Consolidated Communications Holdings, Inc. (CNSL)·Q2 2024 Earnings Summary

Executive Summary

• Q2 revenue declined to $268.7M (-2.3% YoY from $275.2M; -2.2% QoQ from $274.7M), while adjusted EBITDA rose YoY to $84.2M (+9.5%), but fell QoQ (-4.7%), reflecting ongoing cost savings offset by softer top-line and higher interest expense .
• GAAP net loss per share improved YoY to ($0.58) from ($1.05) on lapping a 2023 impairment, but worsened QoQ from ($0.41); adjusted diluted net loss per share was ($0.37) vs ($0.28) YoY and ($0.27) QoQ .
• Consumer fiber momentum continued: consumer fiber broadband revenue grew to $45.4M (Q2) from $41.6M (Q1) and $37.9M (Q4 2023); fiber passings reached 1.274M with fiber penetration at 18.1% .
• Liquidity remained tight ($5M cash), but the company had $75M available on the revolver and $80M undrawn under a term loan; weighted average cost of debt was 7.18% with 72% fixed through Sept 2026 .
• No earnings call due to the pending take-private; close expected in late Q4 2024 or early Q1 2025—deal timing and regulatory approvals are the primary stock catalysts near term .

What Went Well and What Went Wrong

What Went Well

• Fiber-led mix shift: consumer fiber broadband revenue rose to $45.4M (from $41.6M in Q1 and $37.9M in Q4 2023) as fiber passings expanded to 1.274M and penetration improved to 18.1% .
• Cost discipline: “Cost of services and products and selling, general and administrative expenses collectively decreased $3.2 million versus the prior year largely due to lower video programming costs, a reduction in contract labor costs, and lower salaries…” .
• Adjusted EBITDA up YoY: $84.2M vs $76.9M YoY (+9.5%), supported by cost actions and mix, despite lower revenue .

What Went Wrong

• Top-line pressure: revenue fell 2.3% YoY and 2.2% QoQ, with ongoing declines in video, subsidies, network access and carrier voice .
• Higher interest burden: net interest expense increased to $44.1M (+$7.2M YoY) on higher rates and revolver usage, pressuring net income .
• Net adds deceleration and cash burn: total consumer broadband net adds slowed to 3,670 (from 6,338 in Q1), and operating cash flow was negative in Q2 (-$8.2M vs +$12.2M in Q2’23) .

Financial Results

Notes: Margins calculated from cited revenue and profit metrics.

Segment/Category Revenue ($M)

KPIs and Operating Metrics

Additional balance sheet and cash flow:

• Cash and equivalents: $5.3M (6/30/24) vs $7.4M (3/31/24) .
• Q2 operating cash flow: ($8.2M); investing cash benefited from $67.5M Washington sale proceeds .
• Debt cost/structure: 7.18% weighted average; 72% fixed through Sept 2026 .

Guidance Changes

Earnings Call Themes & Trends

Note: No earnings calls were held in Q2 2024, Q1 2024, or Q4 2023 due to the pending transaction .

Management Commentary

• “Cost of services and products and selling, general and administrative expenses collectively decreased $3.2 million versus the prior year largely due to lower video programming costs, a reduction in contract labor costs, and lower salaries driven by certain cost savings initiatives.”
• “Net interest expense was $44.1 million, an increase of $7.2 million versus the prior year, primarily as a result of higher interest rates on the term loan, interest from borrowings on the revolving credit facility, and decreased interest income due to lower cash holdings… 72% of total outstanding debt at a fixed rate through September 2026… weighted average cost of debt was 7.18%.”
• Liquidity and facilities available: “cash and short-term investments of approximately $5 million… $75 million of available borrowing capacity under… revolver and $80 million undrawn under its term loan…”

Q&A Highlights

• No Q&A as the company did not host an earnings conference call due to the pending transaction .
• Transaction update: expected close late Q4 2024 or early Q1 2025, subject to regulatory approvals; not subject to a financing condition .

Estimates Context

• We do not present an estimates comparison for Q2 2024 because S&P Global consensus data for CNSL were not available via our source at the time of analysis. The company also did not provide financial guidance and did not host a call, limiting third-party estimate triangulation .

Key Takeaways for Investors

• Fiber growth remains the core driver: consumer fiber broadband revenue accelerated sequentially to $45.4M, and fiber passings/penetration improved, supporting the medium-term mix shift thesis .
• Top-line headwinds continue in legacy categories (video, network access, carrier voice), weighing on consolidated revenue trajectory despite fiber strength .
• Cost actions are working (YoY OpEx down), lifting YoY adjusted EBITDA, but higher interest expense remains a structural headwind to earnings until rates/structure change .
• Liquidity is tight ($5M cash), though the company retains revolver capacity and an undrawn term loan; monitor covenant dynamics and cash generation, especially as capex remains elevated ($102.7M in Q2) .
• Washington divestiture completed with $67.5M proceeds in Q2, aiding near-term liquidity amid ongoing fiber investment .
• Near-term trading likely to be dominated by deal spread/regulatory milestones on the Searchlight/BCI take-private; management reaffirmed expected timing (late Q4 2024/early Q1 2025) .
• Absent guidance or an earnings call, the fundamental narrative hinges on continued fiber adoption and cost discipline versus secular declines in legacy lines—watch for sustained consumer broadband growth and adjusted EBITDA stability into the closing window .

Appendix: Additional Detail

• Revenue normalization adjusted for Washington divestiture: Q2 2024 normalized total operating revenue $267.2M vs $270.1M normalized in Q2 2023, illustrating underlying YoY pressure even excluding divested operations .
• Adjusted diluted net loss per share reconciliation provided by management confirms key non-GAAP adjustments (transaction/severance, impairment, stock comp, preferred dividends) .