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Mediacom Communications Reports Combined Results for Second Quarter 2018

MEDIACOM PARK, N.Y.--(BUSINESS WIRE)--MEDIACOM COMMUNICATIONS CORPORATION today released combined unaudited financial and operating highlights for the three months ended June 30, 2018.

Mediacom Combined Results for Second Quarter 2018*

  • Revenues were $488.4 million, reflecting a 3.6% increase from the prior year period
  • OIBDA was $185.1 million, reflecting a 3.1% increase from the prior year period
  • Capital expenditures were $76.9 million, compared to $89.1 million in the prior year period
  • Free cash flow was $86.6 million, compared to $64.1 million in the prior year period
  • Ending primary service units (“PSUs”) of 2,658,000, a 4.9% increase from June 30, 2017
  • Ending customer relationships of 1,368,000, a 0.3% increase from June 30, 2017
  • Total leverage ratio of 3.35x, compared to 3.78x at June 30, 2017
  • Interest coverage ratio of 8.59x, compared to 6.82x at June 30, 2017
  • Ending total debt of $2,480.0 million, a $235.0 million reduction from June 30, 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 August 2, 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.

 

TABLE 1*

Mediacom Communications Corporation

Selected Combined Financial and Operating Data

(Dollars in thousands, except per unit data)

(Unaudited)

       
  Three Months Ended
June 30,
   
    2018       2017     YoY % Change
Video $

195,427

    $ 201,311     (2.9 %)
High-speed data   184,190       167,040     10.3 %
Phone   28,389       28,230     0.6 %
Business services   68,062       62,210     9.4 %
Advertising   12,356       12,671     (2.5 %)
Total revenues $ 488,424     $ 471,462     3.6 %
Service costs   (212,641 )     (202,765 )   4.9 %
SG&A expenses   (81,671 )     (80,614 )   1.3 %
Management fees   (9,000 )     (8,500 )   5.9 %
OIBDA (a) $ 185,112     $ 179,583     3.1 %
Cash interest expense (a)   (21,556 )     (26,335 )   (18.1 %)
Capital expenditures   (76,907 )     (89,125 )   (13.7 %)
Free cash flow (a) $ 86,649     $ 64,123     35.1 %
           
OIBDA margin (b)   37.9 %     38.1 %    
           
           
  June 30, 2018   June 30, 2017   YoY % Change
Video customers   808,000       829,000     (2.5 %)
High-speed data (“HSD”) customers   1,251,000       1,185,000     5.6 %
Phone customers   599,000       520,000     15.2 %
Primary service units (“PSUs”)   2,658,000       2,534,000     4.9 %
           
Video customer declines   (9,000 )     (3,000 )    
HSD customer increases   23,000       6,000      
Phone customer increases   17,000       25,000      
Quarterly PSU increases   31,000       28,000      
           
Customer relationships (c)   1,368,000       1,364,000     0.3 %
           
Average total monthly revenue per:          
PSU (d) $ 61.61     $ 62.36     (1.2 %)
Customer relationship (e) $ 119.23     $ 115.05     3.6 %
           
           
  June 30, 2018   June 30, 2017    
Bank credit facility $ 2,280,000     $ 2,215,000      
5½% senior notes due 2021   200,000       200,000      
6⅜% senior notes due 2023

―     

    300,000      
Total debt (f) $ 2,480,000     $ 2,715,000      
           
Total leverage ratio (g)

3.35x  

 

3.78x  

   
Interest coverage ratio (h)

8.59x  

 

6.82x  

   

_______________

* 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
June 30, 2018
 

Mediacom
Broadband

 

Mediacom
LLC

  Eliminations  

Mediacom
Combined

Video $

107,812

    $ 87,615    

    $ 195,427  
High-speed data   100,023       84,167    

      184,190  
Phone   15,271       13,118    

      28,389  
Business services   41,682       26,380    

      68,062  
Advertising   9,964       2,392    

      12,356  
Total revenues $ 274,752     $ 213,672    

    $ 488,424  
Service costs   (115,267 )     (97,374 )  

      (212,641 )
SG&A expenses   (49,102 )     (32,569 )  

      (81,671 )
Management fees   (5,350 )     (3,650 )  

      (9,000 )
OIBDA (a) $ 105,033     $ 80,079    

    $ 185,112  
Investment income from affiliate       4,500     (4,500 )  

 
Adjusted OIBDA (a) $ 105,033     $ 84,579     (4,500 )   $ 185,112  
Cash interest expense (a)   (12,307 )     (9,249 )         (21,556 )
Capital expenditures   (40,439 )     (36,468 )         (76,907 )
Dividend to preferred members   (4,500 )       4,500      
Free cash flow (a) $ 47,787     $ 38,862         $ 86,649  
                       
                       
 

Mediacom
Broadband

 

Mediacom
LLC

       

Mediacom
Combined

Video customers   447,000       361,000             808,000  
HSD customers   690,000       561,000             1,251,000  
Phone customers   332,000       267,000             599,000  
Primary service units (“PSUs”)   1,469,000       1,189,000             2,658,000  
                       
Video customer declines   (6,000 )     (3,000 )           (9,000 )
HSD customer increases   11,000       12,000             23,000  
Phone customer increases   9,000       8,000             17,000  
Quarterly PSU increases   14,000       17,000             31,000  
                       
Customer relationships (c)   757,000       611,000             1,368,000  
                       
Average total monthly revenue per:                      
PSU (d) $ 62.64     $ 60.33           $ 61.61  
Customer relationship (e) $ 121.06     $ 116.95           $ 119.23  
                       
                       
 

Mediacom
Broadband

 

Mediacom
LLC

       

Mediacom
Combined

Bank credit facility $ 1,127,500     $ 1,152,500           $ 2,280,000  
5½% senior notes due 2021   200,000                 200,000  
6⅜% senior notes due 2023                
Total debt (f) $ 1,327,500     $ 1,152,500           $ 2,480,000  
                       
Total leverage ratio (g) 3.16x     3.41x           3.35x  
Interest coverage ratio (h) 8.53x     9.14x           8.59x  

_______________

* 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
June 30, 2017
   

Mediacom
Broadband

 

Mediacom
LLC

    Eliminations  

Mediacom
Combined

Video   $

111,522

    $ 89,789         $ 201,311  
High-speed data     91,246       75,794           167,040  
Phone     15,049       13,181           28,230  
Business services     37,978       24,232           62,210  
Advertising     10,110       2,561           12,671  
Total revenues   $ 265,905     $ 205,557         $ 471,462  
Service costs     (110,930 )     (91,835 )         (202,765 )
SG&A expenses     (48,621 )     (31,993 )         (80,614 )
Management fees     (5,015 )     (3,485 )         (8,500 )
OIBDA (a)   $ 101,339     $ 78,244         $ 179,583  
Investment income from affiliate         4,500     (4,500 )    
Adjusted OIBDA (a)   $ 101,339     $ 82,744     (4,500 )   $ 179,583  
Cash interest expense (a)     (17,074 )     (9,261 )         (26,335 )
Capital expenditures     (48,726 )     (40,399 )         (89,125 )
Dividend to preferred members     (4,500 )       4,500      
Free cash flow (a)   $ 31,039     $ 33,084         $ 64,123  
                         
                         
   

Mediacom
Broadband

 

Mediacom
LLC

         

Mediacom
Combined

Video customers     459,000       370,000             829,000  
HSD customers     655,000       530,000             1,185,000  
Phone customers     288,000       232,000             520,000  
Primary service units (“PSUs”)     1,402,000       1,132,000             2,534,000  
                         
Video customer declines     (2,000 )     (1,000 )           (3,000 )
HSD customer increases     3,000       3,000             6,000  
Phone customer increases     15,000       10,000             25,000  
Quarterly PSU increases     16,000       12,000             28,000  
                         
Customer relationships (c)     754,000       610,000             1,364,000  
                         
Average total monthly revenue per:                        
PSU (d)   $ 63.58     $ 60.85           $ 62.36  
Customer relationship (e)   $ 117.32     $ 112.23           $ 115.05  
                         
                         
   

Mediacom
Broadband

 

Mediacom
LLC

       

Mediacom
Combined

Bank credit facility   $ 1,014,000     $ 1,201,000           $ 2,215,000  
5½% senior notes due 2021     200,000                 200,000  
6⅜% senior notes due 2023     300,000                 300,000  
Total debt (f)   $ 1,514,000     $ 1,201,000           $ 2,715,000  
                         
Total leverage ratio (g)   3.73x     3.63x           3.78x  
Interest coverage ratio (h)   5.94x     8.93x           6.82x  

_______________

* 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.

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 June 30, 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 ended June 30, 2018. Excluding the impact of the timing change, on a combined basis, total revenues and OIBDA for the three months ended June 30, 2018, would have increased 3.6% and 2.8%, 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, on a combined basis, video revenues would have decreased 0.7%, HSD revenues would have increased 8.0% and phone revenues would have decreased 1.1% for the three months ended June 30, 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)

  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 at period end divided by annualized OIBDA for the period. For Mediacom LLC, represents total debt at period end divided by annualized Adjusted OIBDA for the period.
     

(h)

  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