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Mediacom Broadband LLC and Mediacom LLC Report Results for Third 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 September 30, 2015.

Mediacom Broadband LLC*

  • Revenues were $245.4 million, reflecting a 3.3% increase from the prior year period
  • Operating income before depreciation and amortization (“OIBDA”) was $91.7 million, reflecting a 3.0% increase from the prior year period
  • Free cash flow of $29.2 million, compared to $18.1 million in the prior year period
  • Net quarterly increase of 1,000 primary service units (“PSUs”), compared to a net decline of 4,000 PSUs in the prior year period

Mediacom LLC*

  • Revenues were $186.2 million, reflecting a 4.7% increase from the prior year period
  • Adjusted OIBDA was $73.5 million, reflecting a 4.5% increase from the prior year period
  • Free cash flow of $23.1 million, compared to $12.9 million in the prior year period
  • Net quarterly increase of 7,000 PSUs, compared to a net decline of 4,000 PSUs in the prior year period

About Mediacom

Mediacom Communications Corporation is the eighth largest cable operator in the U.S. serving about 1.3 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 http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.mediacomcc.com&esheet=51215041&newsitemid=20151103006063&lan=en-US&anchor=www.mediacomcc.com&index=1&md5=af9d56d9b14f17cdeffa3d6631472066.

* See Table 7 for information regarding our use of non-GAAP measures and definitions of OIBDA, Adjusted OIBDA and free cash flow.

TABLE 1*

Mediacom Broadband LLC

Selected Financial and Operating Data
(Dollars in thousands, except per unit data)

(Unaudited)

Three Months Ended
September 30,
2015 2014 YoY% Change
Video

$

112,038

$ 111,245 0.7 %
High-speed data 74,500 66,568 11.9 %
Phone 14,923 15,708 (5.0 %)
Business services 32,495 29,645 9.6 %
Advertising 11,458 14,445 (20.7 %)
Total revenues $ 245,414 $ 237,611 3.3 %
Service costs (101,208 ) (97,592 ) 3.7 %
SG&A expenses (47,735 ) (46,652 ) 2.3 %
Management fees (4,750 ) (4,300 ) 10.5 %
OIBDA (a) $ 91,721 $ 89,067 3.0 %
Cash interest expense (a) (21,897 ) (24,965 ) (12.3 %)
Capital expenditures (b) (36,156 ) (41,490 ) (12.9 %)
Dividend to preferred members (4,500 ) (4,500 )
Free cash flow (a) $ 29,168 $ 18,112 61.0 %
OIBDA margin (c) 37.4 % 37.5 %
September 30, 2015 September 30, 2014
Video customers 482,000 504,000
High-speed data (“HSD”) customers 593,000 554,000
Phone customers 233,000 213,000
Primary service units (“PSUs”) 1,308,000 1,271,000
Video customer declines (12,000 ) (11,000 )
HSD customer increases 8,000 6,000
Phone customer increases 5,000 1,000
Quarterly PSU increases (declines) 1,000 (4,000 )
Customer relationships (d) 723,000 705,000
Average total monthly revenue per:
PSU (e) $ 62.57 $ 62.22
Customer relationship (f) $ 113.15 $ 112.11
September 30, 2015 September 30, 2014
Bank credit facility $ 1,361,500 $ 1,337,125
5½% senior notes due 2021 200,000 200,000
6⅜% senior notes due 2023 300,000 300,000
Total debt $ 1,861,500 $ 1,837,125
Total leverage ratio (g) 5.07x 5.16x
Interest coverage ratio (h) 4.19x 3.57x

* 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
September 30,
2015 2014 YoY% Change
Video

$

87,390

$ 86,374 1.2 %
High-speed data 60,995 54,777 11.4 %
Phone 13,226 14,037 (5.8 %)
Business services 20,752 18,610 11.5 %
Advertising 3,816 4,060 (6.0 %)
Total revenues $ 186,179 $ 177,858 4.7 %
Service costs (82,625 ) (79,481 ) 4.0 %
SG&A expenses (31,284 ) (29,824 ) 4.9 %
Management fees (3,250 ) (2,700 ) 20.4 %
OIBDA (a) $ 69,020 $ 65,853 4.8 %
Investment income from affiliate 4,500 4,500
Adjusted OIBDA (a) $ 73,520 $ 70,353 4.5 %
Cash interest expense (a) (14,872 ) (20,125 ) (26.1 %)
Capital expenditures (b) (35,570 ) (37,286 ) (4.6 %)
Free cash flow (a) $ 23,078 $ 12,942 78.3 %
Adjusted OIBDA margin (i) 39.5 % 39.6 %
September 30, 2015 September 30, 2014
Video customers 380,000 396,000
High-speed data (“HSD”) customers 474,000 443,000
Phone customers 191,000 179,000
Primary service units (“PSUs”) 1,045,000 1,018,000
Video customer declines (5,000 ) (8,000 )
HSD customer increases 8,000 4,000
Phone customer increases 4,000
Quarterly PSU increases (declines) 7,000 (4,000 )
Customer relationships (d) 583,000 569,000
Average total monthly revenue per:
PSU (e) $ 59.59 $ 58.12
Customer relationship (f) $ 106.63 $ 104.01
September 30, 2015 September 30, 2014
Bank credit facility $ 948,500 $ 1,182,875
7¼% senior notes due 2022 250,000 250,000
Total debt $ 1,198,500 $ 1,432,875
Total leverage ratio (g) 4.08x 5.09x
Interest coverage ratio (h) 4.94x 3.50x

* See Tables 4 and 6.

TABLE 3

Mediacom Broadband LLC

Reconciliation of Non-GAAP Measures

(Dollars in thousands)

(Unaudited)

Three Months Ended

September 30,

2015 2014
Free cash flow

$

29,168

$ 18,112
Capital expenditures 36,156 41,490
Dividend to preferred members 4,500 4,500
Other expense, net (361 ) (445 )
Changes in assets and liabilities, net 5,279 (840 )
Net cash flows provided by operating activities $ 74,742 $ 62,817
OIBDA $ 91,721 $ 89,067
Depreciation and amortization (36,000 ) (38,738 )
Operating income $ 55,721 $ 50,329
Cash interest expense $ 21,897 $ 24,965
Amortization of deferred financing costs 1,742 1,625
Interest expense, net $ 23,639 $ 26,590

TABLE 4

Mediacom LLC

Reconciliation of Non-GAAP Measures
(Dollars in thousands)

(Unaudited)

Three Months Ended

September 30,

2015 2014
Free cash flow

$

23,078

$ 12,942
Capital expenditures 35,570 37,286
Other expense, net (251 ) (796 )
Loss on early extinguishment of debt (j) (15,999 )
Changes in assets and liabilities, net (4,758 ) 2,111
Net cash flows provided by operating activities $ 53,639 $ 35,544
Adjusted OIBDA $ 73,520 $ 70,353
Investment income from affiliate (4,500 ) (4,500 )
OIBDA $ 69,020 $ 65,853
Depreciation and amortization (30,445 ) (29,557 )
Operating income $ 38,575 $ 36,296
Cash interest expense $ 14,872 $ 20,125
Amortization of deferred financing costs 727 927
Interest expense, net $ 15,599 $ 21,052

TABLE 5

Mediacom Broadband LLC

Capital Expenditures
(Dollars in thousands)

(Unaudited)

Three Months Ended

September 30,

2015 2014
Customer premise equipment

$

17,038

$ 15,250
Enterprise networks 2,553 2,842
Scalable infrastructure 5,984 14,299
Line extensions 1,642 1,464
Upgrade / rebuild 5,793 4,059
Support capital 3,146 3,576
Total capital expenditures $ 36,156 $ 41,490

TABLE 6

Mediacom LLC

Capital Expenditures
(Dollars in thousands)

(Unaudited)

Three Months Ended

September 30,

2015 2014
Customer premise equipment

$

16,318

$ 14,987
Enterprise networks 1,903 2,049
Scalable infrastructure 3,860 11,564
Line extensions 2,421 1,809
Upgrade / rebuild 7,788 4,516
Support capital 3,280 2,361
Total capital expenditures $ 35,570 $ 37,286

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, for Mediacom LLC, Adjusted OIBDA as OIBDA plus investment income from its preferred membership interest in Mediacom Broadband LLC, its 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 on Mediacom LLC’s preferred membership interest. 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 Report on Form 10-K and Quarterly Report on Form 10-Q 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 cash uses of $1.7 million and $1.0 million at Mediacom Broadband LLC and Mediacom LLC, respectively, during the three months ended September 30, 2015, and cash uses of $2.2 million and $1.7 million at Mediacom Broadband LLC and Mediacom LLC, respectively, during the three months ended September 30, 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.

(j)

Reflects the cash portion of loss on early extinguishment of debt, and excludes a $7.0 million write-off of deferred financing costs.

Contacts

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