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8-K - 8-K - WideOpenWest Finance, LLCa16-11023_18k.htm

Exhibit 99.1

 

 

Contact:

Richard Fish

Chief Financial Officer

720-479-3538

rich.fish@wowinc.com

 

WOW! ANNOUNCES RESULTS FOR THE FIRST QUARTER ENDED MARCH 31, 2016

 

ENGLEWOOD, CO — (May 11, 2016) - WOW! Internet, Cable & Phone (“WOW!”), a leading, fully-integrated provider of residential and commercial high-speed data, video and telephony services to customers in the United States, announced today financial and operating results for the first quarter ended March 31, 2016.

 

Financial & Operating Highlights (1)

 

For the first quarter ended March 31, 2016, WOW! reported Total Revenue of $302.3 million and Adjusted EBITDA of $112.9 million representing sequential increases in Total Revenue of $1.0 million (or 0.3%) and Adjusted EBITDA of $1.0 million (or 0.9%) over the fourth quarter ended December 31, 2015.

 

On an LTM basis, Total Revenue for the twelve month period ended March 31, 2016, was $1.207 billion, a year-over-year decrease of $18.0 million (or 1.5%) from the Pro Forma twelve month period ended March 31, 2015.  LTM Adjusted EBITDA as of March 31, 2016, totals $447.1 million, a year-over-year increase of $25.5 million (or 6.0%) from the Pro Forma twelve month period ended March 31, 2015.

 

For the first quarter ended March 31, 2016, WOW! reported an increase in Total Customers of 6,800 (an improvement of 16,700 over the quarterly results from the first quarter ended March 31, 2015), an increase of 9,700 HSD RGUs (an improvement of 15,500 over the quarterly results from the first quarter ended March 31, 2015) and a reduction of 10,800 Total RGUs (an improvement of 43,000 over the quarterly results from the first quarter ended March 31, 2015).

 

Conference Call

 

WOW! will host a conference call on Thursday, May 12, 2016 at 9:00 a.m. Eastern to discuss the operating and financial results contained in this press release.  Conference call information is as follows:

 

Call Date:

Thursday, May 12, 2016

Call Time:

9:00 a.m. Eastern

Dial In:

(877) 541-5069

Intn’l Dial In:

(443) 842-7607

Conf. ID:

6946402

 

 

 

A recording of the conference call will be available approximately two hours after the completion of the call until June 11, 2016.  Dial in # for this replay is (855) 859-2056. Additionally, a copy of the transcript will be available approximately forty-eight hours after the call, at www.wowway.com/investor-relations.

 


(1)         Refer to “Definitions of Non-GAAP Financial Measures and Operating Metrics”, “Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures”, and “Unaudited Pro Forma Condensed Combined Financial and Subscriber Information” in this Earnings Release for definitions and information related to Adjusted EBITDA and Pro Forma financial and subscriber information.

 



 

The following unaudited condensed consolidated statements of operations summarizes information in our Form 10-Q for the quarter ended March 31, 2016, as filed on May 11, 2016, with the U.S. Securities and Exchange Commission (“SEC”).  For ease of use, references in this release to “WOW! Internet, Cable & Phone” or “WOW!” mean WideOpenWest Finance, LLC and its consolidated subsidiaries.

 

WideOpenWest Finance, LLC

Condensed Consolidated Statements of Operations (Unaudited)

($ in millions)

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2016

 

2015

 

Revenue

 

 

 

 

 

Residential subscription

 

$

240.5

 

$

254.8

 

Commercial subscription

 

25.8

 

24.1

 

Total subscription revenue

 

$

266.3

 

$

278.9

 

Other commercial services

 

8.2

 

6.8

 

Other

 

27.8

 

26.6

 

Total Revenue

 

$

302.3

 

$

312.3

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

Operating (excluding depreciation & amortization)

 

$

164.5

 

$

178.3

 

Selling, general and administrative

 

26.0

 

27.8

 

Depreciation and amortization

 

52.5

 

54.8

 

Management fee to related party

 

0.4

 

0.4

 

 

 

$

243.4

 

$

261.3

 

 

 

 

 

 

 

Income from operations

 

$

58.9

 

$

51.0

 

Other income (expense):

 

 

 

 

 

Interest expense

 

(54.2

)

(58.9

)

Realized and unrealized gain (loss) on derivative instruments, net

 

1.1

 

2.0

 

Other (expense) income, net

 

 

0.2

 

Income Tax (expense) benefit

 

(1.0

)

(0.9

)

Net loss

 

$

4.8

 

$

(6.6

)

 

The unaudited condensed consolidated statements of operations above and the information in this release should be read in conjunction with our Form 10-K for the year ended December 31, 2015, filed with the U.S. SEC on March 17, 2016.

 

About WOW!

 

WOW! is one of the nation’s leading providers of high-speed Internet, cable TV, and phone serving communities in the U.S.  Our operating philosophy is to deliver an employee and customer experience that lives up to its name.  WOW! is privately owned by Avista Capital Partners and Crestview Partners.  For more information, please visit www.wowway.com.

 

2



 

Forward-Looking Statements

 

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  All statements, other than statements of historical facts, included in this release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future, are forward-looking statements.  Forward-looking statements are not guarantees of future performance and we caution you not to place undue reliance on such statements.  Forward-looking statements are generally identifiable by the use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “project,” “continue,” or the negative of these words, or other similar words or terms.  The forward-looking statements included in this release are made as of the date hereof.  Except as required by law, we assume no obligation to publicly update any forward-looking statement, even if new information becomes available in the future.  Actual results may differ materially from those expected because of various risks and uncertainties, many of which are beyond our control.  You should review our filings with the SEC, including the section titled “Risk Factors” contained in our Annual Report on Form 10-K filed with the SEC on March 17, 2016.

 

Definitions of Non-GAAP Financial Measures and Operating Metrics

 

We have included certain non-GAAP financial measures in this release including Adjusted EBITDA and Pro Forma Adjusted EBITDA.  We believe that these non-GAAP measures enhance an investor’s understanding of our financial performance.  We believe that these non-GAAP measures are useful financial metrics to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business.  We believe that these non-GAAP measures provide investors with useful information for assessing the comparability between periods of our ability to generate cash from operations sufficient to pay taxes, to service debt and to undertake capital expenditures.  We use these non-GAAP measures for business planning purposes and in measuring our performance relative to that of our competitors.  We believe these non-GAAP measures are measures commonly used by investors to evaluate our performance and that of our competitors.

 

Adjusted EBITDA is defined by WOW! as net income (loss) before net interest expense, income taxes, depreciation and amortization (including impairments), gains (losses) realized and unrealized on derivative instruments, management fees to related party, the write-up or write-off/disposal of any asset, debt modification expenses, loss on extinguishment of debt, integration and restructuring expenses and all non-cash charges and expenses (including equity based compensation expense) and certain other income and expenses, as further defined in our credit facilities.  Adjusted EBITDA is not a presentation made in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and our use of the term Adjusted EBITDA varies from others in our industry.  Adjusted EBITDA should not be considered as an alternative to net income (loss), operating income or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows, or as measures of liquidity.

 

Adjusted EBITDA has important limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.  For example, Adjusted EBITDA:

 

·                  excludes certain tax payments that may represent a reduction in cash available to us;

·                  does not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;

·                  does not reflect changes in, or cash requirements for, our working capital needs; and

·                  does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments on our debt.

 

3



 

See “Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures” and the accompanying tables below for reconciliations of Adjusted EBITDA to our net income (loss), which is the most directly comparable GAAP financial measure.

 

Furthermore, Adjusted EBITDA in this release is sometimes presented on a Pro Forma basis, giving effect to the increase in our investment in AAB on May 1, 2014, and the sale of our South Dakota systems on September 30, 2014, as if such transactions had been completed at the beginning of each period presented (see “Unaudited Pro Forma Condensed Combined Financial and Subscriber Information below for a complete discussion).

 

In addition, we use the following subscriber information in this release:

 

·                  Homes Passed — We report homes passed as the number of residential units, such as single residence homes, apartments and condominium units, passed by our broadband network and listed in our database excluding those we believe are covered by exclusive arrangements with other providers of competing services.

 

·                  Subscribers — Because we deliver multiple services to our customers, we report the total number of customers (“Total Customers”) as those who subscribe to at least one of our high-speed data (“HSD”), video (“Video”) or telephony (“Telephony”) services without regard to which or how many of those services they subscribe.  We report Video subscribers as the number of basic cable subscribers and do not include customers who only subscribe to HSD or Telephony services in this total.  We define total Revenue Generating Units (“RGU’s”) as the sum of HSD subscribers, Video subscribers and Telephony subscribers.

 

Subscriber information for acquired entities is preliminary and subject to adjustment until we have completed our review of such information and determined that it is presented in accordance with our policies.

 

Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures

 

The following table provides an unaudited reconciliation of our net income (loss) to Adjusted EBITDA for the respective quarters ended and for the twelve month period ended March 31, 2016:

 

WideOpenWest Finance, LLC

Reconciliation of GAAP Measures to Non-GAAP Measures (Unaudited)

($ in millions)

 

 

 

Three Months Ended

 

LTM

 

 

 

June 30,
2014

 

Sept. 30,
2014

 

Dec. 31,
2014

 

Mar. 31,
2015

 

June 30,
2015

 

Sept. 30,
2015

 

Dec. 31,
2015

 

Mar. 31,
2016

 

Mar. 31,
2015

 

Mar. 31, 2016

 

Net loss

 

$

(7.8

)

$

31.7

 

$

(26.8

)

$

(6.6

)

$

(27.5

)

$

(7.1

)

$

(1.5

)

$

4.8

 

$

(9.5

)

$

(31.3

)

Depreciation and amortization

 

64.1

 

64.0

 

57.2

 

54.8

 

55.5

 

55.9

 

54.9

 

52.5

 

240.1

 

218.8

 

Management fee to related party

 

0.5

 

0.4

 

0.4

 

0.4

 

0.6

 

0.5

 

0.4

 

0.4

 

1.7

 

1.9

 

Interest expense

 

59.4

 

60.0

 

59.8

 

58.9

 

57.1

 

55.3

 

54.7

 

54.2

 

238.1

 

221.3

 

Loss on extinguishment of debt

 

 

 

 

 

22.9

 

 

 

 

 

22.9

 

Unrealized gain on derivative instruments, net

 

(0.8

)

(1.3

)

(1.0

)

(2.0

)

(1.1

)

(1.2

)

(1.3

)

(1.1

)

(5.1

)

(4.7

)

(Gain) Loss on sale of assets

 

 

(52.6

)

(0.3

)

 

 

 

 

 

(52.9

)

 

Non-recurring prof. fees, M&A integration and restr. exp.

 

13.0

 

8.9

 

19.8

 

3.5

 

4.2

 

4.8

 

3.5

 

1.1

 

45.2

 

13.6

 

Other expense (income), net

 

(0.2

)

(2.4

)

(0.9

)

(0.2

)

 

0.6

 

 

 

(3.7

)

0.6

 

Income tax (benefit) expense

 

(16.7

)

1.2

 

(0.5

)

0.9

 

1.0

 

0.8

 

1.2

 

1.0

 

(15.1

)

4.0

 

Adjusted EBITDA (1)

 

$

111.5

 

$

109.9

 

$

107.7

 

$

109.7

 

$

112.7

 

$

109.6

 

$

111.9

 

$

112.9

 

$

438.8

 

$

447.1

 

 


(1)

See “Unaudited Pro Forma Condensed Combined Financial and Subscriber Information below for a reconciliation of Adjusted EBITDA to Pro Forma Adjusted EBITDA for the respective quarters ended giving effect the increase in our investment in Anne Arundel Broadband (“AAB”) on May 1, 2014, and the sale of our South Dakota systems (“South Dakota”) on September 30, 2014, as if such transaction had been completed at the beginning of the respective periods presented herein.

 

4



 

Unaudited Pro Forma Condensed Combined Financial and Subscriber Information

 

The unaudited pro forma condensed combined financial and subscriber information for the periods presented in the tables below has been prepared giving effect the increase in our investment in Anne Arundel Broadband (“AAB”) on May 1, 2014, and the sale of our South Dakota systems (“South Dakota”) on September 30, 2014, as if such transactions had been completed at the beginning of the periods presented by applying pro forma adjustments to the individual historical unaudited condensed combined financial and subscriber information of AAB and South Dakota.

 

Accordingly, the unaudited pro forma condensed combined financial and subscriber information presented in the tables below includes the unaudited financial and subscriber information for AAB for the period from April 1, 2014 to April 30, 2014, and excludes the unaudited financial and subscriber information for South Dakota for the period from April 1, 2014 to September 30, 2014.  The historical combined financial information has been adjusted to give effect to pro forma events that are (1) directly attributable to such transactions, (2) factually supportable and (3) expected to have a continuing impact on the combined results.

 

The unaudited pro forma condensed combined financial and subscriber information is for informational purposes only and does not represent what our results of operations would have been if the transactions had occurred at any date, nor does such information project the results of operations for any future period.  The unaudited pro forma condensed combined financial and subscriber information does not reflect non-recurring charges that have been incurred in connection with the transactions, including any related financing fees, legal fees, broker fees and accounting fees.

 

The following table provides an unaudited reconciliation of our Total Revenue to Pro Forma Total Revenue, Adjusted EBITDA to Pro Forma Adjusted EBITDA and Capital Expenditures to Pro Forma Capital Expenditures for the respective quarters ended:

 

WideOpenWest Finance, LLC

Pro Forma Condensed Combined Financial Information (Unaudited)

($ in millions)

 

 

 

Three Months Ended

 

LTM

 

 

 

June 30,
2014

 

Sept. 30,
 2014

 

Dec. 31,
2014

 

Mar. 31,
2015

 

June 30,
2015

 

Sept. 30,
2015

 

Dec. 31,
2015

 

Mar. 31,
2016

 

Mar. 31,
2015

 

Mar. 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

$

319.8

 

$

323.2

 

$

309.2

 

$

312.3

 

$

305.8

 

$

297.7

 

$

301.3

 

$

302.3

 

$

1,264.5

 

$

1,207.1

 

Pro Forma Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue related to AAB

 

1.8

 

 

 

 

 

 

 

 

1.8

 

 

Revenue related to the South Dakota systems

 

(20.0

)

(21.2

)

 

 

 

 

 

 

(41.2

)

 

Pro Forma Total Revenue

 

$

301.6

 

$

302.0

 

$

309.2

 

$

312.3

 

$

305.8

 

$

297.7

 

$

301.3

 

$

302.3

 

$

1,225.1

 

$

1,207.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

111.5

 

$

109.9

 

$

107.7

 

$

109.7

 

$

112.7

 

$

109.6

 

$

111.9

 

$

112.9

 

438.8

 

447.1

 

Pro Forma Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA related to AAB

 

0.2

 

 

 

 

 

 

 

 

0.2

 

 

Adjusted EBITDA related to the South Dakota systems

 

(8.0

)

(9.4

)

 

 

 

 

 

 

(17.4

)

 

Pro Forma Adjusted EBITDA

 

$

103.7

 

$

100.5

 

$

107.7

 

$

109.7

 

$

112.7

 

$

109.6

 

$

111.9

 

$

112.9

 

$

421.6

 

$

447.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Capex

 

$

66.0

 

$

66.3

 

$

66.7

 

$

55.6

 

$

54.7

 

$

64.5

 

$

57.1

 

$

63.6

 

$

254.6

 

$

239.9

 

Pro Forma Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capex related to AAB

 

0.3

 

 

 

 

 

 

 

 

0.3

 

 

Capex related to the South Dakota systems

 

(3.0

)

(3.1

)

 

 

 

 

 

 

(6.1

)

 

Pro Forma Total Capex

 

$

63.3

 

$

63.2

 

$

66.7

 

$

55.6

 

$

54.7

 

$

64.5

 

$

57.1

 

$

63.6

 

$

248.8

 

$

239.9

 

 

5



 

The unaudited pro forma condensed combined financial information presented above should be read in conjunction with the information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the consolidated financial statements and the accompanying notes appearing in our Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on March 17, 2016.

 

The following table provides an unaudited reconciliation of our reported subscriber information to Pro Forma subscriber information as of the end of each of the respective quarterly periods:

 

 

 

1Q-14

 

2Q-14

 

3Q-14

 

4Q-14

 

1Q-15

 

2Q-15

 

3Q-15

 

4Q-15

 

1Q-16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported Homes Passed

 

2,997,000

 

3,114,000

 

2,978,000

 

2,985,000

 

2,988,600

 

2,993,100

 

2,997,200

 

3,003,100

 

3,010,700

 

Pro Forma Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AAB

 

112,000

 

 

 

 

 

 

 

 

 

South Dakota systems

 

(142,000

)

(142,000

)

 

 

 

 

 

 

 

Pro Forma Homes Passed

 

2,967,000

 

2,972,000

 

2,978,000

 

2,985,000

 

2,988,600

 

2,993,100

 

2,997,200

 

3,003,100

 

3,010,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported Total Customers

 

852,900

 

867,800

 

816,000

 

809,100

 

799,200

 

787,100

 

781,700

 

777,800

 

784,600

 

Pro Forma Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AAB

 

16,600

 

 

 

 

 

 

 

 

 

South Dakota systems

 

(52,700

)

(52,300

)

 

 

 

 

 

 

 

Pro Forma Total Customers

 

816,800

 

815,500

 

816,000

 

809,100

 

799,200

 

787,100

 

781,700

 

777,800

 

784,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported HSD Subscribers

 

756,700

 

769,600

 

729,700

 

727,800

 

722,000

 

713,100

 

712,300

 

712,500

 

722,200

 

Pro Forma Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AAB

 

11,800

 

 

 

 

 

 

 

 

 

South Dakota systems

 

(44,200

)

(44,100

)

 

 

 

 

 

 

 

Pro Forma HSD Subscribers

 

724,300

 

725,500

 

729,700

 

727,800

 

722,000

 

713,100

 

712,300

 

712,500

 

722,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported Video Subscribers

 

694,300

 

699,000

 

653,800

 

634,700

 

606,500

 

582,700

 

564,500

 

547,500

 

537,200

 

Pro Forma Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AAB

 

14,600

 

 

 

 

 

 

 

 

 

South Dakota systems

 

(34,200

)

(33,700

)

 

 

 

 

 

 

 

Pro Forma Video Subscribers

 

674,700

 

665,300

 

653,800

 

634,700

 

606,500

 

582,700

 

564,500

 

547,500

 

537,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported Telephony Subscribers

 

418,800

 

416,200

 

373,900

 

359,400

 

339,600

 

324,500

 

310,600

 

296,800

 

286,600

 

Pro Forma Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AAB

 

5,400

 

 

 

 

 

 

 

 

 

South Dakota systems

 

(32,200

)

(31,500

)

 

 

 

 

 

 

 

Pro Forma Telephony Subscribers

 

392,000

 

384,700

 

373,900

 

359,400

 

339,600

 

324,500

 

310,600

 

296,800

 

286,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported Total RGUs

 

1,869,800

 

1,884,800

 

1,757,500

 

1,721,900

 

1,668,100

 

1,620,300

 

1,587,400

 

1,556,800

 

1,546,000

 

Pro Forma Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AAB

 

31,800

 

 

 

 

 

 

 

 

 

South Dakota systems

 

(110,600

)

(109,300

)

 

 

 

 

 

 

 

Pro Forma Total RGUs

 

1,791,000

 

1,775,500

 

1,757,500

 

1,721,900

 

1,668,100

 

1,620,300

 

1,587,400

 

1,556,800

 

1,546,000

 

 

6