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Consolidated Communications Holdings, Inc. (CNSL)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 revenue was $274.7M, down 0.5% YoY; GAAP net loss attributable to common shareholders was $(47.2)M with GAAP diluted EPS of $(0.41). Adjusted EBITDA rose to $88.4M (+17% YoY) as cost of services declined and fiber growth lifted mix .
  • Consumer broadband revenue increased to $79.9M, with consumer fiber broadband at $41.6M; total consumer broadband net adds were 6,338. Net interest expense increased to $42.5M on higher variable rates and revolver usage .
  • Liquidity at Mar 31: $7M cash, $111M availability on revolver, and $80M undrawn under a new delayed-draw term loan; 73% of debt is fixed through Sep 2026; weighted average cost of debt was 7.14% .
  • Strategic actions: closed sale of Washington operations on May 1, 2024; continues multi-year fiber expansion (10,783 new fiber passings in Q1); plans to discontinue video services entirely by end of Q3 2024; pending take-private transaction expected to close by Q1 2025 (no earnings call hosted) .

What Went Well and What Went Wrong

What Went Well

  • Fiber-led mix shift: Consumer broadband revenue grew to $79.9M; consumer fiber broadband revenue reached $41.6M, supported by 6,338 net adds and 18,802 fiber Gig+ net adds (Q1) as penetration improved to 17.2% on fiber passings .
  • Cost discipline and EBITDA: Cost of services fell to $113.5M (from $131.9M); adjusted EBITDA increased to $88.4M (+$13.0M YoY), aided by USF contribution reductions, lower video programming, and headcount/cost initiatives .
  • Execution on build plan: Upgraded ~10,800 passings in the quarter; fiber route miles expanded to 61,366; management reiterated plan to upgrade ~150,000 passings in 2024 .

What Went Wrong

  • Interest burden: Net interest expense rose to $42.5M (+$8.6M YoY) due to higher variable rates and $100M revolver borrowings, pressuring bottom line despite operating improvements .
  • Legacy revenue declines: Commercial voice, carrier voice/data, network access, and video services continued to decline; video revenue fell to $6.6M with full decommission planned by end of Q3 2024 .
  • Cash generation: Operating cash flow fell to $5.7M (from $55.1M) primarily due to working capital timing and higher cash interest, constraining near-term self-funding capacity .

Financial Results

MetricQ3 2023Q4 2023Q1 2024
Revenue ($USD Millions)$283.7 $275.2 $274.7
GAAP Diluted EPS ($)$(0.61) $(0.52) $(0.41)
Adjusted Diluted EPS ($)$(0.31) $(0.26) $(0.27)
Adjusted EBITDA ($USD Millions)$80.2 $86.7 $88.4
Net Interest Expense ($USD Millions)$39.6 $41.6 $42.5

Segment revenue breakdown

Segment Revenue ($USD Millions)Q3 2023Q4 2023Q1 2024
Consumer Broadband (Data + VoIP)$75.1 $76.5 $79.9
Consumer Voice$31.6 $29.9 $28.3
Consumer Video$8.5 $7.5 $6.6
Commercial Data (incl. VoIP)$53.9 $54.5 $54.7
Commercial Voice$31.8 $31.2 $30.7
Carrier Data & Transport$31.4 $31.7 $31.0
Network Access$20.8 $22.2 $22.5
Subsidies$6.9 $6.9 $6.8
Other Products & Services$10.0 $1.2 $1.1

Selected KPIs

KPIQ3 2023Q4 2023Q1 2024
Fiber Gig+ Capable Passings1,187,076 1,236,208 1,246,991
Consumer Broadband Connections – Fiber175,748 195,195 213,997
Consumer Broadband Connections – DSL/Copper210,473 198,024 185,560
Total Consumer Broadband Connections386,221 393,219 399,557
Fiber Net Adds21,888 19,447 18,802
DSL/Copper Net Adds(12,496) (12,449) (12,464)
Total Consumer Broadband Net Adds9,392 6,998 6,338
Fiber Consumer Broadband Churn1.3% 1.2% 1.1%
Video Connections26,158 21,900 17,620
Fiber Route Network Miles59,915 60,438 61,366

Estimates comparison

  • Wall Street consensus via S&P Global was unavailable for CNSL in this period; therefore, a beat/miss analysis versus consensus could not be performed. No company-provided guidance was issued in Q1 2024 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Financial guidance (Revenue/EPS)FY 2024None (company withdrew 2023 outlook in Q3 2023 and did not provide Q1 2024 guidance) None provided Q1 2024 Maintained (no guidance)
Video services strategyFY 2024Decommissioning underway (declining connections) Discontinue video services in all markets by end of Q3 2024 Announced timing
Fiber build planFY 2024Multi-year plan to upgrade ~1.6M passings; 2023 upgrades 227.5K Plan to upgrade ~150,000 passings in 2024; 10,783 passings added in Q1 Maintained plan; quantified FY 2024 target
Take-private transactionTransaction timelineExpected close by Q1 2025 Expected close by Q1 2025; no call hosted Maintained timeline

Earnings Call Themes & Trends

Note: The company did not host an earnings conference call due to the pending take-private transaction . Themes below reflect disclosures from press releases and the 10-Q.

TopicPrevious Mentions (Q3 2023 and Q4 2023)Current Period (Q1 2024)Trend
Fiber expansion & passings67,120 passings added in Q3 2023; 49,132 passings added in Q4 2023 10,783 passings added; plan for ~150K in 2024 Continued build; steady execution
Broadband mix & pricingBroadband revenue growth, price increases, fiber penetration rising Consumer broadband $79.9M; fiber broadband $41.6M; fiber penetration 17.2% Positive mix shift
Legacy services (voice/video)Ongoing declines in voice and video; restructuring impacts Video decommission by end Q3 2024; continued voice decline Accelerated exit from video
Subsidies/USF/ACPUSF and access changes; ACP participation USF contributions and TX state USF rates reduced; ACP funding lapses after April 2024 Funding changes modest headwind
Interest rates & leverageNet interest up on term loans; 77% fixed through Sep 2026 Net interest $42.5M; 73% fixed; WA cost 7.14% Higher interest burden persists
Regulatory & M&AAnnounced take-private; covenant relief amendment (Oct 2023) Washington asset sale closed; merger timeline unchanged; new delayed-draw term loan Portfolio optimization; transaction track maintained

Management Commentary

  • “In 2024, we plan to continue to execute on our multi-year fiber growth plan… Our fiber build plan includes the upgrade of approximately 150,000 homes and small businesses in 2024.” (10-Q MD&A) .
  • “We plan to discontinue video services in all markets by the end of the third quarter of 2024.” (10-Q MD&A) .
  • “On May 1, 2024, Consolidated completed the sale of its Washington assets.” (Q1 press release) .
  • “As of Mar. 31, 2024… cash and short-term investments of approximately $7 million, $111 million of available borrowing capacity under the revolver, and $80 million undrawn under the Term Loan Agreement.” (Q1 press release) .

Q&A Highlights

  • The company did not host an earnings conference call due to the pending transaction; no Q&A occurred in Q1 2024 .

Estimates Context

  • S&P Global consensus estimates were unavailable for CNSL in this period (no CIQ mapping returned); the company did not provide financial guidance in Q1 2024, and no earnings call was held, limiting external estimate benchmarking .

Key Takeaways for Investors

  • Fiber growth is driving mix improvement and EBITDA: consumer broadband and fiber revenue growth, lower programming costs, and USF contribution reductions supported a 17% YoY adjusted EBITDA increase .
  • Interest expense remains a key headwind: higher variable rates and revolver borrowings lifted net interest expense to $42.5M; 73% of debt is fixed through Sep 2026 offers some protection .
  • Execution on fiber plan and portfolio optimization: ~10.8K passings added; Washington asset sale completed; 2024 goal of ~150K passings underscores build cadence .
  • Legacy service exit accelerates: full video discontinuation by end Q3 2024 should reduce costs and sharpen broadband focus; expect continued declines in legacy voice/video .
  • Liquidity adequate near term: $7M cash, $111M revolver capacity, and $80M undrawn term loan provide flexibility; operating cash flow weakened on working capital timing and higher cash interest .
  • Transaction timeline unchanged: take-private expected by Q1 2025; absence of calls suggests limited near-term disclosures; monitor regulatory approvals and covenant thresholds .

Notes

  • All figures are sourced from company filings and press releases cited above. No S&P Global consensus estimates were available for this ticker in this period.