities and working capital223 - Capital expenditures for Q1 2024 were $666 million, a significant decrease from $1,154 million in Q1 2023; including $363 million in vendor financing payments, total capital investment was $1.029 billion226231 - The company was in compliance with all debt covenants as of March 31, 2024243 Quantitative and Qualitative Disclosures about Market Risk This section details the company's primary market risks, including interest rate fluctuations and equity price exposure - As of March 31, 2024, 87% of the company's total debt had fixed interest rates, minimizing exposure to interest rate changes269 - The only floating-rate debt is a $1.4 billion term loan; a 100 basis point increase in the SOFR would result in approximately $14 million of additional annual interest expense270 - Equity price exposure is primarily limited to the pension plan assets, which increased by $93 million to $2.361 billion in Q1 2024275276 Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls - The principal executive officer and principal financial officer concluded that as of March 31, 2024, the company's disclosure controls and procedures were effective277 - There were no changes in internal control over financial reporting during Q1 2024 that materially affected, or are reasonably likely to materially affect, internal controls278 Part II. Other Information Legal Proceedings The company is involved in various legal proceedings and investigations, which management believes will not materially affect its financial condition - The company is party to various legal proceedings and investigations but believes their resolution will not have a material adverse effect on its financial condition281 Risk Factors This section updates cybersecurity risk factors, specifically addressing the April 14, 2024 incident and its potential impact - This section updates the risk factor related to network and information system breaches, specifically citing the April 14, 2024 cyber-attack282 - The company determined a cybercrime group gained unauthorized access to IT systems and personally identifiable information, leading to an operational disruption that could be considered material287 - Despite containment efforts, the company acknowledges that any security incident could result in misappropriation of data, financial loss, reputational harm, and legal claims, with no assurance that the impact would not be material288 Exhibits This section lists the exhibits filed with the Form 10-Q, including required certifications and iXBRL financial data - The exhibits filed with the report include CEO and CFO certifications pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act, as well as iXBRL data files290
Frontier Communications(FYBR) - 2024 Q1 - Quarterly Report