Mediacom Communications Reports Combined Results for First Quarter 2018

MEDIACOM PARK, N.Y.--()--MEDIACOM COMMUNICATIONS CORPORATION today released combined unaudited financial and operating highlights for the three months ended March 31, 2018.

Mediacom Combined Results for First Quarter 2018*

  • Revenues were $478.4 million, reflecting a 3.4% increase from the prior year period
  • OIBDA was $179.6 million, reflecting a 2.5% increase from the prior year period
  • Capital expenditures were $79.8 million, compared to $79.9 million in the prior year period
  • Free cash flow was $74.7 million, compared to $68.2 million in the prior year period
  • Ending primary service units (“PSUs”) of 2,627,000, a 4.8% increase from March 31, 2017
  • Ending customer relationships of 1,363,000, a 0.4% decrease from March 31, 2017
  • Net leverage ratio of 3.49x, compared to 3.91x at March 31, 2017
  • Interest coverage ratio of 7.16x, compared to 6.46x at March 31, 2017
  • Ending net debt of $2,508.4 million, a $233.8 million reduction from March 31, 2017

Reference to “Mediacom Combined” reflects the combined results of Mediacom Broadband LLC and Mediacom LLC, eliminating intercompany amounts. Mediacom LLC information is being voluntarily provided, as Mediacom LLC’s contractual obligation to file reports with the Securities and Exchange Commission (“SEC”) terminated in February 2017. Mediacom Combined information is being provided for convenience and informational purposes, and does not modify or supplement the previously released separate financial results of Mediacom Broadband LLC. Holders of Mediacom Broadband LLC debt should refer to its separate financial and operating results, which were previously released and furnished with the SEC on Form 8-K on May 7, 2018.

About Mediacom

Mediacom Communications Corporation is the 5th largest cable operator in the U.S. serving almost 1.4 million customers in smaller markets primarily in the Midwest and Southeast. Mediacom offers a wide array of information, communications and entertainment services to households and businesses, including video, high-speed data, phone, and home security and automation. Through Mediacom Business, the company provides innovative broadband solutions to commercial and public sector customers of all sizes, and sells advertising and production services under the OnMedia brand. More information about Mediacom is available at www.mediacomcable.com.

_________________________

* See Table 4 for information about our use of non-GAAP measures and definitions of OIBDA and free cash flow, Table 5 regarding the effect of recent changes to certain accounting standards on our revenue recognition and Table 6 for footnotes.
 
       
TABLE 1*
Mediacom Communications Corporation
Selected Combined Financial and Operating Data
(Dollars in thousands, except per unit data)
(Unaudited)
 
Three Months Ended
March 31,
2018   2017 YoY % Change
Video

$

195,248

$ 199,927

(2.3

%)
High-speed data

178,341

163,754

8.9

%
Phone

28,069

26,893

4.4

%
Business services 65,277 59,954 8.9 %
Advertising   11,468     12,193   (5.9 %)
Total revenues $ 478,403 $ 462,721 3.4 %
Service costs (209,485 ) (199,729 ) 4.9 %
SG&A expenses (79,298 ) (78,187 ) 1.4 %
Management fees   (10,000 )   (9,500 ) 5.3 %
OIBDA (a) $ 179,620 $ 175,305 2.5 %
Cash interest expense (a) (25,087 ) (27,139 ) (7.6 %)
Capital expenditures   (79,820 )   (79,940 ) (0.2 %)
Free cash flow (a) $ 74,713   $ 68,226   9.5 %
 
OIBDA margin (b) 37.5 % 37.9 %
                 
 
March 31, 2018 March 31, 2017 YoY % Change
Video customers 817,000 832,000 (1.8 %)
High-speed data (“HSD”) customers 1,228,000 1,179,000 4.2 %
Phone customers   582,000     495,000   17.6 %
Primary service units (“PSUs”) 2,627,000 2,506,000 4.8 %
 
Video customer declines (4,000 ) (3,000 )
HSD customer increases 19,000 17,000
Phone customer increases   18,000     15,000  
Quarterly PSU increases (c) 33,000 29,000
 
Customer relationships (d) 1,363,000 1,368,000 (0.4 %)
 
Average total monthly revenue per:
PSU (c)(e) $ 61.09 $ 61.91 (1.3 %)
Customer relationship (c)(f) $ 117.00 $ 113.04 3.5 %
                 
 
March 31, 2018 March 31, 2017
Bank credit facility $ 2,189,750 $ 2,260,000
5½% senior notes due 2021 200,000 200,000
6⅜% senior notes due 2023   300,000     300,000  
Total debt (g) $ 2,689,750 $ 2,760,000
Cash   (181,382 )   (17,799 )
Net debt (a) $ 2,508,368 $ 2,742,201
 
Net leverage ratio (h) 3.49x 3.91x
Interest coverage ratio (i) 7.16x 6.46x

_________________________

* See Table 4 for information about our use of non-GAAP measures and definitions of OIBDA and free cash flow, Table 5 regarding the effect of recent changes to certain accounting standards on our revenue recognition and Table 6 for footnotes.
 
     
TABLE 2*
Mediacom Communications Corporation
Selected Combined Financial and Operating Data
(Dollars in thousands, except per unit data)
(Unaudited)
 
Three Months Ended
March 31, 2018

Mediacom
Broadband

 

Mediacom
LLC

  Eliminations  

Mediacom
Combined

Video

$

107,672

$

87,576

$

195,248

High-speed data

97,501

80,840

178,341

Phone

15,149

12,920

28,069

Business services 40,153 25,124 65,277
Advertising   9,206     2,262       11,468  
Total revenues $ 269,681 $ 208,722 $ 478,403
Service costs (113,042

)

(96,443

)

(209,485 )
SG&A expenses (47,708 ) (31,590 ) (79,298 )
Management fees   (6,000 )   (4,000 )     (10,000 )
OIBDA (a) $ 102,931 $ 76,689 $ 179,620
Investment income from affiliate

 

    4,500   (4,500 )

 

 
Adjusted OIBDA (a) $ 102,931 $ 81,189 (4,500 ) $

179,620

Cash interest expense (a) (15,966 ) (9,121 ) (25,087 )
Capital expenditures (44,889 ) (34,931 ) (79,820 )
Dividend to preferred members   (4,500 )

 

  4,500  

 

 
Free cash flow (a) $ 37,576   $ 37,137     $ 74,713  
                                   
 

Mediacom
Broadband

Mediacom
LLC

Mediacom
Combined

Video customers 453,000 364,000 817,000
HSD customers 679,000 549,000 1,228,000
Phone customers   323,000     259,000     582,000  
Primary service units (“PSUs”) 1,455,000 1,172,000 2,627,000
 
Video customer declines (2,000 ) (2,000 ) (4,000 )
HSD customer increases 11,000 8,000 19,000
Phone customer increases   11,000     7,000     18,000  
Quarterly PSU increases 20,000 13,000 33,000
 
Customer relationships (d) 756,000 607,000 1,363,000
 
Average total monthly revenue per:
PSU (e) $ 62.21 $ 59.69 $ 61.09
Customer relationship (f) $ 118.99 $ 114.53 $ 117.00
                                   
 

Mediacom
Broadband

Mediacom
LLC

Mediacom
Combined

Bank credit facility $ 1,039,750 $ 1,150,000 $ 2,189,750
5½% senior notes due 2021 200,000

 

200,000
6⅜% senior notes due 2023   300,000  

 

    300,000  
Total debt (g) $ 1,539,750 $ 1,150,000 $ 2,689,750
Cash   (170,970 )   (10,412 )   (181,382 )
Net debt (a) $ 1,368,780 $ 1,139,588 $ 2,508,368
 
Net leverage ratio (h)

 

3.32x

 

3.51x

 

3.49x

Interest coverage ratio (i)

 

6.45x

 

8.90x

 

7.16x

_________________________

* See Table 4 for information about our use of non-GAAP measures and definitions of OIBDA and free cash flow, Table 5 regarding the effect of recent changes to certain accounting standards on our revenue recognition and Table 6 for footnotes.
 
     
TABLE 3*
Mediacom Communications Corporation
Selected Combined Financial and Operating Data
(Dollars in thousands, except per unit data)
(Unaudited)
 

 

Three Months Ended
March 31, 2017

Mediacom
Broadband

 

Mediacom
LLC

  Eliminations  

Mediacom
Combined

Video

$

111,304

$ 88,623 $ 199,927
High-speed data 89,532 74,222 163,754
Phone 14,265 12,628 26,893
Business services 36,670 23,284 59,954
Advertising   9,737     2,456       12,193  
Total revenues $ 261,508 $ 201,213 $ 462,721
Service costs (109,062 ) (90,667 ) (199,729 )
SG&A expenses (47,517 ) (30,670 ) (78,187 )
Management fees  

(5,650

)   (3,850 )     (9,500 )
OIBDA (a) $ 99,279 $ 76,026 $ 175,305
Investment income from affiliate

 

    4,500   (4,500 )

 

 
Adjusted OIBDA (a) $ 99,279 $ 80,526 (4,500 ) $ 175,305
Cash interest expense (a) (16,737 ) (10,402 ) (27,139 )
Capital expenditures (46,037 ) (33,903 ) (79,940 )
Dividend to preferred members   (4,500 )

 

  4,500  

 

 
Free cash flow (a) $ 32,005   $ 36,221     $ 68,226  
                 
 

Mediacom
Broadband

Mediacom
LLC

Mediacom
Combined

Video customers 461,000 371,000 832,000
HSD customers 652,000 527,000 1,179,000
Phone customers   273,000     222,000     495,000  
Primary service units (“PSUs”) 1,386,000 1,120,000 2,506,000
 
Video customer declines (2,000 ) (1,000 ) (3,000 )
HSD customer increases 9,000 8,000 17,000
Phone customer increases   9,000     6,000     15,000  
Quarterly PSU increases (c) 16,000 13,000 29,000
 
Customer relationships (d) 757,000 611,000 1,368,000
 
Average total monthly revenue per:
PSU (c)(e) $ 63.26 $ 60.23 $ 61.91
Customer relationship (c)(f) $ 115.38 $ 110.13 $ 113.04
                 
 

Mediacom
Broadband

Mediacom
LLC

Mediacom
Combined

Bank credit facility $ 1,091,000 $ 1,169,000 $ 2,260,000
5½% senior notes due 2021 200,000

 

200,000
6⅜% senior notes due 2023   300,000  

 

    300,000  
Total debt (g) $ 1,591,000 $ 1,169,000 $ 2,760,000
Cash   (9,502 )   (8,297 )   (17,799 )
Net debt (a) $ 1,581,498 $ 1,160,703 $ 2,742,201
 
Net leverage ratio (h)

 

3.98x

 

3.60x

 

3.91x

Interest coverage ratio (i)

 

5.93x

 

7.74x

 

6.46x

_________________________

* See Table 4 for information about our use of non-GAAP measures and definitions of OIBDA and free cash flow, Table 5 regarding the effect of recent changes to certain accounting standards on our revenue recognition and Table 6 for footnotes.
 

TABLE 4
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. 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.

Net debt is used as an alternative to total debt for comparison purposes under certain circumstances in which we have greater than usual levels of cash. On April 2, 2018, Mediacom Broadband LLC and Mediacom Broadband Corporation (together, “Mediacom Broadband”) announced the redemption of their existing 6⅜% Senior Notes due 2023 at an aggregate redemption price of $309.6 million, which was funded in part by $158.0 million of such excess cash. Due to the timing of such transaction, Mediacom Broadband temporarily had greater than usual levels of cash as of March 31, 2018, and therefore we believe net debt to be the most appropriate comparative measure.

We define cash interest expense as interest expense, net, less amortization of deferred financing costs. Cash interest expense excludes the amortization of financing costs which were paid upon the financing of the relevant debt.

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. Free cash flow may not be comparable to similarly titled measures reported by other companies.

TABLE 5
Changes in Accounting Standards – Revenue Recognition

As of January 1, 2018, we adopted Accounting Standards Update No. 2014-09 – Revenues from Contracts with Customers and related guidance (collectively, “revenue recognition”), which was issued by the Financial Accounting Standards Board.  Adoption of this accounting standard affected both the timing of revenue recognition (the “timing change”) and the allocation of revenues among video, HSD and phone within our multi-product offerings, in which we offer product bundles at a discount (the “allocation change”). We adopted this accounting standard using a modified retrospective transition, and accordingly, the impact of such adoption was reflected in our financial results only for the three months ended March 31, 2018 and previously reported results were not restated. The adoption of the new standard did not have a material impact on our results of operations for this period. Excluding the impact of the timing change, the combined total revenues and OIBDA for Mediacom would have increased 3.2% and 2.1%, respectively, for the three months ended March 31, 2018. Because of the allocation change, we recorded a decrease in our video revenues and corresponding increases in our HSD and phone revenues. Excluding the overall impact of the timing change and the allocation change, on a combined basis, video revenues would have decreased 0.8%, HSD revenues would have increased 6.6% and phone revenues would have increased 4.0% for the three months ended March 31, 2018.

TABLE 6
Footnotes

(a)

  See Table 4 for information regarding our use of non-GAAP financial measures.
 

(b)

Represents OIBDA as a percentage of total revenues.
 

(c)

Quarterly customer changes and average total monthly revenue metrics for the three months ended March 31, 2017 have been adjusted to reflect Mediacom LLC’s January 2017 acquisition of 7,000 video customers, 6,000 HSD customers and 1,000 phone customers, aggregating 14,000 PSUs and 9,000 customer relationships, as if it had occurred on December 31, 2016.
 

(d)

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

(e)

Represents average total monthly revenues for the period divided by average PSUs for such period.
 

(f)

Represents average total monthly revenues for the period divided by average customer relationships for such period.
 

(g)

Total debt excludes the effect of deferred financing costs, net.
 

(h)

For Mediacom Combined and Mediacom Broadband LLC, represents net debt at period end divided by annualized OIBDA for the period. For Mediacom LLC, represents net debt at period end divided by annualized Adjusted OIBDA for the period.
 

(i)

For Mediacom Combined and Mediacom Broadband LLC, represents OIBDA divided by cash interest expense for the period. For Mediacom LLC, represents Adjusted OIBDA divided by cash interest expense for the period.

Contacts

Mediacom Communications Corporation
Investor Relations
Jack P. Griffin, (845) 443-2654
Vice President, Corporate Finance
or
Media Relations
Thomas J. Larsen, (845) 443-2754
Senior Vice President, Government and Public Relations

Release Summary

Mediacom Communications Reports Combined Results for First Quarter 2018

Contacts

Mediacom Communications Corporation
Investor Relations
Jack P. Griffin, (845) 443-2654
Vice President, Corporate Finance
or
Media Relations
Thomas J. Larsen, (845) 443-2754
Senior Vice President, Government and Public Relations