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Consolidated Communications Reports First Quarter 2016 Results

MATTOON, Ill., May 05, 2016 (GLOBE NEWSWIRE via COMTEX) --

  • Delivered a strong quarter of data connection adds with an increase of 3,500
  • Increased year over year commercial and carrier data and transport services by 6.4%
  • Generated $59.5 million in cash from operations, an increase of 13.6% year over year
  • Announced the agreement to acquire fiber-based Champaign Telephone Company

Consolidated Communications Holdings, Inc. CNSL, -0.08% (the "Company") reported results for the first quarter 2016.

First quarter financial summary:

  • Revenue was $188.8 million.
  • Net cash from operations was $59.5 million.
  • Adjusted EBITDA was $78.6 million.
  • Dividend payout ratio was 61.4%.

"We kicked off 2016 with another solid quarter led by growth in our business and broadband services," said Bob Udell, President and Chief Executive Officer. "We continue to see strong demand for high-bandwidth data services, and with our extensive fiber network, we are well positioned to take advantage of the growth."

"On April 18 [th] , we announced the agreement to acquire Champaign Telephone Company (CTC). CTC provides communication services to businesses and enterprises over its fiber network throughout the Champaign-Urbana, IL area. This is a growing market, underpinned by education and healthcare. The acquisition fits very well with our strategic focus on increasing our fiber footprint into growth areas and delivering fiber-based products and services," Udell concluded.

The Company also previously announced that it has agreed to the sale of its rural independent local exchange company (ILEC) in northwest Iowa to Premier Communications and Winnebago Cooperative Telephone Association. The sale would be an all cash transaction valued at approximately $22.5 million, before contractual adjustments. The ILEC produced approximately $7.0 million in revenue last year. The transaction is subject to standard closing conditions, including regulatory approvals, and is expected to close in the third quarter.

Financial Results for the First Quarter

  • Total revenues were $188.8 million, compared to $192.6 million for the same period last year. Excluding revenue from our equipment sales and service, and revenue associated with the October 2015 sale of the Enventis third party billing platform, revenues were $179.2 million, compared to $180.6 million for the first quarter of 2015. Strong growth in strategic sales channels offset declines in voice services, subsidies and network access revenues.
  • Income from operations was $24.3 million, compared to $26.7 million in the first quarter of 2015. The decline is primarily attributable to lower revenue and higher depreciation expense.
  • Interest expense, net improved by $2.1 million to $18.6 million from $20.7 million for the same period last year. The improvement is primarily due to the use of proceeds from the add-on we completed in June of 2015 to our 6.5% senior notes due 2022. We used certain of the proceeds to redeem the entire remaining portion of our then-outstanding 10 7/8% senior notes.
  • Other income, net was $7.2 million, compared to $6.4 million for the same period in 2015. The first quarter of last year included a non-cash impairment loss of $0.9 million for our investment in Central Valley Independent Network, LLC that was subsequently sold in the second quarter of 2015.
  • Adjusted diluted net income per share excludes certain items in the manner described in the table provided in this release. Adjusted diluted net income per share was $0.19 for the current quarter, compared to $0.20 the same period last year.
  • Cash distributions from our Verizon Wireless partnerships were $6.8 million compared to $7.1 million for the first quarter of 2015.
  • Adjusted EBITDA was $78.6 million compared to $79.7 million for the same period in 2015.
  • The total net debt to last twelve month adjusted EBITDA ratio improved to 4.19x.

Cash Available to Pay Dividends
For the quarter, cash available to pay dividends, or CAPD, was $31.8 million, and the dividend payout ratio was 61.4%. At March 31, 2016, cash and cash equivalents were $24.5 million. Capital expenditures for the quarter were $28.7 million.

Financial Guidance
The Company is reiterating its full year 2016 guidance as outlined below.

2016 Guidance
2015 Results
Cash Interest Expense $73.0 million to $75.0 million $76.9 million
Cash Income Taxes $1.0 million to $3.0 million $1.8 million
Capital Expenditures $125.0 million to $130.0 million $133.9 million

Dividend Payments
On May 2, 2016, the Company's board of directors declared its next quarterly dividend of $0.38738 per common share, which is payable on August 1, 2016 to stockholders of record at the close of business on July 15, 2016. This will represent the 44 [th] consecutive quarterly dividend paid by the Company.

Conference Call Information
The Company will host a conference call today at 11:00 a.m. Eastern Time / 10:00 a.m. Central Time to discuss first quarter earnings and developments with respect to the Company. The live webcast and replay can be accessed from the "Investor Relations" section of the company's website at http://ir.consolidated.com. The live conference call dial-in number is 1-877-374-3981 with conference ID 85995132. A telephonic replay of the conference call will be available through May 12, 2016 and can be accessed by calling 1-855-859-2056.

Use of Non-GAAP Financial Measures
This press release, as well as the conference call, includes disclosures regarding "EBITDA", "adjusted EBITDA", "cash available to pay dividends" and the related "dividend payout ratio", "total net debt to last twelve month adjusted EBITDA coverage ratio", "adjusted diluted net income per share" and "adjusted net income attributable to common stockholders", all of which are non-GAAP financial measures and described in this section as not being in compliance with Regulation S-X. Accordingly, they should not be construed as alternatives to net cash from operating or investing activities, cash and cash equivalents, cash flows from operations, net income or net income per share as defined by GAAP and are not, on their own, necessarily indicative of cash available to fund cash needs as determined in accordance with GAAP. In addition, not all companies use identical calculations, and the non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. A reconciliation of the differences between these non-GAAP financial measures and the most directly comparable financial measures presented in accordance with GAAP is included in the tables that follow.

Adjusted EBITDA is comprised of EBITDA, adjusted for certain items as permitted or required by the lenders under our credit agreement in place at the end of each quarter in the periods presented. The tables that follow include an explanation of how adjusted EBITDA is calculated for each of the periods presented with the reconciliation to net income. EBITDA is defined as net earnings before interest expense, income taxes, depreciation and amortization on a historical basis.

Cash available to pay dividends represents adjusted EBITDA plus cash interest income less (1) cash interest expense, (2) capital expenditures and (3) cash income taxes; this calculation differs in certain respects from the similar calculation used in our credit agreement.

We present adjusted EBITDA, cash available to pay dividends and the related dividend payout ratio for several reasons. Management believes adjusted EBITDA, cash available to pay dividends and the dividend payout ratio are useful as a means to evaluate our...


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