NEW YORK–(BUSINESS WIRE)–Altice USA (NYSE: ATUS) today reports results for the second quarter ended June 30, 2021.

Dexter Goei, Altice USA Chief Executive Officer, said: “As the states and businesses in which we operate have been reopening more widely, Altice USA has seen an acceleration in revenue growth led by Advertising and Business Services. Our Residential business remains extremely focused on achieving faster broadband customer growth going forward from a faster pace of footprint expansion and network upgrades including fiber. We are delighted to have announced recently the new Optimum Mobile brand as the first step in the Company’s plan to align all its connectivity brands under one national Optimum brand, and we continue to invest in innovative new products such as Optimum Stream to support increased video streaming activity which is driving broadband data usage.”

Key Financial Highlights

  • Total Revenue grew +1.7% YoY in Q2 2021 to $2.52 billion, driven by Broadband revenue growth of +7.8% YoY and News & Advertising revenue growth of +36.4% YoY.
  • Net income attributable to stockholders was $197.7 million in Q2 2021, or $0.43/share on a diluted basis, compared to net income of $111.3 million in Q2 2020, or $0.19/share on a diluted basis.
  • Net cash flows from operating activities were $729.5 million in Q2 2021, compared to $936.0 million in Q2 2020.
  • Adjusted EBITDA(1) flat (-0.1%) YoY in Q2 2021 at $1.10 billion due to one-time cost savings in Q2 2020, with a margin of 43.9% (44.8% ex-mobile(2)).
  • Cash capex of $323.1 million in Q2 2021 represented 12.8% of revenue, and was up 41.3% YoY driven by accelerated FTTH, new builds, and Suddenlink network upgrades.
  • Operating Free Cash Flow(1) of $781.5 million in Q2 2021, decreasing -10.9% YoY, reflecting higher cash capex.
  • Free Cash Flow(1) of $406.4 million in Q2 2021, decreasing -42.5% YoY, reflecting higher cash capex and higher cash interest and taxes.
  • Share repurchases of $202.8 million in Q2 2021 ($725.5 million YTD).

Q2-21 Summary Financials

Three Months Ended June 30,

 

Six Months Ended June 30,

($k)

2021

 

2020

 

2021

 

2020

Revenue……………………………………………………………………………………

$2,516,008

 

$2,474,979

 

$4,994,829

 

$4,925,235

Net income attributable to Altice USA, Inc. stockholders………………………………………………………………………………..

197,660

 

111,264

 

471,796

 

110,406

Adjusted EBITDA(1)……………………………………………………………………………………

1,104,602

 

1,105,785

 

2,179,407

 

2,137,164

Capital Expenditures (cash)……………………………………………………………………………………

323,104

 

228,723

 

535,895

 

527,805

Revenue Growth and Adjusted EBITDA Detail

 

Q2-21

 

 

 

Total Revenue YoY

 

+1.7%

Residential Revenue Growth YoY……………………………………………………………………

 

(0.1)%

Business Services Revenue Growth YoY……………………………………………………………………

 

+1.8%

News & Advertising Revenue Growth YoY……………………………………………………………………..

 

+36.4%

 

 

 

Adjusted EBITDA Growth YoY……………………………………………………………………..

 

(0.1)%

Adjusted EBITDA Margin……………………………………………………………………..

 

43.9%

Adjusted EBITDA Margin ex-mobile…………………………………………………………………

 

44.8%

Residential unique customer relationships, broadband subscribers and organic net additions

Subscribers (000s)

   

Q1-20

   

Q2-20

   

Q3-20(3)

   

Q4-20

   

FY-20(3)

   

Q1-21

     

Q2-21(4)(5)

Residential ending relationships

   

4,568.4

   

4,621.4

   

4,663.5

   

4,648.4

   

4,648.4

   

4,647.4

     

4,670.7

Residential organic net additions

   

35.2

   

52.9

   

7.7

   

(15.0)

   

80.8

   

(1.0)

     

(11.9)

Broadband ending subscribers

   

4,237.4

   

4,307.8

   

4,363.5

   

4,359.2

   

4,359.2

   

4,370.8

     

4,401.3

Broadband organic net additions

   

50.0

   

70.4

   

26.0

   

(4.3)

   

142.1

   

11.5

     

0.2

Key Operational Highlights

  • Total unique Residential customer relationships grew +1.1% YoY in Q2 2021 including acquired subscribers. Unique Residential customer organic net losses were -12k in Q2 2021 (or a net gain of +23k total Residential customers when including 35k Morris Broadband subscribers acquired inorganically), compared to +53k Residential customer net additions in Q2 2020 (vs. -1k in Q2 2019 and -4k in Q2 2018). This customer performance reflects usual seasonality in the second quarter, elevated move activity as consumers return to home locations, and the protracted impact of several pandemic-related regulatory programs and storms.
  • Residential Broadband RGUs: Quarterly Residential broadband net additions were flat at +0k in Q2 2021 (or +30k when including Morris Broadband subscribers acquired inorganically), compared to +70k broadband net additions in Q2 2020 (vs. +13k in Q2 2019 and +10k in Q2 2018).
  • Residential Video RGUs: Reported quarterly video net losses were -48k in Q2 2021 (or -36k when including 12k Morris Broadband video subscribers acquired inorganically) compared to -35k video net losses in Q2 2020 (vs. -21k in Q2 2019 and -24k in Q2 2018).
  • Residential revenue was flat (-0.1%) YoY in Q2 2021 at $1.99 billion:

    • Residential revenue per customer relationship in Q2 2021 was down -1.5% YoY to $142.24 but flat sequentially (vs. $142.24 in Q1 2021).
  • Business Services revenue grew +1.8% YoY in Q2 2021 driven by Lightpath growth of +2.7% and SMB / Other revenue growth of +1.4% YoY. Business reopening activity has been accelerating as vaccination rates increase and operational restrictions relax, supporting the best SMB customer quarterly net additions in four years. During the quarter, Lightpath announced the expansion of its network into Boston, MA, and Queens, NY.
  • News and Advertising revenue was up +36.4% YoY in Q2 2021, supported by strong recovery in local, regional, and national advertising plus additional political advertising revenue from the NY mayoral and NJ gubernatorial races.
  • Altice Mobile rebranded as Optimum Mobile as of July 2021 as the first step in the Company’s plan to align all its connectivity brands under one national Optimum brand. Optimum Mobile has approximately 180k mobile lines as of June 30, 2021 (+5k in net additions in Q2 2021), generating revenue of $20.7 million for the quarter (up +4.0% YoY), and reaching 3.8% penetration of Altice USA’s Residential customer base. Since the beginning of 2021, all active Optimum Mobile customers have migrated onto the T-Mobile network from the Sprint network.
  • Increased network usage and demand for higher broadband speeds: Broadband-only customer usage averaged 558 GB per month in Q2 2021, which is 26% higher than the average usage of the entire customer base. The average broadband speed taken by Altice USA’s customer base has nearly doubled in the past three years to 316 Mbps at the end of Q2 2021. Over 50% of our broadband customers remain on plans with download speeds of 200 Mbps or less, representing a sizable opportunity to continue to upgrade speeds.
  • Increase in 1 Gig broadband sell-in:In Q2 2021, 1 Gig sell-in to new customers, where 1 Gig services are available, was in line with the prior quarter at 42%. 11.3% of the total customer base currently takes Gigabit speeds, representing a significant growth opportunity for the Company.
  • FTTH strategy and update: At the end of Q2 2021, Altice USA covered approximately 1.1 million homes with FTTH technology available for service, with FTTH sell-in to new customers at approximately two-thirds of net additions in areas where FTTH is available in Q2. Penetration of FTTH passings grew to 4.3% compared to 1.0% in Q2 2020. The Company remains positive on the future of its FTTH deployment initiatives and confident in delivering a better customer experience, as well as both capex and opex efficiencies, following the completion of its FTTH build.
  • Increase in new-builds: Altice USA has been accelerating the pace of its network edge-outs, adding 127k homes passed in Q2 2021 (39k homes passed excluding Morris Broadband) and a total of 315k homes passed in the last twelve months (160k homes passed LTM on an organic basis excluding the acquisitions of Morris Broadband and Service Electric Cable T.V. of New Jersey). The Company continues to see strong momentum in growing customer penetration, typically reaching approximately 40% within a year of rollout in new-build areas, and this remains a focus area for growth.
  • Suddenlink network upgrade: Altice USA is upgrading its network to deliver higher speeds in certain Suddenlink markets that do not currently offer up to 1 Gbps download speeds. In FY 2021 the Company is on track to upgrade 250-300k homes through RF upgrades and equipment upgrades to enable higher speeds. These markets have previously only offered up to 150 Mbps download speeds and will be upgraded to offer up to 400 Mbps or 1 Gbps.

Financial Outlook Reiterated

The Company reiterates its financial outlook for FY 2021:

  • Revenue: Growth
  • Adjusted EBITDA: Growth
  • Cash capital expenditures: $1.3 to $1.4 billion
  • Year-end leverage target (CSC Holdings, LLC debt silo): < 5.3x net debt / Adjusted EBITDA on an L2QA basis.
  • Share repurchases: $1.5 billion

The Company expects to return to a leverage target of 4.5x – 5.0x net debt / Adjusted EBITDA on an L2QA basis for its CSC Holdings, LLC debt silo over time.

Balance Sheet Review

For the quarter and year ended June 30, 2021:

  • Consolidated net debt for Altice USA at the end of Q2 2021 was $24,839 million(6), representing consolidated net leverage of 5.7x Adjusted EBITDA at the end of Q2 2021 on an L2QA basis (5.6x last-twelve months or “LTM”). The increase in net debt in Q2 2021 of $231 million from the prior quarter is mainly due to the acquisition of Morris Broadband for an implied enterprise value of $310 million, additional Lightpath acquisitions and share repurchases offsetting Free Cash Flow generation.
  • Net debt for CSC Holdings, LLC Restricted Group was $23,473 million at the end of Q2 2021(6), representing net leverage of 5.7x Adjusted EBITDA on an L2QA basis (5.6x LTM). The weighted average cost of debt for CSC Holdings, LLC was 4.7% as of the end of Q2 2021 and the weighted average life was 6.6 years.
  • Net debt for Cablevision Lightpath LLC was $1,416 million at the end of Q2 2021(6), representing net leverage of 6.8x Adjusted EBITDA on an L2QA basis (6.6x LTM). The weighted average cost of debt for Cablevision Lightpath LLC was 4.3% as of the end of Q2 2021 and the weighted average life was 6.6 years.

Additional Highlights and Announcements

Launch of Optimum Stream and Suddenlink Stream

On July 19, 2021, Altice USA unveiled Optimum Stream and Suddenlink Stream, a new 4K streaming device, powered by Android TV OS. Customers have access to a wide variety of video content, including thousands of apps and streaming services on Google Play and over 50 free live streaming channels. The new streaming device is available for free to broadband-only customers who select 1 Gig service or the highest broadband speed available in their service area. It is available to all other broadband-only customers for loyalty pricing of $5 per month.

Lightpath Entry into the Boston Connectivity Market Accelerated by Three Acquisitions

On June 16, 2021, Lightpath announced it had become the first all-fiber, enterprise-grade connectivity provider to enter the Boston market since industry consolidation began over a decade ago. Lightpath announced three acquisitions in the region: Cambridge Network Solutions (CNS), a second area connectivity provider, and the purchase of fiber network assets from Hub Fiber.

Combined, Lightpath acquired over 80 route miles of in-place, high-count fiber network, which currently serve over 100 locations, including 12 area data centers. Additionally, Lightpath’s network in the region will be connected to its New York Metro network, expanding on the company’s existing 18,000 route miles of fiber serving over 12,000 locations.

Lightpath Extends Fiber Network in Queens, NYC Market with New Network Builds

On June 30, 2021, Lightpath announced that it is bringing new connectivity options to businesses in Queens, NY. This expansion adds to the already robust Lightpath footprint in the greater New York City metropolitan area and will bring the network to thousands of new businesses and other organizations in the area.

The Queens expansion includes over 100 miles of new, high-count fiber throughout the market, planned in two phases. Phase 1 of the build will be completed in Q1 of 2022, while the additional proposed routes are targeted for mid-2022. The build will dramatically strengthen Lightpath’s density in Queens, an area that is rich with organizations that require enterprise-grade connectivity solutions.

Recent Refinancing Activity

In May 2021, CSC Holdings, LLC, a wholly-owned subsidiary of Altice USA, issued new $1.5 billion of 10.5 year (non-call 5.5) Senior Guaranteed Notes and new $500 million of 10.5 year (non-call 5.5) Senior Notes to refinance existing indebtedness. Net proceeds were used to (i) refinance the existing 5.5% Senior Guaranteed Notes due 2026, (ii) repay a portion of the drawn revolving credit facility, and (iii) pay any fees, costs and expenses associated with these transactions.

Share Repurchases

For the three months ended June 30, 2021, Altice USA repurchased an aggregate of 5.8 million shares for a total purchase price of approximately $202.8 million, at an average price of $34.84. As of June 30, 2021, Altice USA had 457,080,367 combined Class A and Class B shares outstanding.

For the six months ended June 30, 2021, Altice USA repurchased an aggregate of 21.0 million shares for a total purchase price of approximately $725.5 million, at an average price of $34.55.

Altice USA Consolidated Operating Results

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

Revenue:

 

 

 

 

 

 

 

Broadband

$

992,155

 

 

$

920,363

 

 

$

1,962,726

 

 

$

1,805,892

 

Video

892,605

 

 

952,526

 

 

1,798,439

 

 

1,899,587

 

Telephony

103,374

 

 

117,322

 

 

210,355

 

 

242,352

 

Residential revenue………………………………………………………………………………………………………………..

1,988,134

 

 

1,990,211

 

 

3,971,520

 

 

3,947,831

 

Business services and wholesale

372,010

 

 

365,564

 

 

739,226

 

 

730,094

 

News and Advertising

131,767

 

 

96,631

 

 

236,837

 

 

202,171

 

Mobile

20,664

 

 

19,866

 

 

39,899

 

 

38,222

 

Other

3,433

 

 

2,707

 

 

7,347

 

 

6,917

 

Total revenue

2,516,008

 

 

2,474,979

 

 

4,994,829

 

 

4,925,235

 

Operating expenses:

 

 

 

 

 

 

 

Programming and other direct costs……………………………………………………………………………………………………………

849,872

 

 

860,875

 

 

1,701,736

 

 

1,725,389

 

Other operating expenses……………………………………………………………………………………………………………

589,180

 

 

542,637

 

 

1,169,613

 

 

1,124,946

 

Restructuring and other expense……………………………………………………………………………………………………………

5,864

 

 

40,966

 

 

9,073

 

 

48,260

 

Depreciation and amortization (including impairments)……………………………………………………………………………………………………………

444,327

 

 

521,794

 

 

879,184

 

 

1,069,363

 

Operating income

626,765

 

 

508,707

 

 

1,235,223

 

 

957,277

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense, net………………………………………………………………………………………………………………..

(319,371)

 

 

(350,874)

 

 

(635,683)

 

 

(714,426)

 

Gain (loss) on investments and sale of affiliate interests, net………………………………………………………………………………………………………………..

125,019

 

 

197,597

 

 

198,472

 

 

(257,876)

 

Gain (loss) on derivative contracts, net………………………………………………………………………………………………………………..

(98,840)

 

 

(152,061)

 

 

(152,405)

 

 

287,800

 

Gain (loss) on interest rate swap contracts………………………………………………………………………………………………………………..

(21,574)

 

 

(33,735)

 

 

54,079

 

 

(88,567)

 

Loss on extinguishment of debt and write-off of deferred financing costs……………………………………………………………………………………………………………

(51,712)

 

 

—

 

 

(51,712)

 

 

—

 

Other income, net………………………………………………………………………………………………………………..

2,467

 

 

669

 

 

5,326

 

 

1,592

 

Income before income taxes

262,754

 

 

170,303

 

 

653,300

 

 

185,800

 

Income tax expense

(61,820)

 

 

(58,826)

 

 

(173,827)

 

 

(75,861)

 

Net income

200,934

 

 

111,477

 

 

479,473

 

 

109,939

 

Net loss (income) attributable to noncontrolling interests……………………………………………………………………………………………………………….

(3,274)

 

 

(213)

 

 

(7,677)

 

 

467

 

Net income attributable to Altice USA stockholders……………………………………………………………………………………………………………….

$

197,660

 

 

$

111,264

 

 

$

471,796

 

 

$

110,406

 

Basic net income per share

$

0.43

 

 

$

0.19

 

 

$

1.02

 

 

$

0.18

 

Diluted net income per share

$

0.43

 

 

$

0.19

 

 

$

1.00

 

 

$

0.18

 

 

 

 

 

 

 

 

 

Basic weighted average common shares……………………………………………………………………………………………………………….

456,955

 

 

587,587

 

 

463,060

 

 

604,500

 

Diluted weighted average common shares……………………………………………………………………………………………………………….

463,637

 

 

589,466

 

 

469,510

 

 

606,597

 

Altice USA Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

Six Months Ended June 30,

 

2021

 

2020

Cash flows from operating activities:

 

 

 

Net income…………………………………………………………………………………………………………………………………………….

$

479,473

 

 

$

109,939

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization (including impairments)……………………………………………………………………..

879,184

 

 

1,069,363

 

Loss (gain) on investments and sale of affiliate interests, net……………………………………………………………

(198,472)

 

 

257,876

 

Loss (gain) on derivative contracts, net…………………………………………………………………………………………….

152,405

 

 

(287,800)

 

Loss on extinguishment of debt and write-off of deferred financing costs…………………………………………

51,712

 

 

—

 

Amortization of deferred financing costs and discounts (premiums) on indebtedness………………………

45,917

 

 

48,217

 

Share-based compensation expense ………………………………………………………………………………………………

55,927

 

 

61,053

 

Deferred income taxes……………………………………………………………………………………………………………………..

98,769

 

 

51,105

 

Decrease in right-of-use assets………………………………………………………………………………………………………..

21,691

 

 

23,071

 

Provision for doubtful accounts…………………………………………………………………………………………………………

28,154

 

 

41,857

 

Other…………………………………………………………………………………………………………………………………………………

4,344

 

 

3,156

 

Change in assets and liabilities, net of effects of acquisitions and dispositions:

 

 

 

Accounts receivable, trade………………………………………………………………………………………………………………..

13,078

 

 

27,522

 

Prepaid expenses and other assets…………………………………………………………………………………………………..

31,631

 

 

(5,577)

 

Amounts due from and due to affiliates……………………………………………………………………………………………..

6,505

 

 

1,588

 

Accounts payable and accrued liabilities…………………………………………………………………………………………..

(117,467)

 

 

(2,540)

 

Deferred revenue………………………………………………………………………………………………………………………………

5,782

 

 

(17,302)

 

Liabilities related to interest rate swap contracts……………………………………………………………………………….

(79,468)

 

 

148,013

 

Net cash provided by operating activities………………………………………………………………………………………….

1,479,165

 

 

1,529,541

 

Cash flows from investing activities:

 

 

 

Capital expenditures………………………………………………………………………………………………………………………………

(535,895)

 

 

(527,805)

 

Payment for acquisitions, net of cash acquired………………………………………………………………………………………

(340,570)

 

 

—

 

Other, net……………………………………………………………………………………………………………………………………………….

(1,074)

 

 

1,925

 

Net cash used in investing activities………………………………………………………………………………………………….

(877,539)

 

 

(525,880)

 

Cash flows from financing activities:

 

 

 

Proceeds from long-term debt………………………………………………………………………………………………………………..

3,160,000

 

 

1,925,000

 

Repayment of long-term debt…………………………………………………………………………………………………………………

(3,057,469)

 

 

(277,114)

 

Proceeds from collateralized indebtedness, net……………………………………………………………………………………..

185,105

 

 

—

 

Repayment of collateralized indebtedness and related derivative contracts, net……………………………………

(185,105)

 

 

—

 

Principal payments on finance lease obligations……………………………………………………………………………………

(37,560)

 

 

(11,935)

 

Purchase of shares of Altice USA Class A common stock, pursuant to a share repurchase program…….

(725,518)

 

 

(1,381,235)

 

Other………………………………………………………………………………………………………………………………………………………

1,339

 

 

(7,191)

 

Net cash provided by (used in) financing activities……………………………………………………………………………

(659,208)

 

 

247,525

 

Net increase (decrease) in cash and cash equivalents……………………………………………………………………………..

(57,582)

 

 

1,251,186

 

Effect of exchange rate changes on cash and cash equivalents……………………………………………………………….

479

 

 

(940)

 

Net increase (decrease) in cash and cash equivalents……………………………………………………………………………..

(57,103)

 

 

1,250,246

 

Cash, cash equivalents and restricted cash at beginning of year………………………………………………………………

278,686

 

 

702,160

 

Cash, cash equivalents and restricted cash at end of period…………………………………………………………………….

$

221,583

 

 

$

1,952,406

 

Contacts

Investor Relations
Nick Brown: +1 917 589 9983 / nick.brown@alticeusa.com
Cathy Yao: +1 347 668 8001 / cathy.yao@alticeusa.com

Communications
Lisa Anselmo: +1 516 279 9461 / lisa.anselmo@alticeusa.com

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