EX-99.1 2 cnsl-20220802xex99d1.htm EX-99.1

Exhibit 99.1

Consolidated Communications Reports Transformational Second Quarter 2022 Results

●

Achieved net-positive, total consumer broadband connections for first time in seven years. Added a record 9,600 fiber subscribers and achieved 3x fiber subscriber growth year over year.

●

Built fiber to record 142,300 new locations, tripled the Company’s fiber passings in six quarters. Consolidated now passes over 800,000 locations with fiber becoming one of the largest fiber-to-the-home providers in the U.S. based on locations.

●

Subsequent to the end of the quarter, announced $490 million agreement to sell wireless investments to Verizon to support the Company’s fiber expansion plan and pivot to a pure-play fiber company.

●

Announced over $600 million in aggregate divestitures of non-core assets over the last year.

Note: Consolidated’s second quarter earnings conference call will be webcast on Aug. 2 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.

MATTOON, Ill. – Aug. 2, 2022 – 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 2022.

“In the second quarter, we added a record 9,600 net fiber subscribers, a three-fold increase from a year ago, and achieved total consumer net positive broadband connections for the first time in over seven years,” said Bob Udell, president and chief executive officer at Consolidated Communications. “These important milestones demonstrate strong execution on our strategic priorities. Our Gig+ fiber network and Fidium product now reaches 30% of passings, an improvement from 10% at the start of 2021.”

“Additionally, we reached an agreement with Verizon Wireless to sell our interests in five limited partnerships for $490 million in the aggregate, which will provide additional liquidity to fund our fiber expansion plan and bring FttP to 70% of our addressable market by 2025.”

Second Quarter 2022 Highlights and Results (compared to Second Quarter 2021)

●

Revenue totaled $298.4 million, generating Adjusted EBITDA of $107.5 million.

●

Consumer fiber revenue grew 28.0%, driven by more than 3x consumer fiber net adds.

●

Commercial data services revenue was $57.1 million, up 0.4%.

●

Carrier data-transport revenue grew $2.3 million or 6.8% aided by a $3.1 million one-time fiber build project.

●

Commercial other revenue increased $2.2 million driven primarily by higher equipment sales.

●

Subsidy revenue was $6.5 million, a decline of $10.9 million, primarily reflecting the transition to the Rural Digital Opportunity Fund (RDOF).

Page 1 of 14

●

Total committed capital expenditures were $179.1 million driven by a record 142,300 fiber upgrades in the second quarter, which included acceleration of 40,000 fiber upgrades and preconstruction for future quarter fiber builds mitigating inflationary pressures.

●

Operating expenses were $211.4 million, down $2.9 million from a year ago. The primary drivers were a $4.8 million decline in video programming expense, a $3.0 million reduction in Universal Services Fees offset by $2.1 increase in fuel and travel expenses combined with one-time cost of $2.2 million related to the fiber build project sale previously noted.

Income from operations totaled $14.4 million, down from $30.0 million a year ago. The year-over-year decrease was primarily the result of a revenue decline of $22.0 million offset by lower operating expenses of $2.9 million and a decline in depreciation and amortization expense of $3.5 million.

Net interest expense was $30.2 million, a decrease of $15.3 million compared to a year ago, primarily as a result of non-cash interest of $10.9 million on the Searchlight note, which was converted to perpetual preferred stock in conjunction with the second stage closing of the Searchlight investment in December 2021. The remaining reduction in interest expense was primarily the result of the maturity of an interest swap agreement in July 2021.

Cash distributions from the Company’s wireless partnerships totaled $11.3 million, compared to $12.7 million a year ago.

GAAP net loss was ($1.5 million) compared to a net loss of ($55.1 million) for the same period a year ago. GAAP net loss per share was ($0.10) compared to a net loss of ($0.71) in the prior year. Adjusted diluted net income per share excludes certain items as outlined in the table provided in this release. Adjusted diluted net income per share was $0.01 compared to $0.09 a year ago.

Adjusted EBITDA was $107.5 million, compared to $126.7 million in the prior year.

Sale of Investments in Wireless Partnerships

The Company announced the sale of its limited partnership interests in five wireless partnerships to Cellco Partnership, d/b/a Verizon Wireless, for an aggregate price of $490 million. The sale transactions are expected to close by the end of 2022, subject to certain closing conditions and third-party purchase rights available to other partners in the partnership. The Company expects to use the net proceeds from the sale to support its fiber expansion plan.

2022 Outlook

“We are updating our 2022 outlook for adjusted EBITDA as a result of accelerated legacy revenue declines, inflationary pressures on utilities and fuel, and the timing of cash distributions from the sale of our wireless investments,” said Steve Childers, chief financial officer at Consolidated Communications. “Our updated capex outlook reflects primarily the pre-work associated with fiber expansion for 2023 and some inflationary cost pressures.”

Consolidated Communications provides updated guidance for the full-year 2022.

●

Adjusted EBITDA is expected to be in a range of $400 million to $410 million.
Previous outlook was $410 million to $425 million.

●

Capital expenditures are expected to be in a range of $565 million to $585 million.
Previous outlook was $475 million to $495 million.

●

Cash interest expense is expected to be in a range of $125 million to $129 million.
Previous outlook was $123 million to $127 million.

●

Cash income taxes are expected to be in a range of $12 million to $17 million, an increase from previous outlook of $2 million to $4 million as a result of the estimated incremental state income taxes associated with the sale of the wireless investments.

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About Consolidated Communications

Consolidated Communications Holdings, Inc. (NASDAQ: CNSL) is dedicated to moving people, businesses and communities forward by delivering the latest reliable 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 50,000 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,” and “adjusted diluted net income (loss) per share,” 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.

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. This ratio differs in certain respects from the similar ratio used in our credit agreement 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.

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Forward-Looking Statements
Certain statements in this communication 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. These risks and uncertainties include a number of factors related to our business, including the uncertainties relating to the impact of the novel coronavirus (COVID-19) pandemic on the Company’s business, results of operations, cash flows, stock price and employees; the possibility that any of the anticipated benefits of the strategic investment from Searchlight Capital Partners, L.P. or our refinancing of outstanding debt, including our senior secured credit facilities, or of the proposed sales of the limited partnership interests will not be realized; the ability to meet closing conditions to the proposed sales of the limited partnership interests on a timely basis or at all; the anticipated use of proceeds of the strategic investment or the proposed sales of the limited partnership interests; the outcome of any legal proceedings that may be instituted against the Company or its directors; economic and financial market conditions generally and economic conditions in our service areas; 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 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 or failure to consummate acquisitions or dispositions; system failures; cyber-attacks, information or security breaches or technology failure of ours or of a third party; 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; new or changing tax laws or regulations; 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; liability and compliance costs regarding environmental regulations; risks associated with discontinuing paying dividends on our common stock; and the potential for the rights of our series A preferred stock to negatively impact our cash flow. 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 (“SEC”), 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 the Company 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 communication. 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 SEC, 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.

Investor and Media Contact

Jennifer Spaude, Consolidated Communications

Phone: 507-386-3765
jennifer.spaude@consolidated.com

Tag: [Consolidated-Communications-Earnings]

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Page 4 of 14

Consolidated Communications Holdings, Inc.

Condensed Consolidated Balance Sheets

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

(Unaudited)


	June 30,		December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	18,019	$	99,635
Short-term investments		25,005		110,801
Accounts receivable, net		117,479		133,362
Income tax receivable		2,733		1,134
Prepaid expenses and other current assets		56,928		56,831
Assets held for sale		95,922		26,052
Total current assets		316,086		427,815

Property, plant and equipment, net		2,101,127		2,019,444
Investments		107,514		109,578
Goodwill		929,570		1,013,243
Customer relationships, net		58,514		73,939
Other intangible assets		10,557		10,557
Other assets		62,349		58,116
Total assets	$	3,585,717	$	3,712,692

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	58,761	$	40,953
Advance billings and customer deposits		48,097		53,028
Accrued compensation		64,949		68,272
Accrued interest		17,902		17,819
Accrued expense		92,397		97,417
Current portion of long-term debt and finance lease obligations		9,539		7,959
Liabilities held for sale		4,856		97
Total current liabilities		296,501		285,545

Long-term debt and finance lease obligations		2,124,001		2,118,853
Deferred income taxes		186,183		194,458
Pension and other post-retirement obligations		195,587		214,671
Other long-term liabilities		49,132		62,789
Total liabilities		2,851,404		2,876,316

Series A Preferred Stock, par value $0.01 per share; 10,000,000 shares authorized, 436,943 and 434,266 shares outstanding as of June 30, 2022 and December 31, 2021, respectively; liquidation preference of $456,343 and $436,943 as of June 30, 2022 and December 31, 2021, respectively		307,976		288,576

Shareholders' equity:
Common stock, par value $0.01 per share; 150,000,000 shares authorized, 115,395,668 and 113,647,364 shares outstanding as of June 30, 2022 and December 31, 2021, respectively		1,154		1,137
Additional paid-in capital		726,247		740,746
Accumulated deficit		(258,978)		(141,599)
Accumulated other comprehensive loss, net		(49,491)		(59,571)
Noncontrolling interest		7,405		7,087
Total shareholders' equity		426,337		547,800
Total liabilities, mezzanine equity and shareholders' equity	$	3,585,717	$	3,712,692

Page 5 of 14

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,
	2022		2021		2022		2021

Net revenues	$	298,390	$	320,403	$	598,668	$	645,169
Operating expenses:
Cost of services and products		135,888		145,311		271,783		289,290
Selling, general and administrative expenses		75,510		68,998		148,795		135,848
Loss on impairment of assets held for sale		—		—		126,490		—
Depreciation and amortization		72,543		76,079		144,893		151,690
Income (loss) from operations		14,449		30,015		(93,293)		68,341
Other income (expense):
Interest expense, net of interest income		(30,156)		(45,431)		(59,671)		(93,846)
Loss on extinguishment of debt		—		(5,121)		—		(17,101)
Change in fair value of contingent payment rights		—		(39,826)		—		(97,414)
Other income, net		12,920		10,687		24,325		22,961
Loss before income taxes		(2,787)		(49,676)		(128,639)		(117,059)
Income tax expense (benefit)		(1,275)		5,413		(11,578)		113
Net loss		(1,512)		(55,089)		(117,061)		(117,172)
Less: dividends on Series A preferred stock		9,802		—		19,400		—
Less: net income attributable to noncontrolling interest		203		267		318		283

Net loss attributable to common shareholders	$	(11,517)	$	(55,356)	$	(136,779)	$	(117,455)

Net loss per basic and diluted common shares attributable to common shareholders	$	(0.10)	$	(0.71)	$	(1.22)	$	(1.51)

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Consolidated Communications Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
OPERATING ACTIVITIES
Net loss	$	(1,512)	$	(55,089)	$	(117,061)	$	(117,172)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		72,543		76,079		144,893		151,690
Cash distributions from wireless partnerships in excess of earnings		1,508		1,227		1,661		1,238
Pension and post-retirement contributions in excess of expense		(9,819)		(9,443)		(19,161)		(18,213)
Non-cash, stock-based compensation		2,833		2,493		5,032		3,943
Amortization of deferred financing costs and discounts		1,824		4,366		3,626		8,649
Non-cash interest expense on convertible security interest		—		8,229		—		16,104
Loss on extinguishment of debt		—		5,121		—		17,101
Loss on change in fair value of contingent payment rights		—		39,826		—		97,414
Loss on impairment of assets held for sale		—		—		126,490		—
Other adjustments, net		(207)		4,099		(396)		3,731
Changes in operating assets and liabilities, net		(7,225)		10,433		(3,579)		21,346
Net cash provided by operating activities		59,945		87,341		141,505		185,831
INVESTING ACTIVITIES
Purchase of property, plant and equipment, net		(176,434)		(119,236)		(332,914)		(195,196)
Purchase of investments		—		(89,967)		(39,959)		(89,967)
Proceeds from sale of assets		1,720		65		1,794		89
Proceeds from business dispositions		—		—		26,042		—
Proceeds from sale and maturity of investments		60,800		—		126,554		1,198
Net cash used in investing activities		(113,914)		(209,138)		(218,483)		(283,876)
FINANCING ACTIVITIES
Proceeds from bond offering		—		—		—		400,000
Proceeds from issuance of long-term debt		—		—		—		150,000
Payment of finance lease obligations		(2,183)		(1,338)		(4,524)		(2,936)
Payment on long-term debt		—		—		—		(397,000)
Payment of financing costs		—		(2,693)		—		(8,266)
Share repurchases for minimum tax withholding		—		—		(114)		—
Net cash provided by (used in) financing activities		(2,183)		(4,031)		(4,638)		141,798
Net change in cash and cash equivalents		(56,152)		(125,828)		(81,616)		43,753
Cash and cash equivalents at beginning of period		74,171		325,142		99,635		155,561
Cash and cash equivalents at end of period	$	18,019	$	199,314	$	18,019	$	199,314

Page 7 of 14

Consolidated Communications Holdings, Inc.

Consolidated Revenue by Category

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Consumer:
Broadband (Data and VoIP)	$	67,592	$	67,981	$	133,503	$	133,736
Voice services		36,643		40,173		74,095		80,593
Video services		14,359		16,799		28,725		33,580
		118,594		124,953		236,323		247,909
Commercial:
Data services (includes VoIP)		57,113		56,871		115,008		113,942
Voice services		35,775		39,065		72,114		78,818
Other		11,287		9,091		22,847		18,419
		104,175		105,027		209,969		211,179
Carrier:
Data and transport services		36,263		33,942		69,748		67,219
Voice services		3,718		4,396		7,570		8,922
Other		354		395		745		786
		40,335		38,733		78,063		76,927

Subsidies		6,534		17,465		13,117		34,804
Network access		24,846		31,115		51,059		62,718
Other products and services		3,906		3,110		10,137		11,632
Total operating revenue	$	298,390	$	320,403	$	598,668	$	645,169

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Consolidated Communications Holdings, Inc.

Consolidated Revenue Trend by Category

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	Q2 2022		Q1 2022		Q4 2021		Q3 2021		Q2 2021
Consumer:
Broadband (Data and VoIP)	$	67,592	$	65,911	$	66,983	$	68,604	$	67,981
Voice services		36,643		37,452		39,518		40,587		40,173
Video services		14,359		14,366		15,371		16,163		16,799
		118,594		117,729		121,872		125,354		124,953
Commercial:
Data services (includes VoIP)		57,113		57,895		57,444		57,545		56,871
Voice services		35,775		36,339		37,303		38,446		39,065
Other		11,287		11,560		11,408		10,205		9,091
		104,175		105,794		106,155		106,196		105,027
Carrier:
Data and transport services		36,263		33,485		32,659		33,556		33,942
Voice services		3,718		3,852		4,088		4,173		4,396
Other		354		391		431		375		395
		40,335		37,728		37,178		38,104		38,733

Subsidies		6,534		6,583		17,671		17,264		17,465
Network access		24,846		26,213		27,846		29,923		31,115
Other products and services		3,906		6,231		7,758		1,743		3,110
Total operating revenue	$	298,390	$	300,278	$	318,480	$	318,584	$	320,403

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Consolidated Communications Holdings, Inc.

Schedule of Adjusted EBITDA Calculation

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net loss	$	(1,512)	$	(55,089)	$	(117,061)	$	(117,172)
Add (subtract):
Income tax expense (benefit)		(1,275)		5,413		(11,578)		113
Interest expense, net		30,156		45,431		59,671		93,846
Depreciation and amortization		72,543		76,079		144,893		151,690
EBITDA		99,912		71,834		75,925		128,477

Adjustments to EBITDA (1):
Other, net (2)		6,326		8,748		11,836		10,436
Investment income (accrual basis)		(9,903)		(11,439)		(18,152)		(20,995)
Investment distributions (cash basis)		11,329		12,656		19,545		22,033
Pension/OPEB benefit		(2,964)		(2,542)		(5,947)		(5,083)
Loss on extinguishment of debt		—		5,121		—		17,101
Loss on impairment		—		—		126,490		—
Change in fair value of contingent payment right		—		39,826		—		97,414
Non-cash compensation (3)		2,833		2,493		5,032		3,943
Adjusted EBITDA	$	107,533	$	126,697	$	214,729	$	253,326

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.

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Consolidated Communications Holdings, Inc.

Reconciliation of Net Loss to Adjusted EBITDA Guidance

(Dollars in millions)

(Unaudited)


	Year Ended
	December 31, 2022
	Range
	Low		High
Net loss	$	(151)	$	(138)
Add:
Income tax benefit		(15)		(14)
Interest expense, net		125		122
Depreciation and amortization		293		290
EBITDA		252		260

Adjustments to EBITDA (1):
Other, net (2)		23		25
Loss on impairment		126		126
Pension/OPEB benefit		(11)		(11)
Non-cash compensation (3)		10		10
Adjusted EBITDA	$	400	$	410

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, cash distributions less equity earnings from our investments, 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.

Total Net Debt to LTM Adjusted EBITDA Ratio

(Dollars in thousands)

(Unaudited)


	June 30,
	2022
Summary of Outstanding Debt:
Term loans, net of discount $9,513	$	990,362
6.50% Senior secured notes due 2028		750,000
5.00% Senior secured notes due 2028		400,000
Finance leases		28,092
Total debt as of June 30, 2022		2,168,454
Less deferred debt issuance costs		(34,914)
Less cash on hand		(43,024)
Total net debt as of June 30, 2022	$	2,090,516

Adjusted EBITDA for the 12 months ended June 30, 2022	$	468,265

Total Net Debt to last 12 months Adjusted EBITDA		4.46x

Page 11 of 14

Consolidated Communications Holdings, Inc.

Adjusted Net Income and Net Income Per Share

(Dollars in thousands, except per share amounts)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net loss	$	(1,512)	$	(55,089)	$	(117,061)	$	(117,172)
Integration and severance related costs, net of tax		802		508		1,604		1,678
Loss on impairment of assets held for sale		—		—		126,490		—
Loss on disposition of wireless spectrum licenses, net of tax		—		2,641		—		2,641
Loss on disposition of fixed wireless, net of tax		—		3,085		—		3,085
Loss on extinguishment of debt, net of tax		—		3,785		—		12,639
Change in fair value of contingent payment rights		—		39,826		—		97,414
Non-cash interest expense for Searchlight note including amortization of discount and fees		—		10,861		—		21,062
Non-cash interest expense for swaps, net of tax		(310)		(237)		(605)		(421)
Tax impact of non-deductible goodwill		(392)		—		(11,205)		—
Non-cash stock compensation, net of tax		2,094		1,843		3,720		2,914
Adjusted net income	$	683	$	7,223	$	2,944	$	23,840

Weighted average number of shares outstanding		111,697		78,029		111,694		78,029
Adjusted diluted net income per share	$	0.01	$	0.09	$	0.03	$	0.31

Notes:

Calculations above assume a 26.07% effective tax rate for the quarter and six months ended June 30, 2022 and 26.10% effective tax rate for the quarter and six months ended June 30, 2021.

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Consolidated Communications Holdings, Inc.

Key Operating Metrics

(Unaudited)


	June 30,		March 31,		December 31,		September 30,		June 30,
	2022		2022		2021		2021		2021
Passings
Fiber Gig+ capable passings
Northern New England		451,414		341,010		291,921		217,660		168,165
All other markets		380,365		348,396		313,789		276,500		228,958
Total Fiber Gig+ capable ⁽¹⁾		831,779		689,406		605,710		494,160		397,123

DSL/Copper passings ⁽²⁾
Northern New England		1,284,786		1,395,190		1,444,279		1,518,540		1,568,035
All other markets		635,428		663,835		702,098		737,016		779,781
Total DSL/Copper ⁽²⁾		1,920,214		2,059,025		2,146,377		2,255,556		2,347,816
Total Passings		2,751,993		2,748,431		2,752,087		2,749,716		2,744,939
% Fiber Gig+ Coverage/Total Passings		30%		25%		22%		18%		14%

Consumer Broadband Connections
Fiber Gig+ capable
Northern New England		31,050		24,882		20,032		17,288		14,927
All other markets		72,405		68,930		66,090		64,251		62,594
Total Fiber Gig+ capable connections		103,455		93,812		86,122		81,539		77,521

DSL/Copper ⁽²⁾
Northern New England		126,475		131,763		136,140		140,893		144,057
All other markets		151,283		154,575		162,302		168,229		171,902
Total DSL/Copper connections ⁽²⁾		277,758		286,338		298,442		309,122		315,959
Total Consumer Broadband Connections		381,213		380,150		384,564		390,661		393,480

Consumer Broadband Net Adds
Northern New England		880		473		(2,009)		(803)		(1,887)
All other markets ⁽²⁾		183		(1,327)		(4,088)		(2,016)		(2,635)
Total Consumer Broadband Net Adds		1,063		(854)		(6,097)		(2,819)		(4,522)

Consumer Broadband Penetration %
Fiber Gig+ capable
Northern New England		7%		7%		7%		8%		9%
All other markets		19%		20%		21%		23%		27%
Total Fiber Gig+ capable		12%		14%		14%		17%		20%

DSL/Copper ⁽²⁾
Northern New England		10%		9%		9%		9%		9%
All other markets		24%		23%		23%		23%		22%
Total DSL/Copper ⁽²⁾		14%		14%		14%		14%		13%
Total Consumer Broadband Penetration %		14%		14%		14%		14%		14%

Consumer Broadband Revenue by Service Type ($ in thousands)
Fiber Broadband Revenue	$	19,218	$	17,241	$	16,152	$	15,423	$	15,013
Copper and Other Broadband Revenue		48,374		48,670		50,831		53,181		52,968
Total Consumer Broadband Revenue by Service Type	$	67,592	$	65,911	$	66,983	$	68,604	$	67,981

Consumer Average Revenue Per Unit (ARPU)
Fiber Broadband ARPU	$	64.95	$	63.88	$	64.22	$	64.64	$	65.83
Copper Broadband ARPU	$	52.36	$	50.78	$	50.65	$	51.32	$	49.92

Consumer Voice Connections		306,458		316,634		328,849		341,135		352,835

Video Connections		55,225		58,812		63,447		66,971		70,795

Fiber route network miles (long-haul, metro and FttP)		56,093		54,239		52,402		50,405		48,727

On-net buildings		15,618		15,446		14,891		14,625		14,253

Page 13 of 14

Notes:

(1)

In Q1 2021, the Company launched a multi-year fiber build plan to upgrade 1.6 million passings by 2025 or 70% of our service area to fiber Gig+ capable services by 2025. As of June 30, 2022, 226,000 of the target 400,000 passings for 2022 were upgraded to FttP and total fiber passings were ~832,000 or 30% 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.

As of March 31, 2022, the net assets of our Kansas City operations are classified as held for sale. The Kansas City operations, which are included in All other markets above, include approximately 137,000 passings and approximately 10% consumer broadband penetration. Amounts above have not been adjusted to reflect the pending sale.

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