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Mediacom Communications Reports Combined Results for Fourth Quarter and Full Year 2018

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

Mediacom Combined Results for Fourth Quarter 2018*

  • Revenues were $496.4 million, reflecting a 5.2% increase from the prior year period
  • Adjusted OIBDA was $196.2 million, reflecting a 6.6% increase from the prior year period
  • Capital expenditures were $96.3 million, compared to $82.7 million in the prior year period
  • Free cash flow was $76.6 million, compared to $75.6 million in the prior year period
  • Ending primary service units (“PSUs”) of 2,654,000, a 2.3% increase from December 31, 2017
  • Ending customer relationships of 1,357,000, a 0.4% decline from December 31, 2017
  • Net leverage ratio of 2.91x, compared to 3.50x at December 31, 2017
  • Interest coverage ratio of 8.41x, compared to 7.14x at December 31, 2017

Mediacom Combined Results for Full Year 2018*

  • Revenues were $1,956.4 million, reflecting a 4.2% increase from the prior year
  • Adjusted OIBDA was $745.0 million, reflecting a 4.6% increase from the prior year
  • Capital expenditures were $333.7 million, compared to $341.8 million in the prior year
  • Free cash flow was $319.5 million, compared to $264.4 million in the prior year
  • Net leverage ratio of 3.07x, compared to 3.62x at December 31, 2017
  • Interest coverage ratio of 8.12x, compared to 6.73x at December 31, 2017
  • Ending net debt of $2,286.3 million, a $293.5 million reduction from December 31, 2017

Reference to “Mediacom Combined” reflects the combined results of Mediacom Broadband LLC and Mediacom LLC, eliminating intercompany amounts. 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 February 21, 2019.

 
TABLE 1*
Mediacom Communications Corporation
Selected Combined Financial and Operating Data
(Dollars in thousands, except per unit data)
(Unaudited)
 
   

Three Months Ended
December 31,

     
    2018     2017   YoY% Change

Video

  $

185,974

    $

193,703

   

(4.0

%)
High-speed data     196,024       170,940     14.7 %
Phone     29,244       28,041     4.3 %
Business services     68,639       64,477     6.5 %
Advertising     16,551       14,623     13.2 %
Total revenues   $ 496,432     $ 471,784     5.2 %
Service costs     (208,846 )     (199,786 )   4.5 %
SG&A expenses     (82,388 )     (78,925 )   4.4 %
Management fees     (10,500 )     (9,000 )   16.7 %
OIBDA (a)   $ 194,698     $ 184,073     5.8 %
Non-cash, share based compensation     1,543          
Adjusted OIBDA (a)   $ 196,241     $ 184,073     6.6 %
Cash interest expense (a)     (23,338 )     (25,783 )   (9.5 %)
Capital expenditures     (96,272 )     (82,715 )   16.4 %
Free cash flow (a)   $ 76,631     $ 75,575     1.4 %
                   
Adjusted OIBDA margin (b)     39.5 %     39.0 %      
                   
                   
    December 31, 2018     December 31, 2017     YoY% Change
Video customers     776,000       821,000     (5.5 %)
High-speed data (“HSD”) customers     1,264,000       1,209,000     4.5 %
Phone customers     614,000       564,000     8.9 %
Primary service units (“PSUs”)     2,654,000       2,594,000     2.3 %
                   
Video customer declines     (17,000 )     (2,000 )      
HSD customer increases     4,000       15,000        
Phone customer increases     5,000       22,000        
Quarterly PSU (declines) increases     (8,000 )     35,000        
                   
Customer relationships (c)     1,357,000       1,363,000     (0.4 %)
                   
Average total monthly revenue per:                  
PSU (d)   $ 62.26     $ 61.04     2.0 %
Customer relationship (e)   $ 121.59     $ 115.42     5.3 %
                   
                   
    December 31, 2018     December 31, 2017        
Bank credit facility   $ 2,158,250     $ 2,105,000        
5½% senior notes due 2021     200,000       200,000        
6⅜% senior notes due 2023         300,000        
Total debt (f)   $ 2,358,250     $ 2,605,000        
Cash     (71,994 )     (25,270 )      
Net debt (f)   $ 2,286,256     $ 2,579,730        
                   
Net leverage ratio (g)   2.91x     3.50x        
Interest coverage ratio (h)   8.41x     7.14x        
                   
* See Table 7 for information about our use of non-GAAP measures and definitions of OIBDA and free cash flow, Table 8 regarding recent changes to certain accounting standards on our revenue recognition and Table 9 for footnotes.
 
 
TABLE 2*
Mediacom Communications Corporation
Selected Combined Financial and Operating Data
(Dollars in thousands, except per unit data)
(Unaudited)
 
    Year Ended
December 31,
     
    2018   2017   YoY% Change
Video  

$

768,271

    $ 794,018     (3.2 %)
High-speed data     748,403       670,734     11.6 %
Phone     114,491       111,439     2.7 %
Business services     270,493       249,714     8.3 %
Advertising     54,783       51,647     6.1 %

Total revenues

  $ 1,956,441     $ 1,877,552     4.2 %
Service costs     (844,022 )     (806,978 )   4.6 %
SG&A expenses     (328,941 )     (322,074 )   2.1 %
Management fees     (40,000 )     (36,500 )   9.6 %
OIBDA (a)   $ 743,478     $ 712,000     4.4 %
Non-cash, share based compensation     1,543          
Adjusted OIBDA (a)   $ 745,021     $ 712,000     4.6 %
Cash interest expense (a)     (91,763 )     (105,857 )   (13.3 %)
Capital expenditures     (333,726 )     (341,765 )   (2.4 %)
Free cash flow (a)   $ 319,532     $ 264,378     20.9 %
                   
Adjusted OIBDA margin (b)     38.1 %     37.9 %      
                   
                   
    December 31, 2018   December 31, 2017   YoY% Change
Video customers     776,000       821,000     (5.5 %)
High-speed data (“HSD”) customers     1,264,000       1,209,000     4.5 %
Phone customers     614,000       564,000     8.9 %
Primary service units (“PSUs”)     2,654,000       2,594,000     2.3 %
                   
Video customer declines     (45,000 )     (14,000 )      
HSD customer increases     55,000       47,000        
Phone customer increases     50,000       84,000        
Annual PSU increases (i)     60,000       117,000        
                   
Customer relationships (c)     1,357,000       1,363,000     (0.4 %)
                   
Average total monthly revenue per:                  
PSU (d)(i)   $ 62.13     $ 61.71     0.7 %
Customer relationship (e)(i)   $ 119.88     $ 114.88     4.4 %
                   
                   
    December 31, 2018   December 31, 2017      
Bank credit facility   $ 2,158,250     $ 2,105,000        
5½% senior notes due 2021     200,000       200,000        
6⅜% senior notes due 2023         300,000        
Total debt (f)   $ 2,358,250     $ 2,605,000        
Cash     (71,994 )     (25,270 )      
Net debt (f)   $ 2,286,256     $ 2,579,730        
                   
Net leverage ratio (g)   3.07x     3.62x        
Interest coverage ratio (h)   8.12x     6.73x        
                   
* See Table 7 for information about our use of non-GAAP measures and definitions of OIBDA and free cash flow, Table 8 regarding recent changes to certain accounting standards on our revenue recognition and Table 9 for footnotes.
 
 
TABLE 3*
Mediacom Communications Corporation
Selected Combined Financial and Operating Data
(Dollars in thousands, except per unit data)
(Unaudited)
 
   

Three Months Ended
December 31, 2018

   

Mediacom
Broadband

   

Mediacom
LLC

    Eliminations    

Mediacom
Combined

 

Video

 

$

102,322

    $ 83,652         $ 185,974  
High-speed data     106,564       89,460           196,024  
Phone     15,687       13,557           29,244  
Business services     41,879       26,760           68,639  
Advertising     13,397       3,154           16,551  
Total revenues   $ 279,849     $ 216,583         $ 496,432  
Service costs     (112,437 )     (96,409 )         (208,846 )
SG&A expenses     (49,016 )     (33,372 )         (82,388 )
Management fees     (6,325 )     (4,175 )         (10,500 )
OIBDA (a)   $ 112,071     $ 82,627         $ 194,698  
Investment income from affiliate         4,500     (4,500 )    
Non-cash share-based compensation     818      

725

   

      1,543  
Adjusted OIBDA (a)   $ 112,889     $ 87,852     (4,500 )   $ 196,241  
Cash interest expense (a)     (12,608 )     (10,730 )         (23,338 )
Capital expenditures     (49,490 )     (46,782 )         (96,272 )
Dividend to preferred members     (4,500 )       4,500      
Free cash flow (a)   $ 46,291     $ 30,340         $ 76,631  
                         
                         
   

Mediacom
Broadband

   

Mediacom
LLC

         

Mediacom
Combined

 
Video customers     428,000       348,000             776,000  
HSD customers     699,000       565,000             1,264,000  
Phone customers     339,000       275,000             614,000  
Primary service units (“PSUs”)     1,466,000       1,188,000             2,654,000  
                         
Video customer declines     (9,000 )     (8,000 )           (17,000 )
HSD customer increases     5,000       (1,000 )           4,000  
Phone customer increases     3,000       2,000             5,000  
Quarterly PSU declines     (1,000 )     (7,000 )           (8,000 )
                         
Customer relationships (c)     753,000       604,000             1,357,000  
                         
Average total monthly revenue per:                        
PSU (d)   $ 63.61     $ 60.59           $ 62.26  
Customer relationship (e)   $ 123.64     $ 119.03           $ 121.59  
                         
                         
   

Mediacom
Broadband

   

Mediacom
LLC

         

Mediacom
Combined

 
Bank credit facility   $ 1,024,375     $ 1,133,875           $ 2,158,250  
5½% senior notes due 2021     200,000                 200,000  
6⅜% senior notes due 2023                  
Total debt (f)   $ 1,224,375     $ 1,133,875           $ 2,358,250  
Cash     (29,964 )     (42,030 )           (71,994 )
Net debt (f)   $ 1,194,411     $ 1,091,845           $ 2,286,256  
                         
Net leverage ratio (g)   2.65x     3.11x           2.91x  
Interest coverage ratio (h)   8.95x     8.19x           8.41x  
                         
* See Table 7 for information about our use of non-GAAP measures and definitions of OIBDA and free cash flow, Table 8 regarding recent changes to certain accounting standards on our revenue recognition and Table 9 for footnotes.
 
 
TABLE 4*
Mediacom Communications Corporation
Selected Combined Financial and Operating Data
(Dollars in thousands, except per unit data)
(Unaudited)
 
   

Three Months Ended
December 31, 2017

   

Mediacom
Broadband

   

Mediacom
LLC

    Eliminations    

Mediacom
Combined

 
Video  

$

107,097

    $ 86,606         $ 193,703  
High-speed data     93,222       77,718           170,940  
Phone     14,986       13,055           28,041  
Business services     39,357       25,120           64,477  
Advertising     11,974       2,649           14,623  
Total revenues   $ 266,636     $ 205,148         $ 471,784  
Service costs     (109,113 )     (90,673 )         (199,786 )
SG&A expenses     (48,235 )     (30,690 )         (78,925 )
Management fees     (5,350 )     (3,650 )         (9,000 )
OIBDA (a)   $ 103,938     $ 80,135         $ 184,073  
Investment income from affiliate         4,500     (4,500 )    
Non-cash share-based compensation                
Adjusted OIBDA (a)   $ 103,938     $ 84,635     (4,500 )   $ 184,073  
Cash interest expense (a)     (16,168 )     (9,615 )         (25,783 )
Capital expenditures     (40,223 )     (42,492 )         (82,715 )
Dividend to preferred members     (4,500 )       4,500      
Free cash flow (a)   $ 43,047     $ 32,528         $ 75,575  
                         
                         
   

Mediacom
Broadband

   

Mediacom
LLC

         

Mediacom
Combined

 
Video customers     455,000       366,000             821,000  
HSD customers     668,000       541,000             1,209,000  
Phone customers     312,000       252,000             564,000  
Primary service units (“PSUs”)     1,435,000       1,159,000             2,594,000  
                         
Video customer declines         (2,000 )           (2,000 )
HSD customer increases     9,000       6,000             15,000  
Phone customer increases     12,000       10,000             22,000  
Quarterly PSU increases     21,000       14,000             35,000  
                         
Customer relationships (c)     755,000       608,000             1,363,000  
                         
Average total monthly revenue per:                        
PSU (d)   $ 62.39     $ 59.36           $ 61.04  
Customer relationship (e)   $ 117.80     $ 112.47           $ 115.42  
                         
                         
   

Mediacom
Broadband

   

Mediacom
LLC

         

Mediacom
Combined

 
Bank credit facility   $ 1,077,000     $ 1,028,000           $ 2,105,000  
5½% senior notes due 2021     200,000                 200,000  
6⅜% senior notes due 2023     300,000                 300,000  
Total debt (f)   $ 1,577,000     $ 1,028,000           $ 2,605,000  
Cash     (12,606 )     (12,644 )           (25,270 )
Net debt (f)   $ 1,564,394     $ 1,015,336           $ 2,579,730  
                         
Net leverage ratio (g)   3.76x     3.00x           3.50x  
Interest coverage ratio (h)   6.43x     8.80x           7.14x  
                         
* See Table 7 for information about our use of non-GAAP measures and definitions of OIBDA and free cash flow, Table 8 regarding recent changes to certain accounting standards on our revenue recognition and Table 9 for footnotes.
 
 
TABLE 5*
Mediacom Communications Corporation
Selected Combined Financial and Operating Data
(Dollars in thousands, except per unit data)
(Unaudited)
 
    Year Ended
December 31, 2018
   

Mediacom
Broadband

   

Mediacom
LLC

    Eliminations    

Mediacom
Combined

 
Video  

$

422,485

    $ 345,786         $ 768,271  
High-speed data     406,922       341,481           748,403  
Phone     61,647       52,844           114,491  
Business services     165,665       104,828           270,493  
Advertising     43,957       10,826           54,783  
Total revenues   $ 1,100,676     $ 855,765         $ 1,956,441  
Service costs     (456,527 )     (387,495 )         (844,022 )
SG&A expenses     (197,594 )     (131,347 )         (328,941 )
Management fees     (24,000 )     (16,000 )         (40,000 )
OIBDA (a)   $ 422,555     $ 320,923         $ 743,478  
Investment income from affiliate         18,000     (18,000 )    
Non-cash share-based compensation     818       725           1,543  
Adjusted OIBDA (a)   $ 423,373     $ 339,648     (18,000 )   $ 745,021  
Cash interest expense (a)     (52,890 )     (38,873 )         (91,763 )
Capital expenditures     (178,061 )     (155,665 )         (333,726 )
Dividend to preferred members     (18,000 )       18,000      
Free cash flow (a)   $ 174,422     $ 145,110         $ 319,532  
                         
                         
   

Mediacom
Broadband

   

Mediacom
LLC

         

Mediacom
Combined

 
Video customers     428,000       348,000             776,000  
HSD customers     699,000       565,000             1,264,000  
Phone customers     339,000       275,000             614,000  
Primary service units (“PSUs”)     1,466,000       1,188,000             2,654,000  
                         
Video customer declines     (27,000 )     (18,000 )           (45,000 )
HSD customer increases     31,000       24,000             55,000  
Phone customer increases     27,000       23,000             50,000  
Annual PSU increases     31,000       29,000             60,000  
                         
Customer relationships (c)     753,000       604,000             1,357,000  
                         
Average total monthly revenue per:                        
PSU (d)   $ 63.24     $ 60.77           $ 62.13  
Customer relationship (e)   $ 121.65     $ 117.68           $ 119.88  
                         
                         
   

Mediacom
Broadband

   

Mediacom
LLC

         

Mediacom
Combined

 
Bank credit facility   $ 1,024,375     $ 1,133,875           $ 2,158,250  
5½% senior notes due 2021     200,000                 200,000  
6⅜% senior notes due 2023                  
Total debt (f)   $ 1,224,375     $ 1,133,875           $ 2,358,250  
Cash     (29,964 )     (42,030 )           (71,994 )
Net debt (f)   $ 1,194,411     $ 1,091,845           $ 2,286,256  
                         
Net leverage ratio (g)   2.82x     3.21x           3.07x  
Interest coverage ratio (h)   8.00x     8.74x           8.12x  
                         
* See Table 7 for information about our use of non-GAAP measures and definitions of OIBDA and free cash flow, Table 8 regarding recent changes to certain accounting standards on our revenue recognition and Table 9 for footnotes.
 
 

TABLE 6*

Mediacom Communications Corporation
Selected Combined Financial and Operating Data
(Dollars in thousands, except per unit data)
(Unaudited)
 
    Year Ended
December 31, 2017
   

Mediacom
Broadband

   

Mediacom
LLC

    Eliminations    

Mediacom
Combined

 
Video  

$

439,716

    $ 354,302         $ 794,018  
High-speed data     366,012       304,722           670,734  
Phone     59,350       52,089           111,439  
Business services     152,481       97,233           249,714  
Advertising     41,527       10,120           51,647  
Total revenues   $ 1,059,086     $ 818,466         $ 1,877,552  
Service costs     (439,990 )     (366,988 )         (806,978 )
SG&A expenses     (194,629 )     (127,445 )         (322,074 )
Management fees     (21,665 )     (14,835 )         (36,500 )
OIBDA (a)   $ 402,802     $ 309,198         $ 712,000  
Investment income from affiliate         18,000     (18,000 )    
Non-cash share-based compensation                
Adjusted OIBDA (a)   $ 402,802     $ 327,198     (18,000 )   $ 712,000  
Cash interest expense (a)     (66,250 )     (39,607 )         (105,857 )
Capital expenditures     (181,477 )     (160,288 )         (341,765 )
Dividend to preferred members     (18,000 )       18,000      
Free cash flow (a)   $ 137,075     $ 127,303         $ 264,378  
                         
                         
   

Mediacom
Broadband

   

Mediacom
LLC

         

Mediacom
Combined

 
Video customers     455,000       366,000             821,000  
HSD customers     668,000       541,000             1,209,000  
Phone customers     312,000       252,000             564,000  
Primary service units (“PSUs”)     1,435,000       1,159,000             2,594,000  
                         
Video customer declines     (8,000 )     (6,000 )           (14,000 )
HSD customer increases     25,000       22,000             47,000  
Phone customer increases     48,000       36,000             84,000  
Annual PSU increases (i)     65,000       52,000             117,000  
                         
Customer relationships (c)     755,000       608,000             1,363,000  
                         
Average total monthly revenue per:                        
PSU (d)(i)   $ 62.93     $ 60.20           $ 61.71  
Customer relationship (e)(i)   $ 116.97     $ 112.27           $ 114.88  
                         
                         
   

Mediacom
Broadband

   

Mediacom
LLC

         

Mediacom
Combined

 
Bank credit facility   $ 1,077,000     $ 1,028,000           $ 2,105,000  
5½% senior notes due 2021     200,000                 200,000  
6⅜% senior notes due 2023     300,000                 300,000  
Total debt (f)   $ 1,577,000     $ 1,028,000           $ 2,605,000  
Cash     (12,606 )     (12,644 )           (25,270 )
Net debt (f)   $ 1,564,394     $ 1,015,336           $ 2,579,730  
                         
Net leverage ratio (g)   3.88x     3.10x           3.62x  
Interest coverage ratio (h)   6.08x     8.26x           6.73x  
                         
                         
* See Table 7 for information about our use of non-GAAP measures and definitions of OIBDA and free cash flow, Table 8 for information regarding recent changes to certain accounting standards on our revenue recognition and Table 9 for footnotes.
 

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 and excluding non-cash share-based compensation. 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.

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 Adjusted 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 8
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 and full year ended December 31, 2018 and prior period results were not restated. The adoption of the new standard did not have a material impact on the results of operations of Mediacom Combined for the three months and full year ended December 31, 2018. Excluding the impact of the timing change on Mediacom Combined, total revenues and OIBDA for the three months ended December 31, 2018, would have increased 5.2% and 7.4%, respectively. Excluding the impact of the timing change on Mediacom Combined, total revenues and OIBDA for the full year ended December 31, 2018, would have increased 4.2% and 4.4%, respectively. 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 for Mediacom Combined, video revenues would have decreased 0.1%, HSD revenues would have increased 11.6% and phone revenues would have decreased 4.8% for the three months ended December 31, 2018. Excluding the overall impact of the timing change and the allocation change for Mediacom Combined, video revenues would have decreased 0.5%, HSD revenues would have increased 9.1% and phone revenues would have decreased 1.3% for the full year ended December 31, 2018.

TABLE 9
Footnotes

     
(a)   See Table 7 for information regarding our use of non-GAAP financial measures.
(b)   Represents Adjusted OIBDA as a percentage of total revenues.
(c)   Represents the total number of customers that take at least one service, without regard to which service(s) customers purchase.
(d)   Represents average total monthly revenues for the period divided by average PSUs for such period.
(e)   Represents average total monthly revenues for the period divided by average customer relationships for such period.
(f)   Total debt excludes the effect of deferred financing costs, net.
(g)   For Mediacom Combined and Mediacom Broadband LLC, represents total debt minus cash at period end divided by annualized Adjusted OIBDA for the period. For Mediacom LLC, represents total debt minus cash at period end divided by annualized Adjusted OIBDA for the period.
(h)   For Mediacom Combined and Mediacom Broadband LLC, represents Adjusted OIBDA divided by cash interest expense for the period. For Mediacom LLC, represents Adjusted OIBDA divided by cash interest expense for the period.
(i)   Annual customer changes and average total monthly revenue metrics for the full year ended December 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.
     

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.

 

Contacts

Investor Relations
Jack P. Griffin
Group Vice President,
Corporate Finance
(845) 443-2654

Media Relations
Thomas J. Larsen
Senior Vice President,
Government and Public Relations
(845) 443-2754