EX-99.1 2 cnsl-20230808xex99d1.htm EX-99.1

Exhibit 99.1

Consolidated Communications Announces Second Quarter Financial Results; Delivers 93% Growth in Consumer Fiber Net Adds

●

Added 18,651 fiber net adds, an increase from 9,643 fiber net adds a year ago

●

Grew consumer fiber broadband revenue 58%¹ and increased ARPU 5.1%

●

Upgraded 57,438 locations to fiber Gigabit+ speeds; FttP coverage to approach approximately 50% of addressable market by year end

●

Entered agreement to sell non-core Washington assets for gross proceeds of $73 million

●

Announced business simplification and cost cutting initiatives that are expected to generate annualized cost savings of more than $30 million

MATTOON, Ill. – Aug. 8, 2023 – Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) (the “Company” or “Consolidated”), a top 10 fiber provider in the U.S., today reported results for the second quarter of 2023.

“With an improved go-to-market strategy, we have great momentum, as evidenced by 18,651 consumer fiber net adds in the second quarter and nearly 7,000 overall consumer broadband net adds, representing 190% growth versus the first quarter,” said Bob Udell, president and chief executive officer at Consolidated. “We carried this momentum into July by adding nearly 7,300 consumer fiber subscribers in the month.”

Udell added, “As we move into the second half of the year, we’ll continue to build upon a fiber-first strategy across our consumer, commercial and carrier channels as we generate long-term revenue growth and deliver the most reliable services for our customers. We expect that our business simplification and cost savings initiatives will contribute over $30 million on an annualized basis to improve EBITDA and margins starting in the second half of 2023.”

____________________

¹ Q2 2022 normalized for the divestitures of the Company’s Kansas assets, where applicable, which closed on Nov. 30, 2022. Refer to the tables contained in this press release for a reconciliation of all non-GAAP measures.

Page 1 of 16

Second Quarter 2023 Results (compared to second quarter 2022 where applicable)

●

Revenue totaled $275.2 million, down 7.8% or 3.0% normalized¹.

●

Consumer fiber revenue was $29.6 million, up approximately 54% or 58% normalized¹, driven by strong operating metrics including 18,651 consumer fiber net adds and increased ARPU of 5.1%.

●

Consumer broadband revenue was $71.3 million, up 5.5% or 8.4% normalized¹.

●

Commercial data services revenue was $53.2 million, down 6.8% or up 0.5% normalized¹.

●

Carrier data-transport revenue was $31.2 million, down 13.9% or 5.1% normalized¹.

●

Other products and services revenue was $1.6 million, a decrease of $2.3 million, largely due to lower recognition of public private partnership construction projects.

●

Net loss was ($119.0 million). Adjusted EBITDA was $76.9 million.

●

Total committed capital expenditures were $164.4 million.

Operating expenses decreased $0.9 million versus the prior year driven by lower video programming costs and network access expense, in addition to the impact of the divestiture of the Kansas City operations on Nov. 30, 2022. The decline was mitigated by higher marketing and advertising expenses to drive growth and additional costs related to professional fees for customer service and process improvement initiatives.

Net interest expense was $36.9 million, an increase of $6.7 million versus the prior year, primarily as a result of higher interest on the term loan. The Company entered into a new three-year interest rate swap agreement for $500 million of its term loan debt, commencing upon the termination of its previous swap agreement. Including the new swap agreement, the Company has 77% of its total debt at a fixed rate through September 2026. As of June 30, 2023, the weighted average cost of debt was 6.72%.

Net loss in the second quarter of 2023, which includes an impairment loss of $77.8 million recorded in relation to the Washington assets held for sale, was ($119.0 million) compared to ($11.5 million) in the second quarter of 2022, which included $9.1 million of income from discontinued operations. Net loss per share was ($1.05) in the second quarter of 2023 as compared to ($0.10) in the second quarter of 2022. Adjusted diluted net income (loss) per share excludes certain items as outlined in the table provided in this release. Adjusted diluted net loss per share from continuing operations was ($0.28) compared to ($0.08) in the second quarter of 2022.

Capital Expenditures

Total committed capital expenditures were $164.4 million, driven by 57,438 new fiber passings added in the quarter, record second quarter fiber adds, seasonal infrastructure projects and pre-committed inventory purchases in support of future install and build activity.

Business Simplification and Cost Savings Initiatives

The Company has initiated a significant business simplification and cost savings initiative to further align and focus as a fiber-first provider, better serve its communities, generate efficiencies and drive improved margins. These actions are estimated to result in an annualized benefit of more than $30 million commencing in the second half of 2023.

Washington Divestiture

The Company entered into an agreement to sell its Washington assets for gross proceeds of $73 million, subject to the finalization of certain working capital and other post-closing purchase price adjustments, to Palisade Infrastructure in an all-cash transaction. This was a result of the Company’s ongoing strategic asset review and focus on its fiber expansion plans in its core regions. The transaction is expected to close in the second half of 2024. In the quarter, the Company recognized an impairment loss of $77.8 million associated with this transaction.

Page 2 of 16

Capital Structure

As of June 30, 2023, the Company maintained liquidity with cash and short-term investments of approximately $203 million and $215 million of available borrowing capacity on the revolving credit facility, subject to certain covenants. The net leverage ratio for the trailing 12 months ended June 30, 2023, was 5.55x. The Company continues to balance its fiber build and growth initiatives with the timing of governmental broadband partnerships and its liquidity, which is being enhanced through recent actions, including cost savings initiatives and the sale of non-core assets.

Proposal by Searchlight Capital Partners

Discussions continue between the Special Committee of the Board of Directors and Searchlight Capital Partners regarding the non-binding proposal announced on April 13, 2023.

2023 Outlook

Consolidated Communications updated its guidance for capital expenditures and reaffirmed its guidance for all other metrics for the full-year 2023.

●Adjusted EBITDA is expected to be in a range of $310 million to $330 million.

●

Capital expenditures are expected to be approximately $495 million. Previous capital outlook was $425 million to $445 million.

●Cash interest expense is expected to be in a range of $145 million to $155 million.

●Cash income taxes are expected to be below $10 million.

Conference Call Information

Consolidated’s second quarter earnings conference call will be webcast today at 8:30 am ET. The webcast and materials will be available on Consolidated’s Investor Relations website at http://ir.consolidated.com. The live conference call dial-in number for analysts and investors is 888-440-5977, conference ID 8956400. A replay of the webcast, together with a transcript thereof, will be available on the website following the earnings conference call.

About Consolidated Communications

Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) is dedicated to moving people, businesses and communities forward by delivering the most reliable fiber communications solutions. Consumers, businesses and wireless and wireline carriers depend on Consolidated for a wide range of high-speed internet, data, phone, security, cloud and wholesale carrier solutions. With a network spanning nearly 59,000 fiber route miles, Consolidated is a top 10 U.S. fiber provider, turning technology into solutions that are backed by exceptional customer support. Learn more at consolidated.com.

Use of Non-GAAP Financial Measures

This press release, as well as the conference call, includes disclosures regarding “EBITDA,” “adjusted EBITDA,” “total net debt to last 12 month adjusted EBITDA ratio” or “Net debt leverage ratio,” “adjusted diluted net income (loss) per share,” and “Normalized revenue,” all of which are non-GAAP financial measures. 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 these non-GAAP financial measures to the most directly comparable financial measures presented in accordance with GAAP is included in the tables that follow.

Page 3 of 16

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 (loss) from continuing operations. EBITDA is defined as income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization on a historical basis.

We present adjusted EBITDA for several reasons. Management believes adjusted EBITDA is useful as a means to evaluate our ability to fund our estimated uses of cash (including interest on our debt). In addition, we have presented adjusted EBITDA to investors in the past because it is frequently used by investors, securities analysts and other interested parties in the evaluation of companies in our industry, and management believes presenting it here provides a measure of consistency in our financial reporting. Adjusted EBITDA, referred to as Available Cash in our credit agreement, is also a component 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. The definitions in these covenants and ratios are based on Adjusted EBITDA after giving effect to specified charges. In addition, Adjusted EBITDA provides our board of directors with meaningful information, with other data, assumptions and considerations, to measure our ability to service and repay debt. We present the related “total net debt to last 12 month adjusted EBITDA ratio” or “Net debt leverage ratio” principally to help investors understand how we measure leverage and facilitate comparisons by investors, security analysts and others. Total net debt is defined as the current and long-term portions of debt and finance lease obligations less cash, cash equivalents and short-term investments, deferred debt issuance costs and discounts on debt. Our Net debt leverage ratio differs in certain respects from the similar ratio used in our credit agreement or against comparable measures of certain other companies in our industry. 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. In addition, the ratio of total net debt to last 12-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 this ratio is useful as a means to evaluate our ability to incur additional indebtedness in the future.

We present the non-GAAP measure “adjusted diluted net income (loss) per share” because our net income (loss) and net income (loss) 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.

Forward-Looking Statements

Certain statements in this press release, including those relating to the current expectations, plans, strategies, anticipated financial results, contributions to EBITDA and margins as a result of business simplification and cost savings initiatives, and the timeline for and anticipated benefits related to the closing of the sale of certain Washington non-core assets in the second half of 2024, are forward-looking statements and are made pursuant to the safe harbor provisions of the Private 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, including: significant competition in all parts of our business and among our customer channels; our ability to adapt to rapid technological changes; shifts in our product mix that may result in a decline in operating profitability; public health threats, including the COVID-19 pandemic; continued receipt of support from various funds established under federal and state laws; disruptions in our networks and infrastructure and any related service delays or disruptions could cause us to lose customers and incur additional expenses; cyber-attacks may lead to

Page 4 of 16

unauthorized access to confidential customer, personnel and business information that could adversely affect our business; our operations require substantial capital expenditures and our business, financial condition, results of operations and liquidity may be impacted if funds for capital expenditures are not available when needed; our ability to obtain and maintain necessary rights-of-way for our networks; our ability to obtain necessary hardware, software and operational support from third-party vendors; substantial video content costs continue to rise; our ability to enter into new collective bargaining agreements or renew existing agreements; our ability to attract and/or retain certain key management and other personnel in the future; risks associated with acquisitions and the realization of anticipated benefits from such acquisitions; increasing attention to, and evolving expectations for, environmental, social and governance initiatives; unfavorable changes in financial markets could affect pension plan investments; weak economic conditions, and the other risk factors described in Part I, Item 1A of Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022. 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. 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, undue reliance should not be placed on forward-looking statements, which are based on the information currently available to us and speak only as of the date they are made. Except as required under 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.

Investor and Media Contacts

Philip Kranz, Investor Relations
+1 217-238-8480

Philip.kranz@consolidated.com

Jennifer Spaude, Media Relations
+1 507-386-3765

Jennifer.spaude@consolidated.com

# # #

Page 5 of 16

Condensed Consolidated Balance Sheets

(Dollars in thousands, except share and per share amounts)

(Unaudited)


	June 30,		December 31,
	2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	202,578	$	325,852
Short-term investments		—		87,951
Accounts receivable, net		100,827		119,675
Income tax receivable		6,811		1,670
Prepaid expenses and other current assets		60,138		62,996
Assets held for sale		68,997		—
Total current assets		439,351		598,144

Property, plant and equipment, net		2,390,071		2,234,122
Investments		9,095		10,297
Goodwill		814,624		929,570
Customer relationships, net		29,772		43,089
Other intangible assets		10,557		10,557
Other assets		65,942		61,315
Total assets	$	3,759,412	$	3,887,094

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	50,306	$	33,096
Advance billings and customer deposits		45,625		46,664
Accrued compensation		55,585		60,903
Accrued interest		18,175		18,201
Accrued expense		126,220		95,206
Current portion of long-term debt and finance lease obligations		16,821		12,834
Liabilities held for sale		3,297		—
Total current liabilities		316,029		266,904

Long-term debt and finance lease obligations		2,135,344		2,129,462
Deferred income taxes		241,873		274,309
Pension and other post-retirement obligations		120,756		123,644
Other long-term liabilities		46,172		47,326
Total liabilities		2,860,174		2,841,645

Series A Preferred Stock, par value $0.01 per share; 10,000,000 shares authorized, 477,047 and 456,343 shares outstanding as of June 30, 2023 and December 31, 2022, respectively; liquidation preference of $498,338 and $477,047 as of June 30, 2023 and December 31, 2022, respectively		349,971		328,680

Shareholders' equity:
Common stock, par value $0.01 per share; 150,000,000 shares authorized, 116,610,525 and 115,167,193 shares outstanding as of June 30, 2023 and December 31, 2022, respectively		1,167		1,152
Additional paid-in capital		701,287		720,442
Accumulated deficit		(157,223)		(11,866)
Accumulated other comprehensive loss, net		(3,919)		(610)
Noncontrolling interest		7,955		7,651
Total shareholders' equity		549,267		716,769
Total liabilities, mezzanine equity and shareholders' equity	$	3,759,412	$	3,887,094

Page 6 of 16

Consolidated Communications Holdings, Inc.

Condensed Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022

Net revenues	$	275,162	$	298,390	$	551,288	$	598,668
Operating expenses:
Cost of services and products		126,967		135,888		258,905		271,783
Selling, general and administrative expenses		83,565		75,510		164,849		148,795
Loss on impairment of assets held for sale		77,755		—		77,755		126,490
Loss on disposal of assets		2,384		—		5,688		—
Depreciation and amortization		79,538		72,543		157,237		144,893
Income (loss) from operations		(95,047)		14,449		(113,146)		(93,293)
Other income (expense):
Interest expense, net of interest income		(36,903)		(30,156)		(70,763)		(59,671)
Other income, net		5,410		3,099		8,168		6,441
Loss from continuing operations before income taxes		(126,540)		(12,608)		(175,741)		(146,523)
Income tax benefit		(18,448)		(2,017)		(30,688)		(16,836)
Loss from continuing operations		(108,092)		(10,591)		(145,053)		(129,687)

Discontinued operations:
Income from discontinued operations		—		9,821		—		17,884
Income tax expense		—		742		—		5,258
Income from discontinued operations		—		9,079		—		12,626

Net loss		(108,092)		(1,512)		(145,053)		(117,061)
Less: dividends on Series A preferred stock		10,704		9,802		21,291		19,400
Less: net income attributable to noncontrolling interest		161		203		304		318
Net loss attributable to common shareholders	$	(118,957)	$	(11,517)	$	(166,648)	$	(136,779)

Net income (loss) per common share - basic and diluted:
Loss from continuing operations	$	(1.05)	$	(0.18)	$	(1.47)	$	(1.33)
Income from discontinued operations		—		0.08		—		0.11
Net loss per basic and diluted common shares attributable to common shareholders	$	(1.05)	$	(0.10)	$	(1.47)	$	(1.22)

Page 7 of 16

Consolidated Communications Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
OPERATING ACTIVITIES
Net loss	$	(108,092)	$	(1,512)	$	(145,053)	$	(117,061)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		79,538		72,543		157,237		144,893
Deferred income taxes		(19,020)		(1,266)		(31,259)		(11,826)
Cash distributions from wireless partnerships in excess of earnings		—		1,508		—		1,661
Pension and post-retirement contributions in excess of expense		(2,676)		(9,819)		(5,537)		(19,161)
Non-cash, stock-based compensation		2,388		2,833		3,187		5,032
Amortization of deferred financing costs and discounts		1,874		1,824		3,721		3,626
Loss on impairment of assets held for sale		77,755		—		77,755		126,490
Loss on disposal of assets		2,384		—		5,688		—
Other adjustments, net		(2,443)		(207)		(2,861)		(396)
Changes in operating assets and liabilities, net		(19,475)		(5,959)		4,441		8,247
Net cash provided by operating activities		12,233		59,945		67,319		141,505
INVESTING ACTIVITIES
Purchase of property, plant and equipment, net		(150,034)		(176,434)		(280,860)		(332,914)
Purchase of investments		—		—		—		(39,959)
Proceeds from sale of assets		6,509		1,720		6,801		1,794
Proceeds from business dispositions, net		—		—		—		26,042
Proceeds from sale and maturity of investments		90,000		60,800		91,623		126,554
Net cash used in investing activities		(53,525)		(113,914)		(182,436)		(218,483)
FINANCING ACTIVITIES
Payment of finance lease obligations		(4,007)		(2,183)		(7,121)		(4,524)
Share repurchases for minimum tax withholding		—		—		(1,036)		(114)
Net cash used in financing activities		(4,007)		(2,183)		(8,157)		(4,638)
Net change in cash and cash equivalents		(45,299)		(56,152)		(123,274)		(81,616)
Cash and cash equivalents at beginning of period		247,877		74,171		325,852		99,635
Cash and cash equivalents at end of period	$	202,578	$	18,019	$	202,578	$	18,019

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Consolidated Communications Holdings, Inc.

Consolidated Revenue by Category

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Consumer:
Broadband (Data and VoIP)	$	71,339	$	67,592	$	139,300	$	133,503
Voice services		31,352		36,643		63,615		74,095
Video services		9,362		14,359		18,956		28,725
		112,053		118,594		221,871		236,323
Commercial:
Data services (includes VoIP)		53,230		57,113		106,364		115,008
Voice services		32,236		35,775		64,867		72,114
Other		10,378		11,287		20,134		22,847
		95,844		104,175		191,365		209,969
Carrier:
Data and transport services		31,224		36,263		64,147		69,748
Voice services		4,263		3,718		8,630		7,570
Other		313		354		663		745
		35,800		40,335		73,440		78,063

Subsidies		7,072		6,534		14,108		13,117
Network access		22,747		24,846		47,191		51,059
Other products and services		1,646		3,906		3,313		10,137
Total operating revenue	$	275,162	$	298,390	$	551,288	$	598,668

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Consolidated Communications Holdings, Inc.

Consolidated Revenue Trend by Category

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	Q2 2023		Q1 2023		Q4 2022		Q3 2022		Q2 2022
Consumer:
Broadband (Data and VoIP)	$	71,339	$	67,961	$	69,002	$	69,641	$	67,592
Voice services		31,352		32,263		34,314		36,444		36,643
Video services		9,362		9,594		11,876		13,552		14,359
		112,053		109,818		115,192		119,637		118,594
Commercial:
Data services (includes VoIP)		53,230		53,134		56,662		56,796		57,113
Voice services		32,236		32,631		34,676		35,484		35,775
Other		10,378		9,756		10,320		9,933		11,287
		95,844		95,521		101,658		102,213		104,175
Carrier:
Data and transport services		31,224		32,923		33,752		33,878		36,263
Voice services		4,263		4,367		3,685		3,517		3,718
Other		313		350		338		605		354
		35,800		37,640		37,775		38,000		40,335

Subsidies		7,072		7,036		13,078		7,187		6,534
Network access		22,747		24,444		26,308		27,277		24,846
Other products and services		1,646		1,667		1,965		2,305		3,906
Total operating revenue	$	275,162	$	276,126	$	295,976	$	296,619	$	298,390

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Consolidated Communications Holdings, Inc.

Reconciliation of Historical Revenue by Category to Normalized Revenue by Category

(Dollars in thousands)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30, 2022						June 30, 2022
	Historical		Adjustments⁽¹⁾		Normalized		Historical		Adjustments⁽¹⁾		Normalized
Consumer:
Broadband (Data and VoIP)	$	67,592	$	(1,788)	$	65,804	$	133,503	$	(3,836)	$	129,667
Voice services		36,643		(541)		36,102		74,095		(1,237)		72,858
Video services		14,359		(2,696)		11,663		28,725		(5,406)		23,319
		118,594		(5,025)		113,569		236,323		(10,479)		225,844
Commercial:
Data services (includes VoIP)		57,113		(4,140)		52,973		115,008		(8,369)		106,639
Voice services		35,775		(1,337)		34,438		72,114		(2,792)		69,322
Other		11,287		(286)		11,001		22,847		(587)		22,260
		104,175		(5,763)		98,412		209,969		(11,748)		198,221
Carrier:
Data and transport services		36,263		(3,352)		32,911		69,748		(3,640)		66,108
Voice services		3,718		(4)		3,714		7,570		(9)		7,561
Other		354		(2)		352		745		(3)		742
		40,335		(3,358)		36,977		78,063		(3,652)		74,411

Subsidies		6,534		—		6,534		13,117		(49)		13,068
Network access		24,846		(430)		24,416		51,059		(938)		50,121
Other products and services		3,906		(106)		3,800		10,137		(187)		9,950
Total operating revenue	$	298,390	$	(14,682)	$	283,708	$	598,668	$	(27,053)	$	571,615

Notes:

(1)	These adjustments reflect the removal of operating revenues for divestitures. We completed the sale of the Company's Ohio and Kansas assets on January 31, 2022 and November 30, 2022, respectively.

Page 11 of 16

Consolidated Communications Holdings, Inc.

Reconciliation of Loss from Continuing Operations to Adjusted EBITDA

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Loss from continuing operations	$	(108,092)	$	(10,591)	$	(145,053)	$	(129,687)
Add (subtract):
Income tax benefit		(18,448)		(2,017)		(30,688)		(16,836)
Interest expense, net		36,903		30,156		70,763		59,671
Depreciation and amortization		79,538		72,543		157,237		144,893
EBITDA		(10,099)		90,091		52,259		58,041

Adjustments to EBITDA (1):
Other, net (2)		5,441		6,244		15,471		11,568
Pension/OPEB benefit		(931)		(2,964)		(2,072)		(5,947)
Loss on disposal of assets		2,384		—		5,688		—
Loss on impairment		77,755		—		77,755		126,490
Non-cash compensation (3)		2,388		2,833		3,187		5,032
Adjusted EBITDA from continuing operations		76,938		96,204		152,288		195,184
Investment distributions from discontinued operations		—		11,329		—		19,545
Adjusted EBITDA	$	76,938	$	107,533	$	152,288	$	214,729

Notes:

(1)	These adjustments reflect those required or permitted by the lenders under our credit agreement.

(2)	Other, net includes income attributable to noncontrolling interests, acquisition and non-recurring related costs, and certain miscellaneous items.

(3)	Represents compensation expenses in connection with our Restricted Share Plan, which because of the non-cash nature of the expenses are excluded from adjusted EBITDA.

Page 12 of 16

Consolidated Communications Holdings, Inc.

Reconciliation of Loss from Continuing Operations to Adjusted EBITDA Guidance

(Dollars in millions)

(Unaudited)


	Year Ended
	December 31, 2023
	Range
	Low		High
Loss from continuing operations	$	(123)	$	(105)
Add:
Income tax benefit		(43)		(37)
Interest expense, net		152		148
Depreciation and amortization		314		312
EBITDA		300		318

Adjustments to EBITDA (1):
Other, net (2)		12		14
Pension/OPEB benefit		(12)		(12)
Non-cash compensation (3)		10		10
Adjusted EBITDA	$	310	$	330

Notes:

(1)	These adjustments reflect those required or permitted by the lenders under our credit agreement.

(2)	Other, net includes income attributable to noncontrolling interests, dividend income, and certain miscellaneous items.

(3)	Represents compensation expenses in connection with our Restricted Share Plan, which because of the non-cash nature of the expenses are excluded from adjusted EBITDA.

Consolidated Communications Holdings, Inc.

Reconciliation of Total Net Debt to LTM Adjusted EBITDA Ratio

(Dollars in thousands)

(Unaudited)


	June 30,
	2023
Long-term debt and finance lease obligations:
Term loans, net of discount $7,868	$	992,007
6.50% Senior secured notes due 2028		750,000
5.00% Senior secured notes due 2028		400,000
Finance leases		41,894
Total debt as of June 30, 2023		2,183,901
Less: deferred debt issuance costs		(31,736)
Less: cash, cash equivalents and short-term investments		(202,578)
Total net debt as of June 30, 2023	$	1,949,587

Adjusted EBITDA for the 12 months ended June 30, 2023	$	351,139

Total Net Debt to last 12 months Adjusted EBITDA		5.55x

Page 13 of 16

Consolidated Communications Holdings, Inc.

Reconciliation of Loss Attributable to Common Shareholders from Continuing Operations to Adjusted Loss from Continuing Operations and Calculation of Adjusted Diluted Net Income (Loss) Per Common Share

(Dollars in thousands, except per share amounts)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Loss from continuing operations	$	(108,092)	$	(10,591)	$	(145,053)	$	(129,687)
Less: dividends on Series A preferred stock		10,704		9,802		21,291		19,400
Less: net income attributable to noncontrolling interest		161		203		304		318
Loss attributable to common shareholders from continuing operations		(118,957)		(20,596)		(166,648)		(149,405)

Adjustments to loss attributable to common shareholders:
Dividends on Series A preferred stock		10,704		9,802		21,291		19,400
Integration and severance related costs, net of tax		1,314		802		3,962		1,604
Loss on impairment of assets held for sale		77,755		—		77,755		126,490
Loss on disposition of assets, net of tax		1,761		—		4,202		—
Non-cash interest expense for swaps, net of tax		(293)		(310)		(631)		(605)
Tax impact of non-deductible goodwill		(5,901)		(392)		(5,901)		(11,205)
Non-cash stock compensation, net of tax		1,764		2,094		2,354		3,720
Adjusted net loss from continuing operations	$	(31,853)	$	(8,600)	$	(63,616)	$	(10,001)

Weighted average number of common shares outstanding		113,050		111,697		112,995		111,694

Adjusted diluted net income (loss) per common share:
Adjusted net loss from continuing operations	$	(0.28)	$	(0.08)	$	(0.56)	$	(0.09)
Adjusted income from discontinued operations, net of tax		—		0.08		—		0.11
	$	(0.28)	$	0.00	$	(0.56)	$	0.02

Notes:

Calculations above assume a 26.13% effective tax rate for the three and six months ended June 30, 2023 and 26.07% effective tax rate for the three and six months ended June 30, 2022.

Page 14 of 16

Consolidated Communications Holdings, Inc.

Key Operating Metrics

(Unaudited)


	2021										2022										2023
	Q1		Q2		Q3		Q4		FY		Q1		Q2		Q3		Q4		FY		Q1		Q2
Passings
Total Fiber Gig+ Capable Passings ^(1)(5)(6)		320,806		397,123		494,160		605,710		605,710		689,406		831,779		947,974		1,008,660		1,008,660		1,062,518		1,119,956
Total DSL/Copper Passings ^(2)(3)(5)(6)		2,421,292		2,347,816		2,255,556		2,146,377		2,146,377		2,059,025		1,920,214		1,807,381		1,617,077		1,617,077		1,564,889		1,509,875
Total Passings ^{(1)(2)(3)(5)(6)}		2,742,098		2,744,939		2,749,716		2,752,087		2,752,087		2,748,431		2,751,993		2,755,355		2,625,737		2,625,737		2,627,407		2,629,831
% Fiber Gig+ Coverage/Total Passings		12%		14%		18%		22%		22%		25%		30%		34%		38%		38%		40%		43%

Consumer Broadband Connections
Fiber Gig+ Capable ⁽³⁾		74,495		77,521		81,539		86,122		86,122		93,812		103,455		115,598		122,872		122,872		135,209		153,860
DSL/Copper ⁽²⁾⁽³⁾		323,507		315,959		309,122		298,442		298,442		286,338		277,758		266,314		244,586		244,586		234,653		222,969
Total Consumer Broadband Connections⁽²⁾⁽³⁾		398,002		393,480		390,661		384,564		384,564		380,150		381,213		381,912		367,458		367,458		369,862		376,829

Consumer Broadband Net Adds
Total Fiber Gig+ Capable Net Adds⁽⁷⁾		3,885		3,026		4,018		4,583		15,512		7,690		9,643		12,143		10,599		40,075		12,337		18,651
DSL/Copper Net Adds ⁽⁷⁾		(7,240)		(7,548)		(6,837)		(10,680)		(32,305)		(8,544)		(8,580)		(11,444)		(10,783)		(39,351)		(9,933)		(11,684)
Total Consumer Broadband Net Adds ⁽⁷⁾		(3,355)		(4,522)		(2,819)		(6,097)		(16,793)		(854)		1,063		699		(184)		724		2,404		6,967

Consumer Broadband Penetration %
Fiber Gig+ Capable (on fiber passings)		23.2%		19.5%		16.5%		14.2%		14.2%		13.6%		12.4%		12.2%		12.2%		12.2%		12.7%		13.7%
DSL/Copper (on DSL/copper passings)		13.4%		13.5%		13.7%		13.9%		13.9%		13.9%		14.5%		14.7%		15.1%		15.1%		15.0%		14.8%
Total Consumer Broadband Penetration %		14.5%		14.3%		14.2%		14.0%		14.0%		13.8%		13.9%		13.9%		14.0%		14.0%		14.1%		14.3%

Consumer Average Revenue Per Unit (ARPU)
Fiber Gig+ Capable	$	64.87	$	65.83	$	64.64	$	64.22	$	64.55	$	63.88	$	64.95	$	65.61	$	67.14	$	65.42	$	67.51	$	68.29
DSL/Copper	$	47.72	$	49.92	$	51.32	$	50.65	$	50.06	$	50.78	$	52.36	$	53.87	$	53.55	$	53.36	$	53.21	$	55.88

Churn
Fiber Consumer Broadband Churn⁽⁷⁾		1.3%		1.7%		1.4%		1.0%		1.3%		0.9%		1.1%		1.2%		1.1%		1.1%		1.0%		1.3%
DSL/Copper Consumer Broadband Churn ⁽⁷⁾		1.4%		1.6%		1.9%		2.0%		1.7%		1.3%		1.6%		1.8%		1.7%		1.6%		1.5%		1.7%

Consumer Broadband Revenue ($ in thousands)
Fiber Broadband Revenue ⁽⁴⁾	$	14,120	$	15,010	$	15,422	$	16,150	$	60,702	$	17,242	$	19,218	$	21,558	$	24,016	$	82,034	$	26,136	$	29,613
Copper and Other Broadband Revenue		51,633		52,967		53,182		50,833		208,615		48,669		48,374		48,083		44,986		190,112		41,825		41,726
Total Consumer Broadband Revenue	$	65,753	$	67,977	$	68,604	$	66,983	$	269,317	$	65,911	$	67,592	$	69,641	$	69,002	$	272,146	$	67,961	$	71,339

Consumer Voice Connections⁽³⁾		362,384		352,835		341,135		328,849		328,849		316,634		306,458		294,441		276,779		276,779		267,509		258,680

Video Connections ⁽³⁾		73,986		70,795		66,971		63,447		63,447		58,812		55,225		51,339		35,039		35,039		32,426		28,934

Fiber route network miles (long-haul, metro and FttP)		47,364		48,727		50,405		52,402		52,402		54,239		56,093		57,498		57,865		57,865		57,569		58,836

On-net buildings ⁽³⁾		13,910		14,253		14,625		14,981		14,981		15,446		15,618		15,715		14,427		14,427		14,520		14,735

Page 15 of 16

Notes:

(1)

In Q1 2021, the Company launched a multi-year fiber build plan to upgrade 1.6 million passings or 70% of our service area to fiber Gig+ capable services. As of June 30, 2023, 111,296 of the targeted 225,000 passings for 2023 were upgraded to FttP and total fiber passings were ~1,119,956 or 43% of the Company's service area.

(2)	The sale of the non-core Ohio operations resulted in a reduction of approximately 5,658 DSL/Copper passings and 3,560 DSL/Copper broadband connections in the first quarter of 2022. Prior period amounts have not been adjusted to reflect the sale.

(3)

The sale of the net assets of our Kansas City operations in the fourth quarter of 2022 resulted in a reduction of approximately 135,144 DSL/Copper passings, 3,325 fiber broadband connections, 10,945 DSL/Copper broadband connections, 6,670 consumer voice connections, 13,425 video connections and 1,415 on-net buildings. Prior period amounts have not been adjusted to reflect the sale.

(4)	Fiber broadband revenue includes revenue from our Kansas City operations of approximately $0.3 million for the quarter ended December 31, 2022 and approximately $0.5 million for each of the quarters ended March 31, 2021 through September 30, 2022. Amounts have not been adjusted to reflect the sale.

(5)	Passings counts are estimates of single family units, multi-dwelling units, and multi-tenant units within consumer, small business and enterprise. These counts are based upon the information available at this time and are subject to updates as additional information becomes available.

(6)	When a passing is both fiber and DSL/Copper capable it is counted as a fiber passing.

(7)	Consumer Broadband net adds and churn have been normalized to reflect the divestitures of our Kansas City and Ohio operations.

Page 16 of 16