On August 6, 2024, Consolidated Communications Holdings Inc (CNSL, Financial) released its 8-K filing detailing its financial results for the second quarter of 2024. Consolidated Communications Holdings Inc provides communication services for business and residential customers across various states in the U.S. Its business product suite includes data and Internet solutions, voice, data center services, security services, managed and IT services, and an expanded suite of cloud services. It also offers wholesale solutions to wireless and wireline carriers and other service providers.
Performance Overview
Consolidated Communications Holdings Inc (CNSL, Financial) reported net revenues of $268.7 million for Q2 2024, falling short of the analyst estimate of $275.45 million. This represents a slight decline from the $275.2 million reported in the same quarter last year. The company also reported a net loss of ($66.7) million, a significant improvement from the net loss of ($119.0) million in Q2 2023. The net loss per share was ($0.58) compared to ($1.05) in the previous year.
Cost Management and Expenses
The company saw a collective decrease of $3.2 million in cost of services and products and selling, general, and administrative expenses, largely due to lower video programming costs, reduced contract labor costs, and lower salaries driven by cost-saving initiatives. However, these savings were partly offset by higher professional fees for system enhancements, customer service improvements, and strategic initiatives.
Interest Expense and Debt Management
Net interest expense increased by $7.2 million to $44.1 million, primarily due to higher interest rates on the term loan and borrowings on the revolving credit facility. As of June 30, 2024, the company had 72% of its total outstanding debt at a fixed rate through September 2026, with a weighted average cost of debt at 7.18%.
Capital Expenditures and Liquidity
Total committed capital expenditures were $102.7 million, driven by 32,961 new fiber passings and second-quarter fiber additions. The company maintained liquidity with cash and short-term investments of approximately $5 million, along with $75 million of available borrowing capacity under its revolving credit facility and $80 million undrawn under its term loan agreement.
Washington Asset Sale and Pending Transaction
On May 1, 2024, Consolidated Communications completed the sale of its Washington assets. Additionally, the company is set to be acquired by affiliates of Searchlight Capital Partners, L.P. and British Columbia Investment Management Corporation in an all-cash transaction valued at approximately $3.1 billion, including the assumption of debt. This transaction is expected to close in late Q4 2024 or early Q1 2025, subject to customary closing conditions.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Revenues | $268.7 million | $275.2 million |
| Net Loss | ($66.7) million | ($119.0) million |
| Net Loss Per Share | ($0.58) | ($1.05) |
Balance Sheet and Cash Flow
As of June 30, 2024, Consolidated Communications reported total assets of $3.61 billion, slightly down from $3.63 billion at the end of 2023. The company’s total liabilities stood at $2.91 billion, with long-term debt and finance lease obligations amounting to $2.27 billion. Net cash provided by operating activities was ($8.2) million for Q2 2024, compared to $12.2 million in the same period last year.
Revenue Breakdown
| Category | Q2 2024 | Q2 2023 |
|---|---|---|
| Consumer Broadband | $81.4 million | $71.3 million |
| Commercial Data Services | $54.6 million | $53.2 million |
| Carrier Data and Transport Services | $30.3 million | $31.2 million |
Analysis and Conclusion
Consolidated Communications Holdings Inc (CNSL, Financial) faced a challenging quarter with revenue falling short of analyst estimates. However, the company managed to reduce its net loss significantly compared to the previous year. The ongoing cost-saving initiatives and strategic enhancements are positive signs, but the increased interest expenses and pending acquisition add layers of complexity to its financial outlook. Investors should closely monitor the company's debt management and the progress of the acquisition deal.
Explore the complete 8-K earnings release (here) from Consolidated Communications Holdings Inc for further details.
