Third Quarter 2023 High-Speed Data Revenue increased 7% from the same period last year to a record $109.8 million
ENGLEWOOD, Colo., Nov. 8, 2023 /PRNewswire/ -- WideOpenWest, Inc. ("WOW!" or the "Company") (NYSE: WOW), one of the nation's leading broadband providers, with an efficient, high-performing network that passes 1.9 million residential, business and wholesale consumers, today announced financial and operating results for the third quarter ended September 30, 2023.
Third Quarter 2023 Highlights (1)
- Total Revenue of $173.1 million, a decrease of $0.6 million, compared to the third quarter of 2022
- Record HSD Revenue totaled $109.8 million, an increase of $7.5 million, or 7%, compared to the third quarter of 2022
- Net Loss was $104.5 million for the quarter ended September 30, 2023
- Adjusted EBITDA of $70.9 million, an increase of $2.4 million, or 3%, compared to the third quarter of 2022
- Passed approximately 25,500 new homes in Central Florida and Edge-outs through September 30, 2023
- Launched YouTubeTV as our video service for customers, providing better value and more robust choice of channels
"We continue to transition our business through expansion into new markets, growing our broadband business and migrating our video business to a high margin streaming service," said Teresa Elder, WOW!'s CEO. "During the quarter we announced expansion into three new Greenfield markets, passed more than 25,000 new homes cumulatively this year as part of our expansion initiatives and reported record high-speed data revenue, all of which give us confidence in our strategy and outlook into next year."
"Record high-speed data revenue, which increased 7.3% from last year, was driven by record high-speed data ARPU," said John Rego, WOW!'s CFO. "Managing our cost base and expanding into exciting new markets will continue to drive high-margin growth in our business."
Revenue
Total Revenue was $173.1 million for the quarter ended September 30, 2023, down $0.6 million, as compared to the corresponding period in 2022.
Total Subscription Revenue for the quarter ended September 30, 2023 was $160.3 million, down $0.1 million, as compared to the corresponding period in 2022. The decrease is primarily driven by a shift in service offering mix as we continue to experience a reduction in Video and Telephony RGUs, coupled with a decrease in volume across all services. The decrease is partially offset by an increase in average revenue per unit ("ARPU") driven by rate increases issued in the first and third quarters of 2023, coupled with the purchase of higher speed offerings.
Other Business Services Revenue totaled $5.4 million for the quarter ended September 30, 2023, consistent with the corresponding period in 2022.
Other Revenue totaled $7.4 million for the quarter ended September 30, 2023, down $0.5 million, or 6%, as compared to the corresponding period in 2022 primarily due to decreases in advertising, line assurance and other miscellaneous revenue, partially offset by an increase in paper statement revenue.
(1) | Refer to "Non-GAAP Financial Measures" "Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures," and "Subscriber Information" in this Press Release for definitions and information related to Adjusted EBITDA, Adjusted EBITDA margin and reconciliation of non-GAAP measures to the closest comparable GAAP measures and why our management thinks it is beneficial to present such non-GAAP measures. | |||||||||
Costs and Expenses
Operating Expenses (excluding Depreciation and Amortization) totaled $75.6 million for the quarter ended September 30, 2023, down $3.5 million, or 4%, compared to the corresponding period in 2022 primarily driven by decreases in direct operating expense, specifically programming expense, which aligns with the reduction in Video RGUs between periods, and increases in capitalized labor, partially offset by increases in bad debt expense and software and hardware costs. Selling, General, and Administrative expenses totaled $37.5 million for the quarter ended September 30, 2023, down $2.2 million, or 6%, compared to the corresponding period in 2022 the decrease is primarily attributable to the reduction in stock compensation and marketing expenses, partially offset by increases in restructuring costs related to employee severance and professional service fees.
Net Loss
Net Loss for the quarter ended September 30, 2023 was $104.5 million as compared to net income of $0.5 million for the quarter ended September 30, 2022. Net Profit Margin was (60.4)% for the quarter ended September 30, 2023 as compared to 0.3% for the quarter ended September 30, 2022. Net Loss for the quarter ended September 30, 2023 was primarily driven by the $131.7 million non-cash impairment charge on intangible assets.
Adjusted EBITDA
Adjusted EBITDA for the quarter ended September 30, 2023, was $70.9 million, an increase of $2.4 million, compared to the corresponding period in 2022. Adjusted EBITDA margin was 41.0% for the quarter ended September 30, 2023, as compared to 39.4% for the quarter ended September 30, 2022.
Subscribers
WOW! reported Total Subscribers of 517,400 as of September 30, 2023, a decrease of 20,700, or 4%, compared to September 30, 2022, down 5,000 compared to June 30, 2023. HSD RGUs totaled 503,400 as of September 30, 2023, a decrease of 15,200, or 3%, compared to September 30, 2022, and down 4,400 compared to June 30, 2023.
Market Expansion
Market Expansion projects reached a total of 106,700 homes passed and 25,800 Subscribers since inception.
The 2021 Edge-Out projects include 1,000 Subscribers, which represents 47.6% penetration on such nodes. The 2022 Edge-Out projects include 900 Subscribers, which represents 31.0% penetration on such nodes. The 2023 vintage includes both Edge-Out projects and Greenfield expansion. The Edge-out projects include 3,400 Subscribers, which represents 29.8% penetration on such nodes and the Greenfield projects include 1,700 Subscribers, which represents 12.1% penetration on such nodes.
Capital Expenditures
Capital Expenditures totaled $64.5 million for the quarter ended September 30, 2023, representing a $26.8 million increase compared to the quarter ended September 30, 2022. The increase is primarily related to increases in costs related to our market expansion in locations adjacent and nonadjacent to our existing network.
Capital Expenditures equates to 37% of Total Revenue for the quarter ended September 30, 2023.
Liquidity and Leverage
As of September 30, 2023, the total outstanding amount of long-term debt and finance lease obligations was $889.1 million, and cash and cash equivalents were $22.6 million. Total Net Leverage as of September 30, 2023, was 3.1x on a LTM Adjusted EBITDA basis and undrawn revolver capacity totaled $86.4 million.
The company will provide an update on its outlook for the remainder of the year on its upcoming earnings call.
Webcast
WOW! will host a webcast and conference call on Wednesday, November 8, 2023, at 4:30 p.m. ET to discuss the financial and operating results contained in this press release. The conference call and webcast will be broadcast live on the Company's investor relations website at ir.wowway.com. Those parties interested in participating can use the information as follows:
Call Date: | Wednesday, November 8, 2023 | Call Time: | 4:30 p.m. Eastern | |
Dial In: | (888) 330-3556 | International: | (646) 960-0826 | |
Conf. ID: | 4844814 |
A replay of the call will be available on November 8, 2023, at 7:30 p.m. ET, on the investor relations website or by telephone. To access the telephone replay, which will be available until November 22, 2023, at 11:59 p.m. ET, please dial (800) 770-2030 or (647) 362-9199 and use conference ID 4844814.
WIDEOPENWEST, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(unaudited) | ||||||
September 30, | December 31, | |||||
2023 | 2022 | |||||
(in millions, except share data) | ||||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 22.6 | $ | 31.0 | ||
Accounts receivable—trade, net of allowance for doubtful accounts of $6.7 and $4.3, respectively | 40.5 | 39.9 | ||||
Accounts receivable—other, net | 13.4 | 12.2 | ||||
Prepaid expenses and other | 41.1 | 37.8 | ||||
Total current assets | 117.6 | 120.9 | ||||
Right-of-use lease assets—operating | 18.3 | 15.0 | ||||
Property, plant and equipment, net | 787.3 | 725.8 | ||||
Franchise operating rights | 325.3 | 585.1 | ||||
Goodwill | 225.1 | 225.1 | ||||
Intangible assets subject to amortization, net | 1.1 | 1.3 | ||||
Other non-current assets | 47.2 | 44.2 | ||||
Total assets | $ | 1,521.9 | $ | 1,717.4 | ||
Liabilities and stockholders' equity | ||||||
Current liabilities | ||||||
Accounts payable—trade | $ | 52.0 | $ | 46.1 | ||
Accrued interest | 1.2 | 0.1 | ||||
Current portion of long-term lease liability—operating | 4.2 | 4.9 | ||||
Accrued liabilities and other | 67.8 | 68.7 | ||||
Current portion of long-term debt and finance lease obligations | 17.2 | 17.7 | ||||
Current portion of unearned service revenue | 27.0 | 27.2 | ||||
Total current liabilities | 169.4 | 164.7 | ||||
Long-term debt and finance lease obligations—less current portion and debt issuance costs | 871.9 | 725.0 | ||||
Long-term lease liability—operating | 16.2 | 11.6 | ||||
Deferred income taxes, net | 138.6 | 225.3 | ||||
Other non-current liabilities | 26.8 | 15.7 | ||||
Total liabilities | 1,222.9 | 1,142.3 | ||||
Commitments and contingencies | ||||||
Stockholders' equity: | ||||||
Preferred stock, $0.01 par value, 100,000,000 shares authorized; 0 shares issued and outstanding | — | — | ||||
Common stock, $0.01 par value, 700,000,000 shares authorized; 98,588,713 and 96,830,312 issued as | 1.0 | 1.0 | ||||
Additional paid-in capital | 388.9 | 374.7 | ||||
Accumulated income | 63.8 | 308.0 | ||||
Treasury stock at cost, 14,956,450 and 10,412,579 shares as of September 30, 2023 and | (154.7) | (108.6) | ||||
Total stockholders' equity | 299.0 | 575.1 | ||||
Total liabilities and stockholders' equity | $ | 1,521.9 | $ | 1,717.4 | ||
WIDEOPENWEST, INC. AND SUBSIDIARIES | |||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED | |||||||||||||
(unaudited) | |||||||||||||
Three months ended | Nine months ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||
(in millions, except share data) | |||||||||||||
Revenue: | |||||||||||||
HSD | $ | 109.8 | $ | 102.3 | $ | 321.7 | $ | 305.0 | |||||
Video | 38.9 | 45.3 | 122.6 | 141.6 | |||||||||
Telephony | 11.6 | 12.8 | 35.8 | 39.0 | |||||||||
Total subscription services revenue | 160.3 | 160.4 | 480.1 | 485.6 | |||||||||
Other business services | 5.4 | 5.4 | 15.7 | 16.1 | |||||||||
Other | 7.4 | 7.9 | 22.1 | 22.7 | |||||||||
Total revenue | 173.1 | 173.7 | 517.9 | 524.4 | |||||||||
Costs and expenses: | |||||||||||||
Operating (excluding depreciation and amortization) | 75.6 | 79.1 | 229.3 | 249.4 | |||||||||
Selling, general and administrative | 37.5 | 39.7 | 166.6 | 117.3 | |||||||||
Depreciation and amortization | 49.4 | 45.0 | 141.6 | 132.9 | |||||||||
Impairment losses on intangibles | 131.7 | — | 259.8 | — | |||||||||
294.2 | 163.8 | 797.3 | 499.6 | ||||||||||
(Loss) income from operations | (121.1) | 9.9 | (279.4) | 24.8 | |||||||||
Other income (expense): | |||||||||||||
Interest expense | (18.9) | (10.5) | (51.1) | (25.8) | |||||||||
Other income, net | (0.1) | 1.5 | 1.9 | 15.7 | |||||||||
(Loss) income from operations before provision for income tax | (140.1) | 0.9 | (328.6) | 14.7 | |||||||||
Income tax benefit (expense) | 35.6 | (0.4) | 84.4 | (4.5) | |||||||||
Net (loss) income | $ | (104.5) | $ | 0.5 | $ | (244.2) | $ | 10.2 | |||||
Basic and diluted (loss) earnings per common share | |||||||||||||
Basic | $ | (1.29) | $ | 0.01 | $ | (2.99) | $ | 0.12 | |||||
Diluted | $ | (1.29) | $ | 0.01 | $ | (2.99) | $ | 0.12 | |||||
Weighted-average common shares outstanding | |||||||||||||
Basic | 80,888,537 | 84,274,050 | 81,797,740 | 83,908,691 | |||||||||
Diluted | 80,888,537 | 86,735,246 | 81,797,740 | 86,671,875 | |||||||||
WIDEOPENWEST, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
(unaudited) | ||||||
Nine Months Ended | ||||||
September 30, | ||||||
2023 | 2022 | |||||
(in millions) | ||||||
Cash flows from operating activities: | ||||||
Net (loss) income | $ | (244.2) | $ | 10.2 | ||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 141.3 | 133.9 | ||||
Deferred income taxes | (86.7) | (9.0) | ||||
Provision for doubtful accounts | 8.5 | 2.7 | ||||
Loss (gain) on sale of operating assets, net | 0.3 | (1.0) | ||||
Amortization of debt issuance costs and discount | 1.3 | 1.3 | ||||
Impairment losses on intangibles | 259.8 | — | ||||
Non-cash compensation | 13.9 | 18.5 | ||||
Other non-cash items | 0.1 | 0.1 | ||||
Changes in operating assets and liabilities: | ||||||
Receivables and other operating assets | (16.7) | (5.9) | ||||
Payables and accruals | 12.8 | (163.6) | ||||
Net cash provided by (used in) operating activities | $ | 90.4 | $ | (12.8) | ||
Cash flows from investing activities: | ||||||
Capital expenditures | $ | (188.3) | $ | (114.5) | ||
Other investing activities | 0.2 | 1.3 | ||||
Net cash used in investing activities | $ | (188.1) | $ | (113.2) | ||
Cash flows from financing activities: | ||||||
Proceeds from issuance of long-term debt, net | $ | 160.0 | $ | — | ||
Payments on long-term debt and finance lease obligations | (24.5) | (14.9) | ||||
Purchase of shares | (46.2) | (7.0) | ||||
Net cash provided by (used in) financing activities | $ | 89.3 | $ | (21.9) | ||
Decrease in cash and cash equivalents | (8.4) | (147.9) | ||||
Cash and cash equivalents, beginning of period | 31.0 | 193.2 | ||||
Cash and cash equivalents, end of period | $ | 22.6 | $ | 45.3 | ||
Supplemental disclosures of cash flow information: | ||||||
Cash paid during the periods for interest | $ | 48.5 | $ | 24.3 | ||
Cash paid during the periods for income taxes | $ | 10.9 | $ | 142.7 | ||
Cash received during the periods for refunds of income taxes | $ | 4.9 | $ | — | ||
Non-cash operating activities: | ||||||
Operating lease additions | $ | 8.0 | $ | 2.7 | ||
Non-cash financing activities: | ||||||
Finance lease additions | $ | 9.6 | $ | 8.3 | ||
Capital expenditures within accounts payable and accruals | $ | 36.2 | $ | 25.9 | ||
About WOW!
WOW! is one of the nation's leading broadband providers, with an efficient, high-performing network that passes 1.9 million residential, business and wholesale consumers. WOW! provides services in 15 markets, primarily in the Midwest and Southeast, including Michigan, Alabama, Tennessee, South Carolina, Florida and Georgia. With an expansive portfolio of advanced services, including high-speed Internet services, cable TV, phone, business data, voice, and cloud services, the company is dedicated to providing outstanding service at affordable prices. WOW! also serves as a leader in exceptional human resources practices, having been recognized nine times by the National Association for Business Resources as a Best & Brightest Company to Work For, winning the award for the last five consecutive years. Visit www.wowway.com for more information.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release that are not historical facts 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. These forward-looking statements represent our goals, beliefs, plans and expectations about our prospects for the future and other future events. Forward-looking statements include all statements that are not historical fact and can be identified by terms such as "may," "intend," "might," "will," "should," "could," "would," "anticipate," "expect," "believe," "estimate," "plan," "project," "predict," "potential," or the negative of these terms. Although these forward-looking statements reflect our good-faith belief and reasonable judgment based on current information, these statements are qualified by important factors, many of which are beyond our control that could cause our actual results to differ materially from those in the forward-looking statements. These factors and other risks that could cause our actual results to differ materially are set forth in the section entitled "Risk Factors" in our Annual Report filed on Form 10-K with the Securities and Exchange Commission ("SEC") and other reports subsequently filed with the SEC. Given these uncertainties, you should not place undue reliance on any such forward-looking statements. The forward-looking statements included in this report are made as of the date hereof or the date specified herein, based on information available to us as of such date. Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future.
Non-GAAP Financial Measures
The Company has included certain non-GAAP financial measures in this release, including Adjusted EBITDA and Adjusted EBITDA margin. These terms, as defined herein, are not intended to be considered in isolation, as a substitute for, or superior to, the financial information prepared and presented in accordance with generally accepted accounting principles in the United States of America ("GAAP"). These terms may vary from the use of similar terms by other companies in our industry due to different methods of calculation and therefore are not necessarily comparable.
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 eliminates the impact of expenses that do not relate to overall business performance and is defined by WOW! as net income (loss) before interest expense, income taxes, depreciation and amortization (including impairments), impairment losses on intangibles and goodwill, write-off of any asset, loss on early extinguishment of debt, integration and restructuring expenses and all non‑cash charges and expenses (including stock compensation expense) and certain other income and expenses. 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, operating cash flows or liquidity.
Refer to "Reconciliations of GAAP Measures to Non-GAAP Measures" and the accompanying tables below for a reconciliation of Adjusted EBITDA to Net Income and Adjusted EBITDA margin to Net Profit margin which are the most directly comparable corresponding GAAP financial measures.
Subscriber Information
The Company uses the terms defined below throughout this release.
Homes passed are reported as the number of serviceable addresses, such as single residence homes, apartments and condominium units, and businesses passed by our broadband network and listed in our database.
We deliver multiple services to our customers, as such we report Total Subscribers as the number of Subscribers who receive at least one of our HSD, Video or Telephony services, without regard to which or how many services they subscribe. We define each of the individual HSD Subscribers, Video Subscribers and Telephony Subscribers as a Revenue Generating Unit ("RGU").
While we take appropriate steps to ensure subscriber information is presented on a consistent and accurate basis at any given balance sheet date, we periodically review our policies in light of the variability we may encounter across our different markets due to the nature and pricing of products and services and billing systems. Accordingly, we may from time to time make appropriate adjustments to our subscriber information based on such reviews.
WIDEOPENWEST, INC. AND SUBSIDIARIES | ||||||||||||
Reconciliations of GAAP Measures to Non-GAAP Measures | ||||||||||||
(unaudited) | ||||||||||||
The following table provides a reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin to Net (Loss) Income and | ||||||||||||
Three months ended | Nine months ended | |||||||||||
September 30, | September 30, | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
(in millions) | ||||||||||||
Net (Loss) income | $ | (104.5) | $ | 0.5 | $ | (244.2) | $ | 10.2 | ||||
Net Profit Margin | (60.4) % | 0.3 % | (47.2) % | 1.9 % | ||||||||
Plus: Depreciation and amortization | 49.4 | 45.0 | 141.6 | 132.9 | ||||||||
Impairment losses on intangibles | 131.7 | — | 259.8 | — | ||||||||
Interest expense | 18.9 | 10.5 | 51.1 | 25.8 | ||||||||
Non-recurring professional fees, M&A integration and restructuring expense | 7.4 | 7.2 | 22.9 | 29.3 | ||||||||
Patent litigation settlement | — | — | 45.4 | — | ||||||||
Non-cash stock compensation | 3.5 | 6.4 | 13.9 | 18.5 | ||||||||
Other income, net | 0.1 | (1.5) | (1.9) | (15.7) | ||||||||
Income tax benefit | (35.6) | 0.4 | (84.4) | 4.5 | ||||||||
Adjusted EBITDA | $ | 70.9 | $ | 68.5 | $ | 204.2 | $ | 205.5 | ||||
Adjusted EBITDA Margin | 41.0 % | 39.4 % | 39.4 % | 39.2 % | ||||||||
WIDEOPENWEST, INC. AND SUBSIDIARIES | ||||||||||||
Capital Expenditures and Subscriber Information | ||||||||||||
(unaudited) | ||||||||||||
The following table provides additional information regarding our Capital Expenditures for the periods presented: | ||||||||||||
Three months ended | Nine months ended | |||||||||||
September 30, | September 30, | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
(in millions) | ||||||||||||
Scalable infrastructure | $ | 15.1 | $ | 5.7 | $ | 44.7 | $ | 23.8 | ||||
Customer premise equipment | 16.3 | 14.5 | 48.3 | 48.1 | ||||||||
Line extensions | 18.4 | 6.5 | 57.1 | 16.7 | ||||||||
Support capital and other | 14.7 | 11.0 | 38.2 | 25.9 | ||||||||
Total | $ | 64.5 | $ | 37.7 | $ | 188.3 | $ | 114.5 | ||||
Capital expenditures included in total related to: | ||||||||||||
Greenfields | $ | 28.0 | $ | 5.8 | $ | 71.2 | $ | 10.8 | ||||
Edge-outs | $ | 2.1 | $ | 1.5 | $ | 10.0 | $ | 3.4 | ||||
Business services | $ | 2.8 | $ | 3.3 | $ | 10.4 | $ | 9.1 | ||||
The following table provides an unaudited summary of our continuing operations subscriber information: | ||||||||||
September 30, | December 31, | March 31, | June 30, | September 30, | ||||||
2022 | 2022 | 2023 | 2023 | 2023 | ||||||
Homes Passed | 1,886,000 | 1,886,000 | 1,885,700 | 1,892,600 | 1,905,600 | |||||
Total Subscribers | 538,100 | 530,600 | 527,300 | 522,400 | 517,400 | |||||
HSD RGUs | 518,600 | 511,600 | 508,700 | 507,800 | 503,400 | |||||
Video RGUs | 129,900 | 123,200 | 117,100 | 110,000 | 100,800 | |||||
Telephony RGUs | 92,900 | 89,900 | 87,700 | 85,300 | 82,700 | |||||
Total RGUs | 741,400 | 724,700 | 713,500 | 703,100 | 686,900 | |||||
Additional Information Available on Website:
The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, which will be posted on of our investor relations website at ir.wowway.com, when it is filed with the Securities and Exchange Commission (the "SEC"). A slide presentation to accompany the conference call and a trending schedule containing historical customer and financial data will also be available on our website.
SOURCE WideOpenWest, Inc.
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