News Release Article Detail

• Grew commercial and carrier data and transport revenue by 5.2% year over year
• Delivered another strong quarter of data connections led by growth in Metro Ethernet
• Completed a refinancing reducing interest expense, extending maturities and increasing liquidity
• Closed on the acquisition of fiber-based Champaign Telephone Company and the sale of our rural Iowa ILEC

MATTOON, Ill., Nov. 03, 2016 (GLOBE NEWSWIRE) -- Consolidated Communications Holdings, Inc. (Nasdaq:CNSL) (the "Company") reported results for the third quarter 2016.  

Third quarter financial summary:

• Revenue was $191.5 million.
• Net cash from operations was $58.1 million.
• Adjusted EBITDA was $77.1 million.
• Dividend payout ratio was 74.4%.

"I am pleased with the solid financial results for the quarter and the strong growth in our fiber-based commercial and carrier sales," said Bob Udell, President and Chief Executive Officer.  "We delivered another comfortable dividend payout ratio and our year-to-date payout of 69.2% is right on plan."

"During the third quarter, we closed on both the acquisition in Illinois of Champaign Telephone Company, a fiber-based business communications provider, and the sale of our rural independent local exchange company in Iowa," added Udell.  "These transactions strengthen our strategic focus on expanding our fiber footprint and delivering fiber-based products and services."

"Finally, in early October, we completed a refinancing of our secured bank facility.  This transaction is expected to improve our annual cash interest expenses by approximately $2.0 million.  In addition, it extended our maturities by three years and increased our revolver capacity to $110.0 million from $75.0 million.  We could not have been more pleased with the results of the transaction, and I would like to thank all of our investors and underwriters for their support," Udell concluded.   

Financial Results for the Third Quarter   

• Total revenues were $191.5 million, compared to $194.0 million for the same period last year.  Growth in strategic revenues were offset by declines in legacy voice revenues, network access and subsidy step-downs from CAF II and Texas USF support.    
• Income from operations was $22.7 million, compared to $13.6 million in the third quarter of 2015.  Included in the third quarter last year was $9.6 million of integration and severance charges tied to the Enventis synergy efforts and an early retirement offer made to, and accepted by, certain employees.   
• Interest expense, net was $19.1 million compared to $19.2 million for the same period last year.     
• Other income, net was $8.4 million, compared to $10.5 million for the same period in 2015.   
• On a GAAP basis, net income and net income per share were $7.0 million and $0.14, respectively.  Adjusted diluted net income per share excludes certain items in the manner described in the table provided in this release.  Adjusted diluted net income per share was $0.16 for the current quarter, compared to $0.18 the same period last year. 
• Cash distributions from our Verizon Wireless partnerships were $8.6 million compared to $20.0 million last year.  The third quarter of 2015 included a non-recurring cash distribution for the partnership owned towers that Verizon sold to American Tower.    
• Adjusted EBITDA was $77.1 million compared to $89.4 million for the same period in 2015.  As mentioned above, the third quarter last year included non-recurring cash distributions from the Company's partnerships.
• The total net debt to last 12-month adjusted EBITDA ratio was 4.34.

Financial Results for the Nine Months Ended September 30, 2016

• Revenues were $567.3 million, net cash from operating activities was $173.6 million and adjusted EBITDA was $233.7 million.

Cash Available to Pay Dividends 
For the quarter, cash available to pay dividends, or CAPD, was $26.4 million, and the dividend payout ratio was 74.4%.  At September 30, 2016, cash and cash equivalents were $33.4 million.  Capital expenditures for the quarter were $31.9 million. 

Financial Guidance 
The Company is updating its full year 2016 guidance as outlined below.

Dividend Payments
On October 31, 2016, the Company's board of directors declared its next quarterly dividend of $0.38738 per common share, which is payable on February 1, 2017 to stockholders of record at the close of business on January 13, 2017.  This will represent the 46^th consecutive quarterly dividend paid by the Company. 

Conference Call Information  
The Company will host a conference call today at 11:00 a.m. ET / 10:00 a.m. CT to discuss third quarter earnings and developments with respect to the Company.  The live webcast and replay can be accessed from the "Investor Relations" section of the Company's website at http://ir.consolidated.com.  The live conference call dial-in number is 1-877-374-3981 with conference ID 94247732.  A telephonic replay of the conference call will be available through November 10, 2016 and can be accessed by calling 1-855-859-2056.  

Use of Non-GAAP Financial Measures 
This press release, as well as the conference call, includes disclosures regarding "EBITDA", "adjusted EBITDA", "cash available to pay dividends" and the related "dividend payout ratio", "total net debt to last twelve month adjusted EBITDA coverage ratio", "adjusted diluted net income per share" and "adjusted net income attributable to common stockholders", all of which are non-GAAP financial measures and described in this section as not being in compliance with Regulation S-X.  Accordingly, they should not be construed as alternatives to net cash from operating or investing activities, cash and cash equivalents, cash flows from operations, net income or net income per share as defined by GAAP and are not, on their own, necessarily indicative of cash available to fund cash needs as determined in accordance with GAAP. In addition, not all companies use identical calculations, and the non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.  A reconciliation of the differences between these non-GAAP financial measures and the most directly comparable financial measures presented in accordance with GAAP is included in the tables that follow.

Adjusted EBITDA is comprised of EBITDA, adjusted for certain items as permitted or required by the lenders under our credit agreement in place at the end of each quarter in the periods presented.  The tables that follow include an explanation of how adjusted EBITDA is calculated for each of the periods presented with the reconciliation to net income.  EBITDA is defined as net earnings before interest expense, income taxes, depreciation and amortization on a historical basis.   

Cash available to pay dividends represents adjusted EBITDA plus cash interest income less (1) cash interest expense, (2) capital expenditures and (3) cash income taxes; this calculation differs in certain respects from the similar calculation used in our credit agreement. 

We present adjusted EBITDA, cash available to pay dividends and the related dividend payout ratio for several reasons.  Management believes adjusted EBITDA, cash available to pay dividends and the dividend payout ratio are useful as a means to evaluate our ability to fund our estimated uses of cash (including interest on our debt) and pay dividends. In addition, we have presented adjusted EBITDA, cash available to pay dividends and the dividend payout ratio to investors in the past because they are frequently used by investors, securities analysts and other interested parties in the evaluation of companies in our industry, and management believes presenting them here provides a measure of consistency in our financial reporting. Adjusted EBITDA and cash available to pay dividends, referred to as Available Cash in our credit agreement, are also components of the restrictive covenants and financial ratios contained in our credit agreement that requires us to maintain compliance with these covenants and limit certain activities, such as our ability to incur debt and to pay dividends.  The definitions in these covenants and ratios are based on adjusted EBITDA and cash available to pay dividends after giving effect to specified charges.  In addition, adjusted EBITDA, cash available to pay dividends and the dividend payout ratio provide our board of directors with meaningful information to determine, with other data, assumptions and considerations, our dividend policy and our ability to pay dividends under the restrictive covenants in our credit agreement and to measure our ability to service and repay debt.  We present the related "total net debt to last twelve month adjusted EBITDA coverage ratio" principally to put other non-GAAP measures in context and facilitate comparisons by investors, security analysts and others; this ratio differs in certain respects from the similar ratio used in our credit agreement.  These measures differ in certain respects from the ratios used in our senior notes indenture. 

These non-GAAP financial measures have certain shortcomings.  In particular, adjusted EBITDA does not represent the residual cash flows available for discretionary expenditures, since items such as debt repayment and interest payments are not deducted from such measure.  Similarly, while we may generate cash available to pay dividends, we are not required to use any such cash to pay dividends, and the payment of any dividends is subject to declaration by our board of directors, compliance with applicable law and the terms of our credit agreement.  Because adjusted EBITDA is a component of the dividend payout ratio and the ratio of total net debt to last twelve month adjusted EBITDA, these measures are also subject to the material limitations discussed above.  In addition, the ratio of total net debt to last twelve month adjusted EBITDA is subject to the risk that we may not be able to use the cash on the balance sheet to reduce our debt on a dollar-for-dollar basis. Management believes these ratios are useful as a means to evaluate our ability to incur additional indebtedness in the future. 

We present the non-GAAP measures adjusted diluted net income per share and adjusted diluted net income attributable to common stockholders because our net income and net income per share are regularly affected by items that occur at irregular intervals or are non-cash items.  We believe that disclosing these measures assists investors, securities analysts and other interested parties in evaluating both our company over time and the relative performance of the companies in our industry.

About Consolidated Communications 
Consolidated Communications provides business and broadband communications services across its 11-state service area to carrier, commercial and consumer customers. For more than a century, the Company has consistently provided innovative, reliable, high-quality products and services. The Company offers a wide range of communications solutions including: High-Speed Internet, Data, Digital TV, Phone, managed and cloud services and wireless backhaul over an extensive fiber optic network.

Safe Harbor  
The Securities and Exchange Commission ("SEC") encourages companies to disclose forward-looking information so that investors can better understand a company's future prospects and make informed investment decisions.  Certain statements in this press release are forward-looking statements and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995.  These forward-looking statements reflect, among other things, our current expectations, plans, strategies, and anticipated financial results.  There are a number of risks, uncertainties, and conditions that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements.  These risks and uncertainties include a number of factors related to our business, including economic and financial market conditions generally and economic conditions in our service areas; various risks to shareholders of not receiving dividends and risks to our ability to pursue growth opportunities if we continue to pay dividends according to the current dividend policy; various risks to the price and volatility of our common stock; changes in the valuation of pension plan assets; the substantial amount of debt and our ability to repay or refinance it or incur additional debt in the future; our need for a significant amount of cash to service and repay the debt and to pay dividends on the common stock; restrictions contained in our debt agreements that limit the discretion of management in operating the business; regulatory changes, including changes to subsidies, rapid development and introduction of new technologies and intense competition in the telecommunications industry; risks associated with our possible pursuit of acquisitions; system failures; losses of large customers or government contracts; risks associated with the rights-of-way for the network; disruptions in the relationship with third party vendors; losses of key management personnel and the inability to attract and retain highly qualified management and personnel in the future; changes in the extensive governmental legislation and regulations governing telecommunications providers and the provision of telecommunications services; telecommunications carriers disputing and/or avoiding their obligations to pay network access charges for use of our network; high costs of regulatory compliance; the competitive impact of legislation and regulatory changes in the telecommunications industry; and liability and compliance costs regarding environmental regulations. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements are discussed in more detail in our filings with the Securities and Exchange Commission, including our reports on Form 10-K and Form 10-Q.  Many of these circumstances are beyond our ability to control or predict.  Moreover, forward-looking statements necessarily involve assumptions on our part.  These forward-looking statements generally are identified by the words "believe", "expect", "anticipate", "estimate", "project", "intend", "plan", "should", "may", "will", "would", "will be", "will continue" or similar expressions.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Consolidated Communications Holdings, Inc. and its subsidiaries to be different from those expressed or implied in the forward-looking statements.  All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements that appear throughout this press release.  Furthermore, forward-looking statements speak only as of the date they are made.  Except as required under the federal securities laws or the rules and regulations of the Securities and Exchange Commission, we disclaim any intention or obligation to update or revise publicly any forward-looking statements.  You should not place undue reliance on forward-looking statements.

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