Mediacom Broadband LLC and Mediacom LLC Report Results for First Quarter 2015

MEDIACOM PARK, N.Y.--()--MEDIACOM BROADBAND LLC AND MEDIACOM LLC, wholly-owned subsidiaries of Mediacom Communications Corporation, today each reported unaudited financial and operating highlights for the three months ended March 31, 2015.

Mediacom Broadband LLC*

  • Revenues were $240.0 million, reflecting a 3.2% increase from the prior year period
  • Operating income before depreciation and amortization (“OIBDA”) was $91.2 million, reflecting a 1.2% increase from the prior year period
  • Free cash flow of $30.1 million, compared to $31.3 million in the prior year period
  • Net quarterly increase of 26,000 primary service units (“PSUs”), compared to a net increase of 11,000 PSUs in the prior year period

Mediacom LLC*

  • Revenues were $180.0 million, reflecting a 2.4% increase from the prior year period
  • Adjusted OIBDA was $71.8 million, reflecting a 2.0% increase from the prior year period
  • Free cash flow of $28.0 million, compared to $22.8 million in the prior year period
  • Net quarterly increase of 14,000 PSUs, compared to a net increase of 4,000 PSUs in the prior year period

About Mediacom

Mediacom Communications Corporation is the nation’s eighth largest cable television company and one of the leading cable operators focused on serving the smaller cities in the United States, with a significant customer concentration in the Midwestern and Southeastern regions. Mediacom Communications offers a wide array of information, communications and entertainment services, including video, high-speed data and phone, and provides innovative broadband communications solutions through its Mediacom Business division that can be tailored to any size business. Mediacom Communications sells advertising and production services through its OnMedia division. More information about Mediacom Communications is available at www.mediacomcc.com.

TABLE 1*

Mediacom Broadband LLC

Selected Financial and Operating Data

(Dollars in thousands, except per unit data)

(Unaudited)

 
    Three Months Ended    
March 31,
2015   2014 YoY% Change
Video

$

113,370

$ 113,485 (0.1 %)
High-speed data 70,601 64,759 9.0 %
Phone 15,232 15,849 (3.9 %)
Business services 30,598 27,505 11.2 %
Advertising   10,152     10,955   (7.3 %)
Total revenues $ 239,953 $ 232,553 3.2 %
Service costs (100,225 ) (93,990 ) 6.6 %
SG&A expenses (43,775 ) (44,102 ) (0.7 %)
Management fees   (4,750 )   (4,300 ) 10.5 %
OIBDA (a) $ 91,203 $ 90,161 1.2 %
Cash interest expense (a)

(22,164

) (21,642 ) 2.4 %
Capital expenditures (b) (34,410 ) (32,742 ) 5.1 %
Dividend to preferred members   (4,500 )   (4,500 )

-

 
Free cash flow (a) $

30,129

  $ 31,277   (3.7 %)
 
OIBDA margin (c) 38.0 % 38.8 %
                       
 
March 31, 2015 March 31, 2014
Video customers 502,000 524,000
High-speed data (“HSD”) customers 581,000 546,000
Phone customers   225,000     210,000  
Primary service units (“PSUs”) 1,308,000 1,280,000
 
Video customer increases (declines) 2,000 (4,000 )
HSD customer increases 17,000 12,000
Phone customer increases   7,000     3,000  
Quarterly PSU increases 26,000 11,000
 
Customer relationships (d) 719,000 714,000
 
Average total monthly revenue per:
PSU (e) $ 61.76 $ 60.82
Customer relationship (f) $ 111.94 $ 108.87
                       
 
March 31, 2015 March 31, 2014
Bank credit facility $ 1,422,000 $ 1,363,000
5½% senior notes due 2021 200,000 200,000
6⅜% senior notes due 2023  

300,000

    300,000  
Total debt $ 1,922,000 $ 1,863,000
 
Total leverage ratio (g) 5.27x 5.17x
Interest coverage ratio (h)

4.11x

4.17x

_________________________________

 

* See Tables 3 and 5.

TABLE 2*

Mediacom LLC

Selected Financial and Operating Data

(Dollars in thousands, except per unit data)

(Unaudited)

 
    Three Months Ended    
March 31,  
2015   2014 YoY% Change
Video

$

86,291

$ 86,946 (0.8 %)
High-speed data 57,443 53,346 7.7 %
Phone 13,541 14,330 (5.5 %)
Business services 19,583 17,676 10.8 %
Advertising   3,186     3,441   (7.4 %)
Total revenues $ 180,044 $ 175,739 2.4 %
Service costs (80,644 ) (76,648 ) 5.2 %
SG&A expenses (28,844 ) (30,021 ) (3.9 %)
Management fees   (3,250 )   (3,200 ) 1.6 %
OIBDA (a) $ 67,306 $ 65,870 2.2 %
Investment income from affiliate   4,500     4,500  

-

 
Adjusted OIBDA (a) $ 71,806 $ 70,370 2.0 %
Cash interest expense (a) (15,256 ) (22,965 ) (33.6 %)
Capital expenditures (b)   (28,580 )   (24,626 ) 16.1 %
Free cash flow (a) $ 27,970   $ 22,779   22.8 %
 
Adjusted OIBDA margin (i) 39.9 % 40.0 %
                       
 
March 31, 2015 March 31, 2014
Video customers 389,000 413,000
High-speed data (“HSD”) customers 460,000 438,000
Phone customers   186,000     180,000  
Primary service units (“PSUs”) 1,035,000 1,031,000
 
Video customer declines (1,000 ) (4,000 )
HSD customer increases 11,000 7,000
Phone customer increases   4,000     1,000  
Quarterly PSU increases 14,000 4,000
 
Customer relationships (d) 578,000 577,000
 
Average total monthly revenue per:
PSU (e) $ 58.38 $ 56.93
Customer relationship (f) $ 104.65 $ 101.70
                       
 
March 31, 2015 March 31, 2014
Bank credit facility $ 988,000 $ 862,000
9⅛% senior notes due 2019

-

 

350,000
7¼% senior notes due 2022   250,000     250,000  
Total debt $ 1,238,000 $ 1,462,000
 
Total leverage ratio (g) 4.31x 5.19x
Interest coverage ratio (h) 4.71x 3.06x

_________________________________

 

* See Tables 4 and 6.

TABLE 3

Mediacom Broadband LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

 
    Three Months Ended

March 31,

2015   2014
Free cash flow

$

30,129

$ 31,277
Capital expenditures 34,410 32,742
Dividend to preferred members 4,500 4,500
Other expense, net

(218

) (404 )
Changes in assets and liabilities, net  

8,893

    14,416  
Net cash flows provided by operating activities $

77,714

  $ 82,531  
 
OIBDA $ 91,203 $ 90,161
Depreciation and amortization   (35,563 )   (39,013 )
Operating income $ 55,640   $ 51,148  
 
Cash interest expense $

22,164

$ 21,642
Amortization of deferred financing costs   1,738     1,319  
Interest expense, net $

23,902

  $ 22,961  

_________________________________

 
 

TABLE 4

Mediacom LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

 
    Three Months Ended

March 31,

2015   2014
Free cash flow

$

27,970

$ 22,779
Capital expenditures 28,580 24,626
Other expense, net (229 ) (381 )
Changes in assets and liabilities, net  

(3,431

)   (29,696 )
Net cash flows provided by operating activities $

52,890

  $ 17,328  
 
Adjusted OIBDA $ 71,806 $ 70,370
Investment income from affiliate   (4,500 )   (4,500 )
OIBDA $ 67,306 $ 65,870
Depreciation and amortization   (29,396 )   (28,731 )
Operating income $ 37,910   $ 37,139  
 
Cash interest expense $ 15,256 $ 22,965
Amortization of deferred financing costs   722     937  
Interest expense, net $ 15,978   $ 23,902  

_________________________________

 
 

TABLE 5

Mediacom Broadband LLC

Capital Expenditures

(Dollars in thousands)

(Unaudited)

 
    Three Months Ended

March 31,

2015   2014
Customer premise equipment

$

21,197

$ 16,846
Enterprise networks 2,419 2,851
Scalable infrastructure 3,715 6,889
Line extensions 1,303 1,578
Upgrade / rebuild 3,224 3,079
Support capital   2,552   1,499
Total capital expenditures $ 34,410 $ 32,742

_________________________________

 

TABLE 6

Mediacom LLC

Capital Expenditures

(Dollars in thousands)

(Unaudited)

 
    Three Months Ended

March 31,

2015   2014

Customer premise equipment

$

16,495

$

14,740

Enterprise networks 1,284 1,538
Scalable infrastructure 4,282 3,476
Line extensions 1,278 616
Upgrade / rebuild 3,484 3,044
Support capital   1,757   1,212
Total capital expenditures $ 28,580 $ 24,626

_________________________________

TABLE 7

Use of Non-GAAP Financial Measures

“OIBDA,” “Adjusted OIBDA,” “cash interest expense” and “free cash flow” are not financial measures calculated in accordance with generally accepted accounting principles (“GAAP”) in the United States. We define OIBDA as operating income before depreciation and amortization and Adjusted OIBDA as OIBDA plus investment income from affiliate. We define cash interest expense as interest expense, net, less amortization of deferred financing costs. For Mediacom Broadband LLC, we define free cash flow as OIBDA less capital expenditures, cash interest expense and dividends to preferred members. For Mediacom LLC, we define free cash flow as Adjusted OIBDA less capital expenditures and cash interest expense. OIBDA, Adjusted OIBDA, cash interest expense and free cash flow have inherent limitations as discussed below.

OIBDA and Adjusted OIBDA are some of the primary measures used by management to evaluate our performance and to forecast future results. We believe OIBDA and Adjusted OIBDA are useful for investors because they enable them to assess our performance in a manner similar to the methods used by management, and provide measures that can be used to analyze our value and evaluate our performance compared to other companies in the cable industry. A limitation of OIBDA and Adjusted OIBDA, however, is that they exclude depreciation and amortization, which represents the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. Management utilizes a separate process to budget, measure and evaluate capital expenditures. OIBDA and Adjusted OIBDA may not be comparable to similarly titled measures used by other companies, which may have different depreciation and amortization policies, and are key components in our covenant calculations.

Free cash flow is used by management to evaluate our ability to repay debt and facilitate the growth of our business with internally generated funds. A limitation of free cash flow, however, is that it may be affected by the timing of our capital spending. We believe free cash flow is useful for investors as it provides an additional measure that can be used to analyze our value and evaluate our performance compared to other companies in the cable industry. Free cash flow may not be comparable to similarly titled measures reported by other companies.

OIBDA, Adjusted OIBDA and free cash flow should not be regarded as alternatives to operating income or net income as indicators of operating performance, or to the statement of cash flows as measures of liquidity, nor should they be considered in isolation or as substitutes for financial measures prepared in accordance with GAAP. We believe that operating income is the most directly comparable GAAP financial measure to OIBDA and Adjusted OIBDA, and that net cash flows provided by operating activities is the most directly comparable GAAP financial measure to free cash flow.

Cash interest expense excludes the amortization of financing costs which were paid upon the financing of the relevant debt. We believe cash interest expense is useful for investors because it enables them to assess our cost of debt for the current period without including the amortization of financing costs that were previously paid. We believe interest expense, net, is the most directly comparable GAAP financial measure to cash interest expense.

For reconciliations of OIBDA, Adjusted OIBDA, cash interest expense and free cash flow to their most directly comparable GAAP financial measures, see Tables 3 and 4.

Cautionary Statement Regarding Forward-Looking Statements

This press release may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our beliefs with respect to future events and our future financial performance. These forward-looking statements are not guarantees of future performance or results, and are subject to risks and uncertainties that could cause actual results to differ materially from historical results or those we anticipate as a result of various factors, many of which are beyond our control. Significant factors that may cause such differences to occur include, but are not limited to: increased levels of competition; greater than anticipated programming and other service costs; our ability to generate sufficient cash flow to meet our debt service obligations; and other risks and uncertainties discussed in the most recent Annual Reports on Form 10-K for each of Mediacom Broadband LLC and Mediacom LLC. We disclaim any obligation to update any forward-looking statements contained herein, except as required by applicable federal securities laws.

NOTES:

(a) See Table 7 for information about our use of Non-GAAP financial measures.

(b) Capital expenditures exclude changes in accrued property, plant and equipment, which represented a cash use of $0.1 million and a cash source of $0.6 million at Mediacom Broadband LLC and Mediacom LLC, respectively, during the three months ended March 31, 2015, and cash sources of $4.3 million and $1.8 million at Mediacom Broadband LLC and Mediacom LLC, respectively, during the three months ended March 31, 2014.

(c) Represents OIBDA as a percentage of total revenues.

(d) Represents the total number of customers that receive at least one service, without regard to which service(s) customers purchase.

(e) Represents average total monthly revenues for the quarter divided by average PSUs for such quarter.

(f) Represents average total monthly revenues for the quarter divided by average customer relationships for such quarter.

(g) For Mediacom Broadband LLC, represents total debt at quarter end divided by annualized OIBDA for the quarter. For Mediacom LLC, represents total debt at quarter end divided by annualized Adjusted OIBDA for the quarter.

(h) For Mediacom Broadband LLC, represents OIBDA divided by cash interest expense for the quarter. For Mediacom LLC, represents Adjusted OIBDA divided by cash interest expense for the quarter.

(i) Represents Adjusted OIBDA as a percentage of total revenues.

Contacts

Investor Relations
Jack P. Griffin, 845-443-2654
Senior Director
Corporate Finance
or
Media Relations
Thomas J. Larsen, 845-443-2754
Group Vice President
Legal and Public Affairs

Contacts

Investor Relations
Jack P. Griffin, 845-443-2654
Senior Director
Corporate Finance
or
Media Relations
Thomas J. Larsen, 845-443-2754
Group Vice President
Legal and Public Affairs