Altice USA Reports First Quarter 2024 Results

Altice USA (NYSE: ATUS) today reports results for the first quarter ended March 31, 2024.

Dennis Mathew, Altice USA Chairman and Chief Executive Officer, said: "Our first-quarter results are reflective of the progress we are making to improve our operations and financial performance, which we are confident will set us on a path to achieve sustainable long-term growth. We report improvements in year-over-year trends in customer ARPU and Revenue and generated positive Free Cash Flow in the quarter. We are delivering quality and value to our customers by strengthening our networks, improving our execution discipline, enhancing our product portfolio, and accelerating local go-to-market strategies, and we are proud to once again report growth in our fiber and mobile customer bases alongside continued improvement across key operational and customer experience metrics. Our focus remains on driving profitable customer relationships and elevating network and service quality, all while maintaining financial discipline."

First Quarter 2024 Financial Overview

• Total Revenue of $2.3 billion (-1.9% year over year).
• Residential Revenue⁽¹⁾ of $1.8 billion (-2.9% year over year).
• Residential Revenue per user (ARPU)⁽²⁾ of $135.67 (+0.3% or +$0.35 year over year).
• Business Services Revenue of $364.9 million (+0.3% year over year).
  • Lightpath revenue growth of +3.6% year over year.
  • SMB / Other decline of -0.8% year over year.
• News and Advertising Revenue of $105.7 million (+7.1% year over year).
  • Excluding political advertising revenue, News and Advertising grew +1.8% year over year.
• Net income (loss) attributable to stockholders of ($21.2) million (($0.05)/share on a diluted basis) in
  Q1 2024 and $25.9 million ($0.06/share on a diluted basis) in Q1 2023.
• Net cash flows from operating activities of $399.7 million in Q1 2024 and $416.8 million in Q1 2023.
• Adjusted EBITDA⁽³⁾ of $846.6 million (-2.5% year over year), and margin of 37.6%.
• Cash capital expenditures of $336.1 million (-42.3% year over year), capital intensity of 14.9% (11.1% excluding FTTH and new builds). The Company expects to continue to invest in key growth initiatives, with anticipated cash capex of approximately $1.6 billion to $1.7 billion in Full Year 2024.
• Operating Free Cash Flow⁽³⁾ of $510.5 million (+78.8% year over year), and margin of 22.7%.
• Free Cash Flow⁽³⁾ of $63.6 million.

First Quarter 2024 Key Operational Highlights

• Improved Customer Experience (CX) Leading to Higher Satisfaction Scores
  CX improvements year-over-year across a variety of metrics driven by a 'First Time Right' approach:
  • ~1.7 million fewer inbound calls⁽⁴⁾ LTM Q1 2024.
  • ~235k fewer truck rolls⁽⁵⁾ LTM Q1 2024.
  • +63% increase in self-install rate⁽⁶⁾ Q1 2024.
  • +13pts improvement in tNPS⁽⁷⁾ Q1 2024.
• Strong Fiber Net Adds; Reaching 395k Fiber Customers, an +88% increase in total fiber customers compared to Q1 2023
  • Optimum's best quarter for fiber customer net additions of +53k in Q1 2024, driven by increased migrations of existing customers and fiber gross additions.
  • Penetration of the fiber network reached 14.2% at the end of Q1 2024, up from 8.8% at the end of Q1 2023.
• Optimum Mobile Net Add Growth +29k in Q1 2024; 3.8x Growth Year Over Year; Reaching 352k Lines
  • Optimum Mobile line net additions of +29k in Q1 2024, compared to +8k in Q1 2023.
  • Optimum Mobile grew customer service ARPU⁽⁸⁾ by $4.30 in Q1 2024 year over year.
  • Mobile customer penetration of the broadband base was 5.3% at the end of Q1 2024, up from 3.5% at the end of Q1 2023.
  • 64% of customers are on unlimited or unlimited max mobile plans as of the end of Q1 2024.
  • In Q1 2024, Optimum Mobile launched in business services, and later this year the Company expects to expand mobile product offerings to tablets, smart watches, device protection and to launch accessories in e-commerce platforms.
• Total Broadband Primary Service Units (PSUs) net losses of -30k
  • Broadband net losses were -30k in Q1 2024, compared to -19k in Q1 2023.
• Continued Progress in Building Quality Broadband Network Experiences
  • Optimum Fiber Internet network was recognized by Ookla® Speedtest® for delivering New York and New Jersey's fastest and most reliable internet speeds, and titled lowest latency across New York, New Jersey, and Connecticut.
  • Up to 8 Gig symmetrical speeds are available across Optimum East Fiber footprint.
  • Fiber passings additions of +45k in Q1 2024, reaching 2.8 million fiber passings, and targeting
    approximately 3 million passings by year end 2024.
  • Total passings additions of +51k in Q1 2024, reaching 9.7 million total passings, and will add more than 175k passings in full year 2024.
• Improved Go-to-Market and Base Management with Newly Established Brand Platform
  • Where Local is Big Time brand platform centers on the ability to bring the reach and connectivity resources of a large national provider with the familiarity, connection, and localized attention of a small business.
  • Enhanced base management strategies include speed right-sizing ~300k qualifying customers to higher speed tiers.

Debt Maturities Addressed Near Term

• In January 2024, CSC Holdings issued $2,050 million in aggregate principal amount of senior guaranteed notes due 2029 at an interest rate of 11.750% which will mature on January 31, 2029. The proceeds from these notes were used to repay the outstanding balance of Term Loan B and Incremental Term Loan B-3 in full, as well as pay the fees, costs and expenses associated with these transactions.
• In February 2024, CSC Holdings redeemed in full the 5.250% Senior Notes due 2024 and 5.250% Series B Senior Notes, and drew down $750 million under the revolving credit facility to repay these notes.

Balance Sheet Review as of March 31, 2024

• Net debt⁽⁹⁾ for CSC Holdings, LLC Restricted Group was $23,059 million at the end of Q1 2024, representing net leverage of 7.1x L2QA⁽¹⁰⁾.
  • The weighted average cost of debt for CSC Holdings, LLC Restricted Group was 6.6% and the weighted average life of debt was 4.9 years.
• Net debt⁽⁹⁾ for Cablevision Lightpath LLC was $1,421 million at the end of Q1 2024, representing net leverage of 5.7x L2QA.
  • The weighted average cost of debt for Cablevision Lightpath LLC was 5.4% and the weighted average life of debt was 3.8 years.
• Consolidated net debt⁽⁹⁾ for Altice USA was $24,458 million, representing consolidated net leverage of 7.0x L2QA.
  • The weighted average cost of debt for consolidated Altice USA was 6.5% and the weighted average life of debt was 4.8 years.

Shares Outstanding

As of March 31, 2024, the Company had 459,961,698 combined shares of Class A and Class B common stock outstanding.

Reconciliation of Non-GAAP Financial Measures

We define Adjusted EBITDA, which is a non-GAAP financial measure, as net income (loss) excluding income taxes, non-operating income or expenses, gain (loss) on extinguishment of debt and write-off of deferred financing costs, gain (loss) on interest rate swap contracts, gain (loss) on derivative contracts, gain (loss) on investments and sale of affiliate interests, interest expense, net, depreciation and amortization, share-based compensation, restructuring, impairments and other operating items (such as significant legal settlements and contractual payments for terminated employees).

Adjusted EBITDA eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of our business and from intangible assets recognized from acquisitions, as well as certain non-cash and other operating items that affect the period-to-period comparability of our operating performance. In addition, Adjusted EBITDA is unaffected by our capital and tax structures and by our investment activities.

We believe Adjusted EBITDA is an appropriate measure for evaluating our operating performance. Adjusted EBITDA and similar measures with similar titles are common performance measures used by investors, analysts and peers to compare performance in our industry. Internally, we use revenue and Adjusted EBITDA measures as important indicators of our business performance and evaluate management's effectiveness with specific reference to these indicators. We believe Adjusted EBITDA provides management and investors a useful measure for period-to-period comparisons of our core business and operating results by excluding items that are not comparable across reporting periods or that do not otherwise relate to our ongoing operating results. Adjusted EBITDA should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), and other measures of performance presented in accordance with GAAP. Since Adjusted EBITDA is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies.

We also use Operating Free Cash Flow (defined as Adjusted EBITDA less cash capital expenditures), and Free Cash Flow (defined as net cash flows from operating activities less cash capital expenditures) as indicators of our financial performance. We believe these measures are two of several benchmarks used by investors, analysts and peers for comparison of performance in our industry, although they may not be directly comparable to similar measures reported by other companies.

Consolidated Net Debt as of March 31, 2024

Numerical information is presented on a rounded basis using actual amounts. Minor differences in totals and percentage calculations may exist due to rounding.

About Altice USA

Altice USA (NYSE: ATUS) is one of the largest broadband communications and video services providers in the United States, delivering broadband, video, mobile, proprietary content and advertising services to approximately 4.7 million residential and business customers across 21 states through its Optimum brand. The Company operates a4, an advanced advertising and data business, which provides audience-based, multiscreen advertising solutions to local, regional and national businesses and advertising clients. Altice USA also offers hyper-local, national, international and business news through its News 12 and i24NEWS networks.

FORWARD-LOOKING STATEMENTS

Certain statements in this earnings release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts contained in this earnings release, including, without limitation, those regarding our intentions, beliefs or current expectations concerning, among other things: our future financial conditions and performance, results of operations and liquidity, including Free Cash Flow and capital expenditures; our strategy, objectives, prospects, trends, service and operational improvements, base management strategy, capital expenditure plans, fiber and mobile growth, passings, upgrade plans, and leverage targets; our ability to achieve operational performance improvements; and future developments in the markets in which we participate or are seeking to participate. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "anticipate", "believe", "could", "estimate", "expect", "forecast", "intend", "may", "plan", "project", "should", "target", or "will" or, in each case, their negative, or other variations or comparable terminology. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. To the extent that statements in this earnings release are not recitations of historical fact, such statements constitute forward-looking statements, which, by definition, involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements including risks referred to in our SEC filings, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and Quarterly Reports on Form 10-Q. You are cautioned to not place undue reliance on Altice USA's forward-looking statements. Any forward-looking statement speaks only as of the date on which it was made. Altice USA specifically disclaims any obligation to publicly update or revise any forward-looking statement, as of any future date.